I

104TH CONGRESS

1ST SESSION H. R. 2517

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 20, 1995

Mr. KASICH introduced the following bill; which was referred to the Committee

on the Budget, and in addition to the Committees on Agriculture, Banking and Financial Services, Commerce, Economic and Educational Opportunities, Government Reform and Oversight, International Relations, the

Judiciary, National Security, Resources, Rules, Science, Transportation

and Infrastructure, Veterans’ Affairs, and Ways and Means, for a period

to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee

concerned

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 SECTION 1. SHORT TITLE.

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

5 Budget Reconciliation Act of 1995’’.

6 SEC. 2. TABLE OF TITLES.

7 This Act is organized into titles as follows:
2

•HR 2517 IH

Title I—Committee on Agriculture

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—Preserving, Protecting, and Strengthening Medicare

Title XVI—Transformation of the Medicaid Program

Title XVII—Abolishment of Department of Commerce

Title XVIII—Welfare Reform

Title XIX—Contract with America-Tax Relief

Title XX—Budget Enforcement

1 TITLE I—COMMITTEE ON

2 AGRICULTURE

3 SEC. 1001. SHORT TITLE AND TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This title may be cited as the

5 ‘‘Agricultural Reconciliation Act of 1995’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this title is as follows:

TITLE I—COMMITTEE ON AGRICULTURE

Sec. 1001. Short title and table of contents.

Subtitle A—Freedom to Farm

Sec. 1101. Short title.

Sec. 1102. Seven-year contracts to improve farming certainty and flexibility.

Sec. 1103. Availability of nonrecourse marketing assistance loans for wheat,

feed grains, cotton, rice, and oilseeds.

Sec. 1104. Reform of payment limitation provisions of Food Security Act of

1985.

Sec. 1105. Suspension of certain provisions regarding program crops.

Subtitle B—Dairy

CHAPTER 1—AUTHORIZATION OF MARKET TRANSITION PAYMENTS IN LIEU

OF MILK PRICE SUPPORT PROGRAM

Sec. 1201. Seven-year market transition contracts for milk producers.
3

•HR 2517 IH

Sec. 1202. Recourse loans for commercial processors of dairy products.

CHAPTER 2—DAIRY EXPORT PROGRAMS

Sec. 1211. Dairy export incentive program.

Sec. 1212. Authority to assist in establishment and maintenance of export trading company.

Sec. 1213. Standby authority to indicate entity best suited to provide international market development and export services.

Sec. 1214. Study and report regarding potential impact of Uruguay Round on

prices, income and Government purchases.

CHAPTER 3—DAIRY PROMOTION PROGRAMS

Sec. 1221. Research and promotion activities under Fluid Milk Promotion Act

of 1990.

Sec. 1222. Expansion of dairy promotion program to cover dairy products imported into the United States.

Sec. 1223. Promotion of United States dairy products in international markets

through dairy promotion program.

Sec. 1224. Issuance of amended order under Dairy Production Stabilization Act

of 1983.

CHAPTER 4—VERIFICATION OF MILK RECEIPTS

Sec. 1231. Program to verify receipts of milk.

Sec. 1232. Verification program to supersede multiple existing Federal orders.

CHAPTER 5—MISCELLANEOUS PROVISIONS RELATED TO DAIRY

Sec. 1241. Extension of transfer authority regarding military and veterans hospitals.

Sec. 1242. Extension of dairy indemnity program.

Sec. 1243. Extension of report regarding export sales of dairy products.

Sec. 1244. Status of producer-handlers.

Subtitle C—Other Commodities

Sec. 1301. Extension and modification of price support and quota programs for

peanuts.

Sec. 1302. Availability of loans for processors of sugarcane and sugar beets.

Sec. 1303. Repeal of obsolete authority for price support for cottonseed and

cottonseed products.

Subtitle D—Miscellaneous Program Changes

Sec. 1401. Limitations on assistance under emergency livestock feed assistance

program.

Sec. 1402. Conservation reserve program.

Sec. 1403. Crop insurance program.

Sec. 1404. Repeal of farmer owned reserve program.

Sec. 1405. Reduction in funding levels for export enhancement program.

Sec. 1406. Business Interruption Insurance Program.

Subtitle E—Commission on 21st Century Production

Agriculture

Sec. 1501. Establishment.
4

•HR 2517 IH

Sec. 1502. Composition.

Sec. 1503. Comprehensive review of past and future of production agriculture.

Sec. 1504. Reports.

Sec. 1505. Powers.

Sec. 1506. Commission procedures.

Sec. 1507. Personnel matters.

Sec. 1508. Termination of Commission.

1 Subtitle A—Freedom to Farm

2 SEC. 1101. SHORT TITLE.

3 This subtitle may be cited as the ‘‘Freedom to Farm

4 Act of 1995’’.

5 SEC. 1102. SEVEN-YEAR CONTRACTS TO IMPROVE FARMING

6 CERTAINTY AND FLEXIBILITY.

7 (a) CONTRACTS AUTHORIZED.—Section 102 of the

8 Agricultural Act of 1949 (7 U.S.C. 1443), which is obso9 lete, is amended to read as follows:

10 ‘‘SEC. 102. SEVEN-YEAR MARKET TRANSITION CONTRACTS.

11 ‘‘(a) CONTRACTS AUTHORIZED.—

12 ‘‘(1) OFFER AND MAIN TERMS.—Beginning as

13 soon as possible after the date of the enactment of

14 this section, the Secretary shall offer to enter into

15 a contract (to be known as a ‘market transition con16 tract’) with eligible owners and operators described

17 in paragraph (2) on a farm containing eligible farm18 land. Under the terms of a market transition con19 tract, the owner or operator shall agree, in exchange

20 for annual payments under the contract, to comply

21 with the conservation compliance plan for the farm

22 prepared in accordance with section 1212 of the
5

•HR 2517 IH

1 Food Security Act of 1985 (16 U.S.C. 3812) and

2 wetland protection requirements applicable to the

3 farm under subtitle C of title XII of such Act (16

4 U.S.C. 3821 et seq.).

5 ‘‘(2) ELIGIBLE OWNERS AND OPERATORS DE6 SCRIBED.—The following persons shall be considered

7 to be an owner or operator eligible to enter into a

8 market transition contract:

9 ‘‘(A) An owner of eligible farmland who as10 sumes all of the risk of producing a crop.

11 ‘‘(B) An owner of eligible farmland who

12 shares in the risk of producing a crop.

13 ‘‘(C) An operator of eligible farmland with

14 a share-rent lease of the eligible farmland, re15 gardless of the length of the lease, if the owner

16 enters into the same market transition contract.

17 ‘‘(D) An operator of eligible farmland who

18 cash rents the eligible farmland under a lease

19 expiring on or after September 30, 2002, in

20 which case the consent of the owner is not re21 quired.

22 ‘‘(E) An operator of eligible farmland who

23 cash rents the eligible farmland under a lease

24 expiring before September 30, 2002, if the

25 owner consents to the contract.
6

•HR 2517 IH

1 ‘‘(F) An owner of eligible farmland who

2 cash rents the eligible farmland and the lease

3 term expires before September 30, 2002, but

4 only if the actual operator of the farm declines

5 to enter into a market transition contract. In

6 the case of an owner covered by this subpara7 graph, payments will not begin under a market

8 transition contract until the fiscal year follow9 ing the fiscal year in which the lease held by

10 the nonparticipating operator expires.

11 ‘‘(3) TENANTS AND SHARECROPPERS.—The

12 Secretary shall provide adequate safeguards to pro13 tect the interests of operators who are tenants and

14 sharecroppers.

15 ‘‘(b) ELEMENTS OF CONTRACTING.—

16 ‘‘(1) TIME FOR CONTRACTING.—

17 ‘‘(A) DEADLINE.—Except as provided in

18 subparagraph (B), the Secretary may not enter

19 into a market transition contract after April 15,

20 1996.

21 ‘‘(B) SPECIAL RULE FOR CONSERVATION

22 RESERVE LANDS.—Eligible owners and opera23 tors on farms covered by a conservation reserve

24 contract under section 1231 of the Food Secu25 rity Act of 1985 (16 U.S.C. 3831) that expires
7

•HR 2517 IH

1 after April 15, 1996, may enter into or expand

2 a market transition contract to cover the acre3 age equal to the quantity of the farm’s crop

4 acreage bases restored with respect to the farm

5 under the terms and conditions of the conserva6 tion reserve program. The Secretary shall annu7 ally conduct an enrollment for such conserva8 tion reserve program acreage for the fiscal

9 years 1997 through 2002.

10 ‘‘(2) DURATION OF CONTRACT.—The term of

11 each market transition contract shall—

12 ‘‘(A) begin with the 1996 crop year, or the

13 crop year in which the contract is entered into

14 in the case of a contract entered into after

15 April 15, 1996; and

16 ‘‘(B) extend through the 2002 crop year.

17 ‘‘(3) ESTIMATION OF PAYMENTS.—At the time

18 the Secretary enters into a market transition con19 tract, the Secretary shall provide an estimate of the

20 minimum payments anticipated to be made under

21 the contract during at least the first fiscal year for

22 which payments will be made. If the actual payment

23 under the contract for the first fiscal year is less

24 than 95 percent of the estimated payment, the
8

•HR 2517 IH

1 owner or operator subject to the contract may termi2 nate the contract without penalty.

3 ‘‘(4) REPORT ON CONTRACTING.—Not later

4 than 90 days after the date of the enactment of this

5 section, the Secretary shall submit to the Committee

6 on Agriculture of the House of Representatives and

7 the Committee on Agriculture, Nutrition, and For8 estry of the Senate a report describing the manner

9 in which the Secretary proposes to enter into market

10 transition contracts, the number of persons and

11 acreage covered by such contracts, and the total

12 amount of anticipated payments to be made under

13 such contracts (consistent with the limitations speci14 fied in subsection (e)).

15 ‘‘(c) ELIGIBLE FARMLAND DESCRIBED.—Land shall

16 be considered to be farmland eligible for coverage under

17 a market transition contract only if the land has crop acre18 age base attributable to the land and—

19 ‘‘(1) for at least one of the 1991 through 1995

20 crop years, at least a portion of the land was en21 rolled in the acreage reduction program authorized

22 for a crop of rice, upland cotton, feed grains, or

23 wheat under section 101B, 103B, 105B, or 107B or

24 was considered planted to rice, upland cotton, feed
9

•HR 2517 IH

1 grains, or wheat, as certified under section

2 503(c)(7);

3 ‘‘(2) was subject to a conservation reserve con4 tract under section 1231 of the Food Security Act

5 of 1985 (16 U.S.C. 3831) whose term expired on or

6 after January 1, 1995; or

7 ‘‘(3) is released from coverage under a con8 servation reserve contract by the Secretary during

9 the period beginning on January 1, 1995, and end10 ing on April 15, 1996.

11 ‘‘(d) TIME FOR PAYMENT.—

12 ‘‘(1) IN GENERAL.—An annual payment under

13 a market transition contract shall be made not later

14 than September 30 of each of the fiscal years 1996

15 through 2002.

16 ‘‘(2) ADVANCE PAYMENTS.—Beginning in fiscal

17 year 1997, half of the annual payment may be made

18 on March 15 at the option of the owner or operator

19 subject to the contract. At the option of the owner

20 or operator, half of the annual payment for fiscal

21 year 1996 may be made within 90 days of the date

22 on which the owner or operator enters into the mar23 ket transition contract.

24 ‘‘(e) TOTAL AMOUNTS AVAILABLE FOR PAYMENTS

25 UNDER ALL CONTRACTS.—
10

•HR 2517 IH

1 ‘‘(1) TOTAL PAYMENTS.—Total payments under

2 all market transition contracts for fiscal years 1996

3 through 2002 shall not exceed $38,733,000,000.

4 ‘‘(2) TOTAL PAYMENTS PER FISCAL YEAR.—Be5 ginning in fiscal year 1996, the Secretary shall ex6 pend on a fiscal year basis the following amounts to

7 satisfy the obligations of the Secretary under market

8 transition contracts:

9 ‘‘(A) For fiscal year 1996,

10 $6,014,000,000.

11 ‘‘(B) For fiscal year 1997,

12 $5,829,000,000.

13 ‘‘(C) For fiscal year 1998,

14 $6,244,000,000.

15 ‘‘(D) For fiscal year 1999,

16 $6,047,000,000.

17 ‘‘(E) For fiscal year 2000,

18 $5,573,000,000.

19 ‘‘(F) For fiscal year 2001,

20 $4,574,000,000.

21 ‘‘(G) For fiscal year 2002,

22 $4,453,000,000.

23 ‘‘(3) ADJUSTMENT OF PAYMENT AMOUNTS.—

24 The Secretary shall adjust the amount specified in
11

•HR 2517 IH

1 paragraph (1), and the amount specified in para2 graph (2) for a particular fiscal year, as follows:

3 ‘‘(A) Subtracting an amount equal to the

4 amount, if any, necessary during that fiscal

5 year to satisfy payment requirements under sec6 tions 101B, 103B, 105B, and 107B for the

7 1994 and 1995 crop years.

8 ‘‘(B) Adding an amount equal to the sum

9 of all producer repayments of deficiency pay10 ments received during that fiscal year under

11 section 114(a)(2).

12 ‘‘(C) Adding an amount equal to the sum

13 of all market transition contract payments with14 held by the Secretary, at the request of produc15 ers, during the preceding fiscal year as an off16 set against producer repayments of deficiency

17 payments otherwise required under section

18 114(a)(2).

19 ‘‘(D) Adding an amount equal to the sum

20 of all refunds of market transition contract pay21 ments received during the preceding fiscal year

22 under subsection (i).

23 ‘‘(f) CONTRACT PAYMENTS TO BE BASED ON HIS24 TORIC EXPENDITURE LEVELS.—
12

•HR 2517 IH

1 ‘‘(1) CONTRACT COMMODITY DEFINED.—For

2 purposes of this section, the term ‘contract commod3 ity’ means rice, upland cotton, feed grains, or wheat.

4 ‘‘(2) CALCULATION OF HISTORIC EXPENDITURE

5 LEVELS.—

6 ‘‘(A) IN GENERAL.—For each contract

7 commodity, the Secretary shall calculate the

8 total expenditures that were required for the

9 1991 through 1995 crops of that contract com10 modity under section 101B, 103B, 105B, or

11 107B, including expenditures in the form of de12 ficiency payments, loan deficiency payments,

13 gains realized from repaying loans at a level

14 less than the original level, and marketing cer15 tificates.

16 ‘‘(B) SPECIAL RULE FOR 1995 CROP

17 YEAR.—In the absence of information regarding

18 actual expenditures for the 1995 crop of each

19 contract commodity, the Secretary may use an

20 estimate of expenditures under section 101B,

21 103B, 105B, or 107B for that crop year. The

22 Secretary shall base such estimate on informa23 tion contained in the President’s budget for fis24 cal year 1997 submitted to the Congress under

25 section 1105 of title 31, United States Code.
13

•HR 2517 IH

1 ‘‘(3) AMOUNTS AVAILABLE FOR EACH CON2 TRACT COMMODITY.—The amount available for a fis3 cal year for payments with respect to crop acreage

4 base of a contract commodity included in market

5 transition contracts in effect during that fiscal year

6 shall be equal to the product of—

7 ‘‘(A) the ratio of the amount calculated

8 under paragraph (2) for that contract commod9 ity to the total amount calculated for all con10 tract commodities under such paragraph; and

11 ‘‘(B) the amount specified in paragraph

12 (2) of subsection (e) for that fiscal year, as ad13 justed under paragraph (3) of such subsection.

14 ‘‘(g) DETERMINATION OF PAYMENTS UNDER PAR15 TICULAR CONTRACT.—

16 ‘‘(1) INDIVIDUAL PRODUCTION OF CONTRACT

17 COMMODITIES.—For each market transition con18 tract, the amount of production of a contract com19 modity covered by the contract shall be equal to the

20 product of—

21 ‘‘(A) the crop acreage base of that contract

22 commodity attributable to the eligible farmland

23 subject to the contract; and

24 ‘‘(B) the farm program payment yield in

25 effect for the 1995 crop of that contract com-
14

•HR 2517 IH

1 modity for the farm containing that eligible

2 farmland.

3 ‘‘(2) ANNUAL TOTAL PRODUCTION OF CON4 TRACT COMMODITIES.—For each of the fiscal years

5 1996 through 2002, the total production of each

6 contract commodity covered by all market transition

7 contracts shall be equal to the sum of the amounts

8 calculated under paragraph (1) for each individual

9 market transition contract in effect during that fis10 cal year.

11 ‘‘(3) ANNUAL PAYMENT RATE.—The payment

12 rate for a contract commodity for a fiscal year shall

13 be equal to—

14 ‘‘(A) the amount made available under

15 subsection (f)(3) for that contract commodity

16 for that fiscal year; divided by

17 ‘‘(B) the amount determined under para18 graph (2) for that fiscal year.

19 ‘‘(4) ANNUAL PAYMENT AMOUNT.—For each of

20 the fiscal years 1996 through 2002, the amount to

21 be paid under a particular market transition con22 tract in effect during that fiscal year with respect to

23 a contract commodity shall be equal to the product

24 of—
15

•HR 2517 IH

1 ‘‘(A) the amount of production determined

2 under paragraph (1) for that contract for that

3 contract commodity; and

4 ‘‘(B) the payment rate in effect under

5 paragraph (3) for that fiscal year for that con6 tract commodity.

7 ‘‘(5) ASSIGNMENT OF PAYMENTS.—The provi8 sions of section 8(g) of the Soil Conservation and

9 Domestic Allotment Act (16 U.S.C. 590h(g)) (relat10 ing to assignment of payments) shall apply to pay11 ments under this subsection. The owner or operator

12 making the assignment, or the assignee, shall pro13 vide the Secretary with notice, in such manner as

14 the Secretary may require in the market transition

15 contract, of any assignment made under this para16 graph.

17 ‘‘(6) SHARING OF PAYMENTS.—The Secretary

18 shall provide for the sharing of payments made

19 under a market transition contract among the own20 ers and operators subject to the contract on a fair

21 and equitable basis.

22 ‘‘(h) LIMITATION ON TOTAL AMOUNT OF PAY23 MENT.—The total amount of payments made to a person

24 under a market transition contract during any fiscal year

25 may not exceed $50,000. The Secretary shall issue regula-
16

•HR 2517 IH

1 tions defining the term ‘person’ as used in this section,

2 which shall conform, to the extent practicable, to the regu3 lations defining the term ‘person’ issued under section

4 1001 of the Food Security Act of 1985 (7 U.S.C. 1308).

5 In the case of payments under a market transition con6 tract provided to corporations and other persons described

7 in paragraph (5)(B)(i)(II) of such section, the Secretary

8 shall comply with the attribution requirements specified

9 in paragraph (5)(C) of such section.

10 ‘‘(i) EFFECT OF VIOLATION.—

11 ‘‘(1) TERMINATION OF CONTRACT.—If an

12 owner or operator subject to a market transition

13 contract violates the conservation compliance plan

14 for the farm containing eligible farmland under the

15 contract or wetland protection requirements applica16 ble to the farm, the Secretary may terminate the

17 market transition contract with respect to that

18 owner or operator. Upon such termination, the

19 owner or operator shall forfeit all rights to receive

20 future payments under the contract and shall refund

21 to the Secretary all payments under the contract re22 ceived by the owner or operator during the period of

23 the violation, together with interest thereon as deter24 mined by the Secretary.
17

•HR 2517 IH

1 ‘‘(2) REFUND OR ADJUSTMENT.—If the Sec2 retary determines that a violation of a market tran3 sition contract does not warrant termination of the

4 contract under paragraph (1), the Secretary may re5 quire the owner or operator subject to the con6 tract—

7 ‘‘(A) to refund to the Secretary that part

8 of the payments received by the owner or opera9 tor during the period of the violation, together

10 with interest thereon as determined by the Sec11 retary; or

12 ‘‘(B) to accept an adjustment in the

13 amount of future payments otherwise required

14 under the contract.

15 ‘‘(3) FORECLOSURE.—An owner or operator

16 subject to a market transition contract may not be

17 required to make repayments to the Secretary of

18 amounts received under the contract if the eligible

19 farm land that is subject to the contract has been

20 foreclosed upon and the Secretary determines that

21 forgiving such repayments is appropriate in order to

22 provide fair and equitable treatment. This paragraph

23 shall not void the responsibilities of such an owner

24 or operator under the contract if the owner or opera25 tor continues or resumes operation, or control, of the
18

•HR 2517 IH

1 property that is subject to the contract. Upon the

2 resumption of operation or control over the property

3 by the owner or operator, the provisions of the con4 tract in effect on the date of the foreclosure shall

5 apply.

6 ‘‘(4) REVIEW.—A determination of the Sec7 retary under this subsection shall be considered to

8 be an adverse decision for purposes of the availabil9 ity of administrative review of the determination.

10 ‘‘(j) TRANSFER OF INTEREST IN LANDS SUBJECT TO

11 CONTRACT.—

12 ‘‘(1) EFFECT OF TRANSFER.—Except as pro13 vided in paragraph (2), the transfer by an owner or

14 operator subject to a market transition contract of

15 the right and interest of the owner or operator in

16 the eligible farmland under the contract shall result

17 in the termination of the contract with respect to

18 that farmland, effective on the date of the transfer,

19 unless the transferee of the land agrees with the

20 Secretary to assume all obligations of the contract.

21 At the request of the transferee, the Secretary may

22 modify the contract if the modifications are consist23 ent with the objectives of this section as determined

24 by the Secretary.
19

•HR 2517 IH

1 ‘‘(2) EXCEPTION.—If an owner or operator who

2 is entitled to a payment under a market transition

3 contract dies, becomes incompetent, or is otherwise

4 unable to receive such payment, the Secretary shall

5 make such payment, in accordance with regulations

6 prescribed by the Secretary and without regard to

7 any other provision of law, in such manner as the

8 Secretary determines is fair and reasonable in light

9 of all of the circumstances.

10 ‘‘(k) PLANTING FLEXIBILITY.—

11 ‘‘(1) PERMITTED CROPS.—In the case of acre12 age on a farm that serves as the basis for payments

13 under a market transition contract, an owner or op14 erator on the farm may plant for harvest on the

15 acreage—

16 ‘‘(A) rice, upland cotton, feed grains, and

17 wheat;

18 ‘‘(B) any oilseed;

19 ‘‘(C) any industrial or experimental crop

20 designated by the Secretary;

21 ‘‘(D) mung beans, lentils, and dry peas;

22 and

23 ‘‘(E) any other crop, except any fruit or

24 vegetable crop (including potatoes and dry edi25 ble beans) not covered by subparagraph (D),
20

•HR 2517 IH

1 unless such fruit or vegetable crop is designated

2 by the Secretary as—

3 ‘‘(i) an industrial or experimental

4 crop; or

5 ‘‘(ii) a crop for which no substantial

6 domestic production or market exists.

7 ‘‘(2) LIMITATION.—At the discretion of the

8 Secretary, the Secretary may prohibit the planting

9 of any crop specified in paragraph (1) on acreage on

10 a farm that serves as the basis for payments under

11 a market transition contract.

12 ‘‘(3) NOTIFICATION.—With regard to commod13 ities that may be planted pursuant to this sub14 section, the Secretary shall make a determination in

15 each crop year of the commodities that may not be

16 planted pursuant to this subsection and shall make

17 available a list of the commodities.

18 ‘‘(4) CONSERVATION USES.—In lieu of planting

19 any crop specified in paragraph (1), the owner or

20 operator on a farm may devote to conservation uses

21 all or part of the eligible farmland subject to a mar22 ket transition contract, in accordance with regula23 tions issued by the Secretary.

24 ‘‘(5) HAYING AND GRAZING.—Haying and graz25 ing of eligible farmland subject to a market transi-
21

•HR 2517 IH

1 tion contract shall be permitted, except during any

2 consecutive five-month period that is established by

3 the State committee established under section 8(b)

4 of the Soil Conservation and Domestic Allotment

5 Act (16 U.S.C. 590h(b)) for a State. The 5-month

6 period shall be established during the period begin7 ning April 1, and ending October 31, of a year. In

8 the case of a natural disaster, the Secretary may

9 permit unlimited haying and grazing on the eligible

10 farmland. The Secretary may not exclude irrigated

11 or irrigable acreage not planted in alfalfa when exer12 cising the authority under the preceding sentence.

13 ‘‘(l) MARKET TRANSITION CONTRACTS.—Notwith14 standing any other provision of law, no order issued for

15 any fiscal year under section 252 of the Balanced Budget

16 and Emergency Deficit Control Act of 1985 (2 U.S.C.

17 902) shall affect any payment under any market transi18 tion contract.

19 ‘‘(m) COMMODITY CREDIT CORPORATION.—The Sec20 retary shall carry out this section through the Commodity

21 Credit Corporation, except that no funds of the Corpora22 tion shall be used for any salary or expense of any officer

23 or employee of the Department of Agriculture in connec24 tion with the administration of market transition pay25 ments or loans under this Act.
22

•HR 2517 IH

1 ‘‘(n) REGULATIONS.—The Secretary may issue such

2 regulations as the Secretary determines necessary to carry

3 out this section.’’.

4 (b) CONFORMING AMENDMENTS.—

5 (1) WHEAT 0/85 PROGRAM.—Section

6 107B(c)(1)(E) of the Agricultural Act of 1949 (7

7 U.S.C. 1445b–3a(c)(1)(E)) is amended by striking

8 ‘‘through 1997’’ in clauses (i) and (vii) each place

9 it appears and inserting ‘‘and 1995’’.

10 (2) FEED GRAINS 0/85 PROGRAM.—Section

11 105B(c)(1)(E) of such Act (7 U.S.C.

12 1444f(c)(1)(E)) is amended by striking ‘‘through

13 1997’’ in clauses (i) and (vii) each place it appears

14 and inserting ‘‘and 1995’’.

15 (3) COTTON PROGRAM.—Section 103B of such

16 Act (7 U.S.C. 1444–2) is amended—

17 (A) in the section heading, by striking

18 ‘‘1997’’ and inserting ‘‘1995’’;

19 (B) in subsections (a)(1), (b)(1), (c)(1)(A),

20 (c)(1)(B)(ii), and (o), by striking ‘‘1997’’ each

21 place it appears and inserting ‘‘1995’’;

22 (C) in subsections (c)(1)(D)(i) and

23 (c)(1)(D)(v)(II) by striking ‘‘through 1997’’

24 each place it appears and inserting ‘‘and 1995’’;
23

•HR 2517 IH

1 (D) in the heading of subsection

2 (c)(1)(D)(v)(II), by striking ‘‘THROUGH 1997

3 CROPS’’ and inserting ‘‘AND 1995 CROPS’’;

4 (E) in subsection (e)(1)(D), by striking

‘‘291 5 ⁄2 percent for each of the 1995 and 1996

6 crops, and 29 percent for the 1997 crop’’ and

inserting ‘‘and 291 7 ⁄2 percent for the 1995

8 crop’’; and

9 (F) in subparagraphs (B)(i), (D)(i), (E)(i),

10 and (F)(i) of subsection (a)(5), by striking

11 ‘‘1998’’ each place it appears and inserting

12 ‘‘1996’’.

13 (4) RICE 50/85 PROGRAM.—Section 101B of

14 such Act (7 U.S.C. 1441–2) is amended—

15 (A) in subsections (c)(1)(D)(i) and

16 (c)(1)(D)(v)(II), by striking ‘‘through 1997’’

17 each place it appears and inserting ‘‘and 1995’’;

18 and

19 (B) in the heading of subsection

20 (c)(1)(D)(v)(II), by striking ‘‘THROUGH 1997

21 CROPS’’ and inserting ‘‘AND 1995 CROPS’’.

22 (5) OILSEEDS.—Section 205(c) of such Act (7

23 U.S.C. 1446f(c)) is amended by striking ‘‘through

24 1997’’ both places it appears and inserting ‘‘and

25 1995’’.
24

•HR 2517 IH

1 (6) CROP ACREAGE BASE.—Section 509 of such

2 Act (7 U.S.C. 1469) is amended by striking ‘‘effec3 tive only for the 1991 through 1997 program crops’’

4 and inserting ‘‘effective only until January 1, 1996’’.

5 SEC. 1103. AVAILABILITY OF NONRECOURSE MARKETING

6 ASSISTANCE LOANS FOR WHEAT, FEED

7 GRAINS, COTTON, RICE, AND OILSEEDS.

8 (a) NONRECOURSE LOANS AVAILABLE.—The Agri9 cultural Act of 1949 is amended by inserting after section

10 102, as amended by section 1102, the following new sec11 tion:

12 ‘‘SEC. 102A. NONRECOURSE MARKETING ASSISTANCE

13 LOANS FOR CERTAIN CROPS.

14 ‘‘(a) NONRECOURSE LOANS AVAILABLE.—For each

15 of the 1996 through 2002 crops of wheat, feed grains, up16 land cotton, extra long staple cotton, rice, and oilseeds,

17 the Secretary shall make available to eligible producers on

18 a farm nonrecourse marketing assistance loans under

19 terms and conditions that are prescribed by the Secretary

20 and at a loan rate calculated under subsection (c). A mar21 keting assistance loan shall have a term of nine months

22 beginning on the first day of the first month after the

23 month in which the loan is made. The Secretary may not

24 extend the term of a marketing assistance loan.
25

•HR 2517 IH

1 ‘‘(b) ANNOUNCEMENT OF LOAN RATE.—The Sec2 retary shall announce the loan rate for each commodity

3 specified in subsection (a) not later than the start of the

4 marketing year of the commodity for which the loan rate

5 is to be in effect.

6 ‘‘(c) CALCULATION OF LOAN RATE.—

7 ‘‘(1) CALCULATION.—Subject to adjustment

8 under paragraph (2), the loan rate for marketing as9 sistance loans under subsection (a) for a particular

10 commodity specified in such subsection shall be

11 equal to 70 percent of the simple average price re12 ceived by producers of that commodity during the

13 marketing years for the immediately preceding five

14 crops of that commodity.

15 ‘‘(2) REQUIRED BUDGETARY ADJUSTMENTS.—

16 If the Secretary estimates for one of the marketing

17 years for the 1996 through 2002 crops of a particu18 lar commodity specified in subsection (a) that the

19 average price to be received by producers of that

20 commodity is likely to be less that the loan rate cal21 culated under paragraph (1) for that marketing

22 year, the Secretary shall reduce the loan rate for

23 that commodity for that marketing year by an

24 amount sufficient to enable the Secretary to provide

25 marketing assistance loans at no net cost to the
26

•HR 2517 IH

1 Federal Government by preventing the accumulation

2 of that commodity by the Commodity Credit Cor3 poration through loan forfeitures and by limiting

4 producer gains under the marketing loan provision

5 under subsection (d).

6 ‘‘(3) SIMPLE AVERAGE PRICE.—The Secretary

7 shall be responsible for determining the simple aver8 age price received by producers of a commodity spec9 ified in subsection (a). In determining the simple av10 erage price a commodity for a five-year period, the

11 Secretary shall exclude the year in which the average

12 price was the highest and the year in which the av13 erage price was the lowest during the period.

14 ‘‘(d) MARKETING LOAN PROVISION.—If during the

15 marketing year, the Secretary determines that the market

16 price of a commodity subject to a marketing assistance

17 loan under this section falls below the lower of (1) the

18 loan rate, or (2) the loan rate as adjusted by subsection

19 (c)(2), the Secretary shall allow such loan to be repaid

20 at such market price. This subsection shall not apply in

21 the case of marketing assistance loans for extra long sta22 ple cotton, rye, or oilseeds.

23 ‘‘(e) ADJUSTMENTS FOR GRADE, TYPE, QUALITY,

24 LOCATION, AND OTHER FACTORS.—The Secretary may

25 make such adjustments in the announced loan rate for a
27

•HR 2517 IH

1 commodity specified in subsection (a) as the Secretary

2 considers appropriate to reflect differences in grade, type,

3 quality, location, and other factors.

4 ‘‘(f) PRODUCERS ELIGIBLE FOR LOANS.—Only the

5 following producers shall be eligible for a marketing assist6 ance loan under this section:

7 ‘‘(1) In the case of a marketing assistance loan

8 for a crop of wheat, feed grains (other than rye), up9 land cotton, or rice, a producer whose land on which

10 the crop is raised is subject to a market transition

11 contract under section 102.

12 ‘‘(2) In the case of a marketing assistance loan

13 for a crop of extra long staple cotton, rye, or oil14 seeds, any producer.

15 ‘‘(g) PROHIBITION ON STORAGE PAYMENTS.—The

16 Secretary may not make payments to producers to cover

17 storage charges incurred in connection with marketing as18 sistance loans made under this section.

19 ‘‘(h) DEFINITIONS.—For purposes of this section:

20 ‘‘(1) The term ‘feed grains’ means corn, grain

21 sorghums, barley, oats, and rye.

22 ‘‘(2) The term ‘oilseeds’ means soybeans, sun23 flower seed, rapeseed, canola, safflower, flaxseed,

24 mustard seed, and, if designated by the Secretary,

25 other oilseeds.
28

•HR 2517 IH

1 ‘‘(i) REGULATIONS.—The Secretary may issue such

2 regulations as the Secretary determines necessary to carry

3 out this section.’’.

4 (b) REPEAL OF CURRENT ADJUSTMENT AUTHOR5 ITY.—Section 403 of the Agricultural Act of 1949 (7

6 U.S.C. 1423) is repealed.

7 SEC. 1104. REFORM OF PAYMENT LIMITATION PROVISIONS

8 OF FOOD SECURITY ACT OF 1985.

9 (a) ATTRIBUTION OF PAYMENTS MADE TO CORPORA10 TIONS AND OTHER ENTITIES.—Paragraph (5)(C) of sec11 tion 1001 of the Food Security Act of 1985 (7 U.S.C.

12 1308) is amended to read as follows:

13 ‘‘(C)(i) In the case of payments to corporations and

14 other entities described in subparagraph (B)(i)(II), the

15 Secretary shall attribute payments to individuals in pro16 portion to their ownership interests in the corporation or

17 entity receiving the payment or in any other corporation

18 or entity that has a substantial beneficial interest in the

19 corporation or entity actually receiving the payment. This

20 subparagraph shall apply to individuals who hold or ac21 quire, directly or through another corporation or entity,

22 a substantial beneficial interest in the corporation or en23 tity actually receiving the payment.

24 ‘‘(ii) In the case of payments to corporations and

25 other entities described in subparagraph (B)(i)(II), the
29

•HR 2517 IH

1 Secretary shall also attribute payments to any State (or

2 political subdivision or agency thereof) or other corpora3 tion or entity that has a substantial beneficial interest in

4 the corporation or entity actually receiving the payment

5 in proportion to their ownership interests in the corpora6 tion or entity receiving the payment. This subparagraph

7 shall apply even if the payments are also attributable to

8 individuals under clause (i).

9 ‘‘(iii) For purposes of this subparagraph, the term

10 ‘substantial beneficial interest’ means not less than five

11 percent of all beneficial interests in the corporation or en12 tity actually receiving the payment, except that the Sec13 retary may set a lower percentage in order to ensure that

14 the provisions of this section and the scheme or device pro15 visions in section 1001B are not circumvented.’’.

16 (b) TRACKING OF PAYMENTS.—Paragraph (3) of sec17 tion 1001A(a) of the Food Security Act of 1985 (7 U.S.C.

18 1308–1(a)) is amended to read as follows:

19 ‘‘(3) NOTIFICATION.—To facilitate administra20 tion of this section, each entity or individual receiv21 ing payments as a separate person shall notify each

22 individual or other entity that acquires or holds a

23 substantial beneficial interest in it of the require24 ments and limitations under this subsection. Each

25 such entity or individual receiving payments shall
30

•HR 2517 IH

1 provide to the Secretary, at such times and in such

2 manner as prescribed by the Secretary, the name

3 and social security number of each individual, or the

4 name and taxpayer identification number of each en5 tity, that holds or acquires a substantial beneficial

6 interest.’’.

7 (c) CONFORMING AMENDMENT.—Paragraph (2) of

8 such section is amended to read as follows:

9 ‘‘(2) SUBSTANTIAL BENEFICIAL INTEREST.—

10 For purposes of this subsection, the term ‘substan11 tial beneficial interest’ has the meaning given such

12 term in section 1001(5)(C)(iii).’’.

13 SEC. 1105. SUSPENSION OF CERTAIN PROVISIONS REGARD14 ING PROGRAM CROPS.

15 (a) WHEAT.—

16 (1) NONAPPLICABILITY OF CERTIFICATE RE17 QUIREMENTS.—Sections 379d through 379j of the

18 Agricultural Adjustment Act of 1938 (7 U.S.C.

19 1379d–1379j) (relating to marketing certificate re20 quirements for processors and exporters) shall not

21 be applicable to wheat processors or exporters dur22 ing the period June 1, 1996, through May 31, 2003.

23 (2) SUSPENSION OF LAND USE, WHEAT MAR24 KETING ALLOCATION, AND PRODUCER CERTIFICATE

25 PROVISIONS.—Sections 331 through 339, 379b, and
31

•HR 2517 IH

1 379c of the Agricultural Adjustment Act of 1938 (7

2 U.S.C. 1331 through 1339, 1379b, and 1379c) shall

3 not be applicable to the 1996 through 2002 crops of

4 wheat.

5 (3) SUSPENSION OF CERTAIN QUOTA PROVI6 SIONS.—The joint resolution entitled ‘‘A joint reso7 lution relating to corn and wheat marketing quotas

8 under the Agricultural Adjustment Act of 1938, as

9 amended’’, approved May 26, 1941 (7 U.S.C. 1330

10 and 1340) shall not be applicable to the crops of

11 wheat planted for harvest in the calendar years 1996

12 through 2002.

13 (4) NONAPPLICABILITY OF SECTION 107 PRO14 GRAM.—Section 107 of the Agricultural Act of 1949

15 (7 U.S.C. 1445a) shall not be applicable to the 1996

16 through 2002 crops of wheat.

17 (b) FEED GRAINS.—Section 105 of the Agricultural

18 Act of 1949 (7 U.S.C. 1444b) shall not be applicable to

19 the 1996 through 2002 crops of feed grains.

20 (c) COTTON.—

21 (1) SUSPENSION OF BASE ACREAGE ALLOT22 MENTS, MARKETING QUOTAS, AND RELATED PROVI23 SIONS.—Sections 342, 343, 344, 345, 346, and 377

24 of the Agricultural Adjustment Act of 1938 (7

25 U.S.C. 1342–1346 and 1377) shall not be applicable
32

•HR 2517 IH

1 to any of the 1996 through 2002 crops of upland

2 cotton.

3 (2) NONAPPLICABILITY OF SECTION 103 PRO4 GRAM.—Section 103(a) of the Agricultural Act of

5 1949 (7 U.S.C. 1444(a)) shall not be applicable to

6 the 1996 through 2002 crops of upland cotton.

7 Subtitle B—Dairy

8 CHAPTER 1—AUTHORIZATION OF MARKET

9 TRANSITION PAYMENTS IN LIEU OF

10 MILK PRICE SUPPORT PROGRAM

11 SEC. 1201. SEVEN-YEAR MARKET TRANSITION CONTRACTS

12 FOR MILK PRODUCERS.

13 (a) CONTRACTS AUTHORIZED.—Section 204 of the

14 Agricultural Act of 1949 (7 U.S.C. 1446e) is amended to

15 read as follows:

16 ‘‘SEC. 204. SEVEN-YEAR MARKET TRANSITION CONTRACTS

17 FOR MILK PRODUCERS AND RELATED PROVI18 SIONS.

19 ‘‘(a) MARKET TRANSITION CONTRACTS AUTHOR20 IZED.—

21 ‘‘(1) OFFER AND MAIN TERMS.—The Secretary

22 shall offer to enter into a contract (to be known as

23 a ‘market transition contract’) with willing milk pro24 ducers, under which the milk producers agree, in ex-
33

•HR 2517 IH

1 change for seven payments under the contract, to

2 comply with—

3 ‘‘(A) governmental animal waste manage4 ment regulations otherwise applicable to the

5 milk producer; and

6 ‘‘(B) any wetland protection requirements

7 applicable to the farm under subtitle C of title

8 XII of such Act (16 U.S.C. 3821 et seq.).

9 ‘‘(2) MILK PRODUCER DEFINED.—For purposes

10 of this section, the term ‘milk producer’ means a

11 person that was engaged in the production of cow’s

12 milk in the 48 contiguous States on September 15,

13 1995, and that received a payment during the 45-

14 day period before that date for cow’s milk marketed

15 for commercial use. Such term includes a person

16 considered to be a producer-handler that satisfies

17 the requirements of the preceding sentence.

18 ‘‘(b) TIME FOR CONTRACTING; DURATION.—The

19 Secretary shall begin to offer to enter into market transi20 tion contracts as soon as possible after the date of the

21 enactment of this section. The Secretary may not enter

22 into a market transition contract after April 15, 1996.

23 The term of each market transition contract shall extend

24 through December 31, 2001.
34

•HR 2517 IH

1 ‘‘(c) ESTIMATION OF PAYMENTS.—At the time the

2 Secretary enters into a market transition contract, the

3 Secretary shall provide an estimate of the payments antici4 pated to be made under the contract for at least fiscal

5 year 1996.

6 ‘‘(d) TIME FOR PAYMENT.—The fiscal year 1996

7 payment under a market transition contract shall be made

8 on April 15, 1996, or as soon thereafter as practicable.

9 The Secretary shall make subsequent payments not later

10 than October 15 of each of the fiscal years 1997 through

11 2002.

12 ‘‘(e) PAYMENT RATE.—The Secretary shall use the

13 following payment rates to calculate payments under a

14 market transition contract for a fiscal year:

15 ‘‘(1) For fiscal year 1996, 10 cents per hun16 dredweight.

17 ‘‘(2) For fiscal year 1997, 15 cents per hun18 dredweight.

19 ‘‘(3) For fiscal year 1998, 13 cents per hun20 dredweight.

21 ‘‘(4) For fiscal year 1999, 11 cents per hun22 dredweight.

23 ‘‘(5) For fiscal year 2000, 9 cents per hundred24 weight.
35

•HR 2517 IH

1 ‘‘(6) For fiscal year 2001, 7 cents per hundred2 weight.

3 ‘‘(7) For fiscal year 2002, 5 cents per hundred4 weight.

5 ‘‘(f) CONTRACT PAYMENTS TO BE BASED ON PRO6 DUCTION HISTORY.—

7 ‘‘(1) IN GENERAL.—The Secretary shall deter8 mine the historic annual milk production for each

9 milk producer that enters into a market transition

10 contract on the basis of milk checks reflecting pay11 ments for commercial marketings of cow’s milk or

12 such other records of commercial marketings or

13 product sales as may be acceptable to the Secretary.

14 Each milk producer’s historic annual milk produc15 tion shall be expressed in terms of hundredweights

16 of milk.

17 ‘‘(2) PRODUCERS WITH THREE OR MORE YEARS

18 OF PRODUCTION.—In the case of a milk producer

19 that has been engaged in the production of milk for

20 at least three of the calendar years 1991 through

21 1995, the milk producer’s historic annual milk pro22 duction shall be equal to the average quantity of

23 milk marketed by the milk producer during the three

24 years of such period in which the largest quantities

25 of milk were marketed by the milk producer.
36

•HR 2517 IH

1 ‘‘(3) PRODUCERS WITH FEWER YEARS OF PRO2 DUCTION.—In the case of a milk producer not cov3 ered by paragraph (2), the Secretary shall assign the

4 milk producer an historic annual milk production

5 equal to an annualized average of the monthly quan6 tity of milk marketed by the milk producer during

7 the period in which the milk producer has been en8 gaged in milk production. The Secretary shall not

9 consider months of production after December 31,

10 1995.

11 ‘‘(g) CALCULATION OF PAYMENT AMOUNT.—The

12 total amount to be paid to a milk producer under a market

13 transition contract for a fiscal year shall be equal to the

14 product of—

15 ‘‘(1) the payment rate in effect for that fiscal

16 year under subsection (e); and

17 ‘‘(2) the historic annual milk production for the

18 milk producer determined under subsection (f).

19 ‘‘(h) ASSIGNMENT OF PAYMENTS.—The right of a

20 milk producer to a payment under a market transition

21 contract shall be freely assignable by the milk producer.

22 The milk producer or assignee shall provide the Secretary

23 with notice, in such manner as the Secretary may require

24 in the market transition contract, of any assignment made

25 under this subsection.
37

•HR 2517 IH

1 ‘‘(i) EFFECT OF VIOLATION.—

2 ‘‘(1) TERMINATION OF CONTRACT.—If a milk

3 producer subject to a market transition contract vio4 lates any governmental animal waste management

5 regulation that applies to the producer or wetland

6 protection requirements applicable to the producer,

7 the Secretary may terminate the producer’s market

8 transition contract. Upon such termination, the milk

9 producer shall forfeit all rights to receive future pay10 ments under the contract and shall refund to the

11 Secretary any payment under the contract received

12 by the producer after notification of the violation,

13 together with interest thereon as determined by the

14 Secretary. The Secretary shall make a determination

15 regarding violations of animal waste management

16 regulations under this paragraph in consultation

17 with the appropriate State governmental authority.

18 ‘‘(2) REFUND OR ADJUSTMENT.—If the Sec19 retary determines that a violation of a market tran20 sition contract does not warrant termination of the

21 contract under paragraph (1), the Secretary may re22 quire the milk producer subject to the contract—

23 ‘‘(A) to refund to the Secretary any pay24 ment under the contract received by the pro25 ducer after notification of the violation, to-
38

•HR 2517 IH

1 gether with interest thereon as determined by

2 the Secretary; or

3 ‘‘(B) to accept an adjustment in the

4 amount of future payments otherwise required

5 under the contract.

6 ‘‘(j) MARKET TRANSITION CONTRACTS.—Notwith7 standing any other provision of law, no order issued for

8 any fiscal year under section 252 of the Balanced Budget

9 and Emergency Deficit Control Act of 1985 (2 U.S.C.

10 902) shall affect any payment under any market transi11 tion contract.’’.

12 (b) CONTINUED OPERATION OF EXISTING PROGRAM

13 THROUGH 1995.—

14 (1) PRICE SUPPORT OPERATIONS.—Until De15 cember 31, 1995, the Secretary of Agriculture shall

16 continue to use section 204 of the Agricultural Act

17 of 1949 (7 U.S.C. 1446e), as in effect on the day

18 before the date of the enactment of this Act, to sup19 port the price of milk produced in the 48 contiguous

20 States.

21 (2) PRICE REDUCTION.—Subsection (h) of such

22 section, relating to a reduction in the price received

23 by milk producers for all milk produced in the 48

24 contiguous States and marketed for commercial use,

25 shall continue to apply with respect to milk mar-
39

•HR 2517 IH

1 keted through December 31, 1995. In the case of

2 milk producers that did not increase milk market3 ings in 1995 when compared to 1994 milk market4 ings, the Secretary of Agriculture shall make re5 funds available in 1996 to such milk producers in

6 the manner provided in paragraph (3) of such sub7 section.

8 (c) CONFORMING REPEAL OF GENERAL AUTHORITY

9 TO PROVIDE PRICE SUPPORT FOR MILK.—

10 (1) DESIGNATED NONBASIC AGRICULTURAL

11 COMMODITY.—Section 201(a) of the Agricultural

12 Act of 1949 (7 U.S.C. 1446(a)) is amended by strik13 ing ‘‘milk,’’.

14 (2) OTHER NONBASIC AGRICULTURAL COMMOD15 ITIES.—Section 301 of the Agricultural Act of 1949

16 (7 U.S.C. 1447) is amended by inserting ‘‘(other

17 than milk)’’ after ‘‘title II’’.

18 SEC. 1202. RECOURSE LOANS FOR COMMERCIAL PROC19 ESSORS OF DAIRY PRODUCTS.

20 The Agricultural Act of 1949 is amended by striking

21 section 424 (7 U.S.C. 1433c), as added by section 1003

22 of the Food Security Act of 1985 and effective for 1986

23 through 1990 crops, and inserting the following new sec24 tion:
40

•HR 2517 IH

1 ‘‘SEC. 424. RECOURSE LOANS FOR COMMERCIAL PROC2 ESSORS OF DAIRY PRODUCTS.

3 ‘‘(a) RECOURSE LOANS AVAILABLE.—On and after

4 January 1, 1996, the Secretary may make recourse loans

5 available to commercial processors of eligible dairy prod6 ucts to assist such processors to manage inventories of eli7 gible dairy products to assure a greater degree of price

8 stability for the dairy industry during the year. Recourse

9 loans may be made available under such reasonable terms

10 and conditions as the Secretary may prescribe.

11 ‘‘(b) AMOUNT OF LOAN.—The Secretary shall estab12 lish the amount of a loan for eligible dairy products, which

13 shall reflect 90 percent of the reference price for that

14 product. The rate of interest charged participants in this

15 program shall not be less than the rate of interest charged

16 the Commodity Credit Corporation by the United States

17 Treasury.

18 ‘‘(c) PERIOD OF LOANS.—A recourse loan made

19 under this section may not extend beyond the end of the

20 fiscal year during which the loan is made, except that the

21 Secretary may extend the loan for an additional period

22 not to exceed the end of the next fiscal year.

23 ‘‘(d) DEFINITIONS.—For purposes of this section:

24 ‘‘(1) The term ‘eligible dairy products’ means

25 cheddar cheese, butter, and nonfat dry milk.

26 ‘‘(2) The term ‘reference price’ means—
41

•HR 2517 IH

1 ‘‘(A) for cheddar cheese, the average Na2 tional Cheese Exchange price for 40 pound

3 blocks of cheddar cheese for the previous three

4 months;

5 ‘‘(B) for butter the average Chicago Mer6 cantile Exchange price for butter for the pre7 vious three months; and

8 ‘‘(C) for nonfat dry milk, the Western

9 States price for nonfat dry milk for the pre10 vious three months.’’.

11 CHAPTER 2—DAIRY EXPORT PROGRAMS

12 SEC. 1211. DAIRY EXPORT INCENTIVE PROGRAM.

13 (a) IN GENERAL.—Section 153(c) of the Food Secu14 rity Act of 1985 (15 U.S.C. 713a–14(c)) is amended—

15 (1) by striking ‘‘and’’ at the end of paragraph

16 (1);

17 (2) by striking the period at the end of para18 graph (2) and inserting ‘‘; and’’; and

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

20 paragraphs:

21 ‘‘(3) the maximum volume of dairy product ex22 ports allowable consistent with the obligations of the

23 United States as a member of the World Trade Or24 ganization are exported under the program each

25 year (minus the volume sold under section 1163 of
42

•HR 2517 IH

1 the Food Security Act of 1985 (7 U.S.C. 1731 note)

2 during that year), except to the extent that the ex3 port of such a volume under the program would, in

4 the judgment of the Secretary, exceed the limitations

5 on the value set forth in subsection (f); and

6 ‘‘(4) payments may be made under the program

7 for exports to any destination in the world for the

8 purpose of market development, except a destination

9 in a country with respect to which shipments from

10 the United States are otherwise restricted by law.’’.

11 (b) SOLE DISCRETION.—Section 153(b) of the Food

12 Security Act of 1985 (15 U.S.C. 713a–14(b)) is amended

13 by inserting ‘‘sole’’ before ‘‘discretion’’.

14 (c) MARKET DEVELOPMENT.—Section 153(e)(1) of

15 the Food Security Act of 1985 (15 U.S.C. 713a–14(e)(1))

16 is amended—

17 (1) by striking ‘‘and’’ and inserting ‘‘the’’; and

18 (2) by inserting before the period the following:

19 ‘‘, and any additional amount that may be required

20 to assist in the development of world markets for

21 United States dairy products’’.

22 (d) MAXIMUM ALLOWABLE AMOUNTS.—Section 153

23 of the Food Security Act of 1985 (15 U.S.C. 713a–14)

24 is amended by adding at the end the following:
43

•HR 2517 IH

1 ‘‘(f) REQUIRED FUNDING.—The Commodity Credit

2 Corporation shall in each year use money and commodities

3 for the program under this section in the maximum

4 amount consistent with the obligations of the United

5 States as a member of the World Trade Organization,

6 minus the amount expended under section 1163 of the

7 Food Security Act of 1985 (7 U.S.C. 1731 note) during

8 that year. However, the Commodity Credit Corporation

9 may not exceed the limitations specified in subsection

10 (c)(3) on the volume of allowable dairy product exports.’’.

11 (e) CONFORMING AMENDMENT.—Section 153(a) of

12 the Food Security Act of 1985 (15 U.S.C. 713a–14(a))

13 is amended by striking ‘‘2001’’ and inserting ‘‘2002’’.

14 SEC. 1212. AUTHORITY TO ASSIST IN ESTABLISHMENT AND

15 MAINTENANCE OF EXPORT TRADING COM16 PANY.

17 The Secretary of Agriculture shall, consistent with

18 the obligations of the United States as a member of the

19 World Trade Organization, provide such advice and assist20 ance to the United States dairy industry as may be nec21 essary to enable that industry to establish and maintain

22 an export trading company under the Export Trading

23 Company Act of 1982 (15 U.S.C. 4001 et seq.) for the

24 purpose of facilitating the international market develop-
44

•HR 2517 IH

1 ment for and exportation of dairy products produced in

2 the United States.

3 SEC. 1213. STANDBY AUTHORITY TO INDICATE ENTITY

4 BEST SUITED TO PROVIDE INTERNATIONAL

5 MARKET DEVELOPMENT AND EXPORT SERV6 ICES.

7 (a) INDICATION OF ENTITY BEST SUITED TO ASSIST

8 INTERNATIONAL MARKET DEVELOPMENT FOR AND EX9 PORT OF UNITED STATES DAIRY PRODUCTS.—If—

10 (1) the United States dairy industry has not es11 tablished an export trading company under the Ex12 port Trading Company Act of 1982 (15 U.S.C. 4001

13 et seq.) for the purpose of facilitating the inter14 national market development for and exportation of

15 dairy products produced in the United States on or

16 before June 30, 1996; or

17 (2) the quantity of exports of United States

18 dairy products during the 12-month period preced19 ing July 1, 1997 does not exceed the quantity of ex20 ports of United States dairy products during the 12-

21 month period preceding July 1, 1996 by 1.5 billion

22 pounds (milk equivalent, total solids basis);

23 the Secretary of Agriculture is directed to indicate which

24 entity autonomous of the Government of the United States

25 is best suited to facilitate the international market devel-
45

•HR 2517 IH

1 opment for and exportation of United States dairy prod2 ucts.

3 (b) FUNDING OF EXPORT ACTIVITIES.—The Sec4 retary shall assist the entity in identifying sources of fund5 ing for the activities specified in subsection (a) from with6 in the dairy industry and elsewhere.

7 (c) APPLICATION OF SECTION.—This section shall

8 apply only during the period beginning on July 1, 1997

9 and ending on September 30, 2000.

10 SEC. 1214. STUDY AND REPORT REGARDING POTENTIAL IM11 PACT OF URUGUAY ROUND ON PRICES, IN12 COME AND GOVERNMENT PURCHASES.

13 (a) STUDY.—The Secretary of Agriculture shall con14 duct a study, on a variety by variety of cheese basis, to

15 determine the potential impact on milk prices in the Unit16 ed States, dairy producer income, and Federal dairy pro17 gram costs, of the allocation of additional cheese granted

18 access to the United States as a result of the obligations

19 of the United States as a member of the World Trade

20 Organization.

21 (b) REPORT.—Not later than September 30, 1996,

22 the Secretary shall report to the Committees on Agri23 culture of the Senate and the House of Representatives

24 the results of the study conducted under this section.
46

•HR 2517 IH

1 (c) RULE OF CONSTRUCTION.—Any limitation im2 posed by Act of Congress on the conduct or completion

3 of studies or reports to Congress shall not apply to the

4 study and report required under this section unless such

5 limitation explicitly references this section in doing so.

6 CHAPTER 3—DAIRY PROMOTION

7 PROGRAMS

8 SEC. 1221. RESEARCH AND PROMOTION ACTIVITIES UNDER

9 FLUID MILK PROMOTION ACT OF 1990.

10 (a) EXTENSION OF ORDER.—Section 1999O of the

11 Fluid Milk Promotion Act of 1990 (subtitle H of title XIX

12 of Public Law 101–624; 7 U.S.C. 6414(a)) is amended—

13 (1) by striking subsection (a); and

14 (2) by redesignating subsections (b) and (c) as

15 subsections (a) and (b), respectively.

16 (b) DEFINITION OF RESEARCH.—Paragraph (6) of

17 section 1999C of such Act (7 U.S.C. 6402) is amended

18 to read as follows:

19 ‘‘(6) RESEARCH.—The term ‘research’ means—

20 ‘‘(A) market research to support and in21 crease the effectiveness of industry advertising,

22 promotion, and educational activities; and

23 ‘‘(B) other research to expand sales of

24 fluid milk products, including research regard25 ing the development of new products, new prod-
47

•HR 2517 IH

1 uct characteristics, and improved technology in

2 the production, manufacturing, or processing of

3 milk and the products of milk.’’.

4 (c) CONFORMING AMENDMENTS REGARDING MAR5 KETING ORDERS.—Section 1999J(b) of such Act (7

6 U.S.C. 6409(b)) is amended—

7 (1) by striking paragraph (1);

8 (2) in paragraph (2), by striking ‘‘(2) other9 wise’’ and inserting ‘‘(1)’’; and

10 (3) by redesignating paragraph (3) as para11 graph (2).

12 (d) CLARIFICATION OF REFERENDUM REQUIRE13 MENTS.—

14 (1) SUSPENSION OR TERMINATION.—Subsection

15 (b) of section 1999O of such Act (7 U.S.C. 6414),

16 as redesignated by subsection (a)(2), is amended—

17 (A) in paragraph (1), by striking ‘‘all proc18 essors’’ and inserting ‘‘all fluid milk proc19 essors’’; and

20 (B) in paragraph (2)(B), by striking ‘‘all

21 processors’’ and inserting ‘‘all fluid milk proc22 essors voting in the referendum’’.

23 (2) CONFORMING AMENDMENT.—Section

24 1999N(b)(2) of such Act (7 U.S.C. 6413(b)(2)) is
48

•HR 2517 IH

1 amended by striking ‘‘all processors’’ and inserting

2 ‘‘all fluid milk processors voting in the referendum’’.

3 SEC. 1222. EXPANSION OF DAIRY PROMOTION PROGRAM TO

4 COVER DAIRY PRODUCTS IMPORTED INTO

5 THE UNITED STATES.

6 (a) DECLARATION OF POLICY.—Section 110(b) of

7 the Dairy Production Stabilization Act of 1983 (7 U.S.C.

8 4501(b)) is amended by inserting after ‘‘commercial use’’

9 the following: ‘‘and dairy products imported into the Unit10 ed States’’.

11 (b) DEFINITIONS.—

12 (1) MILK.—Subsection (d) of section 111 of

13 such Act (7 U.S.C. 4502) is amended by inserting

14 before the period at the end the following: ‘‘or cow’s

15 milk imported into the United States in the form of

16 dairy products intended for consumption in the

17 United States’’.

18 (2) DAIRY PRODUCTS.—Subsection (e) of such

19 section is amended by inserting before the semicolon

20 the following: ‘‘and casein (except casein imported

21 under sections 3501.90.20 (casein glue) and

22 3501.90.50 (other) of the Harmonized Tariff Sched23 ule)’’.

24 (3) RESEARCH.—Subsection (j) of such section

25 is amended by inserting before the semicolon the fol-
49

•HR 2517 IH

1 lowing: ‘‘or to reduce the costs associated with proc2 essing or marketing those products’’.

3 (4) UNITED STATES.—Subsection (l) of such

4 section is amended to read as follows:

5 ‘‘(l) the term ‘United States’ means the several

6 States and the District of Columbia;’’.

7 (5) IMPORTERS AND EXPORTERS.—Such section

8 is further amended—

9 (A) in subsection (k), by striking ‘‘and’’ at

10 the end of such subsection; and

11 (B) by adding at the end the following new

12 subsections:

13 ‘‘(m) the term ‘importer’ means the first person

14 to take title to dairy products imported into the

15 United States for domestic consumption; and

16 ‘‘(n) the term ‘exporter’ means any person who

17 exports dairy products from the United States.’’.

18 (c) MEMBERSHIP OF BOARD.—Section 113(b) of

19 such Act (7 U.S.C. 4504(b)) is amended—

20 (1) in the first sentence, by striking ‘‘thirty-six

21 members’’ and inserting ‘‘38 members, including one

22 representative of importers and one representative of

23 exporters to be appointed by the Secretary’’;

24 (2) in the second sentence, by striking ‘‘Mem25 bers’’ and inserting ‘‘The remaining members’’; and
50

•HR 2517 IH

1 (3) in the third sentence, by striking ‘‘United

2 States’’ and inserting ‘‘United States, including

3 Alaska and Hawaii’’.

4 (d) ASSESSMENT.—Section 113(g) of such Act (7

5 U.S.C. 4504(g)) is amended—

6 (1) by inserting ‘‘(1)’’ after ‘‘(g)’’; and

7 (2) by adding at the end the following new

8 paragraph:

9 ‘‘(2) The order shall provide that each importer of

10 dairy products intended for consumption in the United

11 States shall remit to the Board, in the manner prescribed

12 by the order, an assessment equal to 1.2 cents per pound

13 of total milk solids contained in the imported dairy prod14 ucts, or 15 cents per hundredweight of milk contained in

15 the imported dairy products, whichever is less. If an im16 porter can establish that it is participating in active, ongo17 ing qualified State or regional dairy product promotion or

18 nutrition programs intended to increase the consumption

19 of milk and dairy products, the importer shall receive cred20 it in determining the assessment due from that importer

21 for contributions to such programs of up to .8 cents per

22 pound of total milk solids contained in the imported dairy

23 products, or 10 cents per hundredweight of milk contained

24 in the imported dairy products, whichever is less. The as-
51

•HR 2517 IH

1 sessment collected under this paragraph shall be used for

2 the purpose specified in paragraph (1).’’.

3 (e) RECORDS.—Section 113(k) of such Act (7 U.S.C.

4 4504(k)) is amended in the first sentence by inserting

5 after ‘‘commercial use,’’ the following: ‘‘each importer of

6 dairy products,’’.

7 (f) TERMINATION OR SUSPENSION OF ORDER.—Sec8 tion 116(b) of such Act (7 U.S.C. 4507(b)) is amended—

9 (1) by inserting ‘‘and importers’’ after ‘‘produc10 ers’’ each place it appears;

11 (2) by striking ‘‘who, during a representative

12 period (as determined by the Secretary), have been

13 engaged in the production of milk for commercial

14 use’’; and

15 (3) by adding at the end the following new sen16 tences: ‘‘A producer shall be eligible to vote in the

17 referendum if the producer, during a representative

18 period (as determined by the Secretary), has been

19 engaged in the production of milk for commercial

20 use. An importer shall be eligible to vote in the ref21 erendum if the importer, during a representative pe22 riod (as determined by the Secretary), has been en23 gaged in the importation of dairy products into the

24 United States intended for consumption in the

25 United States.’’.
52

•HR 2517 IH

1 SEC. 1223. PROMOTION OF UNITED STATES DAIRY PROD2 UCTS IN INTERNATIONAL MARKETS

3 THROUGH DAIRY PROMOTION PROGRAM.

4 Section 113(e) of the Dairy Production Stabilization

5 Act of 1983 (7 U.S.C. 4504(e)) is amended by adding at

6 the end the following new sentence: ‘‘For each of the fiscal

7 years 1996 through 2000, the Board’s budget shall pro8 vide for the expenditure of not less than 10 percent of

9 the anticipated revenues available to the Board to develop

10 international markets for, and to promote within such

11 markets, the consumption of dairy products produced in

12 the United States from milk produced in the United

13 States.’’.

14 SEC. 1224. ISSUANCE OF AMENDED ORDER UNDER DAIRY

15 PRODUCTION STABILIZATION ACT OF 1983.

16 (a) IMPLEMENTATION OF AMENDMENTS.—To imple17 ment the amendments made by sections 1222 and 1223,

18 the Secretary of Agriculture shall issue an amended dairy

19 products promotion and research order under section 112

20 of the Dairy Production Stabilization Act of 1983 (7

21 U.S.C. 4504) reflecting such amendments, and no other

22 changes, in the order in existence on the date of the enact23 ment of this Act.

24 (b) PROPOSAL OF AMENDED ORDER.—Not later

25 than 60 days after the date of the enactment of this Act,

26 the Secretary of Agriculture shall publish a proposed dairy
53

•HR 2517 IH

1 products promotion and research order reflecting the

2 amendments made by sections 1222 and 1223. The Sec3 retary shall provide notice and an opportunity for public

4 comment on the proposed order.

5 (c) ISSUANCE OF AMENDED ORDER.—After notice

6 and opportunity for public comment are provided in ac7 cordance with subsection (b), the Secretary of Agriculture

8 shall issue a final dairy products promotion and research

9 order, taking into consideration the comments received

10 and including in the order such provisions as are necessary

11 to ensure that the order is in conformity with the amend12 ments made by sections 1222 and 1223.

13 (d) EFFECTIVE DATE.—The final dairy products pro14 motion and research order shall be issued and become ef15 fective not later than 120 days after publication of the

16 proposed order.

17 (e) REFERENDUM ON AMENDMENTS.—Section 115

18 of Dairy Production Stabilization Act of 1983 (7 U.S.C.

19 4506) is amended—

20 (1) by redesignating subsection (b) as sub21 section (c); and

22 (2) by inserting after subsection (a) the follow23 ing new subsection:

24 ‘‘(b) REFERENDUM.—Not later than 36 months after

25 the issuance of the order reflecting the amendments made
54

•HR 2517 IH

1 by sections 1222 and 1223 of the Agricultural Reconcili2 ation Act of 1995, the Secretary shall conduct a referen3 dum under this section for the sole purpose of determining

4 whether the requirements of such amendments shall be

5 continued. The Secretary shall conduct the referendum

6 among persons who have been producers or importers dur7 ing a representative period as determined by the Sec8 retary. The requirements of such amendments shall be

9 continued only if the Secretary determines that such re10 quirements have been approved by not less than a majority

11 of the persons voting in the referendum. If continuation

12 of the amendments is not approved, the Secretary shall

13 issue a new order, within six months after the announce14 ment of the results of the referendum, that is identical

15 to the order in effect on the date of the enactment of the

16 Agricultural Reconciliation Act of 1995. The new order

17 shall become effective upon issuance and shall not be sub18 ject to referendum for approval.’’.

19 CHAPTER 4—VERIFICATION OF MILK

20 RECEIPTS

21 SEC. 1231. PROGRAM TO VERIFY RECEIPTS OF MILK.

22 (a) ESTABLISHMENT OF VERIFICATION PROGRAM.—

23 Section 204 of the Agricultural Act of 1949 (7 U.S.C.

24 1446e), as amended by section 1201, is further amended

25 by adding at the end the following new subsection:
55

•HR 2517 IH

1 ‘‘(k) VERIFICATION OF RECEIPTS OF MILK.—

2 ‘‘(1) VERIFICATION PROGRAM REQUIRED.—The

3 Secretary shall establish a program through which

4 the verification of receipts of all cow’s milk marketed

5 in the 48 contiguous States and the auditing of mar6 keting agreements with respect to receipts of such

7 milk may be accomplished. The Secretary shall pre8 scribe regulations to establish the program required

9 by this subsection.

10 ‘‘(2) ADMINISTRATIVE SERVICES.—The pro11 gram shall provide a means by which (A) processors,

12 associations of producers, and other persons engaged

13 in the handling of milk and milk products file re14 ports with the Secretary regarding receipts of milk,

15 prices paid for milk, and the purposes for which

16 milk was used by handlers, (B) authorized deduc17 tions from payments to producers, including assess18 ments for research and promotion programs, are col19 lected, (C) assurance of proper payment by handlers

20 for milk purchased is achieved, and (D) the reports,

21 records, and facilities of handlers are reviewed and

22 inspected to assure their accuracy. The regulations

23 shall provide for the publication of statistics regard24 ing receipts, prices, and uses of milk. Statistics pub25 lished by the Secretary shall include information re-
56

•HR 2517 IH

1 garding payments received by producers for milk on

2 a component basis, including payments for milkfat,

3 protein and other solids. The Secretary shall collect

4 an assessment from handlers required to file reports

5 under this paragraph to cover any expenses associ6 ated with the collection and publication of such sta7 tistics. Assessments shall be based on the relative

8 volume of receipts of milk by each handler and shall

9 not exceed the total cost of such expenses.

10 ‘‘(3) MARKETING SERVICES.—The program

11 shall further provide a means by which the weighing,

12 sampling, and testing of milk purchased from pro13 ducers is accomplished and verified. This paragraph

14 shall not apply to producers for whom such market15 ing services are rendered by a cooperative marketing

16 association qualified under the provisions of the Act

17 of February 18, 1922 (7 U.S.C. 291–292), com18 monly known as the ‘Co-operative Marketing Asso19 ciations Act’. An assessment may be levied on pro20 ducers for whom such services are performed to

21 cover the expenses of the Secretary or the coopera22 tive marketing association providing the services. As23 sessments shall be based on the relative marketings

24 of milk by each producer and shall not exceed the

25 total cost of providing such services.
57

•HR 2517 IH

1 ‘‘(4) MARKETING AGREEMENTS.—Producers or

2 associations of producers, including cooperative mar3 keting associations qualified under the provisions of

4 the Act of February 18, 1922 (7 U.S.C. 291–292),

5 commonly known as the ‘Co-operative Marketing As6 sociations Act’, may negotiate and enter into mar7 keting agreements or other private contracts with

8 handlers for the marketing and receipt of milk.

9 Upon the request of either or both of the parties, the

10 Secretary may perform an audit of the agreement or

11 contract to assure compliance with its terms, except

12 that the Secretary shall be reimbursed for any costs

13 associated with the audit in the manner provided in

14 the agreement or contract. If there is no provision

15 for the reimbursement of the Secretary in the agree16 ment or contract, the party or parties requesting the

17 audit shall provide such reimbursement.

18 ‘‘(5) PROHIBITION ON MARKETING LIMITA19 TIONS.—No marketing agreement or Government

20 order or regulation applicable to milk and its prod21 ucts in any marketing area or jurisdiction shall pro22 hibit or in any manner limit the marketing in that

23 area of any milk or product of milk produced in any

24 production area in the United States.
58

•HR 2517 IH

1 ‘‘(6) EFFECT ON EXISTING MARKETING OR2 DERS.—Effective July 1, 1996, the program estab3 lished under this subsection shall supersede any

4 Federal marketing order issued under section 8c of

5 the Agricultural Adjustment Act (7 U.S.C. 608c),

6 reenacted with amendments by the Agricultural

7 Marketing Agreement Act of 1937, with respect to

8 milk or its products.’’.

9 (b) TIME FOR ISSUANCE.—Not later than July 1,

10 1996, the Secretary of Agriculture shall issue final regula11 tions under subsection (k) of section 204 of the Agricul12 tural Act of 1949, as added by this section, to establish

13 the verification program required by such subsection. The

14 regulations shall take effect on that date.

15 (c) PROCESS.—In preparation for the issuance of the

16 regulations under subsection (k) of section 204 of the Ag17 ricultural Act of 1949, as added by this section, the Sec18 retary shall comply with the following:

19 (1) The Secretary shall issue proposed regula20 tions not later than April 1, 1996.

21 (2) The Secretary shall provide for a comment

22 period on the regulations, as proposed under para23 graph (1). However, the comment period shall not

24 exceed 60 days nor extend past May 31, 1996.
59

•HR 2517 IH

1 SEC. 1232. VERIFICATION PROGRAM TO SUPERSEDE MUL2 TIPLE EXISTING FEDERAL ORDERS.

3 (a) TERMINATION OF MILK MARKETING ORDERS.—

4 Section 8c of the Agricultural Adjustment Act (7 U.S.C.

5 608c), reenacted with amendments by the Agricultural

6 Marketing Agreement Act of 1937, is amended by striking

7 paragraphs (5) and (18) relating to milk and its products.

8 (b) PROHIBITION ON SUBSEQUENT ORDERS RE9 GARDING MILK.—Paragraph (2) of such section is amend10 ed—

11 (1) by striking ‘‘Milk, fruits’’ and inserting

12 ‘‘Fruits’’; and

13 (2) by inserting ‘‘milk,’’ after ‘‘honey,’’ in sub14 paragraph (B).

15 (c) CONFORMING AMENDMENTS.—(1) Section 2(3) of

16 such Act (7 U.S.C. 602(3) is amended by striking ‘‘, other

17 than milk and its products,’’.

18 (2) Section 8c of such Act (7 U.S.C. 608c) is amend19 ed—

20 (A) in paragraph (6), by striking ‘‘, other than

21 milk and its products,’’;

22 (B) in paragraph (7)(B), by striking ‘‘(except

23 for milk and cream to be sold for consumption in

24 fluid form)’’;
60

•HR 2517 IH

1 (C) in paragraph (11)(B), by striking ‘‘Except

2 in the case of milk and its products, orders’’ and in3 serting ‘‘Orders’’;

4 (D) in paragraph (13)(A), by striking ‘‘, except

5 to a retailer in his capacity as a retailer of milk and

6 its products’’; and

7 (E) in paragraph (17), by striking the second

8 proviso, which relates to milk orders.

9 (3) Section 8d(2) of such Act (7 U.S.C. 608d(2)) is

10 amended by striking the second sentence, which relates to

11 information from milk handlers.

12 (4) Section 10(b)(2) of such Act (7 U.S.C. 610(b)(2))

13 is amended—

14 (A) by striking clause (i);

15 (B) by redesignating clauses (ii) and (iii) as

16 clauses (i) and (ii), respectively; and

17 (C) in clause (i) (as so redesignated), by strik18 ing ‘‘other commodity’’ in the first sentence and in19 serting ‘‘commodity’’.

20 (5) Section 11 of such Act (7 U.S.C. 611) is amended

21 by striking ‘‘and milk, and its products,’’.

22 (6) Section 715 of the Agriculture, Rural Develop23 ment, Food and Drug Administration, and Related Agen24 cies Appropriations Act, 1994 (Public Law 103–111; 107

25 Stat. 1079; 7 U.S.C. 608d note), is amended by striking
61

•HR 2517 IH

1 the third proviso, which relates to information from milk

2 handlers.

3 (d) EFFECTIVE DATE.—The amendments made by

4 this section shall take effect on July 1, 1996.

5 CHAPTER 5—MISCELLANEOUS

6 PROVISIONS RELATED TO DAIRY

7 SEC. 1241. EXTENSION OF TRANSFER AUTHORITY REGARD8 ING MILITARY AND VETERANS HOSPITALS.

9 Subsections (a) and (b) of section 202 of the Agricul10 tural Act of 1949 (7 U.S.C. 1446a) are amended by strik11 ing ‘‘1995’’ both places it appears and inserting ‘‘2002’’.

12 SEC. 1242. EXTENSION OF DAIRY INDEMNITY PROGRAM.

13 Section 3 of Public Law 90–484 (7 U.S.C. 450l) is

14 amended by striking ‘‘1995’’ and inserting ‘‘2002’’.

15 SEC. 1243. EXTENSION OF REPORT REGARDING EXPORT

16 SALES OF DAIRY PRODUCTS.

17 Section 1163(c) of the Food Security Act of 1985 is

18 amended by striking ‘‘1995’’ and inserting ‘‘2002’’.

19 SEC. 1244. STATUS OF PRODUCER-HANDLERS.

20 The legal status of producer-handlers of milk under

21 the Agricultural Adjustment Act (7 U.S.C. 601 et seq.),

22 reenacted with amendments by the Agricultural Marketing

23 Agreement Act of 1937, shall be the same after the

24 amendments made by this title take effect as it was before

25 the effective date of the amendments.
62

•HR 2517 IH

1 Subtitle C—Other Commodities

2 SEC. 1301. EXTENSION AND MODIFICATION OF PRICE SUP3 PORT AND QUOTA PROGRAMS FOR PEANUTS.

4 (a) EXTENSION OF PRICE SUPPORT PROGRAM.—Sec5 tion 108B of the Agricultural Act of 1949 (7 U.S.C.

6 1445c–3) is amended—

7 (1) in the section heading, by striking ‘‘1991

8 THROUGH 1997 CROPS OF’’;

9 (2) in subsections (a)(1), (b)(1), and (h), by

10 striking ‘‘1997’’ each place it appears and inserting

11 ‘‘2002’’;

12 (3) in subsection (g)(1)—

13 (A) by striking ‘‘1997 crops’’ the first

14 place it appears and inserting ‘‘2002 crops’’;

15 and

16 (B) by striking ‘‘1997 crop’’ both places it

17 appears and inserting ‘‘1997 through 2002

18 crops’’; and

19 (4) in subsection (g)(2)(A)—

20 (A) by striking ‘‘1997 crop’’ in clause

21 (i)(IV) and inserting ‘‘1997 through 2002

22 crops’’; and

23 (B) by striking ‘‘1997’’ in clause (ii)(II)

24 and inserting ‘‘2002’’.

25 (b) CHANGES TO PRICE SUPPORT PROGRAM.—
63

•HR 2517 IH

1 (1) QUOTA SUPPORT RATE.—

2 (A) SUPPORT RATE FOR 1996 THROUGH

3 2002 CROPS.—Subsection (a)(2) of section 108B

4 of the Agricultural Act of 1949 (7 U.S.C.

5 1445c–3) is amended to read as follows:

6 ‘‘(2) SUPPORT RATE.—The national average

7 quota support rate for quota peanuts shall be equal

8 to $610 per ton for each of the 1996 through 2002

9 crops of quota peanuts.’’.

10 (B) EFFECT OF AMENDMENT ON CURRENT

11 CROP.—The national average quota support

12 rate in effect under section 108B(a)(2) of the

13 Agricultural Act of 1949 (7 U.S.C. 1445c–3)

14 on the day before the date of the enactment of

15 this Act shall continue to apply with respect to

16 the 1995 crop of quota peanuts.

17 (2) OFFERS FROM HANDLERS.—Subsection (a)

18 of such section is amended—

19 (A) by redesignating paragraphs (4) and

20 (5) as paragraphs (5) and (6), respectively; and

21 (B) by inserting after paragraph (3) the

22 following new paragraph:

23 ‘‘(4) OFFERS FROM HANDLERS.—The Secretary

24 shall reduce the support rate by 15 percent for any

25 producer on a farm who had available to the pro-
64

•HR 2517 IH

1 ducer an offer from a handler to purchase quota

2 peanuts from the farm at a price equal to or greater

3 than the applicable quota support rate.’’.

4 (3) COVERING LOSSES.—Subsection (d)(2) of

5 such section is amended to read as follows:

6 ‘‘(2) QUOTA LOAN POOLS.—Losses in quota

7 area pools shall be covered using the following

8 sources in the following order of priority:

9 ‘‘(A) TRANSFERS FROM ADDITIONAL LOAN

10 POOLS.—The proceeds due any producer from

11 any pool shall be reduced by the amount of any

12 loss that is incurred with respect to peanuts

13 transferred from an additional loan pool to a

14 quota loan pool by such producer under section

15 358–1(b)(8) of the Agricultural Adjustment Act

16 of 1938.

17 ‘‘(B) OTHER PRODUCERS IN SAME POOL.—

18 Further losses in an area quota pool shall be

19 offset by reducing the gain of any producer in

20 such pool by the amount of pool gains attrib21 uted to the same producer from the sale of ad22 ditional peanuts for domestic and export edible

23 use.

24 ‘‘(C) USE OF MARKETING ASSESSMENTS.—

25 The Secretary shall use funds collected under
65

•HR 2517 IH

1 subsection (g) (except funds attributable to

2 handlers) to offset further losses in area quota

3 pools. The Secretary shall transfer to the

4 Treasury those funds collected under subsection

5 (g) and available for use under this paragraph

6 that the Secretary determines are not required

7 to cover losses in area quota pools.

8 ‘‘(D) CROSS COMPLIANCE.—Further losses

9 in area quota pools, other than losses incurred

10 as a result of transfers from additional loan

11 pools to quota loan pools under section 358–

12 1(b)(8) of the Agricultural Adjustment Act of

13 1938, shall be offset by any gains or profits

14 from quota pools in other production areas

15 (other than separate type pools established

16 under subsection (c)(2)(A) for Valencia peanuts

17 produced in New Mexico) in such manner as

18 the Secretary shall by regulation prescribe.

19 ‘‘(E) INCREASED ASSESSMENTS.—If use of

20 the authorities provided in the preceding sub21 paragraphs is not sufficient to cover losses in

22 an area quota pool, the Secretary shall increase

23 the marketing assessment established under

24 subsection (g) by such an amount as the Sec25 retary considers necessary to cover the losses.
66

•HR 2517 IH

1 The increased assessment shall apply only to

2 quota peanuts marketed in the production area

3 covered by that pool. Amounts collected under

4 subsection (g) as a result of the increased as5 sessment shall be retained by the Secretary to

6 cover losses in that pool.’’.

7 (c) EXTENSION OF NATIONAL POUNDAGE QUOTA

8 PROGRAM.—Part VI of subtitle B of title III of the Agri9 cultural Adjustment Act of 1938 is amended—

10 (1) in section 358–1 (7 U.S.C. 1358–1)—

11 (A) in the section heading, by striking

12 ‘‘1991 THROUGH 1997 CROPS OF’’;

13 (B) in subsection (a)(3), by striking

14 ‘‘1990’’ and inserting ‘‘1990, for the 1991

15 through 1995 marketing years, and 1995, for

16 the 1996 through 2002 marketing years’’;

17 (C) in subsection (b)(1)(A)—

18 (i) by striking ‘‘1997’’ and inserting

19 ‘‘2002’’; and

20 (ii) in clause (i), by inserting before

21 the semicolon the following: ‘‘, in the case

22 of the 1991 through 1995 marketing

23 years, and the 1995 marketing year, in the

24 case of the 1996 through 2002 marketing

25 years’’; and
67

•HR 2517 IH

1 (D) in subsections (b)(1)(B), (b)(2)(A),

2 (b)(2)(C), (b)(3)(A), and (f), by striking

3 ‘‘1997’’ each place it appears and inserting

4 ‘‘2002’’;

5 (2) in section 358b (7 U.S.C. 1358b)—

6 (A) in the section heading, by striking

7 ‘‘1991 THROUGH 1995 CROPS OF’’; and

8 (B) in subsection (c), by striking ‘‘1995’’

9 and inserting ‘‘2002’’;

10 (3) in section 358c(d) (7 U.S.C. 1358c(d)), by

11 striking ‘‘1995’’ and inserting ‘‘2002’’; and

12 (4) in section 358e (7 U.S.C. 1359a)—

13 (A) in the section heading, by striking

14 ‘‘1991 THROUGH 1997’’ and inserting ‘‘CER15 TAIN’’; and

16 (B) in subsection (i), by striking ‘‘1997’’

17 and inserting ‘‘2002’’.

18 (d) PRIORITIZED QUOTA REDUCTIONS.—Section

19 358–1(b)(2)(C) of the Agricultural Adjustment Act of

20 1938 (7 U.S.C. 1358–1(b)(2)(C)) is amended—

21 (1) by striking ‘‘all the’’; and

22 (2) by adding at the end the following new sen23 tence: ‘‘Rather than allocating the decrease among

24 all the farms in a State, the Secretary shall allocate
68

•HR 2517 IH

1 the decrease among farms in the following order of

2 priority:

3 ‘‘(i) Farms owned or controlled by

4 municipalities, airport authorities, schools,

5 colleges, refuges, and other public entities

6 (not including universities for research

7 purposes).

8 ‘‘(ii) Farms for which the quota hold9 er is not a producer and resides in another

10 State.

11 ‘‘(iii) Farms for which the quota hold12 er, although a resident of the State, is not

13 a producer.

14 ‘‘(iv) Other farms described in the

15 first sentence of this subparagraph.’’.

16 (e) ELIMINATION OF QUOTA FLOOR.—Section 358–

17 1(a)(1) of the Agricultural Adjustment Act of 1938 (7

18 U.S.C. 1358–1(a)(1)) is amended by striking the second

19 sentence.

20 (f) SPRING AND FALL TRANSFERS WITHIN A

21 STATE.—Section 358b(a)(1) of the Agricultural Adjust22 ment Act of 1938 (7 U.S.C. 1358b(a)(1)) is amended—

23 (1) by striking ‘‘any such lease’’ in the matter

24 preceding the subparagraphs and inserting ‘‘any

25 such sale or lease’’; and
69

•HR 2517 IH

1 (2) by striking ‘‘in the fall or after the normal

2 planting season—’’ and subparagraphs (A) and (B)

3 and inserting the following: ‘‘in the spring (or before

4 the normal planting season) or in the fall (or after

5 the normal planting season) with the owner or oper6 ator of a farm located within any county in the same

7 State. In the case of a fall transfer or a transfer

8 after the normal planting season, the transfer may

9 be made only if not less than 90 percent of the basic

10 quota (the farm quota exclusive of temporary quota

11 transfers), plus any poundage quota transferred to

12 the farm under this subsection, has been planted or

13 considered planted on the farm from which the

14 quota is to be leased.’’.

15 (g) TRANSFERS IN COUNTIES WITH SMALL

16 QUOTAS.—Section 358b(a) of the Agricultural Adjust17 ment Act of 1938 (7 U.S.C. 1358b(a)) is amended by add18 ing at the end the following new paragraph:

19 ‘‘(4) TRANSFERS IN COUNTIES WITH SMALL

20 QUOTAS.—Notwithstanding paragraphs (1) and (2),

21 in the case of any county for which the poundage

22 quota allocated to the county was less than 10,000

23 tons for the preceding year’s crop, all or any part of

24 a farm poundage quota for a farm in that county
70

•HR 2517 IH

1 may be transferred by sale or lease or otherwise to

2 a farm in any other county in the same State.’’.

3 (h) UNDERMARKETINGS.—

4 (1) ELIMINATION.—Subsection (b) of section

5 358–1 of the Agricultural Adjustment Act of 1938

6 (7 U.S.C. 1358–1) is amended by striking para7 graphs (8) and (9).

8 (2) CONFORMING AMENDMENTS.—(A) Such

9 subsection is further amended—

10 (i) in paragraph (1)(B), by striking ‘‘in11 cluding—’’ and clauses (i) and (ii) and insert12 ing ‘‘including any increases resulting from the

13 allocation of quotas voluntarily released for 1

14 year under paragraph (7).’’; and

15 (ii) in paragraph (3)(B), by striking ‘‘in16 clude—’’ and clauses (i) and (ii) and inserting

17 ‘‘include any increase resulting from the alloca18 tion of quotas voluntarily released for 1 year

19 under paragraph (7).’’.

20 (B) Section 358b(a) of the Agricultural Adjust21 ment Act of 1938 (7 U.S.C. 1358b(a)) is amended—

22 (i) in paragraph (1) (as amended by sub23 section (f)), by striking ‘‘(including any applica24 ble under marketings)’’ both places it appears;
71

•HR 2517 IH

1 (ii) in paragraph (2), by striking ‘‘(includ2 ing any applicable under marketings)’’; and

3 (iii) in paragraph (3), by striking ‘‘(includ4 ing any applicable undermarketings)’’.

5 (i) LIMITATION ON PAYMENTS FOR DISASTER

6 TRANSFERS.—Section 358–1(b) of the Agricultural Ad7 justment Act of 1938 (7 U.S.C. 1358–1(b)), as amended

8 by subsection (h), is further amended by adding at the

9 end the following new paragraph:

10 ‘‘(8) TRANSFER OF ADDITIONAL PEANUTS.—

11 Additional peanuts on a farm from which the quota

12 poundage was not harvested and marketed because

13 of drought, flood, or any other natural disaster, or

14 any other condition beyond the control of the pro15 ducer, may be transferred to the quota loan pool for

16 pricing purposes on such basis as the Secretary shall

17 by regulation provide, except that the poundage of

18 such peanuts so transferred shall not exceed the dif19 ference in the total peanuts meeting quality require20 ments for domestic edible use as determined by the

21 Secretary marketed from the farm and the total

22 farm poundage quota, excluding quota pounds trans23 ferred to the farm in the fall. Peanuts transferred

24 under this paragraph shall be supported at a total

25 of not more than 70 percent of the quota support
72

•HR 2517 IH

1 rate for the marketing years in which such transfers

2 occur and such transfers for a farm shall not exceed

3 25 percent of the total farm quota pounds, excluding

4 pounds transferred in the fall.’’.

5 (j) TEMPORARY QUOTA ALLOCATION.—

6 (1) ANNUAL ALLOCATION.—Subsection (b)(2)

7 of section 358–1 of the Agricultural Adjustment Act

8 of 1938 (7 U.S.C. 1358–1) is amended—

9 (A) in subparagraph (A), by striking ‘‘sub10 paragraph (B) and subject to’’; and

11 (B) by striking subparagraph (B) and in12 serting the following new subparagraph:

13 ‘‘(B) TEMPORARY QUOTA ALLOCATION.—

14 ‘‘(i) ALLOCATION RELATED TO SEED

15 PEANUTS.—Temporary allocation of quota

16 pounds for the marketing year only in

17 which the crop is planted shall be made to

18 producers for each of the 1996 through

19 2002 marketing years as provided in this

20 subparagraph. The temporary quota alloca21 tion shall be equal to the pounds of seed

22 peanuts planted on the farm, as may be

23 adjusted under regulations prescribed by

24 the Secretary. The temporary allocation of

25 quota pounds under this paragraph shall
73

•HR 2517 IH

1 be in addition to the farm poundage quota

2 otherwise established under this subsection

3 and shall be credited for the applicable

4 marketing year only, in total to the pro5 ducer of the peanuts on the farm in a

6 manner prescribed by the Secretary.

7 ‘‘(ii) EFFECT OF OTHER REQUIRE8 MENTS.—Nothing in this section shall alter

9 or change in any way the requirements re10 garding the use of quota and additional

11 peanuts established by section 359a(b) of

12 the Agricultural Adjustment Act of 1938

13 (7 U.S.C. 1359a(b)), as added by section

14 804 of the Food, Agriculture, Conserva15 tion, and Trade Act of 1990.’’.

16 (2) CONFORMING AMENDMENT.—Subsection

17 (a)(1) of such section is amended by striking ‘‘do18 mestic edible, seed,’’ and inserting ‘‘domestic edible

19 use’’.

20 (k) SUSPENSION OF MARKETING QUOTAS AND ACRE21 AGE ALLOTMENTS.—The following provisions of the Agri22 cultural Adjustment Act of 1938 shall not apply to the

23 1996 through 2002 crops of peanuts:

24 (1) Subsections (a) through (j) of section 358

25 (7 U.S.C. 1358).
74

•HR 2517 IH

1 (2) Subsections (a) through (h) of section 358a

2 (7 U.S.C. 1358a).

3 (3) Subsections (a), (b), (d), and (e) of section

4 358d (7 U.S.C. 1359).

5 (4) Part I of subtitle C of title III (7 U.S.C.

6 1361 et seq.).

7 (5) Section 371 (7 U.S.C. 1371).

8 (l) EXTENSION OF REPORTING AND RECORD9 KEEPING REQUIREMENTS.—Section 373(a) of the Agri10 cultural Adjustment Act of 1938 (7 U.S.C. 1373(a)) is

11 amended by inserting after the first sentence the following

12 new sentence: ‘‘In the case of the 1996 through 2002

13 crops of peanuts, this subsection shall also apply to all

14 producers engaged in the production of peanuts.’’.

15 (m) SUSPENSION OF CERTAIN PRICE SUPPORT PRO16 VISIONS.—Section 101 of the Agricultural Act of 1949 (7

17 U.S.C. 1441) shall not apply to the 1996 through 2002

18 crops of peanuts.

19 SEC. 1302. AVAILABILITY OF LOANS FOR PROCESSORS OF

20 SUGARCANE AND SUGAR BEETS.

21 (a) SUGAR LOANS.—Section 206 of the Agricultural

22 Act of 1949 (7 U.S.C. 1446g) is amended to read as fol23 lows:
75

•HR 2517 IH

1 ‘‘SEC. 206. ASSURANCE OF ADEQUATE SUGAR SUPPLY.

2 ‘‘(a) SUGARCANE PROCESSOR LOANS.—For the 1996

3 through 2002 crops of domestically grown sugarcane, the

4 Secretary shall make loans available to sugarcane proc5 essors on raw cane sugar processed from such crops. Sub6 ject to subsection (c), loans under this subsection shall be

7 made at a rate equal to the rate provided under this sec8 tion, as in effect on the day before the date of the enact9 ment of the Agricultural Reconciliation Act of 1995, for

10 raw cane sugar produced from the 1995 crop of domesti11 cally grown sugarcane.

12 ‘‘(b) SUGAR BEETS.—For the 1996 through 2002

13 crops of domestically grown sugar beets, the Secretary

14 shall make loans available to sugar beet processors on re15 fined beet sugar processed from such crops. Subject to

16 subsection (c), loans under this subsection shall be made

17 at a rate equal to the rate provided under this section,

18 as in effect on the day before the date of the enactment

19 of the Agricultural Reconciliation Act of 1995, for refined

20 beet sugar produced from the 1995 crop of domestically

21 grown sugar beets.

22 ‘‘(c) REDUCTION IN LOAN RATES.—

23 ‘‘(1) REDUCTION REQUIRED.—The Secretary

24 shall reduce the loan rate specified in subsection (a)

25 for domestically grown sugarcane and subsection (b)

26 for domestically grown sugar beets if the Secretary
76

•HR 2517 IH

1 determines that negotiated reductions in export sub2 sidies and domestic subsidies provided for sugar of

3 the European Union and other major sugar growing,

4 producing, and exporting countries in the aggregate

5 exceed the commitments made as part of the Agree6 ment on Agriculture.

7 ‘‘(2) EXTENT OF REDUCTION.—The Secretary

8 shall not reduce the loan rate under subsection (a)

9 or (b) below a rate that provides an equal measure

10 of support to that provided by the European Union

11 and other major sugar growing, producing, and ex12 porting countries, based on an examination of both

13 domestic and export subsidies subject to reduction in

14 the Agreement on Agriculture.

15 ‘‘(3) ANNOUNCEMENT OF REDUCTION.—The

16 Secretary shall announce any loan rate reduction to

17 be made under this subsection as far in advance as

18 is practicable.

19 ‘‘(4) MAJOR SUGAR COUNTRIES DEFINED.—For

20 purposes of this subsection, the term ‘major sugar

21 growing, producing, and exporting countries’

22 means—

23 ‘‘(A) the countries of the European Union;

24 and
77

•HR 2517 IH

1 ‘‘(B) the ten foreign countries not covered

2 by subparagraph (A) that the Secretary deter3 mines produce the greatest amount of sugar.

4 ‘‘(5) AGREEMENT ON AGRICULTURE DE5 FINED.—For purposes of this subsection and sub6 section (d), the term ‘Agreement on Agriculture’

7 means the Agreement on Agriculture referred to in

8 section 101(d)(2) of the Uruguay Round Agree9 ments Act (19 U.S.C. 3511(d)(2)).

10 ‘‘(d) LOAN TYPE; PROCESSOR ASSURANCES.—

11 ‘‘(1) RECOURSE LOANS.—Subject to paragraph

12 (2), the Secretary shall carry out this section

13 through the use of recourse loans.

14 ‘‘(2) SWITCH TO NONRECOURSE LOANS.—

15 ‘‘(A) IN GENERAL.—During any fiscal year

16 in which the tariff rate quota for imports of

17 sugar into the United States is set at, or is in18 creased to, a level that exceeds the loan modi19 fication threshold, the Secretary shall carry out

20 this section by making available nonrecourse

21 loans. Any recourse loan previously made avail22 able by the Secretary under this section during

23 such fiscal year shall be modified by the Sec24 retary into a nonrecourse loan.
78

•HR 2517 IH

1 ‘‘(B) LOAN MODIFICATION THRESHOLD

2 DEFINED.—For the purposes of this subsection,

3 the term ‘loan modification threshold’ means—

4 ‘‘(i) for fiscal years 1996 and 1997,

5 1,257,000 short tons raw value; and

6 ‘‘(ii) for fiscal years after fiscal year

7 1997, 103 percent of the loan modification

8 threshold for the previous fiscal year.

9 ‘‘(3) PROCESSOR ASSURANCES.—If the Sec10 retary is required under paragraph (2) to make

11 nonrecourse loans available during a fiscal year or to

12 modify recourse loans into nonrecourse loans, the

13 Secretary shall obtain from each processor that re14 ceives a loan under this section such assurances as

15 the Secretary considers adequate that the processor

16 will provide an appropriate minimum payment for

17 sugar beets and sugarcane delivered by producers

18 served by the processor. The Secretary may establish

19 appropriate minimum payments for purposes of this

20 paragraph.

21 ‘‘(4) ANNOUNCEMENT OF THRESHOLD.—As

22 soon as practicable, but not later than September 1

23 of each fiscal year, the Secretary shall announce the

24 loan modification threshold that shall apply under

25 paragraph (2) for the subsequent fiscal year.
79

•HR 2517 IH

1 ‘‘(e) LENGTH OF LOANS.—Each loan made under

2 this section shall be for a term of three months, and may

3 be extended for additional three-month terms, except

4 that—

5 ‘‘(1) no loan may have a cumulative term in ex6 cess of nine months or a term that extends beyond

7 September 30 of the fiscal year in which the loan is

8 made; and

9 ‘‘(2) a processor may terminate a loan and re10 deem the collateral for the loan at any time by pay11 ment in full of principal, interest, and fees then

12 owing.

13 ‘‘(f) USE OF COMMODITY CREDIT CORPORATION.—

14 The Secretary shall use the funds, facilities, and authori15 ties of the Commodity Credit Corporation to carry out this

16 section.

17 ‘‘(g) MARKETING ASSESSMENT.—

18 ‘‘(1) SUGARCANE.—Effective only for market19 ings of raw cane sugar during fiscal years 1996

20 through 2003, the first processor of sugarcane shall

21 remit to the Commodity Credit Corporation a non22 refundable marketing assessment for each pound of

23 raw cane sugar, processed by the processor from do24 mestically produced sugarcane or sugarcane molas25 ses, that has been marketed. The assessment rate
80

•HR 2517 IH

1 per pound is equal to 1.5 percent of the loan rate

2 for raw cane sugar under this section.

3 ‘‘(2) SUGAR BEETS.—Effective only for market4 ings of beet sugar during fiscal years 1996 through

5 2003, the first processor of sugar beets shall remit

6 to the Commodity Credit Corporation a nonrefund7 able marketing assessment for each pound of beet

8 sugar, processed by the processor from domestically

9 produced sugar beets or sugar beet molasses, that

10 has been marketed. The assessment rate per pound

11 is equal to 1.6083 percent of the loan rate for raw

12 cane sugar under this section.

13 ‘‘(3) COLLECTION.—

14 ‘‘(A) TIMING.—Marketing assessments re15 quired under this subsection shall be collected

16 on a monthly basis and shall be remitted to the

17 Commodity Credit Corporation within 30 days

18 after the end of each month. Any cane sugar or

19 beet sugar processed during a fiscal year that

20 has not been marketed by September 30 of that

21 year shall be subject to assessment on that

22 date. The sugar shall not be subject to a second

23 assessment at the time that it is marketed.

24 ‘‘(B) MANNER.—Subject to subparagraph

25 (A), marketing assessments shall be collected
81

•HR 2517 IH

1 under this subsection in the manner prescribed

2 by the Secretary and shall be nonrefundable.

3 ‘‘(4) PENALTIES.—If any person fails to remit

4 the assessment required by this subsection or fails to

5 comply with such requirements for recordkeeping or

6 otherwise as are required by the Secretary to carry

7 out this subsection, the person shall be liable to the

8 Secretary for a civil penalty up to an amount deter9 mined by multiplying—

10 ‘‘(A) the quantity of cane sugar or beet

11 sugar involved in the violation; by

12 ‘‘(B) the loan rate in effect at the time of

13 the violation.

14 ‘‘(5) ENFORCEMENT.—The Secretary may en15 force this subsection in the courts of the United

16 States.

17 ‘‘(6) DEFINITION OF MARKET.—For purposes

18 of this subsection, the term ‘market’ means to sell

19 or otherwise dispose of in commerce in the United

20 States (including, with respect to any integrated

21 processor and refiner, the movement of raw cane

22 sugar into the refining process) and to deliver to a

23 buyer.

24 ‘‘(h) INFORMATION REPORTING.—
82

•HR 2517 IH

1 ‘‘(1) DUTY OF PROCESSORS AND REFINERS TO

2 REPORT.—All sugarcane processors, cane sugar re3 finers, and sugar beet processors shall furnish the

4 Secretary, on a monthly basis, such information as

5 the Secretary may require to administer sugar pro6 grams, including the quantity of purchases of sugar7 cane, sugar beets, and sugar, and production, impor8 tation, distribution, and stock levels of sugar.

9 ‘‘(2) DUTY OF PRODUCERS TO REPORT.—In

10 order to efficiently and effectively carry out the pro11 gram under this section, the Secretary may require

12 a producer of sugarcane or sugar beets to report, in

13 the manner prescribed by the Secretary, the produc14 er’s sugarcane or sugar beet yields and acres planted

15 to sugarcane or sugar beets, respectively.

16 ‘‘(3) PENALTY.—Any person willfully failing or

17 refusing to furnish the information, or furnishing

18 willfully any false information, shall be subject to a

19 civil penalty of not more than $10,000 for each such

20 violation.

21 ‘‘(4) MONTHLY REPORTS.—Taking into consid22 eration the information received under paragraph

23 (1), the Secretary shall publish on a monthly basis

24 composite data on production, imports, distribution,

25 and stock levels of sugar.
83

•HR 2517 IH

1 ‘‘(i) SUGAR ESTIMATES.—

2 ‘‘(1) DOMESTIC REQUIREMENT.—Before the be3 ginning of each fiscal year, the Secretary shall esti4 mate the United States demand for sugar for that

5 fiscal year, which shall be equal to—

6 ‘‘(A) the quantity of sugar, that will be

7 consumed in the United States during the fiscal

8 year (other than sugar imported for the produc9 tion of polyhydric alcohol or to be refined and

10 reexported in refined form or in sugar contain11 ing products); plus

12 ‘‘(B) the quantity of sugar that would pro13 vide for adequate carryover stocks; minus

14 ‘‘(C) the quantity of sugar that will be

15 available from carry-in stocks.

16 ‘‘(2) QUARTERLY REESTIMATES.—The Sec17 retary shall make quarterly reestimates of sugar

18 consumption, stocks, production, and imports for a

19 fiscal year no later than the beginning of each of the

20 second through fourth quarters of the fiscal year.

21 ‘‘(j) REGULATIONS.—The Secretary shall issue such

22 regulations as the Secretary determines necessary to carry

23 out this section.’’.

24 (b) EFFECT ON EXISTING LOANS FOR SUGAR.—Sec25 tion 206 of the Agricultural Act of 1949 (7 U.S.C. 1446g),
84

•HR 2517 IH

1 as in effect on the day before the date of the enactment

2 of this Act, shall continue to apply with respect to the

3 1991 through 1995 crops of sugarcane and sugar beets.

4 (c) TERMINATION OF MARKETING QUOTAS AND AL5 LOTMENTS.—

6 (1) TERMINATION.—Part VII of subtitle B of

7 title III of the Agricultural Adjustment Act of 1938

8 (7 U.S.C. 1359aa–1359jj) is repealed.

9 (2) CONFORMING AMENDMENT.—Section

10 344(f)(2) of such Act (7 U.S.C. 1344(f)(2)) is

11 amended by striking ‘‘sugar cane for sugar; sugar

12 beets for sugar;’’.

13 SEC. 1303. REPEAL OF OBSOLETE AUTHORITY FOR PRICE

14 SUPPORT FOR COTTONSEED AND COTTON15 SEED PRODUCTS.

16 (a) REPEAL.—Section 301(b) of the Disaster Assist17 ance Act of 1988 (7 U.S.C. 1464 note) is amended by

18 striking paragraph (1).

19 (b) CONFORMING REPEAL.—Section 420 of the Agri20 cultural Act of 1949 (7 U.S.C. 1432) is repealed.
85

•HR 2517 IH

1 Subtitle D—Miscellaneous Program

2 Changes

3 SEC. 1401. LIMITATIONS ON ASSISTANCE UNDER EMER4 GENCY LIVESTOCK FEED ASSISTANCE PRO5 GRAM.

6 Section 609 of the Emergency Livestock Feed Assist7 ance Act of 1988 (7 U.S.C. 1471g) is amended by striking

8 subsections (c) and (d) and inserting the following new

9 subsection:

10 ‘‘(c) No person may receive benefits under this title

11 attributable to lost production of a feed commodity due

12 to a natural disaster if crop insurance protection or

13 noninsured crop disaster assistance for the loss of feed

14 produced on the farm is available to the person under the

15 Federal Crop Insurance Act (7 U.S.C. 1501 et seq.).’’.

16 SEC. 1402. CONSERVATION RESERVE PROGRAM.

17 (a) LIMITATIONS ON ACREAGE ENROLLMENTS.—

18 (1) LIMITATION.—Section 1231(d) of the Food

19 Security Act of 1985 (16 U.S.C. 3831(d)) is amend20 ed by striking ‘‘38,000,000 acres’’ and inserting

21 ‘‘36,400,000 acres’’.

22 (2) PROHIBITION ON 1997 INCREASE.—Section

23 727 of the Agriculture, Rural Development, Food

24 and Drug Administration, and Related Agencies Ap-
86

•HR 2517 IH

1 propriations Act, 1996, is amended by striking the

2 proviso relating to enrollment of new acres in 1997.

3 (b) OPTIONAL CONTRACT TERMINATION BY PRODUC4 ERS.—Section 1235 of such Act (16 U.S.C. 3835), is

5 amended by adding at the end the following new sub6 section:

7 ‘‘(e) TERMINATION BY OWNER OR OPERATOR.—

8 ‘‘(1) NOTICE OF TERMINATION.—An owner or

9 operator of land subject to a contract entered into

10 under this subchapter may terminate the contract by

11 submitting to the Secretary written notice of the in12 tention of the owner or operator to terminate the

13 contract.

14 ‘‘(2) EFFECTIVE DATE.—The contract termi15 nation shall take effect 60 days after the date on

16 which the owner or operator submits the written no17 tice under paragraph (1).

18 ‘‘(3) PRO-RATED RENTAL PAYMENT.—If a con19 tract entered into under this subchapter is termi20 nated under this subsection before the end of the fis21 cal year for which a rental payment is due, the Sec22 retary shall provide a prorated rental payment cover23 ing the portion of the fiscal year during which the

24 contract was in effect.
87

•HR 2517 IH

1 ‘‘(4) RENEWED ENROLLMENT.—The termi2 nation of a contract entered into under this sub3 chapter shall not affect the ability of the owner or

4 operator who requested such termination to submit

5 a subsequent bid to enroll the land that was subject

6 to the contract into the conservation reserve.

7 ‘‘(5) CONSERVATION REQUIREMENTS.—If land

8 that was subject to a contract is returned to produc9 tion of an agricultural commodity, the Secretary

10 may impose conservation requirements under sub11 title A on the use of the land that are similar to the

12 requirements imposed on other lands subject to such

13 subtitle, but in no case shall such requirements be

14 more onerous that the requirements imposed on

15 other lands.’’.

16 (c) LIMITATION ON RENTAL RATES.—Section

17 1234(c) of such Act (16 U.S.C. 3834) is amended by add18 ing at the end the following new paragraph:

19 ‘‘(5) In the case of the extension of a contract, or

20 a new contract covering land which was previously enrolled

21 in the conservation reserve, annual rental payments under

22 the new or extended contract may not exceed 75 percent

23 of the annual rental payment under the previous con24 tract.’’.
88

•HR 2517 IH

1 SEC. 1403. CROP INSURANCE.

2 (a) CONVERSION OF CATASTROPHIC RISK PROTEC3 TION PROGRAM TO VOLUNTARY PROGRAM.—Subsection

4 (b)(7) of section 508 of the Federal Crop Insurance Act

5 (7 U.S.C. 1508) is amended—

6 (1) by redesignating subparagraph (B) as sub7 paragraph (C); and

8 (2) by inserting after subparagraph (A) the fol9 lowing new subparagraph:

10 ‘‘(B) EXCEPTION TO MANDATORY PARTICI11 PATION REQUIREMENT.—Notwithstanding sub12 paragraph (A), a producer may decline to ob13 tain catastrophic risk protection beginning with

14 spring-planted 1996 crops and in any subse15 quent crop year, yet remain eligible for any

16 market transition contract or marketing assist17 ance loan, the conservation reserve program, or

18 any benefit described in section 371 of the Con19 solidated Farm and Rural Development Act, if

20 the producer agrees in writing to waive any eli21 gibility for emergency crop loss assistance in

22 connection with losses to any crop for which the

23 producer declines to obtain catastrophic risk

24 protection.’’.
89

•HR 2517 IH

1 (b) DELIVERY OF VOLUNTARY CATASTROPHIC PRO2 TECTION.—Subsection (b)(4) of such section is amended

3 by adding at the end the following new subparagraphs:

4 ‘‘(C) ELIMINATION OF SECRETARIAL OP5 TION.—For crop years beginning after the im6 plementation of the exception under paragraph

7 (7)(B) to the mandatory participation require8 ment, the option for delivery of catastrophic

9 risk protection provided in subparagraph (A)(ii)

10 shall not be available to the Secretary. All risk

11 protection policies written by the Department

12 prior to that date shall be transferred, including

13 all fees collected for the crop year in which the

14 private sector will assume the policies, in an or15 derly manner to the private sector for perform16 ance of all service and loss adjustment func17 tions.

18 ‘‘(D) GUARANTEE OF PRIVATE SECTOR

19 SERVICE.—In full consultation and cooperation

20 with approved insurance providers, the Corpora21 tion shall develop a plan to ensure that each

22 producer of an insured crop has the opportunity

23 to be serviced by an approved insurance pro24 vider if insurance is available for that crop in

25 that county. Not later than May 1, 1996, the
90

•HR 2517 IH

1 Corporation shall submit to the Committee on

2 Agriculture of the House of Representatives

3 and the Committee on Agriculture, Nutrition,

4 and Forestry of the Senate the plan in the form

5 it is to be implemented by the Secretary.’’.

6 (c) ESTABLISHMENT OF THE OFFICE OF RISK MAN7 AGEMENT.—

8 (1) ESTABLISHMENT.—The Department of Ag9 riculture Reorganization Act of 1994 is amended by

10 inserting after section 226 (7 U.S.C. 6932) the fol11 lowing new section:

12 ‘‘SEC. 226A. OFFICE OF RISK MANAGEMENT.

13 ‘‘(a) ESTABLISHMENT.—Subject to subsection (e),

14 the Secretary shall establish and maintain in the Depart15 ment an independent Office of Risk Management.

16 ‘‘(b) FUNCTIONS OF THE OFFICE OF RISK MANAGE17 MENT.—The Office of Risk Management shall have juris18 diction over the following functions:

19 ‘‘(1) Supervision of the Federal Crop Insurance

20 Corporation.

21 ‘‘(2) Administration and oversight of all as22 pects, including delivery through local offices of the

23 Department, of all programs authorized under the

24 Federal Crop Insurance Act (7 U.S.C. 1501 et seq.).
91

•HR 2517 IH

1 ‘‘(3) Any pilot or other programs involving reve2 nue insurance, risk management savings accounts,

3 or the use of the futures market to manage risk and

4 support farm income that may be established under

5 the Federal Crop Insurance Act or other law.

6 ‘‘(4) Such other functions as the Secretary con7 siders appropriate.

8 ‘‘(c) ADMINISTRATOR.—

9 ‘‘(1) The Office of Risk Management shall be

10 headed by an Administrator who shall be appointed

11 by the Secretary.

12 ‘‘(2) The Administrator of the Office of Risk

13 Management shall also serve as Manager of the Fed14 eral Crop Insurance Corporation.

15 ‘‘(d) RESOURCES.—

16 ‘‘(1) FUNCTIONAL COORDINATION.—Certain

17 functions of the Office of Risk Management, such as

18 human resources, public affairs, and legislative af19 fairs, may be provided by a consolidation of such

20 functions under the Under Secretary of Agriculture

21 for Farm and Foreign Agricultural Services.

22 ‘‘(2) MINIMUM PROVISIONS.—Notwithstanding

23 paragraph (1) or any other provision of law or order

24 of the Secretary, the Secretary shall provide the Of25 fice of Risk Management with human and capital
92

•HR 2517 IH

1 resources sufficient for the Office to carry out its

2 functions in a timely and efficient manner.

3 ‘‘(3) FISCAL YEAR 1996 FUNDING.—Not less

4 than $88,500,000 of the appropriation provided for

5 the salaries and expenses of the Consolidated Farm

6 Services Agency in the Agricultural, Rural Develop7 ment, Food and Drug Administration, and Related

8 Agencies Appropriations Act, 1996 shall be provided

9 to the Office of Risk Management for the salaries

10 and expenses of the Office.’’.

11 (2) CONFORMING AMENDMENT.—Section

12 226(b) of such Act (7 U.S.C. 6932(b)) is amended

13 by striking paragraph (2).

14 (d) RECONFIGURATION OF BOARD OF DIRECTORS.—

15 Section 505 of the Federal Crop Insurance Act (7 U.S.C.

16 1505) is amended to read as follows:

17 ‘‘SEC. 505. BOARD OF DIRECTORS.

18 ‘‘(a) AUTHORITY.—The management of the Corpora19 tion shall be vested in a Board of Directors subject to the

20 general supervision of the Secretary.

21 ‘‘(b) MEMBERSHIP.—

22 ‘‘(1) IN GENERAL.—The Board shall consist of

23 the Manager of the Corporation, the Under Sec24 retary of Agriculture for Farm and Foreign Agricul25 tural Services, one person who is an officer or em-
93

•HR 2517 IH

1 ployee of an approved insurance provider, one person

2 who is a licensed crop insurance agent, one person

3 experienced in the reinsurance business who is not

4 otherwise employed by the Federal Government, and

5 four active producers who are not otherwise em6 ployed by the Federal Government. The Secretary

7 shall not be a member of the Board.

8 ‘‘(2) PRODUCER MEMBERS.—In appointing the

9 four active producers who are not otherwise em10 ployed by the Federal Government, the Secretary

11 shall ensure that three such members are policy12 holders and are from different geographic areas of

13 the United States, in order that diverse agricultural

14 interests in the United States are at all times rep15 resented on the Board. The Secretary shall ensure

16 that the fourth active producer, who may also be a

17 policyholder, receives a significant portion of crop in18 come from crops covered by the noninsured crop dis19 aster assistance program established under section

20 519.

21 ‘‘(c) APPOINTMENT.—

22 ‘‘(1) MANAGER.—The Administrator of the Of23 fice of Risk Management appointed by the Secretary

24 under section 226A(c) of the Department of Agri-
94

•HR 2517 IH

1 culture Reorganization Act of 1994 shall serve as

2 Manager of the Corporation.

3 ‘‘(2) TERMS OF OTHER MEMBERS.—Other than

4 the Manager of the Corporation and the Under Sec5 retary of Agriculture for Farm and Foreign Agricul6 tural Services, the members of the Board shall be

7 appointed by the Secretary for a term of three years.

8 However, in the initial appointment of such mem9 bers, the Secretary shall appoint two members for

10 one year, two members for two years, and two mem11 bers for three years in order to provide greater con12 tinuity to the Board.

13 ‘‘(3) SUCCESSION.—A member of the Board ap14 pointed under paragraph (2) may serve after the ex15 piration of the term of office of such member until

16 the successor for such member has taken office.

17 ‘‘(d) QUORUM.—Five of the members in office shall

18 constitute a quorum for the transaction of the business

19 of the Board.

20 ‘‘(e) IMPAIRMENT OF POWERS.—The powers of the

21 Board to execute the functions of the Corporation shall

22 be impaired at any time there are not six members of the

23 Board in office. Any impairment of the powers of the

24 Board shall also serve to impair the powers of the Man-
95

•HR 2517 IH

1 ager to act under any delegation of power provided under

2 subsection (g).

3 ‘‘(f) COMPENSATION.—

4 ‘‘(1) EMPLOYEES OF THE DEPARTMENT.—The

5 members of the Board who are employed in the De6 partment shall receive no additional compensation

7 for their services as members, but may be allowed

8 necessary traveling and subsistence expenses when

9 engaged in business of the Corporation outside of

10 the District of Columbia.

11 ‘‘(2) NONEMPLOYEES OF THE FEDERAL GOV12 ERNMENT.—The members of the Board who are not

13 employed by the Federal Government shall be paid

14 such compensation for their services as members as

15 the Secretary shall determine, but such compensa16 tion shall not exceed the daily equivalent of the rate

17 prescribed for positions a level V of the Executive

18 Schedule under section 5316 of title 5, United

19 States Code, when actually employed. Such members

20 may also receive actual necessary traveling and sub21 sistence expenses, or a per diem allowance in lieu of

22 subsistence expenses, as authorized by section 5703

23 of such title for persons in Government service em24 ployed intermittently, when on the business of the

25 Corporation away from their homes or regular places
96

•HR 2517 IH

1 of business. Any such compensation shall be paid

2 from the insurance fund established under section

3 516(c).

4 ‘‘(g) CHIEF EXECUTIVE OFFICER.—The Manager of

5 the Corporation shall be its chief executive officer, with

6 such power and authority as may be conferred by the

7 Board.’’.

8 SEC. 1404. REPEAL OF FARMER OWNED RESERVE PRO9 GRAM.

10 (a) REPEAL.—Section 110 of the Agricultural Act of

11 1949 (7 U.S.C. 1445e) is repealed.

12 (b) EFFECT OF REPEAL ON EXISTING LOANS.—The

13 repeal of section 110 of the Agricultural Act of 1949 by

14 subsection (a) shall not affect the validity or terms and

15 conditions of any extended price support loan provided

16 under such section before the date of the enactment of

17 this Act.

18 SEC. 1405. REDUCTION IN FUNDING LEVELS FOR EXPORT

19 ENHANCEMENT PROGRAM.

20 Section 301(e) of the Agricultural Trade Act of 1978

21 (7 U.S.C. 5651(e)) is amended by striking paragraph (1)

22 and inserting the following new paragraph:

23 ‘‘(1) IN GENERAL.—To carry out the program

24 established under this section, the Commodity Credit

25 Corporation shall make available—
97

•HR 2517 IH

1 ‘‘(A) for each of the fiscal years 1991

2 through 1995, not more than $500,000,000 of

3 the funds or commodities of the Commodity

4 Credit Corporation;

5 ‘‘(B) for each of the fiscal years 1996 and

6 1997, not more than $400,000,000 of the funds

7 or commodities of the Commodity Credit Cor8 poration;

9 ‘‘(C) for fiscal year 1998, not more than

10 $500,000,000 of the funds or commodities of

11 the Commodity Credit Corporation;

12 ‘‘(D) for fiscal year 1999, not more than

13 $550,000,000 of the funds or commodities of

14 the Commodity Credit Corporation;

15 ‘‘(E) for fiscal year 2000, not more than

16 $579,000,000 of the funds or commodities of

17 the Commodity Credit Corporation; and

18 ‘‘(F) for each of the fiscal years 2001 and

19 2002, not more than $478,000,000 of the funds

20 or commodities of the Commodity Credit Cor21 poration.’’.

22 SEC. 1406. BUSINESS INTERRUPTION INSURANCE PRO23 GRAM.

24 (a) ESTABLISHMENT OF PROGRAM.—Not later than

25 December 31, 1996, the Secretary of Agriculture shall im-
98

•HR 2517 IH

1 plement a program (to be known as the ‘‘Business Inter2 ruption Insurance Program’’), under which the producer

3 of a program crop could elect to obtain revenue insurance

4 coverage to ensure that the producer receives an indemnity

5 payment if the producer suffers a loss of revenue. The na6 ture and extent of the program and the manner of deter7 mining the amount of an indemnity payment shall be es8 tablished by the Secretary.

9 (b) REPORT ON PROGRESS AND PROPOSED EXPAN10 SION.—Not later than January 1, 1998, the Secretary

11 shall submit to the Commission on the 21st Century Pro12 duction Agriculture the data and results of the program

13 through October 1, 1997. In addition, the Secretary shall

14 submit information and recommendations to the Commis15 sion with respect to the program that will serve as the

16 basis for the Secretary to offer revenue insurance to agri17 cultural producers, at one or more levels of coverage,

18 that—

19 (1) is in addition to, or in lieu of, catastrophic

20 and higher levels of crop insurance;

21 (2) is offered through reinsurance arrange22 ments with private insurance companies;

23 (3) is actuarially sound; and

24 (4) requires the payment of premiums and ad25 ministrative fees by participating producers.
99

•HR 2517 IH

1 (c) PROGRAM CROP DEFINED.—For purposes of this

2 section, the term ‘‘program crop’’ means a crop of wheat,

3 corn, grain sorghums, oats, barley, upland cotton, or rice.

4 Subtitle E—Commission on 21st

5 Century Production Agriculture

6 SEC. 1501. ESTABLISHMENT.

7 There is hereby established a commission to be known

8 as the ‘‘Commission on 21st Century Production Agri9 culture’’ (hereinafter in this title referred to as the ‘‘Com10 mission’’).

11 SEC. 1502. COMPOSITION.

12 (a) MEMBERSHIP AND APPOINTMENT.—The Com13 mission shall be composed of 11 members, appointed as

14 follows:

15 (1) Three members shall be appointed by the

16 President.

17 (2) Four members shall be appointed by the

18 Chairman of the Committee on Agriculture of the

19 House of Representatives in consultation with the

20 ranking minority member of the Committee.

21 (3) Four members shall be appointed by the

22 Chairman of the Committee on Agriculture, Nutri23 tion, and Forestry of the Senate in consultation with

24 the ranking minority member of the Committee.
100

•HR 2517 IH

1 (b) QUALIFICATIONS.—At least one of the members

2 appointed under each of the paragraphs (1), (2), and (3)

3 of subsection (a) shall be an individual who is primarily

4 involved in production agriculture. All other members of

5 the Commission shall be appointed from among individ6 uals having knowledge and experience in agricultural pro7 duction, marketing, finance, or trade.

8 (c) TERM OF MEMBERS; VACANCIES.—Members of

9 the Commission shall be appointed for the life of the Com10 mission. A vacancy on the Commission shall not affect its

11 powers, but shall be filled in the same manner as the origi12 nal appointment was made.

13 (d) TIME FOR APPOINTMENT; FIRST MEETING.—

14 The members of the Commission shall be appointed not

15 later than October 1, 1997. The Commission shall convene

16 its first meeting to carry out its duties under this title

17 30 days after six members of the Commission have been

18 appointed.

19 (e) CHAIRMAN.—The chairman of the Commission

20 shall be designated jointly by the Chairman of the Com21 mittee on Agriculture of the House of Representatives and

22 the Chairman of the Committee on Agriculture, Nutrition,

23 and Forestry of the Senate from among the members of

24 the Commission.
101

•HR 2517 IH

1 SEC. 1503. COMPREHENSIVE REVIEW OF PAST AND FUTURE

2 OF PRODUCTION AGRICULTURE.

3 (a) INITIAL REVIEW.—The Commission shall conduct

4 a comprehensive review of changes in the condition of pro5 duction agriculture in the United States since the date of

6 the enactment of this Act and the extent to which such

7 changes are the result of the amendments made by this

8 Act. The review shall include the following:

9 (1) An assessment of the initial success of mar10 ket transition contracts under section 102 of the Ag11 ricultural Act of 1949 in supporting the economic vi12 ability of farming in the United States.

13 (2) An assessment of the food security situation

14 in the United States in the areas of trade, consumer

15 prices, international competitiveness of United

16 States production agriculture, food supplies, and hu17 manitarian relief.

18 (3) An assessment of the changes in farmland

19 values and agricultural producer incomes since the

20 date of the enactment of this Act.

21 (4) An assessment of the extent to which regu22 latory relief for agricultural producers has been en23 acted and implemented, including the application of

24 cost/benefit principles in the issuance of agricultural

25 regulations.
102

•HR 2517 IH

1 (5) An assessment of the extent to which tax

2 relief for agricultural producers has been enacted in

3 the form of capital gains tax reductions, estate tax

4 exemptions, and mechanisms to average tax loads

5 over high and low income years.

6 (6) An assessment of the effect of any Govern7 ment interference in agricultural export markets,

8 such as the imposition of trade embargoes, and the

9 degree of implementation and success of inter10 national trade agreements.

11 (7) An assessment of the likely affect of the

12 sale, lease, or transfer of farm poundage quota for

13 peanuts across State lines.

14 (b) SUBSEQUENT REVIEW.—The Commission shall

15 conduct a comprehensive review of the future of produc16 tion agriculture in the United States and the appropriate

17 role of the Federal Government in support of production

18 agriculture. The review shall include the following:

19 (1) An assessment of changes in the condition

20 of production agriculture in the United States since

21 the initial review conducted under subsection (a).

22 (2) Identification of the appropriate future rela23 tionship of the Federal Government with production

24 agriculture after 2002.
103

•HR 2517 IH

1 (3) An assessment of the personnel and infra2 structure requirements of the Department of Agri3 culture necessary to support the future relationship

4 of the Federal Government with production agri5 culture.

6 (c) RECOMMENDATIONS.—In carrying out the subse7 quent review under subsection (b), the Commission shall

8 develop specific recommendations for legislation to achieve

9 the appropriate future relationship of the Federal Govern10 ment with production agriculture identified under sub11 section (a)(2).

12 SEC. 1504. REPORTS.

13 (a) REPORT ON INITIAL REVIEW.—Not later than

14 June 1, 1998, the Commission shall submit to the Presi15 dent, the Committee on Agriculture of the House of Rep16 resentatives, and the Committee on Agriculture, Nutrition,

17 and Forestry of the Senate a report containing the results

18 of the initial review conducted under section 1503(a).

19 (b) REPORT ON SUBSEQUENT REVIEW.—Not later

20 than January 1, 2001, the Commission shall submit to

21 the President and the congressional committees specified

22 in subsection (a) a report containing the results of the

23 subsequent review conducted under section 1503(b).
104

•HR 2517 IH

1 SEC. 1505. POWERS.

2 (a) HEARINGS.—The Commission may, for the pur3 pose of carrying out this title, conduct such hearings, sit

4 and act at such times, take such testimony, and receive

5 such evidence, as the Commission considers appropriate.

6 (b) ASSISTANCE FROM OTHER AGENCIES.—The

7 Commission may secure directly from any department or

8 agency of the Federal Government such information as

9 may be necessary for the Commission to carry out its du10 ties under this title. Upon request of the chairman of the

11 Commission, the head of the department or agency shall,

12 to the extent permitted by law, furnish such information

13 to the Commission.

14 (c) MAIL.—The Commission may use the United

15 States mails in the same manner and under the same con16 ditions as the departments and agencies of the Federal

17 Government.

18 (d) ASSISTANCE FROM SECRETARY.—The Secretary

19 of Agriculture shall provide to the Commission appropriate

20 office space and such reasonable administrative and sup21 port services as the Commission may request.

22 SEC. 1506. COMMISSION PROCEDURES.

23 (a) MEETINGS.—The Commission shall meet on a

24 regular basis (as determined by the chairman) and at the

25 call of the chairman or a majority of its members.
105

•HR 2517 IH

1 (b) QUORUM.—A majority of the members of the

2 Commission shall constitute a quorum for the transaction

3 of business.

4 SEC. 1507. PERSONNEL MATTERS.

5 (a) COMPENSATION.—Each member of the Commis6 sion shall serve without compensation, but shall be allowed

7 travel expenses including per diem in lieu of subsistence,

8 as authorized by section 5703 of title 5, United States

9 Code, when engaged in the performance of Commission

10 duties.

11 (b) STAFF.—The Commission shall appoint a staff

12 director, who shall be paid at a rate not to exceed the

13 maximum rate of basic pay under section 5376 of title

14 5, United States Code, and such professional and clerical

15 personnel as may be reasonable and necessary to enable

16 the Commission to carry out its duties under this title

17 without regard to the provisions of title 5, United States

18 Code, governing appointments in the competitive service,

19 and without regard to the provisions of chapter 51 and

20 subchapter III of chapter 53 of such title, or any other

21 provision of law, relating to the number, classification, and

22 General Schedule rates. No employee appointed under this

23 subsection (other than the staff director) may be com24 pensated at a rate to exceed the maximum rate applicable

25 to level GS–15 of the General Schedule.
106

•HR 2517 IH

1 (c) DETAILED PERSONNEL.—Upon request of the

2 chairman of the Commission, the head of any department

3 or agency of the Federal Government is authorized to de4 tail, without reimbursement, any personnel of such depart5 ment or agency to the Commission to assist the Commis6 sion in carrying out its duties under this section. The de7 tail of any such personnel may not result in the interrup8 tion or loss of civil service status or privilege of such per9 sonnel.

10 SEC. 1508. TERMINATION OF COMMISSION.

11 The Commission shall terminate upon submission of

12 the final report required by section 1504.

13 TITLE II—COMMITTEE ON BANK14 ING AND FINANCIAL SERV15 ICES

16 SEC. 2001. TABLE OF CONTENTS.

17 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. Foreclosure avoidance and borrower assistance.

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.

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.
107

•HR 2517 IH

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.

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.

Sec. 2309. Duplicative reporting.

Sec. 2310. CRA congressional oversight.

Sec. 2311. Consultation among examiners.

Sec. 2312. Limitation on regulations.

Subtitle D—Phase-Down of Oversight Board

Sec. 2401. Termination of authority of Oversight Board to employ staff.
108

•HR 2517 IH

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.—

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

25 of the enactment of the Seven-Year Balanced
109

•HR 2517 IH

1 Budget Reconciliation Act of 1995, the provi2 sions of this subsection (other than paragraph

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

4 residential property or eligible condominium

5 property.

6 ‘‘(B) SAVINGS PROVISION.—Notwithstand7 ing subparagraph (A), the provisions of this

8 subsection shall continue to apply on and after

9 such date of enactment to any eligible residen10 tial property or eligible condominium property

11 that—

12 ‘‘(i) has been sold or otherwise dis13 posed of by the Corporation before such

14 date of enactment; or

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

16 other disposition entered into before such

17 date of enactment.’’.

18 (c) TERMINATION OF AFFORDABLE HOUSING ADVI19 SORY BOARD.—Section 14(b)(9) of the Resolution Trust

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

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

22 ‘‘September 30, 1995’’.

23 (d) REPEAL OF FDIC PROGRAM AND TRANSFER OF

24 WINDUP AUTHORITY TO HUD.—
110

•HR 2517 IH

1 (1) REPEAL.—Section 40 of the Federal De2 posit Insurance Act (12 U.S.C. 1831q) is hereby re3 pealed.

4 (2) TRANSFER OF WINDUP AUTHORITY.—Not5 withstanding paragraph (1)—

6 (A) effective December 31, 1995, the Sec7 retary shall carry out any remaining authority

8 and responsibilities of the Federal Deposit In9 surance Corporation under section 40 of the

10 Federal Deposit Insurance Act to recapture ex11 cess proceeds from resale of properties and to

12 monitor and enforce low-income occupancy re13 quirements or rent limitations under such sec14 tion and shall assume any direct or contingent

15 liability of the Corporation to carry out such

16 authority and responsibilities; and

17 (B) the Federal Deposit Insurance Cor18 poration shall consummate any sales of prop19 erty under section 40 of such Act that were

20 pending under contracts of sale on September

21 30, 1995.

22 (e) FDIC DISPOSITION OF ASSETS AS CONSERVATOR

23 OR RECEIVER.—Section 11(d)(13)(E) of the Federal De24 posit Insurance Act (12 U.S.C. 1821(d)(13)(E)) is amend25 ed—
111

•HR 2517 IH

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

2 semicolon;

3 (2) in clause (iv), by striking ‘‘; and’’ and in4 serting a period; and

5 (3) by striking clause (v).

6 (f) DISPOSITION OF FDIC ASSETS.—Section

7 13(d)(3)(D) of the Federal Deposit Insurance Act (12

8 U.S.C. 1823(d)(3)(D)) is amended—

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

10 semicolon;

11 (2) in clause (iv), by striking ‘‘; and’’ and in12 serting a period; and

13 (3) by striking clause (v).

14 SEC. 2102. FORECLOSURE AVOIDANCE AND BORROWER AS15 SISTANCE.

16 (a) FORECLOSURE AVOIDANCE.—The last sentence

17 of section 204(a) of the National Housing Act (12 U.S.C.

18 1710(a)) is amended by inserting before the period the

19 following: ‘‘: And provided further, That the Secretary may

20 pay insurance benefits to the mortgagee to recompense the

21 mortgagee for its actions to provide an alternative to fore22 closure of a mortgage that is in default, which actions may

23 include such actions as special forbearance, loan modifica24 tion, and deeds in lieu of foreclosure, all upon such terms

25 and conditions as the mortgagee shall determine in the
112

•HR 2517 IH

1 mortgagee’s sole discretion within guidelines provided by

2 the Secretary, but which may not include assignment of

3 a mortgage to the Secretary: And provided further, That

4 for purposes of the preceding proviso, no action authorized

5 by the Secretary and no action taken, nor any failure to

6 act, by the Secretary or the mortgagee shall be subject

7 to judicial review’’.

8 (b) AUTHORITY TO ASSIST MORTGAGORS IN DE9 FAULT.—Section 230 of the National Housing Act (12

10 U.S.C. 1715u) is amended to read as follows:

11 ‘‘AUTHORITY TO ASSIST MORTGAGORS IN DEFAULT

12 ‘‘SEC. 230. (a) PAYMENT OF PARTIAL CLAIM.—The

13 Secretary may establish a program for payment of a par14 tial insurance claim to a mortgagee that agrees to apply

15 the claim amount to payment of a mortgage on a 1- to

16 4-family residence that is in default. Any such payment

17 under such program to the mortgagee shall be made in

18 the Secretary’s sole discretion and on terms and conditions

19 acceptable to the Secretary, except that—

20 ‘‘(1) the amount of the payment shall be in an

21 amount determined by the Secretary, which shall not

22 exceed an amount equivalent to 12 monthly mort23 gage payments and any costs related to the default

24 that are approved by the Secretary; and
113

•HR 2517 IH

1 ‘‘(2) the mortgagor shall agree to repay the

2 amount of the insurance claim to the Secretary upon

3 terms and conditions acceptable to the Secretary.

4 The Secretary may pay the mortgagee, from the appro5 priate insurance fund, in connection with any activities

6 that the mortgagee is required to undertake concerning

7 repayment by the mortgagor of the amount owed to the

8 Secretary.

9 ‘‘(b) ASSIGNMENT.—

10 ‘‘(1) PROGRAM AUTHORITY.—The Secretary

11 may establish a program for assignment to the Sec12 retary, upon request of the mortgagee, of a mort13 gage on a 1- to 4-family residence insured under this

14 Act.

15 ‘‘(2) PROGRAM REQUIREMENTS.—The Sec16 retary may accept assignment of a mortgage under

17 a program under this subsection only if—

18 ‘‘(A) the mortgage was in default;

19 ‘‘(B) the mortgagee has modified the mort20 gage to cure the default and provide for mort21 gage payments within the reasonable ability of

22 the mortgagor to pay at interest rates not ex23 ceeding current market interest rates; and

24 ‘‘(C) the Secretary arranges for servicing

25 of the assigned mortgage by a mortgagee
114

•HR 2517 IH

1 (which may include the assigning mortgagee)

2 through procedures that the Secretary has de3 termined to be in the best interests of the ap4 propriate insurance fund.

5 ‘‘(3) PAYMENT OF INSURANCE BENEFITS.—

6 Upon accepting assignment of a mortgage under the

7 program under this subsection, the Secretary may

8 pay insurance benefits to the mortgagee from the

9 appropriate insurance fund in an amount that the

10 Secretary determines to be appropriate, but which

11 may not exceed the amount necessary to compensate

12 the mortgagee for the assignment and any losses

13 and expenses resulting from the mortgage modifica14 tion.

15 ‘‘(c) PROHIBITION OF JUDICIAL REVIEW.—No deci16 sion by the Secretary to exercise or forego exercising any

17 authority under this section shall be subject to judicial re18 view.’’.

19 (c) SAVINGS PROVISION.—Any mortgage for which

20 the mortgagor has applied to the Secretary of Housing

21 and Urban Development, before the date of the enactment

22 of this Act, for assignment pursuant to section 230(b) of

23 the National Housing Act shall continue to be governed

24 by the provisions of such section, as in effect immediately

25 before such date of enactment.
115

•HR 2517 IH

1 (d) APPLICABILITY OF OTHER LAWS.—No provision

2 of the National Housing Act or any other law shall be

3 construed to require the Secretary of Housing and Urban

4 Development to provide an alternative to foreclosure for

5 mortgagees with mortgages on 1- to 4-family residences

6 insured by the Secretary under the National Housing Act,

7 or to accept assignments of such mortgages.

8 SEC. 2103. REFORM OF HUD-OWNED MULTIFAMILY PROP9 ERTY DISPOSITION PROGRAM.

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

11 203 of the Housing and Community Development Amend12 ments of 1978 (12 U.S.C. 1701z–11) is amended to read

13 as follows:

14 ‘‘SEC. 203. MANAGEMENT AND DISPOSITION OF HUD15 OWNED MULTIFAMILY HOUSING PROJECTS.

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

17 Urban Development may manage and dispose of (1) multi18 family housing projects that are owned by the Secretary

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

20 and (2) mortgages on multifamily housing projects that

21 are held by the Secretary, without regard to any other pro22 vision of law.

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

24 Housing and Urban Development may delegate to one or

25 more entities the authority to carry out some or all of the
116

•HR 2517 IH

1 functions and responsibilities of the Secretary in connec2 tion with the foreclosure of mortgages on multifamily

3 housing projects held by the Secretary.

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

5 term ‘multifamily housing project’ means any multifamily

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

7 the Secretary was, assisted or insured under the National

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

9 of the Housing Act of 1959.’’.

10 (b) CONFORMING AMENDMENTS.—

11 (1) NONDISCRIMINATION AGAINST CERTIFICATE

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

13 Housing and Community Development Act of 1987

14 (42 U.S.C. 1437f note) is amended by striking ‘‘sec15 tion 203(i)(2) of the Housing and Community De16 velopment Amendments of 1978, as amended by sec17 tion 181(h) of this Act’’ and inserting ‘‘section

18 203(b) of the Housing and Community Development

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

20 1995)’’.

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

22 the Low-Income Housing Preservation and Resident

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

24 amended by striking the last sentence.
117

•HR 2517 IH

1 (3) HOPE HOMEOWNERSHIP PROGRAM.—Sec2 tion 427 of the Cranston-Gonzalez National Afford3 able Housing Act (42 U.S.C. 12877) is amended by

4 striking ‘‘subject to—’’ and all that follows and in5 serting ‘‘subject to the Low-Income Housing Preser6 vation and Resident Homeownership Act of 1990.’’.

7 (4) FHA MULTIFAMILY HOUSING MORTGAGE

8 INSURANCE.—Section 207(k) of the National Hous9 ing Act (12 U.S.C. 1713(k)) is amended by striking

10 the third sentence.

11 (5) MULTIFAMILY MORTGAGE FORECLOSURE

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

13 Mortgage Foreclosure Act of 1981 (12

14 U.S.C.3706(b)(2)) is amended—

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

16 (B) by striking ‘‘(A)’’.

17 (6) PREVENTING MORTGAGE DEFAULTS ON IN18 SURED MULTIFAMILY PROJECTS.—Section

19 103(h)(2)(B) of the Multifamily Housing Property

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

21 1a note) is amended by inserting ‘‘(as in effect be22 fore October 1, 1995)’’ after ‘‘1978’’.
118

•HR 2517 IH

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;
119

•HR 2517 IH

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
120

•HR 2517 IH

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.
121

•HR 2517 IH

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-
122

•HR 2517 IH

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
123

•HR 2517 IH

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—
124

•HR 2517 IH

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-
125

•HR 2517 IH

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
126

•HR 2517 IH

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

such clause may not be less than 2 15 ⁄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
127

•HR 2517 IH

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—
128

•HR 2517 IH

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
129

•HR 2517 IH

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.
130

•HR 2517 IH

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
131

•HR 2517 IH

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
132

•HR 2517 IH

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).
133

•HR 2517 IH

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
134

•HR 2517 IH

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-
135

•HR 2517 IH

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’’;
136

•HR 2517 IH

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);
137

•HR 2517 IH

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’’.
138

•HR 2517 IH

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’’.
139

•HR 2517 IH

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).
140

•HR 2517 IH

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
141

•HR 2517 IH

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).
142

•HR 2517 IH

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 23.7 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-
143

•HR 2517 IH

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
144

•HR 2517 IH

1 determines to be appropriate, taking into ac2 count the factors considered under the risk3 based assessment 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-
145

•HR 2517 IH

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.
146

•HR 2517 IH

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.—
147

•HR 2517 IH

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
148

•HR 2517 IH

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).
149

•HR 2517 IH

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-
150

•HR 2517 IH

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—
151

•HR 2517 IH

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
152

•HR 2517 IH

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
153

•HR 2517 IH

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-
154

•HR 2517 IH

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.’’.
155

•HR 2517 IH

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
156

•HR 2517 IH

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.’’.
157

•HR 2517 IH

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,
158

•HR 2517 IH

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-
159

•HR 2517 IH

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-
160

•HR 2517 IH

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.
161

•HR 2517 IH

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
162

•HR 2517 IH

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.
163

•HR 2517 IH

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.
164

•HR 2517 IH

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—
165

•HR 2517 IH

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.
166

•HR 2517 IH

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
167

•HR 2517 IH

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.
168

•HR 2517 IH

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).
169

•HR 2517 IH

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-
170

•HR 2517 IH

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.)
171

•HR 2517 IH

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
172

•HR 2517 IH

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:
173

•HR 2517 IH

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).
174

•HR 2517 IH

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—
175

•HR 2517 IH

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-
176

•HR 2517 IH

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’’.
177

•HR 2517 IH

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)’’.
178

•HR 2517 IH

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).
179

•HR 2517 IH

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
180

•HR 2517 IH

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.
181

•HR 2517 IH

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-
182

•HR 2517 IH

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,
183

•HR 2517 IH

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-
184

•HR 2517 IH

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
185

•HR 2517 IH

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,
186

•HR 2517 IH

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
187

•HR 2517 IH

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 Effective January 1, 1998, any reference in any Fed8 eral law to the Director of the Office of Thrift Supervision

9 or the Office of Thrift Supervision shall be deemed to be

10 a reference to the appropriate Federal banking agency (as

11 defined in section 3(q) of the Federal Deposit Insurance

12 Act).

13 SEC. 2245. RECONFIGURATION OF BOARD OF DIRECTORS

14 OF FDIC AS A RESULT OF REMOVAL OF DI15 RECTOR OF THE OFFICE OF THRIFT SUPER16 VISION.

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

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

19 to read as follows:

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

21 Corporation shall be vested in a Board of Directors

22 consisting of 3 members—

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

24 the Currency; and
188

•HR 2517 IH

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

2 President, by and with the advice and consent

3 of the Senate, from among individuals who are

4 citizens of the United States.’’.

5 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

6 (1) Section 2(a)(2) of the Federal Deposit In7 surance Act (12 U.S.C. 1812(a)(2)) is amended—

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

9 inserting ‘‘January 1, 1998’’; and

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

11 (2) Section 2(d)(2) of the Federal Deposit In12 surance Act (12 U.S.C. 1812(d)(2)) is amended—

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

14 of the Office of Thrift Supervision’’;

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

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

17 the Office of Thrift Supervision, as the case

18 may be’’; and

19 (D) by striking ‘‘or Director’’.

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

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

22 1998.

23 (d) DESIGNATION OF ABOLISHED POSITION.—Unless

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

25 of the Board of Directors as of January 1, 1998, the
189

•HR 2517 IH

1 President, consistent with the requirements of section

2 2(a)(2) of the Federal Deposit Insurance Act, shall des3 ignate which of the 3 positions of appointed member of

4 such Board of Directors shall be abolished pursuant to

5 the amendment made by subsection (a).

6 Subtitle C—Community

7 Reinvestment Act Amendments

8 SEC. 2301. EXPRESSION OF CONGRESSIONAL INTENT.

9 Subsection (b) of section 802 of the Community Rein10 vestment Act of 1977 (12 U.S.C. 2901) is amended to

11 read as follows:

12 ‘‘(b) It is the purpose of this title to require each ap13 propriate Federal financial supervisory agency to use its

14 authority, when examining financial institutions, to en15 courage such institutions to help meet the credit needs of

16 the local communities in which they are chartered consist17 ent with the safe and sound operation of such institutions.

18 When examining financial institutions, a supervisory agen19 cy shall not impose additional burden, recordkeeping, or

20 reporting upon such institutions.’’.

21 SEC. 2302. COMMUNITY REINVESTMENT ACT EXEMPTION.

22 The Community Reinvestment Act of 1977 (12

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

24 the following new section:
190

•HR 2517 IH

1 ‘‘SEC. 809. TREATMENT OF SMALL FINANCIAL INSTITU2 TIONS.

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

4 section 806A and receiving a written evaluation under sec5 tion 807, an eligible regulated financial institution shall

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

7 public that—

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

9 the institution provides to help meet the credit needs

10 of the local community; and

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

12 credit needs of the local communities in which the

13 institution operates, including low- and moderate-in14 come neighborhoods.

15 ‘‘(b) ELIGIBLE REGULATED FINANCIAL INSTITU16 TIONS.—

17 ‘‘(1) IN GENERAL.—A regulated financial insti18 tution shall be eligible for purposes of subsection (a)

19 if the institution and any bank holding company

20 which controls such institution have aggregate assets

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

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

23 amount in paragraph (1) shall be adjusted annually

24 after December 31, 1994, by the annual percentage

25 increase in the Consumer Price Index for Urban
191

•HR 2517 IH

1 Wage Earners and Clerical Workers published by

2 the Bureau of Labor Statistics.

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

4 regulated financial institution which has complied with the

5 notice requirements of subsection (a) shall not be subject

6 to section 804 and any regulations prescribed under sec7 tion 806.’’.

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

9 Section 804 of the Community Reinvestment Act of

10 1977 (12 U.S.C. 2903) is amended by adding at the end

11 the following new subsection (c):

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

13 ‘‘(1) CERTIFICATION.—In lieu of being evalu14 ated under section 806A and receiving a written

15 evaluation under section 807, a qualifying financial

16 institution may elect to self-certify to the appro17 priate Federal financial supervisory agency that such

18 institution is in compliance with the goals of this

19 title.

20 ‘‘(2) QUALIFYING INSTITUTION.—

21 ‘‘(A) IN GENERAL.—For purposes of para22 graph (1), the term ‘qualifying institution’

23 means a financial institution which—

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

25 in assets;
192

•HR 2517 IH

1 ‘‘(ii) has not been found to have en2 gaged in a pattern or practice of illegal

3 discrimination under the Fair Housing Act

4 or the Equal Credit Opportunity Act for

5 the preceding 5-year calendar period; and

6 ‘‘(iii) received rating under section

7 807(b)(2) of ‘satisfactory’ or ‘outstanding’

8 in the most recent evaluation of such insti9 tution under this title.

10 ‘‘(B) ANNUAL ADJUSTMENT.—The dollar

11 amount in subparagraph (A) shall be adjusted

12 annually after December 31, 1994, by the an13 nual percentage increase in the Consumer Price

14 Index for Urban Wage Earners and Clerical

15 Workers published by the Bureau of Labor

16 Statistics.

17 ‘‘(3) PUBLIC NOTICE.—

18 ‘‘(A) IN GENERAL.—A qualifying institu19 tion shall maintain in every branch a public no20 tice stating that—

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

22 that the institution is satisfactorily helping

23 to meet the credit needs of its community;

24 ‘‘(ii) the institution maintains—
193

•HR 2517 IH

1 ‘‘(I) at the main office of such in2 stitution, a public file which contains

3 a copy of the self-certification to the

4 appropriate Federal financial super5 visory agency; and

6 ‘‘(II) a map delineating the com7 munity served by the institution;

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

9 services that the institution provides to the

10 community served by the institution;

11 ‘‘(iv) such other information that the

12 institution believes demonstrates the insti13 tution’s record of helping to meet the cred14 it needs of its community; and

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

16 the institution (and any response by the

17 institution) received within the previous 2-

18 year period about the record of the institu19 tion of helping to meet the credit needs of

20 its community.

21 ‘‘(B) PUBLIC FILE.—A qualifying institu22 tion shall maintain a public file containing the

23 contents described in this paragraph at the in24 stitution’s main office.

25 ‘‘(4) RATING.—
194

•HR 2517 IH

1 ‘‘(A) IN GENERAL.—A qualifying institu2 tion shall be deemed to have a rating of a ‘sat3 isfactory record of meeting community credit

4 needs’ for the purposes of this section and sec5 tion 806A(c).

6 ‘‘(B) PUBLICATION.—Each Federal finan7 cial supervisory agency shall publish in the Fed8 eral Register once each month a list of institu9 tions that have self-certified during the previous

10 month.

11 ‘‘(C) PUBLICATION CONSTITUTES DISCLO12 SURE.—Publication of the name of the institu13 tion in the Federal Register as having self-cer14 tified shall constitute disclosure of the rating of

15 the institution to the public for purposes of sec16 tions 806A and 807.

17 ‘‘(5) REGULATORY REVIEW.—

18 ‘‘(A) ASSESSMENT.—During each exam19 ination for safety and soundness, a qualifying

20 institution’s supervisory agency shall, as part of

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

22 assess whether the institution’s basis for its

23 self-certification is reasonable based on the pub24 lic notice and the information contained in the

25 public file pursuant to paragraph (3).
195

•HR 2517 IH

1 ‘‘(B) EXAMINATION IF SELF-CERTIFI2 CATION IS NOT REASONABLE.—If the agency

3 determines that the institution’s basis for the

4 institution’s self-certification is not reasonable,

5 the agency shall schedule an examination of the

6 institution for the purpose of assessing the in7 stitution’s record of helping to meet the credit

8 needs of its community.

9 ‘‘(C) REVOCATION OF SELF-CERTIFI10 CATION.—If an assessment pursuant to sub11 paragraph (B) results in a less than ‘satisfac12 tory’ rating, the agency shall revoke the institu13 tion’s self-certification and substitute a written

14 evaluation as provided under section 807.

15 ‘‘(D) PERIOD OF INELIGIBILITY FOR SELF16 CERTIFICATION.—An institution whose self-cer17 tification has been revoked may not self-certify

18 pursuant to this subsection during the 5 years

19 succeeding the year in which the self-certifi20 cation is revoked.

21 ‘‘(E) SUBSEQUENT ELIGIBILITY.—After

22 the end of the period of ineligibility described in

23 subparagraph (D), an institution which meets

24 the requirements for self-certification may elect

25 to self-certify.
196

•HR 2517 IH

1 ‘‘(6) PROHIBITION ON ADDITIONAL REQUIRE2 MENTS.—No appropriate Federal financial super3 visory agency may impose any additional require4 ments, whether by regulation or otherwise, relating

5 to the self-certification procedure under this sub6 section.’’.

7 SEC. 2304. COMMUNITY INPUT AND CONCLUSIVE RATING.

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

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

10 2903) is amended by inserting ‘‘conducted in accordance

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

12 (b) COMMUNITY INPUT AND CONCLUSIVE RATING.—

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

14 2901 et seq.) is amended by inserting after section 806

15 the following new section:

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

17 ‘‘(a) PUBLICATION OF EXAM SCHEDULE AND OPPOR18 TUNITY FOR COMMENT.—

19 ‘‘(1) PUBLICATION OF NOTICE.—Each appro20 priate Federal financial supervisory agency shall—

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

22 days before the beginning of a calendar quarter,

23 a listing of institutions scheduled for evaluation

24 for compliance with this title during such cal25 endar quarter; and
197

•HR 2517 IH

1 ‘‘(B) provide opportunity for written com2 ments from the community on the performance,

3 under this title, of each institution scheduled

4 for evaluation.

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

6 may not be submitted to an appropriate Federal fi7 nancial supervisory agency pursuant to paragraph

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

9 the first day of the calendar quarter.

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

11 provide a copy of such comments to the institution.

12 ‘‘(b) EVALUATION.—The appropriate Federal finan13 cial supervisory agency shall—

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

15 the standards contained in section 804; and

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

17 the institution as required under section 807.

18 ‘‘(c) RECONSIDERATION OF RATING.—

19 ‘‘(1) REQUEST FOR RECONSIDERATION.—A re20 consideration of an institution’s rating referred to in

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

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

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

24 request shall be made in writing and filed with the

25 appropriate Federal financial supervisory agency,
198

•HR 2517 IH

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

2 the community.

3 ‘‘(3) BASIS FOR REQUEST.—Any request for re4 consideration under this subsection shall be based on

5 significant issues of a substantive nature which are

6 relevant to the delineated community of the institu7 tion and, in the case of a request by a member of

8 the community, shall be limited to issues previously

9 raised in comments submitted pursuant to sub10 section (a).

11 ‘‘(4) COMPLETION OF REVIEW.—The appro12 priate Federal financial supervisory agency shall

13 complete any requested reconsideration within 30

14 days of the filing of the request.

15 ‘‘(d) CONCLUSIVE RATING.—

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

17 become conclusive on the later of—

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

19 to the public; or

20 ‘‘(B) the completion of any requested re21 consideration by the Federal financial super22 visory agency.

23 ‘‘(2) RATING CONCLUSIVE OF MEETING COMMU24 NITY CREDIT NEEDS.—An institution’s rating shall

25 be the conclusive assessment of the institution’s
199

•HR 2517 IH

1 record of meeting the credit needs of its community

2 for purposes of section 804 until the institution’s

3 next rating, developed pursuant to an examination,

4 becomes conclusive.

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

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

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

8 ‘‘(4) RULE OF CONSTRUCTION.—Notwithstand9 ing any other provision of law, no provision of this

10 section shall be construed as granting a cause of ac11 tion to any person.’’.

12 (c) OVERALL EVALUATION OF INSTITUTION.—Para13 graph (2) of section 804(a) of the Community Reinvest14 ment Act of 1977 (12 U.S.C. 2903(a)) is amended to read

15 as follows:

16 ‘‘(2) take such record into account in the over17 all evaluation of the condition of the institution by

18 the appropriate Federal financial supervisory agen19 cy.’’.

20 SEC. 2305. SPECIAL PURPOSE FINANCIAL INSTITUTIONS.

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

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

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

24 of this subtitle) the following new subsection:

25 ‘‘(d) SPECIAL PURPOSE INSTITUTIONS.—
200

•HR 2517 IH

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

2 pursuant to this section at any special purpose insti3 tution, the appropriate Federal financial supervisory

4 agency shall—

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

6 institution is involved in; and

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

8 record of the institution commensurate with the

9 amount of deposits (as defined in section 3(1)

10 of the Federal Deposit Insurance Act) received

11 by such institution.

12 ‘‘(2) STANDARDS.—Each appropriate Federal

13 financial supervisory agency shall develop standards

14 under which special purpose institutions may be

15 deemed to have complied with the requirements of

16 this title which are consistent with the specific na17 ture of such businesses.’’.

18 (b) SPECIAL PURPOSE INSTITUTION DEFINED.—

19 Section 803 of the Community Reinvestment Act of 1977

20 (12 U.S.C. 2902) is amended by adding at the end the

21 following new paragraph:

22 ‘‘(5) SPECIAL PURPOSE INSTITUTIONS.—The

23 term ‘special purpose institution’ means a financial

24 institution that does not generally accept deposits

25 from the public in amounts of less than $100,000,
201

•HR 2517 IH

1 such as wholesale, credit card, and trust institu2 tions.’’.

3 SEC. 2306. INCREASED INCENTIVES FOR LENDING TO LOW4 AND MODERATE-INCOME COMMUNITIES.

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

6 Reinvestment Act of 1977 (12 U.S.C. 2903(b)) is amend7 ed to read as follows:

8 ‘‘(b) POSITIVE CONSIDERATION OF CERTAIN LOANS

9 AND INVESTMENTS.—In assessing and taking into ac10 count the records of a regulated financial institution under

11 subsection (a), the appropriate Federal financial super12 visory agency shall—

13 ‘‘(1) consider as a positive factor, consistent

14 with the safe and sound operation of the institution,

15 the institution’s investment in or loan to—

16 ‘‘(A) any minority depository institution or

17 women’s depository institution (as such terms

18 are defined in section 808(b)) or any low-in19 come credit union;

20 ‘‘(B) any joint venture or other entity or

21 project which promotes the public welfare in

22 any distressed community (as defined by such

23 agency) whether or not the distressed commu24 nity is located in the local community in which
202

•HR 2517 IH

1 the regulated financial institution is chartered

2 to do business; and

3 ‘‘(C) targeted low- and moderate-income

4 communities, including real property loans to

5 such communities; and

6 ‘‘(2) consider equally with other factors capital

7 investment, loan participation, and other ventures

8 undertaken by the institution in cooperation with—

9 ‘‘(A) minority- and women-owned financial

10 institutions and low-income credit unions to the

11 extent that these activities help meet the credit

12 needs of the local communities in which such

13 institutions are chartered; and

14 ‘‘(B) community development corporations

15 in extending credit and other financial services

16 principally to low- and moderate-income persons

17 and small businesses to the extent that such

18 community development corporations help meet

19 the credit needs of the local communities served

20 by the majority-owned institution.’’.

21 (b) AMENDMENT TO DEFINITIONS.—Section 803 of

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

23 2902) is amended by inserting after paragraph (5) (as

24 added by section 2305(b) of this subtitle) the following

25 new paragraph:
203

•HR 2517 IH

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.
204

•HR 2517 IH

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.’’.
205

•HR 2517 IH

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
206

•HR 2517 IH

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
207

•HR 2517 IH

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-
208

•HR 2517 IH

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 Subtitle D—Phase-Down of

12 Oversight Board

13 SEC. 2401. TERMINATION OF AUTHORITY OF OVERSIGHT

14 BOARD TO EMPLOY STAFF.

15 (a) IN GENERAL.—Section 21A(a) of the Federal

16 Home Loan Bank Act (12 U.S.C. 1441a(a)) is amended

17 by adding at the end the following new paragraph:

18 ‘‘(17) PHASED-DOWN OPERATION OF OVER19 SIGHT BOARD FOLLOWING TERMINATION OF COR20 PORATION.—

21 ‘‘(A) TERMINATION OF AUTHORITY TO EM22 PLOY STAFF.—Except as provided in subpara23 graph (B), the authority of the Thrift Depositor

24 Protection Oversight Board under paragraph

25 (5) to establish officer and employee positions,
209

•HR 2517 IH

1 to compensate officers and employees of the

2 Board, to provide other benefits for officers and

3 employees of the Board, and to utilize staff of

4 any other department or agency shall terminate

5 as of December 31, 1995.

6 ‘‘(B) LIMITED AUTHORITY FOR DETAILING

7 STAFF FROM OTHER AGENCIES.—If the Thrift

8 Depositor Protection Oversight Board deter9 mines that any staff is required to carry out the

10 functions of the Board after the authority to

11 employ staff terminates under subparagraph

12 (A), the Board shall—

13 ‘‘(i) utilize employees of any other de14 partment or agency in accordance with

15 paragraph (5)(F) to carry out the staff

16 functions which have been determined to

17 be necessary; and

18 ‘‘(i) submit a report to the Congress

19 containing—

20 ‘‘(I) the number of staff positions

21 which the Board has determined are

22 necessary to carry out the Board’s

23 functions after the termination of the

24 Corporation;
210

•HR 2517 IH

1 ‘‘(II) a justification for such de2 termination; and

3 ‘‘(III) an estimate of the length

4 of the period for which such staff po5 sitions will be required.’’.

6 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

7 (1) Subparagraphs (B), (C), (D), and (E) of

8 section 21A(a)(5) of the Federal Home Loan Bank

9 Act (12 U.S.C. 1441a(a)(5)) are each amended by

10 inserting ‘‘subject to paragraph (17)(A),’’ after the

11 closing parenthesis of the subparagraph designation.

12 (2) Section 21A(a)(5)(F) of the Federal Home

13 Loan Bank Act (12 U.S.C. 1441a(a)(5)(F)) is

14 amended by inserting ‘‘subject to subparagraphs (A)

15 and (B) of paragraph (17) and’’ after ‘‘(F)’’.

16 TITLE III—COMMITTEE ON

17 COMMERCE

18 Subtitle A—Communications

19 CHAPTER 1—SPECTRUM AUCTIONS

20 SEC. 3001. SPECTRUM AUCTIONS.

21 (a) EXTENSION AND EXPANSION OF AUCTION AU22 THORITY.—

23 (1) AMENDMENTS.—Section 309(j) of the Com24 munications Act of 1934 (47 U.S.C. 309(j)) is

25 amended—
211

•HR 2517 IH

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

2 inserting in lieu thereof the following:

3 ‘‘(1) GENERAL AUTHORITY.—If, consistent with

4 the obligations described in paragraph (6)(E), mutu5 ally exclusive applications are accepted for any ini6 tial license or construction permit which will involve

7 an exclusive use of the electromagnetic spectrum,

8 then the Commission shall grant such license or per9 mit to a qualified applicant through a system of

10 competitive bidding that meets the requirements of

11 this subsection.

12 ‘‘(2) EXEMPTIONS.—The competitive bidding

13 authority granted by this subsection shall not apply

14 to licenses or construction permits issued by the

15 Commission—

16 ‘‘(A) that, as the result of the Commission

17 carrying out the obligations described in para18 graph (6)(E), are not mutually exclusive;

19 ‘‘(B) for public safety radio services, in20 cluding non-Government uses that protect the

21 safety of life, health, and property and that are

22 not made commercially available to the public;

23 or

24 ‘‘(C) for initial licenses or construction

25 permits for new terrestrial digital television
212

•HR 2517 IH

1 services assigned by the Commission to existing

2 terrestrial broadcast licensees to replace their

3 current television licenses.’’; and

4 (B) by striking ‘‘1998’’ in paragraph (11)

5 and inserting ‘‘2002’’.

6 (2) CONFORMING AMENDMENT.—Subsection (i)

7 of section 309 of such Act is repealed.

8 (3) EFFECTIVE DATE.—The amendment made

9 by paragraph (1)(A) shall not apply with respect to

10 any license or permit for which the Federal Commu11 nications Commission has accepted mutually exclu12 sive applications on or before the date of enactment

13 of this Act.

14 (b) COMMISSION OBLIGATION TO MAKE ADDITIONAL

15 SPECTRUM AVAILABLE BY AUCTION.—

16 (1) IN GENERAL.—The Federal Communica17 tions Commission shall complete all actions nec18 essary to permit the assignment, by September 30,

19 2002, by competitive bidding pursuant to section

20 309(j) of the Communications Act of 1934 (47

21 U.S.C. 309(j)) of licenses for the use of bands of

22 frequencies that—

23 (A) individually span not less than 25

24 megahertz, unless a combination of smaller

25 bands can, notwithstanding the provisions of
213

•HR 2517 IH

1 paragraph (7) of such section, reasonably be ex2 pected to produce greater receipts;

3 (B) in the aggregate span not less than

4 100 megahertz;

5 (C) are located below 3 gigahertz; and

6 (D) have not, as of the date of enactment

7 of this Act—

8 (i) been designated by Commission

9 regulation for assignment pursuant to such

10 section; or

11 (ii) been identified by the Secretary of

12 Commerce pursuant to section 113 of the

13 National Telecommunications and Infor14 mation Administration Organization Act.

15 The Commission shall conduct the competitive

16 bidding for not less than one-half of such aggre17 gate spectrum by September 30, 2000.

18 (2) CRITERIA FOR REASSIGNMENT.—In making

19 available bands of frequencies for competitive bid20 ding pursuant to paragraph (1), the Commission

21 shall—

22 (A) seek to promote the most efficient use

23 of the spectrum;

24 (B) take into account the cost to incum25 bent licensees of relocating existing uses to
214

•HR 2517 IH

1 other bands of frequencies or other means of

2 communication;

3 (C) take into account the needs of public

4 safety radio services; and

5 (D) comply with the requirements of inter6 national agreements concerning spectrum allo7 cations.

8 (3) NOTIFICATION TO NTIA.—The Commission

9 shall notify the Secretary of Commerce if—

10 (A) the Commission is not able to provide

11 for the effective relocation of incumbent licens12 ees to bands of frequencies that are available to

13 the Commission for assignment; and

14 (B) the Commission has identified bands

15 of frequencies that are—

16 (i) suitable for the relocation of such

17 licensees; and

18 (ii) allocated for Federal Government

19 use, but that could be reallocated pursuant

20 to part B of the National Telecommuni21 cations and Information Administration

22 Organization Act (as amended by this

23 Act).

24 (c) IDENTIFICATION AND REALLOCATION OF FRE25 QUENCIES.—The National Telecommunications and Infor-
215

•HR 2517 IH

1 mation Administration Organization Act (47 U.S.C. 901

2 et seq.) is amended—

3 (1) in section 113, by adding at the end the fol4 lowing new subsection:

5 ‘‘(f) ADDITIONAL REALLOCATION REPORT.—If the

6 Secretary receives a notice from the Commission pursuant

7 to section 3001(b)(3) of the Seven-Year Balanced Budget

8 Reconciliation Act of 1995, the Secretary shall prepare

9 and submit to the President and the Congress a report

10 recommending for reallocation for use other than by Fed11 eral Government stations under section 305 of the 1934

12 Act (47 U.S.C. 305), bands of frequencies that are suit13 able for the uses identified in the Commission’s notice.’’;

14 (2) in section 114(a)(1), by striking ‘‘(a) or

15 (d)(1)’’ and inserting ‘‘(a), (d)(1), or (f)’’.

16 (d) COMPLETION OF C-BLOCK PCS AUCTION.—The

17 Federal Communications Commission shall commence the

18 Broadband Personal Communications Services C-Block

19 auction described in the Commission’s Sixth Report and

20 Order in DP Docket 93–253 (FCC 93–510, released July

21 18, 1995) not later than December 4, 1995. The Commis22 sion’s competitive bidding rules governing such auction,

23 as set forth in such Sixth Report and Order, are hereby

24 ratified and adopted as a matter of Federal law.
216

•HR 2517 IH

1 (e) MODIFICATION OF AUCTION POLICY TO PRE2 SERVE AUCTION VALUE OF SPECTRUM.—The voluntary

3 negotiation period for relocating fixed microwave licensees

4 to frequency bands other than those allocated for licensed

5 emerging technology services (including licensed personal

6 communications services), established by the Commis7 sion’s Third Report and Order in ET Docket No. 92–9,

8 shall expire one year after the date of acceptance by the

9 Commission of applications for such licensed emerging

10 technology services. The mandatory negotiation period for

11 relocating fixed microwave licensees to frequency bands

12 other than those allocated for licensed emerging tech13 nology services (including licensed personal communica14 tions services), established in such Third Report and

15 Order, shall expire two years after the date of acceptance

16 by the Commission of applications for such licensed

17 emerging technology services.

18 (f) IDENTIFICATION AND REALLOCATION OF

19 AUCTIONABLE FREQUENCIES.—The National Tele20 communications and Information Administration Organi21 zation Act (47 U.S.C. 901 et seq.) is amended—

22 (1) in section 113(b)—

23 (A) by striking the heading of paragraph

24 (1) and inserting ‘‘INITIAL REALLOCATION RE25 PORT’’;
217

•HR 2517 IH

1 (B) by inserting ‘‘in the first report re2 quired by subsection (a)’’ after ‘‘recommend for

3 reallocation’’ in paragraph (1);

4 (C) by inserting ‘‘or (3)’’ after ‘‘paragraph

5 (1)’’ each place it appears in paragraph (2);

6 and

7 (D) by inserting after paragraph (2) the

8 following new paragraph:

9 ‘‘(3) SECOND REALLOCATION REPORT.—In ac10 cordance with the provisions of this section, the Sec11 retary shall recommend for reallocation in the sec12 ond report required by subsection (a), for use other

13 than by Federal Government stations under section

14 305 of the 1934 Act (47 U.S.C. 305), a single fre15 quency band that spans not less than an additional

16 20 megahertz, that is located below 3 gigahertz, and

17 that meets the criteria specified in paragraphs (1)

18 through (5) of subsection (a).’’; and

19 (2) in section 115—

20 (A) in subsection (b), by striking ‘‘the re21 port required by section 113(a)’’ and inserting

22 ‘‘the initial reallocation report required by sec23 tion 113(a)’’; and

24 (B) by adding at the end the following new

25 subsection:
218

•HR 2517 IH

1 ‘‘(c) ALLOCATION AND ASSIGNMENT OF FRE2 QUENCIES IDENTIFIED IN THE SECOND REALLOCATION

3 REPORT.—With respect to the frequencies made available

4 for reallocation pursuant to section 113(b)(3), the Com5 mission shall, not later than 1 year after receipt of the

6 second reallocation report required by such section, pre7 pare, submit to the President and the Congress, and im8 plement, a plan for the allocation and assignment under

9 the 1934 Act of such frequencies. Such plan shall propose

10 the immediate allocation and assignment of all such fre11 quencies in accordance with section 309(j).’’.

12 CHAPTER 2—FEDERAL COMMUNICATIONS

13 COMMISSION AUTHORIZATION

14 SEC. 3011. SHORT TITLE.

15 This chapter may be cited as the ‘‘Federal Commu16 nications Commission Authorization Act of 1995’’.

17 SEC. 3012. EXTENSION OF AUTHORITY.

18 (a) AUTHORIZATION OF APPROPRIATIONS.—Section

19 6 of the Communications Act of 1934 (47 U.S.C. 156)

20 is amended to read as follows:

21 ‘‘SEC. 6. AUTHORIZATION OF APPROPRIATIONS.

22 ‘‘There are authorized to be appropriated for the ad23 ministration of this Act by the Commission $186,000,000

24 for fiscal year 1996, together with such sums as may be

25 necessary for increases resulting from adjustments in sal-
219

•HR 2517 IH

1 ary, pay, retirement, other employee benefits required by

2 law, and other nondiscretionary costs, for fiscal year 1996.

3 Of the sum appropriated in each fiscal year under this

4 section, a portion, in an amount determined under sections

5 8(b) and 9(b), shall be derived from fees authorized by

6 sections 8 and 9.’’.

7 (b) TRAVEL AND REIMBURSEMENT PROGRAM.—Sec8 tion 4(g)(2) of the Communications Act of 1934 (47

9 U.S.C. 154(g)(2)) is amended to read as follows:

10 ‘‘(2) The Commission shall submit to the appropriate

11 committees of Congress, and publish in the Federal Reg12 ister, semiannual reports specifying the reimbursements

13 which the Commission has accepted under section 1353

14 of title 31, United States Code.’’.

15 (c) COMMUNICATIONS SUPPORT FROM OLDER AMER16 ICANS.—Section 6(a) of the Federal Communications

17 Commission Authorization Act of 1988 (47 U.S.C. 154

18 note) is amended by striking ‘‘fiscal years 1992 and 1993’’

19 and inserting ‘‘fiscal year 1996’’.

20 SEC. 3013. APPLICATION FEES.

21 (a) ADJUSTMENT OF APPLICATION FEE SCHED22 ULE.—Section 8(b) of the Communications Act of 1934

23 (47 U.S.C. 158(b)) is amended to read as follows:

24 ‘‘(b)(1) For fiscal year 1996 and each fiscal year

25 thereafter, the Commission shall, by regulation, modify
220

•HR 2517 IH

1 the application fees by proportionate increases or de2 creases so as to result in estimated total collections for

3 the fiscal year equal to—

4 ‘‘(A) $40,000,000; plus

5 ‘‘(B) an additional amount, specified in an ap6 propriation Act for the Commission for that fiscal

7 year to be collected and credited to such appropria8 tion, not to exceed the amount by which the nec9 essary expenses for the costs described in paragraph

10 (5) exceeds $40,000,000.

11 ‘‘(2) In making adjustments pursuant to this para12 graph the Commission may round such fees to the nearest

13 $5.00 in the case of fees under $100, or to the nearest

14 $20 in the case of fees of $100 or more. The Commission

15 shall transmit to the Congress notification of any adjust16 ment made pursuant to this paragraph immediately upon

17 the adoption of such adjustment.

18 ‘‘(3) The Commission is authorized to continue to col19 lect fees at the prior year’s rate until the effective date

20 of fee adjustments or amendments made pursuant to para21 graphs (1) and (4).

22 ‘‘(4) The Commission shall, by regulation, add, de23 lete, or reclassify services, categories, applications, or

24 other filings subject to application fees to reflect additions,

25 deletions, or changes in the nature of its services or au-
221

•HR 2517 IH

1 thorization of service processes as a consequence of Com2 mission rulemaking proceedings or changes in law.

3 ‘‘(5) Any modified fees established under paragraph

4 (4) shall be derived by determining the full-time equivalent

5 number of employees performing application activities, ad6 justed to take into account other expenses that are reason7 ably related to the cost of processing the application or

8 filing, including all executive and legal costs incurred by

9 the Commission in the discharge of these functions, and

10 other factors that the Commission determines are nec11 essary in the public interest. The Commission shall—

12 ‘‘(A) transmit to the Congress notification of

13 any proposed modification made pursuant to this

14 paragraph immediately upon adoption of such pro15 posal; and

16 ‘‘(B) transmit to the Congress notification of

17 any modification made pursuant to this paragraph

18 immediately upon adoption of such modification.

19 ‘‘(6) Increases or decreases in application fees made

20 pursuant to this subsection shall not be subject to judicial

21 review.’’.

22 (b) TREATMENT OF ADDITIONAL COLLECTIONS.—

23 Section 8(e) of such Act is amended to read as follows:

24 ‘‘(e) Of the moneys received from fees authorized

25 under this section—
222

•HR 2517 IH

1 ‘‘(1) $40,000,000 shall be deposited in the gen2 eral fund of the Treasury to reimburse the United

3 States for amounts appropriated for use by the

4 Commission in carrying out its functions under this

5 Act; and

6 ‘‘(2) the remainder shall be deposited as an off7 setting collection in, and credited to, the account

8 providing appropriations to carry out the functions

9 of the Commission.’’.

10 (c) SCHEDULE OF APPLICATION FEES FOR PCS.—

11 The schedule of application fees in section 8(g) of such

12 Act is amended by adding, at the end of the portion under

13 the heading ‘‘COMMON CARRIER SERVICES’’, the following

14 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’’.

15 (d) VANITY CALL SIGNS.—

16 (1) LIFETIME LICENSE FEES.—

17 (A) AMENDMENT.—The schedule of appli18 cation fees in section 8(g) of such Act is further

19 amended by adding, at the end of the portion

20 under the heading ‘‘PRIVATE RADIO SERVICES’’,

21 the following new item:

‘‘11. Amateur vanity call signs ........................................ 150.00’’.
223

•HR 2517 IH

1 (B) TREATMENT OF RECEIPTS.—Moneys

2 received from fees established under the amend3 ment made by this subsection shall be deposited

4 as an offsetting collection in, and credited to,

5 the account providing appropriations to carry

6 out the functions of the Commission.

7 (2) TERMINATION OF ANNUAL REGULATORY

8 FEES.—The schedule of regulatory fees in section

9 9(g) of such Act (47 U.S.C. 159(g)) is amended by

10 striking the following item from the fees applicable

11 to the Private Radio Bureau:

‘‘Amateur vanity call-signs ......................................................... 7’’.

12 SEC. 3014. REGULATORY FEES.

13 (a) EXECUTIVE AND LEGAL COSTS.—Section 9(a)(1)

14 of the Communications Act of 1934 (47 U.S.C. 159(a)(1))

15 is amended by inserting before the period at the end the

16 following: ‘‘, and all executive and legal costs incurred by

17 the Commission in the discharge of these functions’’.

18 (b) ESTABLISHMENT AND ADJUSTMENT.—Section

19 9(b) of such Act is amended—

20 (1) in paragraph (4)(B), by striking ‘‘90 days’’

21 and inserting ‘‘45 days’’; and

22 (2) by adding at the end the following new

23 paragraph:
224

•HR 2517 IH

1 ‘‘(5) EFFECTIVE DATE OF ADJUSTMENTS.—The

2 Commission is authorized to continue to collect fees

3 at the prior year’s rate until the effective date of fee

4 adjustments or amendments made pursuant to para5 graph (2) or (3).’’.

6 (c) REGULATORY FEES FOR SATELLITE TV OPER7 ATIONS.—The schedule of regulatory fees in section 9(g)

8 of such Act is amended, in the fees applicable to the Mass

9 Media Bureau, by inserting after each of the items per10 taining to construction permits in the fees applicable to

11 VHF commercial and UHF commercial TV the following

12 new item:

‘‘Terrestrial television satellite operations ................................................. 500’’.

13 (d) GOVERNMENTAL ENTITIES USE FOR COMMON

14 CARRIER PURPOSES.—Section 9(h) of such Act is amend15 ed by adding at the end the following new sentence: ‘‘The

16 exceptions provided by this subsection for governmental

17 entities shall not be applicable to any services that are pro18 vided on a commercial basis in competition with another

19 carrier.’’.

20 (e) INFORMATION REQUIRED IN CONNECTION WITH

21 ADJUSTMENT OF REGULATORY FEES.—Title I of such

22 Act is amended—

23 (1) in section 9, by striking subsection (i); and
225

•HR 2517 IH

1 (2) by inserting after section 9 the following

2 new section:

3 ‘‘SEC. 10. ACCOUNTING SYSTEM AND ADJUSTMENT INFOR4 MATION.

5 ‘‘(a) ACCOUNTING SYSTEM REQUIRED.—The Com6 mission shall develop accounting systems for the purposes

7 of making the adjustments authorized by sections 8 and

8 9. The Commission shall annually prepare and submit to

9 the Congress an analysis of such systems and shall annu10 ally afford interested persons the opportunity to submit

11 comments concerning the allocation of the costs of per12 forming the functions described in section 8(a)(5) and

13 9(a)(1) in making such adjustments in the schedules re14 quired by sections 8 and 9.

15 ‘‘(b) INFORMATION REQUIRED IN CONNECTION WITH

16 ADJUSTMENT OF APPLICATION AND REGULATORY

17 FEES.—

18 ‘‘(1) SCHEDULE OF REQUESTED AMOUNTS.—

19 No later than May 1 of each calendar year, the

20 Commission shall prepare and transmit to the Com21 mittees of Congress responsible for the Commis22 sion’s authorization and appropriations a detailed

23 schedule of the amounts requested by the Presi24 dent’s budget to be appropriated for the ensuing fis25 cal year for the activities described in sections
226

•HR 2517 IH

1 8(a)(5) and 9(a)(1), allocated by bureaus, divisions,

2 and offices of the Commission.

3 ‘‘(2) EXPLANATORY STATEMENT.—If the Com4 mission anticipates increases in the application fees

5 or regulatory fees applicable to any applicant, li6 censee, or unit subject to payment of fees, the Com7 mission shall submit to the Congress by May 1 of

8 such calendar year a statement explaining the rela9 tionship between any such increases and either (A)

10 increases in the amounts requested to be appro11 priated for Commission activities in connection with

12 such applicants, licensees, or units subject to pay13 ment of fees, or (B) additional activities to be per14 formed with respect to such applicants, licensees, or

15 units.

16 ‘‘(3) DEFINITION.—For purposes of this sub17 section, the term ‘amount requested by the Presi18 dent’s budget’ shall include any adjustments to such

19 requests that are made by May 1 of such calendar

20 year. If any such adjustment is made after May 1,

21 the Commission shall provide such Committees with

22 updated schedules and statements containing the in23 formation required by this subsection within 10 days

24 after the date of any such adjustment.’’.
227

•HR 2517 IH

1 SEC. 3015. INSPECTION OF SHIP RADIO STATIONS.

2 (a) AUTHORITY TO DESIGNATE ENTITIES TO IN3 SPECT.—Section 4(f)(3) of the Communications Act of

4 1934 (47 U.S.C. 154(f)(3)) is amended by inserting before

5 the period at the end the following: ‘‘: And provided fur6 ther, That, in the alternative, an entity designated by the

7 Commission may make the inspections referred to in this

8 paragraph’’.

9 (b) CONDUCT OF INSPECTIONS.—Section 362(b) of

10 such Act (47 U.S.C. 362(b)) is amended to read as

11 follows:

12 ‘‘(b) Every ship of the United States that is subject

13 to this part shall have the equipment and apparatus pre14 scribed therein inspected at least once each year by the

15 Commission or an entity designated by the Commission.

16 If, after such inspection, the Commission is satisfied that

17 all relevant provisions of this Act and the station license

18 have been complied with, the fact shall be certified to on

19 the station license by the Commission. The Commission

20 shall make such additional inspections at frequent inter21 vals as the Commission determines may be necessary to

22 ensure compliance with the requirements of this Act. The

23 Commission may, upon a finding that the public interest

24 could be served thereby—

25 ‘‘(1) waive the annual inspection required under

26 this section for a period of up to 90 days for the sole
228

•HR 2517 IH

1 purpose of enabling a vessel to complete its voyage

2 and proceed to a port in the United States where an

3 inspection can be held; or

4 ‘‘(2) waive the annual inspection required under

5 this section for a vessel that is in compliance with

6 the radio provisions of the Safety Convention and

7 that is operating solely in waters beyond the juris8 diction of the United States, provided that such in9 spection shall be performed within 30 days of such

10 vessel’s return to the United States.’’.

11 (c) INSPECTION BY OTHER ENTITIES.—Section 385

12 of such Act (47 U.S.C. 385) is amended by inserting ‘‘or

13 an entity designated by the Commission’’ after ‘‘The Com14 mission’’.

15 SEC. 3016. EXPEDITED ITFS PROCESSING.

16 Section 5(c)(1) of the Communications Act of 1934

17 (47 U.S.C. 155(c)(1)) is amended by striking the last sen18 tence and inserting the following: ‘‘Except for cases involv19 ing the authorization of service in the Instructional Tele20 vision Fixed Service, or as otherwise provided in this Act,

21 nothing in this paragraph shall authorize the Commission

22 to provide for the conduct, by any person or persons other

23 than persons referred to in paragraph (2) or (3) of section

24 556(b) of title 5, United States Code, of any hearing to

25 which such section applies.’’.
229

•HR 2517 IH

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
230

•HR 2517 IH

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
231

•HR 2517 IH

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
232

•HR 2517 IH

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);
233

•HR 2517 IH

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);
234

•HR 2517 IH

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.
235

•HR 2517 IH

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,
236

•HR 2517 IH

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)).
237

•HR 2517 IH

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-
238

•HR 2517 IH

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
239

•HR 2517 IH

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
240

•HR 2517 IH

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-
241

•HR 2517 IH

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;
242

•HR 2517 IH

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
243

•HR 2517 IH

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
244

•HR 2517 IH

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
245

•HR 2517 IH

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-
246

•HR 2517 IH

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.’’.
247

•HR 2517 IH

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—
248

•HR 2517 IH

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
249

•HR 2517 IH

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

20 United 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.
250

•HR 2517 IH

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
251

•HR 2517 IH

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-
252

•HR 2517 IH

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).
253

•HR 2517 IH

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.
254

•HR 2517 IH

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
255

•HR 2517 IH

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:
256

•HR 2517 IH

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;
257

•HR 2517 IH

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—
258

•HR 2517 IH

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-
259

•HR 2517 IH

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
260

•HR 2517 IH

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).
261

•HR 2517 IH

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—
262

•HR 2517 IH

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-
263

•HR 2517 IH

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:
264

•HR 2517 IH

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) CONFORMING AMENDMENT.—The table of con15 tents for chapter 25 is amended by inserting after the item

16 for section 1502 the following:

‘‘Sec. 1503. Establishment of Private Corporation.

‘‘Sec. 1504. Ownership Limitations.

‘‘Sec. 1505. Exemption from Liability.

‘‘Sec. 1506. Resolution of Certain Issues.’’.

17 (f) Section 193 (42 U.S.C. 2243) is amended by add18 ing at the end the following:

19 ‘‘(f) LIMITATION.—If the privatization of the United

20 States Enrichment Corporation results in the Corporation

21 being—

22 ‘‘(1) owned, controlled, or dominated by a for23 eign corporation or a foreign government, or
265

•HR 2517 IH

1 ‘‘(2) otherwise inimical to the common defense

2 or security of the United States,

3 any license held by the Corporation under sections 53 and

4 63 shall be terminated.’’.

5 (g) PERIOD FOR CONGRESSIONAL REVIEW.—Section

6 1502(d) (42 U.S.C. 2297d–1(d)) is amended by striking

7 ‘‘less than 60 days after notification of the Congress’’ and

8 inserting ‘‘less than 60 days after the date of the report

9 to Congress by the Comptroller General under subsection

10 (c)’’.

11 SEC. 3041. PERIODIC CERTIFICATION OF COMPLIANCE.

12 Section 1701(c)(2) (42 U.S.C. 2297f(c)(2)) is

13 amended by striking ‘‘ANNUAL APPLICATION FOR CER14 TIFICATE OF COMPLIANCE.—The Corporation shall apply

15 at least annually to the Nuclear Regulatory Commission

16 for a certificate of compliance under paragraph (1).’’ and

17 inserting ‘‘PERIODIC APPLICATION FOR CERTIFICATE OF

18 COMPLIANCE.—The Corporation shall apply to the Nu19 clear Regulatory Commission for a certificate of compli20 ance under paragraph (1) periodically, as determined by

21 the Nuclear Regulatory Commission, but not less than

22 every 5 years.’’.
266

•HR 2517 IH

1 SEC. 3042. LICENSING OF OTHER TECHNOLOGIES.

2 Subsection (a) of section 1702 (42 U.S.C. 2297f–

3 1(a)) is amended by striking ‘‘other than’’ and inserting

4 ‘‘including’’.

5 SEC. 3043. CONFORMING AMENDMENTS.

6 (a) REPEALS IN ATOMIC ENERGY ACT OF 1954 AS

7 OF THE PRIVATIZATION DATE.—

8 (1) REPEALS.—As of the privatization date (as

9 defined in section 1201(13) of the Atomic Energy

10 Act of 1954), the following sections (as in effect on

11 such privatization date) of the Atomic Energy Act of

12 1954 are repealed:

13 (A) Section 1202.

14 (B) Sections 1301 through 1304.

15 (C) Sections 1306 through 1316.

16 (D) Sections 1404 and 1405.

17 (E) Section 1601.

18 (F) Sections 1603 through 1607.

19 (2) CONFORMING AMENDMENT.—The table of

20 contents of such Act is amended by repealing the

21 items referring to sections repealed by paragraph

22 (1).

23 (b) STATUTORY MODIFICATIONS.—As of such privat24 ization date, the following shall take effect:

25 (1) For purposes of title I of the Atomic En26 ergy Act of 1954, all references in such Act to the
267

•HR 2517 IH

1 ‘‘United States Enrichment Corporation’’ shall be

2 deemed to be references to the corporation estab3 lished pursuant to section 1503 of the Atomic En4 ergy Act of 1954 (as added by section 3036(a)).

5 (2) Section 1018(1) of the Energy Policy Act of

6 1992 (42 U.S.C. 2296b–7(1)) is amended by strik7 ing ‘‘the United States’’ and all that follows through

8 the period and inserting ‘‘the corporation referred to

9 in section 1201(4) of the Atomic Energy Act of

10 1954.’’.

11 (3) Section 9101(3) of title 31, United States

12 Code, is amended by striking subparagraph (N), as

13 added by section 902(b) of Public Law 102–486.

14 (c) REVISION OF SECTION 1305.—As of such privat15 ization date, section 1305 of the Atomic Energy Act of

16 1954 (42 U.S.C 2297b–4) is amended—

17 (1) by repealing subsections (a), (b), (c), and

18 (d), and

19 (2) in subsection (e)—

20 (A) by striking the subsection designation

21 and heading,

22 (B) by redesignating paragraph (1) (as

23 added by section 3038(a)) as subsection (a),

24 striking ‘‘IN GENERAL.—’’ and inserting ‘‘IN

25 GENERAL.—’’, redesignating subparagraphs (A)
268

•HR 2517 IH

1 through (E) as paragraphs (1) through (5) (re2 designating in such paragraph, clauses (i)

3 through (iii) as subparagraphs (A) through

4 (C)), striking ‘‘clauses (i) through (iii)’’ in

5 paragraph (5) and inserting ‘‘subparagraphs

6 (A) through (C)’’, and by moving the margins

7 2-ems to the left,

8 (C) by striking paragraph (3), and

9 (D) by redesignating paragraph (4) (as

10 amended by section 3038(b)) as subsection (b),

11 and by moving the margins 2-ems to the left.

12 Subtitle D—Waste Isolation Pilot

13 Project

14 SEC. 3045. SHORT TITLE AND REFERENCE.

15 (a) SHORT TITLE.—This subtitle may be cited as the

16 ‘‘Waste Isolation Pilot Plant Land Withdrawal Amend17 ment Act’’.

18 (b) REFERENCE.—Except as otherwise expressly pro19 vided, whenever in this subtitle an amendment or repeal

20 is expressed in terms of an amendment to, or repeal of,

21 a section or other provision, the reference shall be consid22 ered to be made to a section or other provision of the

23 Waste Isolation Pilot Plant Land Withdrawal Act (Public

24 Law 102–579).
269

•HR 2517 IH

1 SEC. 3046. DEFINITIONS.

2 Paragraphs (18) and (19) of section 2 are repealed.

3 SEC. 3047. TEST PHASE AND RETRIEVAL PLANS.

4 Section 5 is repealed.

5 SEC. 3048. TEST PHASE ACTIVITIES.

6 Section 6 is amended—

7 (1) by repealing subsections (a) and (b),

8 (2) by repealing paragraph (1) of subsection

9 (c),

10 (3) by repealing subparagraph (A) of paragraph

11 (2) of subsection (c),

12 (4) by redesignating subsection (c) as sub13 section (a), by striking the subsection heading and

14 the matter before paragraph (1) and inserting

15 ‘‘STUDY.—The following study shall be conducted:’’,

16 by striking ‘‘(2) REMOTE-HANDLED WASTE.—’’, by

17 striking ‘‘(B) STUDY.—’’, and by redesignating

18 clauses (i), (ii), and (iii) as paragraphs (1), (2), and

19 (3), respectively, and moving them 4-ems to the left,

20 and

21 (5) by redesignating subsection (d) as sub22 section (b).

23 SEC. 3049. DISPOSAL OPERATIONS.

24 Section 7(b) is repealed.
270

•HR 2517 IH

1 SEC. 3050. ENVIRONMENTAL PROTECTION AGENCY DIS2 POSAL REGULATIONS.

3 (a) SECTION 8(d)(1).—Section 8(d)(1) is amended by

4 striking subparagraphs (B), (C), and (D) and by adding

5 after subparagraph (A) the following:

6 ‘‘(B) COMMENTS OF ADMINISTRATOR.—

7 Within 2 months of receipt of the application

8 under subparagraph (A), the Administrator

9 shall provide the Secretary with any comments

10 on the Secretary’s application. Within one

11 month of the receipt of such comments, the

12 Secretary shall, to the extent practicable, incor13 porate the Administrator’s comments in the

14 Secretary’s application. The comments of the

15 Administrator provided to the Secretary should

16 also be transmitted to the appropriate commit17 tees of jurisdiction in the House of Representa18 tives and the Senate.’’.

19 (b) SECTION 8(d) (2), (3).—Section 8(d) is amended

20 by striking paragraphs (2) and (3), by striking ‘‘(1) COM21 PLIANCE WITH DISPOSAL REGULATIONS.—’’, and by re22 designating subparagraphs (A) and (B) of paragraph (1),

23 as amended by subsection (a), as paragraphs (1) and (2),

24 respectively, and moving them 2-ems to the left.

25 (c) SECTION 8(f).—Subsection (f) of section 8 is

26 amended—
271

•HR 2517 IH

1 (1) by amending the subsection heading to read

2 ‘‘PERIODIC REVIEW’’, and

3 (2) by amending paragraph (2) to read as fol4 lows:

5 ‘‘(2) REVIEW BY THE ADMINISTRATOR.—The

6 Administrator shall, not later than 6 months after

7 receiving a submission under paragraph (1), com8 ment on whether or not the WIPP facility continues

9 to be in compliance with the final disposition regula10 tions.’’.

11 (d) SECTION 8(g).—Section 8(g) is amended to read

12 as follows:

13 ‘‘(g) ENGINEERED AND NATURAL BARRIERS, ETC.—

14 The Secretary should determine whether or not engineered

15 barriers or natural barriers, or both, will be required at

16 WIPP consistent with regulations published as part 191

17 of 40 C.F.R.’’.

18 SEC. 3051. COMPLIANCE WITH ENVIRONMENTAL LAWS AND

19 REGULATIONS.

20 (a) SECTION 9(a)(1).—Section 9(a)(1) is amended by

21 adding after and below subparagraph (H) the following:

22 ‘‘With respect to transuranic mixed waste designated

23 by the Secretary for disposal at WIPP, such waste

24 is exempt from the land disposal restrictions pub25 lished at part 268 of 40 C.F.R. because compliance
272

•HR 2517 IH

1 with the environmental radiation protection stand2 ards published at part 191 of 40 C.F.R. renders

3 compliance with the land disposal restrictions unnec4 essary to achieve desired environmental protection

5 and a no migration variance is not required for dis6 posal of transuranic mixed waste at WIPP.’’.

7 (b) SECTION 9(b).—Subsection (b) of section 9 is re8 pealed.

9 (c) SECTIONS 9(c), (d).—Subsections (c) and (d) of

10 section 9 are repealed.

11 SEC. 3052. RETRIEVABILITY.

12 Section 10 is amended to read as follows:

13 ‘‘SEC. 10. TRANSURANIC WASTE.

14 ‘‘It is the intent of Congress that a decision will be

15 made by the Secretary with respect to the disposal of

16 transuranic waste no later than March 31, 1997.’’.

17 SEC. 3053. DECOMMISSIONING OF WIPP.

18 Section 13 is amended—

19 (1) by repealing subsection (a), and

20 (2) in subsection (b), by striking ‘‘(b) MANAGE21 MENT PLAN FOR THE WITHDRAWAL AFTER DECOM22 MISSIONING.—Within 5 years after the date of the

23 enactment of this Act, the’’ and inserting ‘‘The’’.
273

•HR 2517 IH

1 SEC. 3054. ECONOMIC ASSISTANCE AND MISCELLANEOUS

2 PAYMENTS.

3 Section 15(a) is amended—

4 (1) by striking ‘‘to the Secretary for payments

5 to the State $20,000,000 for each of the 15 fiscal

6 years beginning with the fiscal year in which the

7 transport of transuranic waste to WIPP is initiated’’

8 and inserting ‘‘to the State $20,000,000 for each of

9 the 15 fiscal years beginning with the date of the en10 actment of the Waste Isolation Pilot Plant Land

11 Withdrawal Amendment Act’’, and

12 (2) by adding at the end the following: ‘‘An ap13 propriation to the State shall be in addition to any

14 appropriation for WIPP.’’.

15 SEC. 3055. NON-DEFENSE WASTE.

16 Section 7(a) is amended by redesignating paragraph

17 (3) as paragraph (4) and by inserting after paragraph (2)

18 the following:

19 ‘‘(3) NONDEFENSE WASTE.—Within the capac20 ity prescribed by paragraph (4), WIPP may receive

21 transuranic waste from the Secretary which did not

22 result from a defense activity.’’.
274

•HR 2517 IH

1 Subtitle E—Strategic Petroleum

2 Reserve

3 SEC. 3071. LEASE OF EXCESS STRATEGIC PETROLEUM RE4 SERVE CAPACITY.

5 (a) AMENDMENT.—Part B of title I of the Energy

6 Policy and Conservation Act (42 U.S.C. 151 et seq.) is

7 amended by adding at the end the following new section:

8 ‘‘USE OF UNDERUTILIZED FACILITIES

9 ‘‘SEC. 168. (a) AUTHORITY.—Notwithstanding any

10 other provision of this title, the Secretary, by lease or oth11 erwise, for any term and under such other conditions as

12 the Secretary considers necessary or appropriate, may

13 store in underutilized Strategic Petroleum Reserve facili14 ties petroleum product owned by a foreign government or

15 its representative.

16 ‘‘(b) CONDITIONS OF WITHDRAWAL.—The lessee or

17 occupier of facilities under subsection (a) may not with18 draw petroleum product from those facilities more fre19 quently than once every 5 years, unless an earlier

20 drawdown is required to comply with the terms of the

21 International Energy Agreement or to respond to a na22 tional energy emergency involving the disruption of more

23 than 5 percent of the lessee’s or occupier’s imports.

24 ‘‘(c) PRIORITY ACCESS.—When a drawdown of the

25 reserve is ordered pursuant to section 161, the United
275

•HR 2517 IH

1 States shall have priority access, over a lessee or occupier

2 of facilities under subsection (a), to distribution facilities,

3 including pipelines and terminals.

4 ‘‘(d) STATUS OF STORED PETROLEUM PRODUCT.—

5 Petroleum product stored under this section is not part

6 of the Reserve, and may be exported from the United

7 States.’’.

8 (b) TABLE OF CONTENTS AMENDMENT.—The table

9 of contents of part B of title I of the Energy Policy and

10 Conservation Act is amended by adding at the end the

11 following new item:

‘‘Sec. 168. Use of underutilized facilities.’’.

12 TITLE IV—COMMITTEE ON ECO13 NOMIC AND EDUCATIONAL

14 OPPORTUNITIES

15 SEC. 4000. TABLE OF CONTENTS.

16 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—Service Contract Repeal
276

•HR 2517 IH

Sec. 4101. 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.

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.’’.
277

•HR 2517 IH

1 (3) TERMINATION OF AUTHORITY TO ENTER

2 NEW AGREEMENTS.—Section 453(a) of such Act (20

3 U.S.C. 1087c(a)) is amended—

4 (A) in paragraph (1), by inserting ‘‘and

5 ending before July 1, 1996’’ after ‘‘academic

6 years beginning on or after July 1, 1994’’;

7 (B) in paragraph (2)—

8 (i) by inserting ‘‘and’’ after the semi9 colon at the end of subparagraph (A);

10 (ii) by striking the semicolon at the

11 end of subparagraph (B) and inserting a

12 period; and

13 (iii) by striking subparagraphs (C)

14 and (D); and

15 (C) by striking paragraph (3) and redesig16 nating paragraph (4) as paragraph (3).

17 (b) ADMINISTRATIVE COST AMENDMENTS.—Section

18 458 of such Act (20 U.S.C. 1087h) of such Act is amend19 ed—

20 (1) by striking subsection (d);

21 (2) by redesignating subsections (b) and (c) as

22 subsections (f) and (g), respectively; and

23 (3) by striking subsection (a) and inserting the

24 following:

25 ‘‘(a) IN GENERAL.—
278

•HR 2517 IH

1 ‘‘(1) DIRECT ADMINISTRATIVE COSTS.—Each

2 fiscal year there shall be available to the Secretary

3 of Education, from funds not otherwise appro4 priated, funds to be obligated for the subsidy costs

5 of direct administrative costs under this part, sub6 ject to subsection (b) of this section.

7 ‘‘(2) INDIRECT ADMINISTRATIVE COSTS.—There

8 shall also be available from funds available from

9 funds not otherwise appropriated, funds to be obli10 gated for indirect administrative costs under this

11 part and part B, subject to subsection (c) of this

12 section, not to exceed (from such funds not other13 wise appropriated) $260,000,000 in fiscal year

14 1994, $345,000,000 in fiscal year 1995,

15 $110,000,000 in fiscal year 1996 (of which

16 $40,000,000 shall be available for administrative

17 cost allowances for guaranty agencies for October

18 through December of 1995), and $70,000,000 in

19 each of the fiscal years 1997 through 2002.

20 ‘‘(3) REDUCTION.—The amount authorized to

21 be made available for fiscal year 1997 under para22 graph (2) shall be reduced by the amount of any un23 obligated unexpended funds available to carry out

24 this subsection for any fiscal year prior to fiscal year

25 1996.
279

•HR 2517 IH

1 ‘‘(b) SUBSIDY COSTS.—For purposes of this section,

2 ‘subsidy cost’ means the estimated long-term cost to the

3 Federal Government of direct administrative expenses cal4 culated on a net present value basis.

5 ‘‘(c) DIRECT ADMINISTRATIVE EXPENSES.—For pur6 poses of this section, ‘direct administrative expenses’ shall

7 consist of the cost of—

8 ‘‘(1) activities related to credit extension, loan

9 origination, loan servicing, management of contrac10 tors, and payments to contractors, other government

11 entities, and program participants;

12 ‘‘(2) collection of delinquent loans; and

13 ‘‘(3) write-off and closeout of loans.

14 ‘‘(d) INDIRECT ADMINISTRATIVE EXPENSES.—For

15 purposes of this section, ‘indirect administrative expenses’

16 shall consist of the cost of—

17 ‘‘(1) personnel engaged in developing program

18 regulations, policy, and administrative guidelines;

19 ‘‘(2) audits of institutions and contractors;

20 ‘‘(3) program reviews; and

21 ‘‘(4) other oversight of the program.

22 ‘‘(e) LIMITATION ON PART D EXPENDITURES.—For

23 any fiscal year, expenditures for indirect administrative

24 expenses and for loan servicing for loans made pursuant
280

•HR 2517 IH

1 to this part shall not exceed 30 percent of funds available

2 pursuant to paragraph (2) for such fiscal year.’’.

3 (c) ELIMINATION OF TRANSITION TO DIRECT

4 LOANS.—Such Act is further amended—

5 (1) in section 422(c)(7) (20 U.S.C.

6 1072(c)(7))—

7 (A) by striking ‘‘during the transition’’ and

8 all that follows through ‘‘part D of this title’’

9 in subparagraph (A); and

10 (B) by striking ‘‘section 428(c)(10)(F)(v)’’

11 in subparagraph (B) and inserting ‘‘section

12 428(c)(9)(F)(v)’’;

13 (2) in section 428(c)(8) (20 U.S.C. 1078(c)(8)),

14 by striking subparagraph (B) and inserting the fol15 lowing:

16 ‘‘(B) Prior to making such determination for

17 any guaranty agency, the Secretary shall, in con18 sultation with the guaranty agency, develop criteria

19 to determine whether such guaranty agency has

20 made adequate collection efforts. In determining

21 whether a guaranty agency’s collection efforts have

22 met such criteria, the Secretary shall consider the

23 agency’s record of success in collecting on defaulted

24 loans, the age of the loans, and the amount of recent

25 payments received on the loans.’’;
281

•HR 2517 IH

1 (3) in section 428(c)(9)(E)—

2 (A) by inserting ‘‘or’’ after the semicolon

3 at the end of clause (iv);

4 (B) by striking ‘‘; or’’ at the end of clause

5 (v) and inserting a period; and

6 (C) by striking clause (vi);

7 (4) in clause (vii) of section 428(c)(9)(F)—

8 (A) by inserting ‘‘and’’ before ‘‘to avoid

9 disruption’’; and

10 (B) by striking ‘‘, and to ensure an orderly

11 transition’’ and all that follows through the end

12 of such clause and inserting a period;

13 (5) in section 428(c)(9)(K), by striking ‘‘the

14 progress of the transition from the loan programs

15 under this part to’’ and inserting ‘‘the integrity and

16 administration of’’;

17 (6) in section 428(e)(1)(B)(ii), by striking

18 ‘‘during the transition’’ and all that follows through

19 ‘‘part D of this title’’;

20 (7) in section 428(e)(3), by striking ‘‘of transi21 tion’’;

22 (8) in section 428(j)(3)—

23 (A) by striking ‘‘DURING TRANSITION TO

24 DIRECT LENDING’’; and
282

•HR 2517 IH

1 (B) by striking ‘‘during the transition’’

2 and all that follows through ‘‘part D of this

3 title,’’ in subparagraph (A) and inserting a

4 comma;

5 (9) in section 453(c)(2) (20 U.S.C.

6 1087c(c)(2)), by striking ‘‘TRANSITION’’ and insert7 ing ‘‘INSTITUTIONAL’’;

8 (10) in section 453(c), by striking paragraph

9 (3); and

10 (11) in section 456(b) (20 U.S.C. 1087f(b))—

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

12 at the end of paragraph (3);

13 (B) by striking paragraph (4);

14 (C) by redesignating paragraph (5) as

15 paragraph (4); and

16 (D) in such paragraph (4) (as redesig17 nated), by striking ‘‘successful operation’’ and

18 inserting ‘‘integrity and efficiency’’.

19 (d) ADDITIONAL CONFORMING AMENDMENTS.—

20 (1) ABILITY OF PART D BORROWERS TO OBTAIN

21 FEDERAL STAFFORD CONSOLIDATION LOANS.—Sec22 tion 428C(a)(4) of such Act (20 U.S.C. 1078–

23 3(a)(4)) is amended—

24 (A) by redesignating subparagraphs (C)

25 and (D) as subparagraphs (D) and (E); and
283

•HR 2517 IH

1 (B) by inserting after subparagraph (B)

2 the following new subparagraph:

3 ‘‘(C) made under part D of this title;’’.

4 (2) CONFORMING AMENDMENTS.—Section

5 428C(b) of such Act (20 U.S.C. 1078–3(b)) is

6 amended by striking paragraph (5).

7 SEC. 4003. ELIMINATION OF GRACE PERIOD INTEREST SUB8 SIDIES.

9 Section 428(a)(3) of the Higher Education Act of

10 1965 (20 U.S.C. 1078(a)(3)) is amended by adding at the

11 end the following new subparagraph:

12 ‘‘(C) Notwithstanding subparagraph (A), no

13 portion of the interest which accrues after the stu14 dent ceases to carry at an eligible institution at least

15 one-half the normal full-time academic workload (as

16 determined by the institution) and prior to the be17 ginning of the repayment period of the loan shall be

18 paid by the Secretary under this subsection on any

19 loan made on or after January 1, 1996. Interest on

20 the unpaid principal amount of any such loan during

21 the interval described in the preceding sentence

22 shall, at the option of the borrower—

23 ‘‘(i) be paid monthly or quarterly, or
284

•HR 2517 IH

1 ‘‘(ii) be added by the lender to the prin2 cipal amount of the loan at the commencement

3 of the repayment period.’’.

4 SEC. 4004. PLUS PROGRAM REDUCTIONS.

5 (a) LOAN LIMITS.—Section 428B(b) of the Higher

6 Education Act of 1965 (20 U.S.C. 1078-2(b)) is amend7 ed—

8 (1) by striking ‘‘(b) LIMITATION BASED ON

9 NEED.—’’ and inserting the following:

10 ‘‘(b) ANNUAL LIMITS.—

11 ‘‘(1) LIMITATION BASED ON NEED.—’’;

12 (2) by inserting before the last sentence thereof

13 the following:

14 ‘‘(3) LIMITATION COMPUTED ON BASIS OF AC15 TUAL PAYMENTS.—’’; and

16 (3) by inserting before paragraph (3) (as des17 ignated by the amendment made by paragraph (2)

18 of this subsection) the following new paragraph:

19 ‘‘(2) DOLLAR LIMITATION.—Subject to para20 graph (1), the maximum amount parents may bor21 row for one student in any academic year or its

22 equivalent (as defined by regulations of the Sec23 retary) is $15,000.’’.
285

•HR 2517 IH

1 (b) INTEREST REBATE.—Section 428B of such Act

2 is further amended by adding at the end the following new

3 subsection:

4 ‘‘(f) INTEREST REBATE.—

5 ‘‘(1) REBATE REQUIRED.—Each holder of a

6 loan under this section made on or after the date of

7 enactment of this subsection, shall pay, on June 30

8 and December 31 of each year, to the Secretary a

9 rebate of subsidies in an amount equal to 0.8 per10 cent of the outstanding principal balance of loans

11 held on such date. Payment of such rebate shall be

12 made not later than 60 days after each such date.

13 ‘‘(2) DEPOSIT OF REBATES.—The Secretary

14 shall deposit all fees collected pursuant to paragraph

15 (1) into the insurance fund established in section

16 431.’’.

17 (c) PLUS LOANS INTEREST RATES.—Section

18 427A(c)(4) of such Act (20 U.S.C. 1077a(c)(4)) is amend19 ed by adding at the end the following new subparagraph:

20 ‘‘(F) Notwithstanding subparagraphs (A), (D),

21 and (E), for any loan made pursuant to section

22 428B for which the first disbursement is made on or

23 after January 1, 1996—

24 ‘‘(i) subparagraph (B) shall be applied by

25 substituting ‘4.0’ for ‘3.25’; and
286

•HR 2517 IH

1 ‘‘(ii) the interest rate shall not exceed 11

2 percent.’’.

3 (d) CONFORMING AMENDMENT.—Section 427A(h) of

4 such Act (20 U.S.C. 1077a(h)) is amended—

5 (1) by striking paragraph (2); and

6 (2) by redesignating paragraph (3) as para7 graph (2).

8 SEC. 4005. LOAN TRANSFER FEE.

9 Section 428(b)(2) of the Higher Education Act of

10 1965 (20 U.S.C. 1078(b)(2)) is amended—

11 (1) by striking ‘‘and’’ at the end of subpara12 graph (E);

13 (2) by striking the period at the end of sub14 paragraph (F) and inserting ‘‘; and’’; and

15 (3) by adding at the end thereof the following

16 new subparagraph:

17 ‘‘(G) provide that, if a lender or holder, on

18 or after January 1, 1996, sells, transfers, or as19 signs a loan under this part, then the transferee

20 shall pay to the Secretary a transfer fee in an

21 amount equal to 0.20 percent of the principal

22 of the loan, which transfer fee shall be depos23 ited into the insurance fund established in sec24 tion 431, except that the provisions of this sub25 paragraph shall not apply to any such sale,
287

•HR 2517 IH

1 transfer, or assignment by a lender or holder to

2 such lender’s or holder’s affiliate or pursuant to

3 a merger or other consolidation transaction.’’.

4 SEC. 4006. LENDER FEES TO GUARANTY AGENCIES.

5 Subsection (f) of section 428 of the Higher Education

6 Act of 1965 (20 U.S.C. 1078(f)) is amended to read as

7 follows:

8 ‘‘(f) PAYMENTS OF CERTAIN COSTS.—

9 ‘‘(1) PAYMENTS FROM LENDERS.—With respect

10 to any loan under this part for which the first dis11 bursement is made on or after January 1, 1996, the

12 originating lender shall remit to the guaranty agency

13 which guarantees the loan, a fee equal to 0.70 per14 cent of the principal amount of the loan.

15 ‘‘(2) USE OF PAYMENTS.—Payments made pur16 suant to paragraph (1) shall be used for the pur17 poses of—

18 ‘‘(A) the administrative costs of collections

19 of loans;

20 ‘‘(B) the administrative costs of preclaim

21 assistance and other predefault activities;

22 ‘‘(C) the administrative costs of monitoring

23 the enrollment and repayment status of stu24 dents; and
288

•HR 2517 IH

1 ‘‘(D) other such costs related to the stu2 dent loan insurance program.

3 ‘‘(3) TIMING OF PAYMENTS.—Payments made

4 pursuant to paragraph (1) shall be made at the time

5 insurance premiums on such loans are paid to the

6 guaranty agency.

7 ‘‘(4) PROHIBITION ON PASS-THROUGH.—No

8 part of any payments required by this section shall

9 be assessed or collected, directly or indirectly, from

10 any borrower under this part.’’.

11 SEC. 4007. ADDITIONAL LOAN PROGRAM CHANGES.

12 (a) RESERVE FUNDS.—

13 (1) AMENDMENTS TO SECTION 422.—Section

14 422 of the Higher Education Act of 1965 (20

15 U.S.C. 1072) is amended—

16 (A) in the last sentence of subsection

17 (a)(2), by striking ‘‘Except as provided in sec18 tion 428(c)(10)(E) or (F), such unencumbered’’

19 and inserting ‘‘Such’’;

20 (B) in subsection (g)(1), by striking ‘‘or

21 the program authorized by part D of this title’’

22 each place it appears;

23 (C) in subsection (g)(1)(D), by striking

24 ‘‘(A) or (B)’’ and inserting ‘‘(A), (B), or (C)’’;

25 and
289

•HR 2517 IH

1 (D) in subsection (g), by striking para2 graph (4) and inserting the following:

3 ‘‘(4) DISPOSITION OF FUNDS RETURNED TO OR

4 RECOVERED BY THE SECRETARY.—Any funds that

5 are returned to or otherwise recovered by the Sec6 retary pursuant to this subsection shall be returned

7 to the Treasury of the United States for purposes of

8 reducing the Federal debt and shall be deposited

9 into the special account under section 3113(d) of

10 title 31, United States Code.’’.

11 (2) AMENDMENTS TO SECTION 428.—Section

12 428(c)(9)(A) of such Act (20 U.S.C. 1078(c)(9)(A))

13 is amended—

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

15 at the end of clause (i);

16 (B) by striking ‘‘; and’’ at the end of

17 clause (ii) and inserting a period; and

18 (C) by striking clause (iii).

19 (b) APPLICATION FOR PART B LOANS USING FREE

20 FEDERAL APPLICATION.—

21 (1) SINGLE FORM REQUIRED.—Section 483(a)

22 of such Act (20 U.S.C. 1090(a)) is amended—

23 (A) in paragraph (1)—

24 (i) by inserting ‘‘B,’’ after ‘‘assistance

25 under parts A,’’;
290

•HR 2517 IH

1 (ii) by striking ‘‘and to determine the

2 need of a student for the purpose of part

3 B of this title’’; and

4 (iii) by striking the last sentence and

5 inserting the following: ‘‘Such form may be

6 in an electronic or any other format (sub7 ject to section 485B) in order to facilitate

8 use by borrowers and institutions.’’; and

9 (B) in paragraph (3), by striking ‘‘and

10 States shall receive,’’ and inserting ‘‘, any guar11 anty agency authorized by any such institution,

12 and States shall receive, at their request and’’.

13 (2) USE OF ELECTRONIC FORMS.—Section

14 483(a) of such Act is further amended by adding the

15 following new paragraph after paragraph (4):

16 ‘‘(5) ELECTRONIC FORMS.—(A) The Secretary,

17 in cooperation with representatives of institutions of

18 higher education, eligible lenders, and guaranty

19 agencies, shall prescribe an electronic version of the

20 form described in subsection (a)(1). Such electronic

21 form shall not require signatures to be collected at

22 the time such form is submitted if the data con23 tained in the electronic form is certified in one or

24 more separate writings. The Secretary shall pre-
291

•HR 2517 IH

1 scribe the initial electronic form not later than 90

2 days after the date of enactment of this paragraph.

3 ‘‘(B) Nothing in this Act shall preclude the use

4 of the electronic form prescribed under subpara5 graph (A) through software developed, produced,

6 distributed (including by diskette, modem or net7 work communication, or otherwise) or collected by

8 eligible lenders, guaranty agencies, eligible institu9 tions, or consortia thereof. Such organization or con10 sortium shall submit such electronic form to the Sec11 retary for review prior to its use. If such electronic

12 form is inconsistent with the provisions of this part,

13 the Secretary shall notify the submitting organiza14 tion or consortium of his objection within 30 days

15 of such submission, and shall specifically identify the

16 necessary changes. In the absence of such an objec17 tion the organization or consortium may use the

18 electronic form as submitted. No fee may be charged

19 in connection with use of the electronic form, or of

20 any other electronic forms used in conjunction with

21 such form in applying for Federal or State student

22 financial assistance.’’.

23 (c) AMENDMENTS TO ELIGIBLE LENDER DEFINI24 TION.—Section 435(d)(1) of such Act (20 U.S.C. 1085)

25 is amended—
292

•HR 2517 IH

1 (1) by inserting before the semicolon at the end

2 of subparagraph (A) the following: ‘‘; and in deter3 mining whether the making or holding of loans to

4 students and parents under this part is the primary

5 consumer credit function of the eligible lender, loans

6 made or held as trustee or in a trust capacity for

7 the benefit of a third party shall not be considered’’;

8 (2) by striking ‘‘and’’ at the end of subpara9 graph (I);

10 (3) in subparagraph (J), by striking the period

11 and inserting ‘‘; and’’; and

12 (4) by adding at the end the following new sub13 paragraph:

14 ‘‘(K) a wholly owned subsidiary of a pub15 licly-held holding company which, as of the date

16 of enactment of this subparagraph, through one

17 or more subsidiaries (i) acts as a finance com18 pany, and (ii) participates in the program au19 thorized by this part pursuant to subparagraph

20 (C).’’.

21 (d) ADDITIONAL AMENDMENTS TO SECTION 428.—

22 (1) AMENDMENTS.—Section 428 of such Act is

23 further amended—

24 (A) in subsection (b)(1)(G), by striking

25 ‘‘98 percent’’ and inserting ‘‘95 percent’’;
293

•HR 2517 IH

1 (B) in subsection (b)(1)(X), by striking

2 ‘‘section 428(c)(10)’’ and inserting ‘‘section

3 428(c)(9)’’;

4 (C) in subsection (c)(1)(A), by striking

5 ‘‘98 percent’’ and inserting ‘‘96 percent’’;

6 (D) in subsection (c)(1)(B)(i), by striking

7 ‘‘88 percent’’ and inserting ‘‘86 percent’’;

8 (E) in subsection (c)(1)(B)(ii), by striking

9 ‘‘78 percent’’ and inserting ‘‘76 percent’’;

10 (F) in subsection (c)(9)(C)(ii), by striking

11 ‘‘80 percent’’ and inserting ‘‘76 percent’’;

12 (G) in subsection (c)(9)(I) by inserting ‘‘on

13 the record’’ after ‘‘for a hearing’’;

14 (H) in subsection (j)(2)(A), by striking

15 ‘‘60’’ and inserting ‘‘15’’;

16 (I) in subsection (j)(2)(B), by striking

17 ‘‘two rejections’’ and inserting ‘‘one rejection’’;

18 and

19 (J) in subsection (l)—

20 (i) by striking paragraph (2); and

21 (ii) by striking ‘‘(1) ASSISTANCE RE22 QUIRED.—’’.

23 (2) EFFECTIVE DATE.—The amendments made

24 by subparagraphs (A) and (C) through (F) of para25 graph (1) of this subsection shall apply to loans on
294

•HR 2517 IH

1 which the first disbursement of principal is made on

2 or after January 1, 1996.

3 (e) REINSURANCE PERCENTAGE UNDER SECTION

4 428I.—Section 428I of such Act (20 U.S.C. 1078–9) is

5 amended in subsection (b)(1)—

6 (1) by striking ‘‘100 PERCENT’’ in the heading

7 and inserting ‘‘95 PERCENT’’; and

8 (2) by striking ‘‘100 percent’’ and inserting ‘‘95

9 percent’’.

10 (f) LOAN FEES FROM LENDERS.—Section 438(d)(2)

11 of such Act (20 U.S.C. 1087–1(d)(2)) is amended to read

12 as follows:

13 ‘‘(2) AMOUNT OF LOAN FEES.—The amount of

14 the loan fee which shall be deducted under para15 graph (1) shall be—

16 ‘‘(A) 0.50 percent of the principal amount

17 of the loan, for any loan under this part for

18 which the first disbursement was made on or

19 after October 1, 1993, and before January 1,

20 1996; or

21 ‘‘(B) 0.30 percent of the principal amount

22 of the loan, for any loan under this part for

23 which the first disbursement was made on or

24 after January 1, 1996.’’.
295

•HR 2517 IH

1 (g) SMALL LENDER AUDIT EXEMPTION.—Section

2 428(b)(1)(U)(iii) of such Act (20 U.S.C.

3 1078(b)(1)(U)(iii)) is amended—

4 (1) by inserting ‘‘in the case of any lender that

5 originates or holds more than $5,000,000 in prin6 cipal on loans made under this title in any fiscal

7 year,’’ before ‘‘for (I)’’;

8 (2) by inserting ‘‘such’’ before ‘‘lender at least

9 once’’;

10 (3) by inserting ‘‘such’’ before ‘‘a lender that is

11 audited’’; and

12 (4) by striking ‘‘if the lender’’ and inserting ‘‘if

13 such lender’’.

14 SEC. 4008. USE OF RESERVE FUNDS TO PURCHASE DE15 FAULTED LOANS.

16 Section 422 of the Higher Education Act of 1965 (20

17 U.S.C. 1072) is amended by adding at the end the follow18 ing new subsection:

19 ‘‘(h) USE OF RESERVE FUNDS TO PURCHASE DE20 FAULTED LOANS.—

21 ‘‘(1) IN GENERAL.—Except as provided in para22 graph (2), a guaranty agency shall use not less than

23 50 percent of such agency’s reserve funds to pur24 chase and hold defaulted loans that are guaranteed

25 by such agency and for which a claim for insurance
296

•HR 2517 IH

1 is filed with such agency by an eligible lender after

2 the date of enactment of this subsection. The

3 amount of such purchases shall be considered as re4 serve funds under this section and used in the cal5 culation of the minimum reserve level under section

6 428(c)(9).

7 ‘‘(2) SPECIAL RULE.—A guaranty agency shall

8 not be required to use its reserve funds to purchase

9 and hold defaulted loans in accordance with para10 graph (1) to the extent that—

11 ‘‘(A) the dollar volume of insurance claims

12 filed with such agency does not amount to 50

13 percent of such agency’s available reserve

14 funds; or

15 ‘‘(B) such use is prohibited by State law;

16 or

17 ‘‘(C) such use will compromise the ability

18 of the guaranty agency to pay program ex19 penses.’’.

20 SEC. 4009. EXTENSION OF PERIOD A GUARANTY AGENCY

21 MUST HOLD A DEFAULTED LOAN.

22 (a) EXEMPTION FOR EXTENDED HOLDING PE23 RIOD.—The last sentence of section 428(c)(1)(A) of the

24 Higher Education Act of 1965 (20 U.S.C. 1078(c)(1)(A))

25 is amended by striking out ‘‘A guaranty agency’’ and in-
297

•HR 2517 IH

1 serting ‘‘Except as provided in section 428K, a guaranty

2 agency’’.

3 (b) NEW EXTENDED HOLDING PERIOD PROGRAM.—

4 Part B of title IV of such Act (20 U.S.C. 1071 et seq.)

5 is amended by inserting after section 428J the following

6 new section:

7 ‘‘SEC. 428K. GUARANTOR PURCHASE OF CLAIMS WITH RE8 SERVE FUNDS.

9 ‘‘(a) LOANS SUBJECT TO EXTENDED HOLDING PE10 RIOD.—Except as provided in subsection (b), a guaranty

11 agency shall file a claim for reimbursement with respect

12 to losses (resulting from the default of a student borrower)

13 subject to reimbursement by the Secretary pursuant to

14 section 428(c)(1) not less than 180 days nor more than

15 225 days after the guaranty agency discharges such agen16 cy’s insurance obligation on a loan insured under this

17 part. Such claim shall include losses on the unpaid prin18 cipal and accrued interest of any such loan, including in19 terest accrued from the date of such discharge to the date

20 such agency files the claim for reimbursement from the

21 Secretary.

22 ‘‘(b) LOANS EXCLUDED FROM EXTENDED HOLD23 ING.—A guaranty agency may file a claim with respect

24 to losses subject to reimbursement by the Secretary pursu25 ant to section 428(c)(1) prior to 180 days after the date
298

•HR 2517 IH

1 the guaranty agency discharges such agency’s insurance

2 obligation on a loan insured under this part, if—

3 ‘‘(1) such agency used 50 percent or more of

4 such agency’s reserve funds to purchase or hold

5 loans in accordance with section 422(h);

6 ‘‘(2) such claim is based on an inability to lo7 cate the borrower and the guaranty agency certifies

8 to the Secretary that—

9 ‘‘(A) diligent attempts were made to locate

10 the borrower through the use of reasonable

11 skip-tracing techniques in accordance with sec12 tion 428(c)(2)(G); and

13 ‘‘(B) such skip-tracing attempts to locate

14 the borrower were unsuccessful; or

15 ‘‘(3) the guaranty agency determines that the

16 borrower is unlikely to possess the financial re17 sources to begin repaying the loan prior to 180 days

18 after default by the borrower.

19 ‘‘(c) GUARANTY AGENCY EFFORTS DURING EX20 TENDED HOLDING PERIOD.—A guaranty agency shall at21 tempt to bring a loan described in subsection (a) into re22 payment status prior to 180 days after the date the guar23 anty agency discharges its insurance obligation on the

24 loan, so that no claim for reimbursement by the Secretary

25 is necessary. Upon securing payment satisfactory to the
299

•HR 2517 IH

1 guaranty agency during the 180-day period, such agency

2 shall, if practicable, sell such loan to an eligible lender.

3 Such loan shall not be sold to an eligible lender that the

4 guaranty agency determines has substantially failed to ex5 ercise the due diligence required of lenders under this

6 part.

7 ‘‘(d) REGULATION PROHIBITED.—The Secretary

8 shall not regulate the collection activities of a guaranty

9 agency with respect to a loan described in subsection (a)

10 for which reinsurance has not been paid under section

11 428(c)(1).’’.

12 SEC. 4010. PRIVATIZATION OF COLLEGE CONSTRUCTION

13 LOAN INSURANCE ASSOCIATION.

14 (a) REPEAL OF STATUTORY RESTRICTIONS.—Part D

15 of title VII of the Higher Education Act of 1965 (20

16 U.S.C. 1132f et seq.) is repealed.

17 (b) STATUS OF THE CORPORATION.—

18 (1) STATUS OF THE CORPORATION.—The Cor19 poration shall not be an agency, instrumentality, or

20 establishment of the United States Government and

21 shall not be a ‘‘Government corporation’’ nor a

22 ‘‘Government controlled corporation’’ as defined in

23 section 103 of title 5, United States Code. No action

24 under section 1491 of title 28, United States Code

25 (commonly known as the Tucker Act), shall be al-
300

•HR 2517 IH

1 lowable against the United States based on the ac2 tions of the Corporation.

3 (2) CORPORATE POWERS.—The Corporation

4 shall have the power to engage in any business or

5 other activities for which corporations may be orga6 nized under the laws of any State of the United

7 States or the District of Columbia. The Corporation

8 shall have the power to enter into contracts, to exe9 cute instruments, to incur liabilities, to provide prod10 ucts and services, and to do all things as are nec11 essary or incidental to the proper management of its

12 affairs and the efficient operation of a private, for13 profit business.

14 (3) LIMITATION ON OWNERSHIP OF STOCK.—

15 Except as provided in subsection (d)(2) of this sec16 tion, no stock of the Corporation may be sold or is17 sued to an agency, instrumentality, or establishment

18 of the United States Government, to a Government

19 corporation or a Government controlled corporation

20 (as such terms are defined in section 103 of title 5,

21 United States Code), or to a Government sponsored

22 enterprise (as such term is defined in section 622 of

23 title 2, United States Code). The Student Loan

24 Marketing Association shall not own any stock of

25 the Corporation, except that it may retain the stock
301

•HR 2517 IH

1 it owns on the date of enactment. The Student Loan

2 Marketing Association shall not control the oper3 ation of the Corporation, except that the Student

4 Loan Marketing Association may participate in the

5 election of directors as a shareholder, and may con6 tinue to exercise its right to appoint directors under

7 section 754 of the Higher Education Act of 1965 as

8 long as that section is in effect. The Student Loan

9 Marketing Association shall not provide financial

10 support or guarantees to the Corporation. Notwith11 standing the prohibitions in this subsection, the

12 United States may pursue any remedy against a

13 holder of the Corporation’s stock to which it would

14 otherwise be entitled.

15 (c) RELATED PRIVATIZATION REQUIREMENTS.—

16 (1) NOTICE REQUIREMENTS.—During the 5-

17 year period following the date of the enactment of

18 this Act, the Corporation shall include in any docu19 ment offering the Corporation’s securities, in any

20 contracts for insurance, guarantee, or reinsurance of

21 obligations, and in any advertisement or promotional

22 material, a statement that—

23 (A) the Corporation is not a Government24 sponsored enterprise or instrumentality of the

25 United States; and
302

•HR 2517 IH

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-
303

•HR 2517 IH

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.—
304

•HR 2517 IH

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
305

•HR 2517 IH

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-
306

•HR 2517 IH

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.’’.
307

•HR 2517 IH

1 Subtitle B—Service Contract

2 Repeal

3 SEC. 4101. SERVICE CONTRACT ACT OF 1965.

4 (a) REPEAL.—The Service Contract Act of 1965 (41

5 U.S.C. 351 et seq.) is repealed.

6 (b) APPLICATION.—The amendment made by sub7 section (a) shall not apply to a contract which was entered

8 into before the 45th day after the date of the enactment

9 of this Act and to which the Service Contract Act of 1965

10 applied.

11 Subtitle C—Provisions Relating to

12 the Employee Retirement In13 come Security Act of 1974

14 SEC. 4201. WAIVER OF MINIMUM PERIOD FOR JOINT AND

15 SURVIVOR ANNUITY EXPLANATION BEFORE

16 ANNUITY STARTING DATE.

17 (a) GENERAL RULE.—For purposes of section

18 205(c)(3)(A) of the Employee Retirement Income Security

19 Act of 1974 (29 U.S.C. 1055(c)(3)(A)), the minimum pe20 riod prescribed by the Secretary of the Treasury between

21 the date that the explanation referred to in such section

22 is provided and the annuity starting date shall not apply

23 if waived by the participant and, if applicable, the partici24 pant’s spouse.
308

•HR 2517 IH

1 (b) EFFECTIVE DATE.—Subsection (a) shall apply to

2 plan years beginning after December 31, 1995.

3 TITLE V—COMMITTEE ON GOV4 ERNMENT REFORM AND

5 OVERSIGHT

6 SEC. 5001. EXTENSION OF DELAY IN COST-OF-LIVING AD7 JUSTMENTS IN FEDERAL EMPLOYEE RETIRE8 MENT BENEFITS THROUGH FISCAL YEAR

9 2002.

10 Section 11001(a) of the Omnibus Budget Reconcili11 ation Act of 1993 (Public Law 103–66; 107 Stat. 408)

12 is amended in the matter preceding paragraph (1) by

13 striking out ‘‘or 1996,’’ and inserting in lieu thereof

14 ‘‘1996, 1997, 1998, 1999, 2000, 2001, or 2002,’’.

15 SEC. 5002. INCREASED CONTRIBUTIONS TO FEDERAL CI16 VILIAN RETIREMENT SYSTEMS.

17 (a) CIVIL SERVICE RETIREMENT SYSTEM.—

18 (1) DEDUCTIONS.—The first sentence of section

19 8334(a)(1) of title 5, United States Code, is amend20 ed to read as follows: ‘‘The employing agency shall

21 deduct and withhold from the basic pay of an em22 ployee, Member, Congressional employee, law en23 forcement officer, firefighter, bankruptcy judge,

24 judge of the United States Court of Appeals for the

25 Armed Forces, United States magistrate, Claims
309

•HR 2517 IH

1 Court judge, or member of the Capitol Police, as the

2 case may be, the percentage of basic pay applicable

3 under subsection (c).’’.

4 (2) AGENCY CONTRIBUTIONS.—

5 (A) INCREASE IN AGENCY CONTRIBUTIONS

6 DURING CALENDAR YEARS 1996 THROUGH

7 2002.—Section 8334(a)(1) of title 5, United

8 States Code (as amended by this section) is fur9 ther amended—

10 (i) by inserting ‘‘(A)’’ after ‘‘(1)’’; and

11 (ii) by adding at the end thereof the

12 following new subparagraph:

13 ‘‘(B)(i) Notwithstanding subparagraph

14 (A), the agency contribution under the second

15 sentence of such subparagraph, during the pe16 riod beginning on January 1, 1996, through

17 December 31, 2002—

18 ‘‘(I) for each employing agency (other

19 than the United States Postal Service)

20 shall be 8.5 percent of the basic pay of an

21 employee, Congressional employee, and a

22 Member of Congress, 9 percent of the

23 basic pay of a law enforcement officer, a

24 member of the Capitol Police, and a fire25 fighter, and 9.5 percent of the basic pay of
310

•HR 2517 IH

1 a Claims Court judge, a United States

2 magistrate, a judge of the United States

3 Court of Appeals for the Armed Services,

4 and a bankruptcy judge, as the case may

5 be; and

6 ‘‘(II) for the United States Postal

7 Service shall be 7 percent of the basic pay

8 of an employee and 9 percent of the basic

9 pay of a law enforcement officer.’’.

10 (B) NO REDUCTION IN AGENCY CONTRIBU11 TIONS BY THE POSTAL SERVICE.—Agency con12 tributions by the United States Postal Service

13 under section 8348(h) of title 5, United States

14 Code—

15 (i) shall not be reduced as a result of

16 the amendments made under paragraph

17 (3) of this subsection; and

18 (ii) shall be computed as though such

19 amendments had not been enacted.

20 (3) INDIVIDUAL DEDUCTIONS, WITHHOLDINGS,

21 AND DEPOSITS.—The table under section 8334(c) of

22 title 5, United States Code, is amended—

23 (A) in the matter relating to an employee

24 by striking out

‘‘7 ........ After December 31,

1969.’’
311

•HR 2517 IH

1 and inserting in lieu thereof the following:

‘‘7 ........ January 1, 1970, to December 31, 1995.

7.25 ... January 1, 1996, to December 31, 1996.

7.4 ..... January 1, 1997, to December 31, 1997.

7.5 ..... January 1, 1998, to December 31, 2002.

7 ........ After December 31,

2002.’’;

2 (B) in the matter relating to a Member or

3 employee for Congressional employee service by

4 striking out

‘‘71⁄2 .... After December 31,

1969.’’

5 and inserting in lieu thereof the following:

‘‘7.5 ..... January 1, 1970, to December 31, 1995.

7.25 ... January 1, 1996, to December 31, 1996.

7.4 ..... January 1, 1997, to December 31, 1997.

7.5 ..... January 1, 1998, to December 31, 2002.

7 ........ After December 31,

2002.’’;

6 (C) in the matter relating to a Member for

7 Member service by striking out

‘‘8 ........ After December 31,

1969.’’

8 and inserting in lieu thereof the following:

‘‘8 ........ January 1, 1970, to December 31, 1995.

7.25 ... January 1, 1996, to December 31, 1996.
312

•HR 2517 IH

7.4 ..... January 1, 1997, to December 31, 1997.

7.5 ..... January 1, 1998, to December 31, 2002.

7 ........ After December 31,

2002.’’;

1 (D) in the matter relating to a law enforce2 ment officer for law enforcement service and

3 firefighter for firefighter service by striking out

‘‘71⁄2 .... After December 31,

1974.’’

4 and inserting in lieu thereof the following:

‘‘7.5 ..... January 1, 1975, to December 31, 1995.

7.75 ... January 1, 1996, to December 31, 1996.

7.9 ..... January 1, 1997, to December 31, 1997.

8 ........ January 1, 1998, to December 31, 2002.

7.5 ..... After December 31,

2002.’’;

5 (E) in the matter relating to a bankruptcy

6 judge by striking out

‘‘8 ........ After December 31,

1983.’’

7 and inserting in lieu thereof the following:

‘‘8 ........ January 1, 1984, to December 31, 1995.

8.25 ... January 1, 1996, to December 31, 1996.

8.4 ..... January 1, 1997, to December 31, 1997.

8.5 ..... January 1, 1998, to December 31, 2002.

8 ........ After December 31,

2002.’’;
313

•HR 2517 IH

1 (F) in the matter relating to a judge of the

2 United States Court of Appeals for the Armed

3 Forces for service as a judge of that court by

4 striking out

‘‘8 ........ On and after the date of

the enactment of the

Department of Defense Authorization

Act, 1984.’’

5 and inserting in lieu thereof the following:

‘‘8 ........ The date of the enactment of the Department of Defense Authorization Act, 1984,

to December 31,

1995.

8.25 ... January 1, 1996, to December 31, 1996.

8.4 ..... January 1, 1997, to December 31, 1997.

8.5 ..... January 1, 1998, to December 31, 2002.

8 ........ After December 31,

2002.’’;

6 (G) in the matter relating to a United

7 States magistrate by striking out

‘‘8 ........ After September 30,

1987.’’

8 and inserting in lieu thereof the following:

‘‘8 ........ October 1, 1987, to December 31, 1995.

8.25 ... January 1, 1996, to December 31, 1996.

8.4 ..... January 1, 1997, to December 31, 1997.

8.5 ..... January 1, 1998, to December 31, 2002.
314

•HR 2517 IH

8 ........ After December 31,

2002.’’;

1 (H) in the matter relating to a Claims

2 Court judge by striking out

‘‘8 ........ After September 30,

1988.’’

3 and inserting in lieu thereof the following:

‘‘8 ........ October 1, 1988, to December 31, 1995.

8.25 ... January 1, 1996, to December 31, 1996.

8.4 ..... January 1, 1997, to December 31, 1997.

8.5 ..... January 1, 1998, to December 31, 2002.

8 ........ After December 31,

2002.’’;

4 and

5 (I) by inserting after the matter relating to

6 a Claims Court judge the following:

‘‘Member of the Capitol Police .................. 2.5 ....... August 1, 1920, to

June 30, 1926.

‘‘3.5 ..... July 1, 1926, to June

30, 1942.

‘‘5 ........ July 1, 1942, to June

30, 1948.

‘‘6 ........ July 1, 1948, to October 31, 1956.

‘‘6.5 ..... November 1, 1956, to

December 31, 1969.

‘‘7.5 ..... January 1, 1970, to December 31, 1995.

‘‘7.75 ... January 1, 1996, to December 31, 1996.

‘‘7.9 ..... January 1, 1997, to December 31, 1997.

‘‘8 ........ January 1, 1998, to December 31, 2002.

‘‘7.5 ..... After December 31,

2002.’’.
315

•HR 2517 IH

1 (4) OTHER SERVICE.—

2 (A) MILITARY SERVICE.—Section 8334(j)

3 of title 5, United States Code, is amended—

4 (i) in paragraph (1)(A) by inserting

5 ‘‘and subject to paragraph (5),’’ after ‘‘Ex6 cept as provided in subparagraph (B),’’;

7 and

8 (ii) by adding at the end thereof the

9 following new paragraph:

10 ‘‘(5) Effective with respect to any period of military

11 service after December 31, 1995, the percentage of basic

12 pay under section 204 of title 37 payable under paragraph

13 (1) shall be equal to the same percentage as would be ap14 plicable under section 8334(c) for that same period for

15 service as an employee, subject to paragraph (1)(B).’’.

16 (B) VOLUNTEER SERVICE.—Section

17 8334(l) of title 5, United States Code, is

18 amended—

19 (i) in paragraph (1) by adding at the

20 end thereof the following: ‘‘This paragraph

21 shall be subject to paragraph (4).’’; and

22 (ii) by adding at the end thereof the

23 following new paragraph:

24 ‘‘(4) Effective with respect to any period of service

25 after December 31, 1995, the percentage of the readjust-
316

•HR 2517 IH

1 ment allowance or stipend (as the case may be) payable

2 under paragraph (1) shall be equal to the same percentage

3 as would be applicable under section 8334(c) for that same

4 period for service as an employee.’’.

5 (b) FEDERAL EMPLOYEES RETIREMENT SYSTEM.—

6 (1) INDIVIDUAL DEDUCTIONS AND

7 WITHHOLDINGS.—

8 (A) IN GENERAL.—Section 8422(a) of title

9 5, United States Code, is amended by striking

10 out paragraph (2) and inserting in lieu thereof

11 the following:

12 ‘‘(2) The percentage to be deducted and withheld

13 from basic pay for any pay period shall be equal to—

14 ‘‘(A) the applicable percentage under paragraph

15 (3), minus

16 ‘‘(B) the percentage then in effect under section

17 3101(a) of the Internal Revenue Code of 1986 (re18 lating to rate of tax for old-age, survivors, and dis19 ability insurance).

20 ‘‘(3) The applicable percentage under this paragraph,

21 for civilian service shall be as follows:

‘‘Percentage

of basic

pay

Service period

Employee ................................................... 7 .......... Before January 1,

1996.

7.25 ..... January 1, 1996, to December 31, 1996.
317

•HR 2517 IH

‘‘Percentage

of basic

pay

Service period

7.4 ....... January 1, 1997, to December 31, 1997.

7.5 ....... January 1, 1998, to December 31, 2002.

7 .......... After December 31,

2002.

Congressional employee ........................... 7.5 ....... Before January 1,

1996.

7.25 ..... January 1, 1996, to December 31, 1996.

7.4 ....... January 1, 1997, to December 31, 1997.

7.5 ....... January 1, 1998, to December 31, 2002.

7 .......... After December 31,

2002.

Member .................................................... 7.5 ....... Before January 1,

1996.

7.25 ..... January 1, 1996, to December 31, 1996.

7.4 ....... January 1, 1997, to December 31, 1997.

7.5 ....... January 1, 1998, to December 31, 2002.

7 .......... After December 31,

2002.

Law enforcement officer, firefighter,

member of the Capitol Police, or air

traffic controller.

7.5 ....... Before January 1,

1996.

7.75 ..... January 1, 1996, to December 31, 1996.

7.9 ....... January 1, 1997, to December 31, 1997.

8 .......... January 1, 1998, to December 31, 2002.

7.5 ....... After December 31,

2002.’’

1 (B) MILITARY SERVICE.—Section 8422(e)

2 of title 5, United States Code, is amended—

3 (i) in paragraph (1)(A) by inserting

4 ‘‘and subject to paragraph (6),’’ after ‘‘Ex5 cept as provided in subparagraph (B),’’;

6 and
318

•HR 2517 IH

1 (ii) by adding at the end thereof the

2 following:

3 ‘‘(6) The percentage of basic pay under section

4 204 of title 37 payable under paragraph (1), with

5 respect to any period of military service performed

6 during—

7 ‘‘(A) January 1, 1996, through December

8 31, 1996, shall be 3.25 percent;

9 ‘‘(B) January 1, 1997, through December

10 31, 1997, shall be 3.4 percent; and

11 ‘‘(C) January 1, 1998, through December

12 31, 2002, shall be 3.5 percent.’’.

13 (C) VOLUNTEER SERVICE.—Section

14 8422(f) of title 5, United States Code, is

15 amended—

16 (i) in paragraph (1) by adding at the

17 end thereof the following: ‘‘This paragraph

18 shall be subject to paragraph (4).’’; and

19 (ii) by adding at the end the follow20 ing:

21 ‘‘(4) The percentage of the readjustment allow22 ance or stipend (as the case may be) payable under

23 paragraph (1), with respect to any period of volun24 teer service performed during—
319

•HR 2517 IH

1 ‘‘(A) January 1, 1996, through December

2 31, 1996, shall be 3.25 percent;

3 ‘‘(B) January 1, 1997, through December

4 31, 1997, shall be 3.4 percent; and

5 ‘‘(C) January 1, 1998, through December

6 31, 2002, shall be 3.5 percent.’’.

7 (2) NO REDUCTION IN AGENCY CONTRIBU8 TIONS.—Agency contributions under section 8423

9 (a) and (b) of title 5, United States Code, shall not

10 be reduced as a result of the amendments made

11 under paragraph (1) of this subsection.

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

13 this section shall take effect on the first day of the first

14 applicable pay period beginning on or after January 1,

15 1996.

16 SEC. 5003. FEDERAL RETIREMENT PROVISIONS RELATING

17 TO MEMBERS OF CONGRESS AND CONGRES18 SIONAL EMPLOYEES.

19 (a) RELATING TO THE YEARS OF SERVICE AS A

20 MEMBER OF CONGRESS AND CONGRESSIONAL EMPLOY21 EES FOR PURPOSES OF COMPUTING AN ANNUITY.—

22 (1) CSRS.—Section 8339 of title 5, United

23 States Code, is amended—

24 (A) in subsection (a) by inserting ‘‘or

25 Member’’ after ‘‘employee’’; and
320

•HR 2517 IH

1 (B) by striking out subsections (b) and (c).

2 (2) FERS.—Section 8415 of title 5, United

3 States Code, is amended—

4 (A) by striking out subsections (b) and (c);

5 (B) in subsections (a) and (g) by inserting

6 ‘‘or Member’’ after ‘‘employee’’ each place it

7 appears; and

8 (C) in subsection (g)(2) by striking out

9 ‘‘Congressional employee’’.

10 (3) CAPITOL POLICE.—Section 8339(q) of title

11 5, United States Code, is amended—

12 (A) by striking ‘‘subsection (b),’’ and in13 serting ‘‘subsection (b) (as last in effect),’’; and

14 (B) by striking ‘‘subsection (b)(2),’’ and

15 inserting ‘‘subsection (b)(2) (as last in effect),’’.

16 (b) ADMINISTRATIVE REGULATIONS.—The Secretary

17 of the Senate and the Clerk of the House of Representa18 tives, in consultation with the Office of Personnel Manage19 ment, may prescribe regulations to carry out the provi20 sions of this section and the amendments made by this

21 section for applicable employees and Members of Con22 gress.

23 (c) EFFECTIVE DATES.—

24 (1) YEARS OF SERVICE; ANNUITY COMPUTA25 TION.—(A) The amendments made by subsection (a)
321

•HR 2517 IH

1 shall take effect on the date of the enactment of this

2 Act and shall apply only with respect to the com3 putation of an annuity relating to—

4 (i) the service of a Member of Congress as

5 a Member or as a Congressional employee per6 formed on or after January 1, 1996; and

7 (ii) the service of a Congressional employee

8 as a Congressional employee performed on or

9 after January 1, 1996.

10 (B) An annuity shall be computed as though

11 the amendments made under subsection (a) had not

12 been enacted with respect to—

13 (i) the service of a Member of Congress as

14 a Member or a Congressional employee or mili15 tary service performed before January 1, 1996;

16 and

17 (ii) the service of a Congressional employee

18 as a Congressional employee or military service

19 performed before January 1, 1996.

20 (2) REGULATIONS.—The provisions of sub21 section (b) shall take effect on the date of the enact22 ment of this Act.
322

•HR 2517 IH

1 SEC. 5004. FEDERAL EMPLOYEES RETIREMENT SECURITY

2 COMMISSION.

3 (a) ESTABLISHMENT.—There shall be established in

4 the legislative branch a commission to be known as the

5 ‘‘Federal Employees Retirement Security Commission’’

6 (hereinafter in this section referred to as the ‘‘Commis7 sion’’).

8 (b) MEMBERS.—

9 (1) APPOINTMENT.—The Commission shall be

10 composed of 7 members, to be appointed within 30

11 days after the date of the enactment of this Act, as

12 follows:

13 (A) 2 members appointed by the Speaker

14 of the House of Representatives.

15 (B) 2 members appointed by the majority

16 leader of the Senate.

17 (C) 1 member appointed by the minority

18 leader of the House of Representatives.

19 (D) 1 member appointed by the minority

20 leader of the Senate.

21 (E) 1 member appointed by the President.

22 (2) CHAIRMAN; VICE CHAIRMAN.—The members

23 of the Commission shall select 1 of the members to

24 be the Chairman and another to be the Vice Chair25 man of the Commission.
323

•HR 2517 IH

1 (3) TERMS.—Each member shall be appointed

2 for the life of the Commission.

3 (4) PAY AND TRAVEL EXPENSES.—

4 (A) PAY GENERALLY.—Each member,

5 other than the Chairman, shall be paid at a

6 rate not to exceed the daily equivalent of the

7 annual rate of basic pay payable for level IV of

8 the Executive Schedule under section 5315 of

9 title 5, United States Code, for each day (in10 cluding travel time) during which such member

11 is engaged in the actual performance of duties

12 vested in the Commission.

13 (B) PAY FOR THE CHAIRMAN.—The Chair14 man shall be paid, for each day referred to in

15 subparagraph (A), at a rate not to exceed the

16 daily equivalent of the annual rate of basic pay

17 payable for level III of the Executive Schedule

18 under section 5314 of title 5, United States

19 Code.

20 (C) TRAVEL EXPENSES.—Each member of

21 the Commission shall, subject to the availability

22 of appropriations and in such amounts as may

23 be provided by such Act, be allowed travel ex24 penses in the same manner as any individual

25 employed intermittently by the Government is
324

•HR 2517 IH

1 allowed travel expenses under section 5703 of

2 title 5, United States Code.

3 (D) GOVERNMENT EMPLOYEES AND MEM4 BERS OF CONGRESS.—Notwithstanding any

5 other provision of this paragraph, members of

6 the Commission who are full-time officers or

7 employees of the United States or Members of

8 Congress may not receive additional pay, allow9 ances, or benefits by reason of their service on

10 the Commission, except for travel expenses

11 under subparagraph (C).

12 (5) VACANCIES.—A vacancy in the Commission

13 shall be filled in the manner in which the original

14 appointment was made.

15 (c) MEETINGS.—

16 (1) OPEN MEETINGS.—Each meeting of the

17 Commission, other than meetings in which classified

18 information is to be discussed, shall be open to the

19 public.

20 (2) ACCESS BY REQUEST.—

21 (A) IN GENERAL.—All the proceedings, in22 formation, and deliberations of the Commission

23 shall be open, upon request, to the Chairman

24 and the ranking minority party member of the

25 respective committees under subparagraph (B)
325

•HR 2517 IH

1 or such chairmen or ranking minority party

2 members of subcommittees of any such commit3 tee as may be designated by the Chairman or

4 ranking minority party member, respectively, of

5 such committee.

6 (B) IDENTIFICATION OF COMMITTEES.—

7 The committees under this subparagraph are as

8 follows:

9 (i) The Committee on Government

10 Reform and Oversight of the House of

11 Representatives.

12 (ii) The Committee on National Secu13 rity of the House of Representatives.

14 (iii) The Committee on Governmental

15 Affairs of the Senate.

16 (iv) The Committee on Armed Serv17 ices of the Senate.

18 (3) FIRST MEETING.—The Commission shall

19 hold its first meeting within 60 days after the date

20 of the enactment of this Act.

21 (d) DIRECTOR; STAFF.—

22 (1) DIRECTOR.—The Commission shall have a

23 Director, who—

24 (A) shall be appointed by the Commission;

25 and
326

•HR 2517 IH

1 (B) shall be paid at a rate not to exceed

2 the rate of basic pay payable for level IV of the

3 Executive Schedule under section 5315 of title

4 5, United States Code.

5 (2) STAFF.—

6 (A) APPOINTMENTS; PAY.—The Director,

7 with the approval of the Commission, may ap8 point and fix the pay of additional personnel,

9 except that no individual so appointed may re10 ceive pay at a rate in excess of the maximum

11 rate of basic pay payable under section 5376 of

12 title 5, United States Code, for positions classi13 fied above GS-15 of the General Schedule.

14 (B) DETAILS FROM CONGRESSIONAL COM15 MITTEES AND OFFICES.—Upon the request of

16 the Director, the chairman of any standing

17 committee or other committee of either House

18 or both Houses of the Congress, or the head of

19 any other congressional office, may detail any

20 of the personnel of that committee or office to

21 the Commission to assist the Commission in

22 carrying out its duties under this Act.

23 (C) ASSISTANCE FROM GAO.—The Comp24 troller General of the United States shall pro25 vide assistance, including the detailing of em-
327

•HR 2517 IH

1 ployees, to the Commission in accordance with

2 an agreement entered into with the Commis3 sion.

4 (e) DUTIES.—

5 (1) IN GENERAL.—The Commission shall study

6 and, within 7 months after the date of the enact7 ment of this Act, submit to the Congress a written

8 report on—

9 (A) the financial soundness of the retire10 ment systems for Government employees (in11 cluding employees of nonappropriated fund in12 strumentalities) and members of the uniformed

13 services;

14 (B) the cost and level of benefits provided

15 by the Civil Service Retirement System, the

16 Federal Employees’ Retirement System, and

17 the other retirement systems under subpara18 graph (A), as compared with the cost and level

19 of benefits of retirement systems prevalent in

20 the private sector;

21 (C) the appropriate level and design of

22 benefits of an alternative retirement system and

23 modifications of existing systems to achieve the

24 objectives described in paragraph (2); and
328

•HR 2517 IH

1 (D) the cost and suitability of benefits pro2 vided by the military retirement system, and

3 their appropriateness in light of current and

4 projected military readiness requirements.

5 (2) CONSIDERATIONS.—The considerations de6 scribed in this paragraph are as follows:

7 (A) Portability of benefits, consistent with

8 the greater mobility anticipated with respect to

9 the workforce of the 21st century.

10 (B) Financial soundness, consistent with

11 the requirements of the Employee Retirement

12 Income Security Act of 1974 and the require13 ments that must be met in order to qualify to

14 be insured by the Pension Benefit Guarantee

15 Corporation.

16 (C) The Government’s presence in a wide

17 range of occupations and local labor markets,

18 and the need for retirement benefits to be rep19 resentative of the level of benefits received by

20 most Americans in the private sector in order

21 to allow the Government to recruit and retain

22 a qualified workforce.

23 (D) Total compensation trends in the pri24 vate sector, including the use of cafeteria plans.
329

•HR 2517 IH

1 (3) CONTENTS.—The Commission’s report shall

2 contain a detailed statement of the findings and con3 clusions of the Commission, together with its rec4 ommendations for any legislation that the Commis5 sion considers appropriate.

6 (f) OTHER AUTHORITY.—

7 (1) EXPERTS AND CONSULTANTS.—The Com8 mission may procure by contract, to the extent funds

9 are available, the temporary or intermittent services

10 of experts or consultants subject to the same terms

11 and conditions as would apply under section 3109 of

12 title 5, United States Code, in the case of an Execu13 tive agency.

14 (2) LEASES.—The Commission may lease space

15 and acquire personal property to the extent funds

16 are available.

17 (g) FUNDING.—There are authorized to be appro18 priated to the Commission such funds as are necessary

19 to carry out its duties under this Act. Such funds shall

20 remain available until expended.

21 (h) TERMINATION.—The Commission shall cease to

22 exist 30 days after submitting its report to the Congress

23 under subsection (e).
330

•HR 2517 IH

1 SEC. 5005. REPEAL OF AUTHORIZATION OF TRANSITIONAL

2 APPROPRIATIONS FOR THE UNITED STATES

3 POSTAL SERVICE.

4 (a) REPEAL.—

5 (1) IN GENERAL.—Section 2004 of title 39,

6 United States Code, is repealed.

7 (2) TECHNICAL AND CONFORMING AMEND8 MENTS.—

9 (A) The table of sections for chapter 20 of

10 such title is amended by repealing the item re11 lating to section 2004.

12 (B) Section 2003(e)(2) of such title is

13 amended by striking ‘‘sections 2401 and 2004’’

14 each place it appears and inserting ‘‘section

15 2401’’.

16 (b) CLARIFICATION THAT LIABILITIES FORMERLY

17 PAID PURSUANT TO SECTION 2004 REMAIN LIABILITIES

18 PAYABLE BY THE POSTAL SERVICE.—Section 2003 of

19 title 39, United States Code, is amended by adding at the

20 end the following:

21 ‘‘(h) Liabilities of the former Post Office Department

22 to the Employees’ Compensation Fund (appropriations for

23 which were authorized by former section 2004, as in effect

24 before the effective date of this subsection) shall be liabil25 ities of the Postal Service payable out of the Fund.’’.

26 (c) EFFECTIVE DATE.—
331

•HR 2517 IH

1 (1) IN GENERAL.—This section and the amend2 ments made by this section shall be effective as of

3 October 1, 1995.

4 (2) PROVISIONS RELATING TO PAYMENTS FOR

5 FISCAL YEAR 1996.—

6 (A) AMOUNTS NOT YET PAID.—No pay7 ment may be made to the Postal Service Fund,

8 on or after the date of the enactment of this

9 Act, pursuant to any appropriation for fiscal

10 year 1996 authorized by section 2004 of title

11 39, United States Code (as in effect before the

12 effective date of this section).

13 (B) AMOUNTS PAID.—If any payment to

14 the Postal Service Fund is or has been made

15 pursuant to an appropriation for fiscal year

16 1996 authorized by such section 2004, then an

17 amount equal to the amount of such payment

18 shall be paid from such Fund into the Treasury

19 as miscellaneous receipts.

20 SEC. 5006. AVAILABILITY OF SURPLUS PROPERTY FOR

21 HOMELESS ASSISTANCE.

22 (a) REPEAL.—(1) Title V of the Stewart B. McKin23 ney Homeless Assistance Act (42 U.S.C. 11411 et seq.)

24 is repealed.
332

•HR 2517 IH

1 (2) The table of contents in section 101(b) of that

2 Act is amended by striking the items relating to title V.

3 (3) This subsection shall be effective October 1, 1995.

4 (b) AUTHORITY TO TRANSFER SURPLUS REAL

5 PROPERTY FOR HOUSING USE.—Section 203 of the Fed6 eral Property and Administrative Services Act of 1949 (40

7 U.S.C. 484) is amended by adding at the end the

8 following:

9 ‘‘(r) Under such regulations as the Administrator

10 may prescribe, and in consultation with appropriate local

11 governmental authorities, the Administrator may transfer

12 to any nonprofit organization which exists for the primary

13 purpose of providing housing or housing assistance for

14 homeless individuals or families, such surplus real prop15 erty, including buildings, fixtures, and equipment situated

16 thereon, as is needed for housing use.

17 ‘‘(s)(1) Under such regulations as the Administrator

18 may prescribe, and in consultation with appropriate local

19 governmental authorities, the Administrator may transfer

20 to any non-profit organization which exists for the primary

21 purpose of providing housing or housing assistance for

22 low-income individuals or families such surplus real prop23 erty, including buildings, fixtures, and equipment situated

24 thereon, as is needed for housing use.
333

•HR 2517 IH

1 ‘‘(2) In making transfers under this subsection, the

2 Administrator shall take such actions, which may include

3 grant agreements with an organization receiving a grant,

4 as may be necessary to ensure that—

5 ‘‘(A) assistance provided under this subsection

6 is used to facilitate and encourage homeownership

7 opportunities through the construction of self-help

8 housing, under terms which require that the person

9 receiving the assistance contribute a significant

10 amount of labor toward the construction; and

11 ‘‘(B) the dwellings constructed with property

12 transferred under this subsection shall be quality

13 dwellings that comply with local building and safety

14 codes and standards and shall be available at prices

15 below the prevailing market prices.’’.

16 TITLE VI—COMMITTEE ON

17 INTERNATIONAL RELATIONS

18 Subtitle A—Recovery Of Costs Of

19 Certain Health Care Services

20 SEC. 6001. RECOVERY OF COSTS OF HEALTH CARE SERV21 ICES FOR PERSONNEL OF THE FOREIGN

22 SERVICE OF THE UNITED STATES AND

23 OTHER ELIGIBLE INDIVIDUALS.

24 (a) AUTHORITIES.—Section 904 of the Foreign Serv25 ice Act of 1980 (22 U.S.C. 4084) is amended—
334

•HR 2517 IH

1 (1) in subsection (a) by—

2 (A) striking ‘‘and’’ before ‘‘members of the

3 families of such members and employees’’; and

4 (B) by inserting immediately before the pe5 riod ‘‘, and for care provided abroad) such

6 other persons as are designated by the Sec7 retary of State, except that such persons shall

8 be considered persons other than covered bene9 ficiaries for purposes of subsections (g) and

10 (h)’’;

11 (2) in subsection (d) by inserting ‘‘, subject to

12 the provisions of subsections (g) and (h)’’ after

13 ‘‘treatment’’; and

14 (3) by adding the following new subsections:

15 ‘‘(g)(1) In the case of a person who is a covered bene16 ficiary, the Secretary of State is authorized to collect from

17 a third-party payer the reasonable costs incurred by the

18 Department of State on behalf of such person for health

19 care services to the same extent that the covered bene20 ficiary would be eligible to receive reimbursement or in21 demnification from the third-party payer for such costs.

22 ‘‘(2) If the insurance policy, plan, contract, or similar

23 agreement of that third-party payer includes a require24 ment for a deductible or copayment by the beneficiary of

25 the plan, then the Secretary of State may collect from the
335

•HR 2517 IH

1 third-party payer only the reasonable costs of the care pro2 vided less the deductible or copayment amount.

3 ‘‘(3) A covered beneficiary shall not be required to

4 pay any deductible or copayment for health care services

5 under this subsection.

6 ‘‘(4) No provision of any insurance, medical service,

7 or health plan contract or agreement having the effect of

8 excluding from coverage or limiting payment of charges

9 for care in the following circumstances shall operate to

10 prevent collection by the Secretary of State under para11 graph (1)—

12 ‘‘(A) care provided directly or indirectly by a

13 governmental entity;

14 ‘‘(B) care provided to an individual who has not

15 paid a required deductible or copayment; or

16 ‘‘(C) care provided by a provider with which the

17 third-party payer has no participation agreement.

18 ‘‘(5) No law of any State, or of any political subdivi19 sion of a State, and no provision of any contract or agree20 ment shall operate to prevent or hinder recovery or collec21 tion by the United States under this section.

22 ‘‘(6) As to the authority provided in paragraph (1)

23 of this subsection—
336

•HR 2517 IH

1 ‘‘(A) the United States shall be subrogated to

2 any right or claim that the covered beneficiary may

3 have against a third-party payer;

4 ‘‘(B) the United States may institute and pros5 ecute legal proceedings against a third-party payer

6 to enforce a right of the United States under this

7 subsection; and

8 ‘‘(C) the Secretary may compromise, settle, or

9 waive a claim of the United States under this sub10 section.

11 ‘‘(7) The Secretary shall prescribe regulations for the

12 administration of this subsection and subsection (h). Such

13 regulations shall provide for computation of the reasonable

14 cost of health care services.

15 ‘‘(8) Regulations prescribed under this subsection

16 shall provide that medical records of a covered beneficiary

17 receiving health care under this subsection shall be made

18 available for inspection and review by representatives of

19 the payer from which collection by the United States is

20 sought for the sole purpose of permitting the third party

21 to verify—

22 ‘‘(A) that the care or services for which recov23 ery or collection is sought were furnished to the cov24 ered beneficiary; and
337

•HR 2517 IH

1 ‘‘(B) that the provisions of such care or services

2 to the covered beneficiary meets criteria generally

3 applicable under the health plan contract involved,

4 except that this paragraph shall be subject to the

5 provisions of paragraphs (2) and (4).

6 ‘‘(9) Amounts collected under this subsection or

7 under subsection (h) from a third party payer or from any

8 other payer shall be deposited in the Treasury as a mis9 cellaneous offsetting receipt.

10 ‘‘(10) For purposes of this section—

11 ‘‘(A) the term ‘covered beneficiary’ means an

12 individual eligible to receive health care under this

13 section whose health care costs are to be paid by a

14 third-party payer under a contractual agreement

15 with such payer;

16 ‘‘(B) the term ‘services’, as used in ‘health care

17 services’ includes products; and

18 ‘‘(C) the term ‘third-party payer’ means an en19 tity that provides a fee-for-service insurance policy,

20 contract, or similar agreement through the Federal

21 Employees Health Benefit program, under which the

22 expenses of health care services for individuals are

23 paid.

24 ‘‘(h) In the case of a person, other than a covered

25 beneficiary, who receives health care services pursuant to
338

•HR 2517 IH

1 this section, the Secretary of State is authorized to collect

2 from such person the reasonable costs of health care serv3 ices incurred by the Department of State on behalf of such

4 person. The United States shall have the same rights

5 against persons subject to the provisions of this subsection

6 as against third-party payers covered by subsection (g).’’.

7 (b) EFFECTIVE DATE.—The authorities of this sec8 tion shall be effective beginning on the date of the enact9 ment of this Act.

10 Subtitle B—Enactment Into Law of

11 Division A of H.R. 1561

12 SEC. 6101. ENACTMENT INTO LAW OF DIVISION A OF H.R.

13 1561.

14 Division A of H.R. 1561, as passed the House of

15 Representatives on June 8, 1995 (relating to consolidation

16 of foreign affairs agencies), is hereby enacted into law.

17 Subtitle C—Cuban Liberty and

18 Democratic Solidarity (LIBER19 TAD) Act of 1995

20 SEC. 6201. SHORT TITLE.

21 This subtitle may be cited as the ‘‘Cuban Liberty and

22 Democratic Solidarity (LIBERTAD) Act of 1995’’.

23 SEC. 6202. FINDINGS.

24 The Congress makes the following findings:
339

•HR 2517 IH

1 (1) The economy of Cuba has experienced a de2 cline of at least 60 percent in the last 5 years as a

3 result of—

4 (A) the end of its subsidization by the

5 former Soviet Union of between 5 billion and 6

6 billion dollars annually;

7 (B) 36 years of Communist tyranny and

8 economic mismanagement by the Castro govern9 ment;

10 (C) the extreme decline in trade between

11 Cuba and the countries of the former Soviet

12 bloc; and

13 (D) the stated policy of the Russian Gov14 ernment and the countries of the former Soviet

15 bloc to conduct economic relations with Cuba

16 on strictly commercial terms.

17 (2) At the same time, the welfare and health of

18 the Cuban people have substantially deteriorated as

19 a result of this economic decline and the refusal of

20 the Castro regime to permit free and fair democratic

21 elections in Cuba.

22 (3) The Castro regime has made it abundantly

23 clear that it will not engage in any substantive polit24 ical reforms that would lead to democracy, a market

25 economy, or an economic recovery.
340

•HR 2517 IH

1 (4) The repression of the Cuban people, includ2 ing a ban on free and fair democratic elections, and

3 continuing violations of fundamental human rights

4 have isolated the Cuban regime as the only com5 pletely nondemocratic government in the Western

6 Hemisphere.

7 (5) As long as free elections are not held in

8 Cuba, the economic condition of the country and the

9 welfare of the Cuban people will not improve in any

10 significant way.

11 (6) The totalitarian nature of the Castro regime

12 has deprived the Cuban people of any peaceful

13 means to improve their condition and has led thou14 sands of Cuban citizens to risk or lose their lives in

15 dangerous attempts to escape from Cuba to freedom.

16 (7) Radio Marti and Television Marti have both

17 been effective vehicles for providing the people of

18 Cuba with news and information and have helped to

19 bolster the morale of the people of Cuba living under

20 tyranny.

21 (8) The consistent policy of the United States

22 towards Cuba since the beginning of the Castro re23 gime, carried out by both Democratic and Repub24 lican administrations, has sought to keep faith with
341

•HR 2517 IH

1 the people of Cuba, and has been effective in sanc2 tioning the totalitarian Castro regime.

3 (9) The United States has shown a deep com4 mitment, and considers it a moral obligation, to pro5 mote and protect human rights and fundamental

6 freedoms as expressed in the Charter of the United

7 Nations and in the Universal Declaration of Human

8 Rights.

9 (10) The Congress has historically and consist10 ently manifested its solidarity and the solidarity of

11 the American people with the democratic aspirations

12 of the Cuban people.

13 (11) The Cuban Democracy Act of 1992 calls

14 upon the President to encourage the governments of

15 countries that conduct trade with Cuba to restrict

16 their trade and credit relations with Cuba in a man17 ner consistent with the purposes of that Act.

18 (12) The 1992 FREEDOM Support Act re19 quires that the President, in providing economic as20 sistance to Russia and the emerging Eurasian de21 mocracies, take into account the extent to which

22 they are acting to ‘‘terminate support for the com23 munist regime in Cuba, including removal of troops,

24 closing military facilities, and ceasing trade subsidies

25 and economic, nuclear, and other assistance’’.
342

•HR 2517 IH

1 (13) The Cuban Government engages in the il2 legal international narcotics trade and harbors fugi3 tives from justice in the United States.

4 (14) The Castro government threatens inter5 national peace and security by engaging in acts of

6 armed subversion and terrorism such as the training

7 and supplying of groups dedicated to international

8 violence.

9 (15) The Castro government has utilized from

10 its inception and continues to utilize torture in var11 ious forms (including by psychiatry), as well as exe12 cution, exile, confiscation, political imprisonment,

13 and other forms of terror and repression, as means

14 of retaining power.

15 (16) Fidel Castro has defined democratic plu16 ralism as ‘‘pluralistic garbage’’ and continues to

17 make clear that he has no intention of tolerating the

18 democratization of Cuban society.

19 (17) The Castro government holds innocent Cu20 bans hostage in Cuba by no fault of the hostages

21 themselves solely because relatives have escaped the

22 country.

23 (18) Although a signatory state to the 1928

24 Inter-American Convention on Asylum and the

25 International Covenant on Civil and Political Rights
343

•HR 2517 IH

1 (which protects the right to leave one’s own coun2 try), Cuba nevertheless surrounds embassies in its

3 capital by armed forces to thwart the right of its

4 citizens to seek asylum and systematically denies

5 that right to the Cuban people, punishing them by

6 imprisonment for seeking to leave the country and

7 killing them for attempting to do so (as dem8 onstrated in the case of the confirmed murder of

9 over 40 men, women, and children who were seeking

10 to leave Cuba on July 13, 1994).

11 (19) The Castro government continues to utilize

12 blackmail, such as the immigration crisis with which

13 it threatened the United States in the summer of

14 1994, and other unacceptable and illegal forms of

15 conduct to influence the actions of sovereign states

16 in the Western Hemisphere in violation of the Char17 ter of the Organization of American States and

18 other international agreements and international

19 law.

20 (20) The United Nations Commission on

21 Human Rights has repeatedly reported on the unac22 ceptable human rights situation in Cuba and has

23 taken the extraordinary step of appointing a Special

24 Rapporteur.
344

•HR 2517 IH

1 (21) The Cuban Government has consistently

2 refused access to the Special Rapporteur and for3 mally expressed its decision not to ‘‘implement so

4 much as one comma’’ of the United Nations Resolu5 tions appointing the Rapporteur.

6 (22) The United Nations General Assembly

7 passed Resolution 1992/70 on December 4, 1992,

8 Resolution 1993/48/142 on December 20, 1993, and

9 Resolution 1994/49/544 on October 19, 1994, ref10 erencing the Special Rapporteur’s reports to the

11 United Nations and condemning ‘‘violations of

12 human rights and fundamental freedoms’’ in Cuba.

13 (23) Article 39 of Chapter VII of the United

14 Nations Charter provides that the United Nations

15 Security Council ‘‘shall determine the existence of

16 any threat to the peace, breach of the peace, or act

17 of aggression and shall make recommendations, or

18 decide what measures shall be taken . . ., to main19 tain or restore international peace and security.’’.

20 (24) The United Nations has determined that

21 massive and systematic violations of human rights

22 may constitute a ‘‘threat to peace’’ under Article 39

23 and has imposed sanctions due to such violations of

24 human rights in the cases of Rhodesia, South Africa,

25 Iraq, and the former Yugoslavia.
345

•HR 2517 IH

1 (25) In the case of Haiti, a neighbor of Cuba

2 not as close to the United States as Cuba, the

3 United States led an effort to obtain and did obtain

4 a United Nations Security Council embargo and

5 blockade against that country due to the existence of

6 a military dictatorship in power less than 3 years.

7 (26) United Nations Security Council Resolu8 tion 940 of July 31, 1994, subsequently authorized

9 the use of ‘‘all necessary means’’ to restore the

10 ‘‘democratically elected government of Haiti’’, and

11 the democratically elected government of Haiti was

12 restored to power on October 15, 1994.

13 (27) The Cuban people deserve to be assisted in

14 a decisive manner to end the tyranny that has op15 pressed them for 36 years and the continued failure

16 to do so constitutes ethically improper conduct by

17 the international community.

18 (28) For the past 36 years, the Cuban Govern19 ment has posed and continues to pose a national se20 curity threat to the United States.

21 SEC. 6203. PURPOSES.

22 The purposes of this subtitle are as follows:

23 (1) To assist the Cuban people in regaining

24 their freedom and prosperity, as well as in joining
346

•HR 2517 IH

1 the community of democracies that are flourishing in

2 the Western Hemisphere.

3 (2) To seek international sanctions against the

4 Castro government in Cuba.

5 (3) To encourage the holding of free and fair

6 democratic elections in Cuba, conducted under the

7 supervision of internationally recognized observers.

8 (4) To develop a plan for furnishing assistance

9 to a transition government and, subsequently, to a

10 democratically elected government when such gov11 ernments meet the eligibility requirements of this

12 subtitle.

13 (5) To protect property rights abroad of United

14 States nationals.

15 (6) To provide for the continued national secu16 rity of the United States in the face of continuing

17 threats from the Castro government of terrorism,

18 theft of property from United States nationals, and

19 domestic repression from which refugees flee to

20 United States shores.

21 SEC. 6204. DEFINITIONS.

22 As used in this subtitle, the following terms have the

23 following meanings:

24 (1) APPROPRIATE CONGRESSIONAL COMMIT25 TEES.—The term ‘‘appropriate congressional com-
347

•HR 2517 IH

1 mittees’’ means the Committee on International Re2 lations, the Committee on Ways and Means, and the

3 Committee on Appropriations of the House of Rep4 resentatives and the Committee on Foreign Rela5 tions, the Committee on Finance, and the Commit6 tee on Appropriations of the Senate.

7 (2) COMMERCIAL ACTIVITY.—The term ‘‘com8 mercial activity’’ has the meaning given that term in

9 section 1603(d) of title 28, United States Code.

10 (3) CONFISCATED.—As used in parts 1 and 3,

11 the term ‘‘confiscated’’ refers to—

12 (A) the nationalization, expropriation, or

13 other seizure by the Cuban Government of own14 ership or control of property, on or after Janu15 ary 1, 1959—

16 (i) without the property having been

17 returned or adequate and effective com18 pensation provided; or

19 (ii) without the claim to the property

20 having been settled pursuant to an inter21 national claims settlement agreement or

22 other mutually accepted settlement proce23 dure; and

24 (B) the repudiation by the Cuban Govern25 ment of, the default by the Cuban Government
348

•HR 2517 IH

1 on, or the failure by the Cuban Government to

2 pay, on or after January 1, 1959—

3 (i) a debt of any enterprise which has

4 been nationalized, expropriated, or other5 wise taken by the Cuban Government;

6 (ii) a debt which is a charge on prop7 erty nationalized, expropriated, or other8 wise taken by the Cuban Government; or

9 (iii) a debt which was incurred by the

10 Cuban Government in satisfaction or set11 tlement of a confiscated property claim.

12 (4) CUBAN GOVERNMENT.—(A) The term

13 ‘‘Cuban Government’’ includes the government of

14 any political subdivision of Cuba, and any agency or

15 instrumentality of the Government of Cuba.

16 (B) For purposes of subparagraph (A), the

17 term ‘‘agency or instrumentality of the Government

18 of Cuba’’ means an agency or instrumentality of a

19 foreign state as defined in section 1603(b) of title

20 28, United States Code, with ‘‘Cuba’’ substituted for

21 ‘‘a foreign state’’ each place it appears in such sec22 tion.

23 (5) DEMOCRATICALLY ELECTED GOVERNMENT

24 IN CUBA.—The term ‘‘democratically elected govern25 ment in Cuba’’ means a government determined by
349

•HR 2517 IH

1 the President to have met the requirements of sec2 tion 206.

3 (6) ECONOMIC EMBARGO OF CUBA.—The term

4 ‘‘economic embargo of Cuba’’ refers to the economic

5 embargo imposed against Cuba pursuant to section

6 620(a) of the Foreign Assistance Act of 1961 (22

7 U.S.C. 2370(a)), section 5(b) of the Trading With

8 the Enemy Act (50 U.S.C. App. 5(b)), the Inter9 national Emergency Economic Powers Act (50

10 U.S.C. 1701 and following), and the Export Admin11 istration Act of 1979 (50 U.S.C. App. 2401 and fol12 lowing), as modified by the Cuban Democracy Act of

13 1992 (22 U.S.C. 6001 and following).

14 (7) FOREIGN NATIONAL.—The term ‘‘foreign

15 national’’ means—

16 (A) an alien; or

17 (B) any corporation, trust, partnership, or

18 other juridical entity not organized under the

19 laws of the United States, or of any State, the

20 District of Columbia, the Commonwealth of

21 Puerto Rico, or any other territory or posses22 sion of the United States.

23 (8) KNOWINGLY.—The term ‘‘knowingly’’

24 means with knowledge or having reason to know.
350

•HR 2517 IH

1 (9) PROPERTY.—(A) The term ‘‘property’’

2 means any property (including patents, copyrights,

3 trademarks, and any other form of intellectual prop4 erty), whether real, personal, or mixed, and any

5 present, future, or contingent right, security, or

6 other interest therein, including any leasehold inter7 est.

8 (B) For purposes of part 3 of this subtitle, the

9 term ‘‘property’’ shall not include real property used

10 for residential purposes unless, as of the date of the

11 enactment of this Act—

12 (i) the claim to the property is owned by

13 a United States national and the claim has

14 been certified under title V of the International

15 Claims Settlement Act of 1949; or

16 (ii) the property is occupied by a member

17 or official of the Cuban Government or the rul18 ing political party in Cuba.

19 (10) TRAFFICS.—(A) As used in part 3, a per20 son or entity ‘‘traffics’’ in property if that person or

21 entity knowingly and intentionally—

22 (i) sells, transfers, distributes, dispenses,

23 brokers, manages, or otherwise disposes of con24 fiscated property, or purchases, leases, receives,

25 possesses, obtains control of, manages, uses, or
351

•HR 2517 IH

1 otherwise acquires or holds an interest in con2 fiscated property,

3 (ii) engages in a commercial activity using

4 or otherwise benefiting from confiscated prop5 erty, or

6 (iii) causes, directs, participates in, or

7 profits from, trafficking (as described in clauses

8 (i) and (ii)) by another person, or otherwise en9 gages in trafficking (as described in clauses (i)

10 and (ii)) through another person,

11 without the authorization of the United States na12 tional who holds a claim to the property.

13 (B) The term ‘‘traffics’’ does not include—

14 (i) the delivery of international tele15 communication signals to Cuba that are author16 ized by section 1705(e) of the Cuban Democ17 racy Act of 1992 (22 U.S.C. 6004(e)); or

18 (ii) the trading or holding of securities

19 publicly traded or held, unless the trading is

20 with or by a person determined by the Sec21 retary of the Treasury to be a specially des22 ignated national.

23 (11) TRANSITION GOVERNMENT IN CUBA.—The

24 term ‘‘transition government in Cuba’’ means a gov-
352

•HR 2517 IH

1 ernment determined by the President to have met

2 the requirements of section 6235.

3 (12) UNITED STATES NATIONAL.—The term

4 ‘‘United States national’’ means—

5 (A) any United States citizen; or

6 (B) any other legal entity which is orga7 nized under the laws of the United States, or

8 of any State, the District of Columbia, the

9 Commonwealth of Puerto Rico, or any other

10 territory or possession of the United States,

11 and which has its principal place of business in

12 the United States.

13 PART 1—SEEKING SANCTIONS AGAINST THE

14 CASTRO GOVERNMENT

15 SEC. 6211. STATEMENT OF POLICY.

16 It is the sense of the Congress that—

17 (1) the acts of the Castro government, includ18 ing its massive, systematic, and extraordinary viola19 tions of human rights, are a threat to international

20 peace;

21 (2) the President should advocate, and should

22 instruct the United States Permanent Representa23 tive to the United Nations to propose and seek,

24 within the Security Council, a mandatory inter25 national embargo against the totalitarian Cuban
353

•HR 2517 IH

1 Government pursuant to chapter VII of the Charter

2 of the United Nations, which is similar to measures

3 taken by United States representatives with respect

4 to Haiti; and

5 (3) any resumption or commencement of efforts

6 by any state to make operational the nuclear facility

7 at Cienfuegos, Cuba, will have a detrimental impact

8 on United States assistance to and relations with

9 that state.

10 SEC. 6212. ENFORCEMENT OF THE ECONOMIC EMBARGO

11 OF CUBA.

12 (a) POLICY.—(1) The Congress hereby reaffirms sec13 tion 1704(a) of the Cuban Democracy Act of 1992 that

14 states the President should encourage foreign countries to

15 restrict trade and credit relations with Cuba.

16 (2) The Congress further urges the President to take

17 immediate steps to apply the sanctions described in section

18 1704(b) of that Act against countries assisting Cuba.

19 (b) DIPLOMATIC EFFORTS.—The Secretary of State

20 shall ensure that United States diplomatic personnel

21 abroad understand and, in their contacts with foreign offi22 cials, are communicating the reasons for the United States

23 economic embargo of Cuba, and are urging foreign govern24 ments to cooperate more effectively with the embargo.
354

•HR 2517 IH

1 (c) EXISTING REGULATIONS.—The President should

2 instruct the Secretary of the Treasury and the Attorney

3 General to enforce fully the Cuban Assets Control Regula4 tions set forth in part 515 of title 31, Code of Federal

5 Regulations.

6 (d) TRADING WITH THE ENEMY ACT.—

7 (1) CIVIL PENALTIES.—Subsection (b) of sec8 tion 16 of the Trading With the Enemy Act (50

9 U.S.C. App. 16(b)) is amended to read as follows:

10 ‘‘(b)(1) A civil penalty of not to exceed $50,000 may

11 be imposed by the Secretary of the Treasury on any per12 son who violates any license, order, rule, or regulation is13 sued in compliance with the provisions of this Act.

14 ‘‘(2) Any property, funds, securities, papers, or other

15 articles or documents, or any vessel, together with its tack16 le, apparel, furniture, and equipment, that is the subject

17 of a violation under paragraph (1) shall, at the discretion

18 of the Secretary of the Treasury, be forfeited to the United

19 States Government.

20 ‘‘(3) The penalties provided under this subsection

21 may not be imposed for—

22 ‘‘(A) news gathering, research, or the export or

23 import of, or transmission of, information or infor24 mational materials; or
355

•HR 2517 IH

1 ‘‘(B) clearly defined educational or religious ac2 tivities, or activities of recognized human rights or3 ganizations, that are reasonably limited in fre4 quency, duration, and number of participants.

5 ‘‘(4) The penalties provided under this subsection

6 may be imposed only on the record after opportunity for

7 an agency hearing in accordance with sections 554

8 through 557 of title 5, United States Code, with the right

9 to prehearing discovery.

10 ‘‘(5) Judicial review of any penalty imposed under

11 this subsection may be had to the extent provided in sec12 tion 702 of title 5, United States Code.’’.

13 (2) FORFEITURE OF PROPERTY USED IN VIOLA14 TION.—Section 16 of the Trading With the Enemy

15 Act is further amended by striking subsection (c).

16 (3) CLERICAL AMENDMENT.—Section 16 of the

17 Trading With the Enemy Act is further amended by

18 inserting ‘‘SEC. 16.’’ before ‘‘(a)’’.

19 (e) COVERAGE OF DEBT-FOR-EQUITY SWAPS BY

20 ECONOMIC EMBARGO OF CUBA.—Section 1704(b)(2) of

21 the Cuban Democracy Act of 1992 (22 U.S.C. 6003(b)(2))

22 is amended—

23 (1) by striking ‘‘and’’ at the end of subpara24 graph (A);
356

•HR 2517 IH

1 (2) by redesignating subparagraph (B) as sub2 paragraph (C); and

3 (3) by inserting after subparagraph (A) the fol4 lowing new subparagraph:

5 ‘‘(B) includes an exchange, reduction, or

6 forgiveness of Cuban debt owed to a foreign

7 country in return for a grant of an equity inter8 est in a property, investment, or operation of

9 the Government of Cuba (including the govern10 ment of any political subdivision of Cuba, and

11 any agency or instrumentality of the Govern12 ment of Cuba) or of a Cuban national; and’’;

13 and

14 (4) by adding at the end the following flush

15 sentence:

16 ‘‘As used in this paragraph, the term ‘agency or in17 strumentality of the Government of Cuba’ means an

18 agency or instrumentality of a foreign state as de19 fined in section 1603(b) of title 28, United States

20 Code, with ‘Cuba’ substituted for ‘a foreign state’

21 each place it appears in such section.’’.

22 SEC. 6213. PROHIBITION AGAINST INDIRECT FINANCING OF

23 THE CASTRO DICTATORSHIP.

24 (a) PROHIBITION.—Notwithstanding any other provi25 sion of law, no loan, credit, or other financing may be ex-
357

•HR 2517 IH

1 tended knowingly by a United States national, permanent

2 resident alien, or United States agency, to a foreign na3 tional, United States national, or permanent resident

4 alien, in order to finance transactions involving any con5 fiscated property the claim to which is owned by a United

6 States national as of the date of the enactment of this

7 Act.

8 (b) TERMINATION OF PROHIBITION.—The prohibi9 tion of subsection (a) shall cease to apply on the date on

10 which the economic embargo of Cuba terminates under

11 section 6235.

12 (c) PENALTIES.—Violations of subsection (a) shall be

13 punishable by the same penalties as are applicable to viola14 tions of the Cuban Assets Control Regulations set forth

15 in part 515 of title 31, Code of Federal Regulations.

16 (d) DEFINITIONS.—As used in this section—

17 (1) the term ‘‘permanent resident alien’’ means

18 an alien admitted for permanent residence into the

19 United States; and

20 (2) the term ‘‘United States agency’’ has the

21 meaning given the term ‘‘agency’’ in section 551(1)

22 of title 5, United States Code.
358

•HR 2517 IH

1 SEC. 6214. UNITED STATES OPPOSITION TO CUBAN MEM2 BERSHIP IN INTERNATIONAL FINANCIAL IN3 STITUTIONS.

4 (a) OPPOSITION TO CUBAN MEMBERSHIP IN INTER5 NATIONAL FINANCIAL INSTITUTIONS.—(1) Until such

6 time as the President determines that a transition govern7 ment in Cuba is in power, the Secretary of the Treasury

8 should instruct the United States executive director to

9 each international financial institution to use the voice and

10 vote of the United States to oppose the admission of Cuba

11 as a member of such institution.

12 (2) Once a transition government in Cuba is in

13 power, the President is encouraged to take steps to sup14 port the processing of Cuba’s application for membership

15 in any financial institution subject to the membership tak16 ing effect at such time as the President deems most likely

17 to facilitate the transition to a democratically elected gov18 ernment in Cuba.

19 (b) REDUCTION IN UNITED STATES PAYMENTS TO

20 INTERNATIONAL FINANCIAL INSTITUTIONS.—If any

21 international financial institution approves a loan or other

22 assistance to the Cuban Government over the opposition

23 of the United States, then the Secretary of the Treasury

24 shall withhold from payment to that institution an amount

25 equal to the amount of the loan or other assistance to the
359

•HR 2517 IH

1 Cuban Government, with respect to each of the following

2 types of payment:

3 (1) The paid-in portion of the increase in cap4 ital stock of the institution.

5 (2) The callable portion of the increase in cap6 ital stock of the institution.

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

8 term ‘‘international financial institution’’ means the Inter9 national Monetary Fund, the International Bank for Re10 construction and Development, the International Develop11 ment Association, the International Finance Corporation,

12 the Multilateral Investment Guaranty Agency, and the

13 Inter-American Development Bank.

14 SEC. 6215. UNITED STATES OPPOSITION TO ENDING THE

15 SUSPENSION OF THE GOVERNMENT OF CUBA

16 FROM THE ORGANIZATION OF AMERICAN

17 STATES.

18 The President should instruct the United States Per19 manent Representative to the Organization of American

20 States to use the voice and vote of the United States to

21 oppose ending the suspension of the Government of Cuba

22 from the Organization until the President determines

23 under section 6233(c)(3) that a democratically elected

24 government in Cuba is in power.
360

•HR 2517 IH

1 SEC. 6216. ASSISTANCE BY THE INDEPENDENT STATES OF

2 THE FORMER SOVIET UNION FOR THE CUBAN

3 GOVERNMENT.

4 (a) REPORTING REQUIREMENT.—Not later than 90

5 days after the date of the enactment of this Act, the Presi6 dent shall submit to the appropriate congressional com7 mittees a report detailing progress towards the withdrawal

8 of personnel of any independent state of the former Soviet

9 Union (within the meaning of section 3 of the FREEDOM

10 Support Act (22 U.S.C. 5801)), including advisers, techni11 cians, and military personnel, from the Cienfuegos nuclear

12 facility in Cuba.

13 (b) CRITERIA FOR ASSISTANCE.—Section

14 498A(a)(11) of the Foreign Assistance Act of 1961 (22

15 U.S.C. 2295a(a)(11)) is amended by striking ‘‘of military

16 facilities’’ and inserting ‘‘military and intelligence facili17 ties, including the military and intelligence facilities at

18 Lourdes and Cienfuegos’’.

19 (c) INELIGIBILITY FOR ASSISTANCE.—(1) Section

20 498A(b) of that Act (22 U.S.C. 2295a(b)) is amended—

21 (A) by striking ‘‘or’’ at the end of paragraph

22 (4);

23 (B) by redesignating paragraph (5) as para24 graph (6); and

25 (C) by inserting after paragraph (4) the follow26 ing:
361

•HR 2517 IH

1 ‘‘(5) for the government of any independent

2 state effective 30 days after the President has deter3 mined and certified to the appropriate congressional

4 committees (and Congress has not enacted legisla5 tion disapproving the determination within that 30-

6 day period) that such government is providing as7 sistance for, or engaging in nonmarket based trade

8 (as defined in section 498B(k)(3)) with, the Cuban

9 Government; or’’.

10 (2) Subsection (k) of section 498B of that Act (22

11 U.S.C. 2295b(k)), is amended by adding at the end the

12 following:

13 ‘‘(3) NONMARKET BASED TRADE.—As used in

14 section 498A(b)(5), the term ‘nonmarket based

15 trade’ includes exports, imports, exchanges, or other

16 arrangements that are provided for goods and serv17 ices (including oil and other petroleum products) on

18 terms more favorable than those generally available

19 in applicable markets or for comparable commod20 ities, including—

21 ‘‘(A) exports to the Cuban Government on

22 terms that involve a grant, concessional price,

23 guaranty, insurance, or subsidy;

24 ‘‘(B) imports from the Cuban Government

25 at preferential tariff rates;
362

•HR 2517 IH

1 ‘‘(C) exchange arrangements that include

2 advance delivery of commodities, arrangements

3 in which the Cuban Government is not held ac4 countable for unfulfilled exchange contracts,

5 and arrangements under which Cuba does not

6 pay appropriate transportation, insurance, or fi7 nance costs; and

8 ‘‘(D) the exchange, reduction, or forgive9 ness of Cuban debt in return for a grant by the

10 Cuban Government of an equity interest in a

11 property, investment, or operation of the Cuban

12 Government or of a Cuban national.

13 ‘‘(4) CUBAN GOVERNMENT.—(A) The term

14 ‘Cuban Government’ includes the government of any

15 political subdivision of Cuba, and any agency or in16 strumentality of the Government of Cuba.

17 ‘‘(B) For purposes of subparagraph (A), the

18 term ‘agency or instrumentality of the Government

19 of Cuba’ means an agency or instrumentality of a

20 foreign state as defined in section 1603(b) of title

21 28, United States Code, with ‘Cuba’ substituted for

22 ‘a foreign state’ each place it appears in such sec23 tion.’’.

24 (d) FACILITIES AT LOURDES, CUBA.—(1) The Con25 gress expresses its strong disapproval of the extension by
363

•HR 2517 IH

1 Russia of credits equivalent to approximately

2 $200,000,000 in support of the intelligence facility at

3 Lourdes, Cuba, in November 1994.

4 (2) Section 498A of the Foreign Assistance Act of

5 1961 (22 U.S.C. 2295a) is amended by adding at the end

6 the following new subsection:

7 ‘‘(d) REDUCTION IN ASSISTANCE FOR SUPPORT OF

8 INTELLIGENCE FACILITIES IN CUBA.—(1) Notwithstand9 ing any other provision of law, the President shall with10 hold from assistance provided, on or after the date of the

11 enactment of this subsection, for an independent state of

12 the former Soviet Union under this chapter an amount

13 equal to the sum of assistance and credits, if any, provided

14 on or after such date by such state in support of intel15 ligence facilities in Cuba, including the intelligence facility

16 at Lourdes, Cuba.

17 ‘‘(2)(A) The President may waive the requirement of

18 paragraph (1) to withhold assistance if the President cer19 tifies to the appropriate congressional committees that the

20 provision of such assistance is important to the national

21 security of the United States, and, in the case of such

22 a certification made with respect to Russia, if the Presi23 dent certifies that the Russian Government has assured

24 the United States Government that the Russian Govern25 ment is not sharing intelligence data collected at the
364

•HR 2517 IH

1 Lourdes facility with officials or agents of the Cuban Gov2 ernment.

3 ‘‘(B) At the time of a certification made with respect

4 to Russia pursuant to subparagraph (A), the President

5 shall also submit to the appropriate congressional commit6 tees a report describing the intelligence activities of Russia

7 in Cuba, including the purposes for which the Lourdes fa8 cility is used by the Russian Government and the extent

9 to which the Russian Government provides payment or

10 government credits to the Cuban Government for the con11 tinued use of the Lourdes facility.

12 ‘‘(C) The report required by subparagraph (B) may

13 be submitted in classified form.

14 ‘‘(D) For purposes of this paragraph, the term ‘ap15 propriate congressional committees’ includes the Perma16 nent Select Committee on Intelligence of the House of

17 Representatives and the Select Committee on Intelligence

18 of the Senate.

19 ‘‘(3) The requirement of paragraph (1) to withhold

20 assistance shall not apply with respect to—

21 ‘‘(A) assistance to meet urgent humanitarian

22 needs, including disaster and refugee relief;

23 ‘‘(B) democratic political reform and rule of law

24 activities;
365

•HR 2517 IH

1 ‘‘(C) technical assistance for safety upgrades of

2 civilian nuclear power plants;

3 ‘‘(D) the creation of private sector and non4 governmental organizations that are independent of

5 government control;

6 ‘‘(E) the development of a free market eco7 nomic system; and

8 ‘‘(F) assistance for the purposes described in

9 the Cooperative Threat Reduction Act of 1993 (title

10 XII of Public Law 103–160).’’.

11 SEC. 6217. TELEVISION BROADCASTING TO CUBA.

12 (a) CONVERSION TO UHF.—The Director of the

13 United States Information Agency shall implement a con14 version of television broadcasting to Cuba under the Tele15 vision Marti Service to ultra high frequency (UHF) broad16 casting.

17 (b) PERIODIC REPORTS.—Not later than 45 days

18 after the date of the enactment of this Act, and every

19 three months thereafter until the conversion described in

20 subsection (a) is fully implemented, the Director of the

21 United States Information Agency shall submit a report

22 to the appropriate congressional committees on the

23 progress made in carrying out subsection (a).

24 (c) TERMINATION OF BROADCASTING AUTHORI25 TIES.—Upon transmittal of a determination under section
366

•HR 2517 IH

1 6233(c)(3), the Television Broadcasting to Cuba Act (22

2 U.S.C. 1465aa and following) and the Radio Broadcasting

3 to Cuba Act (22 U.S.C. 1465 and following) are repealed.

4 SEC. 6218. REPORTS ON ASSISTANCE AND COMMERCE RE5 CEIVED BY CUBA FROM OTHER FOREIGN

6 COUNTRIES.

7 (a) REPORTS REQUIRED.—Not later than 90 days

8 after the date of the enactment of this Act, and every year

9 thereafter, the President shall submit a report to the ap10 propriate congressional committees on assistance and

11 commerce received by Cuba from other foreign countries

12 during the preceding 12-month period.

13 (b) CONTENTS OF REPORTS.—Each report required

14 by subsection (a) shall, for the period covered by the re15 port, contain the following, to the extent such information

16 is known:

17 (1) A description of all bilateral assistance pro18 vided to Cuba by other foreign countries, including

19 humanitarian assistance.

20 (2) A description of Cuba’s commerce with for21 eign countries, including an identification of Cuba’s

22 trading partners and the extent of such trade.

23 (3) A description of the joint ventures com24 pleted, or under consideration, by foreign nationals

25 involving facilities in Cuba, including an identifica-
367

•HR 2517 IH

1 tion of the location of the facilities involved and a

2 description of the terms of agreement of the joint

3 ventures and the names of the parties that are in4 volved.

5 (4) A determination whether or not any of the

6 facilities described in paragraph (3) is the subject of

7 a claim by a United States national.

8 (5) A determination of the amount of Cuban

9 debt owed to each foreign country, including—

10 (A) the amount of debt exchanged, for11 given, or reduced under the terms of each in12 vestment or operation in Cuba involving foreign

13 nationals; and

14 (B) the amount of debt owed to the foreign

15 country that has been exchanged, reduced, or

16 forgiven in return for a grant by the Cuban

17 Government of an equity interest in a property,

18 investment, or operation of the Cuban Govern19 ment or of a Cuban national.

20 (6) A description of the steps taken to ensure

21 that raw materials and semifinished or finished

22 goods produced by facilities in Cuba involving for23 eign nationals do not enter the United States mar24 ket, either directly or through third countries or par25 ties.
368

•HR 2517 IH

1 (7) An identification of countries that purchase,

2 or have purchased, arms or military supplies from

3 the Cuban Government or that otherwise have en4 tered into agreements with the Cuban Government

5 that have a military application, including—

6 (A) a description of the military supplies,

7 equipment, or other materiel sold, bartered, or

8 exchanged between the Cuban Government and

9 such countries;

10 (B) a listing of the goods, services, credits,

11 or other consideration received by the Cuban

12 Government in exchange for military supplies,

13 equipment, or materiel; and

14 (C) the terms or conditions of any such

15 agreement.

16 SEC. 6219. AUTHORIZATION OF SUPPORT FOR DEMOCRATIC

17 AND HUMAN RIGHTS GROUPS AND INTER18 NATIONAL OBSERVERS.

19 (a) AUTHORIZATION.—Notwithstanding any other

20 provision of law, except for section 634A of the Foreign

21 Assistance Act of 1961 (22 U.S.C. 2394–1) and com22 parable notification requirements contained in any Act

23 making appropriations for foreign operations, export fi24 nancing, and related programs, the President is author25 ized to furnish assistance and provide other support for
369

•HR 2517 IH

1 individuals and independent nongovernmental organiza2 tions to support democracy-building efforts for Cuba, in3 cluding the following:

4 (1) Published and informational matter, such as

5 books, videos, and cassettes, on transitions to de6 mocracy, human rights, and market economies, to be

7 made available to independent democratic groups in

8 Cuba.

9 (2) Humanitarian assistance to victims of polit10 ical repression, and their families.

11 (3) Support for democratic and human rights

12 groups in Cuba.

13 (4) Support for visits and permanent deploy14 ment of independent international human rights

15 monitors in Cuba.

16 (b) OAS EMERGENCY FUND.—(1) The President

17 shall take the necessary steps to encourage the Organiza18 tion of American States to create a special emergency fund

19 for the explicit purpose of deploying human rights observ20 ers, election support, and election observation in Cuba.

21 (2) The President should instruct the United States

22 Permanent Representative to the Organization of Amer23 ican States to encourage other member states of the Orga24 nization to join in calling for the Cuban Government to

25 allow the immediate deployment of independent human
370

•HR 2517 IH

1 rights monitors of the Organization throughout Cuba and

2 on-site visits to Cuba by the Inter-American Commission

3 on Human Rights.

4 (3) Notwithstanding section 307 of the Foreign As5 sistance Act of 1961 (22 U.S.C. 2227) or any other provi6 sion of law limiting the United States proportionate share

7 of assistance to Cuba by any international organization,

8 the President should provide not less than $5,000,000 of

9 the voluntary contributions of the United States to the

10 Organization of American States as of the date of the en11 actment of this Act solely for the purposes of the special

12 fund referred to in paragraph (1).

13 SEC. 6220. WITHHOLDING OF FOREIGN ASSISTANCE FROM

14 COUNTRIES SUPPORTING NUCLEAR PLANT

15 IN CUBA.

16 (a) FINDINGS.—The Congress makes the following

17 findings:

18 (1) President Clinton stated in April 1993 that

19 ‘‘the United States opposes the construction of the

20 Juragua nuclear power plant because of our con21 cerns about Cuba’s ability to ensure the safe oper22 ation of the facility and because of Cuba’s refusal to

23 sign the Nuclear Non-Proliferation Treaty or ratify

24 the Treaty of Tlatelolco.’’.
371

•HR 2517 IH

1 (2) Cuba has not signed the Treaty on the Non2 Proliferation of Nuclear Weapons or ratified the

3 Treaty of Tlatelolco, the latter of which establishes

4 Latin America and the Caribbean as a nuclear weap5 ons-free zone.

6 (3) The State Department, the Nuclear Regu7 latory Commission, and the Department of Energy

8 have expressed concerns about the construction and

9 operation of Cuba’s nuclear reactors.

10 (4) In a September 1992 report to Congress,

11 the General Accounting Office outlined concerns

12 among nuclear energy experts about deficiencies in

13 the nuclear plant project in Juragua, near Cienfue14 gos, Cuba, including—

15 (A) a lack in Cuba of a nuclear regulatory

16 structure;

17 (B) the absence in Cuba of an adequate in18 frastructure to ensure the plant’s safe operation

19 and requisite maintenance;

20 (C) the inadequacy of training of plant op21 erators;

22 (D) reports by a former technician from

23 Cuba who, by examining with x-rays weld sites

24 believed to be part of the auxiliary plumbing
372

•HR 2517 IH

1 system for the plant, found that 10 to 15 per2 cent of those sites were defective;

3 (E) since September 5, 1992, when con4 struction on the plant was halted, the prolonged

5 exposure to the elements, including corrosive

6 salt water vapor, of the primary reactor compo7 nents; and

8 (F) the possible inadequacy of the upper

9 portion of the reactors’ dome retention capabil10 ity to withstand only 7 pounds of pressure per

11 square inch, given that normal atmospheric

12 pressure is 32 pounds per square inch and

13 United States reactors are designed to accom14 modate pressures of 50 pounds per square inch.

15 (5) The United States Geological Survey claims

16 that it had difficulty determining answers to specific

17 questions regarding earthquake activity in the area

18 near Cienfuegos because the Cuban Government was

19 not forthcoming with information.

20 (6) The Geological Survey has indicated that

21 the Caribbean plate, a geological formation near the

22 south coast of Cuba, may pose seismic risks to Cuba

23 and the site of the power plant, and may produce

24 large to moderate earthquakes.
373

•HR 2517 IH

1 (7) On May 25, 1992, the Caribbean plate pro2 duced an earthquake numbering 7.0 on the Richter

3 scale.

4 (8) According to a study by the National Oce5 anic and Atmospheric Administration, summer

6 winds could carry radioactive pollutants from a nu7 clear accident at the power plant throughout all of

8 Florida and parts of the States on the gulf coast as

9 far as Texas, and northern winds could carry the

10 pollutants as far northeast as Virginia and Washing11 ton, D.C.

12 (9) The Cuban Government, under dictator

13 Fidel Castro, in 1962 advocated the Soviets’ launch14 ing of nuclear missiles to the United States, which

15 represented a direct and dangerous provocation of

16 the United States and brought the world to the

17 brink of a nuclear conflict.

18 (10) Fidel Castro over the years has consist19 ently issued threats against the United States Gov20 ernment, most recently that he would unleash an21 other perilous mass migration from Cuba upon the

22 enactment of this Act.

23 (11) Despite the various concerns about the

24 plant’s safety and operational problems, a feasibility

25 study is being conducted that would establish a sup-
374

•HR 2517 IH

1 port group to include Russia, Cuba, and third coun2 tries with the objective of completing and operating

3 the plant.

4 (b) WITHHOLDING OF FOREIGN ASSISTANCE.—

5 (1) IN GENERAL.—Notwithstanding any other

6 provision of law, the President shall withhold from

7 assistance allocated, on or after the date of the en8 actment of this Act, for any country an amount

9 equal to the sum of assistance and credits, if any,

10 provided on or after such date of enactment by that

11 country or any entity in that country in support of

12 the completion of the Cuban nuclear facility at

13 Juragua, near Cienfuegos, Cuba.

14 (2) EXCEPTIONS.—The requirement of para15 graph (1) to withhold assistance shall not apply with

16 respect to—

17 (A) assistance to meet urgent humani18 tarian needs, including disaster and refugee re19 lief;

20 (B) democratic political reform and rule of

21 law activities;

22 (C) the creation of private sector and non23 governmental organizations that are independ24 ent of government control;
375

•HR 2517 IH

1 (D) the development of a free market eco2 nomic system; and

3 (E) assistance for the purposes described

4 in the Cooperative Threat Reduction Act of

5 1993 (title XII of Public Law 103–160).

6 (3) DEFINITION.—As used in paragraph (1),

7 the term ‘‘assistance’’ means assistance under the

8 Foreign Assistance Act of 1961, credits, sales, and

9 guarantees of extensions of credit under the Arms

10 Export Control Act, assistance under titles I and III

11 of the Agricultural Trade Development and Assist12 ance Act of 1954, assistance under the FREEDOM

13 Support Act of 1992, and any other program of as14 sistance or credits provided by the United States to

15 other countries under other provisions of law, except

16 that the term ‘‘assistance’’ does not include humani17 tarian assistance, including disaster relief assistance.

18 SEC. 6221. EXPULSION OF CRIMINALS FROM CUBA.

19 The President shall instruct all United States Gov20 ernment officials who engage in official conduct with the

21 Cuban Government to raise on a regular basis the extra22 dition of or rendering to the United States all persons re23 siding in Cuba who are sought by the United States De24 partment of Justice for crimes committed in the United

25 States.
376

•HR 2517 IH

1 PART 2—ASSISTANCE TO A FREE AND

2 INDEPENDENT CUBA

3 SEC. 6231. POLICY TOWARD A TRANSITION GOVERNMENT

4 AND A DEMOCRATICALLY ELECTED GOVERN5 MENT IN CUBA.

6 The policy of the United States is as follows:

7 (1) To support the self-determination of the

8 Cuban people.

9 (2) To recognize that the self-determination of

10 the Cuban people is a sovereign and national right

11 of the citizens of Cuba which must be exercised free

12 of interference by the government of any other coun13 try.

14 (3) To encourage the Cuban people to empower

15 themselves with a government which reflects the self16 determination of the Cuban people.

17 (4) To recognize the potential for a difficult

18 transition from the current regime in Cuba that may

19 result from the initiatives taken by the Cuban people

20 for self-determination in response to the intran21 sigence of the Castro regime in not allowing any

22 substantive political or economic reforms, and to be

23 prepared to provide the Cuban people with humani24 tarian, developmental, and other economic assist25 ance.
377

•HR 2517 IH

1 (5) In solidarity with the Cuban people, to pro2 vide appropriate forms of assistance—

3 (A) to a transition government in Cuba;

4 (B) to facilitate the rapid movement from

5 such a transition government to a democrat6 ically elected government in Cuba that results

7 from an expression of the self-determination of

8 the Cuban people; and

9 (C) to support such a democratically elect10 ed government.

11 (6) Through such assistance, to facilitate a

12 peaceful transition to representative democracy and

13 a market economy in Cuba and to consolidate de14 mocracy in Cuba.

15 (7) To deliver such assistance to the Cuban

16 people only through a transition government in

17 Cuba, through a democratically elected government

18 in Cuba, through United States Government organi19 zations, or through United States, international, or

20 indigenous nongovernmental organizations.

21 (8) To encourage other countries and multilat22 eral organizations to provide similar assistance, and

23 to work cooperatively with such countries and orga24 nizations to coordinate such assistance.
378

•HR 2517 IH

1 (9) To ensure that appropriate assistance is

2 rapidly provided and distributed to the people of

3 Cuba upon the institution of a transition govern4 ment in Cuba.

5 (10) Not to provide favorable treatment or in6 fluence on behalf of any individual or entity in the

7 selection by the Cuban people of their future govern8 ment.

9 (11) To assist a transition government in Cuba

10 and a democratically elected government in Cuba to

11 prepare the Cuban military forces for an appropriate

12 role in a democracy.

13 (12) To be prepared to enter into negotiations

14 with a democratically elected government in Cuba ei15 ther to return the United States Naval Base at

16 Guantanamo to Cuba or to renegotiate the present

17 agreement under mutually agreeable terms.

18 (13) To consider the restoration of diplomatic

19 recognition and support the reintegration of the

20 Cuban Government into Inter-American organiza21 tions when the President determines that there ex22 ists a democratically elected government in Cuba.

23 (14) To take steps to remove the economic em24 bargo of Cuba when the President determines that
379

•HR 2517 IH

1 a transition to a democratically elected government

2 in Cuba has begun.

3 (15) To assist a democratically elected govern4 ment in Cuba to strengthen and stabilize its national

5 currency.

6 (16) To pursue trade relations with a free,

7 democratic, and independent Cuba.

8 SEC. 6232. ASSISTANCE FOR THE CUBAN PEOPLE.

9 (a) AUTHORIZATION.—

10 (1) IN GENERAL.—The President shall develop

11 a plan for providing economic assistance to Cuba at

12 such time as the President determines that a transi13 tion government or a democratically elected govern14 ment in Cuba (as determined under section 6233(c))

15 is in power.

16 (2) EFFECT ON OTHER LAWS.—Assistance may

17 be provided under this section subject to an author18 ization of appropriations and subject to the availabil19 ity of appropriations.

20 (b) PLAN FOR ASSISTANCE.—

21 (1) DEVELOPMENT OF PLAN.—The President

22 shall develop a plan for providing assistance under

23 this section—

24 (A) to Cuba when a transition government

25 in Cuba is in power; and
380

•HR 2517 IH

1 (B) to Cuba when a democratically elected

2 government in Cuba is in power.

3 (2) TYPES OF ASSISTANCE.—Assistance under

4 the plan developed under paragraph (1) may, subject

5 to an authorization of appropriations and subject to

6 the availability of appropriations, include the follow7 ing:

8 (A) TRANSITION GOVERNMENT.—(i) Ex9 cept as provided in clause (ii), assistance to

10 Cuba under a transition government shall, sub11 ject to an authorization of appropriations and

12 subject to the availability of appropriations, be

13 limited to—

14 (I) such food, medicine, medical sup15 plies and equipment, and assistance to

16 meet emergency energy needs, as is nec17 essary to meet the basic human needs of

18 the Cuban people; and

19 (II) assistance described in subpara20 graph (C).

21 (ii) Assistance provided only after the

22 President certifies to the appropriate congres23 sional committees, in accordance with proce24 dures applicable to reprogramming notifications

25 under section 634A of the Foreign Assistance
381

•HR 2517 IH

1 Act of 1961, that such assistance is essential to

2 the successful completion of the transition to

3 democracy.

4 (iii) Only after a transition government in

5 Cuba is in power, remittances by individuals to

6 their relatives of cash or goods, as well as free7 dom to travel to visit them without any restric8 tions, shall be permitted.

9 (B) DEMOCRATICALLY ELECTED GOVERN10 MENT.—Assistance to a democratically elected

11 government in Cuba may, subject to an author12 ization of appropriations and subject to the

13 availability of appropriations, consist of addi14 tional economic assistance, together with assist15 ance described in subparagraph (C). Such eco16 nomic assistance may include—

17 (i) assistance under chapter 1 of part

18 I (relating to development assistance), and

19 chapter 4 of part II (relating to the eco20 nomic support fund), of the Foreign As21 sistance Act of 1961;

22 (ii) assistance under the Agricultural

23 Trade Development and Assistance Act of

24 1954;
382

•HR 2517 IH

1 (iii) financing, guarantees, and other

2 forms of assistance provided by the Ex3 port-Import Bank of the United States;

4 (iv) financial support provided by the

5 Overseas Private Investment Corporation

6 for investment projects in Cuba;

7 (v) assistance provided by the Trade

8 and Development Agency;

9 (vi) Peace Corps programs; and

10 (vii) other appropriate assistance to

11 carry out the policy of section 6231.

12 (C) MILITARY ADJUSTMENT ASSIST13 ANCE.—Assistance to a transition government

14 in Cuba and to a democratically elected govern15 ment in Cuba shall also include assistance in

16 preparing the Cuban military forces to adjust

17 to an appropriate role in a democracy.

18 (c) STRATEGY FOR DISTRIBUTION.—The plan devel19 oped under subsection (b) shall include a strategy for dis20 tributing assistance under the plan.

21 (d) DISTRIBUTION.—Assistance under the plan devel22 oped under subsection (b) shall be provided through

23 United States Government organizations and nongovern24 mental organizations and private and voluntary organiza25 tions, whether within or outside the United States, includ-
383

•HR 2517 IH

1 ing humanitarian, educational, labor, and private sector

2 organizations.

3 (e) INTERNATIONAL EFFORTS.—The President shall

4 take the necessary steps—

5 (1) to seek to obtain the agreement of other

6 countries and of international financial institutions

7 and multilateral organizations to provide to a transi8 tion government in Cuba, and to a democratically

9 elected government in Cuba, assistance comparable

10 to that provided by the United States under this

11 subtitle; and

12 (2) to work with such countries, institutions,

13 and organizations to coordinate all such assistance

14 programs.

15 (f) COMMUNICATION WITH THE CUBAN PEOPLE.—

16 The President shall take the necessary steps to commu17 nicate to the Cuban people the plan for assistance devel18 oped under this section.

19 (g) REPORT TO CONGRESS.—Not later than 180 days

20 after the date of the enactment of this Act, the President

21 shall transmit to the appropriate congressional committees

22 a report describing in detail the plan developed under this

23 section.

24 (h) TRADE AND INVESTMENT RELATIONS.—
384

•HR 2517 IH

1 (1) REPORT TO CONGRESS.—The President, fol2 lowing the transmittal to the Congress of a deter3 mination under section 6233(c)(3) that a democrat4 ically elected government in Cuba is in power, shall

5 submit to the appropriate congressional committees

6 a report that describes—

7 (A) acts, policies, and practices that con8 stitute significant barriers to, or distortions of,

9 United States trade in goods or services or for10 eign direct investment with respect to Cuba;

11 (B) policy objectives of the United States

12 regarding trade relations with a democratically

13 elected government in Cuba, and the reasons

14 therefor, including possible—

15 (i) reciprocal extension of nondiscrim16 inatory trade treatment (most-favored17 nation treatment);

18 (ii) designation of Cuba as a bene19 ficiary developing country under title V of

20 the Trade Act of 1974 (relating to the

21 Generalized System of Preferences) or as a

22 beneficiary country under the Caribbean

23 Basin Economic Recovery Act, and the im24 plications of such designation with respect

25 to trade with any other country that is
385

•HR 2517 IH

1 such a beneficiary developing country or

2 beneficiary country or is a party to the

3 North American Free Trade Agreement;

4 and

5 (iii) negotiations regarding free trade,

6 including the accession of Cuba to the

7 North American Free Trade Agreement;

8 (C) specific trade negotiating objectives of

9 the United States with respect to Cuba, includ10 ing the objectives described in section 108(b)(5)

11 of the North American Free Trade Agreement

12 Implementation Act (19 U.S.C. 3317(b)(5));

13 and

14 (D) actions proposed or anticipated to be

15 undertaken, and any proposed legislation nec16 essary or appropriate, to achieve any of such

17 policy and negotiating objectives.

18 (2) CONSULTATIONS.—The President shall con19 sult with the appropriate congressional committees

20 and shall seek advice from the appropriate advisory

21 committees established under section 135 of the

22 Trade Act of 1974 regarding the policy and nego23 tiating objectives and the legislative proposals de24 scribed in paragraph (1).
386

•HR 2517 IH

1 SEC. 6233. COORDINATION OF ASSISTANCE PROGRAM; IM2 PLEMENTATION AND REPORTS TO CON3 GRESS; REPROGRAMMING.

4 (a) COORDINATING OFFICIAL.—The President shall

5 designate a coordinating official who shall be responsible

6 for—

7 (1) implementing the strategy for distributing

8 assistance described in section 6232(b);

9 (2) ensuring the speedy and efficient distribu10 tion of such assistance; and

11 (3) ensuring coordination among, and appro12 priate oversight by, the agencies of the United

13 States that provide assistance described in section

14 6232(b), including resolving any disputes among

15 such agencies.

16 (b) UNITED STATES-CUBA COUNCIL.—Upon making

17 a determination under subsection (c)(3) that a democrat18 ically elected government in Cuba is in power, the Presi19 dent, after consultation with the coordinating official, is

20 authorized to designate a United States-Cuba council—

21 (1) to ensure coordination between the United

22 States Government and the private sector in re23 sponding to change in Cuba, and in promoting mar24 ket-based development in Cuba; and
387

•HR 2517 IH

1 (2) to establish periodic meetings between rep2 resentatives of the United States and Cuban private

3 sectors for the purpose of facilitating bilateral trade.

4 (c) IMPLEMENTATION OF PLAN; REPORTS TO CON5 GRESS.—

6 (1) IMPLEMENTATION WITH RESPECT TO TRAN7 SITION GOVERNMENT.—Upon making a determina8 tion that a transition government in Cuba is in

9 power, the President shall transmit that determina10 tion to the appropriate congressional committees and

11 shall, subject to an authorization of appropriations

12 and subject to the availability of appropriations,

13 commence the delivery and distribution of assistance

14 to such transition government under the plan devel15 oped under section 6232(b).

16 (2) REPORTS TO CONGRESS.—(A) The Presi17 dent shall transmit to the appropriate congressional

18 committees a report setting forth the strategy for

19 providing assistance described in section 6232(b)(2)

20 (A) and (C) to the transition government in Cuba

21 under the plan of assistance developed under section

22 6232(b), the types of such assistance, and the extent

23 to which such assistance has been distributed in ac24 cordance with the plan.
388

•HR 2517 IH

1 (B) The President shall transmit the report not

2 later than 90 days after making the determination

3 referred to in paragraph (1), except that the Presi4 dent shall transmit the report in preliminary form

5 not later than 15 days after making that determina6 tion.

7 (3) IMPLEMENTATION WITH RESPECT TO

8 DEMOCRATICALLY ELECTED GOVERNMENT.—The

9 President shall, upon determining that a democrat10 ically elected government in Cuba is in power, sub11 mit that determination to the appropriate congres12 sional committees and shall, subject to an authoriza13 tion of appropriations and subject to the availability

14 of appropriations, commence the delivery and dis15 tribution of assistance to such democratically elected

16 government under the plan developed under section

17 6232(b).

18 (4) ANNUAL REPORTS TO CONGRESS.—Not

19 later than 60 days after the end of each fiscal year,

20 the President shall transmit to the appropriate con21 gressional committees a report on the assistance

22 provided under the plan developed under section

23 6232(b), including a description of each type of as24 sistance, the amounts expended for such assistance,
389

•HR 2517 IH

1 and a description of the assistance to be provided

2 under the plan in the current fiscal year.

3 (d) REPROGRAMMING.—Any changes in the assist4 ance to be provided under the plan developed under sec5 tion 6232(b) may not be made unless the President noti6 fies the appropriate congressional committees at least 15

7 days in advance in accordance with the procedures appli8 cable to reprogramming notifications under section 634A

9 of the Foreign Assistance Act of 1961 (22 U.S.C. 2394–

10 1).

11 SEC. 6234. TERMINATION OF THE ECONOMIC EMBARGO OF

12 CUBA.

13 (a) PRESIDENTIAL ACTIONS.—Upon submitting a de14 termination to the appropriate congressional committees

15 under section 6233(c)(1) that a transition government in

16 Cuba is in power, the President, after consulting with the

17 Congress, is authorized to take steps to suspend the eco18 nomic embargo of Cuba to the extent that such action con19 tributes to a stable foundation for a democratically elected

20 government in Cuba.

21 (b) SUSPENSION OF CERTAIN PROVISIONS OF

22 LAW.—In carrying out subsection (a), the President may

23 suspend the enforcement of—

24 (1) section 620(a) of the Foreign Assistance

25 Act of 1961 (22 U.S.C. 2370(a));
390

•HR 2517 IH

1 (2) section 620(f) of the Foreign Assistance Act

2 of 1961 (22 U.S.C. 2370(f)) with regard to the ‘‘Re3 public of Cuba’’;

4 (3) sections 1704, 1705(d), and 1706 of the

5 Cuban Democracy Act (22 U.S.C. 6003, 6004(d),

6 6005);

7 (4) section 902(c) of the Food Security Act of

8 1985; and

9 (5) the prohibitions on transactions described in

10 part 515 of title 31, Code of Federal Regulations.

11 (c) ADDITIONAL PRESIDENTIAL ACTIONS.—Upon

12 submitting a determination to the appropriate congres13 sional committees under section 6233(c)(3) that a demo14 cratically elected government in Cuba is in power, the

15 President shall take steps to terminate the economic em16 bargo of Cuba.

17 (d) CONFORMING AMENDMENTS.—On the date on

18 which the President submits a determination under sec19 tion 6233(c)(3)—

20 (1) section 620(a) of the Foreign Assistance

21 Act of 1961 (22 U.S.C. 2370(a)) is repealed;

22 (2) section 620(f) of the Foreign Assistance Act

23 of 1961 (22 U.S.C. 2370(f)) is amended by striking

24 ‘‘Republic of Cuba’’;
391

•HR 2517 IH

1 (3) sections 1704, 1705(d), and 1706 of the

2 Cuban Democracy Act of 1992 (22 U.S.C. 6003,

3 6004(d), and 6005) are repealed; and

4 (4) section 902(c) of the Food Security Act of

5 1985 is repealed.

6 (e) REVIEW OF SUSPENSION OF ECONOMIC EMBAR7 GO.—

8 (1) REVIEW.—If the President takes action

9 under subsection (a) to suspend the economic em10 bargo of Cuba, the President shall immediately so

11 notify the Congress. The President shall report to

12 the Congress no less frequently than every 6 months

13 thereafter, until he submits a determination under

14 section 6233(c)(3) that a democratically elected gov15 ernment in Cuba is in power, on the progress being

16 made by Cuba toward the establishment of such a

17 democratically elected government. The action of the

18 President under subsection (a) shall cease to be ef19 fective upon the enactment of a joint resolution de20 scribed in paragraph (2).

21 (2) JOINT RESOLUTIONS.—For purposes of this

22 subsection, the term ‘‘joint resolution’’ means only a

23 joint resolution of the 2 Houses of Congress, the

24 matter after the resolving clause of which is as fol25 lows: ‘‘That the Congress disapproves the action of
392

•HR 2517 IH

1 the President under section 6234(a) of the Cuban

2 Liberty and Democratic Solidarity (LIBERTAD)

3 Act of 1995 to suspend the economic embargo of

4 Cuba, notice of which was submitted to the Congress

5 on ll.’’, with the blank space being filled with the

6 appropriate date.

7 (3) REFERRAL TO COMMITTEES.—Joint resolu8 tions introduced in the House of Representatives

9 shall be referred to the Committee on International

10 Relations and joint resolutions introduced in the

11 Senate shall be referred to the Committee on For12 eign Relations.

13 (4) PROCEDURES.—(A) Any joint resolution

14 shall be considered in the Senate in accordance with

15 the provisions of section 601(b) of the International

16 Security Assistance and Arms Export Control Act

17 of 1976.

18 (B) For the purpose of expediting the consider19 ation and enactment of joint resolutions, a motion to

20 proceed to the consideration of any joint resolution

21 after it has been reported by the appropriate com22 mittee shall be treated as highly privileged in the

23 House of Representatives.

24 (C) Not more than 1 joint resolution may be

25 considered in the House of Representatives and the
393

•HR 2517 IH

1 Senate in the 6-month period beginning on the date

2 on which the President notifies the Congress under

3 paragraph (1) of the action taken under subsection

4 (a), and in each 6-month period thereafter.

5 SEC. 6235. REQUIREMENTS FOR A TRANSITION GOVERN6 MENT.

7 For purposes of this subtitle, a transition government

8 in Cuba is a government in Cuba which—

9 (1) is demonstrably in transition from com10 munist totalitarian dictatorship to representative de11 mocracy;

12 (2) has recognized the right to independent po13 litical activity and association;

14 (3) has released all political prisoners and al15 lowed for investigations of Cuban prisons by appro16 priate international human rights organizations;

17 (4) has ceased any interference with Radio or

18 Television Marti broadcasts;

19 (5) makes public commitments to and is mak20 ing demonstrable progress in—

21 (A) establishing an independent judiciary;

22 (B) dissolving the present Department of

23 State Security in the Cuban Ministry of the In24 terior, including the Committees for the De-
394

•HR 2517 IH

1 fense of the Revolution and the Rapid Response

2 Brigades;

3 (C) respecting internationally recognized

4 human rights and basic freedoms as set forth in

5 the Universal Declaration of Human Rights, to

6 which Cuba is a signatory nation;

7 (D) effectively guaranteeing the rights of

8 free speech and freedom of the press;

9 (E) organizing free and fair elections for a

10 new government—

11 (i) to be held in a timely manner with12 in a period not to exceed 1 year after the

13 transition government assumes power;

14 (ii) with the participation of multiple

15 independent political parties that have full

16 access to the media on an equal basis, in17 cluding (in the case of radio, television, or

18 other telecommunications media) in terms

19 of allotments of time for such access and

20 the times of day such allotments are given;

21 and

22 (iii) to be conducted under the super23 vision of internationally recognized observ24 ers, such as the Organization of American
395

•HR 2517 IH

1 States, the United Nations, and other elec2 tions monitors;

3 (F) assuring the right to private property;

4 (G) taking appropriate steps to return to

5 United States citizens (and entities which are

6 50 percent or more beneficially owned by Unit7 ed States citizens) property taken by the Cuban

8 Government from such citizens and entities on

9 or after January 1, 1959, or to provide equi10 table compensation to such citizens and entities

11 for such property;

12 (H) granting permits to privately owned

13 telecommunications and media companies to op14 erate in Cuba; and

15 (I) allowing the establishment of independ16 ent trade unions as set forth in conventions 87

17 and 98 of the International Labor Organiza18 tion, and allowing the establishment of inde19 pendent social, economic, and political associa20 tions;

21 (6) does not include Fidel Castro or Raul Cas22 tro;

23 (7) has given adequate assurances that it will

24 allow the speedy and efficient distribution of assist25 ance to the Cuban people;
396

•HR 2517 IH

1 (8) permits the deployment throughout Cuba of

2 independent and unfettered international human

3 rights monitors; and

4 (9) has extradited or otherwise rendered to the

5 United States all persons sought by the United

6 States Department of Justice for crimes committed

7 in the United States.

8 SEC. 6236. REQUIREMENTS FOR A DEMOCRATICALLY

9 ELECTED GOVERNMENT.

10 For purposes of this subtitle, a democratically elected

11 government in Cuba, in addition to continuing to comply

12 with the requirements of section 6235, is a government

13 in Cuba which—

14 (1) results from free and fair elections con15 ducted under the supervision of internationally rec16 ognized observers;

17 (2) has permitted opposition parties ample time

18 to organize and campaign for such elections, and has

19 permitted full access to the media to all candidates

20 in the elections;

21 (3) is showing respect for the basic civil lib22 erties and human rights of the citizens of Cuba;

23 (4) has made demonstrable progress in estab24 lishing an independent judiciary;
397

•HR 2517 IH

1 (5) is substantially moving toward a market-ori2 ented economic system;

3 (6) is committed to making constitutional

4 changes that would ensure regular free and fair elec5 tions that meet the requirements of paragraph (2);

6 and

7 (7) has made demonstrable progress in return8 ing to United States citizens (and entities which are

9 50 percent or more beneficially owned by United

10 States citizens) property taken by the Cuban Gov11 ernment from such citizens and entities on or after

12 January 1, 1959, or providing full compensation for

13 such property in accordance with international law

14 standards and practice.

15 PART 3—PROTECTION OF PROPERTY RIGHTS OF

16 UNITED STATES NATIONALS AGAINST CON17 FISCATORY TAKINGS BY THE CASTRO RE18 GIME

19 SEC. 6251. STATEMENT OF POLICY.

20 The Congress makes the following findings:

21 (1) The right of individuals to hold and enjoy

22 property is a fundamental right recognized by the

23 United States Constitution and international human

24 rights law, including the Universal Declaration of

25 Human Rights.
398

•HR 2517 IH

1 (2) The illegal confiscation or taking of prop2 erty by governments, and the acquiescence of gov3 ernments in the confiscation of property by their

4 citizens, undermines the comity among nations, the

5 free flow of commerce, and economic development.

6 (3) It is in the interest of all nations to respect

7 equally the property rights of their citizens and na8 tionals of other countries.

9 (4) Nations that provide an effective mecha10 nism for prompt, adequate, and fair compensation

11 for the confiscation of private property will continue

12 to have the support of the United States.

13 (5) The United States Government has an obli14 gation to its citizens to provide protection against il15 legal confiscation by foreign nations and their citi16 zens, including the provision of private remedies.

17 (6) Nations that illegally confiscate private

18 property should not be immune to another nation’s

19 laws whose purpose is to protect against the

20 confiscation of lawfully acquired property by its citi21 zens.

22 (7) Trafficking in illegally acquired property is

23 a crime under the laws of the United States and

24 other nations, yet this same activity is allowed under

25 international law.
399

•HR 2517 IH

1 (8) International law, by not providing effective

2 remedies, condones the illegal confiscation of prop3 erty and allows for the unjust enrichment from the

4 use of confiscated property by governments and pri5 vate entities at the expense of those who hold legal

6 claim to the property.

7 (9) The development of an international mecha8 nism sanctioning those governments and private en9 tities that confiscate and unjustly use private prop10 erty so confiscated should be a priority objective of

11 United States foreign policy.

12 SEC. 6252. LIABILITY FOR TRAFFICKING IN PROPERTY

13 CONFISCATED FROM UNITED STATES NA14 TIONALS.

15 (a) CIVIL REMEDY.—

16 (1) LIABILITY FOR TRAFFICKING.—(A) Except

17 as provided in paragraphs (3) and (4), any person,

18 including any agency or instrumentality of a foreign

19 state in the conduct of a commercial activity, that,

20 after the end of the 6-month period beginning on the

21 date of the enactment of this Act, traffics in con22 fiscated property shall be liable to any United States

23 national who owns the claim to such property for

24 money damages in an amount equal to the sum of—

25 (i) the amount which is the greater of—
400

•HR 2517 IH

1 (I) the amount, if any, certified to the

2 claimant by the Foreign Claims Settlement

3 Commission under the International

4 Claims Settlement Act of 1949, plus inter5 est;

6 (II) the amount determined under sec7 tion 6253(a)(2), plus interest; or

8 (III) the fair market value of that

9 property, calculated as being the then cur10 rent value of the property, or the value of

11 the property when confiscated plus inter12 est, whichever is greater; and

13 (ii) reasonable costs and attorneys’ fees.

14 (B) Interest under subparagraph (A)(i) shall be

15 at the rate set forth in section 1961 of title 28,

16 United States Code, computed by the court from the

17 date of the confiscation of the property involved to

18 the date on which the action is brought under this

19 subsection.

20 (2) PRESUMPTION IN FAVOR OF CERTIFIED

21 CLAIMS.—There shall be a presumption that the

22 amount for which a person, including any agency or

23 instrumentality of a foreign state in the conduct of

24 a commercial activity, is liable under clause (i) of

25 paragraph (1)(A) is the amount that is certified
401

•HR 2517 IH

1 under subclause (I) of that clause. The presumption

2 shall be rebuttable by clear and convincing evidence

3 that the amount described in subclause (II) or (III)

4 of that clause is the appropriate amount of liability

5 under that clause.

6 (3) INCREASED LIABILITY FOR PRIOR NO7 TICE.—Except as provided in paragraph (4), any

8 person, including any agency or instrumentality of a

9 foreign state in the conduct of a commercial activity,

10 that traffics in confiscated property after having re11 ceived—

12 (A) notice of a claim to ownership of the

13 property by a United States national who owns

14 a claim to the confiscated property, and

15 (B) notice of the provisions of this section,

16 shall be liable to that United States national for

17 money damages in an amount which is the sum of

18 the amount equal to the amount determined under

19 paragraph (1)(A)(ii) plus triple the amount deter20 mined applicable under subclause (I), (II), or (III)

21 of paragraph (1)(A)(i).

22 (4) APPLICABILITY.—(A) Except as otherwise

23 provided in this paragraph, actions may be brought

24 under paragraph (1) with respect to property con-
402

•HR 2517 IH

1 fiscated before, on, or after the date of the enact2 ment of this Act.

3 (B) In the case of property confiscated before

4 the date of the enactment of this Act, no United

5 States national may bring an action under this sec6 tion unless such national acquired ownership of the

7 claim to the confiscated property before such date.

8 (C) In the case of property confiscated on or

9 after the date of the enactment of this Act, no Unit10 ed States national who acquired ownership of a

11 claim to confiscated property by assignment for

12 value after such date of enactment may bring an ac13 tion on the claim under this section.

14 (5) TREATMENT OF CERTAIN ACTIONS.—(A) In

15 the case of any action brought under this section by

16 a United States national who was eligible to file the

17 underlying claim in the action with the Foreign

18 Claims Settlement Commission under title V of the

19 International Claims Settlement Act of 1949 but did

20 not so file the claim, the court may hear the case

21 only if the court determines that the United States

22 national had good cause for not filing the claim.

23 (B) In the case of any action brought under

24 this section by a United States national whose claim

25 in the action was timely filed with the Foreign
403

•HR 2517 IH

1 Claims Settlement Commission under title V of the

2 International Claims Settlement Act of 1949 but

3 was denied by the Commission, the court may assess

4 the basis for the denial and may accept the findings

5 of the Commission on the claim as conclusive in the

6 action under this section unless good cause justifies

7 another result.

8 (6) INAPPLICABILITY OF ACT OF STATE DOC9 TRINE.—No court of the United States shall decline,

10 based upon the act of state doctrine, to make a de11 termination on the merits in an action brought

12 under paragraph (1).

13 (b) DEFINITION.—As used in this subsection, the

14 term ‘‘agency or instrumentality of a foreign state’’ has

15 the meaning given that term in section 1603(b) of title

16 28, United States Code.

17 (c) JURISDICTION.—

18 (1) IN GENERAL.—Chapter 85 of title 28, Unit19 ed States Code, is amended by inserting after sec20 tion 1331 the following new section:

21 ‘‘§ 1331a. Civil actions involving confiscated property

22 ‘‘The district courts shall have exclusive jurisdiction

23 of any action brought under section 6252 of the Cuban

24 Liberty and Democratic Solidarity (LIBERTAD) Act of

25 1995, regardless of the amount in controversy.’’.
404

•HR 2517 IH

1 (2) CONFORMING AMENDMENT.—The table of

2 sections for chapter 85 of title 28, United States

3 Code, is amended by inserting after the item relating

4 to section 1331 the following:

‘‘1331a. Civil actions involving confiscated property.’’.

5 (d) CERTAIN PROPERTY IMMUNE FROM EXECU6 TION.—Section 1611 of title 28, United States Code, is

7 amended by adding at the end the following:

8 ‘‘(c) Notwithstanding the provisions of section 1610

9 of this chapter, the property of a foreign state shall be

10 immune from attachment and from execution in an action

11 brought under section 6252 of the Cuban Liberty and

12 Democratic Solidarity (LIBERTAD) Act of 1995 to the

13 extent the property is a facility or installation used by an

14 accredited diplomatic mission for official purposes.’’.

15 (e) ELECTION OF REMEDIES.—

16 (1) ELECTION.—Subject to paragraph (2)—

17 (A) any United States national that brings

18 an action under this section may not bring any

19 other civil action or proceeding under the com20 mon law, Federal law, or the law of any of the

21 several States, the District of Columbia, or any

22 territory or possession of the United States,

23 that seeks monetary or nonmonetary compensa24 tion by reason of the same subject matter; and
405

•HR 2517 IH

1 (B) any person who brings, under the com2 mon law or any provision of law other than this

3 section, a civil action or proceeding for mone4 tary or nonmonetary compensation arising out

5 of a claim for which an action would otherwise

6 be cognizable under this section may not bring

7 an action under this section on that claim.

8 (2) TREATMENT OF CERTIFIED CLAIMANTS.—

9 In the case of any United States national that

10 brings an action under this section based on a claim

11 certified under title V of the International Claims

12 Settlement Act of 1949—

13 (A) if the recovery in the action is equal to

14 or greater than the amount of the certified

15 claim, the United States national may not re16 ceive payment on the claim under any agree17 ment entered into between the United States

18 and Cuba settling claims covered by such title,

19 and such national shall be deemed to have dis20 charged the United States from any further re21 sponsibility to represent the United States na22 tional with respect to that claim;

23 (B) if the recovery in the action is less

24 than the amount of the certified claim, the

25 United States national may receive payment
406

•HR 2517 IH

1 under a claims agreement described in subpara2 graph (A) but only to the extent of the dif3 ference between the amount of the recovery and

4 the amount of the certified claim; and

5 (C) if there is no recovery in the action,

6 the United States national may receive payment

7 on the certified claim under a claims agreement

8 described in subparagraph (A) to the same ex9 tent as any certified claimant who does not

10 bring an action under this section.

11 (f) DEPOSIT OF EXCESS PAYMENTS BY CUBA UNDER

12 CLAIMS AGREEMENT.—Any amounts paid by Cuba under

13 any agreement entered into between the United States and

14 Cuba settling certified claims under title V of the Inter15 national Claims Settlement Act of 1949 that are in excess

16 of the payments made on such certified claims after the

17 application of subsection (e) shall be deposited into the

18 United States Treasury.

19 (g) TERMINATION OF RIGHTS.—

20 (1) IN GENERAL.—All rights created under this

21 section to bring an action for money damages with

22 respect to property confiscated before the date of the

23 enactment of this Act shall cease upon the transmit24 tal to the Congress of a determination of the Presi25 dent under section 6233(c)(3).
407

•HR 2517 IH

1 (2) PENDING SUITS.—The termination of rights

2 under paragraph (1) shall not affect suits com3 menced before the date of such termination, and in

4 all such suits, proceedings shall be had, appeals

5 taken, and judgments rendered in the same manner

6 and with the same effect as if this subsection had

7 not been enacted.

8 SEC. 6253. DETERMINATION OF CLAIMS TO CONFISCATED

9 PROPERTY.

10 (a) EVIDENCE OF OWNERSHIP.—

11 (1) CONCLUSIVENESS OF CERTIFIED CLAIMS.—

12 In any action brought under this part, the courts

13 shall accept as conclusive proof of ownership a cer14 tification of a claim to ownership that has been

15 made by the Foreign Claims Settlement Commission

16 pursuant to title V of the International Claims Set17 tlement Act of 1949 (22 U.S.C. 1643 and following).

18 (2) CLAIMS NOT CERTIFIED.—In the case of a

19 claim that has not been certified by the Foreign

20 Claims Settlement Commission before the enactment

21 of this Act, a court may appoint a special master,

22 including the Foreign Claims Settlement Commis23 sion, to make determinations regarding the amount

24 and validity of claims to ownership of confiscated

25 property. Such determinations are only for evi-
408

•HR 2517 IH

1 dentiary purposes in civil actions brought under this

2 part and do not constitute certifications pursuant to

3 title V of the International Claims Settlement Act of

4 1949.

5 (3) EFFECT OF DETERMINATIONS OF FOREIGN

6 ENTITIES.—In determining ownership, courts shall

7 not accept as conclusive evidence of ownership any

8 findings, orders, judgments, or decrees from admin9 istrative agencies or courts of foreign countries or

10 international organizations that invalidate the claim

11 held by a United States national, unless the invali12 dation was found pursuant to binding international

13 arbitration to which United States national submit14 ted the claim.

15 (b) AMENDMENT OF THE INTERNATIONAL CLAIMS

16 SETTLEMENT ACT OF 1949.—Title V of the International

17 Claims Settlement Act of 1949 (22 U.S.C. 1643 and fol18 lowing) is amended by adding at the end the following new

19 section:

20 ‘‘EVALUATION OF OWNERSHIP CLAIMS REFERRED BY

21 DISTRICT COURTS OF THE UNITED STATES

22 ‘‘SEC. 514. Notwithstanding any other provision of

23 this title and only for purposes of section 6252 the Cuban

24 Liberty and Solidarity (LIBERTAD) Act, a United States

25 district court, for fact-finding purposes, may refer to the

26 Commission, and the Commission may determine, ques-
409

•HR 2517 IH

1 tions of the amount and ownership of a claim by a United

2 States national (as defined in section 6204 of the Cuban

3 Liberty and Solidarity (LIBERTAD) Act) resulting from

4 the confiscation of property by the Government of Cuba

5 described in section 503(a), whether or not the United

6 States national qualified as a national of the United States

7 (as defined in section 502(1)) at the time of the action

8 by the Government of Cuba.’’.

9 (c) RULE OF CONSTRUCTION.—Nothing in this sub10 title or section 514 of the International Claims Settlement

11 Act of 1949, as added by subsection (b), shall be con12 strued—

13 (1) to require or otherwise authorize the claims

14 of Cuban nationals who became United States citi15 zens after their property was confiscated to be in16 cluded in the claims certified to the Secretary of

17 State by the Foreign Claims Settlement Commission

18 for purposes of future negotiation and espousal of

19 claims with a friendly government in Cuba when dip20 lomatic relations are restored; or

21 (2) as superseding, amending, or otherwise al22 tering certifications that have been made pursuant

23 to title V of the International Claims Settlement Act

24 of 1949 before the enactment of this Act.
410

•HR 2517 IH

1 SEC. 6254. EXCLUSIVITY OF FOREIGN CLAIMS SETTLEMENT

2 COMMISSION CERTIFICATION PROCEDURE.

3 Title V of the International Claims Settlement Act

4 of 1949 (22 U.S.C. 1643 and following), as amended by

5 section 6253, is further amended by adding at the end

6 the following new section:

7 ‘‘EXCLUSIVITY OF FOREIGN CLAIMS SETTLEMENT

8 COMMISSION CERTIFICATION PROCEDURE

9 ‘‘SEC. 515. (a) Subject to subsection (b), neither any

10 national of the United States who was eligible to file a

11 claim under section 503 but did not timely file such claim

12 under that section, nor any national of the United States

13 (on the date of the enactment of this section) who was

14 not eligible to file a claim under that section, nor any na15 tional of Cuba, including any agency, instrumentality, sub16 division, or enterprise of the Government of Cuba or any

17 local government of Cuba in place on the date of the enact18 ment of this section, nor any successor thereto, whether

19 or not recognized by the United States, shall have a claim

20 to, participate in, or otherwise have an interest in, the

21 compensation proceeds or other nonmonetary compensa22 tion paid or allocated to a national of the United States

23 by virtue of a claim certified by the Commission under

24 section 507, nor shall any court of the United States or

25 any State court have jurisdiction to adjudicate any such

26 claim.
411

•HR 2517 IH

1 ‘‘(b) Nothing in subsection (a) shall be construed to

2 detract from or otherwise affect any rights in the shares

3 of the capital stock of nationals of the United States own4 ing claims certified by the Commission under section

5 507.’’.

6 PART 4—EXCLUSION OF CERTAIN ALIENS

7 SEC. 6271. EXCLUSION FROM THE UNITED STATES OF

8 ALIENS WHO HAVE CONFISCATED PROPERTY

9 OF UNITED STATES NATIONALS OR WHO

10 TRAFFIC IN SUCH PROPERTY.

11 (a) GROUNDS FOR EXCLUSION.—The Secretary of

12 State, in consultation with the Attorney General, shall ex13 clude from the United States any alien who the Secretary

14 of State determines is a person who—

15 (1) has confiscated, or has directed or overseen

16 the confiscation of, property a claim to which is

17 owned by a United States national, or converts or

18 has converted for personal gain confiscated property,

19 a claim to which is owned by a United States na20 tional;

21 (2) traffics in confiscated property, a claim to

22 which is owned by a United States national;

23 (3) is a corporate officer, principal, or share24 holder with a controlling interest of an entity which

25 has been involved in the confiscation of property or
412

•HR 2517 IH

1 trafficking in confiscated property, a claim to which

2 is owned by a United States national; or

3 (4) is a spouse, minor child, or agent of a per4 son excludable under paragraph (1), (2), or (3).

5 (b) DEFINITIONS.—As used in this section, the fol6 lowing terms have the following meanings:

7 (1) CONFISCATED; CONFISCATION.—The terms

8 ‘‘confiscated’’ and ‘‘confiscation’’ refer to—

9 (A) the nationalization, expropriation, or

10 other seizure by foreign governmental authority

11 of ownership or control of property on or after

12 January 1, 1959—

13 (i) without the property having been

14 returned or adequate and effective com15 pensation provided; or

16 (ii) without the claim to the property

17 having been settled pursuant to an inter18 national claims settlement agreement or

19 other mutually accepted settlement proce20 dure; and

21 (B) the repudiation by foreign govern22 mental authority of, the default by foreign gov23 ernmental authority on, or the failure by for24 eign governmental authority to pay, on or after

25 January 1, 1959—
413

•HR 2517 IH

1 (i) a debt of any enterprise which has

2 been nationalized, expropriated, or other3 wise taken by foreign governmental author4 ity;

5 (ii) a debt which is a charge on prop6 erty nationalized, expropriated, or other7 wise taken by foreign governmental author8 ity; or

9 (iii) a debt which was incurred by for10 eign governmental authority in satisfaction

11 or settlement of a confiscated property

12 claim.

13 (2) PROPERTY.—The term ‘‘property’’ does not

14 include claims arising from a territory in dispute as

15 a result of war between United Nations member

16 states in which the ultimate resolution of the dis17 puted territory has not been resolved.

18 (3) TRAFFICS.—(A) A person or entity ‘‘traf19 fics’’ in property if that person or entity knowingly

20 and intentionally—

21 (i) sells, transfers, distributes, dispenses,

22 brokers, manages, or otherwise disposes of con23 fiscated property, or purchases, leases, receives,

24 possesses, obtains control of, manages, uses, or
414

•HR 2517 IH

1 otherwise acquires or holds an interest in con2 fiscated property,

3 (ii) engages in a commercial activity using

4 or otherwise benefiting from confiscated prop5 erty, or

6 (iii) causes, directs, participates in, or

7 profits from, trafficking (as described in clauses

8 (i) and (ii)) by another person, or otherwise en9 gages in trafficking (as described in clauses (i)

10 and (ii)) through another person,

11 without the authorization of the United States na12 tional who holds a claim to the property.

13 (B) The term ‘‘traffics’’ does not include—

14 (i) the delivery of international tele15 communication signals to Cuba that are author16 ized by section 1705(e) of the Cuban Democ17 racy Act of 1992 (22 U.S.C. 6004(e)); or

18 (ii) the trading or holding of securities

19 publicly traded or held, unless the trading is

20 with or by a person determined by the Sec21 retary of the Treasury to be a specially des22 ignated national.

23 (c) NATIONAL INTEREST EXEMPTION.—This section

24 shall not apply where the Secretary of State finds, on a

25 case-by-case basis, that making a determination under
415

•HR 2517 IH

1 subsection (a) would be contrary to the national interest

2 of the United States.

3 (d) EFFECTIVE DATE.—

4 (1) IN GENERAL.—This section applies to aliens

5 seeking to enter the United States on or after the

6 date of the enactment of this Act.

7 (2) TRAFFICKING.—This section applies only

8 with respect to acts within the meaning of ‘‘traffics’’

9 that occur on or after the date of the enactment of

10 this Act.

11 TITLE VII—COMMITTEE ON THE

12 JUDICIARY

13 SEC. 7001. PATENT AND TRADEMARK FEES.

14 Section 10101 of the Omnibus Budget Reconciliation

15 Act of 1990 (35 U.S.C. 41 note) is amended—

16 (1) in subsection (a) by striking ‘‘1998’’ and in17 serting ‘‘2002’’;

18 (2) in subsection (b)(2) by striking ‘‘1998’’ and

19 inserting ‘‘2002’’; and

20 (3) in subsection (c)—

21 (A) by striking ‘‘through 1998’’ and insert22 ing ‘‘through 2002’’; and

23 (B) by adding at the end the following:

24 ‘‘(9) $119,000,000 in fiscal year 1999.

25 ‘‘(10) $119,000,000 in fiscal year 2000.
416

•HR 2517 IH

1 ‘‘(11) $119,000,000 in fiscal year 2001.

2 ‘‘(12) $119,000,000 in fiscal year 2002.’’.

3 SEC. 7002. CIVIL MONETARY PENALTY SURCHARGE AND

4 TELECOMMUNICATIONS CARRIER COMPLI5 ANCE PAYMENTS.

6 Public Law 103-414 is amended by adding at the end

7 the following:

8 ‘‘TITLE IV—CIVIL MONETARY PENALTY

9 SURCHARGE AND TELECOMMUNI10 CATIONS CARRIER COMPLIANCE PAY11 MENTS

12 ‘‘SEC. 401. CIVIL MONETARY PENALTY SURCHARGE.

13 ‘‘(a) IMPOSITION.—Notwithstanding any other provi14 sion of law, and subject to section 402(c) of this title, a

15 surcharge of 40 percent of the principal amount of a civil

16 monetary penalty shall be added to each civil monetary

17 penalty at the time it is assessed by the United States

18 or an agency thereof.

19 ‘‘(b) APPLICATION OF PAYMENTS.—Payments relat20 ing to a civil monetary penalty shall be applied in the fol21 lowing order: (1) to costs; (2) to principal; (3) to sur22 charges required by subsection (a) of this section; and (4)

23 to interest.

24 ‘‘(c) EFFECTIVE DATES.—(1) A surcharge under

25 subsection (a) of this section shall be added to all civil
417

•HR 2517 IH

1 monetary penalties assessed on or after October 1, 1995,

2 or the date of enactment of this title, whichever is later.

3 ‘‘(2) The authority to add a surcharge under this sec4 tion shall terminate on October 1, 1998.

5 ‘‘(d) LIMITATION.—The provisions of this section

6 shall not apply to any civil monetary penalty assessed

7 under title 26, United States Code.

8 ‘‘SEC. 402. DEPARTMENT OF JUSTICE TELECOMMUNI9 CATIONS CARRIER COMPLIANCE FUND.

10 ‘‘(a) ESTABLISHMENT OF FUND.—There is hereby

11 established in the United States Treasury a fund to be

12 known as the Department of Justice Telecommunications

13 Carrier Compliance Fund (hereinafter referred to as ‘the

14 Fund’), which shall be available to the Attorney General

15 to the extent and in the amounts authorized by subsection

16 (c) of this section to make payments to telecommuni17 cations carriers, as authorized by section 109 of the Com18 munications Assistance for Law Enforcement Act.

19 ‘‘(b) OFFSETTING COLLECTIONS.—Notwithstanding

20 section 3302 of title 31, United States Code, the Attorney

21 General may credit surcharges added pursuant to section

22 401 of this title to the Fund as offsetting collections.

23 ‘‘(c) REQUIREMENTS FOR APPROPRIATIONS OFF24 SET.—(1) Surcharges added pursuant to section 401 of
418

•HR 2517 IH

1 this title are authorized only to the extent and in the

2 amounts provided for in advance in appropriations acts.

3 ‘‘(2)(A)(i) Subject to the requirements of this sub4 paragraph, collections credited to the Fund are authorized

5 to be appropriated in amounts of $56,000,000 for fiscal

6 year 1996, and $112,000,000 for each of fiscal years 1997

7 and 1998.

8 ‘‘(ii) Notwithstanding clause (i), the maximum

9 amount authorized to be appropriated for any such fiscal

10 year shall equal the amount that the Office of Manage11 ment and Budget estimates will be credited to the Fund

12 during that year.

13 ‘‘(B) Amounts described in subparagraph (A) of this

14 paragraph are authorized to be appropriated without fiscal

15 year limitation.

16 ‘‘(d) TERMINATION.—(1) The Attorney General may

17 terminate the Fund at such time as the Attorney General

18 determines that the Fund is no longer necessary.

19 ‘‘(2) Any balance in the Fund at the time of its termi20 nation shall be deposited in the general fund of the Treas21 ury.

22 ‘‘(3) A decision of the Attorney General to terminate

23 the Fund shall not be subject to judicial review.
419

•HR 2517 IH

1 ‘‘SEC. 403. DEFINITIONS.

2 ‘‘For purposes of this title, the terms ‘agency’ and

3 ‘civil monetary penalty’ have the meanings given to them

4 by section 3 of the Federal Civil Penalties Inflation Ad5 justment Act of 1990, Public Law 101–410, October 5,

6 1990, 104 Stat. 890 (28 U.S.C. 2461 note).’’.

7 TITLE VIII—COMMITTEE ON

8 NATIONAL SECURITY

9 Subtitle A—Military Retired Pay

10 SEC. 8001. ELIMINATION OF DISPARITY BETWEEN EFFEC11 TIVE DATES FOR MILITARY AND CIVILIAN RE12 TIREE COST-OF-LIVING ADJUSTMENTS FOR

13 FISCAL YEARS 1996, 1997, AND 1998.

14 (a) CONFORMANCE WITH SCHEDULE FOR CIVIL

15 SERVICE COLAS.—Subparagraph (B) of section

16 1401a(b)(2) of title 10, United States Code, is amended—

17 (1) by striking out ‘‘THROUGH 1998’’ the first

18 place it appears and all that follows through ‘‘In the

19 case of’’ the second place it appears and inserting in

20 lieu thereof ‘‘THROUGH 1996.—In the case of’’;

21 (2) by striking ‘‘of 1994, 1995, 1996, or 1997’’

22 and inserting in lieu thereof ‘‘of 1993, 1994, or

23 1995’’; and

24 (3) by striking out ‘‘September’’ and inserting

25 in lieu thereof ‘‘March’’.
420

•HR 2517 IH

1 (b) REPEAL OF PRIOR CONDITIONAL ENACTMENT.—

2 Section 8114A(b) of Public Law 103–335 (108 Stat.

3 2648) is repealed.

4 Subtitle B—Naval Petroleum

5 Reserves

6 SEC. 8011. SALE OF NAVAL PETROLEUM RESERVES.

7 (a) SALE OF RESERVES REQUIRED.—Chapter 641 of

8 title 10, United States Code, is amended by inserting after

9 section 7421 the following new section:

10 ‘‘§ 7421a. Sale of naval petroleum reserves

11 ‘‘(a) SALE REQUIRED.—(1) Notwithstanding any

12 other provision of this chapter, the Secretary shall sell all

13 right, title, and interest of the United States in and to

14 the lands owned or controlled by the United States inside

15 the naval petroleum and oil shale reserves established by

16 this chapter. In the case of Naval Petroleum Reserve

17 Numbered 1, the lands to be sold shall include sections

18 16 and 36 of township 30 south, range 23 east, Mount

19 Diablo Principal Meridian, California.

20 ‘‘(2) Not later than September 30, 1996, the Sec21 retary shall enter into one or more contracts for the sale

22 of all of the interest of the United States in the naval

23 petroleum reserves.

24 ‘‘(b) TIMING AND ADMINISTRATION OF SALE.—(1)

25 Not later than January 1, 1996, the Secretary shall retain
421

•HR 2517 IH

1 the services of five independent experts in the valuation

2 of oil and gas fields to conduct separate assessments, in

3 a manner consistent with commercial practices, of the fair

4 market value of the interest of the United States in each

5 naval petroleum reserve. In making their assessments for

6 each naval petroleum reserve, the independent experts

7 shall consider (among other factors) all equipment and fa8 cilities to be included in the sale, the net present value

9 of the reserve, and the net present value of the anticipated

10 revenue stream that the Secretary determines the Treas11 ury would receive from the reserve if it were not sold, ad12 justed for any anticipated increases in tax revenues that

13 would result if it were sold. The independent experts shall

14 complete their assessments not later than June 1, 1996.

15 In setting the minimum acceptable price for each naval

16 petroleum reserve, the Secretary shall consider the average

17 of the five assessments regarding the reserve or, if more

18 advantageous to the Government, the average of three as19 sessments after excluding the high and low assessments.

20 ‘‘(2) Not later than March 1, 1996, the Secretary

21 shall retain the services of an investment banker to inde22 pendently administer, in a manner consistent with com23 mercial practices and in a manner that maximizes sale

24 proceeds to the Government, the sale of the naval petro25 leum reserves under this section. The Secretary may enter
422

•HR 2517 IH

1 into the contracts required under this paragraph and

2 paragraph (1) on a noncompetitive basis.

3 ‘‘(3) Not later than June 1, 1996, the sales adminis4 trator selected under paragraph (2) shall complete a draft

5 contract for the sale of each naval petroleum reserve,

6 which shall accompany the invitation for bids and describe

7 the terms and provisions of the sale of the interest of the

8 United States in the reserve. Each draft contract shall

9 identify all equipment and facilities to be included in the

10 sales. Each draft contract, including the terms and provi11 sions of the sale of the interest of the United States in

12 the naval petroleum reserves, shall be subject to review

13 and approval by the Secretary, the Secretary of the Treas14 ury, and the Director of the Office of Management and

15 Budget.

16 ‘‘(4) Not later than July 1, 1996, the Secretary shall

17 publish an invitation for bids for the purchase of the naval

18 petroleum reserves.

19 ‘‘(5) Not later than September 1, 1996, the Secretary

20 shall accept the highest responsible offer for purchase of

21 the interest of the United States in the naval petroleum

22 reserves, or a particular reserve, that meets or exceeds the

23 minimum acceptable price determined under paragraph

24 (1). The Secretary may accept an offer for only a portion

25 of a reserve so long as the entire reserve is still sold under
423

•HR 2517 IH

1 this section at a price that meets or exceeds the minimum

2 acceptable price.

3 ‘‘(c) FUTURE LIABILITIES.—To effectuate the sale of

4 the interest of the United States in a naval petroleum re5 serve, the Secretary may extend such indemnities and war6 ranties as the Secretary considers reasonable and nec7 essary to protect the purchaser from claims arising from

8 the ownership in the reserve by the United States.

9 ‘‘(d) SPECIAL RULES PREPARATORY TO SALE OF

10 NAVAL PETROLEUM RESERVE NUMBERED 1.—(1) Not

11 later than June 1, 1996, the Secretary shall finalize equity

12 interests of the known oil and gas zones in Naval Petro13 leum Reserve Numbered 1 in the manner provided by this

14 subsection.

15 ‘‘(2) The Secretary shall retain the services of an

16 independent petroleum engineer, mutually acceptable to

17 the equity owners, who shall prepare a recommendation

18 on final equity figures. The Secretary may accept the rec19 ommendation of the independent petroleum engineer for

20 final equity in each known oil and gas zone and establish

21 final equity interest in the Naval Petroleum Reserve Num22 bered 1 in accordance with such recommendation, or the

23 Secretary may use such other method to establish final

24 equity interest in that reserve as the Secretary considers
424

•HR 2517 IH

1 appropriate. The Secretary may enter into the contract re2 quired under this paragraph on a noncompetitive basis.

3 ‘‘(3) If, on the effective date of this section, there

4 is an ongoing equity redetermination dispute between the

5 equity owners under section 9(b) of the unit plan contract,

6 such dispute shall be resolved in the manner provided in

7 the unit plan contract not later than June 1, 1996. Such

8 resolution shall be considered final for all purposes under

9 this section.

10 ‘‘(4) In this section, the term ‘unit plan contract’

11 means the unit plan contract between equity owners of the

12 lands within the boundaries of Naval Petroleum Reserve

13 Numbered 1 (Elk Hills) entered into on June 19, 1944.

14 ‘‘(e) PRODUCTION ALLOCATION REGARDING NAVAL

15 PETROLEUM RESERVE NUMBERED 1.—(1) As part of the

16 contract for purchase of Naval Petroleum Reserve Num17 bered 1, the purchaser of the interest of the United States

18 in that reserve shall agree to make up to 25 percent of

19 the purchaser’s share of annual petroleum production

20 from the purchased lands available for sale to small refin21 ers, which do not have their own adequate sources of sup22 ply of petroleum, for processing or use only in their own

23 refineries. None of the reserved production sold to small

24 refiners may be resold in kind. The purchaser of that re25 serve may reduce the quantity of petroleum reserved under
425

•HR 2517 IH

1 this subsection in the event of an insufficient number of

2 qualified bids. The seller of this petroleum production has

3 the right to refuse bids that are less than the prevailing

4 market price of comparable oil.

5 ‘‘(2) The purchaser of Naval Petroleum Reserve

6 Numbered 1 shall also agree to ensure that the terms of

7 every sale of the purchaser’s share of annual petroleum

8 production from the purchased lands shall be so struc9 tured as to give full and equal opportunity for the acquisi10 tion of petroleum by all interested persons, including

11 major and independent oil producers and refiners alike.

12 ‘‘(f) MAINTAINING PRODUCTION PENDING SALE OF

13 NAVAL PETROLEUM RESERVE NUMBERED 1.—Until the

14 sale of Naval Petroleum Reserve Numbered 1 is completed

15 under this section, the Secretary shall continue to produce

16 that reserve at the maximum daily oil or gas rate from

17 a reservoir, which will permit maximum economic develop18 ment of the reservoir consistent with sound oil field engi19 neering practices in accordance with section 3 of the unit

20 plan contract. The definition of maximum efficient rate

21 in section 7420(6) of this title shall not apply to Naval

22 Petroleum Reserve Numbered 1.

23 ‘‘(g) EFFECT ON EXISTING CONTRACTS.—(1) In the

24 case of any contract, in effect on the effective date of this

25 section, for the purchase of production from any part of
426

•HR 2517 IH

1 the United States’ share of the naval petroleum reserves,

2 the sale of the interest of the United States in the reserves

3 shall be subject to the contract for a period of three

4 months after the closing date of the sale or until termi5 nation of the contract, whichever occurs first. The term

6 of any contract entered into after the effective date of this

7 section for the purchase of such production shall not ex8 ceed the anticipated closing date for the sale of the re9 serve.

10 ‘‘(2) In the case of Naval Petroleum Reserve Num11 bered 1, the Secretary shall exercise the termination pro12 cedures provided in the contract between the United

13 States and Bechtel Petroleum Operation, Inc., Contract

14 Number DE–ACO1–85FE60520 so that the contract ter15 minates not later than the date of closing of the sale of

16 that reserve.

17 ‘‘(3) In the case of Naval Petroleum Reserve Num18 bered 1, the Secretary shall exercise the termination pro19 cedures provided in the unit plan contract so that the unit

20 plan contract terminates not later than the date of closing

21 of the sale of that reserve.

22 ‘‘(h) OFFER OF SETTLEMENT OF STATE OF CALI23 FORNIA CLAIMS REGARDING NAVAL PETROLEUM RE24 SERVE NUMBERED 1.—(1) In connection with the sale of

25 Naval Petroleum Reserve Numbered 1, the Secretary shall
427

•HR 2517 IH

1 offer to settle all claims against the United States by the

2 State of California and the Teachers’ Retirement Fund

3 of the State of California with respect to lands within that

4 reserve, including sections 16 and 36 of township 30

5 south, range 23 east, Mount Diablo Principal Meridian,

6 California, or production or proceeds of sale from that re7 serve. Subject to paragraph (2), the Secretary shall offer

8 in settlement of such claims—

9 ‘‘(A) a payment from funds provided for this

10 purpose in advance in appropriation Acts;

11 ‘‘(B) a grant of land pursuant to sections 2275

12 and 2276 of the Revised Statutes of the United

13 States (43 U.S.C. 851 and 852) so long as such

14 land is not generating revenue for the United States;

15 ‘‘(C) any other option that would not be incon16 sistent with the Congressional Budget Act of 1974

17 (2 U.S.C. 621 et seq.); or

18 ‘‘(D) any combination of subparagraphs (A),

19 (B), and (C).

20 ‘‘(2) The value of any payment, grant, or option (or

21 combination thereof) offered as settlement under para22 graph (1) may not exceed an amount equal to seven per23 cent of the proceeds from the sale of Naval Petroleum Re24 serve Numbered 1, after deducting the costs incurred to

25 conduct the sale of that reserve.
428

•HR 2517 IH

1 ‘‘(3) Acceptance of the settlement offered under para2 graph (1) shall be subject to the condition that all claims

3 against the United States by the State of California or

4 the Teachers’ Retirement Fund of the State of California

5 are released with respect to lands within the Naval Petro6 leum Reserve Numbered 1, including sections 16 and 36

7 of township 30 south, range 23 east, Mount Diablo Prin8 cipal Meridian, California, or production or proceeds of

9 sale from that reserve. The Secretary may specify the

10 manner in which the release of such claims shall be evi11 denced.

12 ‘‘(i) EFFECT ON ANTITRUST LAWS.—Nothing in this

13 section shall be construed to alter the application of the

14 antitrust laws of the United States to the purchaser of

15 a naval petroleum reserve or to the lands in the naval pe16 troleum reserves subject to sale under this section upon

17 the completion of the sale.

18 ‘‘(j) PRESERVATION OF PRIVATE RIGHT, TITLE, AND

19 INTEREST.—Nothing in this section shall be construed to

20 adversely affect the ownership interest of any other entity

21 having any right, title, and interest in and to lands within

22 the boundaries of the naval petroleum reserves.

23 ‘‘(k) CONGRESSIONAL NOTIFICATION.—Section 7431

24 of this title shall not apply to the sale of the naval petro25 leum reserves under this section. However, the Secretary
429

•HR 2517 IH

1 may not enter into a contract for the sale of a naval petro2 leum reserve until the end of the 15-day period beginning

3 on the date on which the Secretary notifies the Committee

4 on Armed Services of the Senate and the Committee on

5 National Security and the Committee on Commerce of the

6 House of Representatives that the Secretary has accepted

7 an offer under subsection (b)(5) for the sale of that re8 serve.’’.

9 (b) CLERICAL AMENDMENT.—The table of sections

10 at the beginning of such chapter is amended by inserting

11 after the item relating to section 7421 the following new

12 item:

‘‘7421a. Sale of naval petroleum reserves.’’.

13 Subtitle C—National Defense

14 Stockpile

15 SEC. 8021. DISPOSAL OF CERTAIN MATERIALS IN NATIONAL

16 DEFENSE STOCKPILE FOR DEFICIT REDUC17 TION.

18 (a) DISPOSALS REQUIRED.—(1) During fiscal year

19 1996, the President shall dispose of all cobalt contained

20 in the National Defense Stockpile that, as of the date of

21 the enactment of this Act, is authorized for disposal under

22 any law (other than this Act).

23 (2) In addition to the disposal of cobalt under para24 graph (1), the President shall dispose of additional quan25 tities of cobalt and quantities of aluminum, ferro colum-
430

•HR 2517 IH

1 bium, germanium, palladium, platinum, and rubber con2 tained in the National Defense Stockpile so as to result

3 in receipts to the United States in amounts equal to—

4 (A) $21,000,000 during the fiscal year ending

5 September 30, 1996;

6 (B) $338,000,000 during the five-fiscal year pe7 riod ending on September 30, 2000; and

8 (C) $649,000,000 during the seven-fiscal year

9 period ending on September 30, 2002.

10 (3) The President is not required to include the dis11 posal of the materials identified in paragraph (2) in an

12 annual materials plan for the National Defense Stockpile.

13 Disposals made under this section may be made without

14 consideration of the requirements of an annual materials

15 plan.

16 (b) LIMITATION ON DISPOSAL QUANTITY.—The total

17 quantities of materials authorized for disposal by the

18 President under subsection (a)(2) may not exceed the

19 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
431

•HR 2517 IH

1 (c) DEPOSIT OF RECEIPTS.—Notwithstanding sec2 tion 9 of the Strategic and Critical Materials Stock Piling

3 Act (50 U.S.C. 98h), funds received as a result of the dis4 posal of materials under subsection (a)(2) shall be depos5 ited into the general fund of the Treasury for the purpose

6 of deficit reduction.

7 (d) RELATIONSHIP TO OTHER DISPOSAL AUTHOR8 ITY.—The disposal authority provided in subsection (a)(2)

9 is new disposal authority and is in addition to, and shall

10 not affect, any other disposal authority provided by law

11 regarding the materials specified in such subsection.

12 (e) TERMINATION OF DISPOSAL AUTHORITY.—The

13 President may not use the disposal authority provided in

14 subsection (a)(2) after the date on which the total amount

15 of receipts specified in subparagraph (C) of such sub16 section is achieved.

17 (f) DEFINITION.—The term ‘‘National Defense

18 Stockpile’’ means the National Defense Stockpile provided

19 for in section 4 of the Strategic and Critical Materials

20 Stock Piling Act (50 U.S.C. 98c).

21 TITLE IX—COMMITTEE ON

22 RESOURCES

23 SEC. 9000. TABLE OF CONTENTS.

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

TITLE IX—COMMITTEE ON RESOURCES
432

•HR 2517 IH

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. Evaluation of sales of Southeastern, Southwestern, and Western

Area Power Administration facilities.

Sec. 9203. Bonneville Power Administration appropriations refinancing.

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.
433

•HR 2517 IH

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.

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.
434

•HR 2517 IH

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

Sec. 9601. Indian gaming.

Subtitle G—Consultation

Sec. 9701. Consultation.

Subtitle H—Mapping

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.

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.
435

•HR 2517 IH

1 1652), such oil may be exported unless the President finds

2 that exportation of this oil is not in the national interest.

3 The President shall make his national interest determina4 tion within 5 months after the date of enactment of this

5 subsection. In evaluating whether exports of this oil are

6 in the national interest, the President shall at a minimum

7 consider—

8 ‘‘(A) whether exports of this oil would diminish

9 the total quantity or quality of petroleum available

10 to the United States;

11 ‘‘(B) the results of an appropriate environ12 mental review, including consideration of appropriate

13 measures to mitigate any potential adverse effects of

14 exports of this oil on the environment, which shall

15 be completed within four months of the date of the

16 enactment of this subsection; and

17 ‘‘(C) whether exports of this oil are likely to

18 cause sustained material oil supply shortages or sus19 tained oil prices significantly above world market

20 levels that would cause sustained material adverse

21 employment effects in the United States or that

22 would cause substantial harm to consumers, includ23 ing in noncontiguous States and Pacific territories.

24 If the President determines that exports of this oil are

25 in the national interest, he may impose such terms and
436

•HR 2517 IH

1 conditions (other than a volume limitation) as are nec2 essary or appropriate to ensure that such exports are con3 sistent with the national interest.

4 ‘‘(2) Except in the case of oil exported to a country

5 with which the United States entered into a bilateral inter6 national oil supply agreement before November 26, 1979,

7 or to a country pursuant to the International Emergency

8 Oil Sharing Plan of the International Energy Agency, any

9 oil transported by pipeline over right-of-way granted pur10 suant to section 203 of the Trans-Alaska Pipeline Author11 ization Act (43 U.S.C. 1652) shall, when exported, be

12 transported by a vessel documented under the laws of the

13 United States and owned by a citizen of the United States

14 (as determined in accordance with section 2 of the Ship15 ping Act, 1916 (46 U.S.C. App. 802)).

16 ‘‘(3) Nothing in this subsection shall restrict the au17 thority of the President under the Constitution, the Inter18 national Emergency Economic Powers Act (50 U.S.C.

19 1701 et seq.), or the National Emergencies Act (50 U.S.C.

20 1601 et seq.) to prohibit exports of this oil or under Part

21 B of title II of the Energy Policy and Conservation Act

22 (42 U.S.C. 6271–76).

23 ‘‘(4) The Secretary of Commerce shall issue any rules

24 necessary for implementation of the President’s national

25 interest determination, including any licensing require-
437

•HR 2517 IH

1 ments and conditions, within 30 days of the date of such

2 determination by the President. The Secretary of Com3 merce shall consult with the Secretary of Energy in ad4 ministering the provisions of this subsection.

5 ‘‘(5) If the Secretary of Commerce finds that export6 ing oil under authority of this subsection has caused sus7 tained material oil supply shortages or sustained oil prices

8 significantly above world market levels and further finds

9 that these supply shortages or price increases have caused

10 or are likely to cause sustained material adverse employ11 ment effects in the United States, the Secretary of Com12 merce, in consultation with the Secretary of Energy, shall

13 recommend, and the President may take, appropriate ac14 tion concerning exports of this oil, which may include

15 modifying or revoking authority to export such oil.

16 ‘‘(6) Administrative action under this subsection is

17 not subject to sections 551 and 553 through 559 of title

18 5, United States Code.’’.

19 (b) GAO REPORT.—

20 (1) REVIEW.—The Comptroller General of the

21 United States shall conduct a review of energy pro22 duction in California and Alaska and the effects of

23 Alaskan North Slope oil exports, if any, on consum24 ers, independent refiners, and shipbuilding and ship

25 repair yards on the West Coast and in Hawaii. The
438

•HR 2517 IH

1 Comptroller General shall commence this review 2

2 years after the date of enactment of this Act and,

3 within 6 months after commencing the review, shall

4 provide a report to the Committee on Resources and

5 the Committee on Commerce of the House of Rep6 resentatives and the Committee on Energy and Nat7 ural Resources of the Senate.

8 (2) CONTENTS OF REPORT.—The report shall

9 contain a statement of the principal findings of the

10 review and recommendations for Congress and the

11 President to address job loss in the shipbuilding and

12 ship repair industry on the West Coast, as well as

13 adverse impacts on consumers and refiners on the

14 West Coast and in Hawaii, that the Comptroller

15 General attributes to Alaska North Slope oil exports.

16 SEC. 9002. ARCTIC COASTAL PLAIN LEASING AND REVE17 NUE.

18 (a) PURPOSE.—It is the purpose of this section to

19 reduce the Federal deficit by an estimated $1,300,000,000

20 over the next 5 years. This revenue will be derived from

21 competitive bonus bids for oil and gas leases in the Coastal

22 Plain area of Alaska’s North Slope.

23 (b) DEFINITIONS.—For the purposes of this section:

24 (1) The term ‘‘Secretary’’ means the Secretary

25 of the Interior.
439

•HR 2517 IH

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:
440

•HR 2517 IH

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-
441

•HR 2517 IH

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-
442

•HR 2517 IH

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.
443

•HR 2517 IH

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
444

•HR 2517 IH

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
445

•HR 2517 IH

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
446

•HR 2517 IH

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-
447

•HR 2517 IH

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
448

•HR 2517 IH

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.
449

•HR 2517 IH

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
450

•HR 2517 IH

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-
451

•HR 2517 IH

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.
452

•HR 2517 IH

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

22 of 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
453

•HR 2517 IH

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.’’.
454

•HR 2517 IH

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 ‘‘Snettishan 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
455

•HR 2517 IH

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-
456

•HR 2517 IH

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) The Secretary is directed to use up to

18 $5,000,000 from unobligated balances available to

19 the Department of Energy to fund any sale prepara20 tion costs for the sales under this section, and shall

21 provide an accounting of all sale preparation costs to

22 the Committee on Resources of the House of Rep23 resentatives and to the Committee on Energy and

24 Natural Resources of the Senate within 60 days

25 after completion of the sale.
457

•HR 2517 IH

1 (c) GENERAL PROVISIONS.—

2 (1) RIGHTS-OF-WAY AND OTHER LANDS FOR

3 THE EKLUTNA PROJECT.—With respect to Eklutna

4 lands described in Exhibit A of the Eklutna Pur5 chase Agreement:

6 (A) The Secretary of the Interior shall

7 issue rights-of-way to the Alaska Power Admin8 istration for subsequent reassignment to the

9 Eklutna Purchasers at no cost to the Eklutna

10 Purchasers.

11 (B) Such rights-of-way shall remain effec12 tive for a period equal to the life of the Eklutna

13 hydroelectric project as extended by improve14 ments, repairs, renewals, or replacements.

15 (C) Such rights-of-way shall be sufficient

16 for the operation, maintenance, repair, and re17 placement of, and access to, the facilities of the

18 Eklutna hydroelectric project located on mili19 tary lands and lands managed by the Bureau of

20 Land Management, including land selected by,

21 but not yet conveyed to, the State of Alaska.

22 (D) If the Eklutna Purchasers subse23 quently sell or transfer the Eklutna hydro24 electric project to private ownership, the Bu25 reau of Land Management may assess reason-
458

•HR 2517 IH

1 able and customary fees for continued use of

2 the rights-of-way on lands managed by the Bu3 reau of Land Management and military lands

4 in accordance with applicable law.

5 (E) The Secretary shall transfer fee title to

6 lands at Anchorage Substation to the Eklutna

7 Purchasers at no additional cost if the Sec8 retary of the Interior determines that pending

9 claims to and selections of those lands are in10 valid or relinquished.

11 (F) With respect only to the Eklutna lands

12 identified in Exhibit A of the Eklutna Purchase

13 Agreement, the State of Alaska may select, and

14 the Secretary of the Interior shall convey, to the

15 State, improved lands under the selection enti16 tlements in section 6 of the Alaska Statehood

17 Act (Public Law 85–508; 72 Stat. 339) and the

18 North Anchorage Land Agreement of January

19 31, 1983. The conveyance of such lands is sub20 ject to the rights-of-way provided to the

21 Eklutna Purchasers under subparagraph (A).

22 (2) LANDS FOR THE SNETTISHAM PROJECT.—

23 With respect to the Snettisham lands identified in

24 Exhibit A of the Snettisham Purchase Agreement,

25 the State of Alaska may select, and the Secretary of
459

•HR 2517 IH

1 the Interior shall convey to the State, improved

2 lands under the selection entitlement in section 6 of

3 the Alaska Statehood Act (Public Law 85–508; 72

4 Stat. 339).

5 (3) EFFECT ON STATE SELECTIONS.—Notwith6 standing the expiration of the right of the State of

7 Alaska to make selections under section 6 of the

8 Alaska Statehood Act (Public Law 85–508; 72 Stat.

9 339), the State of Alaska may select lands author10 ized for selection under this section or any Purchase

11 Agreement incorporated into or ratified by this sec12 tion. The State shall complete such selections within

13 one year after the date of the enactment of this sec14 tion. The Secretary of the Interior shall convey lands

15 selected by the State under this section notwith16 standing the limitation contained in section 6(b) of

17 the Alaska Statehood Act (Public Law 85–508; 72

18 Stat. 339) regarding the occupancy, appropriation,

19 or reservation of selected lands. Nothing in this sub20 section shall be construed to authorize the Secretary

21 of the Interior to convey to the State of Alaska a

22 total acreage of selected lands in excess of the total

23 acreage which could be transferred to the State of

24 Alaska pursuant to the Alaska Statehood Act (Pub-
460

•HR 2517 IH

1 lic Law 85–508; 72 Stat. 339), and other applicable

2 law.

3 (4) REPEAL OF ACT OF AUGUST 9, 1955.—The

4 Act of August 9, 1955 (69 Stat. 618), concerning

5 water resources investigations in Alaska, is repealed.

6 (5) TREATMENT OF ASSET SALE.—The sales of

7 assets under this section shall not be considered a

8 disposal of Federal surplus property under the Fed9 eral Property and Administrative Services Act of

10 1949 (40 U.S.C. 484) or the Surplus Property Act

11 of 1944 (50 U.S.C. App. 1622).

12 (6) APPLICATION OF CERTAIN LAWS.—(A) The

13 Act of July 31, 1950 (64 Stat. 382), shall cease to

14 apply on the date, as determined by the Secretary,

15 when all Eklutna assets have been conveyed to the

16 Eklutna Purchasers.

17 (B) Section 204 of the Flood Control Act of

18 1962 (Public Law 87–874; 76 Stat. 1193) shall

19 cease to apply effective on the date, as determined

20 by the Secretary, when all Snettisham assets have

21 been conveyed to the State of Alaska.

22 (d) TERMINATION OF ALASKA POWER ADMINISTRA23 TION.—

24 (1) TERMINATION OF ALASKA POWER

25 ADMINISTATION.—Not later than one year after both
461

•HR 2517 IH

1 of the sales authorized in this section have occurred,

2 as measured by the Transaction Dates stipulated in

3 the Purchase Agreements, the Secretary shall—

4 (A) complete the business of, and close

5 out, the Alaska Power Administration;

6 (B) prepare and submit to Congress a re7 port documenting the sales; and

8 (C) return unobligated balances of funds

9 appropriated for the Alaska Power Administra10 tion to the Treasury of the United States.

11 (2) DOE ORGANIZATION ACT.—Section 302(a)

12 of the Department of Energy Organization Act (42

13 U.S.C. 7152(a)) is amended as follows:

14 (A) In paragraph (1)—

15 (i) by striking out subparagraph (C);

16 and

17 (ii) by redesignating subparagraphs

18 (D), (E), and (F) as subparagraphs (C),

19 (D), and (E) respectively.

20 (B) In paragraph (2), by striking out ‘‘the

21 Bonneville Power Administration, and the Alas22 ka Power Administration’’ and inserting in lieu

23 thereof ‘‘and the Bonneville Power Administra24 tion’’.
462

•HR 2517 IH

1 The amendments made by this paragraph shall take

2 effect on the date on which the Secretary submits

3 the report referred to in subparagraph (B) of para4 graph (1).

5 (e) PROCEEDS.—The proceeds from the sale of

6 Snettisham and Eklutna assets under this section shall be

7 credited to miscellaneous receipts in the Treasury.

8 (f) SECTION 147(d) OF INTERNAL REVENUE

9 CODE.—For purposes of section 147(d) of the Internal

10 Revenue Code of 1986, the ‘‘first use’’ of Snettisham shall

11 be considered to occur pursuant to acquistion of the prop12 erty by or on behalf of the State of Alaska.

13 PART 2—HELIUM PRIVATIZATION

14 SEC. 9011. SHORT TITLE.

15 This part may be cited as the ‘‘Helium Privatization

16 Act of 1995’’.

17 SEC. 9012. AMENDMENT OF HELIUM ACT.

18 Except as otherwise expressly provided, whenever in

19 this part an amendment or repeal is expressed in terms

20 of an amendment to, or repeal of, a section or other provi21 sion, the reference shall be considered to be made to a

22 section or other provision of the Helium Act (50 U.S.C.

23 167 to 167n).

24 SEC. 9013. AUTHORITY OF SECRETARY.

25 Sections 3, 4, and 5 are amended to read as follows:
463

•HR 2517 IH

1 ‘‘SEC. 3. AUTHORITY OF SECRETARY.

2 ‘‘(a) EXTRACTION AND DISPOSAL OF HELIUM ON

3 FEDERAL LANDS.—(1) The Secretary may enter into

4 agreements with private parties for the recovery and dis5 posal of helium on Federal lands upon such terms and

6 conditions as he deems fair, reasonable and necessary. The

7 Secretary may grant leasehold rights to any such helium.

8 The Secretary may not enter into any agreement by which

9 the Secretary sells such helium other than to a private

10 party with whom the Secretary has an agreement for re11 covery and disposal of helium. Such agreements may be

12 subject to such rules and regulations as may be prescribed

13 by the Secretary.

14 ‘‘(2) Any agreement under this subsection shall be

15 subject to the existing rights of any affected Federal oil

16 and gas lessee. Each such agreement (and any extension

17 or renewal thereof) shall contain such terms and condi18 tions as deemed appropriate by the Secretary.

19 ‘‘(3) This subsection shall not in any manner affect

20 or diminish the rights and obligations of the Secretary and

21 private parties under agreements to dispose of helium pro22 duced from Federal lands in existence at the enactment

23 of the Helium Privatization Act of 1995 except to the ex24 tent that such agreements are renewed or extended after

25 such date.
464

•HR 2517 IH

1 ‘‘(b) STORAGE, TRANSPORTATION, AND SALE.—The

2 Secretary is authorized to store, transport, and sell helium

3 only in accordance with this Act.

4 ‘‘(c) MONITORING AND REPORTING.—The Secretary

5 is authorized to monitor helium production and helium re6 serves in the United States and to periodically prepare re7 ports regarding the amounts of helium produced and the

8 quantity of crude helium in storage in the United States.

9 ‘‘SEC. 4. STORAGE, TRANSPORTATION, AND WITHDRAWAL

10 OF CRUDE HELIUM.

11 ‘‘(a) STORAGE, TRANSPORTATION, AND WITH12 DRAWAL.—The Secretary is authorized to store and trans13 port crude helium and to maintain and operate existing

14 crude helium storage at the Bureau of Mines Cliffside

15 Field, together with related helium transportation and

16 withdrawal facilities.

17 ‘‘(b) CESSATION OF PRODUCTION, REFINING, AND

18 MARKETING.—Effective 18 months after the date of en19 actment of the Helium Privatization Act of 1995, the Sec20 retary shall cease producing, refining and marketing re21 fined helium and shall cease carrying out all other activi22 ties relating to helium which the Secretary was authorized

23 to carry out under this Act before the date of enactment

24 of the Helium Privatization Act of 1995, except those ac25 tivities described in subsection (a). The amount of helium
465

•HR 2517 IH

1 reserves owned by the United States and stored in the Bu2 reau of Mines Cliffside Field at such date of cessation,

3 less 600,000,000 cubic feet, shall be the helium reserves

4 owned by the United States required to be sold pursuant

5 to section 8(b) hereof.

6 ‘‘(c) DISPOSAL OF FACILITIES.—(1) Within two

7 years after the date on which the Secretary ceases produc8 ing, refining and marketing refined helium and ceases all

9 other activities relating to helium in accordance with sub10 section (b), the Secretary shall dispose of all facilities,

11 equipment, and other real and personal property, together

12 with all interests therein, held by the United States for

13 the purpose of producing, refining and marketing refined

14 helium. The disposal of such property shall be in accord15 ance with the provisions of law governing the disposal of

16 excess or surplus properties of the United States.

17 ‘‘(2) All proceeds accruing to the United States by

18 reason of the sale or other disposal of such property shall

19 be treated as moneys received under this chapter for pur20 poses of section 6(f). All costs associated with such sale

21 and disposal (including costs associated with termination

22 of personnel) and with the cessation of activities under

23 subsection (b) shall be paid from amounts available in the

24 helium production fund established under section 6(f).
466

•HR 2517 IH

1 ‘‘(3) Paragraph (1) shall not apply to any facilities,

2 equipment, or other real or personal property, or any in3 terest therein, necessary for the storage and transpor4 tation of crude helium or any equipment needed to main5 tain the purity, quality control, and quality assurance of

6 helium in the reserve.

7 ‘‘(d) EXISTING CONTRACTS.—All contracts which

8 were entered into by any person with the Secretary for

9 the purchase by such person from the Secretary of refined

10 helium and which are in effect on the date of the enact11 ment of the Helium Privatization Act of 1995 shall remain

12 in force and effect until the date on which the facilities

13 referred to in subsection (c) are disposed of. Any costs

14 associated with the termination of such contracts shall be

15 paid from the helium production fund established under

16 section 6(f).

17 ‘‘SEC. 5. FEES FOR STORAGE, TRANSPORTATION AND WITH18 DRAWAL.

19 ‘‘Whenever the Secretary provides helium storage,

20 withdrawal, or transportation services to any person, the

21 Secretary is authorized and directed to impose fees on

22 such person to reimburse the Secretary for the full costs

23 of providing such storage, transportation, and withdrawal.

24 All such fees received by the Secretary shall be treated
467

•HR 2517 IH

1 as moneys received under this Act for purposes of section

2 6(f).’’.

3 SEC. 9014. SALE OF CRUDE HELIUM.

4 Section 6 is amended as follows:

5 (1) Subsection (a) is amended by striking out

6 ‘‘from the Secretary’’ and inserting ‘‘from persons

7 who have entered into enforceable contracts to pur8 chase an equivalent amount of crude helium from

9 the Secretary’’.

10 (2) Subsection (b) is amended by inserting

11 ‘‘crude’’ before ‘‘helium’’ and by adding the follow12 ing at the end thereof: ‘‘Except as may be required

13 by reason of subsection (a), the Secretary shall not

14 make sales of crude helium under this section in

15 such amounts as will disrupt the market price of

16 crude helium.’’.

17 (3) Subsection (c) is amended by inserting

18 ‘‘crude’’ before ‘‘helium’’ the first place it appears

19 and by striking ‘‘together with interest as provided

20 in subsection (d) of this section’’ and all that follows

21 down through the period at the end of such sub22 section and inserting the following:

23 ‘‘all funds required to be repaid to the United States as

24 of October 1, 1995, under this section (hereinafter re25 ferred to as ‘repayable amounts’). The price at which
468

•HR 2517 IH

1 crude helium is sold by the Secretary shall not be less than

2 the amount determined by the Secretary as follows:

3 ‘‘(1) Divide the outstanding amount of such re4 payable amounts by the volume (in mcf) of crude he5 lium owned by the United States and stored in the

6 Bureau of Mines Cliffside Field at the time of the

7 sale concerned.

8 ‘‘(2) Adjust the amount determined under para9 graph (1) by the Consumer Price Index for years be10 ginning after December 31, 1995.’’.

11 (4) Subsection (d) is amended to read as fol12 lows:

13 ‘‘(d) EXTRACTION OF HELIUM FROM DEPOSITS ON

14 FEDERAL LANDS.—All moneys received by the Secretary

15 from the sale or disposition of helium on Federal lands

16 shall be paid to the Treasury and credited against the

17 amounts required to be repaid to the Treasury under sub18 section (c) of this section.’’.

19 (5) Subsection (e) is repealed.

20 (6) Subsection (f) is amended by inserting

21 ‘‘(1)’’ after ‘‘(f)’’ and by adding the following at the

22 end thereof:

23 ‘‘(2) Within 7 days after the commencement of each

24 fiscal year after the disposal of the facilities referred to

25 in section 4(c), all amounts in such fund in excess of
469

•HR 2517 IH

1 $2,000,000 (or such lesser sum as the Secretary deems

2 necessary to carry out this Act during such fiscal year)

3 shall be paid to the Treasury and credited as provided in

4 paragraph (1). Upon repayment of all amounts referred

5 to in subsection (c), the fund established under this sec6 tion shall be terminated and all moneys received under this

7 Act shall be deposited in the Treasury as General Reve8 nues.’’.

9 SEC. 9015. ELIMINATION OF STOCKPILE.

10 Section 8 is amended to read as follows:

11 ‘‘SEC. 8. ELIMINATION OF STOCKPILE.

12 ‘‘(a) REVIEW OF RESERVES.—The Secretary shall re13 view annually the known helium reserves in the United

14 States and make a determination as to the expected life

15 of the domestic helium reserves (other than Federally

16 owned helium stored at the Cliffside Reservoir) at that

17 time.

18 ‘‘(b) STOCKPILE SALES.—Not later than January 1,

19 2005, the Secretary shall commence offering for sale crude

20 helium from helium reserves owned by the United States

21 in such minimum annual amounts as would be necessary

22 to dispose of all such helium reserves in excess of

23 600,000,000 cubic feet (mcf) on a straight-line basis be24 tween such date and January 1, 2015: Provided, That the

25 minimum price for all such sales, as determined by the
470

•HR 2517 IH

1 Secretary in consultation with the helium industry, shall

2 be such as will ensure repayment of the amounts required

3 to be repaid to the Treasury under section 6(c), and pro4 vided further that the minimum annual sales requirement

5 may be deferred only if, and to the extent that, the Sec6 retary is unable to arrange sales at the minimum price.

7 The sales shall be at such times during each year and in

8 such lots as the Secretary determines, in consultation with

9 the helium industry, are necessary to carry out this sub10 section with minimum market disruption.

11 ‘‘(c) DISCOVERY OF ADDITIONAL RESERVES.—The

12 discovery of additional helium reserves shall not affect the

13 duty of the Secretary to make sales of helium as provided

14 in subsection (b), as the case may be.’’.

15 SEC. 9016. REPEAL OF AUTHORITY TO BORROW.

16 Sections 12 and 15 are repealed.

17 SEC. 9017. REPORTS.

18 Section 16 is amended by redesignating existing sec19 tion 16 as section 16(a) and inserting the following at the

20 end thereof:

21 ‘‘(b)(1) The Inspector General of the Department of

22 the Interior shall cause to be prepared, not later than

23 March 31 following each fiscal year commencing with the

24 date of enactment of the Helium Privatization Act of

25 1995, annual financial statements for the Helium Oper-
471

•HR 2517 IH

1 ations of the Bureau of Mines. The Director of the Bureau

2 of Mines shall cooperate with the Inspector General in ful3 filling this requirement, and shall provide him with such

4 personnel and accounting assistance as may be necessary

5 for that purpose. The financial statements shall be audited

6 by the General Accounting Office, and a report on such

7 audit shall be delivered by the General Accounting Office

8 to the Secretary of the Interior and Congress, not later

9 than June 30 following the end of the fiscal year for which

10 they are prepared. The audit shall be prepared in accord11 ance with generally accepted government auditing stand12 ards.

13 ‘‘(2) The financial statements shall be comprised of

14 the following:

15 ‘‘(A) A balance sheet reflecting the overall fi16 nancial position of the Helium Operations, including

17 assets and liabilities thereof;

18 ‘‘(B) the Statement of Operations, reflecting

19 the fiscal period results of the Helium Operations;

20 ‘‘(C) a statement cash flows or changes in fi21 nancial position of the Helium Operations; and

22 ‘‘(D) a reconciliation of budget reports of the

23 Helium Operations.

24 ‘‘(3) The Statement of Operations shall include but

25 not be limited to the revenues from, and costs of, sales
472

•HR 2517 IH

1 of crude helium, the storage and transportation of crude

2 helium, the production, refining and marketing of refined

3 helium, and the maintenance and operation of helium stor4 age facilities at the Bureau of Mines Cliffside Field. The

5 term ‘revenues’ for this purpose shall exclude (A) royalties

6 paid to the United States for production of helium or other

7 extraction of resources, except to the extent that the He8 lium Operations incur direct costs in connection therewith,

9 and (B) proceeds from sales of assets other than inven10 tory. The term ‘expenses’ shall include, but not be limited

11 to (i) all labor costs of the Bureau of Mines Helium Oper12 ations, and of the Department of the Interior in connec13 tion therewith, and (ii) for financial reporting purposes

14 but not in connection with the determination of sales

15 prices in section 6(c), all current-period interest on out16 standing repayable amounts (as described in section 6(c))

17 calculated at the same rates as such interest was cal18 culated prior to the enactment of the Helium Privatization

19 Act of 1995.

20 ‘‘(4) The balance sheet shall include, but not be lim21 ited to, on the asset side, the present discounted market

22 value of crude helium reserves; and on the liability side,

23 the accrued liability for principal and interest on debt to

24 the United States. For financial reporting purposes but

25 not in connection with the determination of sales prices
473

•HR 2517 IH

1 in section 6(c), the balance sheet shall also include accrued

2 but unpaid interest on outstanding repayable amounts (as

3 described in section 6(c)) through the date of the report,

4 calculated at the same rates as such interest was cal5 culated prior to the enactment of the Helium Privatization

6 Act of 1995.’’.

7 SEC. 9018. LAND CONVEYANCE IN POTTER COUNTY, TEXAS.

8 (a) IN GENERAL.—The Secretary of the Interior shall

9 transfer all right, title, and interest of the United States

10 in and to the parcel of land described in subsection (b)

11 to the Texas Plains Girl Scout Council for consideration

12 of $1, reserving to the United States such easements as

13 may be necessary for pipeline rights-of-way.

14 (b) LAND DESCRIPTION.—The parcel of land re15 ferred to in subsection (a) is all those certain lots, tracts

16 or parcels of land lying and being situated in the County

17 of Potter and State of Texas, and being the East Three

18 Hundred Thirty-One (E331) acres out of Section Seventy19 eight (78) in Block Nine (9), B.S. & F. Survey, (some20 times known as the G. D. Landis pasture) Potter County,

21 Texas, located by certificate No. 1/39 and evidenced by

22 letters patents Nos. 411 and 412 issued by the State of

23 Texas under date of November 23, 1937, and of record

24 in Vol. 66A of the Patent Records of the State of Texas.
474

•HR 2517 IH

1 The metes and bounds description of such lands is as fol2 lows:

3 (1) FIRST TRACT.—One Hundred Seventy-one

4 (171) acres of land known as the North part of the

5 East part of said survey Seventy-eight (78) afore6 said, described by metes and bounds as follows:

7 Beginning at a stone 20 x 12 x 3 inches

8 marked X, set by W. D. Twichell in 1905, for

9 the Northeast corner of this survey and the

10 Northwest corner of Section 59;

11 Thence, South 0 degrees 12 minutes East with

12 the West line of said Section 59, 999.4 varas to

13 the Northeast corner of the South 160 acres of

14 East half of Section 78;

15 Thence, North 89 degrees 47 minutes West

16 with the North line of the South 150 acres of

17 the East half, 956.8 varas to a point in the

18 East line of the West half Section 78;

19 Thence North 0 degrees 10 minutes West with

20 the East line of the West half 999.4 varas to

21 a stone 18 x 14 x 3 inches in the middle of the

22 South line of Section 79;

23 Thence South 89 degrees 47 minutes East 965

24 varas to the place of beginning.
475

•HR 2517 IH

1 (2) SECOND TRACT.—One Hundred Sixty (160)

2 acres of land known as the South part of the East

3 part of said survey No. Seventy-eight (78) described

4 by metes and bounds as follows:

5 Beginning at the Southwest corner of Section

6 59, a stone marked X and a pile of stones;

7 Thence North 89 degrees 47 minutes West with

8 the North line of Section 77, 966.5 varas to the

9 Southeast corner of the West half of Section

10 78; Thence North 0 degrees 10 minutes West

11 with the East line of the West half of Section

12 78;

13 Thence South 89 degrees 47 minutes East

14 965.8 varas to a point in the East line of Sec15 tion 78;

16 Thence South 0 degrees 12 minutes East 934.6

17 varas to the place of beginning.

18 Containing an area of 331 acres, more or less.

19 Subtitle B—Water and Power

20 PART 1—POWER MARKETING ADMINISTRATIONS

21 SEC. 9201. SHORT TITLE.

22 This part may be cited as the ‘‘Power Administration

23 Act’’.
476

•HR 2517 IH

1 SEC. 9202. EVALUATION OF SALES OF SOUTHEASTERN,

2 SOUTHWESTERN, AND WESTERN AREA

3 POWER ADMINISTRATION FACILITIES.

4 (a) REPEALS.—The following provisions are repealed:

5 (1) Section 505 of Public Law 102–377, the

6 Fiscal Year 1993 Energy and Water Development

7 Appropriations Act.

8 (2) Section 208 of Public Law 99–349, the Ur9 gent Supplemental Appropriations Act, 1986.

10 (3) Section 510 of Public Law 101–514, the

11 Fiscal Year 1991 Energy and Water Development

12 appropriations Act.

13 (b) EVALUATION OF ISSUES.—(1) The Secretary of

14 Energy, the Secretary of the Interior, and the Secretary

15 of the Army shall enter into arrangements with an experi16 enced private sector firm to serve as advisor to the Sec17 retaries with respect to the sale of the facilities used to

18 generate and transmit the electric power marketed by the

19 Southeastern Power Administration, the Southwestern

20 Power Administration and the Western Area Power Ad21 ministration, including all transmission and related struc22 tures, equipment, facilities and all real, tangible and intan23 gible property (including rights-of-way) which are used in

24 connection with, and necessary for, the operation of such

25 power generation and transmission facilities.
477

•HR 2517 IH

1 (2) Prior to December 31, 1996, the advisor shall

2 provide to the Secretaries and the Congress a report iden3 tifying all recipients of water and power from such facili4 ties, all relevant contracts, debt obligations, equity inter5 ests, and other binding agreements which apply to the fa6 cilities concerned and to the sale of electric power from

7 such facilities, all assets tangible or intangible, all applica8 ble requirements relating to environmental mitigation, In9 dian trust responsibilities, land ownership or use rights

10 relevant to the proposed transfers which could terminate

11 based on a transfer out of Federal ownership, and naviga12 tional requirements which affect the operation of such fa13 cilities.

14 (3) In conducting the evaluation, the Secretaries and

15 the advisor should also recognize that many of the dams

16 and reservoirs associated with the generation of electric

17 power marketed by the Power Marketing Administrations

18 are first and foremost water supply, flood control, or navi19 gation projects. In general, power generation is incidental

20 to these primary purposes. In addition, there are also sec21 ondary purposes such as recreation and environmental val22 ues which are served by these facilities as well as the

23 power production. The evaluation should assume that such

24 facilities will continue to be operated in a manner consist25 ent with their current, primary purposes and the evalua-
478

•HR 2517 IH

1 tion directed by this section shall not assume any changes

2 in the other current operational objectives of the facilities.

3 (4) Such evaluation shall also include an evaluation

4 of the tax consequences, and the revenue impacts of such

5 consequences for the United States, of possible arrange6 ments for the sale of generation and transmission facilities

7 to potential transferees identified by the advisor. The re8 port shall also investigate alternative groupings of such

9 generation and transmission facilities for purposes of sale

10 in order to determine which groupings would be most de11 sirable for purposes of effectuating such sales. Proposed

12 transfers should be structured by watershed or by project

13 unless the advisor can provide satisfactory information to

14 the Secretaries that another alternative should be used.

15 Asset groupings shall specifically be designed to avoid the

16 sale of the most valuable assets while the Federal govern17 ment would be forced to retain the less valuable assets.

18 SEC. 9203. BONNEVILLE POWER ADMINISTRATION APPRO19 PRIATIONS REFINANCING.

20 (a) DEFINITIONS.—For the purposes of this section:

21 (1) The term ‘‘Administrator’’ means the Ad22 ministrator of the Bonneville Power Administration.

23 (2) The term ‘‘capital investment’’ means a

24 capitalized cost funded by Federal appropriations

25 that—
479

•HR 2517 IH

1 (A) is for a project, facility, or separable

2 unit or feature of a project or facility;

3 (B) is a cost for which the Administrator

4 is required by law to establish rates to repay to

5 the United States Treasury through the sale of

6 electric power, transmission, or other services;

7 (C) excludes a Federal irrigation invest8 ment; and

9 (D) excludes an investment financed by the

10 current revenues of the Administrator or by

11 bonds issued and sold, or authorized to be is12 sued and sold, by the Administrator under sec13 tion 13 of the Federal Columbia River Trans14 mission System Act (16 U.S.C. 838(k)).

15 (3) The term ‘‘new capital investment’’ means

16 a capital investment for a project, facility, or sepa17 rable unit or feature of a project or facility, placed

18 in service after September 30, 1995.

19 (4) The term ‘‘old capital investment’’ means a

20 capital investment whose capitalized cost—

21 (A) was incurred, but not repaid, before

22 October 1, 1995; and

23 (B) was for a project, facility, or separable

24 unit or feature of a project or facility, placed in

25 service before October 1, 1995.
480

•HR 2517 IH

1 (5) The term ‘‘repayment date’’ means the end

2 of the period within which the Administrator’s rates

3 are to assure the repayment of the principal amount

4 of a capital investment.

5 (6) The term ‘‘Treasury rate’’ means—

6 (A) for an old capital investment, a rate

7 determined by the Secretary of the Treasury,

8 taking into consideration prevailing market

9 yields, during the month preceding October 1,

10 1995, on outstanding interest-bearing obliga11 tions of the United States with periods to matu12 rity comparable to the period between October

13 1, 1995, and the repayment date for the old

14 capital investment; and

15 (B) for a new capital investment, a rate

16 determined by the Secretary of the Treasury,

17 taking into consideration prevailing market

18 yields, during the month preceding the begin19 ning of the fiscal year in which the related

20 project, facility, or separable unit or feature is

21 placed in service, on outstanding interest-bear22 ing obligations of the United States with peri23 ods to maturity comparable to the period be24 tween the beginning of the fiscal year and the

25 repayment date for the new capital investment.
481

•HR 2517 IH

1 (b) NEW PRINCIPAL AMOUNTS.—(1) Effective Octo2 ber 1, 1995, an old capital investment shall have a new

3 principal amount that is the sum of—

4 (A) the present value of the old payment

5 amounts for the old capital investment, calculated

6 using a discount rate equal to the Treasury rate for

7 the old capital investment; and

8 (B) an amount equal to $100,000,000 multi9 plied by a fraction whose numerator is the principal

10 amount of the old payment amounts for the old cap11 ital investment and whose denominator is the sum of

12 the principal amounts of the old payment amounts

13 for all old capital investments.

14 (2) With the approval of the Secretary of the Treas15 ury based solely on consistency with this Act, the Adminis16 trator shall determine the new principal amounts under

17 paragraph (1) and the assignment of interest rates to the

18 new principal amounts under subsection (c).

19 (3) For the purposes of this section, ‘‘old payment

20 amounts’’ means, for an old capital investment, the annual

21 interest and principal that the Administrator would have

22 paid to the United States Treasury from October 1, 1995,

23 if this section were not enacted, assuming that—

24 (A) the principal were repaid—
482

•HR 2517 IH

1 (i) on the repayment date the Adminis2 trator assigned before October 1, 1993, to the

3 old capital investment, or

4 (ii) with respect to an old capital invest5 ment for which the Administrator has not as6 signed a repayment date before October 1,

7 1993, on a repayment date the Administrator

8 shall assign to the old capital investment in ac9 cordance with paragraph 10(d)(1) of the ver10 sion of Department of Energy Order RA

11 6120.2 in effect on October 1, 1993; and

12 (B) interest were paid—

13 (i) at the interest rate the Administrator

14 assigned before October 1, 1993, to the old cap15 ital investment, or

16 (ii) with respect to an old capital invest17 ment for which the Administrator has not as18 signed an interest rate before October 1, 1993,

19 at a rate determined by the Secretary of the

20 Treasury, taking into consideration prevailing

21 market yields, during the month preceding the

22 beginning of the fiscal year in which the related

23 project, facility, or separable unit or feature is

24 placed in service, on outstanding interest-bear25 ing obligations of the United States with peri-
483

•HR 2517 IH

1 ods to maturity comparable to the period be2 tween the beginning of the fiscal year and the

3 repayment date for the old capital investment.

4 (c) INTEREST RATE FOR NEW PRINCIPAL

5 AMOUNTS.—As of October 1, 1995, the unpaid balance

6 on the new principal amount established for an old capital

7 investment under subsection (b) shall bear interest annu8 ally at the Treasury rate for the old capital investment

9 until the earlier of the date that the new principal amount

10 is repaid or the repayment date for the new principal

11 amount.

12 (d) REPAYMENT DATES.—As of October 1, 1995, the

13 repayment date for the new principal amount established

14 for an old capital investment under subsection (b) shall

15 be no earlier than the repayment date for the old capital

16 investment assumed in subsection (b)(3)(A).

17 (e) PREPAYMENT LIMITATIONS.—During the period

18 October 1, 1995, through September 30, 2000, the total

19 new principal amounts of old capital investments, as es20 tablished under subsection (b), that the Administrator

21 may pay before their respective repayment dates shall not

22 exceed $100,000,000.

23 (f) INTEREST RATES FOR NEW CAPITAL INVEST24 MENTS DURING CONSTRUCTION.—(1) The principal

25 amount of a new capital investment includes interest in
484

•HR 2517 IH

1 each fiscal year of construction of the related project, facil2 ity, or separable unit or feature at a rate equal to the

3 one-year rate for the fiscal year on the sum of—

4 (A) construction expenditures that were made

5 from the date construction commenced through the

6 end of the fiscal year, and

7 (B) accrued interest during construction.

8 (2) The Administrator shall not be required to pay,

9 during construction of the project, facility, or separable

10 unit or feature, the interest calculated, accrued, and cap11 italized under paragraph (1).

12 (3) For the purposes of this subsection, ‘‘one-year

13 rate’’ for a fiscal year means a rate determined by the

14 Secretary of the Treasury, taking into consideration pre15 vailing market yields, during the month preceding the be16 ginning of the fiscal year, on outstanding interest-bearing

17 obligations of the United States with periods to maturity

18 of approximately one year.

19 (g) INTEREST RATES FOR NEW CAPITAL INVEST20 MENTS.—The unpaid balance on the principal amount of

21 a new capital investment bears interest at the Treasury

22 rate for the new capital investment from the date the re23 lated project, facility, or separable unit or feature is placed

24 in service until the earlier of the date the new capital in-
485

•HR 2517 IH

1 vestment is repaid or the repayment date for the new cap2 ital investment.

3 (h) CREDITS TO ADMINISTRATOR’S PAYMENTS TO

4 THE UNITED STATES TREASURY.—The Confederated

5 Tribe of the Colville Reservation Grand Coulee Dam Set6 tlement Act (Public Law 103–436) is amended by striking

7 section 6 and inserting the following:

8 ‘‘SEC. 6. CREDITS TO ADMINISTRATOR’S PAYMENTS TO THE

9 UNITED STATES TREASURY.

10 ‘‘(a) IN GENERAL.—So long as the Adminisatrator

11 makes annual payments to the tribes under the settlement

12 agreement, the Administrator shall apply against amounts

13 otherwise payable by the Administrator to the United

14 States Treasury a credit that reduces the Administrator’s

15 payment in the amount and for each fiscal year as follows:

16 $15,250,000 in fiscal year 1996; $15,860,000 in fiscal

17 year 1997; $16,490,000 in fiscal year 1998; $17,150,000

18 in fiscal year 1999; $17,840,000 in fiscal year 2000; and

19 $4,100,000 in each succeeding fiscal year.

20 ‘‘(b) DEFINITIONS.—For the purposes of this sec21 tion—

22 ‘‘(1) the term ‘settlement agreement’ means

23 that settlement agreement between the United

24 States of America and the Confederated Tribes of

25 the Colville Reservation signed by the Tribes on
486

•HR 2517 IH

1 April 16, 1994, and by the United States of America

2 on April 21, 1994, which settlement agreement re3 solves claims of the Tribes in Docket 181–D of the

4 Indian Claims Commission, which docket has been

5 transferred to the United States Court of Federal

6 Claims; and

7 ‘‘(2) the term ‘Tribes’ means the Confederated

8 Tribes of the Colville Reservation, a Federally recog9 nized Indian Tribe.’’.

10 (i) CONTRACT PROVISIONS.—In each contract of the

11 Administrator that provides for the Administrator to sell

12 electric power, transmission, or related services, and that

13 is in effect after September 30, 1995, the Administrator

14 shall offer to include, or as the case may be, shall offer

15 to amend to include, provisions specifying that after Sep16 tember 30, 1995—

17 (1) the Administrator shall establish rates and

18 charges on the basis that—

19 (A) the principal amount of an old capital

20 investment shall be no greater than the new

21 principal amount established under subsection

22 (b);

23 (B) the interest rate applicable to the un24 paid balance of the new principal amount of an

25 old capital investment shall be no greater than
487

•HR 2517 IH

1 the interest rate established under subsection

2 (c);

3 (C) any payment of principal of an old

4 capital investment shall reduce the outstanding

5 principal balance of the old capital investment

6 in the amount of the payment at the time the

7 payment is tendered; and

8 (D) any payment of interest on the unpaid

9 balance of the new principal amount of an old

10 capital investment shall be a credit against the

11 appropriate interest account in the amount of

12 the payment at the time the payment is ten13 dered;

14 (2) apart from charges necessary to repay the

15 new principal amount of an old capital investment as

16 established under subsection (b), and to pay the in17 terest on the principal amount under subsection (c),

18 no amount may be charged for return to the United

19 States Treasury as repayment for or return on an

20 old capital investment, whether by way of rate, rent,

21 lease payment, assessment, user charge, or any other

22 fee;

23 (3) amounts provided under section 1304 of

24 title 31, United States Code, shall be available to

25 pay, and shall be the sole source for payment of, a
488

•HR 2517 IH

1 judgment against or settlement by the Administrator

2 or the United States on a claim for a breach of the

3 contract provisions required by this Act; and

4 (4) the contract provisions specified in this Act

5 shall not—

6 (A) preclude the Administrator from recov7 ering, through rates or other means, any tax

8 that is generally imposed on electric utilities in

9 the United States, or

10 (B) affect the Administrator’s authority

11 under applicable law, including section 7(g) of

12 the Pacific Northwest Electric Power Planning

13 and Conservation Act (16 U.S.C. 839e(g)), to—

14 (i) allocate costs and benefits, includ15 ing but not limited to fish and wildlife

16 costs, to rates or resources, or

17 (ii) design rates.

18 (j) SAVINGS PROVISIONS.—(1) This section does not

19 affect the obligation of the Administrator to repay the

20 principal associated with each capital investment, and to

21 pay interest on the principal, only from the ‘‘Administra22 tor’s net proceeds,’’ as defined in section 13 of the Federal

23 Columbia River Transmission System Act (16 U.S.C.

24 838k(b)).
489

•HR 2517 IH

1 (2) Except as provided in subsection (e) of this sec2 tion, this section does not affect the authority of the Ad3 ministrator to pay all or a portion of the principal amount

4 associated with a capital investment before the repayment

5 date for the principal amount.

6 (k) DOE STUDY.—(1) The Administrator shall un7 dertake a study to determine the effect that increases in

8 the rates for electric power sales made by the Adminis9 trator may have on the customer base of the Bonneville

10 Power Administration. Such study shall identify other

11 sources of electric power that may be available to cus12 tomers of the Bonneville Power Administration and shall

13 estimate the level at which higher rates for power sales

14 by the Administration may result in the loss of customers

15 by the Administration.

16 (2) The Administrator shall undertake a study to de17 termine the total prior costs incurred by the Bonneville

18 Power Administration for compliance with the provisions

19 of the Endangered Species Act of 1973 and the total fu20 ture costs anticipated to be incurred by the Administration

21 for compliance with such provisions.

22 (3) The Administrator shall submit the results of the

23 studies undertaken under this section to the Congress

24 within 180 days after the date of the enactment of this

25 Act.
490

•HR 2517 IH

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,
491

•HR 2517 IH

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
492

•HR 2517 IH

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
493

•HR 2517 IH

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-
494

•HR 2517 IH

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.’’.
495

•HR 2517 IH

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-
496

•HR 2517 IH

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
497

•HR 2517 IH

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-
498

•HR 2517 IH

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.
499

•HR 2517 IH

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
500

•HR 2517 IH

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
501

•HR 2517 IH

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.
502

•HR 2517 IH

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
503

•HR 2517 IH

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
504

•HR 2517 IH

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-
505

•HR 2517 IH

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—
506

•HR 2517 IH

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-
507

•HR 2517 IH

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.—
508

•HR 2517 IH

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.
509

•HR 2517 IH

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.
510

•HR 2517 IH

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.
511

•HR 2517 IH

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
512

•HR 2517 IH

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
513

•HR 2517 IH

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
514

•HR 2517 IH

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.
515

•HR 2517 IH

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
516

•HR 2517 IH

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
517

•HR 2517 IH

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;
518

•HR 2517 IH

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,
519

•HR 2517 IH

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
520

•HR 2517 IH

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
521

•HR 2517 IH

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-
522

•HR 2517 IH

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
523

•HR 2517 IH

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-
524

•HR 2517 IH

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).
525

•HR 2517 IH

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-
526

•HR 2517 IH

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.
527

•HR 2517 IH

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
528

•HR 2517 IH

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.
529

•HR 2517 IH

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
530

•HR 2517 IH

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
531

•HR 2517 IH

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-
532

•HR 2517 IH

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-
533

•HR 2517 IH

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
534

•HR 2517 IH

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
535

•HR 2517 IH

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-
536

•HR 2517 IH

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.
537

•HR 2517 IH

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
538

•HR 2517 IH

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
539

•HR 2517 IH

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
540

•HR 2517 IH

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
541

•HR 2517 IH

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
542

•HR 2517 IH

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.
543

•HR 2517 IH

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
544

•HR 2517 IH

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-
545

•HR 2517 IH

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
546

•HR 2517 IH

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.
547

•HR 2517 IH

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.
548

•HR 2517 IH

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’’.
549

•HR 2517 IH

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
550

•HR 2517 IH

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:
551

•HR 2517 IH

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-
552

•HR 2517 IH

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.
553

•HR 2517 IH

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—
554

•HR 2517 IH

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.
555

•HR 2517 IH

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
556

•HR 2517 IH

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
557

•HR 2517 IH

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.
558

•HR 2517 IH

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—
559

•HR 2517 IH

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,
560

•HR 2517 IH

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.
561

•HR 2517 IH

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’’
562

•HR 2517 IH

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
563

•HR 2517 IH

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-
564

•HR 2517 IH

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-
565

•HR 2517 IH

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
566

•HR 2517 IH

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
567

•HR 2517 IH

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-
568

•HR 2517 IH

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
569

•HR 2517 IH

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
570

•HR 2517 IH

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.
571

•HR 2517 IH

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-
572

•HR 2517 IH

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
573

•HR 2517 IH

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.
574

•HR 2517 IH

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.
575

•HR 2517 IH

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
576

•HR 2517 IH

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
577

•HR 2517 IH

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.
578

•HR 2517 IH

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-
579

•HR 2517 IH

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
580

•HR 2517 IH

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-
581

•HR 2517 IH

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.
582

•HR 2517 IH

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.
583

•HR 2517 IH

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:
584

•HR 2517 IH

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-
585

•HR 2517 IH

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
586

•HR 2517 IH

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
587

•HR 2517 IH

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.
588

•HR 2517 IH

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-
589

•HR 2517 IH

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-
590

•HR 2517 IH

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
591

•HR 2517 IH

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
592

•HR 2517 IH

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;
593

•HR 2517 IH

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—
594

•HR 2517 IH

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—
595

•HR 2517 IH

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;
596

•HR 2517 IH

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:
597

•HR 2517 IH

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.
598

•HR 2517 IH

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 ‘‘(c) TOLLING OF LIMITATION PERIOD.—The run7 ning of the limitation period under subsection (a) shall

8 not be suspended, tolled, extended, or enlarged for any ob9 ligation for any reason by any action, including an action

10 by the Secretary or the United States, other than the fol11 lowing:

12 ‘‘(1) TOLLING AGREEMENT.—A written agree13 ment executed during the limitation period between

14 the Secretary and a lessee which tolls the limitation

15 period for the amount of time during which the

16 agreement is in effect.

17 ‘‘(2) SUBPOENA.—The issuance of a subpoena

18 in accordance with the provisions of section 107(c)

19 shall toll the limitation period with respect to the ob20 ligation which is the subject of a subpoena only for

21 the period beginning on the date the lessee receives

22 the subpoena and ending on the date on which (A)

23 the lessee has produced such subpoenaed records for

24 the subject obligation, (B) the Secretary receives

25 written notice that the subpoenaed records for the
599

•HR 2517 IH

1 subject obligation are not in existence or are not in

2 the lessee’s possession or control, or (C) a court has

3 determined in a final decision that such records are

4 not required to be produced, whichever occurs first.

5 ‘‘(3) FRAUD OR CONCEALMENT.—Any fraud or

6 concealment by a lessee in an attempt to defeat or

7 evade an obligation in which case the limitation pe8 riod shall be tolled for the period of such fraud or

9 such concealment.

10 ‘‘(4) TOLLING REQUEST.—A written tolling re11 quest from a lessee based upon the lessee’s represen12 tation that the lessee’s entitlement to an overpay13 ment has not been finally determined. The limitation

14 period shall be tolled pursuant to this paragraph

15 from the date the Secretary receives the tolling re16 quest until the earlier of the end of the requested

17 period or 12 months after the date the Secretary re18 ceives the tolling request, but is subject to successive

19 12-month renewals by the lessee made prior to the

20 expiration of the then applicable 12-month period.

21 The tolling request shall be sufficient if it identi22 fies—

23 ‘‘(A) the person who made the potential

24 overpayment;
600

•HR 2517 IH

1 ‘‘(B) the leases and production months in2 volved in the potential overpayment; and

3 ‘‘(C) the reasons the lessee believes that it

4 may later be entitled to a refund of the over5 payment.

6 ‘‘(5) ORDER TO PERFORM A RESTRUCTURED

7 ACCOUNTING.—The issuance of a notice under sec8 tion 107(d)(4) that the lessee has not adequately

9 performed a restructured accounting shall toll the

10 limitation period with respect to the obligation which

11 is the subject of the notice only for the period begin12 ning on the date the lessee receives the notice and

13 ending on the date on which (A) the Secretary re14 ceives written notice the accounting or other require15 ment has been performed, or (B) a court has deter16 mined in a final decision that the lessee is not re17 quired to perform the accounting, whichever occurs

18 first.

19 ‘‘(d) TERMINATION OF LIMITATION PERIOD.—The

20 limitation period shall be terminated in the event—

21 ‘‘(1) the Secretary has notified the lessee in

22 writing that a time period is closed to further audit;

23 or

24 ‘‘(2) the Secretary and a lessee have so agreed

25 in writing.
601

•HR 2517 IH

1 ‘‘(e) FINAL AGENCY ACTION.—

2 ‘‘(1) 3-YEAR PERIOD.—The Secretary shall

3 issue a final decision in any administrative proceed4 ing, including any administrative proceedings pend5 ing on the date of enactment of the Federal Oil and

6 Gas Royalty Simplification and Fairness Act of

7 1995, within three years from the date such pro8 ceeding was initiated or three years from the date of

9 such enactment, whichever is later. The three-year

10 period may be extended by any period of time agreed

11 upon in writing by the Secretary and the lessee.

12 ‘‘(2) EFFECT OF FAILURE TO ISSUE DECI13 SION.—

14 ‘‘(A) IN GENERAL.—If no such decision

15 has been issued by the Secretary within the

16 three-year period referred to in paragraph (1)—

17 ‘‘(i) the Secretary shall be deemed to

18 have issued and granted a decision in favor

19 of the lessee or lessees as to any

20 nonmonetary obligation and any monetary

21 obligation the principal amount of which is

22 less than $2,500; and

23 ‘‘(ii) the Secretary shall be deemed to

24 have issued a final decision in favor of the

25 Secretary, which decision shall be deemed
602

•HR 2517 IH

1 to affirm those issues for which the agency

2 rendered a decision prior to the end of

3 such period, as to any monetary obligation

4 the principal amount of which is $2,500 or

5 more, and the lessee shall have a right to

6 a de novo judicial review of such deemed

7 final decision.

8 ‘‘(B) NO PRECEDENTIAL EFFECT ON

9 OTHER PROCEEDINGS.—Deemed decisions

10 under subparagraph (A) shall have no

11 precedential effect in any judicial or administra12 tive proceeding or for any other purpose.

13 ‘‘(f) ADMINISTRATIVE SETTLEMENT.—During the

14 pendency of any administrative proceeding, the parties

15 shall hold at least one settlement consultation for the pur16 pose of discussing disputed matters between the parties.

17 For purposes of settlement, the Secretary may take such

18 action as is appropriate to compromise and settle a dis19 puted obligation, including interest and allowing offsetting

20 of obligations among leases. The Secretary and the State

21 concerned shall seek to resolve disputes with a lessee in

22 as expeditious a manner as possible, through settlement

23 negotiations and other alternative dispute resolution proc24 esses methods. If any dispute involving an obligation due

25 is not resolved by the end of the six-year period beginning
603

•HR 2517 IH

1 on the date the obligation became due, the amount of in2 terest otherwise payable with respect to the obligation

3 shall accrue after such six-year period at the rate—

4 ‘‘(1) for purposes of section 111(h), reduced

5 each year thereafter by two additional percentage

6 points from the rate in effect under this subsection

7 for the previous year (but not less than zero); and

8 ‘‘(2) for purposes of section 111(a), reduced

9 each year thereafter by one additional percentage

10 point from the rate in effect under this subsection

11 for the previous year (but not less than zero).

12 ‘‘(g) LIMITATION ON CERTAIN ACTIONS.—When an

13 action on or enforcement of an obligation under the min14 eral leasing laws is barred under this section—

15 ‘‘(1) no other or further action regarding that

16 obligation, including (but not limited to) the issu17 ance of any order, request, demand or other commu18 nication seeking any document, accounting, deter19 mination, calculation, recalculation, payment, prin20 cipal, interest, assessment, or penalty or the initi21 ation, pursuit or completion of an audit with respect

22 to that obligation may be taken; and

23 ‘‘(2) no other equitable or legal remedy, wheth24 er under statute or common law, with respect to an
604

•HR 2517 IH

1 action on or an enforcement of said obligation may

2 be pursued.

3 ‘‘(h) JUDICIAL REVIEW.—In the event a demand sub4 ject to this section is timely commenced, a judicial pro5 ceeding challenging the final agency action with respect

6 to such demand shall be deemed timely so long as such

7 judicial proceeding is commenced within 180 days from

8 receipt of notice by the lessee of the final agency action.

9 ‘‘(i) IMPLEMENTATION OF FINAL DECISION.—In the

10 event a judicial proceeding or demand subject to this sec11 tion is timely commenced and thereafter the limitation pe12 riod in this section lapses during the pendency of such

13 proceeding, any party to such proceeding shall not be

14 barred from taking such action as is required or necessary

15 to implement a final unappealable judicial or administra16 tive decision, including any action required or necessary

17 to implement such decision by the recovery or recoupment

18 of an underpayment or overpayment by means of refund

19 or credit.

20 ‘‘(j) STAY OF PAYMENT OBLIGATION PENDING RE21 VIEW.—Any party ordered by the Secretary or the United

22 States to pay any obligation (other than an assessment)

23 shall be entitled to a stay of such payment without bond

24 or other surety instrument pending an administrative or

25 judicial proceeding if the party periodically demonstrates
605

•HR 2517 IH

1 to the satisfaction of the Secretary that such party is fi2 nancially solvent or otherwise able to pay the obligation.

3 In the event the party is not able to so demonstrate, the

4 Secretary may require a bond or other surety instrument

5 satisfactory to cover the obligation. Any party ordered by

6 the Secretary to pay an assessment shall be entitled to

7 a stay without bond or other surety instrument.

8 ‘‘(k) INAPPLICABILITY OF THE OTHER STATUTES OF

9 LIMITATION.—The limitations set forth in sections 2401,

10 2415, 2416, and 2462 of title 28, United States Code,

11 section 42 of the Mineral Leasing Act (30 U.S.C. 226-

12 2) and section 3716 of title 31, United States Code, shall

13 not apply to any obligation to which this Act applies.’’.

14 (b) SUBPOENA.—Section 107 of the Federal Oil and

15 Gas Royalty Management Act of 1982 (30 U.S.C. 1717)

16 is amended by adding at the end the following:

17 ‘‘(c) RULES REGARDING ISSUANCE OF SUBPOENA

18 RELATING TO REPORTING AND PAYMENT OF AN OBLIGA19 TION DUE.—

20 ‘‘(1) IN GENERAL.—A subpoena which requires

21 a lessee to produce records necessary to determine

22 the proper reporting and payment of an obligation

23 due the Secretary may be issued under this section

24 only by an Assistant Secretary of the Interior and

25 an acting Assistant Secretary of the Interior who is
606

•HR 2517 IH

1 a schedule C employee (as defined by section

2 213.3301 of title 5, Code of Federal Regulations)

3 and may not be delegated.

4 ‘‘(2) PRIOR WRITTEN REQUEST REQUIRED.—A

5 subpoena described in paragraph (1) may only be is6 sued against a lessee during the limitation period

7 provided in section 115 and only after the Secretary

8 has in writing requested the records from the lessee

9 related to the obligation which is the subject of the

10 subpoena and has determined that—

11 ‘‘(A) the lessee has failed to respond within

12 a reasonable period of time to the Secretary’s

13 written request for such records necessary for

14 an audit, investigation or other inquiry made in

15 accordance with the Secretary’s responsibilities

16 under this Act;

17 ‘‘(B) the lessee has in writing denied the

18 Secretary’s written request to produce such

19 records in the lessee’s possession or control nec20 essary for an audit, investigation or other in21 quiry made in accordance with the Secretary’s

22 responsibilities under this Act; or

23 ‘‘(C) the lessee has unreasonably delayed

24 in producing records necessary for an audit, in25 vestigation or other inquiry made in accordance
607

•HR 2517 IH

1 with the Secretary’s responsibilities under this

2 Act after the Secretary’s written request.

3 ‘‘(3) REASONABLE PERIOD FOR COMPLIANCE

4 WITH WRITTEN REQUEST.—In seeking records, the

5 Secretary shall afford the lessee a reasonable period

6 of time after a written request by the Secretary in

7 which to provide such records prior to the issuance

8 of any subpoena.’’.

9 (c) RESTRUCTURED ACCOUNTING.—Section 107 of

10 the Federal Oil and Gas Royalty Management Act of 1982

11 (30 U.S.C. 1717), as amended by subsection (b) of this

12 section, is amended by adding at the end the following:

13 ‘‘(d) RESTRUCTURED ACCOUNTING.—

14 ‘‘(1) IN GENERAL.—The Secretary shall issue

15 an order to perform a restructured accounting when

16 the Secretary determines during an in-depth audit of

17 a lessee that the lessee should recalculate royalty

18 due on an obligation based upon the Secretary’s

19 finding that the lessee has made identified under20 payments or overpayments which are demonstrated

21 by the Secretary to be based upon repeated, systemic

22 reporting errors for a significant number of leases or

23 a single lease for a significant number of reporting

24 months with the same type of error which con25 stitutes a pattern of violations and which are likely
608

•HR 2517 IH

1 to result in either significant underpayments or over2 payments.

3 ‘‘(2) DELEGATION.—The power of the Sec4 retary to issue an order to perform a restructured

5 accounting may not be delegated below the most

6 senior career professional position having respon7 sibility for the royalty management program, which

8 position is currently designated as the ‘Associate Di9 rector for Royalty Management’. An order to per10 form a restructured accounting shall—

11 ‘‘(A) be issued within a reasonable period

12 of time from when the audit identifies the sys13 temic, reporting errors;

14 ‘‘(B) specify the reasons and factual bases

15 for such order; and

16 ‘‘(C) be specifically identified as an ‘order

17 to perform a restructured accounting’.

18 ‘‘(3) ORDER TO PERFORM.—An order to per19 form a restructured accounting shall not include any

20 other communication or action by or on behalf of the

21 Secretary or the United States.

22 ‘‘(4) NOTICE.—If a lessee fails to adequately

23 perform a restructured accounting pursuant to this

24 subsection, a notice shall be issued to the lessee that

25 the restructured accounting has not been adequately
609

•HR 2517 IH

1 performed. Such notice may be issued under this

2 section only by an Assistant Secretary of the Inte3 rior or an acting Assistant Secretary of the Interior

4 who is a schedule C employee (as defined by section

5 213.3301 of title 5, Code of Federal Regulations)

6 and may not be delegated.’’.

7 (d) STATE SUITS.—Section 204 of the Federal Oil

8 and Gas Royalty Management Act of 1982 (30 U.S.C.

9 1751) is amended by adding at the end the following:

10 ‘‘(d) With respect to an obligation, a State bringing

11 an action under this section shall enjoy no greater rights

12 than the Secretary enjoys under this Act.’’.

13 (e) CLERICAL AMENDMENT.—The table of contents

14 in section 1 of such Act (30 U.S.C. 1701) is amended by

15 adding after the item relating to section 114 the following

16 new item:

‘‘Sec. 115. Limitation periods and agency actions.’’.

17 SEC. 9514. ADJUSTMENT AND REFUNDS.

18 (a) IN GENERAL.—The Federal Oil and Gas Royalty

19 Management Act of 1982 (30 U.S.C. 1701 et seq.) is

20 amended by adding after section 111 the following new

21 section:

22 ‘‘SEC. 111A. ADJUSTMENTS AND REFUNDS.

23 ‘‘(a) ADJUSTMENTS.—

24 ‘‘(1) If, during the adjustment period, a lessee

25 determines that an adjustment or refund request is
610

•HR 2517 IH

1 necessary to correct an underpayment or overpay2 ment of an obligation, the lessee shall make such ad3 justment or request a refund within a reasonable pe4 riod of time and only during the adjustment period.

5 The filing of a royalty report which reflects the

6 underpayment or overpayment of an obligation shall

7 constitute prior written notice to the Secretary of an

8 adjustment.

9 ‘‘(2)(A) For any adjustment, the lessee shall

10 calculate and report the interest due attributable to

11 such adjustment at the same time the lessee adjusts

12 the principal amount of the subject obligation, ex13 cept as provided by subparagraph (B).

14 ‘‘(B) In the case of a lessee on whom the Sec15 retary determines that subparagraph (A) would im16 pose a hardship, the Secretary shall calculate the in17 terest due and notify the lessee within a reasonable

18 time of the amount of interest due, unless such les19 see elects to calculate and report interest in accord20 ance with subparagraph (A).

21 ‘‘(3) An adjustment or a request for a refund

22 for an obligation may be made after the adjustment

23 period only upon written notice to and approval by

24 the Secretary during an audit of the period which

25 includes the production month for which the adjust-
611

•HR 2517 IH

1 ment is being made. If an overpayment is identified

2 during an audit, then the Secretary shall allow a

3 credit or refund in the amount of the overpayment.

4 ‘‘(4) For purposes of this section, the adjust5 ment period for any obligation shall be the five-year

6 period following the date on which an obligation be7 came due. The adjustment period shall be sus8 pended, tolled, extended, enlarged, or terminated by

9 the same actions as the limitation period in section

10 115.

11 ‘‘(b) REFUNDS.—

12 ‘‘(1) IN GENERAL.—A request for refund is suf13 ficient if it—

14 ‘‘(A) is made in writing to the Secretary

15 and, for purposes of section 115, is specifically

16 identified as a demand;

17 ‘‘(B) identifies the person entitled to such

18 refund;

19 ‘‘(C) provides the Secretary information

20 that reasonably enables the Secretary to iden21 tify the overpayment for which such refund is

22 sought; and

23 ‘‘(D) provides the reasons why the pay24 ment was an overpayment.
612

•HR 2517 IH

1 ‘‘(2) PAYMENT BY SECRETARY OF THE TREAS2 URY.—The Secretary shall certify the amount of the

3 refund to be paid under paragraph (1) to the Sec4 retary of the Treasury who shall make such refund.

5 Such refund shall be paid from amounts received as

6 current receipts from sales, bonuses, royalties (in7 cluding interest charges collected under this section)

8 and rentals of the public lands and the Outer Con9 tinental Shelf under the provisions of the Mineral

10 Leasing Act and the Outer Continental Shelf Lands

11 Act, which are not payable to a State or the Rec12 lamation Fund. The portion of any such refund at13 tributable to any amounts previously disbursed to a

14 State, the Reclamation Fund, or any recipient pre15 scribed by law shall be deducted from the next dis16 bursements to that recipient made under the appli17 cable law. Such amounts deducted from subsequent

18 disbursements shall be credited to miscellaneous re19 ceipts in the Treasury.

20 ‘‘(3) PAYMENT PERIOD.—A refund under this

21 subsection shall be paid or denied (with an expla22 nation of the reasons for the denial) within 120 days

23 of the date on which the request for refund is re24 ceived by the Secretary. Such refund shall be subject
613

•HR 2517 IH

1 to later audit by the Secretary and subject to the

2 provisions of this Act.

3 ‘‘(4) PROHIBITION AGAINST REDUCTION OF RE4 FUNDS OR CREDITS.—In no event shall the Sec5 retary directly or indirectly claim any amount or

6 amounts against, or reduce any refund or credit (or

7 interest accrued thereon) by the amount of any obli8 gation the enforcement of which is barred by section

9 115.’’.

10 (b) CLERICAL AMENDMENT.—The table of contents

11 in section 1 of such Act (30 U.S.C. 1701) is amended by

12 adding after the item relating to section 111 the following

13 new item:

‘‘Sec. 111A. Adjustments and refunds.’’.

14 SEC. 9515. REQUIRED RECORDKEEPING.

15 Section 103 of the Federal Oil and Gas Royalty Man16 agement Act of 1982 (30 U.S.C. 1713(b)) is amended by

17 adding at the end the following:

18 ‘‘(c) Records required by the Secretary for the pur19 pose of determining compliance with any applicable min20 eral leasing law, lease provision, regulation or order with

21 respect to oil and gas leases from Federal lands or the

22 Outer Continental Shelf shall be maintained for the same

23 period of time during which a judicial proceeding or de24 mand may be commenced under section 115(a). If a judi25 cial proceeding or demand is timely commenced, the
614

•HR 2517 IH

1 record holder shall maintain such records until the final

2 nonappealable decision in such judicial proceeding is

3 made, or with respect to that demand is rendered, unless

4 the Secretary authorizes in writing an earlier release of

5 the requirement to maintain such records. Notwithstand6 ing anything herein to the contrary, under no cir7 cumstance shall a record holder be required to maintain

8 or produce any record relating to an obligation for any

9 time period which is barred by the applicable limitation

10 in section 115.’’.

11 SEC. 9516. ROYALTY INTEREST, PENALTIES, AND PAY12 MENTS.

13 (a) PERIOD.—Section 111(f) of the Federal Oil and

14 Gas Royalty Management Act of 1982 (30 U.S.C.

15 1721(f)) is amended to read as follows:

16 ‘‘(f) Upon a determination that it will further the ef17 fective and efficient performance of his duties and respon18 sibilities, the Secretary may waive or forego such interest

19 in whole or in part. Interest shall be charged under this

20 section only for the number of days a payment is late.’’.

21 (b) LESSEE INTEREST.—Section 111 of the Federal

22 Oil and Gas Royalty Management Act of 1982 (30 U.S.C.

23 1721) is amended by adding after subsection (g) the fol24 lowing:
615

•HR 2517 IH

1 ‘‘(h) Interest shall be allowed and the Secretary shall

2 pay or credit such interest on any overpayment, with such

3 interest to accrue from the date such overpayment was

4 made, at the rate obtained by applying the provisions of

5 subparagraphs (A) and (B) of section 6621(a)(1) of the

6 Internal Revenue Code of 1986. Interest which has ac7 crued on any overpayment may be applied to reduce an

8 underpayment. This subsection applies to overpayments

9 made later than six months after the date of enactment

10 of this subsection or September 1, 1996, whichever is

11 later. Such interest shall be paid from amounts received

12 as current receipts from sales, bonuses, royalties (includ13 ing interest charges collected under this section) and rent14 als of the public lands and the Outer Continental Shelf

15 under the provisions of the Mineral Leasing Act, and the

16 Outer Continental Shelf Lands Act, which are not payable

17 to a State or the Reclamation Fund. The portion of any

18 such interest payment attributable to any amounts pre19 viously disbursed to a State, the Reclamation Fund, or

20 any other recipient designated by law shall be deducted

21 from the next disbursements to that recipient made under

22 the applicable law. Such amounts deducted from subse23 quent disbursements shall be credited to miscellaneous re24 ceipts in the Treasury.’’.
616

•HR 2517 IH

1 (c) LIMITATION ON INTEREST.—Section 111 of such

2 Act, as amended by subsection (b) of this Act, is further

3 amended by adding at the end the following:

4 ‘‘(i) Upon a determination by the Secretary that an

5 excessive overpayment (based upon all obligations of a les6 see for a given reporting month) was made for the sole

7 purpose of receiving interest, interest shall not be paid on

8 the excessive amount of such overpayment. For purposes

9 of this Act, an ‘excessive overpayment’ shall be the amount

10 that any overpayment a lessee pays for a given reporting

11 month (excluding payments for demands for obligations

12 as a result of judicial or administrative proceedings for

13 settlement agreements and for other similar payments) for

14 the aggregate of all of its Federal leases exceeds 25 per15 cent of the total royalties paid that month for those

16 leases.’’.

17 (d) ESTIMATED PAYMENT.—Section 111 of such Act,

18 as amended by subsections (b) and (c) of this Act, is fur19 ther amended by adding at the end the following:

20 ‘‘(j) A lessee may make a payment for the approxi21 mate amount of royalties (hereinafter in this subsection

22 ‘estimated payment’) that would otherwise be due to the

23 Secretary for such lease to avoid underpayment or

24 nonpayment interest charges. When an estimated payment

25 is made, actual royalties become due at the end of the
617

•HR 2517 IH

1 month following the period covered by the estimated pay2 ment. If the lessee makes a payment for such actual royal3 ties, the lessee may apply the estimated payment to future

4 royalties. Any estimated payment may be adjusted, re5 couped, or reinstated at any time by the lessee.’’.

6 (e) VOLUME ALLOCATION OF OIL AND GAS PRODUC7 TION.—Section 111 of such Act (30 U.S.C. 1721), as

8 amended by subsections (b) through (d) of this Act, is

9 amended by adding at the end the following:

10 ‘‘(k)(1) Except as otherwise provided by this sub11 section—

12 ‘‘(A) a lessee of a lease in a unit or

13 communitization agreement which contains only

14 Federal leases with the same royalty rate and funds

15 distribution must report and pay royalties on oil and

16 gas production for each production month based on

17 the actual volume of production sold by or on behalf

18 of that lessee;

19 ‘‘(B) a lessee of a lease in any other unit or

20 communitization agreement must report and pay

21 royalties on oil and gas production for each produc22 tion month based on the volume of oil and gas pro23 duced from such agreement and allocated to the

24 lease in accordance with the terms of the agreement;

25 and
618

•HR 2517 IH

1 ‘‘(C) a lessee of a lease that is not contained in

2 a unit or communitization agreement must report

3 and pay royalties on oil and gas production for each

4 production month based on the actual volume of pro5 duction sold by or on behalf of that lessee.

6 ‘‘(2) This subsection applies only to requirements for

7 reporting and paying royalties. Nothing in this subsection

8 is intended to alter a lessee’s liability for royalties on oil

9 or gas production based on the share of production allo10 cated to the lease in accordance with the terms of the

11 lease, a unit or communitization agreement, or any other

12 agreement.

13 ‘‘(3) For any unit or communitization agreement, if

14 all lessees contractually agree to an alternative method of

15 royalty reporting and payment, the lessees may submit

16 such alternative method to the Secretary for approval and

17 make payments in accordance with such approved alter18 native method so long as such alternative method does not

19 reduce the amount of the royalty obligation.

20 ‘‘(4) The Secretary shall grant an exception from the

21 reporting and payment requirements for marginal prop22 erties by allowing for any calendar year or portion thereof

23 royalties to be paid each month based on the volume of

24 production sold. Interest shall not accrue on the difference

25 for the entire calendar year or portion thereof between the
619

•HR 2517 IH

1 amount of oil and gas actually sold and the share of pro2 duction allocated to the lease until the beginning of the

3 month following calendar year or portion thereof. Any ad4 ditional royalties due or overpaid royalties and associated

5 interest shall be paid, refunded, or credited within six

6 months after the end of each calendar year in which royal7 ties are paid based on volumes of production sold. For

8 the purpose of this subsection, the term ‘marginal prop9 erty’ means a lease that produces on average the combined

10 equivalent of less than 15 barrels of oil per day or 90 thou11 sand cubic feet of gas per day, or a combination thereof,

12 determined by dividing the average daily production of do13 mestic crude oil and domestic natural gas from producing

14 wells on such lease by the number of such wells, unless

15 the Secretary, together with the State concerned, deter16 mines that a different production is more appropriate.

17 ‘‘(5) Not later than two years after the date of the

18 enactment of this subsection, the Secretary shall issue any

19 appropriate demand for all outstanding royalty payment

20 disputes regarding who is required to report and pay roy21 alties on production from units and communitization

22 agreements outstanding on the date of the enactment of

23 this subsection, and collect royalty amounts owed on such

24 production.’’.
620

•HR 2517 IH

1 (f) PRODUCTION ALLOCATION.—Section 111 of such

2 Act (30 U.S.C. 1721), as amended by subsections (b)

3 through (e) of this Act, is amended by adding at the end

4 the following:

5 ‘‘(l) The Secretary shall issue all determinations of

6 allocations of production for units and communitization

7 agreements within 120 days of a request for determina8 tion. If the Secretary fails to issue a determination within

9 such 120-day period, the Secretary shall waive interest

10 due on obligations subject to the determination until the

11 end of the month following the month in which the deter12 mination is made.’’.

13 SEC. 9517. LIMITATION ON ASSESSMENTS.

14 Section 111 of the Federal Oil and Gas Royalty Man15 agement Act of 1982 (30 U.S.C. 1721), as amended by

16 section 9516, is further amended by adding at the end

17 the following:

18 ‘‘(m)(1) After the date of enactment of this sub19 section, the Secretary shall not impose any assessment for

20 any late payment or underpayment. After the date of en21 actment of this subsection, the Secretary may impose an

22 assessment only for erroneous reports submitted by lessees

23 subject to the limitations of paragraph (2). Nothing in this

24 section shall prohibit the Secretary from imposing pen-
621

•HR 2517 IH

1 alties or interest under other sections of this Act for late

2 payments or underpayments.

3 ‘‘(2) No assessment for erroneous reports shall be im4 posed for 18 months following the date of enactment of

5 this subsection, or until the Secretary issues a final rule

6 which provides for imposition of an assessment only on

7 a lessee who chronically submits erroneous reports and

8 which establishes what constitutes chronic errors for a les9 see, whichever is later. However, if the Secretary deter10 mines during that 18-month period that the reporting

11 error rate for all reporters for all Federal leases has in12 creased by one-third for three consecutive report months

13 for either production reporting or royalty reporting over

14 the 12 months preceding the date of enactment of this

15 subsection, the Secretary may impose an assessment for

16 erroneous reports only for the increased category of report

17 under regulations in effect on the date of enactment of

18 this subsection.’’.

19 SEC. 9518. ALTERNATIVES FOR MARGINAL PROPERTIES.

20 (a) IN GENERAL.—The Federal Oil and Gas Royalty

21 Management Act of 1982 (30 U.S.C. 1701 et seq.), as

22 amended by section 9513 of this Act, is further amended

23 by adding at the end the following:

24 ‘‘SEC. 116. ALTERNATIVES FOR MARGINAL PROPERTIES.

25 ‘‘(a) SELLING THE REVENUE STREAM.—
622

•HR 2517 IH

1 ‘‘(1) IN GENERAL.—Notwithstanding the provi2 sions of any lease to the contrary, upon request of

3 the lessee or a State under section 205(g), the Sec4 retary shall authorize a lessee for a marginal prop5 erty and for a lease, the administration of which is

6 not cost-effective for the Secretary to administer, to

7 make a prepayment in lieu of royalty payments

8 under the lease for the remainder of the lease term.

9 For the purposes of this section, the term ‘marginal

10 property’ has the same meaning given such term in

11 section 111(k)(4), unless the Secretary, together

12 with each State in which such marginal production

13 occurs, determines that a different definition of mar14 ginal property better achieves the purpose of this

15 section.

16 ‘‘(2) MARGINAL PROPERTIES.—For marginal

17 properties, prepayments under paragraph (1) shall

18 begin—

19 ‘‘(A) in the case of those properties pro20 ducing on average $500 or less per month in

21 total royalties to the United States, two years

22 after the date of the enactment of this section;

23 ‘‘(B) in the case of those properties pro24 ducing on average more than $500 but $1,000

25 or less per month in total royalties to the
623

•HR 2517 IH

1 United States, three years after the date of the

2 enactment of this section;

3 ‘‘(C) in the case of those properties pro4 ducing on average more than $1,000 but

5 $1,500 or less per month in total royalties to

6 the United States, four years after the date of

7 the enactment of this section; and

8 ‘‘(D) in the case of those properties not de9 scribed in subparagraphs (A) through (C), five

10 years after the date of the enactment of this

11 section.

12 ‘‘(3) ADMINISTRATION NOT COST-EFFECTIVE.—

13 For a lease, the administration of which is not cost14 effective for the Secretary to administer, prepay15 ments under paragraph (1) shall begin on the date

16 of the enactment of this section.

17 ‘‘(4) SATISFACTION OF ROYALTY OBLIGA18 TION.—A lessee who makes a prepayment under this

19 section shall have satisfied in full its obligation to

20 pay royalty on production from the lease or a por21 tion of a lease and shall not be required to submit

22 any royalty reports to the Secretary. The prepay23 ment shall be shared by the Secretary with any

24 State or other recipient to the same extent as any

25 royalty payment for such lease.
624

•HR 2517 IH

1 ‘‘(5) VALUATION.—The prepayment authorized

2 under this section shall only occur if the Secretary,

3 the State concerned, and the lessee determine that

4 such prepayment is based on the present value of

5 the projected remaining royalties from the produc6 tion from the lease, based on appropriate nominal

7 discount rate for a comparable term. Prior to ac8 cepting such prepayment, the Secretary and State

9 concerned shall agree that such prepayment is in the

10 best interest of the United States and the State con11 cerned.

12 ‘‘(b) ALTERNATIVE ACCOUNTING AND AUDITING RE13 QUIREMENTS.—

14 ‘‘(1) IN GENERAL.—Within one year after the

15 date of the enactment of this section, for the mar16 ginal properties referenced in subsection (a)(1), the

17 Secretary shall provide accounting, reporting, and

18 auditing relief that will encourage lessees to continue

19 to produce and develop such properties: Provided,

20 That such relief will only be available to lessees in

21 a State that concurs. Prior to granting such relief,

22 the Secretary and the State concerned shall agree

23 that the type of marginal wells and relief provided

24 under this paragraph is in the best interest of the

25 United States and the State concerned.
625

•HR 2517 IH

1 ‘‘(2) PAYMENT DATE.—For leases subject to

2 this section, the Secretary may allow royalties to be

3 paid later than the time specified in the lease.’’.

4 (b) CLERICAL AMENDMENT.—The table of contents

5 in section 1 of such Act (30 U.S.C. 1701) is amended by

6 adding after the item relating to section 115 the following

7 new item:

‘‘Sec. 116. Alternatives for marginal properties.’’.

8 SEC. 9519. ROYALTY IN KIND.

9 (a) IN GENERAL.—

10 (1) OCS.—Section 27(a)(1) of the Outer Con11 tinental Shelf Lands Act (43 U.S.C. 1353(a)(1)) is

12 amended by adding at the end the following:

13 ‘‘Any royalty or net profit share of oil or gas accruing

14 to the United States under any such lease, at the Sec15 retary’s option, may be taken in kind at or near the lease

16 (unless the lease expressly provides for delivery at a dif17 ferent location) upon prior written notice given reasonably

18 in advance by the Secretary to the lessee. Once the United

19 States has commenced taking royalty in kind, it shall con20 tinue to do so until a reasonable time after the Secretary

21 has provided written notice reasonably in advance to the

22 lessee that it will resume taking royalty in value. Delivery

23 of royalty in kind by the lessee shall satisfy in full the

24 lessee’s royalty obligation. Once the oil or gas is delivered,
626

•HR 2517 IH

1 the lessee shall not be subject to the reporting and record2 keeping requirements under section 103 for its share of

3 oil and gas production other than records necessary to ver4 ify the quantity of oil or gas delivered.’’.

5 (2) ONSHORE.—Section 36 of the Mineral

6 Leasing Act (30 U.S.C. 192) is amended by adding

7 at the end the following undesignated paragraph:

8 ‘‘Notwithstanding the provisions of the previous para9 graph, any royalty or net profit share of oil or gas accru10 ing to the United States under any lease issued or main11 tained by the Secretary for the exploration, production

12 and development of oil and gas on Federal lands, at the

13 Secretary’s option, may be taken in kind at or near the

14 lease (unless the lease expressly provides for delivery at

15 a different location) after prior written notice given rea16 sonably in advance by the Secretary to the lessee. Once

17 the United States has commenced taking royalty in kind,

18 it shall continue to do so until a reasonable time after the

19 Secretary has provided written notice reasonably in ad20 vance to the lessee that it will resume taking royalty in

21 value. Delivery of royalty in kind by the lessee shall satisfy

22 in full the lessee’s royalty obligation. Once the oil or gas

23 is delivered, the lessee shall not be subject to the reporting

24 and recordkeeping requirements under section 103 for its
627

•HR 2517 IH

1 share of oil and gas production other than records nec2 essary to verify the quantity of oil or gas delivered.’’.

3 (b) SALE.—Sections 27(b)(1) and (c)(1) of the Outer

4 Continental Shelf Lands Act (43 U.S.C. 1353(c)(1)) are

5 each amended by striking ‘‘competitive bidding for not

6 more than its regulated price, or, if no regulated price ap7 plies, not less than its fair market value’’ and inserting

8 ‘‘competitive bidding or private sale’’.

9 SEC. 9520. ROYALTY SIMPLIFICATION AND COST-EFFEC10 TIVE AUDIT AND COLLECTION REQUIRE11 MENTS.

12 (a) IN GENERAL.—Section 101 of the Federal Oil

13 and Gas Royalty Management Act of 1982 (30 U.S.C.

14 1711) is amended by adding at the end the following:

15 ‘‘(d)(1) For the purpose of reducing costs and in16 creasing net royalties to the United States and the States,

17 the Secretary, in consultation with States concerned, shall,

18 within one year after the date of the enactment of this

19 subsection, streamline and simplify current royalty man20 agement requirements and practices, including royalty re21 porting, instructions, audits and collections. This stream22 lining and simplification shall specifically include—

23 ‘‘(A) elimination of all unnecessary royalty and

24 production reports;
628

•HR 2517 IH

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.
629

•HR 2517 IH

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.
630

•HR 2517 IH

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:
631

•HR 2517 IH

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
632

•HR 2517 IH

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.
633

•HR 2517 IH

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

10 SEC. 9601. INDIAN GAMING.

11 (a) COMMISSION FUNDING.—Section 18(a) of the In12 dian Gaming Regulatory Act (25 U.S.C. 2717(a)) is

13 amended by striking out ‘‘$1,500,000’’ each place it ap14 pears and inserting in lieu thereof ‘‘$2,500,000’’.

15 (b) AUTHORIZATION OF APPROPRIATIONS.—Section

16 19(a) of the Indian Gaming Regulatory Act (25 U.S.C.

17 2718(a)) is amended by striking out all after ‘‘(a)’’ and

18 inserting in lieu thereof the following: ‘‘Notwithstanding

19 the provisions of section 18, no funds may be authorized

20 to be appropriated for the operation of the Commission.’’.

21 Subtitle G—Consultation

22 SEC. 9701. CONSULTATION.

23 Section 7(d) of the Endangered Species Act of 1973

24 (16 U.S.C. 1536(d)) is amended to read as follows:

25 ‘‘(d) LIMITATION ON COMMITMENT OF RE26 SOURCES.—After initiation of consultation required under
634

•HR 2517 IH

1 subsection (a)(2) of this section, the Federal agency and

2 the permit or license applicant shall not make any irre3 versible or irretrievable commitment of resources with re4 spect to the agency action which has the effect of foreclos5 ing the formulation or implementation of any reasonable

6 and prudent alternative measures which would not violate

7 subsection (a)(2) of this section. This limitation on the

8 commitment of resources is only applicable to consulta9 tions regarding site-specific projects and activities, and

10 shall not apply to any consultation regarding an agency’s

11 periodic or long-term planning activities, mission or policy

12 statements, programmatic documents, or general policies,

13 regulations, or activities, whether or not such consultation

14 has previously been initiated pursuant to a court order,

15 and regardless of the date on which consultation was or16 dered or initiated.’’.

17 Subtitle H—Mapping

18 SEC. 9801. SHORT TITLE.

19 This subtitle may be cited as the ‘‘Department of the

20 Interior Surveying and Mapping Efficiency and Economic

21 Opportunity Act of 1995’’.

22 SEC. 9802. SURVEYING AND MAPPING CONTRACTING PRO23 GRAM.

24 In order to provide private firms, including small and

25 small disadvantaged businesses, ample opportunities to
635

•HR 2517 IH

1 provide quality services to the Department of the Interior

2 (hereinafter referred to as the ‘‘Department’’), the Sec3 retary of the Interior (hereinafter referred to as the ‘‘Sec4 retary’’) shall conduct a surveying and mapping contract5 ing program.

6 SEC. 9803. INVENTORY OF ACTIVITIES.

7 (a) PUBLICATION OF INVENTORY.—Not later than

8 90 days after the date of enactment of this Act, the Sec9 retary, in consultation with the Administrator of the Of10 fice of Federal Procurement Policy, the Administrator of

11 the Small Business Administration and the trade associa12 tion of private surveying and mapping firms, shall publish

13 an inventory of surveying and mapping activities in the

14 Department of the Interior for the last fiscal year com15 pleted prior to the date of enactment of this Act.

16 (b) ITEMS INCLUDED.—The inventory shall include

17 each of the following:

18 (1) The total dollar value of surveying and

19 mapping activities in each agency of the Depart20 ment.

21 (2) The total dollar value of surveying and

22 mapping activities in each agency of the Department

23 performed by contract with private sector firms.
636

•HR 2517 IH

1 (3) The total dollar value of surveying and

2 mapping activities in each agency of the Department

3 performed by personnel of the Department.

4 (4) The total dollar value of surveying and

5 mapping activities in each agency of the Department

6 performed for any other department or agency of the

7 Federal Government.

8 (5) The total dollar value of surveying and

9 mapping activities in each agency of the Department

10 performed for any State or political subdivision

11 thereof, or for any foreign government.

12 (6) The total number of personnel involved in

13 surveying and mapping activities in each agency of

14 the Department.

15 SEC. 9804. PLAN TO INCREASE USE OF CONTRACTS.

16 (a) ESTABLISHMENT.—Based on the inventory con17 ducted pursuant to section 9803 of this Act, not later than

18 180 days after the date of enactment of this Act, the Sec19 retary, in consultation with the Administrator of the Of20 fice of Federal Procurement Policy, the Administrator of

21 the Small Business Administration and the trade associa22 tion of private surveying and mapping firms, shall develop

23 and implement a plan to increase the use of contracts with

24 private firms for surveying and mapping services.
637

•HR 2517 IH

1 (b) ITEMS INCLUDED IN PLAN.—The plan estab2 lished pursuant to subsection (a) of this section shall in3 clude, but not be limited to each of the following:

4 (1) A reduction of surveying and mapping ac5 tivities by personnel in the Department that dupli6 cate capabilities available by contract from the pri7 vate sector.

8 (2) A reduction of acquisition and maintenance

9 of surveying and mapping equipment that duplicate

10 capabilities and capital investment already made by

11 the private sector.

12 (3) The elimination of unfair Government com13 petition in activities in which the Department uses

14 its personnel to perform surveying and mapping for

15 which it shares the cost with, is reimbursed for, or

16 makes a grant to any other agency of the Federal

17 Government, a State or political subdivision thereof,

18 or a foreign government, for such activities, when

19 such activities can be obtained by contract from the

20 private sector.

21 (4) The use of contracts to perform surveying

22 and mapping requirements of the Department cre23 ated through attrition.

24 (5) The enhancement of the leadership role of

25 the Department of the Interior in—
638

•HR 2517 IH

1 (A) the preparation of standards and spec2 ifications;

3 (B) research in surveying and mapping in4 strumentation and procedures, and the prompt

5 transfer of technology to the private sector;

6 (C) providing technical guidance, coordina7 tion, cost sharing, cooperative efforts and ad8 ministration in the use of Federal funds for

9 surveying and mapping activities, and the devel10 opment of geographic information systems, that

11 are performed by the private sector by the con12 tract to Federal, State, and local government

13 agencies;

14 (D) establishing a schedule with quantifi15 able goals for increasing the use of contracts

16 with private sector for current and future sur17 veying and mapping activities; and

18 (E) using Department personnel to per19 form only those surveying and mapping activi20 ties that are inherently governmental in nature,

21 necessary to keep current the skills of such per22 sonnel for evaluating contractor performance

23 and administering contracts, and to perform

24 basic research.
639

•HR 2517 IH

1 SEC. 9805. REPORTS.

2 The Secretary shall transmit to the Committee on

3 Resources of the House of Representatives and the Com4 mittee on Energy and Natural Resources of the Senate

5 a report on implementation of the program not later than

6 January 15 of each year.

7 SEC. 9806. DEFINITIONS.

8 As used in this subtitle:

9 (1) The term ‘‘surveying and mapping’’ means

10 collecting, storing, retrieving, or disseminating

11 graphical or digital data depicting natural or man12 made physical features, phenomena and boundaries

13 of the earth and any information related thereto, in14 cluding but not limited to data shown on or in rela15 tion to surveys, maps, and charts.

16 (2) The ‘‘contract’’ means an instrument to re17 tain private firms with licensed, certified, or other18 wise qualified professionals in such fields as survey19 ing, photogrammetry, cartography, and geodesy,

20 which shall be awarded in accordance with the selec21 tion procedures in title IX of the Federal Property

22 and Administrative Services Act of 1949 (40 U.S.C.

23 541 and following).
640

•HR 2517 IH

1 TITLE X—COMMITTEE ON

2 TRANSPORTATION AND IN3 FRASTRUCTURE

4 Subtitle A—Water Resources

5 SEC. 10001. COMMERCIAL CONCESSIONS AT CORPS OF EN6 GINEERS PROJECTS.

7 Notwithstanding part 1 of subtitle C of title IX of

8 this Act, the Secretary of the Army shall not modify any

9 concession service agreement, concession license, or simi10 lar instrument (or any policy or procedure relating to such

11 agreement, license, or agreement) except to the extent that

12 such modification is permitted under laws in effect on the

13 day before the date of the enactment of this Act.

14 SEC. 10002. FEMA RADIOLOGICAL EMERGENCY PREPARED15 NESS FEES.

16 (a) IN GENERAL.—The Director of the Federal

17 Emergency Management Agency may assess and collect

18 fees applicable to persons subject to radiological emer19 gency preparedness regulations issued by the Director.

20 (b) REQUIREMENTS.—The assessment and collection

21 of fees by the Director under subsection (a) shall be fair

22 and equitable and shall reflect the full amount of costs

23 to the Agency of providing radiological emergency plan24 ning, preparedness, response, and associated services.

25 Such fees shall be assessed by the Director in a manner
641

•HR 2517 IH

1 which reflects the use of resources of the Agency for class2 es of regulated persons and the administrative costs of col3 lecting such fees.

4 (c) AMOUNT OF FEES.—The aggregate amount of

5 fees assessed under subsection (a) in a fiscal year shall

6 approximate, but not be less than, 100 percent of the

7 amounts anticipated by the Director to be obligated for

8 the radiological emergency preparedness program of the

9 Agency for such fiscal year.

10 (d) DEPOSIT OF FEES IN TREASURY.—Fees received

11 pursuant to subsection (a) shall be deposited in the gen12 eral fund of the Treasury as offsetting receipts.

13 (e) EXPIRATION OF AUTHORITY.—The authority of

14 the Director to assess and collect fees under subsection

15 (a) shall expire on September 30, 2002.

16 Subtitle B—Ocean Shipping

17 Reform

18 SEC. 10201. SHORT TITLE.

19 This subtitle may be cited as the ‘‘Ocean Shipping

20 Reform Act of 1995’’.

21 CHAPTER 1—OCEAN SHIPPING REFORM

22 SEC. 10211. PURPOSES.

23 Section 2 of the Shipping Act of 1984 (46 U.S.C.

24 App. 1701) is amended—
642

•HR 2517 IH

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);
643

•HR 2517 IH

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)—
644

•HR 2517 IH

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—
645

•HR 2517 IH

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:
646

•HR 2517 IH

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’’;
647

•HR 2517 IH

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—
648

•HR 2517 IH

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-
649

•HR 2517 IH

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
650

•HR 2517 IH

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)
651

•HR 2517 IH

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);
652

•HR 2517 IH

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;
653

•HR 2517 IH

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
654

•HR 2517 IH

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—
655

•HR 2517 IH

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.
656

•HR 2517 IH

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)
657

•HR 2517 IH

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
658

•HR 2517 IH

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
659

•HR 2517 IH

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.—
660

•HR 2517 IH

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
661

•HR 2517 IH

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:
662

•HR 2517 IH

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
663

•HR 2517 IH

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,
664

•HR 2517 IH

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
665

•HR 2517 IH

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-
666

•HR 2517 IH

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
667

•HR 2517 IH

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
668

•HR 2517 IH

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.
669

•HR 2517 IH

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.
670

•HR 2517 IH

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
671

•HR 2517 IH

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)).
672

•HR 2517 IH

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
673

•HR 2517 IH

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.
674

•HR 2517 IH

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
675

•HR 2517 IH

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-
676

•HR 2517 IH

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-
677

•HR 2517 IH

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
678

•HR 2517 IH

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
679

•HR 2517 IH

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-
680

•HR 2517 IH

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-
681

•HR 2517 IH

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-
682

•HR 2517 IH

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
683

•HR 2517 IH

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
684

•HR 2517 IH

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
685

•HR 2517 IH

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
686

•HR 2517 IH

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
687

•HR 2517 IH

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
688

•HR 2517 IH

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.
689

•HR 2517 IH

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-
690

•HR 2517 IH

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
691

•HR 2517 IH

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.
692

•HR 2517 IH

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-
693

•HR 2517 IH

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
694

•HR 2517 IH

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
695

•HR 2517 IH

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.—
696

•HR 2517 IH

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.
697

•HR 2517 IH

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
698

•HR 2517 IH

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,’’.
699

•HR 2517 IH

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
700

•HR 2517 IH

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
701

•HR 2517 IH

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 TITLE XI—COMMITTEE ON

21 VETERANS’ AFFAIRS

22 SEC. 11001. SHORT TITLE; TABLE OF CONTENTS.

23 (a) SHORT TITLE.—This title may be cited as the

24 ‘‘Veterans Reconciliation Act of 1995’’.
702

•HR 2517 IH

1 (b) TABLE OF CONTENTS.—The contents of this title

2 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.

Sec. 11035. Improved efficiency in health care resource management.

Sec. 11036. Sharing agreements for specialized medical resources.

Sec. 11037. Personnel furnishing shared resources.
703

•HR 2517 IH

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 Section 5317(g) of title 38, United States Code, is

22 amended by striking out ‘‘September 30, 1998’’ and in23 serting in lieu thereof ‘‘September 30, 2002’’.
704

•HR 2517 IH

1 SEC. 11014. LIMITATION ON PENSION FOR CERTAIN RECIPI2 ENTS OF MEDICAID-COVERED NURSING

3 HOME CARE.

4 Section 5503(f)(7) of title 38, United States Code,

5 is amended by striking out ‘‘September 30, 1998’’ and in6 serting in lieu thereof ‘‘September 30, 2002’’.

7 SEC. 11015. HOME LOAN FEES.

8 Section 3729(a) of title 38, United States Code, is

9 amended—

10 (1) in paragraph (4), by striking out ‘‘October

11 1, 1998’’ and inserting in lieu thereof ‘‘October 1,

12 2002’’; and

13 (2) in paragraph (5)(C), by striking out ‘‘Octo14 ber 1, 1998’’ and inserting in lieu thereof ‘‘October

15 1, 2002’’.

16 SEC. 11016. PROCEDURES APPLICABLE TO LIQUIDATION

17 SALES ON DEFAULTED HOME LOANS GUAR18 ANTEED BY THE DEPARTMENT OF VETERANS

19 AFFAIRS.

20 Section 3732(c)(11) of title 38, United States Code,

21 is amended by striking out ‘‘October 1, 1998’’ and insert22 ing ‘‘October 1, 2002’’.
705

•HR 2517 IH

1 Subtitle B—Other Matters

2 SEC. 11021. REVISION TO PRESCRIPTION DRUG

3 COPAYMENT.

4 (a) INCREASE IN AMOUNT OF COPAYMENT.—Section

5 1722A(a) of title 38, United States Code, is amended—

6 (1) in paragraph (1), by striking out ‘‘$2’’ and

7 inserting in lieu thereof ‘‘$3’’;

8 (2) by striking out paragraph (2); and

9 (3) by redesignating paragraph (3) as para10 graph (2).

11 (b) RECOVERY OF INDEBTEDNESS.—(1) Section

12 5302 of such title is amended by adding at the end the

13 following new subsection:

14 ‘‘(f) The Secretary may not waive under this section

15 the recovery of any payment or the collection of any in16 debtedness owed under section 1722A of this title.’’.

17 (2) The amendment made by paragraph (1) shall

18 apply with respect to amounts that become due to the

19 United States under section 1722A of title 38, United

20 States Code, on or after the date of the enactment of this

21 Act.

22 SEC. 11022. ROUNDING DOWN OF COST-OF-LIVING ADJUST23 MENTS IN COMPENSATION AND DIC RATES.

24 (a) FISCAL YEAR 1996 COLA.—(1) Effective as of

25 December 1, 1995, the Secretary of Veterans Affairs shall
706

•HR 2517 IH

1 recompute any increase in an adjustment that is otherwise

2 provided by law to be effective during fiscal year 1996 in

3 the rates of disability compensation and dependency and

4 indemnity compensation paid by the Secretary as such

5 rates were in effect on November 30, 1995. The recom6 putation shall provide for the same percentage increase

7 as provided under such law, but with amounts so recom8 puted (if not a whole dollar amount) rounded down to the

9 next lower whole dollar amount (rather than to the nearest

10 whole dollar amount) and with each old-law DIC rate in11 creased by the amount by which the new-law DIC rate

12 is increased (rather than by a uniform percentage).

13 (2) For purposes of paragraph (1):

14 (A) The term ‘‘old-law DIC rate’’ means a dol15 lar amount in effect under section 1311(a)(3) of title

16 38, United States Code.

17 (B) The term ‘‘new-law DIC rate’’ means the

18 dollar amount in effect under section 1311(a)(1) of

19 title 38, United States Code.

20 (b) OUT-YEAR COMPENSATION COLAS.—(1) Chap21 ter 11 of title 38, United States Code, is amended by in22 serting after section 1102 the following new section:

23 ‘‘§ 1103. Cost-of-living adjustments

24 ‘‘(a) In the computation of cost-of-living adjustments

25 for fiscal years 1997 through 2002 in the rates of, and
707

•HR 2517 IH

1 dollar limitations applicable to, compensation payable

2 under this chapter, such adjustments shall be made by a

3 uniform percentage that is no more than the percentage

4 equal to the social security increase for that fiscal year,

5 with all increased monthly rates and limitations (other

6 than increased rates or limitations equal to a whole dollar

7 amount) rounded down to the next lower whole dollar

8 amount.

9 ‘‘(b) For purposes of this section, the term ‘social se10 curity increase’ means the percentage by which benefit

11 amounts payable under title II of the Social Security Act

12 (42 U.S.C. 401 et seq.) are increased for any fiscal year

13 as a result of a determination under section 215(i) of such

14 Act (42 U.S.C. 415(i)).’’.

15 (2) The table of sections at the beginning of such

16 chapter is amended by inserting after the item relating

17 to section 1102 the following new item:

‘‘1103. Cost-of-living adjustments.’’.

18 (c) OUT-YEAR DIC COLAS.—(1) Chapter 13 of title

19 38, United States Code, is amended by inserting after sec20 tion 1302 the following new section:

21 ‘‘§ 1303. Cost-of-living adjustments

22 ‘‘(a) In the computation of cost-of-living adjustments

23 for fiscal years 1997 through 2002 in the rates of depend24 ency and indemnity compensation payable under this

25 chapter, such adjustments (except as provided in sub-
708

•HR 2517 IH

1 section (b)) shall be made by a uniform percentage that

2 is no more than the percentage equal to the social security

3 increase for that fiscal year, with all increased monthly

4 rates (other than increased rates equal to a whole dollar

5 amount) rounded down to the next lower whole dollar

6 amount.

7 ‘‘(b)(1) Cost-of-living adjustments for each of fiscal

8 years 1997 through 2002 in old-law DIC rates shall be

9 in a whole dollar amount that is no greater than the

10 amount by which the new-law DIC rate is increased for

11 that fiscal year as determined under subsection (a).

12 ‘‘(2) For purposes of paragraph (1):

13 ‘‘(A) The term ‘old-law DIC rates’ means the

14 dollar amounts in effect under section 1311(a)(3) of

15 this title.

16 ‘‘(B) The term ‘new-law DIC rate’ means the

17 dollar amount in effect under section 1311(a)(1) of

18 this title.

19 ‘‘(c) For purposes of this section, the term ‘social se20 curity increase’ means the percentage by which benefit

21 amounts payable under title II of the Social Security Act

22 (42 U.S.C. 401 et seq.) are increased for any fiscal year

23 as a result of a determination under section 215(i) of such

24 Act (42 U.S.C. 415(i)).’’.
709

•HR 2517 IH

1 (2) The table of sections at the beginning of such

2 chapter is amended by inserting after the item relating

3 to section 1302 the following new item:

‘‘1303. Cost-of-living adjustments.’’.

4 SEC. 11023. REVISED STANDARD FOR LIABILITY FOR INJU5 RIES RESULTING FROM DEPARTMENT OF

6 VETERANS AFFAIRS TREATMENT.

7 (a) REVISED STANDARD.—Section 1151 of title 38,

8 United States Code, is amended—

9 (1) by designating the second sentence as sub10 section (c);

11 (2) by striking out the first sentence and insert12 ing in lieu thereof the following:

13 ‘‘(a) Compensation under this chapter and depend14 ency and indemnity compensation under chapter 13 of this

15 title shall be awarded for a qualifying additional disability

16 of a veteran or the qualifying death of a veteran in the

17 same manner as if such disability or death were service18 connected.

19 ‘‘(b)(1) For purposes of this section, a disability or

20 death is a qualifying additional disability or a qualifying

21 death only if the disability or death—

22 ‘‘(A) was caused by Department health care

23 and was a proximate result of—
710

•HR 2517 IH

1 ‘‘(i) negligence on the part of the Depart2 ment in furnishing the Department health care;

3 or

4 ‘‘(ii) an event not reasonably foreseeable;

5 or

6 ‘‘(B) was incurred as a proximate result of the

7 provision of training and rehabilitation services by

8 the Secretary (including by a service-provider used

9 by the Secretary for such purpose under section

10 3115 of this title) as part of an approved rehabilita11 tion program under chapter 31 of this title.

12 ‘‘(2) For purposes of this section, the term ‘Depart13 ment health care’ means hospital care, medical or surgical

14 treatment, or an examination that is furnished under any

15 law administered by the Secretary to a veteran by a De16 partment employee or in a Department facility (as defined

17 in section 1701(3)(A) of this title).

18 ‘‘(3) A disability or death of a veteran which is the

19 result of the veteran’s willful misconduct is not a qualify20 ing disability or death for purposes of this section.’’; and

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

22 ‘‘(d) Effective with respect to injuries, aggravations

23 of injuries, and deaths occurring after September 30,

24 2002, a disability or death is a qualifying additional dis25 ability or a qualifying death for purposes of this section
711

•HR 2517 IH

1 (notwithstanding the provisions of subsection (b)(1)) if the

2 disability or death—

3 ‘‘(1) was the result of Department health care;

4 or

5 ‘‘(2) was the result of the pursuit of a course

6 of vocational rehabilitation under chapter 31 of this

7 title.’’.

8 (b) CONFORMING AMENDMENTS.—Subsection (c) of

9 such section, as designated by subsection (a)(1), is amend10 ed—

11 (1) by striking out ‘‘, aggravation,’’ both places

12 it appears; and

13 (2) by striking out ‘‘sentence’’ and inserting in

14 lieu thereof ‘‘subsection’’.

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

16 this section shall apply to any administrative or judicial

17 determination of eligibility for benefits under section 1151

18 of title 38, United States Code, based on a claim that is

19 received by the Secretary on or after October 1, 1995, in20 cluding any such determination based on an original appli21 cation or an application seeking to reopen, revise, recon22 sider, or otherwise readjudicate any claim for benefits

23 under section 1151 of that title or any predecessor provi24 sion of law.
712

•HR 2517 IH

1 SEC. 11024. ENHANCED LOAN ASSET SALE AUTHORITY.

2 Section 3720(h)(2) of title 38, United States Code,

3 is amended by striking out ‘‘December 31, 1995’’ and in4 serting in lieu thereof ‘‘September 30, 1996’’.

5 SEC. 11025. WITHHOLDING OF PAYMENTS AND BENEFITS.

6 (a) NOTICE REQUIRED IN LIEU OF CONSENT OR

7 COURT ORDER.—Section 3726 of title 38, United States

8 Code, is amended by striking out ‘‘unless’’ and all that

9 follows and inserting in lieu thereof the following: ‘‘unless

10 the Secretary provides such veteran or surviving spouse

11 with notice by certified mail with return receipt requested

12 of the authority of the Secretary to waive the payment

13 of indebtedness under section 5302(b) of this title. If the

14 Secretary does not waive the entire amount of the liability,

15 the Secretary shall then determine whether the veteran or

16 surviving spouse should be released from liability under

17 section 3713(b) of this title. If the Secretary determines

18 that the veteran or surviving spouse should not be released

19 from liability, the Secretary shall notify the veteran or sur20 viving spouse of that determination and provide a notice

21 of the procedure for appealing that determination, unless

22 the Secretary has previously made such determination and

23 notified the veteran or surviving spouse of the procedure

24 for appealing the determination.’’.
713

•HR 2517 IH

1 (b) CONFORMING AMENDMENT.—Section 5302(b) of

2 such title is amended by inserting ‘‘with return receipt re3 quested’’ after ‘‘certified mail’’.

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

5 this section shall apply with respect to any indebtedness

6 to the United States arising pursuant to chapter 37 of

7 title 38, United States Code, before, on, or after the date

8 of the enactment of this Act.

9 Subtitle C—Health Care Eligibility

10 Reform

11 SEC. 11031. HOSPITAL CARE AND MEDICAL SERVICES.

12 (a) ELIGIBILITY FOR CARE.—Section 1710(a) of title

13 38, United States Code, is amended by striking out para14 graphs (1) and (2) and inserting the following:

15 ‘‘(a)(1) The Secretary shall, to the extent and in the

16 amount provided in advance in appropriations Acts for

17 these purposes, provide hospital care and medical services,

18 and may provide nursing home care, which the Secretary

19 determines is needed to any veteran—

20 ‘‘(A) with a compensable service-connected dis21 ability;

22 ‘‘(B) whose discharge or release from active

23 military, naval, or air service was for a compensable

24 disability that was incurred or aggravated in the line

25 of duty;
714

•HR 2517 IH

1 ‘‘(C) who is in receipt of, or who, but for a sus2 pension pursuant to section 1151 of this title (or

3 both a suspension and the receipt of retired pay),

4 would be entitled to disability compensation, but

5 only to the extent that such veteran’s continuing eli6 gibility for such care is provided for in the judgment

7 or settlement provided for in such section;

8 ‘‘(D) who is a former prisoner of war;

9 ‘‘(E) of the Mexican border period or of World

10 War I;

11 ‘‘(F) who was exposed to a toxic substance, ra12 diation, or environmental hazard, as provided in sub13 section (e); and

14 ‘‘(G) who is unable to defray the expenses of

15 necessary care as determined under section 1722(a)

16 of this title.

17 ‘‘(2) In the case of a veteran who is not described

18 in paragraph (1), the Secretary may, to the extent re19 sources and facilities are available and subject to the pro20 visions of subsection (f), furnish hospital care, medical

21 services, and nursing home care which the Secretary deter22 mines is needed.’’.

23 (b) CONFORMING AMENDMENTS.—(1) Section

24 1710(e) of such title is amended—
715

•HR 2517 IH

1 (A) in paragraph (1), by striking out ‘‘hospital

2 care and nursing home care’’ in subparagraphs (A),

3 (B), and (C) and inserting in lieu thereof ‘‘hospital

4 care, medical services, and nursing home care’’;

5 (B) in paragraph (2), by inserting ‘‘and medical

6 services’’ after ‘‘Hospital and nursing home care’’;

7 and

8 (C) by striking out ‘‘subsection (a)(1)(G) of

9 this section’’ each place it appears and inserting in

10 lieu thereof ‘‘subsection (a)(1)(F)’’.

11 (2) Chapter 17 of such title is amended—

12 (A) by redesignating subsection (g) of section

13 1710 as subsection (h); and

14 (B) by transferring subsection (f) of section

15 1712 of such title to section 1710 so as to appear

16 after subsection (f), redesignating such subsection as

17 subsection (g), and amending such subsection by

18 striking out ‘‘section 1710(a)(2) of this title’’ in

19 paragraph (1) and inserting in lieu thereof ‘‘sub20 section (a)(2) of this section’’.

21 (3) Section 1712 of such title is amended—

22 (A) by striking out subsections (a) and (i); and

23 (B) by redesignating subsections (b), (c), (d),

24 (h) and (j), as subsections (a), (b), (c), (d), and (e),

25 respectively.
716

•HR 2517 IH

1 SEC. 11032. EXTENSION OF AUTHORITY TO PRIORITY

2 HEALTH CARE FOR PERSIAN GULF VETER3 ANS.

4 Section 1710(e)(3) of title 38, United States Code,

5 is amended by striking out ‘‘December 31, 1995’’ and in6 serting in lieu thereof ‘‘December 31, 1998’’.

7 SEC. 11033. PROSTHETICS.

8 (a) ELIGIBILITY FOR PROSTHETICS.—Section

9 1701(6)(A)(i) of title 38, United States Code, is amend10 ed—

11 (1) by striking out ‘‘(in the case of a person

12 otherwise receiving care or services under this chap13 ter)’’ and ‘‘(except under the conditions described in

14 section 1712(a)(5)(A) of this title),’’;

15 (2) by inserting ‘‘(in the case of a person other16 wise receiving care or services under this chapter)’’

17 before ‘‘wheelchairs,’’; and

18 (3) by inserting ‘‘except that the Secretary may

19 not furnish sensori-neural aids other than in accord20 ance with guidelines which the Secretary shall pre21 scribe,’’ after ‘‘reasonable and necessary,’’.

22 (b) REGULATIONS.—Not later than 30 days after the

23 date of the enactment of this Act, the Secretary of Veter24 ans Affairs shall prescribe the guidelines required by the

25 amendments made by subsection (a) and shall furnish a
717

•HR 2517 IH

1 copy of those guidelines to the Committees on Veterans’

2 Affairs of the Senate and House of Representatives.

3 SEC. 11034. MANAGEMENT OF HEALTH CARE.

4 (a) IN GENERAL.—(1) Chapter 17 of title 38, United

5 States Code, is amended by inserting after section 1704

6 the following new sections:

7 ‘‘§ 1705. Management of health care: patient enroll8 ment system

9 ‘‘(a) In managing the provision of hospital care and

10 medical services under section 1710(a)(1) of this title, the

11 Secretary, in accordance with regulations the Secretary

12 shall prescribe, shall establish and operate a system of an13 nual patient enrollment. The Secretary shall manage the

14 enrollment of veterans in accordance with the following

15 priorities, in the order listed:

16 ‘‘(1) Veterans with service-connected disabilities

17 rated 30 percent or greater.

18 ‘‘(2) Veterans who are former prisoners of war

19 and veterans with service connected disabilities rated

20 10 percent or 20 percent.

21 ‘‘(3) Veterans who are in receipt of increased

22 pension based on a need of regular aid and attend23 ance or by reason of being permanently housebound

24 and other veterans who are catastrophically disabled.
718

•HR 2517 IH

1 ‘‘(4) Veterans not covered by paragraphs (1)

2 through (3) who are unable to defray the expenses

3 of necessary care as determined under section

4 1722(a) of this title.

5 ‘‘(5) All other veterans eligible for hospital care,

6 medical services, and nursing home care under sec7 tion 1710(a)(1) of this title.

8 ‘‘(b) In the design of an enrollment system under

9 subsection (a), the Secretary—

10 ‘‘(1) shall ensure that the system will be man11 aged in a manner to ensure that the provision of

12 care to enrollees is timely and acceptable in quality;

13 ‘‘(2) may establish additional priorities within

14 each priority group specified in subsection (a), as

15 the Secretary determines necessary; and

16 ‘‘(3) may provide for exceptions to the specified

17 priorities where dictated by compelling medical rea18 sons.

19 ‘‘§ 1706. Management of health care: other require20 ments

21 ‘‘(a) In managing the provision of hospital care and

22 medical services under section 1710(a) of this title, the

23 Secretary shall, to the extent feasible, design, establish

24 and manage health care programs in such a manner as
719

•HR 2517 IH

1 to promote cost-effective delivery of health care services

2 in the most clinically appropriate setting.

3 ‘‘(b) In managing the provision of hospital care and

4 medical services under section 1710(a) of this title, the

5 Secretary—

6 ‘‘(1) may contract for hospital care and medical

7 services when Department facilities are not capable

8 of furnishing such care and services economically,

9 and

10 ‘‘(2) shall make such rules and regulations re11 garding acquisition procedures or policies as the Sec12 retary considers appropriate to provide such needed

13 care and services.

14 ‘‘(c) In managing the provision of hospital care and

15 medical services under section 1710(a) of this title, the

16 Secretary shall ensure that the Department maintains its

17 capacity to provide for the specialized treatment and reha18 bilitative needs of disabled veterans described in section

19 1710(a) of this title (including veterans with spinal cord

20 dysfunction, blindness, amputations, and mental illness)

21 within distinct programs or facilities of the Department

22 that are dedicated to the specialized needs of those veter23 ans in a manner that (1) affords those veterans reasonable

24 access to care and services for those specialized needs, and

25 (2) ensures that overall capacity of the Department to pro-
720

•HR 2517 IH

1 vide such services is not reduced below the capacity of the

2 Department, nationwide, to provide those services, as of

3 the date of the enactment of this section.

4 ‘‘(d) In managing the provision of hospital care and

5 medical services under section 1710(a) of this title, the

6 Secretary shall ensure that any veteran with a service-con7 nected disability is provided all benefits under this chapter

8 for which that veteran was eligible before the date of the

9 enactment of this section.’’.

10 (2) The table of sections at the beginning of chapter

11 17 of such title is amended by inserting after the item

12 relating to section 1704 the following new items:

‘‘1705. Management of health care: patient enrollment system.

‘‘1706. Management of health care: other requirements.’’.

13 (b) CONFORMING AMENDMENTS TO SECTION

14 1703.—(1) Section 1703 of such title is amended—

15 (A) by striking out subsections (a) and (b); and

16 (B) in subsection (c) by—

17 (i) striking out ‘‘(c)’’, and

18 (ii) striking out ‘‘this section, sections’’

19 and inserting in lieu thereof ‘‘sections 1710,’’.

20 (2)(A) The heading of such section is amended to

21 read as follows:
721

•HR 2517 IH

1 ‘‘§ 1703. Annual report on furnishing of care and

2 services by contract’’.

3 (B) The item relating to such section in the table of

4 sections at the beginning of chapter 17 of such title is

5 amended to read as follows:

‘‘1703. Annual report on furnishing of care and services by contract.’’.

6 SEC. 11035. IMPROVED EFFICIENCY IN HEALTH CARE RE7 SOURCE MANAGEMENT.

8 (a) REPEAL OF SUNSET PROVISION.—Section 204 of

9 the Veterans Health Care Act of 1992 (Public Law 102–

10 585; 106 Stat. 4950) is repealed.

11 (b) COST RECOVERY.—Title II of such Act is further

12 amended by adding at the end the following new section:

13 ‘‘SEC. 207. AUTHORITY TO BILL HEALTH-PLAN CONTRACTS.

14 ‘‘(a) RIGHT TO RECOVER.—In the case of a primary

15 beneficiary (as described in section 201(2)(B)) who has

16 coverage under a health-plan contract, as defined in sec17 tion 1729(i)(1)(A) of title 38, United States Code, and

18 who is furnished care or services by a Department medical

19 facility pursuant to this title, the United States shall have

20 the right to recover or collect charges for such care or

21 services from such health-plan contract to the extent that

22 the beneficiary (or the provider of the care or services)

23 would be eligible to receive payment for such care or serv24 ices from such health-plan contract if the care or services

25 had not been furnished by a department or agency of the
722

•HR 2517 IH

1 United States. Any funds received from such health-plan

2 contract shall be credited to funds that have been allotted

3 to the facility that furnished the care or services.

4 ‘‘(b) ENFORCEMENT.—The right of the United

5 States to recover under such a beneficiary’s health-plan

6 contract shall be enforceable in the same manner as that

7 provided by subsections (a)(3), (b), (c)(1), (d), (f), (h),

8 and (i) of section 1729 of title 38, United States Code.’’.

9 SEC. 11036. SHARING AGREEMENTS FOR SPECIALIZED MED10 ICAL RESOURCES.

11 (a) REPEAL OF SECTION 8151.—(1) Subchapter IV

12 of chapter 81 of title 38, United States Code, is amend13 ed—

14 (A) by striking out section 8151; and

15 (B) by redesignating sections 8152, 8153,

16 8154, 8155, 8156, 8157, and 8158 as sections 8151,

17 8152, 8153, 8154, 8155, 8156, and 8157, respec18 tively.

19 (2) The table of sections at the beginning of chapter

20 81 is amended—

21 (A) by striking out the item relating to section

22 8151; and

23 (B) by revising the items relating to sections

24 8152, 8153, 8154, 8155, 8156, 8157, and 8158 to

25 reflect the redesignations by paragraph (1)(B).
723

•HR 2517 IH

1 (b) REVISED AUTHORITY FOR SHARING AGREE2 MENTS.—Section 8152 of such title, as redesignated by

3 subsection (a)(1)(B), is amended—

4 (1) in subsection (a)(1)(A)—

5 (A) by striking out ‘‘specialized medical re6 sources’’ and inserting in lieu thereof ‘‘health7 care resources’’; and

8 (B) by striking out ‘‘other’’ and all that

9 follows through ‘‘medical schools’’ and inserting

10 in lieu thereof ‘‘any medical school, health-care

11 provider, health-care plan, insurer, or other en12 tity or individual’’;

13 (2) in subsection (a)(2) by striking out ‘‘only’’

14 and all that follows through ‘‘are not’’ and inserting

15 in lieu thereof ‘‘if such resources are not, or would

16 not be,’’;

17 (3) in subsection (b), by striking out ‘‘reciprocal

18 reimbursement’’ in the first sentence and all that

19 follows through the period at the end of that sen20 tence and inserting in lieu thereof ‘‘payment to the

21 Department in accordance with procedures that pro22 vide appropriate flexibility to negotiate payment

23 which is in the best interest of the Government.’’;

24 (4) in subsection (d), by striking out ‘‘preclude

25 such payment, in accordance with—’’ and all that
724

•HR 2517 IH

1 follows through ‘‘to such facility therefor’’ and in2 serting in lieu thereof ‘‘preclude such payment to

3 such facility for such care or services’’;

4 (5) by redesignating subsection (e) as sub5 section (f); and

6 (6) by inserting after subsection (d) the follow7 ing new subsection (e):

8 ‘‘(e) The Secretary may make an arrangement that

9 authorizes the furnishing of services by the Secretary

10 under this section to individuals who are not veterans only

11 if the Secretary determines—

12 ‘‘(1) that such an arrangement will not result

13 in the denial of, or a delay in providing access to,

14 care to any veteran at that facility; and

15 ‘‘(2) that such an arrangement—

16 ‘‘(A) is necessary to maintain an accept17 able level and quality of service to veterans at

18 that facility; or

19 ‘‘(B) will result in the improvement of

20 services to eligible veterans at that facility.’’.

21 (c) CROSS-REFERENCE AMENDMENTS.—(1) Section

22 8110(c)(3)(A) of such title is amended by striking out

23 ‘‘8153’’ and inserting in lieu thereof ‘‘8152’’.

24 (2) Subsection (b) of section 8154 of such title (as

25 redesignated by subsection (a)(1)(B)) is amended by strik-
725

•HR 2517 IH

1 ing out ‘‘section 8154’’ and inserting in lieu thereof ‘‘sec2 tion 8153’’.

3 (3) Section 8156 of such title (as redesignated by

4 subsection (a)(1)(B)) is amended—

5 (A) in subsection (a), by striking out ‘‘section

6 8153(a)’’ and inserting in lieu thereof ‘‘section

7 8152(a)’’; and

8 (B) in subsection (b)(3), by striking out ‘‘sec9 tion 8153’’ and inserting in lieu thereof ‘‘section

10 8152’’.

11 (4) Subsection (a) of section 8157 of such title (as

12 redesignated by subsection (a)(1)(B)) is amended—

13 (A) in the matter preceding paragraph (1), by

14 striking out ‘‘section 8157’’ and ‘‘section 8153(a)’’

15 and inserting in lieu thereof ‘‘section 8156’’ and

16 ‘‘section 8152(a)’’, respectively; and

17 (B) in paragraph (1), by striking out ‘‘section

18 8157(b)(4)’’ and inserting in lieu thereof ‘‘section

19 8156(b)(4)’’.

20 SEC. 11037. PERSONNEL FURNISHING SHARED RESOURCES.

21 Section 712(b)(2) of title 38, United States Code, is

22 amended—

23 (1) by striking out ‘‘the sum of—’’ and insert24 ing in lieu thereof ‘‘the sum of the following:’’;
726

•HR 2517 IH

1 (2) by capitalizing the first letter of the first

2 word of each of subparagraphs (A) and (B);

3 (3) by striking out ‘‘; and’’ at the end of sub4 paragraph (A) and inserting in lieu thereof a period;

5 and

6 (4) by adding at the end the following:

7 ‘‘(C) The number of such positions in the

8 Department during that fiscal year held by per9 sons involved in providing health-care resources

10 under section 8111 or 8152 of this title.’’.

11 TITLE XII—TRADE

12 Subtitle A—Technical Corrections

13 and Miscellaneous Trade Provi14 sions

15 SEC. 12001. PAYMENT OF DUTIES AND FEES.

16 (a) INTEREST ACCRUAL.—Section 505(c) of the Tar17 iff Act of 1930 (19 U.S.C. 1505(c)) is amended in the

18 second sentence by inserting after ‘‘duties, fees, and inter19 est’’ the following: ‘‘or, in a case in which a claim is made

20 under section 520(d), from the date on which such claim

21 is made,’’.

22 (b) EFFECTIVE DATE.—The amendment made by

23 subsection (a) shall apply to claims made pursuant to sec24 tion 520(d) of the Tariff Act of 1930 on or after April

25 25, 1995.
727

•HR 2517 IH

1 SEC. 12002. OTHER TECHNICAL AND CONFORMING AMEND2 MENTS.

3 (a) EXAMINATION OF BOOKS AND WITNESSES.—Sec4 tion 509(a)(2) of the Tariff Act of 1930 (19 U.S.C.

5 1509(a)(2)) is amended by striking ‘‘(c)(1)(A)’’ and in6 serting ‘‘(d)(1)(A)’’.

7 (b) REQUIREMENT FOR CERTIFICATE FOR IMPORTA8 TION OF ALCOHOLIC LIQUORS IN SMALL VESSELS.—Sec9 tion 7 of the Act of August 5, 1935 (19 U.S.C. 1707;

10 49 Stat. 520), is repealed.

11 (c) MANIFESTS.—Section 431(c)(1) of the Tariff Act

12 of 1930 (19 U.S.C. 1431(c)(1)) is amended in the matter

13 preceding subparagraph (A) by striking ‘‘such manifest’’

14 and inserting ‘‘a vessel manifest’’.

15 (d) DOCUMENTATION FOR ENTRY OF MERCHAN16 DISE.—Section 484(a)(1) of the Tariff Act of 1930 (19

17 U.S.C. 1484(a)(1)) is amended in the matter preceding

18 subparagraph (A) by striking ‘‘553, and 336(j)’’ and in19 serting ‘‘and 553’’.

20 (e) PENALTIES FOR CERTAIN VIOLATIONS.—Section

21 592 of the Tariff Act of 1930 (19 U.S.C. 1592) is amend22 ed—

23 (1) in subsection (a)(1), by striking ‘‘lawful

24 duty’’ and inserting ‘‘lawful duty, tax, or fee’’; and

25 (2) in subsections (b)(1)(A)(vi), (c)(2)(A)(ii),

26 (c)(3)(A)(ii), (c)(4)(A)(i), and (c)(4)(B) by striking
728

•HR 2517 IH

1 ‘‘lawful duties’’ each place it appears and inserting

2 ‘‘lawful duties, taxes, and fees’’.

3 (f) DEPRIVATION OF LAWFUL DUTIES, TAXES, OR

4 FEES.—Section 592(d) of the Tariff Act of 1930 (19

5 U.S.C. 1592(d)) is amended by striking ‘‘or fees be re6 stored’’ and inserting ‘‘and fees be restored’’.

7 (g) RECONCILIATION TREATED AS ENTRY FOR REC8 ORDKEEPING.—

9 (1) Section 401(s) of the Tariff Act of 1930

10 (19 U.S.C. 1401(s)) is amended by inserting ‘‘rec11 ordkeeping,’’ after ‘‘reliquidation,’’.

12 (2) Section 508(c)(1) of such Act (19 U.S.C.

13 1508(c)(1)) is amended by inserting ‘‘, filing of a

14 reconciliation,’’ after ‘‘entry’’.

15 (h) EXTENSION OF LIQUIDATION.—Section 504(d) of

16 the Tariff Act of 1930 (19 U.S.C. 1504(d)) is amended

17 by inserting ‘‘, unless liquidation is extended under sub18 section (b),’’ after ‘‘shall liquidate the entry’’.

19 (i) EXEMPTION FROM DUTY FOR PERSONAL AND

20 HOUSEHOLD GOODS ACCOMPANYING RETURNING RESI21 DENTS.—Section 321(a)(2)(B) of the Tariff Act of 1930

22 (19 U.S.C. 1321(a)(2)(B)) is amended by inserting ‘‘,

23 9804.00.65,’’ after ‘‘9804.00.30’’.

24 (j) DEBT COLLECTION.—Section 631(a) of the Tariff

25 Act of 1930 (19 U.S.C. 1631(a)) is amended—
729

•HR 2517 IH

1 (1) by inserting after ‘‘law,’’ the following: ‘‘in2 cluding section 3302 of title 31, United States Code,

3 and subchapters I and II of chapter 37 of such

4 title,’’; and

5 (2) by inserting ‘‘and the expenses associated

6 with recovering such indebtedness,’’ after ‘‘Govern7 ment,’’.

8 (k) EXAMINATION OF BOOKS AND WITNESSES.—Sec9 tion 509(b) of the Tariff Act of 1930 (19 U.S.C. 1509(b))

10 is amended in paragraphs (3) and (4) by striking ‘‘appro11 priate regional commissioner’’ and inserting ‘‘officer des12 ignated pursuant to regulations’’.

13 (l) REVIEW OF PROTESTS.—Section 515(d) of the

14 Tariff Act of 1930 (19 U.S.C. 1515(d)) is amended by

15 striking ‘‘district director’’ and inserting ‘‘port director’’.

16 (m) EFFECTIVE DATE.—The amendments made by

17 this section apply as of December 8, 1993.

18 SEC. 12003. CLARIFICATION REGARDING THE APPLICATION

19 OF CUSTOMS USER FEES.

20 (a) IN GENERAL.—Subparagraph (D) of section

21 13031(b)(8) of the Consolidated Omnibus Budget Rec22 onciliation Act of 1985 (19 U.S.C. 58c(b)(8)(D)) is

23 amended—

24 (1) in clause (iv)—
730

•HR 2517 IH

1 (A) by striking ‘‘subparagraph 9802.00.80

2 of such Schedules’’ and inserting ‘‘heading

3 9802.00.80 of such Schedule’’; and

4 (B) by striking ‘‘and’’ at the end of clause

5 (iv);

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

7 (v) and inserting ‘‘; and’’; and

8 (3) by inserting after clause (v) the following

9 new clause:

10 ‘‘(vi) in the case of merchandise entered from

11 a foreign trade zone (other than merchandise to

12 which clause (v) applies), be applied only to the

13 value of the privileged or nonprivileged foreign sta14 tus merchandise under section 3 of the Act of June

15 18, 1934 (commonly known as the Foreign Trade

16 Zones Act, 19 U.S.C. 81c).’’.

17 (b) EFFECTIVE DATE.—The amendments made by

18 subsection (a) apply to—

19 (1) any entry made from a foreign trade zone

20 on or after the 15th day after the date of the enact21 ment of this Act; and

22 (2) any entry made from a foreign trade zone

23 after November 30, 1986, and before such 15th day

24 if liquidation of the entry was not final before such

25 15th day.
731

•HR 2517 IH

1 (c) APPLICATION OF FEES TO CERTAIN AGRICUL2 TURAL PRODUCTS.—The amendment made by section

3 111(b)(2)(D)(iv) of the Customs and Trade Act of 1990

4 shall apply to—

5 (1) any entry made from a foreign trade zone

6 on or after the 15th day after the date of the enact7 ment of this Act; and

8 (2) any entry made from a foreign trade zone

9 after November 30, 1986, and before such 15th day

10 if the liquidation of the entry was not final before

11 such 15th day.

12 SEC. 12004. TECHNICAL AMENDMENT TO THE CUSTOMS

13 AND TRADE ACT OF 1990.

14 Subsection (b) of section 484H of the Customs and

15 Trade Act of 1990 (19 U.S.C. 1553 note) is amended by

16 striking ‘‘, or withdrawn from warehouse for consump17 tion,’’ and inserting ‘‘for transportation in bond’’.

18 SEC. 12005. TECHNICAL AMENDMENTS REGARDING CER19 TAIN BENEFICIARY COUNTRIES.

20 (a) CARIBBEAN BASIN ECONOMIC RECOVERY ACT.—

21 Section 213(h)(1) of the Caribbean Basin Economic Re22 covery Act (19 U.S.C. 2703(h)(1)) is amended by adding

23 at the end thereof the following flush sentence:
732

•HR 2517 IH

1 ‘‘The duty reductions provided for under this paragraph

2 shall not apply to textile and apparel articles which are

3 subject to textile agreements.’’.

4 (b) ANDEAN TRADE PREFERENCE ACT.—Section

5 204(c)(1) of the Andean Trade Preference Act (19 U.S.C.

6 3203(c)(1)) is amended by adding at the end thereof the

7 following flush sentence:

8 ‘‘The duty reductions provided for under this paragraph

9 shall not apply to textile and apparel articles which are

10 subject to textile agreements.’’.

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

12 this section apply with respect to—

13 (1) articles entered, or withdrawn from ware14 house for consumption, on or after the 15th day

15 after the date of the enactment of this Act, and

16 (2) articles entered after December 31, 1991,

17 and before such 15th day, if the liquidation of the

18 entry of such articles was not final before such 15th

19 day.

20 SEC. 12006. CLARIFICATION OF FEES FOR CERTAIN CUS21 TOMS SERVICES.

22 (a) IN GENERAL.—Section 13031(b)(9)(A) of the

23 Consolidated Omnibus Budget Reconciliation Act of 1985

24 (19 U.S.C. 58c(b)(9)(A)) is amended—
733

•HR 2517 IH

1 (1) by striking ‘‘centralized hub facility or’’ in

2 clause (i); and

3 (2) in clause (ii)—

4 (A) by striking ‘‘facility—’’ and inserting

5 ‘‘facility or centralized hub facility—’’,

6 (B) by striking ‘‘customs inspectional’’ in

7 subclause (I), and

8 (C) by striking ‘‘at the facility’’ in

9 subclause (I) and inserting ‘‘for the facility’’.

10 (b) DEFINITIONS.—Section 13031(b)(9)(B)(i) of the

11 Consolidated Omnibus Budget Reconciliation Act of 1985

12 (19 U.S.C. 58c(b)(9)(B)(i)) is amended—

13 (1) by striking ‘‘, as in effect on July 30,

14 1990’’, and

15 (2) by adding at the end thereof the following

16 new sentence: ‘‘Nothing in this paragraph shall be

17 construed as prohibiting the Secretary of the Treas18 ury from processing merchandise that is informally

19 entered or released at any centralized hub facility or

20 express consignment carrier facility during the nor21 mal operating hours of the Customs Service, subject

22 to reimbursement and payment under subparagraph

23 (A).’’.

24 (c) CITATION.—Section 13031(b)(9)(B)(ii) of the

25 Consolidated Omnibus Budget Reconciliation Act of 1985
734

•HR 2517 IH

1 (19 U.S.C. 58c(b)(9)(B)(ii)) is amended by striking ‘‘sec2 tion 236 of the Tariff and Trade Act of 1984’’ and insert3 ing ‘‘section 236 of the Trade and Tariff Act of 1984’’.

4 SEC. 12007. SPECIAL RULE FOR EXTENDING TIME FOR FIL5 ING DRAWBACK CLAIMS.

6 Section 313(r) of the Tariff Act of 1930 (19 U.S.C.

7 1313(r)) is amended by adding at the end the following:

8 ‘‘(3)(A)(i) Subject to clause (ii), the Customs

9 Service may, notwithstanding the limitation set forth

10 in paragraph (1), extend the time for filing a draw11 back claim for a period not to exceed 18 months,

12 if—

13 ‘‘(I) the claimant establishes to the satis14 faction of the Customs Service that the claim15 ant was unable to file the drawback claim be16 cause of an event declared by the President to

17 be a major disaster on or after January 1,

18 1994; and

19 ‘‘(II) the claimant files a request for such

20 extension with the Customs Service within one

21 year from the last day of the 3-year period re22 ferred to in paragraph (1).

23 ‘‘(ii) In the case of a major disaster occurring

24 on or after January 1, 1994, and before the date of

25 the enactment of this paragraph—
735

•HR 2517 IH

1 ‘‘(I) the Customs Service may extend the

2 time for filing the drawback claim for a period

3 not to exceed 1 year; and

4 ‘‘(II) the request under clause (i)(II) must

5 be filed not later than 1 year from the date of

6 the enactment of this paragraph.

7 ‘‘(B) If an extension is granted with respect to

8 a request filed under this paragraph, the periods of

9 time for retaining records set forth in subsection (t)

10 of this section and section 508(c)(3) shall be ex11 tended for an additional 18 months or, in a case to

12 which subparagraph (A)(ii) applies, for a period not

13 to exceed 1 year from the date the claim is filed.

14 ‘‘(C) For purposes of this paragraph, the term

15 ‘major disaster’ has the meaning given that term in

16 section 102(2) of the Robert T. Stafford Disaster

17 Relief and Emergency Assistance Act (42 U.S.C.

18 5122(2)).’’.

19 SEC. 12008. TREATMENT OF CERTAIN ENTRIES.

20 (a) LIQUIDATION OR RELIQUIDATION OF ENTRIES.—

21 Notwithstanding sections 514 and 520 of the Tariff Act

22 of 1930 (19 U.S.C. 1514 and 1520), and any other provi23 sion of law, the United States Customs Service shall liq24 uidate or reliquidate those entry numbers made at New

25 York, New York, which are listed in subsection (c), in ac-
736

•HR 2517 IH

1 cordance with the final results of the administrative re2 view, covering the period from May 1, 1984, through

3 March 31, 1985, undertaken by the International Trade

4 Administration of the Department of Commerce for such

5 entries (case number A–580–008).

6 (b) PAYMENT OF AMOUNTS OWED.—Any amounts

7 owed by the United States pursuant to the liquidation or

8 reliquidation of an entry under subsection (a) shall be paid

9 by the Customs Service within 90 days after such liquida10 tion or reliquidation.

11 (c) ENTRY LIST.—The entries referred to in sub12 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.

13 SEC. 12009. TEMPORARY DUTY SUSPENSION FOR PER14 SONAL EFFECTS OF PARTICIPANTS IN CER15 TAIN WORLD ATHLETIC EVENTS.

16 (a) IN GENERAL.—Subchapter II of chapter 99 of

17 the Harmonized Tariff Schedule of the United States is

18 amended by inserting in numerical sequence the following

19 new heading:
737

•HR 2517 IH

‘‘ 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 ’’.

1 (b) TAXES AND FEES NOT TO APPLY.—The articles

2 described in heading 9902.98.05 of the Harmonized Tariff

3 Schedule of the United States (as added by subsection (a))

4 shall be free of taxes and fees which may be otherwise

5 applicable.

6 (c) EFFECTIVE DATE.—The amendment made by

7 this section applies to articles entered, or withdrawn from

8 warehouse for consumption, on or after the 15th day after

9 the date of the enactment of this Act.
738

•HR 2517 IH

1 SEC. 12010. MISCELLANEOUS TECHNICAL CORRECTIONS.

2 (a) DRAWBACK AND REFUNDS.—Section

3 313(s)(2)(B) of the Tariff Act of 1930 (19 U.S.C.

4 1313(s)(2)(B)) is amended by striking ‘‘successor’’ the

5 first place it appears and inserting ‘‘predecessor’’.

6 (b) TRADE ACT OF 1974.—Section 301(c)(4) of the

7 Trade Act of 1974 (19 U.S.C. 2411(c)(4)) is amended by

8 striking ‘‘(1)(C)(iii)’’ and inserting ‘‘(1)(D)(iii)’’.

9 SEC. 12011. URUGUAY ROUND AGREEMENTS ACT.

10 Section 405(b) of the Uruguay Round Agreements

11 Act (19 U.S.C. 3602(b)) is amended—

12 (1) in paragraph (1) by striking ‘‘1(a)’’ and in13 serting ‘‘1(b)’’; and

14 (2) in paragraph (2) by striking ‘‘1(b)’’ and in15 serting ‘‘1(a)’’.

16 SEC. 12012. FILING OF CERTIFICATIONS FOR CIVIL AIR17 CRAFT PARTS.

18 General Note 6 of the Harmonized Tariff Schedule

19 of the United States is amended—

20 (1) by inserting ‘‘or electronic’’ after ‘‘shall file

21 a written’’; and

22 (2) by striking ‘‘with the appropriate customs

23 officer’’ and inserting ‘‘with the United States Cus24 toms Service’’.
739

•HR 2517 IH

1 SEC. 12013. EXEMPTION REGARDING CERTAIN VESSEL RE2 PAIRS.

3 (a) TEMPORARY EXEMPTION EXTENDED.—Section

4 484E(b)(2)(B) of the Customs and Trade Act of 1990 (19

5 U.S.C. 1466 note) is amended by striking ‘‘December 31,

6 1992’’ and inserting ‘‘December 31, 1994’’.

7 (b) EFFECTIVE DATE.—The amendment made by

8 this section applies to any entry made after December 31,

9 1992, and before January 1, 1995.

10 SEC. 12014. FEES FOR CERTAIN CUSTOMS SERVICES.

11 (a) IN GENERAL.—Section 13031(a)(5) of the Con12 solidated Omnibus Budget Reconciliation Act of 1985 (19

13 U.S.C. 58c(a)(5)) is amended—

14 (1) in subparagraph (A), by inserting ‘‘a place’’

15 after ‘‘aircraft from’’; and

16 (2) in subparagraph (B), by striking ‘‘sub17 section (b)(1)(A)’’ and inserting ‘‘subsection

18 (b)(1)(A)(i)’’.

19 (b) LIMITATION ON FEES.—Section 13031(b)(1) of

20 the Consolidated Omnibus Budget Reconciliation Act of

21 1985 (19 U.S.C. 58c(b)(1)) is amended to read as follows:

22 ‘‘(b) LIMITATIONS ON FEES.—(1)(A) No fee may be

23 charged under subsection (a) of this section for customs

24 services provided in connection with—

25 ‘‘(i) the arrival of any passenger whose jour26 ney—
740

•HR 2517 IH

1 ‘‘(I) originated in—

2 ‘‘(aa) Canada,

3 ‘‘(bb) Mexico,

4 ‘‘(cc) a territory or possession of the

5 United States, or

6 ‘‘(dd) any adjacent island (within the

7 meaning of section 101(b)(5) of the Immi8 gration and Nationality Act (8 U.S.C.

9 1101(b)(5))), or

10 ‘‘(II) originated in the United States and

11 was limited to—

12 ‘‘(aa) Canada,

13 ‘‘(bb) Mexico,

14 ‘‘(cc) territories and possessions of the

15 United States, and

16 ‘‘(dd) such adjacent islands;

17 ‘‘(ii) the arrival of any railroad car the journey

18 of which originates and terminates in the same

19 country, but only if no passengers board or dis20 embark from the train and no cargo is loaded or un21 loaded from such car while the car is within any

22 country other than the country in which such car

23 originates and terminates;

24 ‘‘(iii) the arrival of any ferry; or
741

•HR 2517 IH

1 ‘‘(iv) the arrival of any passenger on board a

2 commercial vessel traveling only between ports which

3 are within the customs territory of the United

4 States.

5 ‘‘(B) The exemption provided for in subparagraph

6 (A) shall not apply in the case of the arrival of any pas7 senger on board a commercial vessel whose journey origi8 nates and terminates at the same place in the United

9 States if there are no intervening stops.

10 ‘‘(C) The exemption provided for in subparagraph

11 (A)(i) shall not apply to fiscal years 1994, 1995, 1996,

12 and 1997.’’.

13 (c) FEE ASSESSED ONLY ONCE.—Section

14 13031(b)(4) of the Consolidated Omnibus Budget Rec15 onciliation Act of 1985 (19 U.S.C. 58c(b)(4)) is amend16 ed—

17 (1) by redesignating subparagraphs (A) and

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

19 (2) by striking ‘‘No fee’’ and inserting ‘‘(A) No

20 fee’’; and

21 (3) by adding at the end the following new sub22 paragraph:

23 ‘‘(B) In the case of a commercial vessel making a

24 single voyage involving 2 or more United States ports with

25 respect to which the passengers would otherwise be
742

•HR 2517 IH

1 charged a fee pursuant to subsection (a)(5), such fee shall

2 be charged only 1 time for each passenger.’’.

3 (d) EFFECTIVE DATE.—The amendments made by

4 this section shall take effect as if included in the amend5 ments made by section 521 of the North American Free

6 Trade Agreement Implementation Act.

7 SEC. 12015. TECHNICAL CORRECTION TO CERTAIN CHEMI8 CAL DESCRIPTION.

9 (a) AMENDMENT TO SUBHEADING 2933.90.02.—The

10 article description for subheading 2933.90.02 of the Har11 monized Tariff Schedule of the United States is amended

12 by striking ‘‘(Quizalofop ethyl)’’.

13 (b) EFFECTIVE DATE.—

14 (1) GENERAL RULE.—The amendment made by

15 this section applies to articles entered, or withdrawn

16 from warehouse for consumption, on or after the

17 15th day after the date of the enactment of this Act.

18 (2) RETROACTIVE PROVISION.—Notwithstand19 ing section 514 of the Tariff Act of 1930 or any

20 other provision of law, upon proper request (which

21 includes sufficient information to identify and locate

22 the entry) filed with the Customs Service on or be23 fore the date that is 180 days after the date of the

24 enactment of this Act, any entry, or withdrawal
743

•HR 2517 IH

1 from warehouse for consumption, of an article that

2 occurred—

3 (A) after December 31, 1994, and before

4 the date that is 15 days after the date of the

5 enactment of this Act, and

6 (B) with respect to which there would have

7 been no duty or a lesser duty if the amendment

8 made by subsection (a) applied to such entry or

9 withdrawal,

10 shall be liquidated or reliquidated as though such

11 amendment applied to such entry or withdrawal.

12 SEC. 12016. MARKING OF IMPORTED ARTICLES AND CON13 TAINERS.

14 (a) IN GENERAL.—Section 304 of the Tariff Act of

15 1930 (19 U.S.C.1304) is amended—

16 (1) by redesignating subsections (f), (g), (h),

17 and (i) as subsections (i), (j), (k), and (l), respec18 tively, and

19 (2) by inserting after subsection (e) the follow20 ing new subsections:

21 ‘‘(f) MARKING OF METAL FORGINGS.—The marking

22 requirements of subsections (a) and (b) shall not apply

23 to—

24 ‘‘(1) metal forgings that—
744

•HR 2517 IH

1 ‘‘(A) are imported for processing into fin2 ished hand tools in the United States, and

3 ‘‘(B) have not been improved in condition

4 beyond rough burring, trimming, grinding,

5 turning, hammering, chiseling, or filing; and

6 ‘‘(2) hand tools made from metal forgings de7 scribed in paragraph (1).

8 ‘‘(g) MARKING OF CERTAIN COFFEE AND TEA PROD9 UCTS.—The marking requirements of subsections (a) and

10 (b) shall not apply to articles described in subheading

11 0901.21, 0901.22, 0902.10, 0902.20, 0902.30, 0902.40,

12 2101.10, or 2101.20 of the Harmonized Tariff Schedule

13 of the United States, as in effect on January 1, 1995.

14 ‘‘(h) MARKING OF SPICES.—The marking require15 ments of subsections (a) and (b) shall not apply to articles

16 provided for under subheadings 0904.11, 0904.12,

17 0904.20, 0905.00, 0906.10, 0906.20, 0907.00, 0908.10,

18 0908.20, 0908.30, 0909.10, 0909.20, 0909.30, 0909.40,

19 0909.50, 0910.10, 0910.20, 0910.30, 0910.40, 0910.50,

20 0910.91, 0910.99, 1106.20, 1207.40, 1207.50, 1207.91,

21 1404.90, and 3302.10, and items classifiable in categories

22 0712.90.60, 0712.90.8080, 1209.91.2000, 1211.90.2000,

23 1211.90.8040, 1211.90.8050, 1211.90.8090,

24 2006.00.3000, 2918.13.2000, 3203.00.8000,

25 3301.90.1010, 3301.90.1020, and 3301.90.1050 of the
745

•HR 2517 IH

1 Harmonized Tariff Schedule of the United States, as in

2 effect on January 1, 1995.’’.

3 (b) EFFECTIVE DATE.—The amendments made by

4 this section apply to goods entered, or withdrawn from

5 warehouse for consumption, on or after the date of the

6 enactment of this Act.

7 SEC. 12017. RELIQUIDATING ENTRY OF WARP KNITTING

8 MACHINES.

9 Notwithstanding section 514 of the Tariff Act of

10 1930 (19 U.S.C. 1514) or any other provision of law, upon

11 proper request filed with the Customs Service before the

12 180th day after the date of the enactment of this Act,

13 the Secretary of the Treasury shall—

14 (1) liquidate or reliquidate as duty free Entry

15 No. 100–3022436–3, made on July 12, 1989, at the

16 port of Charleston, South Carolina; and

17 (2) refund any duties and interest paid with re18 spect to such entry.

19 SEC. 12018. IDENTIFICATION OF TRADE EXPANSION PRIOR20 ITIES.

21 Section 310(a)(1) of the Trade Act of 1974 (19

22 U.S.C. 2420(a)(1)) is amended by striking ‘‘calendar year

23 1995’’ and inserting ‘‘each of calendar years 1995 through

24 2000’’.
746

•HR 2517 IH

1 Subtitle B—Generalized System of

2 Preferences

3 SEC. 12101. SHORT TITLE.

4 This subtitle may be cited as the ‘‘GSP Renewal Act

5 of 1995’’.

6 SEC. 12102. GENERALIZED SYSTEM OF PREFERENCES.

7 (a) IN GENERAL.—Title V of the Trade Act of 1974

8 is amended to read as follows:

9 ‘‘TITLE V—GENERALIZED

10 SYSTEM OF PREFERENCES

11 ‘‘SEC. 501. AUTHORITY TO EXTEND PREFERENCES.

12 ‘‘The President may provide duty-free treatment for

13 any eligible article from any beneficiary developing coun14 try in accordance with the provisions of this title. In tak15 ing any such action, the President shall have due regard

16 for—

17 ‘‘(1) the effect such action will have on further18 ing the economic development of developing coun19 tries through the expansion of their exports;

20 ‘‘(2) the extent to which other major developed

21 countries are undertaking a comparable effort to as22 sist developing countries by granting generalized

23 preferences with respect to imports of products of

24 such countries;
747

•HR 2517 IH

1 ‘‘(3) the anticipated impact of such action on

2 United States producers of like or directly competi3 tive products; and

4 ‘‘(4) the extent of the beneficiary developing

5 country’s competitiveness with respect to eligible ar6 ticles.

7 ‘‘SEC. 502. DESIGNATION OF BENEFICIARY DEVELOPING

8 COUNTRIES.

9 ‘‘(a) AUTHORITY TO DESIGNATE COUNTRIES.—

10 ‘‘(1) BENEFICIARY DEVELOPING COUNTRIES.—

11 The President is authorized to designate countries

12 as beneficiary developing countries for purposes of

13 this title.

14 ‘‘(2) LEAST-DEVELOPED BENEFICIARY DEVEL15 OPING COUNTRIES.—The President is authorized to

16 designate any beneficiary developing country as a

17 least-developed beneficiary developing country for

18 purposes of this title, based on the considerations in

19 section 501 and subsection (c) of this section.

20 ‘‘(b) COUNTRIES INELIGIBLE FOR COUNTRY DES21 IGNATION.—

22 ‘‘(1) SPECIFIC COUNTRIES.—The following

23 countries may not be designated as beneficiary devel24 oping countries for purposes of this title:

25 ‘‘(A) Australia.
748

•HR 2517 IH

1 ‘‘(B) Canada.

2 ‘‘(C) European Union member states.

3 ‘‘(D) Iceland.

4 ‘‘(E) Japan.

5 ‘‘(F) Monaco.

6 ‘‘(G) New Zealand.

7 ‘‘(H) Norway.

8 ‘‘(I) Switzerland.

9 ‘‘(2) OTHER BASES FOR INELIGIBILITY.—The

10 President shall not designate any country a bene11 ficiary developing country under this title if any of

12 the following applies:

13 ‘‘(A) Such country is a Communist coun14 try, unless—

15 ‘‘(i) the products of such country re16 ceive nondiscriminatory treatment,

17 ‘‘(ii) such country is a WTO Member

18 (as such term is defined in section 2 of the

19 Uruguay Round Agreements Act,) and a

20 member of the International Monetary

21 Fund, and

22 ‘‘(iii) such country is not dominated

23 or controlled by international communism.

24 ‘‘(B) Such country is a party to an ar25 rangement of countries and participates in any
749

•HR 2517 IH

1 action pursuant to such arrangement, the effect

2 of which is—

3 ‘‘(i) to withhold supplies of vital com4 modity resources from international trade

5 or to raise the price of such commodities

6 to an unreasonable level, and

7 ‘‘(ii) to cause serious disruption of the

8 world economy.

9 ‘‘(C) Such country affords preferential

10 treatment to the products of a developed coun11 try, other than the United States, which has, or

12 is likely to have, a significant adverse effect on

13 United States commerce.

14 ‘‘(D)(i) Such country—

15 ‘‘(I) has nationalized, expropriated, or

16 otherwise seized ownership or control of

17 property, including patents, trademarks, or

18 copyrights, owned by a United States citi19 zen or by a corporation, partnership, or as20 sociation which is 50 percent or more ben21 eficially owned by United States citizens,

22 ‘‘(II) has taken steps to repudiate or

23 nullify an existing contract or agreement

24 with a United States citizen or a corpora25 tion, partnership, or association which is
750

•HR 2517 IH

1 50 percent or more beneficially owned by

2 United States citizens, the effect of which

3 is to nationalize, expropriate, or otherwise

4 seize ownership or control of property, in5 cluding patents, trademarks, or copyrights,

6 so owned, or

7 ‘‘(III) has imposed or enforced taxes

8 or other exactions, restrictive maintenance

9 or operational conditions, or other meas10 ures with respect to property, including

11 patents, trademarks, or copyrights, so

12 owned, the effect of which is to nationalize,

13 expropriate, or otherwise seize ownership

14 or control of such property,

15 unless clause (ii) applies.

16 ‘‘(ii) This clause applies if the President

17 determines that—

18 ‘‘(I) prompt, adequate, and effective

19 compensation has been or is being made to

20 the citizen, corporation, partnership, or as21 sociation referred to in clause (i),

22 ‘‘(II) good faith negotiations to pro23 vide prompt, adequate, and effective com24 pensation under the applicable provisions

25 of international law are in progress, or the
751

•HR 2517 IH

1 country described in clause (i) is otherwise

2 taking steps to discharge its obligations

3 under international law with respect to

4 such citizen, corporation, partnership, or

5 association, or

6 ‘‘(III) a dispute involving such citizen,

7 corporation, partnership, or association

8 over compensation for such a seizure has

9 been submitted to arbitration under the

10 provisions of the Convention for the Settle11 ment of Investment Disputes, or in an12 other mutually agreed upon forum,

13 and the President promptly furnishes a copy of

14 such determination to the Senate and House of

15 Representatives.

16 ‘‘(E) Such country fails to act in good

17 faith in recognizing as binding or in enforcing

18 arbitral awards in favor of United States citi19 zens or a corporation, partnership, or associa20 tion which is 50 percent or more beneficially

21 owned by United States citizens, which have

22 been made by arbitrators appointed for each

23 case or by permanent arbitral bodies to which

24 the parties involved have submitted their dis25 pute.
752

•HR 2517 IH

1 ‘‘(F) Such country aids or abets, by grant2 ing sanctuary from prosecution to, any individ3 ual or group which has committed an act of

4 international terrorism.

5 ‘‘(G) Such country has not taken or is not

6 taking steps to afford internationally recognized

7 worker rights to workers in the country (includ8 ing any designated zone in that country).

9 Subparagraphs (D), (E), (F), and (G) shall not pre10 vent the designation of any country as a beneficiary

11 developing country under this title if the President

12 determines that such designation will be in the na13 tional economic interest of the United States and re14 ports such determination to the Congress with the

15 reasons therefor.

16 ‘‘(c) FACTORS AFFECTING COUNTRY DESIGNA17 TION.—In determining whether to designate any country

18 as a beneficiary developing country under this title, the

19 President shall take into account—

20 ‘‘(1) an expression by such country of its desire

21 to be so designated;

22 ‘‘(2) the level of economic development of such

23 country, including its per capita gross national prod24 uct, the living standards of its inhabitants, and any
753

•HR 2517 IH

1 other economic factors which the President deems

2 appropriate;

3 ‘‘(3) the extent to which other major developed

4 countries are extending generalized preferential tar5 iff treatment to such country;

6 ‘‘(4) the extent to which such country has as7 sured the United States that it will provide equitable

8 and reasonable access to the markets and basic com9 modity resources of such country and the extent to

10 which such country has assured the United States

11 that it will refrain from engaging in unreasonable

12 export practices;

13 ‘‘(5) whether such country is providing ade14 quate and effective protection of intellectual property

15 rights;

16 ‘‘(6) the extent to which such country has taken

17 action to—

18 ‘‘(A) reduce trade distorting investment

19 practices and policies (including export per20 formance requirements); and

21 ‘‘(B) reduce or eliminate barriers to trade

22 in services;

23 ‘‘(7) whether or not such country has taken or

24 is taking steps to afford to workers in that country
754

•HR 2517 IH

1 (including any designated zone in that country)

2 internationally recognized worker rights; and

3 ‘‘(8) the extent to which such country fails to

4 cooperate with the United States in preventing the

5 proliferation of nuclear weapons, nuclear weapons

6 components, and nuclear weapons delivery systems,

7 or in preventing illegal drug trafficking.

8 A country may be found to not provide adequate and effec9 tive protection of intellectual property rights under para10 graph (5) and section 503(d)(2)(B), notwithstanding the

11 fact that it may be in compliance with the specific obliga12 tions of the Agreement on Trade-Related Aspects of Intel13 lectual Property Rights referred to in section 101(d)(15)

14 of the Uruguay Round Agreements Act.

15 ‘‘(d) WITHDRAWAL, SUSPENSION, OR LIMITATION OF

16 COUNTRY DESIGNATION.—

17 ‘‘(1) IN GENERAL.—The President may with18 draw, suspend, or limit the application of the duty19 free treatment accorded under this title with respect

20 to any country. Except in exceptional circumstances,

21 the President, before taking any action under this

22 subsection, shall provide a period for the submission

23 of public comments on the matter under consider24 ation, and in taking any action under this sub25 section, the President shall consider the factors set
755

•HR 2517 IH

1 forth in section 501 and subsection (c) of this sec2 tion, and comments received from the public.

3 ‘‘(2) CHANGED CIRCUMSTANCES.—The Presi4 dent shall, after complying with the requirements of

5 subsection (f)(2), withdraw or suspend the designa6 tion of any country as a beneficiary developing coun7 try if, after such designation, the President deter8 mines that as the result of changed circumstances

9 such country would be barred from designation as a

10 beneficiary developing country under subsection

11 (b)(2). Such country shall cease to be a beneficiary

12 developing country on the day on which the Presi13 dent issues an Executive order or Presidential proc14 lamation revoking the designation of such country

15 under this title.

16 ‘‘(e) MANDATORY GRADUATION OF BENEFICIARY

17 DEVELOPING COUNTRIES.—If the President determines

18 that a beneficiary developing country has become a ‘high

19 income’ country, as defined by the official statistics of the

20 International Bank for Reconstruction and Development,

21 then the President shall terminate the designation of such

22 country as a beneficiary developing country for purposes

23 of this title, effective on January 1 of the second year fol24 lowing the year in which such determination is made.

25 ‘‘(f) CONGRESSIONAL NOTIFICATION.—
756

•HR 2517 IH

1 ‘‘(1) NOTIFICATION OF DESIGNATION.—

2 ‘‘(A) IN GENERAL.—Before the President

3 designates any country as a beneficiary develop4 ing country under this title, the President shall

5 notify the Congress of the President’s intention

6 to make such designation, together with the

7 considerations entering into such decision.

8 ‘‘(B) DESIGNATION AS LEAST-DEVELOPED

9 BENEFICIARY DEVELOPING COUNTRY.—At least

10 60 days before the President designates any

11 country as a least-developed beneficiary develop12 ing country, the President shall notify the Con13 gress of the President’s intention to make such

14 designation.

15 ‘‘(2) NOTIFICATION OF TERMINATION.—If the

16 President has designated any country as a bene17 ficiary developing country under this title, the Presi18 dent shall not terminate such designation unless, at

19 least 60 days before such termination, the President

20 has notified the Congress and has notified such

21 country of the President’s intention to terminate

22 such designation, together with the considerations

23 entering into such decision.

24 ‘‘SEC. 503. DESIGNATION OF ELIGIBLE ARTICLES.

25 ‘‘(a) ELIGIBLE ARTICLES.—
757

•HR 2517 IH

1 ‘‘(1) DESIGNATION.—

2 ‘‘(A) IN GENERAL.—Except as provided in

3 subsection (b), the President is authorized to

4 designate articles as eligible articles for all ben5 eficiary developing countries for purposes of

6 this title by Executive order or Presidential

7 proclamation after receiving the advice of the

8 International Trade Commission in accordance

9 with subsection (e).

10 ‘‘(B) LEAST-DEVELOPED BENEFICIARY DE11 VELOPING COUNTRIES.—Except as provided in

12 subsection (b), the President is authorized to

13 designate additional articles as eligible articles

14 only for countries designated as least-developed

15 beneficiary developing countries under section

16 502(a)(2) if, after receiving the advice of the

17 International Trade Commission in accordance

18 with subsection (e) of this section, the Presi19 dent determines that such articles are not im20 port-sensitive in the context of imports from

21 least-developed beneficiary developing countries.

22 ‘‘(C) THREE-YEAR RULE.—If, after receiv23 ing the advice of the International Trade Com24 mission under subsection (e), an article has

25 been formally considered for designation as an
758

•HR 2517 IH

1 eligible article under this title and denied such

2 designation, such article may not be reconsid3 ered for such designation for a period of three

4 years after such denial.

5 ‘‘(2) RULE OF ORIGIN.—

6 ‘‘(A) GENERAL RULE.—The duty-free

7 treatment provided under this title shall apply

8 to any eligible article which is the growth, prod9 uct, or manufacture of a beneficiary developing

10 country if—

11 ‘‘(i) that article is imported directly

12 from a beneficiary developing country into

13 the customs territory of the United States;

14 and

15 ‘‘(ii) the sum of—

16 ‘‘(I) the cost or value of the ma17 terials produced in the beneficiary de18 veloping country or any two or more

19 countries which are members of the

20 same association of countries which is

21 treated as one country under section

22 506(2), plus

23 ‘‘(II) the direct costs of process24 ing operations performed in such ben-
759

•HR 2517 IH

1 eficiary developing country or such

2 member countries,

3 is not less than 35 percent of the ap4 praised value of such article at the time it

5 is entered.

6 ‘‘(B) EXCLUSIONS.—An article shall not

7 be treated as the growth, product, or manufac8 ture of a beneficiary developing country by vir9 tue of having merely undergone—

10 ‘‘(i) simple combining or packaging

11 operations, or

12 ‘‘(ii) mere dilution with water or mere

13 dilution with another substance that does

14 not materially alter the characteristics of

15 the article.

16 ‘‘(3) REGULATIONS.—The Secretary of the

17 Treasury, after consulting with the United States

18 Trade Representative, shall prescribe such regula19 tions as may be necessary to carry out paragraph

20 (2), including, but not limited to, regulations provid21 ing that, in order to be eligible for duty-free treat22 ment under this title, an article—

23 ‘‘(A) must be wholly the growth, product,

24 or manufacture of a beneficiary developing

25 country, or
760

•HR 2517 IH

1 ‘‘(B) must be a new or different article of

2 commerce which has been grown, produced, or

3 manufactured in the beneficiary developing

4 country.

5 ‘‘(b) ARTICLES THAT MAY NOT BE DESIGNATED AS

6 ELIGIBLE ARTICLES.—

7 ‘‘(1) IMPORT SENSITIVE ARTICLES.—The Presi8 dent may not designate any article as an eligible ar9 ticle under subsection (a) if such article is within

10 one of the following categories of import-sensitive ar11 ticles:

12 ‘‘(A) Textile and apparel articles which

13 were not eligible articles for purposes of this

14 title on January 1, 1994, as this title was in ef15 fect on such date.

16 ‘‘(B) Import-sensitive electronic articles.

17 ‘‘(C) Import-sensitive steel articles.

18 ‘‘(D) Footwear, handbags, luggage, flat

19 goods, work gloves, and leather wearing apparel

20 which were not eligible articles for purposes of

21 this title on January 1, 1995, as this title was

22 in effect on such date.

23 ‘‘(E) Import-sensitive semimanufactured

24 and manufactured glass products.
761

•HR 2517 IH

1 ‘‘(F) Any other articles which the Presi2 dent determines to be import-sensitive in the

3 context of the Generalized System of Pref4 erences.

5 ‘‘(2) ARTICLES AGAINST WHICH OTHER AC6 TIONS TAKEN.—An article shall not be an eligible

7 article for purposes of this title for any period dur8 ing which such article is the subject of any action

9 proclaimed pursuant to section 203 of this Act (19

10 U.S.C. 2253) or section 232 or 351 of the Trade

11 Expansion Act of 1962 (19 U.S.C. 1862, 1981).

12 ‘‘(3) AGRICULTURAL PRODUCTS.—No quantity

13 of an agricultural product subject to a tariff-rate

14 quota that exceeds the in-quota quantity shall be eli15 gible for duty-free treatment under this title.

16 ‘‘(c) WITHDRAWAL, SUSPENSION, OR LIMITATION OF

17 DUTY-FREE TREATMENT; COMPETITIVE NEED LIMITA18 TION.—

19 ‘‘(1) IN GENERAL.—The President may with20 draw, suspend, or limit the application of the duty21 free treatment accorded under this title with respect

22 to any article, except that no rate of duty may be

23 established with respect to any article pursuant to

24 this subsection other than the rate which would

25 apply but for this title. In taking any action under
762

•HR 2517 IH

1 this subsection, the President shall consider the fac2 tors set forth in sections 501 and 502(c).

3 ‘‘(2) COMPETITIVE NEED LIMITATION.—

4 ‘‘(A) BASIS FOR WITHDRAWAL OF DUTY5 FREE TREATMENT.—Except as provided in this

6 paragraph and subject to subsection (d), when7 ever the President determines that a beneficiary

8 developing country has exported (directly or in9 directly) to the United States during any cal10 endar year beginning after December 31,

11 1995—

12 ‘‘(i) a quantity of an eligible article

13 having an appraised value in excess of

14 $75,000,000, except that, in applying this

15 clause, the amount of $75,000,000 shall be

16 increased by $5,000,000 on January 1 of

17 each calendar year after calendar year

18 1995, or

19 ‘‘(ii) a quantity of an eligible article

20 equal to or exceeding 50 percent of the ap21 praised value of the total imports of that

22 article into the United States during the

23 calendar year,

24 then the President shall, not later than July 1

25 of the next calendar year, terminate the duty-
763

•HR 2517 IH

1 free treatment for that article from that bene2 ficiary developing country.

3 ‘‘(B) COUNTRY DEFINED.—For purposes

4 of this paragraph, the term ‘country’ does not

5 include an association of countries which is

6 treated as one country under section 506(2),

7 but does include a country which is a member

8 of any such association.

9 ‘‘(C) REDESIGNATIONS.—A country which

10 is no longer treated as a beneficiary developing

11 country with respect to an eligible article by

12 reason of subparagraph (A) may be redesig13 nated a beneficiary developing country with re14 spect to such article, subject to the consider15 ations set forth in sections 501 and 502, if im16 ports of such article from such country did not

17 exceed the limitations in subparagraph (A) dur18 ing the preceding calendar year.

19 ‘‘(D) LEAST-DEVELOPED BENEFICIARY

20 DEVELOPING COUNTRIES.—Subparagraph (A)

21 shall not apply to any least-developed bene22 ficiary developing country.

23 ‘‘(E) ARTICLES NOT PRODUCED IN THE

24 UNITED STATES EXCLUDED.—Subparagraph

25 (A)(ii) shall not apply with respect to any eligi-
764

•HR 2517 IH

1 ble article if a like or directly competitive article

2 was not produced in the United States on Jan3 uary 1, 1995.

4 ‘‘(F) DE MINIMIS WAIVERS.—The Presi5 dent may disregard subparagraph (A)(ii) with

6 respect to any eligible article from any bene7 ficiary developing country if the appraised value

8 of the total imports of such article into the

9 United States during calendar year 1995 or any

10 calendar year thereafter does not exceed

11 $13,000,000, except that, in applying this sub12 paragraph, the amount of $13,000,000 shall be

13 increased by $500,000 on January 1 of each

14 calendar year after calendar year 1995.

15 ‘‘(d) WAIVER OF COMPETITIVE NEED LIMITATION.—

16 ‘‘(1) IN GENERAL.—The President may waive

17 the application of subsection (c)(2) with respect to

18 any eligible article of any beneficiary developing

19 country if, before July 1 of the calendar year begin20 ning after the calendar year for which a determina21 tion described in subsection (c)(2)(A) was made with

22 respect to such eligible article, the President—

23 ‘‘(A) receives the advice of the Inter24 national Trade Commission under section 332

25 of the Tariff Act of 1930 on whether any indus-
765

•HR 2517 IH

1 try in the United States is likely to be adversely

2 affected by such waiver,

3 ‘‘(B) determines, based on the consider4 ations described in sections 501 and 502(c) and

5 the advice described in subparagraph (A), that

6 such waiver is in the national economic interest

7 of the United States, and

8 ‘‘(C) publishes the determination described

9 in subparagraph (B) in the Federal Register.

10 ‘‘(2) CONSIDERATIONS BY THE PRESIDENT.—In

11 making any determination under paragraph (1), the

12 President shall give great weight to—

13 ‘‘(A) the extent to which the beneficiary

14 developing country has assured the United

15 States that such country will provide equitable

16 and reasonable access to the markets and basic

17 commodity resources of such country, and

18 ‘‘(B) the extent to which such country pro19 vides adequate and effective protection of intel20 lectual property rights.

21 ‘‘(3) EFFECTIVE PERIOD OF WAIVER.—Any

22 waiver granted under this subsection shall remain in

23 effect until the President determines that such waiv24 er is no longer warranted due to changed cir25 cumstances.
766

•HR 2517 IH

1 ‘‘(e) INTERNATIONAL TRADE COMMISSION AD2 VICE.—Before designating articles as eligible articles

3 under section 503(a)(1), the President shall publish and

4 furnish the International Trade Commission with lists of

5 articles which may be considered for designation as eligible

6 articles for purposes of this title. The provisions of sec7 tions 131, 132, 133, and 134 shall be complied with as

8 though action under section 501 and this section were ac9 tion under section 123 to carry out a trade agreement en10 tered into under section 123.

11 ‘‘(f) SPECIAL RULE CONCERNING PUERTO RICO.—

12 No action under this title may affect any tariff duty im13 posed by the Legislature of Puerto Rico pursuant to sec14 tion 319 of the Tariff Act of 1930 on coffee imported into

15 Puerto Rico.

16 ‘‘SEC. 504. REVIEW AND REPORTS TO CONGRESS.

17 ‘‘(a) REPORT ON OPERATION OF TITLE.—On or be18 fore July 31, 1997, the President shall submit to the Con19 gress a full and complete report regarding the operation

20 of this title.

21 ‘‘(b) ANNUAL REPORTS ON WORKER RIGHTS.—The

22 President shall submit an annual report to the Congress

23 on the status of internationally recognized worker rights

24 within each beneficiary developing country.
767

•HR 2517 IH

1 ‘‘SEC. 505. DATE OF TERMINATION.

2 ‘‘No duty-free treatment provided under this title

3 shall remain in effect after December 31, 1997.

4 ‘‘SEC. 506. DEFINITIONS.

5 ‘‘For purposes of this title:

6 ‘‘(1) BENEFICIARY DEVELOPING COUNTRY.—

7 The term ‘beneficiary developing country’ means any

8 country with respect to which there is in effect an

9 Executive order or Presidential proclamation by the

10 President designating such country as a beneficiary

11 developing country for purposes of this title.

12 ‘‘(2) COUNTRY.—The term ‘country’ means any

13 foreign country or territory, including any overseas

14 dependent territory or possession of a foreign coun15 try, or the Trust Territory of the Pacific Islands. In

16 the case of an association of countries which is a

17 free trade area or customs union, or which is con18 tributing to comprehensive regional economic inte19 gration among its members through appropriate

20 means, including, but not limited to, the reduction

21 of duties, the President may by Executive order or

22 Presidential proclamation provide that all members

23 of such association other than members which are

24 barred from designation under section 502(b) shall

25 be treated as one country for purposes of this title.
768

•HR 2517 IH

1 ‘‘(3) ENTERED.—The term ‘entered’ means en2 tered, or withdrawn from warehouse for consump3 tion, in the customs territory of the United States.

4 ‘‘(4) INTERNATIONALLY RECOGNIZED WORKER

5 RIGHTS.—The term ‘internationally recognized work6 er rights’ includes—

7 ‘‘(A) the right of association;

8 ‘‘(B) the right to organize and bargain col9 lectively;

10 ‘‘(C) a prohibition on the use of any form

11 of forced or compulsory labor;

12 ‘‘(D) a minimum age for the employment

13 of children; and

14 ‘‘(E) acceptable conditions of work with re15 spect to minimum wages, hours of work, and

16 occupational safety and health.

17 ‘‘(5) LEAST-DEVELOPED BENEFICIARY DEVEL18 OPING COUNTRY.—The term ‘least-developed bene19 ficiary developing country’ means a beneficiary de20 veloping country that is designated as a least-devel21 oped beneficiary developing country under section

22 502(a)(2).’’.

23 (b) TABLE OF CONTENTS.—The items relating to

24 title V in the table of contents of the Trade Act of 1974

25 are amended to read as follows:

‘‘TITLE V—GENERALIZED SYSTEM OF PREFERENCES
769

•HR 2517 IH

‘‘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.’’.

1 SEC. 12103. RETROACTIVE APPLICATION FOR CERTAIN LIQ2 UIDATIONS AND RELIQUIDATIONS.

3 (a) IN GENERAL.—Notwithstanding section 514 of

4 the Tariff Act of 1930 or any other provision of law and

5 subject to subsection (b), the entry—

6 (1) of any article to which duty-free treatment

7 under title V of the Trade Act of 1974 would have

8 applied if the entry had been made on July 31,

9 1995, and

10 (2) that was made after July 31, 1995, and be11 fore the date of the enactment of this Act,

12 shall be liquidated or reliquidated as free of duty, and the

13 Secretary of the Treasury shall refund any duty paid with

14 respect to such entry. As used in this subsection, the term

15 ‘‘entry’’ includes a withdrawal from warehouse for con16 sumption.

17 (b) REQUESTS.—Liquidation or reliquidation may be

18 made under subsection (a) with respect to an entry only

19 if a request therefor is filed with the Customs Service,

20 within 180 days after the date of the enactment of this

21 Act, that contains sufficient information to enable the

22 Customs Service—
770

•HR 2517 IH

1 (1) to locate the entry; or

2 (2) to reconstruct the entry if it cannot be lo3 cated.

4 (c) TREATMENT OF CERTAIN ENTRIES OF

5 BUFFALO LEATHER.—Notwithstanding section 514

6 of the Tariff Act of 1930 or any other provision of

7 law, buffalo leather, provided for under subheading

8 4104.39.20 of the Harmonized Tariff Schedule of

9 the United States, that is a product of Thailand and

10 entered into the United States under entry numbers

11 M42–1113868–8 and M42–1113939–7, shall be liq12 uidated or reliquidated, as appropriate, as if entered

13 on June 30, 1995.

14 SEC. 12104. CONFORMING AMENDMENTS.

15 (a) TRADE LAWS.—

16 (1) Section 1211(b) of the Omnibus Trade and

17 Competitiveness Act of 1988 (19 U.S.C. 3011(b)) is

18 amended—

19 (A) in paragraph (1), by striking ‘‘(19

20 U.S.C. 2463(a), 2464(c)(3))’’ and inserting

21 ‘‘(as in effect on the day before the date of the

22 enactment of the GSP Renewal Act of 1995)’’;

23 and

24 (B) in paragraph (2), by striking ‘‘(19

25 U.S.C. 2464(c)(1))’’ and inserting the follow-
771

•HR 2517 IH

1 ing: ‘‘(as in effect on the day before the date

2 of the enactment of the GSP Renewal Act of

3 1995)’’.

4 (2) Section 203(c)(7) of the Andean Trade

5 Preference Act (19 U.S.C. 3202(c)(7)) is amended

6 by striking ‘‘502(a)(4)’’ and inserting ‘‘506(4)’’.

7 (3) Section 212(b)(7) of the Caribbean Basin

8 Economic Recovery Act (19 U.S.C. 2702(b)(7)) is

9 amended by striking ‘‘502(a)(4)’’ and inserting

10 ‘‘506(4)’’.

11 (4) General note 3(a)(iv)(C) of the Harmonized

12 Tariff Schedule of the United States is amended by

13 striking ‘‘sections 503(b) and 504(c)’’ and inserting

14 ‘‘subsections (a), (c), and (d) of section 503’’.

15 (b) OTHER LAWS.—

16 (1) Section 871(f)(2)(B) of the Internal Reve17 nue Code of 1986 is amended by striking ‘‘within

18 the meaning of section 502’’ and inserting ‘‘under

19 title V’’.

20 (2) Section 2202(8) of the Export Enhance21 ment Act of 1988 (15 U.S.C. 4711(8)) is amended

22 by striking ‘‘502(a)(4)’’ and inserting ‘‘506(4)’’.

23 (3) Section 231A(a) of the Foreign Assistance

24 Act of 1961 (22 U.S.C. 2191a(a)) is amended—
772

•HR 2517 IH

1 (A) in paragraph (1) by striking

2 ‘‘502(a)(4) of the Trade Act of 1974 (19

3 U.S.C. 2462(a)(4))’’ and inserting ‘‘506(4) of

4 the Trade Act of 1974’’;

5 (B) in paragraph (2) by striking ‘‘505(c)

6 of the Trade Act of 1974 (19 U.S.C. 2465(c))’’

7 and inserting ‘‘504(b) of the Trade Act of

8 1974’’; and

9 (C) in paragraph (4) by striking

10 ‘‘502(a)(4)’’ and inserting ‘‘506(4)’’.

11 Subtitle C—Trade Adjustment

12 Assistance

13 SEC. 12201. MODIFICATION OF TRADE ADJUSTMENT AS14 SISTANCE.

15 (a) REQUIREMENT OF TRAINING.—(1) Section

16 231(c) of the Trade Act of 1974 (19 U.S.C. 2291) is

17 amended—

18 (A) in paragraph (1)(A) and (B) by striking ‘‘it

19 is not feasible or appropriate to approve a training

20 program’’ and inserting ‘‘a training program is not

21 available’’; and

22 (B) in paragraph (2)(A) and (B) by striking ‘‘it

23 is feasible or appropriate to approve a training pro24 gram’’ and inserting ‘‘a training program is avail25 able’’.
773

•HR 2517 IH

1 (2) Section 233(b) of such Act (19 U.S.C. 2293(b))

2 is repealed.

3 (3) Paragraph (3) of section 250(d) of the Trade Act

4 of 1974 (19 U.S.C. 2331(d)) is amended—

5 (A) by striking ‘‘it is not feasible or appropriate

6 to approve a training program’’ in subparagraph (A)

7 and inserting ‘‘a training program is not available’’,

8 and

9 (B) by striking ‘‘notwithstanding the provisions

10 of section 233(b),’’ in subparagraph (B).

11 (b) TERMINATION OF RELOCATION ALLOWANCES.—

12 (1) Section 238 of the Trade Act of 1974 (19 U.S.C.

13 2298), and the item relating to that section in the table

14 of contents for that Act, are repealed.

15 (2) Section 250(d) of the Trade Act of 1974 (19

16 U.S.C. 2331(d)) is amended by striking paragraph (5).

17 (c) TERMINATION OF PROGRAM.—Section 285(c) of

18 the Trade Act of 1974 (19 U.S.C. 2271 preceding note)

19 is amended—

20 (1) in paragraph (1), by striking ‘‘1998’’ and

21 inserting ‘‘2000’’; and

22 (2) by amending paragraph (2) to read as fol23 lows:
774

•HR 2517 IH

1 ‘‘(2) No assistance, vouchers, allowances, or other

2 payments may be provided under subchapter D of chapter

3 2 after September 30, 1998.’’.

4 (d) EXTENSION OF AUTHORIZATION.—(1) Section

5 245(a) of the Trade Act of 1974 (19 U.S.C. 2317(a)) is

6 amended by striking ‘‘and 1998’’ and inserting ‘‘1998,

7 1999, and 2000’’.

8 (2) Section 256(b) of the Trade Act of 1974 (19

9 U.S.C. 2346(a)) is amended by striking ‘‘and 1998’’ and

10 inserting ‘‘1998, 1999, and 2000’’.

11 (e) EFFECTIVE DATE.—

12 (1) IN GENERAL.—Except as provided in para13 graph (2), the amendments made by this section

14 shall take effect on the date of the enactment of this

15 Act.

16 (2) SUBSECTIONS (a) AND (b).—The amend17 ments made by subsections (a) and (b) shall take ef18 fect on October 1, 1996.

19 TITLE XIII—COMMITTEE ON

20 WAYS AND MEANS—REVENUE

21 RECONCILIATION

22 SEC. 13001. SHORT TITLE; AMENDMENT OF 1986 CODE.

23 (a) SHORT TITLE.—This title may be cited as the

24 ‘‘Revenue Reconciliation Act of 1995’’.
775

•HR 2517 IH

1 (b) AMENDMENT OF 1986 CODE.—Except as other2 wise expressly provided, whenever in this title an amend3 ment or repeal is expressed in terms of an amendment

4 to, or repeal of, a section or other provision, the reference

5 shall be considered to be made to a section or other provi6 sion of the Internal Revenue Code of 1986.

7 (c) TABLE OF CONTENTS.—The table of contents for

8 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.

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.
776

•HR 2517 IH

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.

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.
777

•HR 2517 IH

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.

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
778

•HR 2517 IH

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. 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.

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
779

•HR 2517 IH

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.

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—
780

•HR 2517 IH

1 ‘‘(A) a qualified AFDC recipient,

2 ‘‘(B) a qualified ex-felon,

3 ‘‘(C) a high-risk youth,

4 ‘‘(D) a vocational rehabilitation referral, or

5 ‘‘(E) a qualified summer youth employee.

6 ‘‘(2) QUALIFIED AFDC RECIPIENT.—

7 ‘‘(A) IN GENERAL.—The term ‘qualified

8 AFDC recipient’ means any individual who is

9 certified by the designated local agency as being

10 a member of a family receiving assistance under

11 an AFDC program for at least a 9-month pe12 riod ending during the 9-month period ending

13 on the hiring date.

14 ‘‘(B) AFDC PROGRAM.—For purposes of

15 this paragraph, the term ‘AFDC program’

16 means any program providing aid under a State

17 plan approved under part A of title IV of the

18 Social Security Act (relating to aid to families

19 with dependent children) and any successor of

20 such program.

21 ‘‘(C) SPECIAL RULES FOR VETERANS.—In

22 the case of a veteran, subparagraph (A) shall be

23 applied by substituting ‘12-month’ for ‘9-

24 month’ the second place it appears.
781

•HR 2517 IH

1 ‘‘(D) VETERAN.—For purposes of sub2 paragraph (C), the term ‘veteran’ means any

3 individual who is certified by the designated

4 local agency as—

5 ‘‘(i)(I) having served on active duty

6 (other than active duty for training) in the

7 Armed Forces of the United States for a

8 period of more than 180 days, or

9 ‘‘(II) having been discharged or re10 leased from active duty in the Armed

11 Forces of the United States for a service12 connected disability, and

13 ‘‘(ii) not having any day during the

14 60-day period ending on the hiring date

15 which was a day of extended active duty in

16 the Armed Forces of the United States.

17 For purposes of clause (ii), the term ‘extended

18 active duty’ means a period of more than 90

19 days during which the individual was on active

20 duty (other than active duty for training).

21 ‘‘(3) QUALIFIED EX-FELON.—The term ‘quali22 fied ex-felon’ means any individual who is certified

23 by the designated local agency—
782

•HR 2517 IH

1 ‘‘(A) as having been convicted of a felony

2 under any statute of the United States or any

3 State,

4 ‘‘(B) as having a hiring date which is not

5 more than 1 year after the last date on which

6 such individual was so convicted or was released

7 from prison, and

8 ‘‘(C) as being a member of a family which

9 had an income during the 6 months imme10 diately preceding the earlier of the month in

11 which such income determination occurs or the

12 month in which the hiring date occurs, which,

13 on an annual basis, would be 70 percent or less

14 of the Bureau of Labor Statistics lower living

15 standard.

16 Any determination under subparagraph (C) shall be

17 valid for the 45-day period beginning on the date

18 such determination is made.

19 ‘‘(4) HIGH-RISK YOUTH.—

20 ‘‘(A) IN GENERAL.—The term ‘high-risk

21 youth’ means any individual who is certified by

22 the designated local agency—

23 ‘‘(i) as having attained age 18 but not

24 age 25 on the hiring date, and
783

•HR 2517 IH

1 ‘‘(ii) as having his principal place of

2 abode within an empowerment zone or en3 terprise community.

4 ‘‘(B) YOUTH MUST CONTINUE TO RESIDE

5 IN ZONE.—In the case of a high-risk youth, the

6 term ‘qualified wages’ shall not include wages

7 paid or incurred for services performed while

8 such youth’s principal place of abode is outside

9 an empowerment zone or enterprise community.

10 ‘‘(5) VOCATIONAL REHABILITATION REFER11 RAL.—The term ‘vocational rehabilitation referral’

12 means any individual who is certified by the des13 ignated local agency as—

14 ‘‘(A) having a physical or mental disability

15 which, for such individual, constitutes or results

16 in a substantial handicap to employment, and

17 ‘‘(B) having been referred to the employer

18 upon completion of (or while receiving) rehabili19 tative services pursuant to—

20 ‘‘(i) an individualized written rehabili21 tation plan under a State plan for voca22 tional rehabilitation services approved

23 under the Rehabilitation Act of 1973, or
784

•HR 2517 IH

1 ‘‘(ii) a program of vocational rehabili2 tation carried out under chapter 31 of title

3 38, United States Code.

4 ‘‘(6) QUALIFIED SUMMER YOUTH EMPLOYEE.—

5 ‘‘(A) IN GENERAL.—The term ‘qualified

6 summer youth employee’ means any individ7 ual—

8 ‘‘(i) who performs services for the em9 ployer between May 1 and September 15,

10 ‘‘(ii) who is certified by the designated

11 local agency as having attained age 16 but

12 not 18 on the hiring date (or if later, on

13 May 1 of the calendar year involved),

14 ‘‘(iii) who has not been an employee

15 of the employer during any period prior to

16 the 90-day period described in subpara17 graph (B)(i), and

18 ‘‘(iv) who is certified by the des19 ignated local agency as having his principal

20 place of abode within an empowerment

21 zone or enterprise community.

22 ‘‘(B) SPECIAL RULES FOR DETERMINING

23 AMOUNT OF CREDIT.—For purposes of applying

24 this subpart to wages paid or incurred to any

25 qualified summer youth employee—
785

•HR 2517 IH

1 ‘‘(i) subsection (b)(2) shall be applied

2 by substituting ‘any 90-day period between

3 May 1 and September 15’ for ‘the 1-year

4 period beginning with the day the individ5 ual begins work for the employer’, and

6 ‘‘(ii) subsection (b)(3) shall be applied

7 by substituting ‘$3,000’ for ‘$6,000’.

8 The preceding sentence shall not apply to an in9 dividual who, with respect to the same em10 ployer, is certified as a member of another tar11 geted group after such individual has been a

12 qualified summer youth employee.

13 ‘‘(C) YOUTH MUST CONTINUE TO RESIDE

14 IN ZONE.—Paragraph (4)(B) shall apply for

15 purposes of this paragraph.

16 ‘‘(7) HIRING DATE.—The term ‘hiring date’

17 means the day the individual is hired by the em18 ployer.

19 ‘‘(8) DESIGNATED LOCAL AGENCY.—The term

20 ‘designated local agency’ means a State employment

21 security agency established in accordance with the

22 Act of June 6, 1933, as amended (29 U.S.C. 49-

23 49n).

24 ‘‘(9) SPECIAL RULES FOR CERTIFICATIONS.—
786

•HR 2517 IH

1 ‘‘(A) IN GENERAL.—An individual shall

2 not be treated as a member of a targeted group

3 unless—

4 ‘‘(i) on or before the day on which

5 such individual begins work for the em6 ployer, the employer has received a certifi7 cation from a designated local agency that

8 such individual is a member of a targeted

9 group, or

10 ‘‘(ii)(I) on or before the day the indi11 vidual is offered employment with the em12 ployer, a pre-screening notice is completed

13 with respect to such individual, and

14 ‘‘(II) not later than the 14th day after

15 the individual begins work for the em16 ployer, the employer submits such notice to

17 the designated local agency as part of a

18 written request for such a certification

19 from such agency.

20 For purposes of this paragraph, the term ‘pre21 screening notice’ means a document (in such

22 form as the Secretary shall prescribe) which is

23 signed by the employer and the individual under

24 penalties of perjury and which contains infor25 mation provided by the individual on the basis
787

•HR 2517 IH

1 of which the employer believes that the individ2 ual is a member of a targeted group.

3 ‘‘(B) INCORRECT CERTIFICATIONS.—If—

4 ‘‘(i) an individual has been certified

5 by a designated local agency as a member

6 of a targeted group, and

7 ‘‘(ii) such certification is incorrect be8 cause it was based on false information

9 provided by such individual,

10 the certification shall be revoked and wages

11 paid by the employer after the date on which

12 notice of revocation is received by the employer

13 shall not be treated as qualified wages.

14 ‘‘(C) EXPLANATION OF DENIAL OF RE15 QUEST.—If a designated local agency denies a

16 request for certification of membership in a tar17 geted group, such agency shall provide to the

18 person making such request a written expla19 nation of the reasons for such denial.’’

20 (c) MINIMUM EMPLOYMENT PERIOD.—Paragraph

21 (3) of section 51(i) is amended to read as follows:

22 ‘‘(3) INDIVIDUALS NOT MEETING MINIMUM EM23 PLOYMENT PERIOD.—No wages shall be taken into

24 account under subsection (a) with respect to any in25 dividual unless such individual either—
788

•HR 2517 IH

1 ‘‘(A) is employed by the employer at least

2 180 days (20 days in the case of a qualified

3 summer youth employee), or

4 ‘‘(B) has completed at least 500 hours

5 (120 hours in the case of a qualified summer

6 youth employee) of services performed for the

7 employer.’’

8 (d) DEFINITION OF WAGES.—Subsection (c) of sec9 tion 51 is amended by striking paragraph (3).

10 (e) TERMINATION.—Paragraph (4) of section 51(c)

11 is amended to read as follows:

12 ‘‘(3) TERMINATION.—The term ‘wages’ shall

13 not include any amount paid or incurred to an indi14 vidual who begins work for the employer—

15 ‘‘(A) after December 31, 1994, and before

16 January 1, 1996, or

17 ‘‘(B) after December 31, 1997.’’

18 (f) REDESIGNATION OF CREDIT.—

19 (1) Sections 38(b)(2) and 51(a) are each

20 amended by striking ‘‘targeted jobs credit’’ and in21 serting ‘‘work opportunity credit’’.

22 (2) The subpart heading for subpart F of part

23 IV of subchapter A of chapter 1 is amended by

24 striking ‘‘Targeted Jobs Credit’’ and inserting

25 ‘‘Work Opportunity Credit’’.
789

•HR 2517 IH

1 (3) The table of subparts for such part IV is

2 amended by striking ‘‘targeted jobs credit’’ and in3 serting ‘‘work opportunity credit’’.

4 (g) BUSINESS AWARENESS PROGRAM.—The Sec5 retary of Labor shall implement a program to encourage

6 small businesses to use the services of local agencies to

7 identify individuals who qualify to be certified as members

8 of targeted groups (as defined in section 51 of the Internal

9 Revenue Code of 1986, as amended by this section). Such

10 Secretary, and the heads of other Federal agencies, shall

11 make every effort to encourage small businesses to benefit

12 from the credit allowable under such section by simplifying

13 procedures to the extent possible.

14 (h) TECHNICAL AMENDMENTS.—

15 (1) Paragraph (1) of section 51(c) is amended

16 by striking ‘‘, subsection (d)(8)(D),’’.

17 (2) Paragraph (3) of section 51(i) is amended

18 by striking ‘‘(d)(12)’’ each place it appears and in19 serting ‘‘(d)(6)’’.

20 (i) EFFECTIVE DATE.—The amendments made by

21 this section shall apply to individuals who begin work for

22 the employer after December 31, 1995.
790

•HR 2517 IH

1 SEC. 13102. EMPLOYER-PROVIDED EDUCATIONAL ASSIST2 ANCE PROGRAMS.

3 (a) EXTENSION.—Subsection (d) of section 127 (re4 lating to educational assistance programs) is amended by

5 striking ‘‘December 31, 1994’’ and inserting ‘‘December

6 31, 1997’’.

7 (b) LIMITATION TO EDUCATION BELOW GRADUATE

8 LEVEL.—The last sentence of section 127(c)(1) is amend9 ed by inserting before the period ‘‘or at the graduate

10 level’’.

11 (c) EFFECTIVE DATES.—

12 (1) EXTENSION.—The amendment made by

13 subsection (a) shall apply to taxable years beginning

14 after December 31, 1994.

15 (2) LIMITATION.—The amendment made by

16 subsection (b) shall apply to taxable years beginning

17 after December 31, 1995.

18 SEC. 13103. RESEARCH CREDIT.

19 (a) IN GENERAL.—Subsection (h) of section 41 (re20 lating to credit for research activities) is amended—

21 (1) by striking ‘‘June 30, 1995’’ each place it

22 appears and inserting ‘‘December 31, 1997’’, and

23 (2) by striking ‘‘July 1, 1995’’ each place it ap24 pears and inserting ‘‘January 1, 1998’’.
791

•HR 2517 IH

1 (b) BASE AMOUNT FOR START-UP COMPANIES.—

2 Clause (i) of section 41(c)(3)(B) (relating to start-up com3 panies) is amended to read as follows:

4 ‘‘(i) TAXPAYERS TO WHICH SUBPARA5 GRAPH APPLIES.—The fixed-base percent6 age shall be determined under this sub7 paragraph if—

8 ‘‘(I) the first taxable year in

9 which a taxpayer had both gross re10 ceipts and qualified research expenses

11 begins after December 31, 1983, or

12 ‘‘(II) there are fewer than 3 tax13 able years beginning after December

14 31, 1983, and before January 1,

15 1989, in which the taxpayer had both

16 gross receipts and qualified research

17 expenses.’’

18 (c) ELECTION OF ALTERNATIVE INCREMENTAL

19 CREDIT.—Subsection (c) of section 41 is amended by re20 designating paragraphs (4) and (5) as paragraphs (5) and

21 (6), respectively, and by inserting after paragraph (3) the

22 following new paragraph:

23 ‘‘(4) ELECTION OF ALTERNATIVE INCREMEN24 TAL CREDIT.—
792

•HR 2517 IH

1 ‘‘(A) IN GENERAL.—At the election of the

2 taxpayer, the credit determined under sub3 section (a)(1) shall be equal to the sum of—

4 ‘‘(i) 1.65 percent of so much of the

5 qualified research expenses for the taxable

6 year as exceeds 1 percent of the average

7 described in subsection (c)(1)(B) but does

8 not exceed 1.5 percent of such average,

9 ‘‘(ii) 2.2 percent of so much of such

10 expenses as exceeds 1.5 percent of such av11 erage but does not exceed 2 percent of

12 such average, and

13 ‘‘(iii) 2.75 percent of so much of such

14 expenses as exceeds 2 percent of such aver15 age.

16 ‘‘(B) ELECTION.—An election under this

17 paragraph may be made only for the first tax18 able year of the taxpayer beginning after June

19 30, 1995. Such an election shall apply to the

20 taxable year for which made and all succeeding

21 taxable years unless revoked with the consent of

22 the Secretary.’’

23 (d) INCREASED CREDIT FOR CONTRACT RESEARCH

24 EXPENSES WITH RESPECT TO CERTAIN RESEARCH CON-
793

•HR 2517 IH

1 SORTIA.—Paragraph (3) of section 41(b) is amended by

2 adding at the end the following new subparagraph:

3 ‘‘(C) AMOUNTS PAID TO CERTAIN RE4 SEARCH CONSORTIA.—

5 ‘‘(i) IN GENERAL.—Subparagraph (A)

6 shall be applied by substituting ‘75 per7 cent’ for ‘65 percent’ with respect to

8 amounts paid or incurred by the taxpayer

9 to a qualified research consortium for

10 qualified research.

11 ‘‘(ii) QUALIFIED RESEARCH CONSOR12 TIUM.—The term ‘qualified research con13 sortium’ means any organization described

14 in subsection (e)(6)(B) if—

15 ‘‘(I) at least 15 unrelated tax16 payers paid (during the calendar year

17 in which the taxable year of the tax18 payer begins) amounts to such organi19 zation for qualified research,

20 ‘‘(II) no 3 persons paid during

21 such calendar year more than 50 per22 cent of the total amounts paid during

23 such calendar year for qualified re24 search, and
794

•HR 2517 IH

1 ‘‘(III) no person contributed

2 more than 20 percent of such total

3 amounts.

4 For purposes of subclause (I), all persons

5 treated as a single employer under sub6 section (a) or (b) of section 52 shall be

7 treated as related taxpayers.’’

8 (e) CONFORMING AMENDMENT.—Subparagraph (D)

9 of section 28(b)(1) is amended by striking ‘‘June 30,

10 1995’’ and inserting ‘‘December 31, 1997’’.

11 (f) EFFECTIVE DATE.—

12 (1) IN GENERAL.—Except as provided in para13 graph (2), the amendments made by this section

14 shall apply to taxable years ending after June 30,

15 1995.

16 (2) SUBSECTIONS (c) AND (d).—The amend17 ments made by subsections (c) and (d) shall apply

18 to taxable years beginning after June 30, 1995.

19 SEC. 13104. CONTRIBUTIONS OF STOCK TO PRIVATE FOUN20 DATIONS.

21 (a) IN GENERAL.—Subparagraph (D) of section

22 170(e)(5) is amended by striking ‘‘December 31, 1994’’

23 and inserting ‘‘December 31, 1997’’.
795

•HR 2517 IH

1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to contributions made after De3 cember 31, 1994.

4 SEC. 13105. CREDIT FOR CLINICAL TESTING EXPENSES.

5 (a) IN GENERAL.—Subsection (e) of section 28 is

6 amended by striking ‘‘December 31, 1994’’ and inserting

7 ‘‘December 31, 1997’’.

8 (b) EFFECTIVE DATE.—The amendment made by

9 this section shall apply to taxable years ending after De10 cember 31, 1994.

11 PART II—PERMANENT EXTENSION OF FUTA EX12 EMPTION FOR ALIEN AGRICULTURAL WORK13 ERS

14 SEC. 13106. FUTA EXEMPTION FOR ALIEN AGRICULTURAL

15 WORKERS.

16 (a) IN GENERAL.—Subparagraph (B) of section

17 3306(c)(1) (defining employment) is amended by striking

18 ‘‘before January 1, 1995,’’.

19 (b) EFFECTIVE DATE.—The amendment made by

20 subsection (a) shall apply to services performed after De21 cember 31, 1994.
796

•HR 2517 IH

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
797

•HR 2517 IH

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
798

•HR 2517 IH

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.—
799

•HR 2517 IH

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
800

•HR 2517 IH

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’’.
801

•HR 2517 IH

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
802

•HR 2517 IH

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.
803

•HR 2517 IH

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—
804

•HR 2517 IH

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-
805

•HR 2517 IH

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
806

•HR 2517 IH

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
807

•HR 2517 IH

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.
808

•HR 2517 IH

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.
809

•HR 2517 IH

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
810

•HR 2517 IH

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.—
811

•HR 2517 IH

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—
812

•HR 2517 IH

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
813

•HR 2517 IH

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 591 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.
814

•HR 2517 IH

1 In the case of such a distribution, for purposes of

2 section 61, any net income described in subpara3 graph (C) shall be deemed to have been earned and

4 receivable in the taxable year in which such con5 tribution is made.

6 ‘‘(4) ROLLOVERS.—Paragraph (1) shall not

7 apply to any amount paid or distributed out of a

8 medical savings account to the account holder if the

9 entire amount received (including money and any

10 other property) is paid into another medical savings

11 account for the benefit of such holder not later than

12 the 60th day after the day on which he received the

13 payment or distribution.

14 ‘‘(5) COORDINATION WITH MEDICAL EXPENSE

15 DEDUCTION.—For purposes of section 213, any pay16 ment or distribution out of a medical savings ac17 count for qualified medical expenses shall not be

18 treated as an expense paid for medical care to the

19 extent of the amount of such payment or distribu20 tion which is excludable from gross income solely by

21 reason of paragraph (1)(A).

22 ‘‘(g) COST-OF-LIVING ADJUSTMENT.—

23 ‘‘(1) IN GENERAL.—In the case of any taxable

24 year beginning in a calendar year after 1996, each
815

•HR 2517 IH

1 dollar amount in subsection (b)(1) or in subsection

2 (c)(2) shall be increased by an amount equal to—

3 ‘‘(A) such dollar amount, multiplied by

4 ‘‘(B) the medical care cost adjustment for

5 such calendar year.

6 If any increase under the preceding sentence is not

7 a multiple of $50, such increase shall be rounded to

8 the nearest multiple of $50.

9 ‘‘(2) MEDICAL CARE COST ADJUSTMENT.—For

10 purposes of paragraph (1), the medical care cost ad11 justment for any calendar year is the percentage (if

12 any) by which—

13 ‘‘(A) the medical care component of the

14 Consumer Price Index (as defined in section

15 1(f)(5)) for August of the preceding calendar

16 year, exceeds

17 ‘‘(B) such component for August of 1995.

18 ‘‘(h) REPORTS.—The trustee of a medical savings ac19 count shall make such reports regarding such account to

20 the Secretary and to the account holder with respect to

21 contributions, distributions, and such other matters as the

22 Secretary may require under regulations. The reports re23 quired by this subsection shall be filed at such time and

24 in such manner and furnished to such individuals at such
816

•HR 2517 IH

1 time and in such manner as may be required by those reg2 ulations.’’

3 (b) DEDUCTION ALLOWED WHETHER OR NOT INDI4 VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a)

5 of section 62 is amended by inserting after paragraph (15)

6 the following new paragraph:

7 ‘‘(16) MEDICAL SAVINGS ACCOUNTS.—The de8 duction allowed by section 220.’’

9 (c) EXCLUSIONS FOR EMPLOYER CONTRIBUTIONS TO

10 MEDICAL SAVINGS ACCOUNTS.—

11 (1) EXCLUSION FROM INCOME TAX.—The text

12 of section 106 (relating to contributions by employer

13 to accident and health plans) is amended to read as

14 follows:

15 ‘‘(a) GENERAL RULE.—Gross income of an employee

16 does not include employer-provided coverage under an ac17 cident or health plan.

18 ‘‘(b) CONTRIBUTIONS TO MEDICAL SAVINGS AC19 COUNTS.—

20 ‘‘(1) IN GENERAL.—In the case of an employee

21 who is an eligible individual, gross income does not

22 include amounts contributed by such employee’s em23 ployer to any medical savings account of such em24 ployee.
817

•HR 2517 IH

1 ‘‘(2) COORDINATION WITH DEDUCTION LIMITA2 TION.—The amount excluded from the gross income

3 of an employee under this subsection for any taxable

4 year shall not exceed the limitation under section

5 220(b)(1) (determined without regard to this sub6 section) which is applicable to such employee for

7 such taxable year.’’

8 ‘‘(3) NO CONSTRUCTIVE RECEIPT.—No amount

9 shall be included in the gross income of any em10 ployee solely because the employee may choose be11 tween the contributions referred to in paragraph (1)

12 and employer contributions to another health plan of

13 the employer.

14 ‘‘(4) SPECIAL RULE FOR DEDUCTION OF EM15 PLOYER CONTRIBUTIONS.—Any employer contribu16 tion to a medical savings account, if otherwise allow17 able as a deduction under this chapter, shall be al18 lowed only for the taxable year in which paid.

19 ‘‘(5) DEFINITIONS.—For purposes of this sub20 section, the terms ‘eligible individual’ and ‘medical

21 savings account’ have the respective meanings given

22 to such terms by section 220.’’

23 (2) EXCLUSION FROM EMPLOYMENT TAXES.—

24 (A) SOCIAL SECURITY TAXES.—
818

•HR 2517 IH

1 (i) Subsection (a) of section 3121 is

2 amended by striking ‘‘or’’ at the end of

3 paragraph (20), by striking the period at

4 the end of paragraph (21) and inserting ‘‘;

5 or’’, and by inserting after paragraph (21)

6 the following new paragraph:

7 ‘‘(22) any payment made to or for the benefit

8 of an employee if at the time of such payment it is

9 reasonable to believe that the employee will be able

10 to exclude such payment from income under section

11 106(b).’’

12 (ii) Subsection (a) of section 209 of

13 the Social Security Act is amended by

14 striking ‘‘or’’ at the end of paragraph (17),

15 by striking the period at the end of para16 graph (18) and inserting ‘‘; or’’, and by in17 serting after paragraph (18) the following

18 new paragraph:

19 ‘‘(19) any payment made to or for the benefit

20 of an employee if at the time of such payment it is

21 reasonable to believe that the employee will be able

22 to exclude such payment from income under section

23 106(b) of the Internal Revenue Code of 1986.’’
819

•HR 2517 IH

1 (B) RAILROAD RETIREMENT TAX.—Sub2 section (e) of section 3231 is amended by add3 ing at the end the following new paragraph:

4 ‘‘(10) MEDICAL SAVINGS ACCOUNT CONTRIBU5 TIONS.—The term ‘compensation’ shall not include

6 any payment made to or for the benefit of an em7 ployee if at the time of such payment it is reason8 able to believe that the employee will be able to ex9 clude such payment from income under section

10 106(b).’’

11 (C) UNEMPLOYMENT TAX.—Subsection (b)

12 of section 3306 is amended by striking ‘‘or’’ at

13 the end of paragraph (15), by striking the pe14 riod at the end of paragraph (16) and inserting

15 ‘‘; or’’, and by inserting after paragraph (16)

16 the following new paragraph:

17 ‘‘(17) any payment made to or for the benefit

18 of an employee if at the time of such payment it is

19 reasonable to believe that the employee will be able

20 to exclude such payment from income under section

21 106(b).’’

22 (D) WITHHOLDING TAX.—Subsection (a)

23 of section 3401 is amended by striking ‘‘or’’ at

24 the end of paragraph (19), by striking the pe25 riod at the end of paragraph (20) and inserting
820

•HR 2517 IH

1 ‘‘; or’’, and by inserting after paragraph (20)

2 the following new paragraph:

3 ‘‘(21) 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 (d) MEDICAL SAVINGS ACCOUNT CONTRIBUTIONS

9 NOT AVAILABLE UNDER CAFETERIA PLANS.—Subsection

10 (f) of section 125 is amended by inserting ‘‘106(b),’’ be11 fore ‘‘117’’.

12 (e) TAX ON PROHIBITED TRANSACTIONS.—Section

13 4975 (relating to tax on prohibited transactions) is

14 amended—

15 (1) by adding at the end of subsection (c) the

16 following new paragraph:

17 ‘‘(4) SPECIAL RULE FOR MEDICAL SAVINGS AC18 COUNTS.—An individual for whose benefit a medical

19 savings account (within the meaning of section

20 220(d)) is established shall be exempt from the tax

21 imposed by this section with respect to any trans22 action concerning such account (which would other23 wise be taxable under this section) if, with respect

24 to such transaction, the account ceases to be a medi-
821

•HR 2517 IH

1 cal savings account by reason of the application of

2 section 220(e)(2) to such account.’’, and

3 (2) by inserting ‘‘or a medical savings account

4 described in section 220(d)’’ in subsection (e)(1)

5 after ‘‘described in section 408(a)’’.

6 (f) FAILURE TO PROVIDE REPORTS ON MEDICAL

7 SAVINGS ACCOUNTS.—Section 6693 (relating to failure to

8 provide reports on individual retirement accounts or annu9 ities) is amended—

10 (1) by inserting ‘‘OR ON MEDICAL SAVINGS

11 ACCOUNTS’’ after ‘‘ANNUITIES’’ in the heading of

12 such section, and

13 (2) by adding at the end of subsection (a) the

14 following: ‘‘The person required by section 220(h) to

15 file a report regarding a medical savings account at

16 the time and in the manner required by such section

17 shall pay a penalty of $50 for each failure to so file

18 unless it is shown that such failure is due to reason19 able cause.’’

20 (g) CLERICAL AMENDMENTS.—

21 (1) The table of sections for part VII of sub22 chapter B of chapter 1 is amended by striking the

23 last item and inserting the following:

‘‘Sec. 220. Medical savings accounts.

‘‘Sec. 221. Cross reference.’’
822

•HR 2517 IH

1 (2) The table of sections for subchapter B of

2 chapter 68 is amended by inserting ‘‘or on medical

3 savings accounts’’ after ‘‘annuities’’ in the item re4 lating to section 6693.

5 (h) EFFECTIVE DATE.—The amendments made by

6 this section shall apply to taxable years beginning after

7 December 31, 1995.

8 Subtitle C—Pickle-Johnson

9 Taxpayer Bill of Rights 2

10 PART I—TAXPAYER ADVOCATE

11 SEC. 13301. ESTABLISHMENT OF POSITION OF TAXPAYER

12 ADVOCATE WITHIN INTERNAL REVENUE

13 SERVICE.

14 (a) GENERAL RULE.—Section 7802 (relating to

15 Commissioner of Internal Revenue; Assistant Commis16 sioner (Employee Plans and Exempt Organizations)) is

17 amended by adding at the end the following new sub18 section:

19 ‘‘(d) OFFICE OF TAXPAYER ADVOCATE.—

20 ‘‘(1) IN GENERAL.—There is established in the

21 Internal Revenue Service an office to be known as

22 the ‘Office of the Taxpayer Advocate’. Such office

23 shall be under the supervision and direction of an of24 ficial to be known as the ‘Taxpayer Advocate’ who

25 shall be appointed by and report directly to the
823

•HR 2517 IH

1 Commissioner of Internal Revenue. The Taxpayer

2 Advocate shall be entitled to compensation at the

3 same rate as the highest level official reporting di4 rectly to the Deputy Commissioner of the Internal

5 Revenue Service.

6 ‘‘(2) FUNCTIONS OF OFFICE.—

7 ‘‘(A) IN GENERAL.—It shall be the func8 tion of the Office of Taxpayer Advocate to—

9 ‘‘(i) assist taxpayers in resolving prob10 lems with the Internal Revenue Service,

11 ‘‘(ii) identify areas in which taxpayers

12 have problems in dealings with the Internal

13 Revenue Service,

14 ‘‘(iii) to the extent possible, propose

15 changes in the administrative practices of

16 the Internal Revenue Service to mitigate

17 problems identified under clause (ii), and

18 ‘‘(iv) identify potential legislative

19 changes which may be appropriate to miti20 gate such problems.

21 ‘‘(B) ANNUAL REPORTS.—

22 ‘‘(i) OBJECTIVES.—Not later than

23 June 30 of each calendar year after 1995,

24 the Taxpayer Advocate shall report to the

25 Committee on Ways and Means of the
824

•HR 2517 IH

1 House of Representatives and the Commit2 tee on Finance of the Senate on the objec3 tives of the Taxpayer Advocate for the fis4 cal year beginning in such calendar year.

5 Any such report shall contain full and sub6 stantive analysis, in addition to statistical

7 information.

8 ‘‘(ii) ACTIVITIES.—Not later than De9 cember 31 of each calendar year after

10 1995, the Taxpayer Advocate shall report

11 to the Committee on Ways and Means of

12 the House of Representatives and the

13 Committee on Finance of the Senate on

14 the activities of the Taxpayer Advocate

15 during the fiscal year ending during such

16 calendar year. Any such report shall con17 tain full and substantive analysis, in addi18 tion to statistical information, and shall—

19 ‘‘(I) identify the initiatives the

20 Taxpayer Advocate has taken on im21 proving taxpayer services and Internal

22 Revenue Service responsiveness,

23 ‘‘(II) contain recommendations

24 received from individuals with the au-
825

•HR 2517 IH

1 thority to issue Taxpayer Assistance

2 Orders under section 7811,

3 ‘‘(III) contain a summary of at

4 least 20 of the most serious problems

5 encountered by taxpayers, including a

6 description of the nature of such prob7 lems,

8 ‘‘(IV) contain an inventory of the

9 items described in subclauses (I), (II),

10 and (III) for which action has been

11 taken and the result of such action,

12 ‘‘(V) contain an inventory of the

13 items described in subclauses (I), (II),

14 and (III) for which action remains to

15 be completed and the period during

16 which each item has remained on such

17 inventory,

18 ‘‘(VI) contain an inventory of the

19 items described in subclauses (II) and

20 (III) for which no action has been

21 taken, the period during which each

22 item has remained on such inventory,

23 the reasons for the inaction, and iden24 tify any Internal Revenue Service offi-
826

•HR 2517 IH

1 cial who is responsible for such inac2 tion,

3 ‘‘(VII) identify any Taxpayer As4 sistance Order which was not honored

5 by the Internal Revenue Service in a

6 timely manner, as specified under sec7 tion 7811(b),

8 ‘‘(VIII) contain recommendations

9 for such administrative and legislative

10 action as may be appropriate to re11 solve problems encountered by tax12 payers,

13 ‘‘(IX) describe the extent to

14 which regional problem resolution offi15 cers participate in the selection and

16 evaluation of local problem resolution

17 officers, and

18 ‘‘(X) include such other informa19 tion as the Taxpayer Advocate may

20 deem advisable.

21 ‘‘(iii) REPORT TO BE SUBMITTED DI22 RECTLY.—Each report required under this

23 subparagraph shall be provided directly to

24 the Committees referred to in clauses (i)

25 and (ii) without any prior review or com-
827

•HR 2517 IH

1 ment from the Commissioner, the Sec2 retary of the Treasury, any other officer

3 or employee of the Department of the

4 Treasury, or the Office of Management

5 and Budget.

6 ‘‘(3) RESPONSIBILITIES OF COMMISSIONER.—

7 The Commissioner of Internal Revenue shall estab8 lish procedures requiring a formal response to all

9 recommendations submitted to the Commissioner

10 by the Taxpayer Advocate within 3 months after

11 submission to the Commissioner.’’

12 (b) CONFORMING AMENDMENTS.—

13 (1) Section 7811 (relating to Taxpayer Assist14 ance Orders) is amended—

15 (A) by striking ‘‘the Office of Ombuds16 man’’ in subsection (a) and inserting ‘‘the Of17 fice of the Taxpayer Advocate’’, and

18 (B) by striking ‘‘Ombudsman’’ each place

19 it appears (including in the headings of sub20 sections (e) and (f)) and inserting ‘‘Taxpayer

21 Advocate’’.

22 (2) The heading for section 7802 is amended to

23 read as follows:
828

•HR 2517 IH

1 ‘‘SEC. 7802. COMMISSIONER OF INTERNAL REVENUE; AS2 SISTANT COMMISSIONERS; TAXPAYER ADVO3 CATE.’’

4 (3) The table of sections for subchapter A of

5 chapter 80 is amended by striking the item relating

6 to section 7802 and inserting the following new

7 item:

‘‘Sec. 7802. Commissioner of Internal Revenue; Assistant Commissioners; Taxpayer Advocate.’’

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

9 this section shall take effect on the date of the enactment

10 of this Act.

11 SEC. 13302. EXPANSION OF AUTHORITY TO ISSUE TAX12 PAYER ASSISTANCE ORDERS.

13 (a) TERMS OF ORDERS.—Subsection (b) of section

14 7811 (relating to terms of Taxpayer Assistance Orders)

15 is amended—

16 (1) by inserting ‘‘within a specified time pe17 riod’’ after ‘‘the Secretary’’, and

18 (2) by inserting ‘‘take any action as permitted

19 by law,’’ after ‘‘cease any action,’’.

20 (b) LIMITATION ON AUTHORITY TO MODIFY OR RE21 SCIND.—Section 7811(c) (relating to authority to modify

22 or rescind) is amended to read as follows:
829

•HR 2517 IH

1 ‘‘(c) AUTHORITY TO MODIFY OR RESCIND.—Any

2 Taxpayer Assistance Order issued by the Taxpayer Advo3 cate under this section may be modified or rescinded—

4 ‘‘(1) only by the Taxpayer Advocate, the Com5 missioner of Internal Revenue, the Deputy Commis6 sioner of Internal Revenue, or a regional problem

7 resolution officer, and

8 ‘‘(2) only if a written explanation of the reasons

9 for the modification or rescission is provided to the

10 Taxpayer Advocate.’’

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 PART II—MODIFICATIONS TO INSTALLMENT

15 AGREEMENT PROVISIONS

16 SEC. 13306. NOTIFICATION OF REASONS FOR TERMINATION

17 OF INSTALLMENT AGREEMENTS.

18 (a) TERMINATIONS.—Subsection (b) of section 6159

19 (relating to extent to which agreements remain in effect)

20 is amended by adding at the end the following new para21 graph:

22 ‘‘(5) NOTICE REQUIREMENTS.—The Secretary

23 may not take any action under paragraph (2), (3),

24 or (4) unless—
830

•HR 2517 IH

1 ‘‘(A) a notice of such action is provided to

2 the taxpayer not later than the day 30 days be3 fore the date of such action, and

4 ‘‘(B) such notice includes an explanation

5 why the Secretary intends to take such action.

6 The preceding sentence shall not apply in any case

7 in which the Secretary believes that collection of any

8 tax to which an agreement under this section relates

9 is in jeopardy.’’

10 (b) CONFORMING AMENDMENT.—Paragraph (3) of

11 section 6159(b) is amended to read as follows:

12 ‘‘(3) SUBSEQUENT CHANGE IN FINANCIAL CON13 DITIONS.—If the Secretary makes a determination

14 that the financial condition of a taxpayer with whom

15 the Secretary has entered into an agreement under

16 subsection (a) has significantly changed, the Sec17 retary may alter, modify, or terminate such agree18 ment.’’

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

20 this section shall take effect on the date 6 months after

21 the date of the enactment of this Act.

22 SEC. 13307. ADMINISTRATIVE REVIEW OF TERMINATION OF

23 INSTALLMENT AGREEMENT.

24 (a) GENERAL RULE.—Section 6159 (relating to

25 agreements for payment of tax liability in installments)
831

•HR 2517 IH

1 is amended by adding at the end the following new sub2 section:

3 ‘‘(c) ADMINISTRATIVE REVIEW.—The Secretary shall

4 establish procedures for an independent administrative re5 view of terminations of installment agreements under this

6 section for taxpayers who request such a review.’’

7 (b) EFFECTIVE DATE.—The amendment made by

8 subsection (a) shall take effect on January 1, 1996.

9 PART III—ABATEMENT OF INTEREST AND

10 PENALTIES

11 SEC. 13311. EXPANSION OF AUTHORITY TO ABATE INTER12 EST.

13 (a) GENERAL RULE.—Paragraph (1) of section

14 6404(e) (relating to abatement of interest in certain cases)

15 is amended—

16 (1) by inserting ‘‘unreasonable’’ before ‘‘error’’

17 each place it appears in subparagraphs (A) and (B),

18 and

19 (2) by striking ‘‘in performing a ministerial

20 act’’ each place it appears and inserting ‘‘in per21 forming a ministerial or managerial act’’.

22 (b) CLERICAL AMENDMENT.—The subsection head23 ing for subsection (e) of section 6404 is amended—

24 (1) by striking ‘‘ASSESSMENTS’’ and inserting

25 ‘‘ABATEMENT’’, and
832

•HR 2517 IH

1 (2) by inserting ‘‘UNREASONABLE’’ before ‘‘ER2 RORS’’.

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

4 this section shall apply to interest accruing with respect

5 to deficiencies or payments for taxable years beginning

6 after the date of the enactment of this Act.

7 SEC. 13312. REVIEW OF IRS FAILURE TO ABATE INTEREST.

8 (a) IN GENERAL.—Section 6404 is amended by add9 ing at the end the following new subsection:

10 ‘‘(g) REVIEW OF DENIAL OF REQUEST FOR ABATE11 MENT OF INTEREST.—The Tax Court shall have jurisdic12 tion over any action brought by a taxpayer who meets the

13 requirements referred to in section 7430(c)(4)(A)(iii) to

14 determine whether the Secretary’s failure to abate interest

15 under this section was an abuse of discretion if such action

16 is brought within 6 months after the date of the Sec17 retary’s final determination not to abate such interest.’’

18 (b) EFFECTIVE DATE.—The amendment made by

19 this section shall apply to requests for abatement after the

20 date of the enactment of this Act.
833

•HR 2517 IH

1 SEC. 13313. EXTENSION OF INTEREST-FREE PERIOD FOR

2 PAYMENT OF TAX AFTER NOTICE AND DE3 MAND.

4 (a) GENERAL RULE.—Paragraph (3) of section

5 6601(e) (relating to payments made within 10 days after

6 notice and demand) is amended to read as follows:

7 ‘‘(3) PAYMENTS MADE WITHIN SPECIFIED PE8 RIOD AFTER NOTICE AND DEMAND.—If notice and

9 demand is made for payment of any amount and if

10 such amount is paid within 21 calendar days (10

11 business days if the amount for which such notice

12 and demand is made equals or exceeds $100,000)

13 after the date of such notice and demand, interest

14 under this section on the amount so paid shall not

15 be imposed for the period after the date of such no16 tice and demand.’’

17 (b) CONFORMING AMENDMENTS.—

18 (1) Subparagraph (A) of section 6601(e)(2) is

19 amended by striking ‘‘10 days from the date of no20 tice and demand therefor’’ and inserting ‘‘21 cal21 endar days from the date of notice and demand

22 therefor (10 business days if the amount for which

23 such notice and demand is made equals or exceeds

24 $100,000)’’.

25 (2) Paragraph (3) of section 6651(a) is amend26 ed by striking ‘‘10 days of the date of the notice and
834

•HR 2517 IH

1 demand therefor’’ and inserting ‘‘21 calendar days

2 from the date of notice and demand therefor (10

3 business days if the amount for which such notice

4 and demand is made equals or exceeds $100,000)’’.

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

6 this section shall apply in the case of any notice and de7 mand given after June 30, 1996.

8 PART IV—JOINT RETURNS

9 SEC. 13316. STUDIES OF JOINT RETURN-RELATED ISSUES.

10 The Secretary of the Treasury or his delegate and

11 the Comptroller General of the United States shall each

12 conduct separate studies of—

13 (1) the effects of changing the liability for tax

14 on a joint return from being joint and several to

15 being proportionate to the tax attributable to each

16 spouse,

17 (2) the effects of providing that, if a divorce de18 cree allocates liability for tax on a joint return filed

19 before the divorce, the Secretary may collect such li20 ability only in accordance with the decree,

21 (3) whether those provisions of the Internal

22 Revenue Code of 1986 intended to provide relief to

23 innocent spouses provide meaningful relief in all

24 cases where such relief is appropriate, and
835

•HR 2517 IH

1 (4) the effect of providing that community in2 come (as defined in section 66(d) of such Code)

3 which, in accordance with the rules contained in sec4 tion 879(a) of such Code, would be treated as the

5 income of one spouse is exempt from a levy for fail6 ure to pay any tax imposed by subtitle A by the

7 other spouse for a taxable year ending before their

8 marriage.

9 The reports of such studies shall be submitted to the Com10 mittee on Ways and Means of the House of Representa11 tives and the Committee on Finance of the Senate within

12 6 months after the date of the enactment of this Act.

13 SEC. 13317. JOINT RETURN MAY BE MADE AFTER SEPA14 RATE RETURNS WITHOUT FULL PAYMENT OF

15 TAX.

16 (a) GENERAL RULE.—Paragraph (2) of section

17 6013(b) (relating to limitations on filing of joint return

18 after filing separate returns) is amended by striking sub19 paragraph (A) and redesignating the following subpara20 graphs accordingly.

21 (b) EFFECTIVE DATE.—The amendment made by

22 subsection (a) shall apply to taxable years beginning after

23 the date of the enactment of this Act.
836

•HR 2517 IH

1 SEC. 13318. DISCLOSURE OF COLLECTION ACTIVITIES.

2 Subsection (e) of section 6103 (relating to disclosure

3 to persons having material interest) is amended by adding

4 at the end the following new paragraph:

5 ‘‘(8) DISCLOSURE OF COLLECTION ACTIVITIES

6 WITH RESPECT TO JOINT RETURN.—If any defi7 ciency of tax with respect to a joint return is as8 sessed and the individuals filing such return are no

9 longer married or no longer reside in the same

10 household, upon request in writing by either of such

11 individuals, the Secretary shall disclose in writing to

12 the individual making the request whether the Sec13 retary has attempted to collect such deficiency from

14 such other individual, the general nature of such col15 lection activities, and the amount collected.’’

16 PART V—COLLECTION ACTIVITIES

17 SEC. 13321. MODIFICATIONS TO LIEN AND LEVY PROVI18 SIONS.

19 (a) WITHDRAWAL OF CERTAIN NOTICES.—Section

20 6323 (relating to validity and priority against certain per21 sons) is amended by adding at the end the following new

22 subsection:

23 ‘‘(j) WITHDRAWAL OF NOTICE IN CERTAIN CIR24 CUMSTANCES.—

25 ‘‘(1) IN GENERAL.—The Secretary may with26 draw a notice of a lien filed under this section and
837

•HR 2517 IH

1 this chapter shall be applied as if the withdrawn no2 tice had not been filed, if the Secretary determines

3 that—

4 ‘‘(A) the filing of such notice was pre5 mature or otherwise not in accordance with ad6 ministrative procedures of the Secretary,

7 ‘‘(B) the taxpayer has entered into an

8 agreement under section 6159 to satisfy the tax

9 liability for which the lien was imposed by

10 means of installment payments, unless such

11 agreement provides otherwise,

12 ‘‘(C) the withdrawal of such notice will fa13 cilitate the collection of the tax liability, or

14 ‘‘(D) with the consent of the taxpayer or

15 the Taxpayer Advocate, the withdrawal of such

16 notice would be in the best interests of the tax17 payer (as determined by the Taxpayer Advo18 cate) and the United States.

19 Any such withdrawal shall be made by filing notice

20 at the same office as the withdrawn notice. A copy

21 of such notice of withdrawal shall be provided to the

22 taxpayer.

23 ‘‘(2) NOTICE TO CREDIT AGENCIES, ETC.—

24 Upon written request by the taxpayer with respect

25 to whom a notice of a lien was withdrawn under
838

•HR 2517 IH

1 paragraph (1), the Secretary shall promptly make

2 reasonable efforts to notify credit reporting agencies,

3 and any financial institution or creditor whose name

4 and address is specified in such request, of the with5 drawal of such notice. Any such request shall be in

6 such form as the Secretary may prescribe.’’

7 (b) RETURN OF LEVIED PROPERTY IN CERTAIN

8 CASES.—Section 6343 (relating to authority to release

9 levy and return property) is amended by adding at the

10 end the following new subsection:

11 ‘‘(d) RETURN OF PROPERTY IN CERTAIN CASES.—

12 If—

13 ‘‘(1) any property has been levied upon, and

14 ‘‘(2) the Secretary determines that—

15 ‘‘(A) the levy on such property was pre16 mature or otherwise not in accordance with ad17 ministrative procedures of the Secretary,

18 ‘‘(B) the taxpayer has entered into an

19 agreement under section 6159 to satisfy the tax

20 liability for which the levy was imposed by

21 means of installment payments, unless such

22 agreement provides otherwise,

23 ‘‘(C) the return of such property will facili24 tate the collection of the tax liability, or
839

•HR 2517 IH

1 ‘‘(D) with the consent of the taxpayer or

2 the Taxpayer Advocate, the return of such

3 property would be in the best interests of the

4 taxpayer (as determined by the Taxpayer Advo5 cate) and the United States,

6 the provisions of subsection (b) shall apply in the same

7 manner as if such property had been wrongly levied upon,

8 except that no interest shall be allowed under subsection

9 (c).’’

10 (c) MODIFICATIONS IN CERTAIN LEVY EXEMPTION

11 AMOUNTS.—

12 (1) FUEL, ETC.—Paragraph (2) of section

13 6334(a) (relating to fuel, provisions, furniture, and

14 personal effects exempt from levy) is amended—

15 (A) by striking ‘‘If the taxpayer is the

16 head of a family, so’’ and inserting ‘‘So’’,

17 (B) by striking ‘‘his household’’ and insert18 ing ‘‘the taxpayer’s household’’, and

19 (C) by striking ‘‘$1,650 ($1,550 in the

20 case of levies issued during 1989)’’ and insert21 ing ‘‘$2,500’’.

22 (2) INFLATION ADJUSTMENT.—Section 6334

23 (relating to property exempt from levy) is amended

24 by adding at the end the following new subsection:

25 ‘‘(f) INFLATION ADJUSTMENT.—
840

•HR 2517 IH

1 ‘‘(1) IN GENERAL.—In the case of any calendar

2 year beginning after 1996, each dollar amount re3 ferred to in paragraphs (2) and (3) of subsection (a)

4 shall be increased by an amount equal to—

5 ‘‘(A) such dollar amount, multiplied by

6 ‘‘(B) the cost-of-living adjustment deter7 mined under section 1(f)(3) for such calendar

8 year, by substituting ‘calendar year 1995’ for

9 ‘calendar year 1992’ in subparagraph (B)

10 thereof.

11 ‘‘(2) ROUNDING.—If any dollar amount after

12 being increased under paragraph (1) is not a mul13 tiple of $10, such dollar amount shall be rounded to

14 the nearest multiple of $10.’’

15 (3) TECHNICAL AMENDMENT.—Paragraph (3)

16 of section 6334(a) is amended by striking ‘‘($1,050

17 in the case of levies issued during 1989)’’.

18 (d) EFFECTIVE DATES.—

19 (1) IN GENERAL.—Except as provided in para20 graph (2), the amendments made by this section

21 shall take effect on the date of the enactment of this

22 Act.

23 (2) EXEMPT AMOUNTS.—The amendments

24 made by subsection (c) shall take effect with respect

25 to levies issued after December 31, 1995.
841

•HR 2517 IH

1 SEC. 13322. OFFERS-IN-COMPROMISE.

2 (a) REVIEW REQUIREMENTS.—Subsection (b) of sec3 tion 7122 (relating to records) is amended by striking

4 ‘‘$500.’’ and inserting ‘‘$100,000. However, such com5 promise shall be subject to continuing quality review by

6 the Secretary.’’

7 (b) EFFECTIVE DATE.—The amendment made by

8 this section shall take effect on the date of the enactment

9 of this Act.

10 PART VI—INFORMATION RETURNS

11 SEC. 13326. CIVIL DAMAGES FOR FRAUDULENT FILING OF

12 INFORMATION RETURNS.

13 (a) GENERAL RULE.—Subchapter B of chapter 76

14 (relating to proceedings by taxpayers and third parties)

15 is amended by redesignating section 7434 as section 7435

16 and by inserting after section 7433 the following new

17 section:

18 ‘‘SEC. 7434. CIVIL DAMAGES FOR FRAUDULENT FILING OF

19 INFORMATION RETURNS.

20 ‘‘(a) IN GENERAL.—If any person willfully files a

21 fraudulent information return with respect to payments

22 purported to be made to any other person, such other per23 son may bring a civil action for damages against the per24 son so filing such return.

25 ‘‘(b) DAMAGES.—In any action brought under sub26 section (a), upon a finding of liability on the part of the
842

•HR 2517 IH

1 defendant, the defendant shall be liable to the plaintiff in

2 an amount equal to the greater of $5,000 or the sum of—

3 ‘‘(1) any actual damages sustained by the plain4 tiff as a proximate result of the filing of the fraudu5 lent information return (including any costs attrib6 utable to resolving deficiencies asserted as a result

7 of such filing),

8 ‘‘(2) the costs of the action, and

9 ‘‘(3) in the court’s discretion, reasonable attor10 neys fees.

11 ‘‘(c) PERIOD FOR BRINGING ACTION.—Notwith12 standing any other provision of law, an action to enforce

13 the liability created under this section may be brought

14 without regard to the amount in controversy and may be

15 brought only within the later of—

16 ‘‘(1) 6 years after the date of the filing of the

17 fraudulent information return, or

18 ‘‘(2) 1 year after the date such fraudulent in19 formation return would have been discovered by ex20 ercise of reasonable care.

21 ‘‘(d) COPY OF COMPLAINT FILED WITH IRS.—Any

22 person bringing an action under subsection (a) shall pro23 vide a copy of the complaint to the Internal Revenue Serv24 ice upon the filing of such complaint with the court.
843

•HR 2517 IH

1 ‘‘(e) FINDING OF COURT TO INCLUDE CORRECT

2 AMOUNT OF PAYMENT.—The decision of the court award3 ing damages in an action brought under subsection (a)

4 shall include a finding of the correct amount which should

5 have been reported in the information return.

6 ‘‘(f) INFORMATION RETURN.—For purposes of this

7 section, the term ‘information return’ means any state8 ment described in section 6724(d)(1)(A).’’

9 (b) CLERICAL AMENDMENT.—The table of sections

10 for subchapter B of chapter 76 is amended by striking

11 the item relating to section 7434 and inserting the

12 following:

‘‘Sec. 7434. Civil damages for fraudulent filing of information returns.

‘‘Sec. 7435. Cross references.’’

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

14 this section shall apply to fraudulent information returns

15 filed after the date of the enactment of this Act.

16 SEC. 13327. REQUIREMENT TO CONDUCT REASONABLE IN17 VESTIGATIONS OF INFORMATION RETURNS.

18 (a) GENERAL RULE.—Section 6201 (relating to as19 sessment authority) is amended by redesignating sub20 section (d) as subsection (e) and by inserting after sub21 section (c) the following new subsection:

22 ‘‘(d) REQUIRED REASONABLE VERIFICATION OF IN23 FORMATION RETURNS.—In any court proceeding, if a tax24 payer asserts a reasonable dispute with respect to any
844

•HR 2517 IH

1 item of income reported on an information return filed

2 with the Secretary under subpart B or C of part III of

3 subchapter A of chapter 61 by a third party and the tax4 payer has fully cooperated with the Secretary (including

5 providing, within a reasonable period of time, access to

6 and inspection of all witnesses, information, and docu7 ments within the control of the taxpayer as reasonably re8 quested by the Secretary), the Secretary shall have the

9 burden of producing reasonable and probative information

10 concerning such deficiency in addition to such information

11 return.’’

12 (b) EFFECTIVE DATE.—The amendment made by

13 subsection (a) shall take effect on the date of the enact14 ment of this Act.

15 PART VII—AWARDING OF COSTS AND CERTAIN

16 FEES

17 SEC. 13331. UNITED STATES MUST ESTABLISH THAT ITS PO18 SITION IN PROCEEDING WAS SUBSTANTIALLY

19 JUSTIFIED.

20 (a) GENERAL RULE.—Subparagraph (A) of section

21 7430(c)(4) (defining prevailing party) is amended by

22 striking clause (i) and by redesignating clauses (ii) and

23 (iii) as clauses (i) and (ii), respectively.

24 (b) BURDEN OF PROOF ON UNITED STATES.—Para25 graph (4) of section 7430(c) is amended by redesignating
845

•HR 2517 IH

1 subparagraph (B) as subparagraph (C) and by inserting

2 after subparagraph (A) the following new subparagraph:

3 ‘‘(B) EXCEPTION IF UNITED STATES ES4 TABLISHES THAT ITS POSITION WAS SUBSTAN5 TIALLY JUSTIFIED.—

6 ‘‘(i) GENERAL RULE.—A party shall

7 not be treated as the prevailing party in a

8 proceeding to which subsection (a) applies

9 if the United States establishes that the

10 position of the United States in the pro11 ceeding was substantially justified.

12 ‘‘(ii) PRESUMPTION OF NO JUSTIFICA13 TION IF INTERNAL REVENUE SERVICE

14 DIDN’T FOLLOW CERTAIN PUBLISHED

15 GUIDANCE.—For purposes of clause (i),

16 the position of the United States shall be

17 presumed not to be substantially justified

18 if the Internal Revenue Service did not fol19 low its applicable published guidance in the

20 administrative proceeding. Such presump21 tion may be rebutted.

22 ‘‘(iii) APPLICABLE PUBLISHED GUID23 ANCE.—For purposes of clause (ii), the

24 term ‘applicable published guidance’

25 means—
846

•HR 2517 IH

1 ‘‘(I) regulations, revenue rulings,

2 revenue procedures, information re3 leases, notices, and announcements,

4 and

5 ‘‘(II) any of the following which

6 are issued to the taxpayer: private let7 ter rulings, technical advice memo8 randa, and determination letters.’’

9 (c) CONFORMING AMENDMENTS.—

10 (1) Subparagraph (B) of section 7430(c)(2) is

11 amended by striking ‘‘paragraph (4)(B)’’ and insert12 ing ‘‘paragraph (4)(C)’’.

13 (2) Subparagraph (C) of section 7430(c)(4), as

14 redesignated by subsection (b), is amended by strik15 ing ‘‘subparagraph (A)’’ and inserting ‘‘this para16 graph’’.

17 (3) Sections 6404(g) and 6656(c)(1), as amend18 ed by this title, are each amended by striking ‘‘sec19 tion 7430(c)(4)(A)(iii)’’ and inserting ‘‘section

20 7430(c)(4)(A)(ii)’’.

21 SEC. 13332. INCREASED LIMIT ON ATTORNEY FEES.

22 Paragraph (1) of section 7430(c) (defining reason23 able litigation costs) is amended—

24 (1) by striking ‘‘$75’’ in clause (iii) of subpara25 graph (B) and inserting ‘‘$110’’,
847

•HR 2517 IH

1 (2) by striking ‘‘an increase in the cost of living

2 or’’ in clause (iii) of subparagraph (B), and

3 (3) by adding after clause (iii) the following:

4 ‘‘In the case of any calendar year beginning after

5 1996, the dollar amount referred to in clause (iii)

6 shall be increased by an amount equal to such dollar

7 amount multiplied by the cost-of-living adjustment

8 determined under section 1(f)(3) for such calendar

9 year, by substituting ‘calendar year 1995’ for ‘cal10 endar year 1992’ in subparagraph (B) thereof. If

11 any dollar amount after being increased under the

12 preceding sentence is not a multiple of $10, such

13 dollar amount shall be rounded to the nearest mul14 tiple of $10.’’

15 SEC. 13333. FAILURE TO AGREE TO EXTENSION NOT TAKEN

16 INTO ACCOUNT.

17 Paragraph (1) of section 7430(b) (relating to require18 ment that administrative remedies be exhausted) is

19 amended by adding at the end the following new sentence:

20 ‘‘Any failure to agree to an extension of the time for the

21 assessment of any tax shall not be taken into account for

22 purposes of determining whether the prevailing party

23 meets the requirements of the preceding sentence.’’
848

•HR 2517 IH

1 SEC. 13334. AWARD OF LITIGATION COSTS PERMITTED IN

2 DECLARATORY JUDGMENT PROCEEDINGS.

3 Subsection (b) of section 7430 is amended by striking

4 paragraph (3) and by redesignating paragraph (4) as

5 paragraph (3).

6 SEC. 13335. EFFECTIVE DATE.

7 The amendments made by this part shall apply in the

8 case of proceedings commenced after the date of the enact9 ment of this Act.

10 PART VIII—MODIFICATION TO RECOVERY OF

11 CIVIL DAMAGES FOR UNAUTHORIZED COL12 LECTION ACTIONS

13 SEC. 13336. INCREASE IN LIMIT ON RECOVERY OF CIVIL

14 DAMAGES FOR UNAUTHORIZED COLLECTION

15 ACTIONS.

16 (a) GENERAL RULE.—Subsection (b) of section 7433

17 (relating to damages) is amended by striking ‘‘$100,000’’

18 and inserting ‘‘$1,000,000’’.

19 (b) EFFECTIVE DATE.—The amendment made by

20 subsection (a) shall apply to actions by officers or employ21 ees of the Internal Revenue Service after the date of the

22 enactment of this Act.
849

•HR 2517 IH

1 SEC. 13337. COURT DISCRETION TO REDUCE AWARD FOR

2 LITIGATION COSTS FOR FAILURE TO EX3 HAUST ADMINISTRATIVE REMEDIES.

4 (a) GENERAL RULE.—Paragraph (1) of section

5 7433(d) (relating to civil damages for certain unauthor6 ized collection actions) is amended to read as follows:

7 ‘‘(1) AWARD FOR DAMAGES MAY BE REDUCED

8 IF ADMINISTRATIVE REMEDIES NOT EXHAUSTED.—

9 The amount of damages awarded under subsection

10 (b) may be reduced if the court determines that the

11 plaintiff has not exhausted the administrative rem12 edies available to such plaintiff within the Internal

13 Revenue Service.’’

14 (b) EFFECTIVE DATE.—The amendment made by

15 this section shall apply in the case of proceedings com16 menced after the date of the enactment of this Act.

17 PART IX—MODIFICATIONS TO PENALTY FOR

18 FAILURE TO COLLECT AND PAY OVER TAX

19 SEC. 13341. PRELIMINARY NOTICE REQUIREMENT.

20 (a) IN GENERAL.—Section 6672 (relating to failure

21 to collect and pay over tax, or attempt to evade or defeat

22 tax) is amended by redesignating subsection (b) as sub23 section (c) and by inserting after subsection (a) the follow24 ing new subsection:

25 ‘‘(b) PRELIMINARY NOTICE REQUIREMENT.—
850

•HR 2517 IH

1 ‘‘(1) IN GENERAL.—No penalty shall be im2 posed under subsection (a) unless the Secretary noti3 fies the taxpayer in writing by mail to an address as

4 determined under section 6212(b) that the taxpayer

5 shall be subject to an assessment of such penalty.

6 ‘‘(2) TIMING OF NOTICE.—The mailing of the

7 notice described in paragraph (1) shall precede any

8 notice and demand of any penalty under subsection

9 (a) by at least 60 days.

10 ‘‘(3) STATUTE OF LIMITATIONS.—If a notice

11 described in paragraph (1) with respect to any pen12 alty is mailed before the expiration of the period

13 provided by section 6501 for the assessment of such

14 penalty (determined without regard to this para15 graph), the period provided by such section for the

16 assessment of such penalty shall not expire before

17 the later of—

18 ‘‘(A) the date 90 days after the date on

19 which such notice was mailed, or

20 ‘‘(B) if there is a timely protest of the pro21 posed assessment, the date 30 days after the

22 Secretary makes a final administrative deter23 mination with respect to such protest.
851

•HR 2517 IH

1 ‘‘(4) EXCEPTION FOR JEOPARDY.—This sub2 section shall not apply if the Secretary finds that the

3 collection of the penalty is in jeopardy.’’

4 (b) EFFECTIVE DATE.—The amendment made by

5 subsection (a) shall apply to proposed assessments made

6 after June 30, 1996.

7 SEC. 13342. DISCLOSURE OF CERTAIN INFORMATION

8 WHERE MORE THAN 1 PERSON LIABLE FOR

9 PENALTY FOR FAILURE TO COLLECT AND

10 PAY OVER TAX.

11 (a) IN GENERAL.—Subsection (e) of section 6103

12 (relating to disclosure to persons having material interest),

13 as amended by section 13318, is amended by adding at

14 the end the following new paragraph:

15 ‘‘(9) DISCLOSURE OF CERTAIN INFORMATION

16 WHERE MORE THAN 1 PERSON SUBJECT TO PEN17 ALTY UNDER SECTION 6672.—If the Secretary deter18 mines that a person is liable for a penalty under sec19 tion 6672(a) with respect to any failure, upon re20 quest in writing of such person, the Secretary shall

21 disclose in writing to such person—

22 ‘‘(A) the name of any other person whom

23 the Secretary has determined to be liable for

24 such penalty with respect to such failure, and
852

•HR 2517 IH

1 ‘‘(B) whether the Secretary has attempted

2 to collect such penalty from such other person,

3 the general nature of such collection activities,

4 and the amount collected.’’

5 (b) EFFECTIVE DATE.—The amendment made by

6 subsection (a) shall take effect on the date of the enact7 ment of this Act.

8 SEC. 13343. RIGHT OF CONTRIBUTION WHERE MORE THAN

9 1 PERSON LIABLE FOR PENALTY FOR FAIL10 URE TO COLLECT AND PAY OVER TAX.

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 adding at the end the following new

14 subsection:

15 ‘‘(d) RIGHT OF CONTRIBUTION WHERE MORE THAN

16 1 PERSON LIABLE FOR PENALTY.—If more than 1 person

17 is liable for the penalty under subsection (a) with respect

18 to any tax, each person who paid such penalty shall be

19 entitled to recover from other persons who are liable for

20 such penalty an amount equal to the excess of the amount

21 paid by such person over such person’s proportionate

22 share of the penalty. Any claim for such a recovery may

23 be made only in a proceeding which is separate from, and

24 is not joined with—
853

•HR 2517 IH

1 ‘‘(1) an action for collection of such penalty

2 brought by the United States, or

3 ‘‘(2) a proceeding in which the United States

4 files a counterclaim or third-party complaint for the

5 collection of such penalty.’’

6 (b) EFFECTIVE DATE.—The amendment made by

7 subsection (a) shall apply to penalties assessed after the

8 date of the enactment of this Act.

9 SEC. 13344. VOLUNTEER BOARD MEMBERS OF TAX-EXEMPT

10 ORGANIZATIONS EXEMPT FROM PENALTY

11 FOR FAILURE TO COLLECT AND PAY OVER

12 TAX.

13 (a) IN GENERAL.—Section 6672 is amended by add14 ing at the end the following new subsection:

15 ‘‘(e) EXCEPTION FOR VOLUNTARY BOARD MEMBERS

16 OF TAX-EXEMPT ORGANIZATIONS.—No penalty shall be

17 imposed by subsection (a) on any unpaid, volunteer mem18 ber of any board of trustees or directors of an organization

19 exempt from tax under subtitle A if such member—

20 ‘‘(1) is solely serving in an honorary capacity,

21 ‘‘(2) does not participate in the day-to-day or

22 financial operations of the organization, and

23 ‘‘(3) does not have actual knowledge of the fail24 ure on which such penalty is imposed.
854

•HR 2517 IH

1 The preceding sentence shall not apply if it results in no

2 person being liable for the penalty imposed by subsection

3 (a).’’

4 (b) PUBLIC INFORMATION REQUIREMENTS.—

5 (1) IN GENERAL.—The Secretary of the Treas6 ury or the Secretary’s delegate (hereafter in this

7 subsection referred to as the ‘‘Secretary’’) shall take

8 such actions as may be appropriate to ensure that

9 employees are aware of their responsibilities under

10 the Federal tax depository system, the circumstances

11 under which employees may be liable for the penalty

12 imposed by section 6672 of the Internal Revenue

13 Code of 1986, and the responsibility to promptly re14 port to the Internal Revenue Service any failure re15 ferred to in subsection (a) of such section 6672.

16 Such actions shall include—

17 (A) printing of a warning on deposit cou18 pon booklets and the appropriate tax returns

19 that certain employees may be liable for the

20 penalty imposed by such section 6672, and

21 (B) the development of a special informa22 tion packet.

23 (2) DEVELOPMENT OF EXPLANATORY MATE24 RIALS.—The Secretary shall develop materials ex25 plaining the circumstances under which board mem-
855

•HR 2517 IH

1 bers of tax-exempt organizations (including vol2 untary and honorary members) may be subject to

3 penalty under section 6672 of such Code. Such ma4 terials shall be made available to tax-exempt organi5 zations.

6 (3) IRS INSTRUCTIONS.—The Secretary shall

7 clarify the instructions to Internal Revenue Service

8 employees on the application of the penalty under

9 section 6672 of such Code with regard to voluntary

10 members of boards of trustees or directors of tax11 exempt organizations.

12 PART X—MODIFICATIONS OF RULES RELATING

13 TO SUMMONSES

14 SEC. 13346. ENROLLED AGENTS INCLUDED AS THIRD15 PARTY RECORDKEEPERS.

16 (a) IN GENERAL.—Paragraph (3) of section 7609(a)

17 (relating to third-party recordkeeper defined) is amended

18 by striking ‘‘and’’ at the end of subparagraph (G), by

19 striking the period at the end of subparagraph (H) and

20 inserting ‘‘; and’’, and by adding at the end the following

21 the subparagraph:

22 ‘‘(I) any enrolled agent.’’

23 (b) EFFECTIVE DATE.—The amendment made by

24 subsection (a) shall apply to summonses issued after the

25 date of the enactment of this Act.
856

•HR 2517 IH

1 SEC. 13347. SAFEGUARDS RELATING TO DESIGNATED SUM2 MONSES.

3 (a) STANDARD OF REVIEW.—Subparagraph (A) of

4 section 6503(j)(2) (defining designated summons) is

5 amended by redesignating clauses (i) and (ii) as clauses

6 (ii) and (iii), respectively, and by inserting before clause

7 (ii) (as so redesignated) the following new clause:

8 ‘‘(i) the issuance of such summons is

9 preceded by a review of such issuance by

10 the regional counsel of the Office of Chief

11 Counsel for the region in which the exam12 ination of the corporation is being con13 ducted,’’.

14 (b) LIMITATION ON PERSONS TO WHOM DES15 IGNATED SUMMONS MAY BE ISSUED.—Paragraph (1) of

16 section 6503(j) is amended by striking ‘‘with respect to

17 any return of tax by a corporation’’ and inserting ‘‘to a

18 corporation (or to any other person to whom the corpora19 tion has transferred records) with respect to any return

20 of tax by such corporation for a taxable year (or other

21 period) for which such corporation is being examined

22 under the coordinated examination program (or any suc23 cessor program) of the Internal Revenue Service’’.

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

25 this section shall apply to summonses issued after the date

26 of the enactment of this Act.
857

•HR 2517 IH

1 SEC. 13348. ANNUAL REPORT TO CONGRESS CONCERNING

2 DESIGNATED SUMMONSES.

3 Not later than December 31 of each calendar year

4 after 1995, the Secretary of the Treasury or his delegate

5 shall report to the Committee on Ways and Means of the

6 House of Representatives and the Committee on Finance

7 of the Senate on the number of designated summonses (as

8 defined in section 6503(j) of the Internal Revenue Code

9 of 1986) which were issued during the preceding 12

10 months.

11 PART XI—RELIEF FROM RETROACTIVE APPLICA12 TION OF TREASURY DEPARTMENT REGULA13 TIONS

14 SEC. 13351. RELIEF FROM RETROACTIVE APPLICATION OF

15 TREASURY DEPARTMENT REGULATIONS.

16 (a) IN GENERAL.—Subsection (b) of section 7805

17 (relating to rules and regulations) is amended to read as

18 follows:

19 ‘‘(b) RETROACTIVITY OF REGULATIONS.—

20 ‘‘(1) IN GENERAL.—Except as otherwise pro21 vided in this subsection, no temporary, proposed, or

22 final regulation relating to the internal revenue laws

23 shall apply to any taxable period ending before the

24 earliest of the following dates:

25 ‘‘(A) The date on which such regulation is

26 filed with the Federal Register.
858

•HR 2517 IH

1 ‘‘(B) In the case of any final regulation,

2 the date on which any proposed or temporary

3 regulation to which such final regulation relates

4 was filed with the Federal Register.

5 ‘‘(C) The date on which any notice sub6 stantially describing the expected contents of

7 any temporary, proposed, or final regulation is

8 issued to the public.

9 ‘‘(2) EXCEPTION FOR PROMPTLY ISSUED REGU10 LATIONS.—Paragraph (1) shall not apply to regula11 tions filed or issued within 12 months of the date of

12 the enactment of the statutory provision to which

13 the regulation relates.

14 ‘‘(3) PREVENTION OF ABUSE.—The Secretary

15 may provide that any regulation may take effect or

16 apply retroactively to prevent abuse.

17 ‘‘(4) CORRECTION OF PROCEDURAL DE18 FECTS.—The Secretary may provide that any regu19 lation may apply retroactively to correct a proce20 dural defect in the issuance of any prior regulation.

21 ‘‘(5) INTERNAL REGULATIONS.—The limitation

22 of paragraph (1) shall not apply to any regulation

23 relating to internal Treasury Department policies,

24 practices, or procedures.
859

•HR 2517 IH

1 ‘‘(6) CONGRESSIONAL AUTHORIZATION.—The

2 limitation of paragraph (1) may be superseded by a

3 legislative grant from Congress authorizing the Sec4 retary to prescribe the effective date with respect to

5 any regulation.

6 ‘‘(7) ELECTION TO APPLY RETROACTIVELY.—

7 Paragraph (1) shall not apply to any regulation

8 which the taxpayer elects to apply before the dates

9 specified in paragraph (1) but only if such election

10 applies to all regulations which were issued with

11 such regulation under the statutory provision to

12 which such regulation relates.

13 ‘‘(8) APPLICATION TO RULINGS.—The Sec14 retary may prescribe the extent, if any, to which any

15 ruling (including any judicial decision or any admin16 istrative determination other than by regulation) re17 lating to the internal revenue laws shall be applied

18 without retroactive effect.’’

19 (b) EFFECTIVE DATE.—The amendment made by

20 subsection (a) shall apply with respect to regulations

21 which relate to statutory provisions enacted on or after

22 the date of the enactment of this Act.
860

•HR 2517 IH

1 PART XII—MISCELLANEOUS PROVISIONS

2 SEC. 13356. REPORT ON PILOT PROGRAM FOR APPEAL OF

3 ENFORCEMENT ACTIONS.

4 Not later than March 1, 1996, the Secretary of the

5 Treasury or his delegate shall submit to the Committee

6 on Ways and Means of the House of Representatives and

7 the Committee on Finance of the Senate a report on the

8 pilot program for appeals of enforcement actions (includ9 ing lien, levy, and seizure actions) to the Appeals Division

10 of the Internal Revenue Service, together with such rec11 ommendations as he may deem advisable.

12 SEC. 13357. PHONE NUMBER OF PERSON PROVIDING PAYEE

13 STATEMENTS REQUIRED TO BE SHOWN ON

14 SUCH STATEMENT.

15 (a) GENERAL RULE.—The following provisions are

16 each amended by striking ‘‘name and address’’ and insert17 ing ‘‘name, address, and phone number of the information

18 contact’’:

19 (1) Section 6041(d)(1).

20 (2) Section 6041A(e)(1).

21 (3) Section 6042(c)(1).

22 (4) Section 6044(e)(1).

23 (5) Section 6045(b)(1).

24 (6) Section 6049(c)(1)(A).

25 (7) Section 6050B(b)(1).

26 (8) Section 6050H(d)(1).
861

•HR 2517 IH

1 (9) Section 6050I(e)(1).

2 (10) Section 6050J(e).

3 (11) Section 6050K(b)(1).

4 (12) Section 6050N(b)(1).

5 (b) EFFECTIVE DATE.—The amendments made by

6 subsection (a) shall apply to statements required to be fur7 nished after December 31, 1996 (determined without

8 regard to any extension).

9 SEC. 13358. REQUIRED NOTICE OF CERTAIN PAYMENTS.

10 If any payment is received by the Secretary of the

11 Treasury or his delegate from any taxpayer and the Sec12 retary cannot associate such payment with such taxpayer,

13 the Secretary shall make reasonable efforts to notify the

14 taxpayer of such inability within 60 days after the re15 ceipt of such payment.

16 SEC. 13359. UNAUTHORIZED ENTICEMENT OF INFORMA17 TION DISCLOSURE.

18 (a) IN GENERAL.—Subchapter B of chapter 76 (re19 lating to proceedings by taxpayers and third parties), as

20 amended by section 13316(a), is amended by redesignat21 ing section 7435 as section 7436 and by inserting after

22 section 7434 the following new section:
862

•HR 2517 IH

1 ‘‘SEC. 7435. CIVIL DAMAGES FOR UNAUTHORIZED ENTICE2 MENT OF INFORMATION DISCLOSURE.

3 ‘‘(a) IN GENERAL.—If any officer or employee of the

4 United States intentionally compromises the determina5 tion or collection of any tax due from an attorney, certified

6 public accountant, or enrolled agent representing a tax7 payer in exchange for information conveyed by the tax8 payer to the attorney, certified public accountant, or en9 rolled agent for purposes of obtaining advice concerning

10 the taxpayer’s tax liability, such taxpayer may bring a civil

11 action for damages against the United States in a district

12 court of the United States. Such civil action shall be the

13 exclusive remedy for recovering damages resulting from

14 such actions.

15 ‘‘(b) DAMAGES.—In any action brought under sub16 section (a), upon a finding of liability on the part of the

17 defendant, the defendant shall be liable to the plaintiff in

18 an amount equal to the lesser of $500,000 or the sum

19 of—

20 ‘‘(1) actual, direct economic damages sustained

21 by the plaintiff as a proximate result of the informa22 tion disclosure, and

23 ‘‘(2) the costs of the action.

24 Damages shall not include the taxpayer’s liability for any

25 civil or criminal penalties, or other losses attributable to

26 incarceration or the imposition of other criminal sanctions.
863

•HR 2517 IH

1 ‘‘(c) PAYMENT AUTHORITY.—Claims pursuant to

2 this section shall be payable out of funds appropriated

3 under section 1304 of title 31, United States Code.

4 ‘‘(d) PERIOD FOR BRINGING ACTION.—Notwith5 standing any other provision of law, an action to enforce

6 liability created under this section may be brought without

7 regard to the amount in controversy and may be brought

8 only within 2 years after the date the actions creating such

9 liability would have been discovered by exercise of reason10 able care.

11 ‘‘(e) MANDATORY STAY.—Upon a certification by the

12 Commissioner or the Commissioner’s delegate that there

13 is an ongoing investigation or prosecution of the taxpayer,

14 the district court before which an action under this section

15 is pending, shall stay all proceedings with respect to such

16 action pending the conclusion of the investigation or

17 prosecution.

18 ‘‘(f) CRIME-FRAUD EXCEPTION.—Subsection (a)

19 shall not apply to information conveyed to an attorney,

20 certified public accountant, or enrolled agent for the pur21 pose of perpetrating a fraud or crime.’’

22 (b) CLERICAL AMENDMENT.—The table of sections

23 for subchapter B of chapter 76, as amended by section

24 13316(b), is amended by striking the item relating to sec-
864

•HR 2517 IH

1 tion 7435 and by adding at the end the following new

2 items:

‘‘Sec. 7435. Civil damages for unauthorized enticement of information disclosure.

‘‘Sec. 7436. Cross references.’’

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

4 this section shall apply to actions after the date of the

5 enactment of this Act.

6 SEC. 13360. ANNUAL REMINDERS TO TAXPAYERS WITH OUT7 STANDING DELINQUENT ACCOUNTS.

8 (a) IN GENERAL.—Chapter 77 (relating to mis9 cellaneous provisions) is amended by adding at the end

10 the following new section:

11 ‘‘SEC. 7524. ANNUAL NOTICE OF TAX DELINQUENCY.

12 ‘‘Not less often than annually, the Secretary shall

13 send a written notice to each taxpayer who has a tax delin14 quent account of the amount of the tax delinquency as

15 of the date of the notice.’’

16 (b) CLERICAL AMENDMENT.—The table of sections

17 for chapter 77 is amended by adding at the end the follow18 ing new item:

‘‘Sec. 7524. Annual notice of tax delinquency.’’

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

20 this section shall apply to calendar years after 1995.
865

•HR 2517 IH

1 SEC. 13361. 5-YEAR EXTENSION OF AUTHORITY FOR UNDER2 COVER OPERATIONS.

3 (a) IN GENERAL.—Paragraph (3) of section 7601(c)

4 of the Anti-Drug Abuse Act of 1988 is amended by strik5 ing all that follows ‘‘this Act’’ and inserting a period.

6 (b) RESTORATION OF AUTHORITY FOR 5 YEARS.—

7 Subsection (c) of section 7608 is amended by adding at

8 the end the following new paragraph:

9 ‘‘(6) APPLICATION OF SECTION.—The provi10 sions of this subsection—

11 ‘‘(A) shall apply after November 17, 1988,

12 and before January 1, 1990, and

13 ‘‘(B) shall apply after the date of the en14 actment of this paragraph and before January

15 1, 2001.

16 All amounts expended pursuant to this subsection

17 during the period described in subparagraph (B)

18 shall be recovered to the extent possible, and depos19 ited in the Treasury of the United States as mis20 cellaneous receipts, before January 1, 2001.’’

21 (c) ENHANCED OVERSIGHT.—

22 (1) ADDITIONAL INFORMATION REQUIRED IN

23 REPORTS TO CONGRESS.—Subparagraph (B) of sec24 tion 7608(c)(4) is amended—

25 (A) by striking ‘‘preceding the period’’ in

26 clause (ii),
866

•HR 2517 IH

1 (B) by striking ‘‘and’’ at the end of clause

2 (ii), and

3 (C) by striking clause (iii) and inserting

4 the following:

5 ‘‘(iii) the number, by programs, of un6 dercover investigative operations closed in

7 the 1-year period for which such report is

8 submitted, and

9 ‘‘(iv) the following information with

10 respect to each undercover investigative op11 eration pending as of the end of the 1-year

12 period for which such report is submitted

13 or closed during such 1-year period—

14 ‘‘(I) the date the operation began

15 and the date of the certification re16 ferred to in the last sentence of para17 graph (1),

18 ‘‘(II) the total expenditures

19 under the operation and the amount

20 and use of the proceeds from the op21 eration,

22 ‘‘(III) a detailed description of

23 the operation including the potential

24 violation being investigated and
867

•HR 2517 IH

1 whether the operation is being con2 ducted under grand jury auspices, and

3 ‘‘(IV) the results of the operation

4 including the results of criminal pro5 ceedings.’’

6 (2) AUDITS REQUIRED WITHOUT REGARD TO

7 AMOUNTS INVOLVED.—Subparagraph (C) of section

8 7608(c)(5) is amended to read as follows:

9 ‘‘(C) UNDERCOVER INVESTIGATIVE OPER10 ATION.—The term ‘undercover investigative op11 eration’ means any undercover investigative op12 eration of the Service; except that, for purposes

13 of subparagraphs (A) and (C) of paragraph (4),

14 such term only includes an operation which is

15 exempt from section 3302 or 9102 of title 31,

16 United States Code.’’

17 (3) EFFECTIVE DATE.—The amendments made

18 by this subsection shall take effect on the date of the

19 enactment of this Act.

20 SEC. 13362. DISCLOSURE OF FORM 8300 INFORMATION ON

21 CASH TRANSACTIONS.

22 (a) IN GENERAL.—Subsection (l) of section 6103 (re23 lating to disclosure of returns and return information for

24 purposes other than tax administration) is amended by

25 adding at the end the following new paragraph:
868

•HR 2517 IH

1 ‘‘(15) DISCLOSURE OF RETURNS FILED UNDER

2 SECTION 6050I.—The Secretary may, upon written

3 request, disclose to officers and employees of—

4 ‘‘(A) any Federal agency,

5 ‘‘(B) any agency of a State or local govern6 ment, or

7 ‘‘(C) any agency of the government of a

8 foreign country,

9 information contained on returns filed under section

10 6050I. Any such disclosure shall be made on the

11 same basis, and subject to the same conditions, as

12 apply to disclosures of information on reports filed

13 under section 5313 of title 31, United States Code;

14 except that no disclosure under this paragraph shall

15 be made for purposes of the administration of any

16 tax law.’’

17 (b) CONFORMING AMENDMENTS.—

18 (1) Subsection (i) of section 6103 is amended

19 by striking paragraph (8).

20 (2) Subparagraph (A) of section 6103(p)(3) is

21 amended—

22 (A) by striking ‘‘(7)(A)(ii), or (8)’’ and in23 serting ‘‘or (7)(A)(ii)’’, and

24 (B) by striking ‘‘or (14)’’ and inserting

25 ‘‘(14), or (15)’’.
869

•HR 2517 IH

1 (3) The material preceding subparagraph (A) of

2 section 6103(p)(4) is amended—

3 (A) by striking ‘‘(5), or (8)’’ and inserting

4 ‘‘or (5)’’,

5 (B) by striking ‘‘(i)(3)(B)(i), or (8)’’ and

6 inserting ‘‘(i)(3)(B)(i),’’, and

7 (C) by striking ‘‘or (12)’’ and inserting

8 ‘‘(12), or (15)’’.

9 (4) Clause (ii) of section 6103(p)(4)(F) is

10 amended—

11 (A) by striking ‘‘(5), or (8)’’ and inserting

12 ‘‘or (5)’’, and

13 (B) by striking ‘‘or (14)’’ and inserting

14 ‘‘(14), or (15)’’.

15 (5) Paragraph (2) of section 7213(a) is amend16 ed by striking ‘‘or (12)’’ and inserting ‘‘(12), or

17 (15)’’.

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. 13363. DISCLOSURE OF RETURNS AND RETURN INFOR22 MATION TO DESIGNEE OF TAXPAYER.

23 Subsection (c) of section 6103 (relating to disclosure

24 of returns and return information to designee of taxpayer)

25 is amended by striking ‘‘written request for or consent to
870

•HR 2517 IH

1 such disclosure’’ and inserting ‘‘request for or consent to

2 such disclosure’’.

3 SEC. 13364. STUDY OF NETTING OF INTEREST ON OVERPAY4 MENTS AND LIABILITIES.

5 (a) IN GENERAL.—The Secretary of the Treasury or

6 his delegate shall—

7 (1) conduct a study of the manner in which the

8 Internal Revenue Service has implemented the net9 ting of interest on overpayments and underpayments

10 and of the policy and administrative implications of

11 global netting, and

12 (2) before submitting the report of such study,

13 hold a public hearing to receive comments on the

14 matters included in such study.

15 (b) REPORT.—The report of such study shall be sub16 mitted not later than 6 months after the date of the enact17 ment of this Act to the Committee on Ways and Means

18 of the House of Representatives and the Committee on

19 Finance of the Senate.

20 SEC. 13365. CREDIT FOR EXPENSES OF CERTAIN TCMP AU21 DITS.

22 (a) IN GENERAL.—Subchapter B of chapter 65 is

23 amended by adding at the end the following new section:
871

•HR 2517 IH

1 ‘‘SEC. 6428. CREDIT FOR EXPENSES OF 1994 TCMP AUDITS.

2 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in3 dividual, there shall be allowed as a credit against the tax

4 imposed by subtitle A an amount equal to the qualified

5 TCMP expenses paid or incurred by the taxpayer during

6 the taxable year.

7 ‘‘(b) LIMITATION.—The amount of the credit allowed

8 by subsection (a) shall not exceed $3,000 with respect to

9 an audit.

10 ‘‘(c) QUALIFIED TCMP EXPENSES.—For purposes

11 of this section, the term ‘qualified TCMP expenses’ means

12 amounts which would (but for subsection (d)) be allowed

13 as a deduction under section 162 or 212(3) in connection

14 with an audit under the Taxpayer Compliance Measure15 ment Program of the taxpayer’s return of tax imposed by

16 chapter 1 for any taxable year beginning during 1994.

17 Such term shall not include any expense in connection

18 with an audit of an estate, trust, partnership, or S cor19 poration.

20 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction

21 shall be allowed under chapter 1 for any amount for which

22 a credit is allowed under this section.

23 ‘‘(e) CREDIT TREATED AS SUBPART C CREDIT.—For

24 purposes of this title, the credit allowed under subsection

25 (a) shall be treated as a credit allowed under subpart C

26 of part IV of subchapter A of chapter 1.’’
872

•HR 2517 IH

1 (b) TECHNICAL AMENDMENTS.—

2 (1) Paragraph (2) of section 1324(b) of title

3 31, United States Code, is amended by inserting be4 fore the period ‘‘, or from section 6428 of such

5 Code’’.

6 (2) The table of sections for such subchapter B

7 is amended by adding at the end the following new

8 item:

‘‘Sec. 6428. Credit for expenses of 1994 TCMP audits.’’

9 (d) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to amounts paid or incurred after

11 December 31, 1994, in taxable years ending after such

12 date.

13 SEC. 13366. EXPENSES OF DETECTION OF UNDERPAYMENTS

14 AND FRAUD, ETC.

15 (a) IN GENERAL.—Section 7623 (relating to ex16 penses of deduction and punishment of frauds) is amended

17 to read as follows:

18 ‘‘SEC. 7623. EXPENSES OF DETECTION OF UNDERPAYMENTS

19 AND FRAUD, ETC.

20 ‘‘The Secretary, under regulations prescribed by the

21 Secretary, is authorized to pay such sums as he deem nec22 essary for—

23 ‘‘(1) detecting underpayments of tax, and
873

•HR 2517 IH

1 ‘‘(2) detecting and bringing to trial and punish2 ment persons guilty of violating the internal revenue

3 laws or conniving at the same,

4 in cases where such expenses are not otherwise provided

5 for by law. Any amount payable under the preceding sen6 tence shall be paid from the proceeds of amounts (other

7 than interest) collected by reason of the information pro8 vided, and any amount so collected shall be available for

9 such payments.’’.

10 (b) CLERICAL AMENDMENT.—The table of sections

11 for subchapter B of chapter 78 is amended by striking

12 the item relating to section 7623 and inserting the follow13 ing new item:

‘‘Sec. 7623. Expenses of detection of underpayments and fraud,

etc.’’.

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

15 this section shall take effect on the date which is 6 months

16 after the enactment of this Act.

17 (d) REPORT.—The Secretary of the Treasury or his

18 delegate shall submit an annual report to the Committee

19 on Ways and Means of the House of Representatives and

20 the Committee on Finance of the Senate on the payments

21 under section 7623 of the Internal Revenue Code of 1986

22 during the year and on the amounts collected for which

23 such payments were made.
874

•HR 2517 IH

1 Subtitle D—Additional Technical

2 Corrections

3 SEC. 13401. REPORTING OF REAL ESTATE TRANSACTIONS.

4 (a) IN GENERAL.—Paragraph (3) of section 6045(e)

5 (relating to prohibition of separate charge for filing re6 turn) is amended by adding at the end the following new

7 sentence: ‘‘Nothing in this paragraph shall be construed

8 to prohibit the real estate reporting person from taking

9 into account its cost of complying with such requirement

10 in establishing its charge (other than a separate charge

11 for complying with such requirement) to any customer for

12 performing services in the case of a real estate trans13 action.’’

14 (b) EFFECTIVE DATE.—The amendment made by

15 subsection (a) shall take effect as if included in section

16 1015(e)(2)(A) of the Technical and Miscellaneous Reve17 nue Act of 1988.

18 SEC. 13402. CLARIFICATION OF DENIAL OF DEDUCTION

19 FOR STOCK REDEMPTION EXPENSES.

20 (a) IN GENERAL.—Paragraph (1) of section 162(k)

21 is amended by striking ‘‘the redemption of its stock’’ and

22 inserting ‘‘the reacquisition of its stock or of the stock

23 of any related person (as defined in section

24 465(b)(3)(C))’’.
875

•HR 2517 IH

1 (b) CERTAIN DEDUCTIONS PERMITTED.—Subpara2 graph (A) of section 162(k)(2) is amended by striking

3 ‘‘or’’ at the end of clause (i), by redesignating clause (ii)

4 as clause (iii), and by inserting after clause (i) the follow5 ing new clause:

6 ‘‘(ii) deduction for amounts which are

7 properly allocable to indebtedness and am8 ortized over the term of such indebtedness,

9 or’’.

10 (c) CLERICAL AMENDMENT.—The subsection head11 ing for subsection (k) of section 162 is amended by strik12 ing ‘‘REDEMPTION’’ and inserting ‘‘REACQUISITION’’.

13 (d) EFFECTIVE DATE.—

14 (1) IN GENERAL.—Except as provided in para15 graph (2), the amendments made by this section

16 shall apply to amounts paid or incurred after Sep17 tember 13, 1995, in taxable years ending after such

18 date.

19 (2) SUBSECTION (b).—The amendment made

20 by subsection (b) shall take effect as if included in

21 the amendment made by section 613 of the Tax Re22 form Act of 1986.
876

•HR 2517 IH

1 SEC. 13403. CLARIFICATION OF DEPRECIATION CLASS FOR

2 CERTAIN ENERGY PROPERTY.

3 (a) IN GENERAL.—Subparagraph (B) of section

4 168(e)(3) (relating to 5-year property) is amended by add5 ing at the end the following flush sentence:

6 ‘‘Nothing in any provision of law shall be con7 strued to treat property as not being described

8 in clause (vi)(I) (or the corresponding provi9 sions of prior law) by reason of being public

10 utility property (within the meaning of section

11 48(a)(3)).’’

12 (b) EFFECTIVE DATE.—The amendment made by

13 subsection (a) shall take effect as if included in the

14 amendments made by section 11813 of the Revenue Rec15 onciliation Act of 1990.

16 SEC. 13404. CLERICAL AMENDMENT TO SECTION 404.

17 (a) IN GENERAL.—Paragraph (1) of section 404(j)

18 is amended by striking ‘‘(10)’’ and inserting ‘‘(9)’’.

19 (b) EFFECTIVE DATE.—The amendment made by

20 subsection (a) shall take effect as if included in the

21 amendments made by section 713(d)(4)(A) of the Deficit

22 Reduction Act of 1984.

23 SEC. 13405. TREATMENT OF CERTAIN VETERANS’ REEM24 PLOYMENT RIGHTS.

25 (a) IN GENERAL.—Section 414 is amended by adding

26 at the end the following new subsection:
877

•HR 2517 IH

1 ‘‘(u) SPECIAL RULES RELATING TO VETERANS’ RE2 EMPLOYMENT RIGHTS.—

3 ‘‘(1) TREATMENT OF CERTAIN CONTRIBUTIONS

4 MADE PURSUANT TO VETERANS’ REEMPLOYMENT

5 RIGHTS.—If any contribution is made by an em6 ployer or an employee under an individual account

7 plan with respect to an employee, or by an employee

8 to a defined benefit pension plan that provides for

9 employee contributions, and such contribution is re10 quired by reason of such employee’s rights under

11 chapter 43 of title 38, United States Code, resulting

12 from qualified military service, then—

13 ‘‘(A) such contribution shall not be subject

14 to any otherwise applicable limitation contained

15 in section 402(g), 402(h), 403(b), 404(a),

16 404(h), 408, 415, or 457, and shall not be

17 taken into account in applying such limitations

18 to other contributions or benefits under such

19 plan or any other plan, with respect to the year

20 in which the contribution is made,

21 ‘‘(B) such contribution shall be subject to

22 the limitations referred to in subparagraph (A)

23 with respect to the year to which the contribu24 tion relates (in accordance with rules prescribed

25 by the Secretary), and
878

•HR 2517 IH

1 ‘‘(C) such plan shall not be treated as fail2 ing to meet the requirements of section

3 401(a)(4), 401(a)(26), 401(k)(3), 401(m),

4 403(b)(12), 408(k)(3), 408(k)(6), 410(b), or

5 416 by reason of the making of such contribu6 tion.

7 For purposes of the preceding sentence, any elective

8 deferral or employee contribution made under para9 graph (2) shall be treated as required by reason of

10 the employee’s rights under such chapter.

11 ‘‘(2) REEMPLOYMENT RIGHTS WITH RESPECT

12 TO ELECTIVE DEFERRALS.—

13 ‘‘(A) IN GENERAL.—For purposes of this

14 subchapter and subchapter E, if an employee is

15 entitled to the benefits of chapter 43 of title 38,

16 United States Code, with respect to any plan

17 which provides for elective deferrals, the em18 ployer sponsoring the plan shall be treated as

19 meeting the requirements of such chapter 43

20 with respect to such elective deferrals only if

21 such employer—

22 ‘‘(i) permits such employee to make

23 additional elective deferrals under such

24 plan (in the amount determined under sub25 paragraph (B) or such lesser amount as is
879

•HR 2517 IH

1 elected by the employee) during the period

2 which begins on the date of the reemploy3 ment of such employee with such employer

4 and has the same length as the lesser of—

5 ‘‘(I) the product of 3 and the pe6 riod of qualified military service which

7 resulted in such rights, and

8 ‘‘(II) 5 years, and

9 ‘‘(ii) makes a matching contribution

10 with respect to any additional elective de11 ferral made pursuant to clause (i) which

12 would have been required had such defer13 ral actually been made during the period of

14 such qualified military service.

15 ‘‘(B) AMOUNT OF MAKEUP REQUIRED.—

16 The amount determined under this subpara17 graph with respect to any plan is the maximum

18 amount of the elective deferrals that the indi19 vidual would have been permitted to make

20 under the plan in accordance with the limita21 tions referred to in paragraph (1)(A) during his

22 period of qualified military service if he had

23 continued to be employed by the employer dur24 ing such period and received compensation as

25 determined under paragraph (7). Proper adjust-
880

•HR 2517 IH

1 ment shall be made to the amount determined

2 under the preceding sentence for any elective

3 deferrals actually made during the period of

4 such qualified military service.

5 ‘‘(C) ELECTIVE DEFERRAL.—For purposes

6 of this paragraph, the term ‘elective deferral’

7 has the meaning given such term by section

8 402(g)(3); except that such term shall include

9 any deferral of compensation under an eligible

10 deferred compensation plan (as defined in sec11 tion 457(b)).

12 ‘‘(D) AFTER-TAX EMPLOYEE CONTRIBU13 TIONS.—References in subparagraphs (A) and

14 (B) to elective deferrals shall be treated as in15 cluding references to other employee contribu16 tions.

17 ‘‘(3) CERTAIN RETROACTIVE ADJUSTMENTS

18 NOT REQUIRED.—For purposes of this subchapter

19 and subchapter E, no provision of chapter 43 of title

20 38, United States Code, shall be construed as re21 quiring—

22 ‘‘(A) any crediting of earnings to an em23 ployee with respect to any contribution before

24 such contribution is actually made, or
881

•HR 2517 IH

1 ‘‘(B) any allocation of any forfeiture with

2 respect to the period of qualified military serv3 ice.

4 ‘‘(4) LOAN REPAYMENT SUSPENSIONS PER5 MITTED.—If any plan suspends the obligation to

6 repay any loan made to an employee from such plan

7 for any part of any period during which such em8 ployee is performing qualified military service, such

9 suspension shall not be taken into account for pur10 poses of section 72(p), 401(a), or 4975(d)(1).

11 ‘‘(5) QUALIFIED MILITARY SERVICE.—For pur12 poses of this subsection, the term ‘qualified military

13 service’ means any service in the uniformed services

14 (as defined in chapter 43 of title 38, United States

15 Code) by any individual if such individual is entitled

16 to reemployment rights under such chapter with re17 spect to such service.

18 ‘‘(6) INDIVIDUAL ACCOUNT PLAN.—For pur19 poses of this subsection, the term ‘individual account

20 plan’ means any defined contribution plan, any tax21 sheltered annuity plan under section 403(b), and

22 any eligible deferred compensation plan (as defined

23 in section 457(b)).

24 ‘‘(7) COMPENSATION.—For purposes of section

25 415(c)(3), an employee who is in qualified military
882

•HR 2517 IH

1 service shall be treated as receiving compensation

2 from the employer during such period of qualified

3 military service equal to—

4 ‘‘(A) the compensation the employee would

5 have received during such period if the em6 ployee were not in qualified military service, de7 termined based on the rate of pay the employee

8 would have received from the employer but for

9 absence during the period of qualified military

10 service, or

11 ‘‘(B) if the compensation of the employee

12 was not based on a fixed rate, the employee’s

13 average compensation from the employer during

14 the 12-month period immediately preceding the

15 qualified military service (or, if shorter, the pe16 riod of employment immediately preceding the

17 qualified military service).

18 ‘‘(8) REQUIREMENTS FOR QUALIFIED RETIRE19 MENT PLAN.—For purposes of this subchapter and

20 subchapter E, an employer sponsoring a plan shall

21 be treated as meeting the requirements of chapter

22 43 of title 38, United States Code, only if each of

23 the following requirements is met:

24 ‘‘(A) An individual reemployed under such

25 chapter is treated with respect to such plan as
883

•HR 2517 IH

1 not having incurred a break in service with the

2 employer maintaining the plan by reason of

3 such individual’s period of qualified military

4 service.

5 ‘‘(B) Each period of qualified military

6 service served by an individual is, upon reem7 ployment under such chapter, deemed with re8 spect to such plan to constitute service with the

9 employer maintaining the plan for the purpose

10 of determining the nonforfeitability of the indi11 vidual’s accrued benefits under such plan and

12 for the purpose of determining the accrual of

13 benefits under such plan.

14 ‘‘(C) An individual reemployed under such

15 chapter is entitled to accrued benefits that are

16 contingent on the making of, or derived from,

17 employee contributions or elective deferrals only

18 to the extent the individual makes payment to

19 the plan with respect to such contributions or

20 deferrals. No such payment may exceed the

21 amount the individual would have been per22 mitted or required to contribute had the indi23 vidual remained continuously employed by the

24 employer throughout the period of qualified

25 military service. Any payment to such plan shall
884

•HR 2517 IH

1 be made during the period beginning with the

2 date of reemployment and whose duration is 3

3 times the period of the qualified military service

4 (but not greater than 5 years).

5 ‘‘(9) REFERENCES.—For purposes of this sec6 tion, any reference to chapter 43 of title 38, United

7 States Code, shall be treated as a reference to such

8 chapter as in effect on December 12, 1994 (without

9 regard to any subsequent amendment).’’

10 (b) EFFECTIVE DATE.—The amendments made by

11 this section shall be effective as of December 12, 1994.

12 Subtitle E—Tax Information

13 Sharing

14 SEC. 13501. DISCLOSURE OF RETURN INFORMATION FOR

15 ADMINISTRATION OF CERTAIN VETERANS

16 PROGRAMS.

17 (a) GENERAL RULE.—Subparagraph (D) of section

18 6103(l)(7) (relating to disclosure of return information to

19 Federal, State, and local agencies administering certain

20 programs) is amended by striking ‘‘Clause (viii) shall not

21 apply after September 30, 1998.’’

22 (b) EFFECTIVE DATE.—The amendment made by

23 subsection (a) shall take effect on the date of the enact24 ment of this Act.
885

•HR 2517 IH

1 Subtitle F—Revenue Increases

2 PART I—PROVISIONS RELATING TO BUSINESSES

3 SEC. 13601. TAX TREATMENT OF CERTAIN EXTRAORDINARY

4 DIVIDENDS.

5 (a) TREATMENT OF EXTRAORDINARY DIVIDENDS IN

6 EXCESS OF BASIS.—Paragraph (2) of section 1059(a) (re7 lating to corporate shareholder’s basis in stock reduced by

8 nontaxed portion of extraordinary dividends) is amended

9 to read as follows:

10 ‘‘(2) AMOUNTS IN EXCESS OF BASIS.—If the

11 nontaxed portion of such dividends exceeds such

12 basis, such excess shall be treated as gain from the

13 sale or exchange of such stock for the taxable year

14 in which the extraordinary dividend is received.’’

15 (b) TREATMENT OF REDEMPTIONS WHERE OPTIONS

16 INVOLVED.—Paragraph (1) of section 1059(e) (relating to

17 treatment of partial liquidations and non-pro rata redemp18 tions) is amended to read as follows:

19 ‘‘(1) TREATMENT OF PARTIAL LIQUIDATIONS

20 AND CERTAIN REDEMPTIONS.—Except as otherwise

21 provided in regulations—

22 ‘‘(A) REDEMPTIONS.—In the case of any

23 redemption of stock—
886

•HR 2517 IH

1 ‘‘(i) which is part of a partial liquida2 tion (within the meaning of section 302(e))

3 of the redeeming corporation,

4 ‘‘(ii) which is not pro rata as to all

5 shareholders, or

6 ‘‘(iii) which would not have been

7 treated (in whole or in part) as a dividend

8 if any options had not been taken into ac9 count under section 318(a)(4),

10 any amount treated as a dividend with respect

11 to such redemption shall be treated as an ex12 traordinary dividend to which paragraphs (1)

13 and (2) of subsection (a) apply without regard

14 to the period the taxpayer held such stock. In

15 the case of a redemption described in clause

16 (iii), only the basis in the stock redeemed shall

17 be taken into account under subsection (a).

18 ‘‘(B) REORGANIZATIONS, ETC.—An ex19 change described in section 356(a)(1) which is

20 treated as a dividend under section 356(a)(2)

21 shall be treated as a redemption of stock for

22 purposes of applying subparagraph (A).’’

23 (c) EFFECTIVE DATES.—
887

•HR 2517 IH

1 (1) IN GENERAL.—The amendments made by

2 this section shall apply to distributions after May 3,

3 1995.

4 (2) TRANSITION RULE.—The amendments

5 made by this section shall not apply to any distribu6 tion made pursuant to the terms of—

7 (A) a written binding contract in effect on

8 May 3, 1995, and at all times thereafter before

9 such distribution, or

10 (B) a tender offer outstanding on May 3,

11 1995.

12 (3) CERTAIN DIVIDENDS NOT PURSUANT TO

13 CERTAIN REDEMPTIONS.—In determining whether

14 the amendment made by subsection (a) applies to

15 any extraordinary dividend other than a dividend

16 treated as an extraordinary dividend under section

17 1059(e)(1) of the Internal Revenue Code of 1986

18 (as amended by this Act), paragraphs (1) and (2)

19 shall be applied by substituting ‘‘September 13,

20 1995’’ for ‘‘May 3, 1995’’.

21 SEC. 13602. REGISTRATION OF CONFIDENTIAL CORPORATE

22 TAX SHELTERS.

23 (a) IN GENERAL.—Section 6111 (relating to registra24 tion of tax shelters) is amended by redesignating sub25 sections (d) and (e) as subsections (e) and (f), respectively,
888

•HR 2517 IH

1 and by inserting after subsection (c) the following new

2 subsection:

3 ‘‘(d) CERTAIN CONFIDENTIAL ARRANGEMENTS

4 TREATED AS TAX SHELTERS.—

5 ‘‘(1) IN GENERAL.—For purposes of this sec6 tion, the term ‘tax shelter’ includes any entity, plan,

7 arrangement, or transaction—

8 ‘‘(A) a significant purpose of which is the

9 avoidance or evasion of Federal income tax for

10 a participant which is a corporation,

11 ‘‘(B) which is offered to any potential par12 ticipant under conditions of confidentiality, and

13 ‘‘(C) for which the tax shelter organizers

14 may receive fees in excess of $100,000 in the

15 aggregate.

16 ‘‘(2) CONDITIONS OF CONFIDENTIALITY.—For

17 purposes of paragraph (1)(C), an offer is under con18 ditions of confidentiality if—

19 ‘‘(A) the potential participant to whom the

20 offer is made (or any other person acting on be21 half of such participant) has an understanding

22 or agreement with or for the benefit of any pro23 moter of the tax shelter that such participant

24 (or other person) will limit disclosure of the tax
889

•HR 2517 IH

1 shelter or any significant tax features of the tax

2 shelter, or

3 ‘‘(B) any promoter of the tax shelter—

4 ‘‘(i) claims, knows, or has reason to

5 know,

6 ‘‘(ii) knows or has reason to know

7 that any other person (other than the po8 tential participant) claims, or

9 ‘‘(iii) causes another person to claim,

10 that the tax shelter (or any aspect thereof) is

11 proprietary to any person other than the poten12 tial participant or is otherwise protected from

13 disclosure to or use by others.

14 For purposes of this subsection, the term ‘promoter’

15 means any person who participates in the organiza16 tion, management, or sale of the tax shelter.

17 ‘‘(3) PERSONS OTHER THAN ORGANIZER RE18 QUIRED TO REGISTER IN CERTAIN CASES.—

19 ‘‘(A) IN GENERAL.—If—

20 ‘‘(i) the requirements of subsection (a)

21 are not met with respect to any tax shelter

22 (as defined in paragraph (1)) by any tax

23 shelter organizer, and

24 ‘‘(ii) no tax shelter organizer is a

25 United States person,
890

•HR 2517 IH

1 then each United States person who discussed

2 participation in such shelter shall register such

3 shelter under subsection (a).

4 ‘‘(B) EXCEPTION.—Subparagraph (A)

5 shall not apply to a United States person who

6 discussed participation in a tax shelter if—

7 ‘‘(i) such person notified the promoter

8 in writing (not later than the close of the

9 day on which such discussions began) that

10 such person would not participate in such

11 shelter, and

12 ‘‘(ii) such person does not participate

13 in such shelter.

14 ‘‘(4) OFFER TO PARTICIPATE TREATED AS

15 OFFER FOR SALE.—For purposes of subsections (a)

16 and (b), an offer to participate in a tax shelter (as

17 defined in paragraph (1)) shall be treated as an

18 offer for sale.’’

19 (b) PENALTY.—Subsection (a) of section 6707 (relat20 ing to failure to furnish information regarding tax shel21 ters) is amended by adding at the end the following new

22 paragraph:

23 ‘‘(3) CONFIDENTIAL ARRANGEMENTS.—

24 ‘‘(A) IN GENERAL.—In the case of a tax

25 shelter (as defined in section 6111(d)), the pen-
891

•HR 2517 IH

1 alty imposed under paragraph (1) shall be an

2 amount equal to the greater of—

3 ‘‘(i) 50 percent of the fees paid to any

4 promoter of the tax shelter with respect to

5 offerings made before the date such shelter

6 is registered under section 6111, or

7 ‘‘(ii) $10,000.

8 Clause (i) shall be applied by substituting ‘75

9 percent’ for ‘50 percent’ in the case of an inten10 tional failure or act described in paragraph (1).

11 ‘‘(B) SPECIAL RULE FOR PARTICIPANTS

12 REQUIRED TO REGISTER SHELTER.—In the

13 case of a person required to register such a tax

14 shelter by reason of section 6111(d)(3)—

15 ‘‘(i) such person shall be required to

16 pay the penalty under paragraph (1) only

17 if such person actually participated in such

18 shelter,

19 ‘‘(ii) the amount of such penalty shall

20 be determined by taking into account

21 under subparagraph (A)(i) only the fees

22 paid by such person, and

23 ‘‘(iii) such penalty shall be in addition

24 to the penalty imposed on any other person

25 for failing to register such shelter.’’
892

•HR 2517 IH

1 (c) CONFORMING AMENDMENTS.—

2 (1) Paragraph (2) of section 6707(a) is amend3 ed by striking ‘‘The penalty’’ and inserting ‘‘Except

4 as provided in paragraph (3), the penalty’’.

5 (2) Subparagraph (A) of section 6707(a)(1) is

6 amended by striking ‘‘paragraph (2)’’ and inserting

7 ‘‘paragraph (2) or (3), as the case may be’’.

8 (d) EFFECTIVE DATE.—

9 (1) IN GENERAL.—The amendments made by

10 this section shall apply to any tax shelter (as defined

11 in section 6111(d) of the Internal Revenue Code of

12 1986, as amended by this section) interests in which

13 are offered to potential participants after the date of

14 the enactment of this Act.

15 (2) DUE DATE FOR REGISTRATION.—The due

16 date for registering any tax shelter required to be

17 registered by reason of the amendments made by

18 this section shall be not earlier than the close of a

19 reasonable period after the Secretary of the Treas20 ury prescribes guidance with respect to meeting such

21 requirements.
893

•HR 2517 IH

1 SEC. 13603. DENIAL OF DEDUCTION FOR INTEREST ON

2 LOANS WITH RESPECT TO COMPANY-OWNED

3 INSURANCE.

4 (a) IN GENERAL.—Paragraph (4) of section 264(a)

5 is amended—

6 (1) by inserting ‘‘or endowment or annuity con7 tract’’ after ‘‘life insurance policies’’, and

8 (2) by striking all that follows ‘‘carried on by

9 the taxpayer’’ and inserting a period.

10 (b) PHASE-IN OF DISALLOWANCE.—Section 264 is

11 amended by adding at the end the following new sub12 section:

13 ‘‘(d) PHASE-IN OF DISALLOWANCE UNDER SUB14 SECTION (a)(4).—In the case of calendar years after 1995

15 and before 2000—

16 ‘‘(1) IN GENERAL.—The amount of interest

17 paid or accrued during any period in any such cal18 endar year with respect to qualified indebtedness

19 which is disallowed by reason of the amendment

20 made by section 13603(a) of the Revenue Reconcili21 ation Act of 1995 (determined without regard to this

22 subsection) shall not exceed the applicable percent23 age of such interest which is so disallowed.

24 ‘‘(2) QUALIFIED INDEBTEDNESS.—For pur25 poses of paragraph (1), the term ‘qualified indebted26 ness’ means indebtedness incurred before September
894

•HR 2517 IH

1 18, 1995, with respect to a life insurance policy cov2 ering only the life of the individual who was insured

3 under such policy on such date. Any increase on or

4 after such date in the amount of such indebtedness

5 shall be treated as indebtedness incurred after such

6 date.

7 ‘‘(3) APPLICABLE PERCENTAGE.—For purposes

8 of paragraph (1), the applicable percentage shall be

9 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.’’

10 (c) EFFECTIVE DATE.—

11 (1) IN GENERAL.—The amendments made by

12 this section shall apply to interest paid or accrued

13 after December 31, 1995.

14 (2) EXCEPTION.—The amendments made by

15 this section shall not apply to contracts purchased

16 on or before June 20, 1986.

17 (d) 4-YEAR SPREAD OF INCOME INCLUSION ON SUR18 RENDER, ETC. OF CONTRACTS.—

19 (1) IN GENERAL.—In the case of indebtedness

20 with respect to any life insurance policy described in

21 paragraph (4) of section 264(a) of the Internal Rev22 enue Code of 1986, if—
895

•HR 2517 IH

1 (A) the interest paid or accrued after De2 cember 31, 1995, on such indebtedness is not

3 allowed as a deduction under chapter 1 of such

4 Code by reason of such paragraph (4) (as

5 amended by this section), and

6 (B) the entire amount of interest paid or

7 accrued on or before such date on such indebt8 edness was allowed as a deduction under such

9 chapter 1,

10 then (in lieu of any other inclusion in gross income)

11 the qualified amount with respect to such policy

12 shall be includible in gross income ratably over the

13 4 taxable years beginning with the taxable year such

14 amount would (but for this paragraph) be includible.

15 (2) QUALIFIED AMOUNT.—For purposes of

16 paragraph (1), the term ‘‘qualified amount’’ means,

17 with respect to any policy, the amount received

18 under such policy—

19 (A) on the complete surrender, redemption,

20 or maturity of such policy during 1996, or

21 (B) in full discharge during 1996 of the

22 obligation under the policy which is in the na23 ture of a refund of the consideration paid for

24 the policy,
896

•HR 2517 IH

1 but only to the extent such amount is includible in

2 gross income for the taxable year in which the event

3 described in subparagraph (A) or (B) occurs.

4 (3) SPECIAL RULE.—A contract shall not be

5 treated as failing to meet the requirement of section

6 264(c)(1) of the Internal Revenue Code of 1986

7 solely by reason of an occurrence described in sub8 paragraph (A) or (B) of paragraph (2) of this sub9 section.

10 SEC. 13604. TERMINATION OF SUSPENSE ACCOUNTS FOR

11 FAMILY CORPORATIONS REQUIRED TO USE

12 ACCRUAL METHOD OF ACCOUNTING.

13 (a) IN GENERAL.—Subsection (i) of section 447 (re14 lating to method of accounting for corporations engaged

15 in farming) is amended by adding at the end the following

16 new paragraph:

17 ‘‘(7) TERMINATION.—

18 ‘‘(A) IN GENERAL.—No suspense account

19 may be established under this subsection by any

20 corporation required by this section to change

21 its method of accounting for any taxable year

22 ending after September 13, 1995.

23 ‘‘(B) 20-YEAR PHASEOUT OF EXISTING

24 SUSPENSE ACCOUNTS.—Each suspense account

25 under this subsection shall be reduced (but not
897

•HR 2517 IH

1 below zero) for each of the first 20 taxable

2 years beginning after September 13, 1995, by

3 an amount equal to the applicable portion of

4 such account. Any reduction in a suspense ac5 count under this paragraph shall be included in

6 gross income for the taxable year of the reduc7 tion. The amount of the reduction required

8 under this paragraph for any taxable year shall

9 be reduced (but not below zero) by the amount

10 of any reduction required for such taxable year

11 under any other provision of this subsection.

12 ‘‘(C) APPLICABLE PORTION.—For pur13 poses of subparagraph (B), the term ‘applicable

14 portion’ means, for any taxable year, the

15 amount which would ratably reduce the amount

16 in the account (after taking into account prior

17 reductions) to zero over the period consisting of

18 such taxable year and the remaining taxable

19 years in such first 20 taxable years.’’

20 (b) EFFECTIVE DATE.—The amendment made by

21 this section shall apply to taxable years ending after Sep22 tember 13, 1995.
898

•HR 2517 IH

1 SEC. 13605. TERMINATION OF PUERTO RICO AND POSSES2 SION TAX CREDIT.

3 (a) IN GENERAL.—Section 936 is amended by adding

4 at the end the following new subsection:

5 ‘‘(j) TERMINATION.—

6 ‘‘(1) IN GENERAL.—This section shall not apply

7 to any taxable year beginning after December 31,

8 1995.

9 ‘‘(2) EXCEPTION FOR EXISTING CLAIMANTS.—

10 ‘‘(A) IN GENERAL.—Paragraph (1) shall

11 be applied by substituting ‘2005’ for ‘1995’ in

12 the case of an existing credit claimant.

13 ‘‘(B) EXCEPTION TERMINATES IF NEW

14 LINE OF BUSINESS ADDED.—If, after Septem15 ber 13, 1995, a corporation which would (but

16 for this subparagraph) be an existing credit

17 claimant adds a substantial new line of busi18 ness, such corporation shall cease to be treated

19 as an existing credit claimant as of the close of

20 the taxable year ending before the date of such

21 addition.

22 ‘‘(C) EXISTING CREDIT CLAIMANT.—For

23 purposes of this subsection, the term ‘existing

24 credit claimant’ means any corporation which

25 satisfied the conditions of both subparagraph

26 (A) and subparagraph (B) of subsection (a)(2)
899

•HR 2517 IH

1 for at least 1 base period year for which such

2 corporation elected the application of this sec3 tion.

4 ‘‘(3) LIMIT ON CREDIT OF EXISTING CLAIM5 ANTS.—

6 ‘‘(A) IN GENERAL.—In the case of an ex7 isting credit claimant, the aggregate amount of

8 income taken into account under subsection

9 (a)(1) for any taxable year beginning after De10 cember 31, 1995 (hereinafter in this subsection

11 referred to as the ‘current year’), shall not ex12 ceed the adjusted base period income of such

13 claimant.

14 ‘‘(B) COORDINATION WITH SUBSECTION

15 (a)(4).—The amount of income described in sub16 section (a)(1)(A) which is taken into account in

17 applying subsection (a)(4) shall be such income

18 as reduced under this paragraph. In determin19 ing such reduction, any reduction under sub20 paragraph (A) in the amount which would oth21 erwise be taken into account under subsection

22 (a)(1) shall be allocated between the income de23 scribed in subparagraph (A) thereof and the in24 come described in subparagraph (B) thereof in
900

•HR 2517 IH

1 proportion to the respective amounts of such in2 comes.

3 ‘‘(4) ADJUSTED BASE PERIOD INCOME.—For

4 purposes of paragraph (3)—

5 ‘‘(A) IN GENERAL.—The term ‘adjusted

6 base period income’ means the average of the

7 inflation-adjusted possession incomes of the cor8 poration for each base period year.

9 ‘‘(B) INFLATION-ADJUSTED POSSESSION

10 INCOME.—For purposes of subparagraph (A),

11 the inflation-adjusted possession income of any

12 corporation for any base period year shall be an

13 amount equal to the possession income of such

14 corporation for such base period year multiplied

15 by the inflation adjustment percentage for such

16 base period year.

17 ‘‘(C) INFLATION ADJUSTMENT PERCENT18 AGE.—For purposes of subparagraph (B), the

19 inflation adjustment percentage for any base

20 period year means, with respect to the current

21 year, the percentage (if any) by which—

22 ‘‘(i) the CPI for last calendar year

23 ending before the beginning of the current

24 year, exceeds
901

•HR 2517 IH

1 ‘‘(ii) the CPI for last calendar year

2 ending before the beginning of the base pe3 riod year.

4 For purposes of the preceding sentence, the

5 CPI for any calendar year is the CPI (as de6 fined in section 1(f)(5)) for such year under

7 section 1(f)(4).

8 ‘‘(D) INCREASE IN INFLATION ADJUST9 MENT PERCENTAGE FOR GROWTH DURING BASE

10 YEARS.—The inflation adjustment percentage

11 (determined under subparagraph (C) without

12 regard to this subparagraph) for each of the 5

13 taxable years referred to in paragraph (5)(A)

14 shall be increased by—

15 ‘‘(i) 5 percentage points in the case of

16 a taxable year ending during the 1-year pe17 riod ending on September 12, 1995;

18 ‘‘(ii) 10.25 percentage points in the

19 case of a taxable year ending during the 1-

20 year period ending on September 12, 1994;

21 ‘‘(iii) 15.76 percentage points in the

22 case of a taxable year ending during the 1-

23 year period ending on September 12, 1993;

24 ‘‘(iv) 21.55 percentage points in the

25 case of a taxable year ending during the 1-
902

•HR 2517 IH

1 year period ending on September 12, 1992;

2 and

3 ‘‘(v) 27.63 percentage points in the

4 case of a taxable year ending during the 1-

5 year period ending on September 12, 1991.

6 ‘‘(5) BASE PERIOD YEAR.—For purposes of this

7 subsection—

8 ‘‘(A) IN GENERAL.—The term ‘base period

9 year’ means each of 3 taxable years which are

10 among the 5 most recent taxable years of the

11 corporation ending before September 13, 1995,

12 determined by disregarding—

13 ‘‘(i) one taxable year for which the

14 corporation had the largest inflation-ad15 justed possession income, and

16 ‘‘(ii) one taxable year for which the

17 corporation had the smallest inflation-ad18 justed possession income.

19 ‘‘(B) CORPORATIONS NOT HAVING SIGNIFI20 CANT POSSESSION INCOME THROUGHOUT 5-

21 YEAR PERIOD.—

22 ‘‘(i) IN GENERAL.—If a corporation

23 does not have significant possession income

24 for each of the most recent 5 taxable years

25 ending before September 13, 1995, then,
903

•HR 2517 IH

1 in lieu of applying subparagraph (A), the

2 term ‘base period year’ means only those

3 taxable years (of such 5 taxable years) for

4 which the corporation has significant pos5 session income; except that, if such cor6 poration has significant possession income

7 for 4 of such 5 taxable years, the rule of

8 subparagraph (A)(ii) shall apply.

9 ‘‘(ii) SPECIAL RULE.—If there is no

10 year (of such 5 taxable years) for which a

11 corporation has significant possession in12 come—

13 ‘‘(I) the term ‘base period year’

14 means the first taxable year ending on

15 or after September 13, 1995, but

16 ‘‘(II) the amount of possession

17 income for such year which is taken

18 into account under paragraph (4)

19 shall be the amount which would be

20 determined if such year were a short

21 taxable year ending on August 31,

22 1995.

23 ‘‘(iii) SIGNIFICANT POSSESSION IN24 COME.—For purposes of this subpara25 graph, the term ‘significant possession in-
904

•HR 2517 IH

1 come’ means possession income which ex2 ceeds 2 percent of the possession income of

3 the taxpayer for the taxable year (of the

4 period of 6 taxable years ending with the

5 first taxable year ending on or after Sep6 tember 13, 1995) having the greatest pos7 session income.

8 ‘‘(C) ELECTION TO USE ONE BASE PERIOD

9 YEAR.—

10 ‘‘(i) IN GENERAL.—At the election of

11 the taxpayer, the term ‘base period year’

12 means only the last taxable year of the cor13 poration ending in calendar year 1992.

14 ‘‘(ii) ELECTION.—An election under

15 this subparagraph by any possession cor16 poration may be made only for the cor17 poration’s first taxable year beginning

18 after December 31, 1995, for which it is a

19 possession corporation. The rules of

20 subclauses (II) and (III) of subsection

21 (a)(4)(B)(iii) shall apply to the election

22 under this subparagraph.

23 ‘‘(D) ACQUISITIONS AND DISPOSITIONS.—

24 Rules similar to the rules of subparagraphs (A)
905

•HR 2517 IH

1 and (B) of section 41(f)(3) shall apply for pur2 poses of this subsection.

3 ‘‘(6) POSSESSION INCOME.—For purposes of

4 this subsection, the term ‘possession income’ means

5 the sum of the income referred to in subsection

6 (a)(1)(A) and the income referred to in subsection

7 (a)(1)(B). In no event shall possession income be

8 treated as being less than zero.

9 ‘‘(7) SHORT YEARS.—If the current year or a

10 base period year is a short taxable year, the applica11 tion of this subsection shall be made with such

12 annualizations as the Secretary shall prescribe.’’

13 (b) EFFECTIVE DATE.—The amendment made by

14 this section shall apply to taxable years beginning after

15 December 31, 1995.

16 SEC. 13606. DEPRECIATION UNDER INCOME FORECAST

17 METHOD.

18 (a) GENERAL RULE.—Section 167 (relating to depre19 ciation) is amended by redesignating subsection (g) as

20 subsection (h) and by inserting after subsection (f) the

21 following new subsection:

22 ‘‘(g) DEPRECIATION UNDER INCOME FORECAST

23 METHOD.—

24 ‘‘(1) IN GENERAL.—If the depreciation deduc25 tion allowable under this section to any taxpayer
906

•HR 2517 IH

1 with respect to any property is determined under the

2 income forecast method or any similar method—

3 ‘‘(A) in determining the amount of the de4 preciation deduction under such method, the es5 timated income from the property shall include

6 all estimated income from use of the property,

7 ‘‘(B) the adjusted basis of the property

8 shall only include amounts with respect to

9 which the requirements of section 461(h) are

10 satisfied,

11 ‘‘(C) the depreciation deduction under such

12 method for the 10th taxable year beginning

13 after the taxable year in which the property was

14 placed in service shall be equal to the adjusted

15 basis of such property as of the beginning of

16 such 10th taxable year, and

17 ‘‘(D) such taxpayer shall pay (or be enti18 tled to receive) interest computed under the

19 look-back method of paragraph (2) for any re20 computation year.

21 ‘‘(2) LOOK-BACK METHOD.—The interest com22 puted under the look-back method of this paragraph

23 for any recomputation year shall be determined by—

24 ‘‘(A) first determining the depreciation de25 ductions under this section with respect to such
907

•HR 2517 IH

1 property which would have been allowable for

2 prior taxable years if the determination of the

3 amounts so allowable had been made on the

4 basis of the sum of the following (instead of the

5 estimated income with respect to such prop6 erty)—

7 ‘‘(i) the actual income from such

8 property for periods before the close of the

9 recomputation year, and

10 ‘‘(ii) an estimate of the future income

11 with respect to such property for periods

12 after the recomputation year,

13 ‘‘(B) second, determining (solely for pur14 poses of computing such interest) the overpay15 ment or underpayment of tax for each such

16 prior taxable year which would result solely

17 from the application of subparagraph (A), and

18 ‘‘(C) then using the adjusted overpayment

19 rate (as defined in section 460(b)(7)),

20 compounded daily, on the overpayment or

21 underpayment determined under subparagraph

22 (B).

23 For purposes of the preceding sentence, any cost in24 curred after the property is placed in service (which

25 is not treated as a separate property under para-
908

•HR 2517 IH

1 graph (5)) shall be taken into account by discount2 ing (using the Federal mid-term rate determined

3 under section 1274(d) as of the time such cost is in4 curred) such cost to its value as of the date the

5 property is placed in service. The taxpayer may elect

6 with respect to any property to have the preceding

7 sentence not apply to such property.

8 ‘‘(3) EXCEPTION FROM LOOK-BACK METHOD.—

9 Paragraph (1)(D) shall not apply with respect to

10 any property which, when placed in service by the

11 taxpayer, had a basis of $100,000 or less.

12 ‘‘(4) RECOMPUTATION YEAR.—For purposes of

13 this subsection, except as provided in regulations,

14 the term ‘recomputation year’ means, with respect to

15 any property, the third and the 10th taxable years

16 beginning after the taxable year in which the prop17 erty was placed in service, unless the actual income

18 from the property for such third or 10th taxable

19 year (as the case may be) and each prior taxable

20 year is within 10 percent of the estimated income

21 from the property for each such year which was

22 taken into account under paragraph (1)(A).

23 ‘‘(5) SPECIAL RULES.—

24 ‘‘(A) CERTAIN COSTS TREATED AS SEPA25 RATE PROPERTY.—For purposes of this section,
909

•HR 2517 IH

1 the following costs shall be treated as separate

2 properties:

3 ‘‘(i) Any costs incurred with respect

4 to any property after the 10th taxable year

5 beginning after the taxable year in which

6 the property was placed in service.

7 ‘‘(ii) Any costs incurred after the

8 property is placed in service and before the

9 close of such 10th taxable year if such

10 costs are significant and give rise to a sig11 nificant increase in the income from the

12 property which was not included in the es13 timated income from the property.

14 ‘‘(B) SYNDICATION INCOME FROM TELE15 VISION SERIES.—In the case of property which

16 is an episode in a television series, estimated in17 come from syndicating such series shall not be

18 required to be taken into account under this

19 subsection before the earlier of—

20 ‘‘(i) the 4th taxable year beginning

21 after the date the first episode in such se22 ries is placed in service, or

23 ‘‘(ii) the earliest taxable year in which

24 the taxpayer had a reasonable expectation
910

•HR 2517 IH

1 that there would be a future syndication of

2 such series.

3 ‘‘(C) COLLECTION OF INTEREST.—For

4 purposes of subtitle F (other than sections

5 6654 and 6655), any interest required to be

6 paid by the taxpayer under paragraph (1) for

7 any recomputation year shall be treated as an

8 increase in the tax imposed by this chapter for

9 such year.

10 ‘‘(D) DETERMINATIONS.—For purposes of

11 this subsection, determinations of the amount

12 of income from any property shall be deter13 mined in the same manner as for purposes of

14 applying the income forecast method; except

15 that any income from the disposition of such

16 property shall be taken into account.

17 ‘‘(E) TREATMENT OF PASS-THRU ENTI18 TIES.—Rules similar to the rules of section

19 460(b)(4) shall apply for purposes of this sub20 section.’’

21 (b) EFFECTIVE DATE.—

22 (1) IN GENERAL.—The amendment made by

23 subsection (a) shall apply to property placed in serv24 ice after September 13, 1995.
911

•HR 2517 IH

1 (2) BINDING CONTRACTS.—The amendment

2 made by subsection (a) shall not apply to any prop3 erty produced or acquired by the taxpayer pursuant

4 to a written contract which was binding on Septem5 ber 13, 1995, and at all times thereafter before such

6 production or acquisition.

7 SEC. 13607. TRANSFERS OF EXCESS PENSION ASSETS.

8 (a) IN GENERAL.—Section 420 (relating to transfers

9 of excess pension assets to retiree health accounts) is

10 amended by adding at the end the following new sub11 section:

12 ‘‘(f) SIMILAR RULES TO APPLY TO OTHER TRANS13 FERS OF EXCESS PLAN ASSETS.—

14 ‘‘(1) IN GENERAL.—If there is a qualified unre15 stricted transfer of any excess pension assets of a

16 defined benefit plan (other than a multiemployer

17 plan) to an employer—

18 ‘‘(A) a trust which is part of such plan

19 shall not be treated as failing to meet the re20 quirements of section 401(a) solely by reason of

21 such transfer (or any other action authorized

22 under this section), and

23 ‘‘(B) such transfer shall not be treated as

24 a prohibited transaction for purposes of section

25 4975.
912

•HR 2517 IH

1 The gross income of the employer shall include the

2 amount of any qualified transfer made during the

3 taxable year.

4 ‘‘(2) QUALIFIED UNRESTRICTED TRANSFER.—

5 For purposes of this section—

6 ‘‘(A) IN GENERAL.—The term ‘qualified

7 unrestricted transfer’ means a transfer—

8 ‘‘(i) of excess pension assets of a de9 fined benefit plan to the employer, and

10 ‘‘(ii) with respect to which the re11 quirements of subsection (c)(2)(A) are met

12 (determined by treating such transfer as a

13 qualified transfer).

14 ‘‘(B) COORDINATION WITH TRANSFERS TO

15 RETIREE HEALTH ACCOUNTS.—Such term shall

16 not include any qualified transfer (as defined in

17 subsection (b)).

18 ‘‘(C) EXPIRATION.—No transfer in any

19 taxable year beginning after December 31,

20 2000, shall be treated as a qualified unre21 stricted transfer.

22 ‘‘(3) DEFINITION AND SPECIAL RULE.—For

23 purposes of this subsection—

24 ‘‘(A) EXCESS PENSION ASSETS.—The term

25 ‘excess pension assets’ has the meaning given
913

•HR 2517 IH

1 such term by subsection (e)(2); except that the

2 amount thereof shall be the lesser of—

3 ‘‘(i) the amount determined as of the

4 most recent valuation date of the plan pre5 ceding the transfer, or

6 ‘‘(ii) the amount determined as of

7 January 1, 1995 (or, if January 1, 1995,

8 is not a valuation date, the most recent

9 prior valuation date).

10 ‘‘(B) COORDINATION WITH SECTION 412.—

11 In the case of a qualified unrestricted trans12 fer—

13 ‘‘(i) any assets transferred in a plan

14 year on or before the valuation date for

15 such year (and any income allocable there16 to) shall, for purposes of section 412, be

17 treated as assets in the plan as of the valu18 ation date for such year, and

19 ‘‘(ii) the plan shall be treated as hav20 ing a net experience loss under section

21 412(b)(2)(B)(iv) in an amount equal to the

22 amount of such transfer and for which am23 ortization charges begin for the first plan

24 year after the plan year in which such

25 transfer occurs, except that such section
914

•HR 2517 IH

1 shall be applied to such amount by sub2 stituting ‘10 plan years’ for ‘5 plan years’.

3 ‘‘(C) TREATMENT OF TRANSFERS.—Ex4 cept for purposes of this section, a qualified un5 restricted transfer shall be treated as a quali6 fied transfer to a health benefits account.’’

7 (b) REVERSION TAX.—Section 4980 (relating to tax

8 on reversion of qualified plan assets to employers) is

9 amended by adding at the end the following new sub10 section:

11 ‘‘(e) SPECIAL RULES FOR QUALIFIED UNRE12 STRICTED TRANSFERS UNDER SECTION 420.—In the

13 case of a qualified unrestricted transfer to which section

14 420(f) applies—

15 ‘‘(1) no tax shall be imposed by subsection (a)

16 if such transfer occurs before July 1, 1996,

17 ‘‘(2) subsection (a) shall be applied by sub18 stituting ‘6.5 percent’ for ‘20 percent’ if such trans19 fer occurs after June 30, 1996, and

20 ‘‘(3) subsection (d) shall not apply.’’

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

22 this section shall take effect on January 1, 1995.
915

•HR 2517 IH

1 PART II—LEGAL REFORMS

2 SEC. 13611. REPEAL OF EXCLUSION FOR PUNITIVE DAM3 AGES AND FOR DAMAGES NOT ATTRIB4 UTABLE TO PHYSICAL INJURIES OR SICK5 NESS.

6 (a) IN GENERAL.—Paragraph (2) of section 104(a)

7 (relating to compensation for injuries or sickness) is

8 amended to read as follows:

9 ‘‘(2) the amount of any damages (other than

10 punitive damages) received (whether by suit or

11 agreement and whether as lump sums or as periodic

12 payments) on account of personal physical injuries

13 or physical sickness;’’.

14 (b) EMOTIONAL DISTRESS AS SUCH TREATED AS

15 NOT PHYSICAL INJURY OR PHYSICAL SICKNESS.—Sec16 tion 104(a) is amended by striking the last sentence and

17 inserting the following new sentence: ‘‘For purposes of

18 paragraph (2), emotional distress shall not be treated as

19 a physical injury or physical sickness. The preceding sen20 tence shall not apply to an amount of damages not in ex21 cess of the amount paid for medical care (described in sub22 paragraph (A) or (B) of section 213(d)(1)) attributable

23 to emotional distress.’’

24 (c) EFFECTIVE DATE.—

25 (1) IN GENERAL.—Except as provided in para26 graph (2), the amendments made by this section
916

•HR 2517 IH

1 shall apply to amounts received after December 31,

2 1995, in taxable years ending after such date.

3 (2) EXCEPTION.—The amendments made by

4 this section shall not apply to any amount received

5 under a written binding agreement, court decree, or

6 mediation award in effect on (or issued on or before)

7 September 13, 1995.

8 SEC. 13612. REPORTING OF CERTAIN PAYMENTS MADE TO

9 ATTORNEYS.

10 (a) IN GENERAL.—Section 6045 (relating to returns

11 of brokers) is amended by adding at the end the following

12 new subsection:

13 ‘‘(f) RETURN REQUIRED IN THE CASE OF PAY14 MENTS TO ATTORNEYS.—

15 ‘‘(1) IN GENERAL.—Any person engaged in a

16 trade or business and making a payment (in the

17 course of such trade or business) to which this sub18 section applies shall file a return under subsection

19 (a) and a statement under subsection (b) with re20 spect to such payment.

21 ‘‘(2) APPLICATION OF SUBSECTION.—

22 ‘‘(A) IN GENERAL.—This subsection shall

23 apply to any payment to an attorney in connec24 tion with legal services (whether or not such

25 services are performed for the payor).
917

•HR 2517 IH

1 ‘‘(B) EXCEPTION.—This subsection shall

2 not apply to the portion of any payment which

3 is required to be reported under section 6041(a)

4 (or would be so required but for the dollar limi5 tation contained therein) or section 6051.’’

6 (b) REPORTING OF ATTORNEYS FEES PAYABLE TO

7 CORPORATIONS.—The regulations providing an exception

8 under section 6041 of the Internal Revenue Code of 1986

9 for payments made to corporations shall not apply to pay10 ments of attorneys fees.

11 (c) EFFECTIVE DATE.—The amendment made by

12 subsection (a), and subsection (b), shall apply to payments

13 made after December 31, 1995.

14 PART III—TREATMENT OF INDIVIDUALS WHO

15 LOSE UNITED STATES CITIZENSHIP

16 SEC. 13616. REVISION OF INCOME, ESTATE, AND GIFT

17 TAXES ON INDIVIDUALS WHO LOSE UNITED

18 STATES CITIZENSHIP.

19 (a) IN GENERAL.—Subsection (a) of section 877 is

20 amended to read as follows:

21 ‘‘(a) TREATMENT OF EXPATRIATES.—

22 ‘‘(1) IN GENERAL.—Every nonresident alien in23 dividual who, within the 10-year period immediately

24 preceding the close of the taxable year, lost United

25 States citizenship, unless such loss did not have for
918

•HR 2517 IH

1 1 of its principal purposes the avoidance of taxes

2 under this subtitle or subtitle B, shall be taxable for

3 such taxable year in the manner provided in sub4 section (b) if the tax imposed pursuant to such sub5 section exceeds the tax which, without regard to this

6 section, is imposed pursuant to section 871.

7 ‘‘(2) CERTAIN INDIVIDUALS TREATED AS HAV8 ING TAX AVOIDANCE PURPOSE.—For purposes of

9 paragraph (1), an individual shall be treated as hav10 ing a principal purpose to avoid such taxes if—

11 ‘‘(A) the average annual net income tax

12 (as defined in section 38(c)(1)) of such individ13 ual for the period of 5 taxable years ending be14 fore the date of the loss of United States citi15 zenship is greater than $100,000, or

16 ‘‘(B) the net worth of the individual as of

17 such date is $500,000 or more.

18 In the case of the loss of United States citizenship

19 in any calendar year after 1996, such $100,000 and

20 $500,000 amounts shall be increased by an amount

21 equal to such dollar amount multiplied by the cost22 of-living adjustment determined under section

23 1(f)(3) for such calendar year by substituting ‘1994’

24 for ‘1992’ in subparagraph (B) thereof. Any in-
919

•HR 2517 IH

1 crease under the preceding sentence shall be round2 ed to the nearest multiple of $1,000.’’

3 (b) EXCEPTIONS.—

4 (1) IN GENERAL.—Section 877 is amended by

5 striking subsection (d), by redesignating subsection

6 (c) as subsection (d), and by inserting after sub7 section (b) the following new subsection:

8 ‘‘(c) TAX AVOIDANCE NOT PRESUMED IN CERTAIN

9 CASES.—

10 ‘‘(1) IN GENERAL.—Subsection (a)(2) shall not

11 apply to an individual if—

12 ‘‘(A) such individual is described in a sub13 paragraph of paragraph (2) of this subsection,

14 and

15 ‘‘(B) within the 1-year period beginning on

16 the date of the loss of United States citizenship,

17 such individual submits a ruling request for the

18 Secretary’s determination as to whether such

19 loss has for 1 of its principal purposes the

20 avoidance of taxes under this subtitle or subtitle

21 B.

22 ‘‘(2) INDIVIDUALS DESCRIBED.—

23 ‘‘(A) DUAL CITIZENSHIP, ETC.—An indi24 vidual is described in this subparagraph if—
920

•HR 2517 IH

1 ‘‘(i) the individual became at birth a

2 citizen of the United States and a citizen

3 of another country and continues to be a

4 citizen of such other country, or

5 ‘‘(ii) the individual becomes (not later

6 than the close of a reasonable period after

7 loss of United States citizenship) a citizen

8 of the country in which—

9 ‘‘(I) such individual was born,

10 ‘‘(II) if such individual is mar11 ried, such individual’s spouse was

12 born, or

13 ‘‘(III) either of such individual’s

14 parents were born.

15 ‘‘(B) LONG-TERM FOREIGN RESIDENTS.—

16 An individual is described in this subparagraph

17 if, for each year in the 10-year period ending on

18 the date of loss of United States citizenship, the

19 individual was present in the United States for

20 30 days or less. The rule of section

21 7701(b)(3)(D)(ii) shall apply for purposes of

22 this subparagraph.

23 ‘‘(C) RENUNCIATION UPON REACHING AGE

24 OF MAJORITY.—An individual is described in

25 this subparagraph if the individual’s loss of
921

•HR 2517 IH

1 United States citizenship occurs before such individual attains age 181 2 ⁄2.

3 ‘‘(D) INDIVIDUALS SPECIFIED IN REGULA4 TIONS.—An individual is described in this sub5 paragraph if the individual is described in a

6 category of individuals prescribed by regulation

7 by the Secretary.’’

8 (2) TECHNICAL AMENDMENT.—Paragraph (1)

9 of section 877(b) of such Code is amended by strik10 ing ‘‘subsection (c)’’ and inserting ‘‘subsection (d)’’.

11 (c) TREATMENT OF PROPERTY DISPOSED OF IN

12 NONRECOGNITION TRANSACTIONS; TREATMENT OF DIS13 TRIBUTIONS FROM CERTAIN CONTROLLED FOREIGN

14 CORPORATIONS.—Subsection (d) of section 877, as redes15 ignated by subsection (b), is amended to read as follows:

16 ‘‘(d) SPECIAL RULES FOR SOURCE, ETC.—For pur17 poses of subsection (b)—

18 ‘‘(1) SOURCE RULES.—The following items of

19 gross income shall be treated as income from sources

20 within the United States:

21 ‘‘(A) SALE OF PROPERTY.—Gains on the

22 sale or exchange of property (other than stock

23 or debt obligations) located in the United

24 States.
922

•HR 2517 IH

1 ‘‘(B) STOCK OR DEBT OBLIGATIONS.—

2 Gains on the sale or exchange of stock issued

3 by a domestic corporation or debt obligations of

4 United States persons or of the United States,

5 a State or political subdivision thereof, or the

6 District of Columbia.

7 ‘‘(C) INCOME OR GAIN DERIVED FROM

8 CONTROLLED FOREIGN CORPORATION.—Any in9 come or gain derived from stock in a foreign

10 corporation but only—

11 ‘‘(i) if the individual losing United

12 States citizenship owned (within the mean13 ing of section 958(a)), or is considered as

14 owning (by applying the ownership rules of

15 section 958(b)), at any time during the 2-

16 year period ending on the date of the loss

17 of United States citizenship, more than 50

18 percent of—

19 ‘‘(I) the total combined voting

20 power of all classes of stock entitled

21 to vote of such corporation, or

22 ‘‘(II) the total value of the stock

23 of such corporation, and

24 ‘‘(ii) to the extent such income or gain

25 does not exceed the earnings and profits
923

•HR 2517 IH

1 attributable to such stock which were

2 earned or accumulated before the loss of

3 citizenship and during periods that the

4 ownership requirements of clause (i) are

5 met.

6 ‘‘(2) GAIN RECOGNITION ON CERTAIN EX7 CHANGES.—

8 ‘‘(A) IN GENERAL.—In the case of any ex9 change of property to which this paragraph ap10 plies, notwithstanding any other provision of

11 this title, such property shall be treated as sold

12 for its fair market value on the date of such ex13 change, and any gain shall be recognized for

14 the taxable year which includes such date.

15 ‘‘(B) EXCHANGES TO WHICH PARAGRAPH

16 APPLIES.—This paragraph shall apply to any

17 exchange during the 10-year period described in

18 subsection (a) if—

19 ‘‘(i) gain would not (but for this para20 graph) be recognized on such exchange in

21 whole or in part for purposes of this sub22 title,

23 ‘‘(ii) income derived from such prop24 erty was from sources within the United
924

•HR 2517 IH

1 States (or, if no income was so derived,

2 would have been from such sources), and

3 ‘‘(iii) income derived from the prop4 erty acquired in the exchange would be

5 from sources outside the United States.

6 ‘‘(C) EXCEPTION.—Subparagraph (A)

7 shall not apply if the individual enters into an

8 agreement with the Secretary which specifies

9 that any income or gain derived from the prop10 erty acquired in the exchange (or any other

11 property which has a basis determined in whole

12 or part by reference to such property) during

13 such 10-year period shall be treated as from

14 sources within the United States. If the prop15 erty transferred in the exchange is disposed of

16 by the person acquiring such property, such

17 agreement shall terminate and any gain which

18 was not recognized by reason of such agreement

19 shall be recognized as of the date of such dis20 position.

21 ‘‘(D) SECRETARY MAY EXTEND PERIOD.—

22 To the extent provided in regulations prescribed

23 by the Secretary, subparagraph (B) shall be ap24 plied by substituting the 15-year period begin25 ning 5 years before the loss of United States
925

•HR 2517 IH

1 citizenship for the 10-year period referred to

2 therein.

3 ‘‘(E) SECRETARY MAY REQUIRE RECOGNI4 TION OF GAIN IN CERTAIN CASES.—To the ex5 tent provided in regulations prescribed by the

6 Secretary—

7 ‘‘(i) the removal of appreciated tan8 gible personal property from the United

9 States, and

10 ‘‘(ii) any other occurrence which

11 (without recognition of gain) results in a

12 change in the source of the income or gain

13 from property from sources within the

14 United States to sources outside the Unit15 ed States,

16 shall be treated as an exchange to which this

17 paragraph applies.

18 ‘‘(3) SUBSTANTIAL DIMINISHING OF RISKS OF

19 OWNERSHIP.—For purposes of determining whether

20 this section applies to any gain on the sale or ex21 change of any property, the running of the 10-year

22 period described in subsection (a) shall be suspended

23 for any period during which the individual’s risk of

24 loss with respect to the property is substantially di25 minished by—
926

•HR 2517 IH

1 ‘‘(A) the holding of a put with respect to

2 such property (or similar property),

3 ‘‘(B) the holding by another person of a

4 right to acquire the property, or

5 ‘‘(C) a short sale or any other trans6 action.’’

7 (d) CREDIT FOR FOREIGN TAXES IMPOSED ON

8 UNITED STATES SOURCE INCOME.—

9 (1) Subsection (b) of section 877 is amended by

10 adding at the end the following new sentence: ‘‘The

11 tax imposed solely by reason of this section shall be

12 reduced (but not below zero) by the amount of any

13 income, war profits, and excess profits taxes (within

14 the meaning of section 903) paid to any foreign

15 country or possession of the United States on any

16 income of the taxpayer on which tax is imposed sole17 ly by reason of this section.’’

18 (2) Subsection (a) of section 877, as amended

19 by subsection (a), is amended by inserting ‘‘(after

20 any reduction in such tax under the last sentence of

21 such subsection)’’ after ‘‘such subsection’’.

22 (e) COMPARABLE ESTATE AND GIFT TAX TREAT23 MENT.—

24 (1) ESTATE TAX.—
927

•HR 2517 IH

1 (A) IN GENERAL.—Subsection (a) of sec2 tion 2107 is amended to read as follows:

3 ‘‘(a) TREATMENT OF EXPATRIATES.—

4 ‘‘(1) RATE OF TAX.—A tax computed in accord5 ance with the table contained in section 2001 is

6 hereby imposed on the transfer of the taxable estate,

7 determined as provided in section 2106, of every de8 cedent nonresident not a citizen of the United States

9 if, within the 10-year period ending with the date of

10 death, such decedent lost United States citizenship,

11 unless such loss did not have for 1 of its principal

12 purposes the avoidance of taxes under this subtitle

13 or subtitle A.

14 ‘‘(2) CERTAIN INDIVIDUALS TREATED AS HAV15 ING TAX AVOIDANCE PURPOSE.—

16 ‘‘(A) IN GENERAL.—For purposes of para17 graph (1), an individual shall be treated as hav18 ing a principal purpose to avoid such taxes if

19 such individual is so treated under section

20 877(a)(2).

21 ‘‘(B) EXCEPTION.—Subparagraph (A)

22 shall not apply to a decedent meeting the re23 quirements of section 877(c)(1).’’

24 (B) CREDIT FOR FOREIGN DEATH

25 TAXES.—Subsection (c) of section 2107 is
928

•HR 2517 IH

1 amended by redesignating paragraph (2) as

2 paragraph (3) and by inserting after paragraph

3 (1) the following new paragraph:

4 ‘‘(2) CREDIT FOR FOREIGN DEATH TAXES.—

5 ‘‘(A) IN GENERAL.—The tax imposed by

6 subsection (a) shall be credited with the amount

7 of any estate, inheritance, legacy, or succession

8 taxes actually paid to any foreign country in re9 spect of any property which is included in the

10 gross estate solely by reason of subsection (b).

11 ‘‘(B) LIMITATION ON CREDIT.—The credit

12 allowed by subparagraph (A) for such taxes

13 paid to a foreign country shall not exceed the

14 lesser of—

15 ‘‘(i) the amount which bears the same

16 ratio to the amount of such taxes actually

17 paid to such foreign country in respect of

18 property included in the gross estate as the

19 value of the property included in the gross

20 estate solely by reason of subsection (b)

21 bears to the value of all property subjected

22 to such taxes by such foreign country, or

23 ‘‘(ii) such property’s proportionate

24 share of the excess of—
929

•HR 2517 IH

1 ‘‘(I) the tax imposed by sub2 section (a), over

3 ‘‘(II) the tax which would be im4 posed by section 2101 but for this

5 section.

6 ‘‘(C) PROPORTIONATE SHARE.—For pur7 poses of subparagraph (B), a property’s propor8 tionate share is the percentage which the value

9 of the property which is included in the gross

10 estate solely by reason of subsection (b) bears

11 to the total value of the gross estate.’’

12 (C) EXPANSION OF INCLUSION IN GROSS

13 ESTATE OF STOCK OF FOREIGN CORPORA14 TIONS.—Paragraph (2) of section 2107(b) is

15 amended by striking ‘‘more than 50 percent of’’

16 and all that follows and inserting ‘‘more than

17 50 percent of—

18 ‘‘(A) the total combined voting power of all

19 classes of stock entitled to vote of such corpora20 tion, or

21 ‘‘(B) the total value of the stock of such

22 corporation,’’.

23 (2) GIFT TAX.—

24 (A) IN GENERAL.—Paragraph (3) of sec25 tion 2501(a) is amended to read as follows:
930

•HR 2517 IH

1 ‘‘(3) EXCEPTION.—

2 ‘‘(A) CERTAIN INDIVIDUALS.—Paragraph

3 (2) shall not apply in the case of a donor who,

4 within the 10-year period ending with the date

5 of transfer, lost United States citizenship, un6 less such loss did not have for 1 of its principal

7 purposes the avoidance of taxes under this sub8 title or subtitle A.

9 ‘‘(B) CERTAIN INDIVIDUALS TREATED AS

10 HAVING TAX AVOIDANCE PURPOSE.—For pur11 poses of subparagraph (A), an individual shall

12 be treated as having a principal purpose to

13 avoid such taxes if such individual is so treated

14 under section 877(a)(2).

15 ‘‘(C) EXCEPTION FOR CERTAIN INDIVID16 UALS.—Subparagraph (B) shall not apply to a

17 decedent meeting the requirements of section

18 877(c)(1).

19 ‘‘(D) CREDIT FOR FOREIGN GIFT TAXES.—

20 The tax imposed by this section solely by reason

21 of this paragraph shall be credited with the

22 amount of any gift tax actually paid to any for23 eign country in respect of any gift which is tax24 able under this section solely by reason of this

25 paragraph.’’
931

•HR 2517 IH

1 (f) COMPARABLE TREATMENT OF LAWFUL PERMA2 NENT RESIDENTS WHO CEASE TO BE TAXED AS RESI3 DENTS.—

4 (1) IN GENERAL.—Section 877 is amended by

5 redesignating subsection (e) as subsection (f) and by

6 inserting after subsection (d) the following new sub7 section:

8 ‘‘(e) COMPARABLE TREATMENT OF LAWFUL PERMA9 NENT RESIDENTS WHO CEASE TO BE TAXED AS RESI10 DENTS.—

11 ‘‘(1) IN GENERAL.—Any long-term resident of

12 the United States who—

13 ‘‘(A) ceases to be a lawful permanent resi14 dent of the United States (within the meaning

15 of section 7701(b)(6)), or

16 ‘‘(B) commences to be treated as a resi17 dent of a foreign country under the provisions

18 of a tax treaty between the United States and

19 the foreign country and who does not waive the

20 benefits of such treaty applicable to residents of

21 the foreign country,

22 shall be treated for purposes of this section and sec23 tions 2107, 2501, and 6039F in the same manner

24 as if such resident were a citizen of the United
932

•HR 2517 IH

1 States who lost United States citizenship on the date

2 of such cessation or commencement.

3 ‘‘(2) LONG-TERM RESIDENT.—For purposes of

4 this subsection, the term ‘long-term resident’ means

5 any individual (other than a citizen of the United

6 States) who is a lawful permanent resident of the

7 United States in at least 8 taxable years during the

8 period of 15 taxable years ending with the taxable

9 year during which the event described in subpara10 graph (A) or (B) of paragraph (1) occurs. For pur11 poses of the preceding sentence, an individual shall

12 not be treated as a lawful permanent resident for

13 any taxable year if such individual is treated as a

14 resident of a foreign country for the taxable year

15 under the provisions of a tax treaty between the

16 United States and the foreign country and does not

17 waive the benefits of such treaty applicable to resi18 dents of the foreign country.

19 ‘‘(3) SPECIAL RULES.—

20 ‘‘(A) EXCEPTIONS NOT TO APPLY.—Sub21 section (c) shall not apply to an individual who

22 is treated as provided in paragraph (1).

23 ‘‘(B) STEP-UP IN BASIS.—Solely for pur24 poses of determining any tax imposed by reason

25 of this subsection, property which was held by
933

•HR 2517 IH

1 the long-term resident on the date the individ2 ual first became a resident of the United States

3 shall be treated as having a basis on such date

4 of not less than the fair market value of such

5 property on such date. The preceding sentence

6 shall not apply if the individual elects not to

7 have such sentence apply. Such an election,

8 once made, shall be irrevocable.

9 ‘‘(4) AUTHORITY TO EXEMPT INDIVIDUALS.—

10 This subsection shall not apply to an individual who

11 is described in a category of individuals prescribed

12 by regulation by the Secretary.

13 ‘‘(5) REGULATIONS.—The Secretary shall pre14 scribe such regulations as may be appropriate to

15 carry out this subsection, including regulations pro16 viding for the application of this subsection in cases

17 where an alien individual becomes a resident of the

18 United States during the 10-year period after being

19 treated as provided in paragraph (1).’’

20 (2) CONFORMING AMENDMENTS.—

21 (A) Section 2107 is amended by striking

22 subsection (d), by redesignating subsection (e)

23 as subsection (d), and by inserting after sub24 section (d) (as so redesignated) the following

25 new subsection:
934

•HR 2517 IH

1 ‘‘(e) CROSS REFERENCE.—

‘‘For comparable treatment of long-term lawful

permanent residents who ceased to be taxed as residents, see section 877(e).’’

2 (B) Paragraph (3) of section 2501(a) (as

3 amended by subsection (e)) is amended by add4 ing at the end the following new subparagraph:

5 ‘‘(E) CROSS REFERENCE.—

‘‘For comparable treatment of long-term lawful

permanent residents who ceased to be taxed as residents, see section 877(e).’’

6 (g) EFFECTIVE DATE.—

7 (1) IN GENERAL.—The amendments made by

8 this section shall apply to—

9 (A) individuals losing United States citi10 zenship (within the meaning of section 877 of

11 the Internal Revenue Code of 1986) on or after

12 February 6, 1995, and

13 (B) long-term residents of the United

14 States with respect to whom an event described

15 in subparagraph (A) or (B) of section 877(e)(1)

16 of such Code occurs on or after June 13, 1995.

17 (2) SPECIAL RULE.—

18 (A) IN GENERAL.—In the case of an indi19 vidual who performed an act of expatriation

20 specified in paragraph (1), (2), (3), or (4) of

21 section 349(a) of the Immigration and Nation22 ality Act (8 U.S.C. 1481(a)(1)–(4)) before Feb-
935

•HR 2517 IH

1 ruary 6, 1995, but who did not, on or before

2 such date, furnish to the United States Depart3 ment of State a signed statement of voluntary

4 relinquishment of United States nationality con5 firming the performance of such act, the

6 amendments made by this section shall apply to

7 such individual except that—

8 (i) the 10-year period described in

9 section 877(a) of such Code shall not ex10 pire before the end of the 10-year period

11 beginning on the date such statement is so

12 furnished, and

13 (ii) the 1-year period referred to in

14 section 877(c) of such Code, as amended

15 by this section, shall not expire before the

16 date which is 1 year after the date of the

17 enactment of this Act.

18 (B) EXCEPTION.—Subparagraph (A) shall

19 not apply if the individual establishes to the

20 satisfaction of the Secretary of the Treasury

21 that such loss of United States citizenship oc22 curred before February 6, 1994.
936

•HR 2517 IH

1 SEC. 13617. INFORMATION ON INDIVIDUALS LOSING UNIT2 ED STATES CITIZENSHIP.

3 (a) IN GENERAL.—Subpart A of part III of sub4 chapter A of chapter 61 is amended by inserting after sec5 tion 6039E the following new section:

6 ‘‘SEC. 6039F. INFORMATION ON INDIVIDUALS LOSING

7 UNITED STATES CITIZENSHIP.

8 ‘‘(a) IN GENERAL.—Notwithstanding any other pro9 vision of law, any individual who loses United States citi10 zenship (within the meaning of section 877(a)) shall pro11 vide a statement which includes the information described

12 in subsection (b). Such statement shall be—

13 ‘‘(1) provided not later than the earliest date of

14 any act referred to in subsection (c), and

15 ‘‘(2) provided to the person or court referred to

16 in subsection (c) with respect to such act.

17 ‘‘(b) INFORMATION TO BE PROVIDED.—Information

18 required under subsection (a) shall include—

19 ‘‘(1) the taxpayer’s TIN,

20 ‘‘(2) the mailing address of such individual’s

21 principal foreign residence,

22 ‘‘(3) the foreign country in which such individ23 ual is residing,

24 ‘‘(4) the foreign country of which such individ25 ual is a citizen,
937

•HR 2517 IH

1 ‘‘(5) in the case of an individual having a net

2 worth of at least the dollar amount applicable under

3 section 877(a)(2)(B), information detailing the as4 sets and liabilities of such individual, and

5 ‘‘(6) such other information as the Secretary

6 may prescribe.

7 ‘‘(c) ACTS DESCRIBED.—For purposes of this sec8 tion, the acts referred to in this subsection are—

9 ‘‘(1) the individual’s renunciation of his United

10 States nationality before a diplomatic or consular of11 ficer of the United States pursuant to paragraph (5)

12 of section 349(a) of the Immigration and Nationality

13 Act (8 U.S.C. 1481(a)(5)),

14 ‘‘(2) the individual’s furnishing to the United

15 States Department of State a signed statement of

16 voluntary relinquishment of United States national17 ity confirming the performance of an act of expatria18 tion specified in paragraph (1), (2), (3), or (4) of

19 section 349(a) of the Immigration and Nationality

20 Act (8 U.S.C. 1481(a)(1)–(4)),

21 ‘‘(3) the issuance by the United States Depart22 ment of State of a certificate of loss of nationality

23 to the individual, or
938

•HR 2517 IH

1 ‘‘(4) the cancellation by a court of the United

2 States of a naturalized citizen’s certificate of natu3 ralization.

4 ‘‘(d) PENALTY.—Any individual failing to provide a

5 statement required under subsection (a) shall be subject

6 to a penalty for each year (of the 10-year period beginning

7 on the date of loss of United States citizenship) during

8 any portion of which such failure continues in an amount

9 equal to the greater of—

10 ‘‘(1) 5 percent of the tax required to be paid

11 under section 877 for the taxable year ending during

12 such year, or

13 ‘‘(2) $1,000,

14 unless it is shown that such failure is due to reasonable

15 cause and not to willful neglect.

16 ‘‘(e) INFORMATION TO BE PROVIDED TO SEC17 RETARY.—Notwithstanding any other provision of law—

18 ‘‘(1) any Federal agency or court which collects

19 (or is required to collect) the statement under sub20 section (a) shall provide to the Secretary—

21 ‘‘(A) a copy of any such statement, and

22 ‘‘(B) the name (and any other identifying

23 information) of any individual refusing to com24 ply with the provisions of subsection (a),
939

•HR 2517 IH

1 ‘‘(2) the Secretary of State shall provide to the

2 Secretary a copy of each certificate as to the loss of

3 American nationality under section 358 of the Immi4 gration and Nationality Act which is approved by

5 the Secretary of State, and

6 ‘‘(3) the Federal agency primarily responsible

7 for administering the immigration laws shall provide

8 to the Secretary the name of each lawful permanent

9 resident of the United States (within the meaning of

10 section 7701(b)(6)) whose status as such has been

11 revoked or has been administratively or judicially de12 termined to have been abandoned.

13 Notwithstanding any other provision of law, not later than

14 30 days after the close of each calendar quarter, the Sec15 retary shall publish in the Federal Register the name of

16 each individual losing United States citizenship (within

17 the meaning of section 877(a)) with respect to whom the

18 Secretary receives information under the preceding sen19 tence during such quarter.

20 ‘‘(f) REPORTING BY LONG-TERM LAWFUL PERMA21 NENT RESIDENTS WHO CEASE TO BE TAXED AS RESI22 DENTS.—In lieu of applying the last sentence of sub23 section (a), any individual who is required to provide a

24 statement under this section by reason of section

25 877(e)(1) shall provide such statement with the return of
940

•HR 2517 IH

1 tax imposed by chapter 1 for the taxable year during

2 which the event described in such section occurs.

3 ‘‘(g) EXEMPTION.—The Secretary may by regula4 tions exempt any class of individuals from the require5 ments of this section if he determines that applying this

6 section to such individuals is not necessary to carry out

7 the purposes of this section.’’

8 (b) CLERICAL AMENDMENT.—The table of sections

9 for such subpart A is amended by inserting after the item

10 relating to section 6039E the following new item:

‘‘Sec. 6039F. Information on individuals losing United States citizenship.’’

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

12 this section shall apply to—

13 (1) individuals losing United States citizenship

14 (within the meaning of section 877 of the Internal

15 Revenue Code of 1986) after the date of the enact16 ment of this Act, and

17 (2) long-term residents of the United States

18 with respect to whom an event described in subpara19 graph (A) or (B) of section 877(e)(1) of such Code

20 occurs after such date.
941

•HR 2517 IH

1 SEC. 13618. REPORT ON TAX COMPLIANCE BY UNITED

2 STATES CITIZENS AND RESIDENTS LIVING

3 ABROAD.

4 Not later than 90 days after the date of the enact5 ment of this Act, the Secretary of the Treasury shall pre6 pare and submit to the Committee on Ways and Means

7 of the House of Representatives and the Committee on

8 Finance of the Senate a report—

9 (1) describing the compliance with subtitle A of

10 the Internal Revenue Code of 1986 by citizens and

11 lawful permanent residents of the United States

12 (within the meaning of section 7701(b)(6) of such

13 Code) residing outside the United States, and

14 (2) recommending measures to improve such

15 compliance (including improved coordination be16 tween executive branch agencies).

17 PART IV—REFORMS RELATING TO ENERGY

18 PROVISIONS

19 SEC. 13621. TERMINATION OF CREDIT FOR ELECTRICITY

20 PRODUCED FROM CERTAIN RENEWABLE RE21 SOURCES.

22 (a) FACILITIES MUST BE PLACED IN SERVICE BE23 FORE SEPTEMBER 14, 1995.—Paragraph (3) of section

24 45(c) (defining qualified facility) is amended by striking

25 ‘‘July 1, 1999’’ and inserting ‘‘September 14, 1995’’.

26 (b) EFFECTIVE DATE.—
942

•HR 2517 IH

1 (1) IN GENERAL.—The amendment made by

2 this section shall apply to taxable years ending after

3 September 13, 1995.

4 (2) BINDING CONTRACTS.—The amendment

5 made by this section shall not apply to any facility—

6 (A) which is constructed or acquired by the

7 taxpayer pursuant to a written contract which

8 was binding on September 13, 1995, and at all

9 times thereafter before such construction or ac10 quisition, and

11 (B) which is placed in service before Sep12 tember 14, 1996.

13 SEC. 13622. EXCLUSION FOR ENERGY CONSERVATION SUB14 SIDIES LIMITED TO SUBSIDIES WITH RE15 SPECT TO DWELLING UNITS.

16 (a) IN GENERAL.—Paragraph (1) of section 136(c)

17 (defining energy conservation measure) is amended by

18 striking ‘‘energy demand—’’ and all that follows and in19 serting ‘‘energy demand with respect to a dwelling unit.’’

20 (b) CONFORMING AMENDMENTS.—

21 (1) Subsection (a) of section 136 is amended to

22 read as follows:

23 ‘‘(a) EXCLUSION.—Gross income shall not include

24 the value of any subsidy provided (directly or indirectly)
943

•HR 2517 IH

1 by a public utility to a customer for the purchase or instal2 lation of any energy conservation measure.’’

3 (2) Paragraph (2) of section 136(c) is amend4 ed—

5 (A) by striking subparagraph (A) and by

6 redesignating subparagraphs (B) and (C) as

7 subparagraphs (A) and (B), respectively, and

8 (B) by striking ‘‘AND SPECIAL RULES’’ in

9 the paragraph heading.

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

11 this section shall apply to amounts received after Septem12 ber 13, 1995, unless received pursuant to a written bind13 ing contract in effect on September 13, 1995, and at all

14 times thereafter.

15 PART V—REFORMS RELATING TO

16 NONRECOGNITION PROVISIONS

17 SEC. 13626. BASIS ADJUSTMENT TO PROPERTY HELD BY

18 CORPORATION WHERE STOCK IN CORPORA19 TION IS REPLACEMENT PROPERTY UNDER

20 INVOLUNTARY CONVERSION RULES.

21 (a) IN GENERAL.—Subsection (b) of section 1033 is

22 amended to read as follows:

23 ‘‘(b) BASIS OF PROPERTY ACQUIRED THROUGH IN24 VOLUNTARY CONVERSION.—
944

•HR 2517 IH

1 ‘‘(1) CONVERSIONS DESCRIBED IN SUBSECTION

2 (a)(1).—If the property was acquired as the result

3 of a compulsory or involuntary conversion described

4 in subsection (a)(1), the basis shall be the same as

5 in the case of the property so converted—

6 ‘‘(A) decreased in the amount of any

7 money received by the taxpayer which was not

8 expended in accordance with the provisions of

9 law (applicable to the year in which such con10 version was made) determining the taxable sta11 tus of the gain or loss upon such conversion,

12 and

13 ‘‘(B) increased in the amount of gain or

14 decreased in the amount of loss to the taxpayer

15 recognized upon such conversion under the law

16 applicable to the year in which such conversion

17 was made.

18 ‘‘(2) CONVERSIONS DESCRIBED IN SUBSECTION

19 (a)(2).—In the case of property purchased by the

20 taxpayer in a transaction described in subsection

21 (a)(2) which resulted in the nonrecognition of any

22 part of the gain realized as the result of a compul23 sory or involuntary conversion, the basis shall be the

24 cost of such property decreased in the amount of the

25 gain not so recognized; and if the property pur-
945

•HR 2517 IH

1 chased consists of more than 1 piece of property, the

2 basis determined under this sentence shall be allo3 cated to the purchased properties in proportion to

4 their respective costs.

5 ‘‘(3) PROPERTY HELD BY CORPORATION THE

6 STOCK OF WHICH IS REPLACEMENT PROPERTY.—

7 ‘‘(A) IN GENERAL.—If the basis of stock

8 in a corporation is decreased under paragraph

9 (2), an amount equal to such decrease shall also

10 be applied to reduce the basis of property held

11 by the corporation at the time the taxpayer ac12 quired control (as defined in subsection

13 (a)(2)(E)) of such corporation.

14 ‘‘(B) LIMITATION.—Subparagraph (A)

15 shall not apply to the extent that it would (but

16 for this subparagraph) require a reduction in

17 the aggregate adjusted bases of the property of

18 the corporation below the taxpayer’s adjusted

19 basis of the stock in the corporation (deter20 mined immediately after such basis is decreased

21 under paragraph (2)).

22 ‘‘(C) ALLOCATION OF BASIS REDUCTION.—

23 The decrease required under subparagraph (A)

24 shall be allocated—
946

•HR 2517 IH

1 ‘‘(i) first to property which is similar

2 or related in service or use to the converted

3 property,

4 ‘‘(ii) second to depreciable property

5 (as defined in section 1017(b)(3)(B)) not

6 described in clause (i), and

7 ‘‘(iii) then to other property.

8 ‘‘(D) SPECIAL RULES.—

9 ‘‘(i) REDUCTION NOT TO EXCEED AD10 JUSTED BASIS OF PROPERTY.—No reduc11 tion in the basis of any property under this

12 paragraph shall exceed the adjusted basis

13 of such property (determined without re14 gard to such reduction).

15 ‘‘(ii) ALLOCATION OF REDUCTION

16 AMONG PROPERTIES.—If more than 1

17 property is described in a clause of sub18 paragraph (C), the reduction under this

19 paragraph shall be allocated among such

20 property in proportion to the adjusted

21 bases of such property (determined without

22 regard to such reduction).’’

23 (b) EFFECTIVE DATE.—The amendment made by

24 this section shall apply to involuntary conversions occur25 ring after September 13, 1995.
947

•HR 2517 IH

1 SEC. 13627. EXPANSION OF REQUIREMENT THAT INVOLUN2 TARILY CONVERTED PROPERTY BE RE3 PLACED WITH PROPERTY ACQUIRED FROM

4 AN UNRELATED PERSON.

5 (a) IN GENERAL.—Subsection (i) of section 1033 is

6 amended to read as follows:

7 ‘‘(i) REPLACEMENT PROPERTY MUST BE ACQUIRED

8 FROM UNRELATED PERSON IN CERTAIN CASES.—

9 ‘‘(1) IN GENERAL.—If the property which is in10 voluntarily converted is held by a taxpayer to which

11 this subsection applies, subsection (a) shall not apply

12 if the replacement property or stock is acquired from

13 a related person. The preceding sentence shall not

14 apply to the extent that the related person acquired

15 the replacement property or stock from an unrelated

16 person during the period applicable under subsection

17 (a)(2)(B).

18 ‘‘(2) TAXPAYERS TO WHICH SUBSECTION AP19 PLIES.—This subsection shall apply to—

20 ‘‘(A) a C corporation,

21 ‘‘(B) a partnership in which 1 or more C

22 corporations own, directly or indirectly (deter23 mined in accordance with section 707(b)(3)),

24 more than 50 percent of the capital interest, or

25 profits interest, in such partnership at the time

26 of the involuntary conversion, and
948

•HR 2517 IH

1 ‘‘(C) any other taxpayer if, with respect to

2 property which is involuntarily converted during

3 the taxable year, the aggregate of the amount

4 of realized gain on such property on which

5 there is realized gain exceeds $100,000.

6 In the case of a partnership, subparagraph (C) shall

7 apply with respect to the partnership and with re8 spect to each partner. A similar rule shall apply in

9 the case of an S corporation and its shareholders.

10 ‘‘(3) RELATED PERSON.—For purposes of this

11 subsection, a person is related to another person if

12 the person bears a relationship to the other person

13 described in section 267(b) or 707(b)(1).’’

14 (b) EFFECTIVE DATE.—The amendment made by

15 this section shall apply to involuntary conversions occur16 ring after September 13, 1995.

17 SEC. 13628. NO ROLLOVER OR EXCLUSION OF GAIN ON

18 SALE OF PRINCIPAL RESIDENCE WHICH IS

19 ATTRIBUTABLE TO DEPRECIATION DEDUC20 TIONS.

21 (a) IN GENERAL.—Subsection (d) of section 1034

22 (relating to limitations) is amended by adding at the end

23 the following new paragraph:

24 ‘‘(3) RECOGNITION OF GAIN ATTRIBUTABLE TO

25 DEPRECIATION.—Subsection (a) shall not apply to
949

•HR 2517 IH

1 so much of the gain from the sale of any residence

2 as does not exceed the portion of the depreciation

3 adjustments (as defined in section 1250(b)(3)) at4 tributable to periods after December 31, 1995, in re5 spect of such residence.’’

6 (b) COMPARABLE TREATMENT UNDER 1-TIME EX7 CLUSION OF GAIN ON SALE OF PRINCIPAL RESIDENCE.—

8 Subsection (d) of section 121 is amended by adding at

9 the end the following new paragraph:

10 ‘‘(10) RECOGNITION OF GAIN ATTRIBUTABLE

11 TO DEPRECIATION.—

12 ‘‘(A) IN GENERAL.—Subsection (a) shall

13 not apply to so much of the gain from the sale

14 of any property as does not exceed the portion

15 of the depreciation adjustments (as defined in

16 section 1250(b)(3)) attributable to periods after

17 December 31, 1995, in respect of such prop18 erty.

19 ‘‘(B) COORDINATION WITH PARAGRAPH

20 (5).—If this section does not apply to gain at21 tributable to a portion of a residence by reason

22 of paragraph (5), subparagraph (A) shall not

23 apply to depreciation adjustments attributable

24 to such portion.’’
950

•HR 2517 IH

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

2 this section shall apply to taxable years ending after De3 cember 31, 1995.

4 SEC. 13629. NONRECOGNITION OF GAIN ON SALE OF PRIN5 CIPAL RESIDENCE BY NONCITIZENS LIMITED

6 TO NEW RESIDENCES LOCATED IN THE UNIT7 ED STATES.

8 (a) IN GENERAL.—Subsection (d) of section 1034

9 (relating to limitations) (as amended by section 13628)

10 is amended by adding at the end the following new para11 graph:

12 ‘‘(4) NEW RESIDENCE MUST BE LOCATED IN

13 UNITED STATES IN CERTAIN CASES.—

14 ‘‘(A) IN GENERAL.—In the case of a sale

15 of an old residence by a taxpayer—

16 ‘‘(i) who is not a citizen of the United

17 States at the time of sale, and

18 ‘‘(ii) who is not a citizen or resident

19 of the United States on the date which is

20 2 years after the date of the sale of such

21 old residence,

22 subsection (a) shall apply only if the new resi23 dence is located in the United States or a pos24 session of the United States.
951

•HR 2517 IH

1 ‘‘(B) PROPERTY HELD JOINTLY BY HUS2 BAND AND WIFE.—Subparagraph (A) shall not

3 apply if—

4 ‘‘(i) the old residence is held by a hus5 band and wife as joint tenants, tenants by

6 the entirety, or community property,

7 ‘‘(ii) such husband and wife make a

8 joint return for the taxable year of the sale

9 or exchange, and

10 ‘‘(iii) one spouse is a citizen of the

11 United States at the time of sale.’’

12 (b) EFFECTIVE DATE.—

13 (1) IN GENERAL.—The amendment made by

14 this section shall apply to sales of old residences

15 after December 31, 1995.

16 (2) TREATMENT OF PURCHASES OF NEW RESI17 DENCES.—The amendment made by this section

18 shall not apply to new residences—

19 (A) purchased before September 13, 1995,

20 or

21 (B) purchased on or after such date pursu22 ant to a binding contract in effect on such date

23 and at all times thereafter before such pur24 chase.
952

•HR 2517 IH

1 (3) CERTAIN RULES TO APPLY.—For purposes

2 of this subsection, the rules of paragraphs (1), (2),

3 and (3) of section 1034(c) of the Internal Revenue

4 Code of 1986 shall apply.

5 PART VI—REFORMS RELATING TO GAMING

6 ACTIVITIES

7 SEC. 13631. TREATMENT OF INDIAN GAMING ACTIVITIES

8 UNDER UNRELATED BUSINESS INCOME TAX.

9 (a) IN GENERAL.—Paragraph (2) of section 511(a)

10 (relating to imposition of tax on unrelated business income

11 of charitable, etc., organizations) is amended by adding

12 at the end the following new subparagraph:

13 ‘‘(C) GAMING ACTIVITIES OF INDIAN

14 TRIBES.—

15 ‘‘(i) IN GENERAL.—The tax imposed

16 by paragraph (1) shall apply to any Indian

17 tribal organization; except that, notwith18 standing any other provision of this part,

19 in the case of such an organization, the

20 term ‘unrelated trade or business’ means

21 only a trade or business of conducting any

22 class II or class III gaming activity (as de23 fined in section 4 of the Indian Gaming

24 Regulatory Act (25 U.S.C. 2701 et seq.),

25 as in effect on the date of the enactment
953

•HR 2517 IH

1 of this subparagraph), including a gaming

2 activity described in section 513(a)(1).

3 ‘‘(ii) INDIAN TRIBAL ORGANIZA4 TION.—For purposes of clause (i), the

5 term ‘Indian tribal organization’ means

6 any Indian tribe and any organization

7 which is immune or exempt from tax under

8 this subtitle solely by reason of being

9 owned or controlled by an Indian tribe.’’

10 (b) TREATMENT OF AMOUNTS PAID FOR CHARI11 TABLE PURPOSES, ETC., BY REASON OF STATE OR FED12 ERAL LAW.—Subsection (b) of section 512 is amended by

13 adding at the end the following new paragraph:

14 ‘‘(17) In the case of an Indian tribal organiza15 tion (as defined in section 511(a)(3)), if, by reason

16 of State or Federal law or of a contract with the

17 United States or with any State or political subdivi18 sion thereof, such organization is required to use

19 any portion of the net proceeds of any gaming activ20 ity for specified purposes, the deduction for so using

21 such proceeds shall be treated as allowed under sec22 tion 170 for purposes of applying paragraph (10).

23 The preceding sentence shall not apply to such pro24 ceeds which are paid as general revenues to the
954

•HR 2517 IH

1 United States or to any State or political subdivision

2 thereof.’’

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

4 this section shall take effect on January 1, 1996.

5 (d) STUDY OF GAMBLING CONDUCTED BY TAX-EX6 EMPT ORGANIZATIONS.—The Secretary of the Treasury or

7 his delegate shall conduct a study on the nature and ex8 tent of gaming activities conducted by organizations ex9 empt from tax under section 501(a) of the Internal Reve10 nue Code of 1986, including an examination of—

11 (1) the types of gaming activities (including

12 bingo, pull tabs, and casino nights) engaged in by

13 charities and other nonprofit organizations and the

14 frequency of such activities;

15 (2) the dollar volume of such gaming activities;

16 (3) the nature and extent of the involvement of

17 for-profit entities and private parties in the manage18 ment or operation of gaming activities of such orga19 nizations;

20 (4) competition between taxable gaming activi21 ties and gaming activities that are exempt from Fed22 eral income tax; and

23 (5) an analysis of the present law tax treatment

24 of gaming activities of tax-exempt organizations.
955

•HR 2517 IH

1 The study may include any recommendations for change,

2 including examination of the South End decision and the

3 special exception for bingo games. The Secretary shall

4 submit the results of the study to the Committee on Ways

5 and Means of the House of Representatives and the Com6 mittee on Finance of the Senate not later than July 1,

7 1996.

8 SEC. 13632. REPEAL OF TARGETED EXEMPTION FROM TAX

9 ON UNRELATED TRADE OR BUSINESS IN10 COME FROM GAMBLING IN CERTAIN STATES.

11 (a) IN GENERAL.—Section 311 of the Tax Reform

12 Act of 1984 is hereby repealed.

13 (b) EFFECTIVE DATE.—The amendment made by

14 subsection (a) shall apply to games of chance conducted

15 after December 31, 1995, in taxable years ending after

16 such date.

17 SEC. 13633. EXTENSION OF WITHHOLDING TO CERTAIN

18 GAMBLING WINNINGS.

19 (a) REPEAL OF EXEMPTION FOR BINGO AND

20 KENO.—Paragraph (5) of section 3402(q) is amended to

21 read as follows:

22 ‘‘(5) EXEMPTION FOR SLOT MACHINES.—The

23 tax imposed under paragraph (1) shall not apply to

24 winnings from a slot machine.’’
956

•HR 2517 IH

1 (b) THRESHOLD AMOUNT.—Paragraph (3) of section

2 3402(q) is amended—

3 (1) by striking ‘‘(B) and (C)’’ in subparagraph

4 (A) and inserting ‘‘(B), (C), and (D)’’, and

5 (2) by adding at the end the following new sub6 paragraph:

7 ‘‘(D) BINGO AND KENO.—Proceeds of

8 more than $5,000 from a wager placed in a

9 bingo or keno game.’’

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

11 this section shall take effect on January 1, 1996.

12 PART VII—OTHER REFORMS

13 SEC. 13636. SUNSET OF LOW-INCOME HOUSING CREDIT.

14 (a) REPEAL OF REALLOCATION OF UNUSED CRED15 ITS AMONG STATES.—Subparagraph (D) of section

16 42(h)(3) is amended by adding at the end the following

17 new clause:

18 ‘‘(v) TERMINATION.—No amount may

19 be allocated under this paragraph for any

20 calendar year after 1995.’’

21 (b) TERMINATION.—Section 42 is amended by add22 ing at the end the following new subsection:

23 ‘‘(o) TERMINATION.—

24 ‘‘(1) IN GENERAL.—Except as provided in para25 graph (2)—
957

•HR 2517 IH

1 ‘‘(A) clause (i) of subsection (h)(3)(C)

2 shall not apply to any amount allocated after

3 December 31, 1997, and

4 ‘‘(B) subsection (h)(4) shall not apply to

5 any building placed in service after such date.

6 ‘‘(2) EXCEPTION FOR BOND-FINANCED BUILD7 INGS IN PROGRESS.—For purposes of paragraph

8 (1)(B), a building shall be treated as placed in serv9 ice before January 1, 1998, if—

10 ‘‘(A) the bonds with respect to such build11 ing are issued before such date,

12 ‘‘(B) the taxpayer’s basis in the project (of

13 which the building is a part) as of December

14 31, 1997, is more than 10 percent of the tax15 payer’s reasonably expected basis in such

16 project as of December 31, 1999, and

17 ‘‘(C) such building is placed in service be18 fore January 1, 2000.’’

19 SEC. 13637. REPEAL OF CREDIT FOR CONTRIBUTIONS TO

20 COMMUNITY DEVELOPMENT CORPORATIONS.

21 (a) IN GENERAL.—Section 13311 of the Revenue

22 Reconciliation Act of 1993 (relating to credit for contribu23 tions to certain community development corporations) is

24 hereby repealed.
958

•HR 2517 IH

1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply to contributions made after the

3 date of the enactment of this Act (other than contributions

4 made pursuant to a legally enforceable agreement which

5 is effect on the date of the enactment of this Act).

6 SEC. 13638. REPEAL OF DIESEL FUEL TAX REBATE TO PUR7 CHASERS OF DIESEL-POWERED AUTO8 MOBILES AND LIGHT TRUCKS.

9 (a) IN GENERAL.—Section 6427 is amended by strik10 ing subsection (g).

11 (b) CONFORMING AMENDMENTS.—

12 (1) Paragraph (3) of section 34(a) is amended

13 to read as follows:

14 ‘‘(3) under section 6427 with respect to fuels

15 used for nontaxable purposes or resold during the

16 taxable year (determined without regard to section

17 6427(k)).’’

18 (2) Paragraphs (1) and (2)(A) of section

19 6427(i) are each amended—

20 (A) by striking ‘‘(g),’’, and

21 (B) by striking ‘‘(or a qualified diesel pow22 ered highway vehicle purchased)’’ each place it

23 appears.
959

•HR 2517 IH

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

2 this section shall apply to vehicles purchased after Decem3 ber 31, 1995.

4 SEC. 13639. APPLICATION OF FAILURE-TO-PAY PENALTY TO

5 SUBSTITUTE RETURNS.

6 (a) GENERAL RULE.—Section 6651 (relating to fail7 ure to file tax return or to pay tax) is amended by adding

8 at the end the following new subsection:

9 ‘‘(g) TREATMENT OF RETURNS PREPARED BY SEC10 RETARY UNDER SECTION 6020(b).—In the case of any

11 return made by the Secretary under section 6020(b)—

12 ‘‘(1) such return shall be disregarded for pur13 poses of determining the amount of the addition

14 under paragraph (1) of subsection (a), but

15 ‘‘(2) such return shall be treated as the return

16 filed by the taxpayer for purposes of determining the

17 amount of the addition under paragraphs (2) and

18 (3) of subsection (a).’’

19 (b) EFFECTIVE DATE.—The amendment made by

20 subsection (a) shall apply in the case of any return the

21 due date for which (determined without regard to exten22 sions) is after the date of the enactment of this Act.
960

•HR 2517 IH

1 SEC. 13640. REPEAL OF SPECIAL RULE FOR RENTAL USE OF

2 VACATION HOMES, ETC., FOR LESS THAN 15

3 DAYS.

4 (a) IN GENERAL.—Section 280A (relating to dis5 allowance of certain expenses in connection with business

6 use of home, rental of vacation homes, etc.) is amended

7 by striking subsection (g).

8 (b) NO BASIS REDUCTION UNLESS DEPRECIATION

9 CLAIMED.—Section 1016 is amended by redesignating

10 subsection (e) as subsection (f) and by inserting after sub11 section (d) the following new subsection:

12 ‘‘(e) SPECIAL RULE WHERE RENTAL USE OF VACA13 TION HOME, ETC., FOR LESS THAN 15 DAYS.—If a dwell14 ing unit is used during the taxable year by the taxpayer

15 as a residence and such dwelling unit is actually rented

16 for less than 15 days during the taxable year, the reduc17 tion under subsection (a)(2) by reason of such rental use

18 in any taxable year beginning after December 31, 1995,

19 shall not exceed the depreciation deduction allowed for

20 such rental use.’’

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

22 this section shall apply to taxable years beginning after

23 December 31, 1995.
961

•HR 2517 IH

1 SEC. 13641. ELECTION TO CEASE STATUS AS QUALIFIED

2 SCHOLARSHIP FUNDING CORPORATION.

3 (a) IN GENERAL.—Subsection (d) of section 150 (re4 lating to definitions and special rules) is amended by add5 ing at the end thereof the following new paragraph:

6 ‘‘(3) ELECTION TO CEASE STATUS AS QUALI7 FIED SCHOLARSHIP FUNDING CORPORATION.—

8 ‘‘(A) IN GENERAL.—Any qualified scholar9 ship funding bond, and qualified student loan

10 bond, outstanding on the date of the issuer’s

11 election under this paragraph (and any bond

12 (or series of bonds) issued to refund such a

13 bond) shall not fail to be a tax-exempt bond

14 solely because the issuer ceases to be described

15 in subparagraphs (A) and (B) of paragraph (2)

16 if the issuer meets the requirements of subpara17 graphs (B) and (C) of this paragraph.

18 ‘‘(B) ASSETS AND LIABILITIES OF ISSUER

19 TRANSFERRED TO TAXABLE SUBSIDIARY.—The

20 requirements of this subparagraph are met by

21 an issuer if—

22 ‘‘(i) all of the student loan notes of

23 the issuer and other assets pledged to se24 cure the repayment of qualified scholarship

25 funding bond indebtedness of the issuer

26 are transferred to another corporation
962

•HR 2517 IH

1 within a reasonable period after the elec2 tion is made under this paragraph;

3 ‘‘(ii) such transferee corporation as4 sumes or otherwise provides for the pay5 ment of all of the qualified scholarship

6 funding bond indebtedness of the issuer

7 within a reasonable period after the elec8 tion is made under this paragraph;

9 ‘‘(iii) to the extent permitted by law,

10 such transferee corporation assumes all of

11 the responsibilities, and succeeds to all of

12 the rights, of the issuer under the issuer’s

13 agreements with the Secretary of Edu14 cation in respect of student loans;

15 ‘‘(iv) immediately after such transfer,

16 the issuer, together with any other issuer

17 which has made an election under this

18 paragraph in respect of such transferee,

19 hold all of the senior stock in such trans20 feree corporation; and

21 ‘‘(v) such transferee corporation is not

22 exempt from tax under this chapter.

23 ‘‘(C) ISSUER TO OPERATE AS INDEPEND24 ENT ORGANIZATION DESCRIBED IN SECTION

25 501(c)(3).—The requirements of this subpara-
963

•HR 2517 IH

1 graph are met by an issuer if, within a reason2 able period after the transfer referred to in sub3 paragraph (B)—

4 ‘‘(i) the issuer is described in section

5 501(c)(3) and exempt from tax under sec6 tion 501(a);

7 ‘‘(ii) the issuer no longer is described

8 in subparagraphs (A) and (B) of para9 graph (2); and

10 ‘‘(iii) at least 80 percent of the mem11 bers of the board of directors of the issuer

12 are independent members.

13 ‘‘(D) SENIOR STOCK.—For purposes of

14 this paragraph, the term ‘senior stock’ means

15 stock—

16 ‘‘(i) which participates pro rata and

17 fully in the equity value of the corporation

18 with all other common stock of the cor19 poration but which has the right to pay20 ment of liquidation proceeds prior to pay21 ment of liquidation proceeds in respect of

22 other common stock of the corporation;

23 ‘‘(ii) which has a fixed right upon liq24 uidation and upon redemption to an

25 amount equal to the greater of—
964

•HR 2517 IH

1 ‘‘(I) the fair market value of such

2 stock on the date of liquidation or re3 demption (whichever is applicable); or

4 ‘‘(II) the fair market value of all

5 assets transferred in exchange for

6 such stock and reduced by the amount

7 of all liabilities of the corporation

8 which has made an election under this

9 paragraph assumed by the transferee

10 corporation in such transfer;

11 ‘‘(iii) the holder of which has the right

12 to require the transferee corporation to re13 deem on a date that is not later than 10

14 years after the date on which an election

15 under this paragraph was made and pursu16 ant to such election such stock was issued;

17 and

18 ‘‘(iv) in respect of which, during the

19 time such stock is outstanding, there is not

20 outstanding any equity interest in the cor21 poration having any liquidation, redemp22 tion or dividend rights in the corporation

23 which are superior to those of such stock.

24 ‘‘(E) INDEPENDENT MEMBER.—The term

25 ‘independent member’ means a member of the
965

•HR 2517 IH

1 board of directors of the issuer who (except for

2 services as a member of such board) receives no

3 compensation directly or indirectly—

4 ‘‘(i) for services performed in connec5 tion with such transferee corporation, or

6 ‘‘(ii) for services as a member of the

7 board of directors or as an officer of such

8 transferee corporation.

9 For purposes of clause (ii), the term ‘officer’ in10 cludes any individual having powers or respon11 sibilities similar to those of officers.

12 ‘‘(F) COORDINATION WITH CERTAIN PRI13 VATE FOUNDATION TAXES.—For purposes of

14 sections 4942 (relating to the excise tax on a

15 failure to distribute income) and 4943 (relating

16 to the excise tax on excess business holdings),

17 the transferee corporation referred to in sub18 paragraph (B) shall be treated as a functionally

19 related business (within the meaning of section

20 4942(j)(4)) with respect to the issuer during

21 the period commencing with the date on which

22 an election is made under this paragraph and

23 ending on the date that is the earlier of—

24 ‘‘(i) the last day of the last taxable

25 year for which more than 50 percent of the
966

•HR 2517 IH

1 gross income of such transferee corpora2 tion is derived from, or more than 50 per3 cent of the assets (by value) of such trans4 feree corporation consists of, student loan

5 notes incurred under the Higher Education

6 Act of 1965; or

7 ‘‘(ii) the last day of the taxable year

8 of the issuer during which occurs the date

9 which is 10 years after the date on which

10 the election under this paragraph is made.

11 ‘‘(G) ELECTION.—An election under this

12 paragraph may be revoked only with the con13 sent of the Secretary.’’

14 (b) EFFECTIVE DATE.—The amendment made by

15 this section shall take effect on the date of the enactment

16 of this Act.

17 SEC. 13642. CERTAIN AMOUNTS DERIVED FROM FOREIGN

18 CORPORATIONS TREATED AS UNRELATED

19 BUSINESS TAXABLE INCOME.

20 (a) GENERAL RULE.—Subsection (b) of section 512

21 (relating to modifications) is amended by adding at the

22 end thereof the following new paragraph:

23 ‘‘(18) TREATMENT OF CERTAIN AMOUNTS DE24 RIVED FROM FOREIGN CORPORATIONS.—
967

•HR 2517 IH

1 ‘‘(A) IN GENERAL.—Notwithstanding para2 graph (1), any amount included in gross income

3 under section 951(a)(1)(A) shall be included as

4 an item of gross income derived from an unre5 lated trade or business to the extent the

6 amount so included is attributable to insurance

7 income (as defined in section 953) which, if de8 rived directly by the organization, would be

9 treated as gross income from an unrelated

10 trade or business. There shall be allowed all de11 ductions directly connected with amounts in12 cluded in gross income under the preceding sen13 tence.

14 ‘‘(B) EXCEPTION.—Subparagraph (A)

15 shall not apply to income attributable to a pol16 icy of insurance or reinsurance with respect to

17 which the person (directly or indirectly) insured

18 is—

19 ‘‘(i) such organization,

20 ‘‘(ii) an affiliate of such organization

21 which is exempt from tax under section

22 501(a), or

23 ‘‘(iii) a director, officer, or employee

24 of such organization or affiliate but only if

25 the insurance covers solely risks associated
968

•HR 2517 IH

1 with the performance of services for the

2 benefit of such organization or affiliate.

3 ‘‘(C) REGULATIONS.—The Secretary shall

4 prescribe such regulations as may be necessary

5 or appropriate to carry out the purposes of this

6 paragraph, including regulations for the appli7 cation of this paragraph in the case of income

8 paid through 1 or more entities or between 2 or

9 more chains of entities.’’

10 (b) EFFECTIVE DATE.—The amendment made by

11 this section shall apply to amounts included in gross in12 come in any taxable year beginning after December 31,

13 1995.

14 PART VIII—EXCISE TAX ON AMOUNTS OF

15 PRIVATE EXCESS BENEFITS

16 SEC. 13646. EXCISE TAXES FOR FAILURE BY CERTAIN

17 CHARITABLE ORGANIZATIONS TO MEET CER18 TAIN QUALIFICATION REQUIREMENTS.

19 (a) IN GENERAL.—Chapter 42 (relating to private

20 foundations and certain other tax-exempt organizations)

21 is amended by redesignating subchapter D as subchapter

22 E and by inserting after subchapter C the following new

23 subchapter:
969

•HR 2517 IH

1 ‘‘Subchapter D—Failure By Certain

2 Charitable Organizations To

3 Meet Certain Qualification Re4 quirements

‘‘Sec. 4958. Taxes on excess benefit transactions.

5 ‘‘SEC. 4958. TAXES ON EXCESS BENEFIT TRANSACTIONS.

6 ‘‘(a) INITIAL TAXES.—

7 ‘‘(1) ON THE DISQUALIFIED PERSON.—There is

8 hereby imposed on each excess benefit transaction a

9 tax equal to 25 percent of the excess benefit. The

10 tax imposed by this paragraph shall be paid by any

11 disqualified person referred to in subsection (f)(1)

12 with respect to such transaction.

13 ‘‘(2) ON THE MANAGEMENT.—In any case in

14 which a tax is imposed by paragraph (1), there is

15 hereby imposed on the participation of any organiza16 tion manager in the excess benefit transaction,

17 knowing that it is such a transaction, a tax equal to

18 10 percent of the excess benefit, unless such partici19 pation is not willful and is due to reasonable cause.

20 The tax imposed by this paragraph shall be paid by

21 any organization manager who participated in the

22 excess benefit transaction.

23 ‘‘(b) ADDITIONAL TAX ON THE DISQUALIFIED PER24 SON.—In any case in which an initial tax is imposed by
970

•HR 2517 IH

1 subsection (a)(1) on an excess benefit transaction and the

2 excess benefit involved in such transaction is not corrected

3 within the taxable period, there is hereby imposed a tax

4 equal to 200 percent of the excess benefit involved. The

5 tax imposed by this subsection shall be paid by any dis6 qualified person referred to in subsection (f)(1) with re7 spect to such transaction.

8 ‘‘(c) EXCESS BENEFIT TRANSACTION; EXCESS BEN9 EFIT.—For purposes of this section—

10 ‘‘(1) EXCESS BENEFIT TRANSACTION.—

11 ‘‘(A) IN GENERAL.—The term ‘excess ben12 efit transaction’ means any transaction in

13 which an economic benefit is provided by an ap14 plicable tax-exempt organization directly or in15 directly to or for the use of any disqualified

16 person if the value of the economic benefit pro17 vided exceeds the value of the consideration (in18 cluding the performance of services) received

19 for providing such benefit. For purposes of the

20 preceding sentence, an economic benefit shall

21 not be treated as consideration for the perform22 ance of services unless such organization clearly

23 indicated its intent to so treat such benefit.
971

•HR 2517 IH

1 ‘‘(B) EXCESS BENEFIT.—The term ‘excess

2 benefit’ means the excess referred to in sub3 paragraph (A).

4 ‘‘(2) AUTHORITY TO INCLUDE CERTAIN OTHER

5 PRIVATE INUREMENT.—To the extent provided in

6 regulations prescribed by the Secretary, the term

7 ‘excess benefit transaction’ includes any transaction

8 in which the amount of any economic benefit pro9 vided to or for the use of a disqualified person is de10 termined in whole or in part by the revenues of 1

11 or more activities of the organization but only if

12 such transaction results in inurement not permitted

13 under paragraph (3) or (4) of section 501(c), as the

14 case may be. In the case of any such transaction,

15 the excess benefit shall be the amount of the

16 inurement not so permitted.

17 ‘‘(d) SPECIAL RULES.—For purposes of this sec18 tion—

19 ‘‘(1) JOINT AND SEVERAL LIABILITY.—If more

20 than 1 person is liable for any tax imposed by sub21 section (a) or subsection (b), all such persons shall

22 be jointly and severally liable for such tax.

23 ‘‘(2) LIMIT FOR MANAGEMENT.—With respect

24 to any 1 excess benefit transaction, the maximum
972

•HR 2517 IH

1 amount of the tax imposed by subsection (a)(2) shall

2 not exceed $10,000.

3 ‘‘(e) APPLICABLE TAX-EXEMPT ORGANIZATION.—

4 For purposes of this subchapter, the term ‘applicable tax5 exempt organization’ means any organization which (with6 out regard to any excess benefit) would be described in

7 paragraph (3) or (4) of section 501(c) and exempt from

8 tax under section 501(a). Such term shall not include a

9 private foundation (as defined in section 509(a)).

10 ‘‘(f) OTHER DEFINITIONS.—For purposes of this sec11 tion—

12 ‘‘(1) DISQUALIFIED PERSON.—The term ‘dis13 qualified person’ means, with respect to any trans14 action—

15 ‘‘(A) any person who was, at any time dur16 ing the 5-year period ending on the date of

17 such transaction—

18 ‘‘(i) an organization manager, or

19 ‘‘(ii) an individual (other than an or20 ganization manager) in a position to exer21 cise substantial influence over the affairs

22 of the organization,

23 ‘‘(B) a member of the family of an individ24 ual described in subparagraph (A), and

25 ‘‘(C) a 35-percent controlled entity.
973

•HR 2517 IH

1 ‘‘(2) ORGANIZATION MANAGER.—The term ‘or2 ganization manager’ means, with respect to any ap3 plicable tax-exempt organization, any officer, direc4 tor, or trustee of such organization (or any individ5 ual having powers or responsibilities similar to those

6 of officers, directors, or trustees of the organiza7 tion).

8 ‘‘(3) 35-PERCENT CONTROLLED ENTITY.—

9 ‘‘(A) IN GENERAL.—The term ‘35-percent

10 controlled entity’ means—

11 ‘‘(i) a corporation in which persons

12 described in subparagraph (A) or (B) of

13 paragraph (1) own more than 35 percent

14 of the total combined voting power,

15 ‘‘(ii) a partnership in which such per16 sons own more than 35 percent of the

17 profits interest, and

18 ‘‘(iii) a trust or estate in which such

19 persons own more than 35 percent of the

20 beneficial interest.

21 ‘‘(B) CONSTRUCTIVE OWNERSHIP

22 RULES.—Rules similar to the rules of para23 graphs (3) and (4) of section 4946(a) shall

24 apply for purposes of this paragraph.
974

•HR 2517 IH

1 ‘‘(4) FAMILY MEMBERS.—The members of an

2 individual’s family shall be determined under section

3 4946(d); except that such members also shall in4 clude the brothers and sisters (whether by the whole

5 or half blood) of the individual and their spouses.

6 ‘‘(5) TAXABLE PERIOD.—The term ‘taxable pe7 riod’ means, with respect to any excess benefit

8 transaction, the period beginning with the date on

9 which the transaction occurs and ending on the ear10 liest of—

11 ‘‘(A) the date of mailing a notice of defi12 ciency under section 6212 with respect to the

13 tax imposed by subsection (a)(1), or

14 ‘‘(B) the date on which the tax imposed by

15 subsection (a)(1) is assessed.

16 ‘‘(6) CORRECTION.—The terms ‘correction’ and

17 ‘correct’ mean, with respect to any excess benefit

18 transaction, undoing the excess benefit to the extent

19 possible, and where fully undoing the excess benefit

20 is not possible, such additional corrective action as

21 is prescribed by the Secretary by regulations.

22 ‘‘(g) TREATMENT OF PREVIOUSLY EXEMPT ORGANI23 ZATIONS.—

24 ‘‘(1) IN GENERAL.—For purposes of this sec25 tion, the status of any organization as an applicable
975

•HR 2517 IH

1 tax-exempt organization shall be terminated only

2 if—

3 ‘‘(A)(i) such organization notifies the Sec4 retary (at such time and in such manner as the

5 Secretary may by regulations prescribe) of its

6 intent to accomplish such termination, or

7 ‘‘(ii) there is a final determination by the

8 Secretary that such status has terminated, and

9 ‘‘(B)(i) such organization pays the tax im10 posed by paragraph (2) (or any portion not

11 abated pursuant to paragraph (3)), or

12 ‘‘(ii) the entire amount of such tax is

13 abated pursuant to paragraph (3).

14 ‘‘(2) IMPOSITION OF TAX.—There is hereby im15 posed on each organization referred to in paragraph

16 (1) a tax equal to the lesser of—

17 ‘‘(A) the amount which the organization

18 substantiates by adequate records or other cor19 roborating evidence as the aggregate tax benefit

20 resulting from its exemption from tax under

21 section 501(a), or

22 ‘‘(B) the value of the net assets of such or23 ganization.

24 ‘‘(3) ABATEMENT OF TAX.—The Secretary may

25 abate the unpaid portion of the assessment of any
976

•HR 2517 IH

1 tax imposed by paragraph (2), or any liability in re2 spect thereof, if the applicable tax-exempt organiza3 tion distributes all of its net assets to 1 or more or4 ganizations each of which has been in existence, and

5 described in section 501(c)(3), for a continuous pe6 riod of at least 60 calendar months. If the distribut7 ing organization is described in section 501(c)(4),

8 the preceding sentence shall be applied by treating

9 the reference to section 501(c)(3) as including a ref10 erence to section 501(c)(4).

11 ‘‘(4) CERTAIN RULES MADE APPLICABLE.—

12 Rules similar to the rules of subsections (d), (e), and

13 (f) of section 507 shall apply for purposes of this

14 subsection.’’

15 (b) APPLICATION OF PRIVATE INUREMENT RULE TO

16 TAX-EXEMPT ORGANIZATIONS DESCRIBED IN SECTION

17 501(c)(4).—Paragraph (4) of section 501(c) is amended

18 by inserting ‘‘(A)’’ after ‘‘(4)’’ and by adding at the end

19 the following:

20 ‘‘(B) Subparagraph (A) shall not apply to an

21 entity unless no part of the net earnings of such en22 tity inures to the benefit of any private shareholder

23 or individual.’’

24 (c) TECHNICAL AND CONFORMING AMENDMENTS.—
977

•HR 2517 IH

1 (1) Subsection (e) of section 4955 is amend2 ed—

3 (A) by striking ‘‘SECTION 4945’’ in the

4 heading and inserting ‘‘SECTIONS 4945 and

5 4958’’, and

6 (B) by inserting before the period ‘‘or an

7 excess benefit for purposes of section 4958’’.

8 (2) Subsections (a), (b), and (c) of section 4963

9 are each amended by inserting ‘‘4958,’’ after

10 ‘‘4955,’’.

11 (3) Subsection (e) of section 6213 is amended

12 by inserting ‘‘4958 (relating to private excess bene13 fit),’’ before ‘‘4971’’.

14 (4) Paragraphs (2) and (3) of section 7422(g)

15 are each amended by inserting ‘‘4958,’’ after

16 ‘‘4955,’’.

17 (5) Subsection (b) of section 7454 is amended

18 by inserting ‘‘or whether an organization manager

19 (as defined in section 4958(f)(2)) has ‘knowingly’

20 participated in an excess benefit transaction (as de21 fined in section 4958(c)),’’ after ‘‘section 4912(b),’’.

22 (6) The table of subchapters for chapter 42 is

23 amended by striking the last item and inserting the

24 following:
978

•HR 2517 IH

‘‘Subchapter D. Failure by certain charitable organizations to

meet certain qualification requirements.

‘‘Subchapter E. Abatement of first and second tier taxes in certain cases.’’

1 (d) EFFECTIVE DATES.—

2 (1) IN GENERAL.—The amendments made by

3 this section (other than subsection (b)) shall apply

4 to excess benefit transactions occurring on or after

5 September 14, 1995.

6 (2) BINDING CONTRACTS FOR PERSONAL SERV7 ICES.—The amendments referred to in paragraph

8 (1) shall not apply to any transaction pursuant to

9 any written contract for the performance of personal

10 services which was binding on September 13, 1995,

11 and at all times thereafter before such transaction

12 occurred.

13 (3) APPLICATION OF PRIVATE INUREMENT

14 RULE TO TAX-EXEMPT ORGANIZATIONS DESCRIBED

15 IN SECTION 501(C)(4).—

16 (A) IN GENERAL.—The amendment made

17 by subsection (b) shall apply to inurement oc18 curring on or after September 14, 1995.

19 (B) BINDING CONTRACTS.—The amend20 ment made by subsection (b) shall not apply to

21 any inurement occurring before January 1,

22 1997, pursuant to a written contract which was

23 binding on September 13, 1995, and at all
979

•HR 2517 IH

1 times thereafter before such inurement oc2 curred.

3 SEC. 13647. REPORTING OF CERTAIN EXCISE TAXES AND

4 OTHER INFORMATION.

5 (a) REPORTING BY ORGANIZATIONS DESCRIBED IN

6 SECTION 501(c)(3).—Subsection (b) of section 6033 (re7 lating to certain organizations described in section

8 501(c)(3)) is amended by striking ‘‘and’’ at the end of

9 paragraph (9), by redesignating paragraph (10) as para10 graph (14), and by inserting after paragraph (9) the fol11 lowing new paragraphs:

12 ‘‘(10) the respective amounts (if any) of the

13 taxes paid by the organization during the taxable

14 year under the following provisions:

15 ‘‘(A) section 4911 (relating to tax on ex16 cess expenditures to influence legislation),

17 ‘‘(B) section 4912 (relating to tax on dis18 qualifying lobbying expenditures of certain or19 ganizations), and

20 ‘‘(C) section 4955 (relating to taxes on po21 litical expenditures of section 501(c)(3) organi22 zations),

23 ‘‘(11) the respective amounts (if any) of the

24 taxes paid by the organization or any disqualified

25 person during the taxable year under section 4958
980

•HR 2517 IH

1 (relating to taxes on private excess benefit from cer2 tain charitable organizations),

3 ‘‘(12) such information as the Secretary may

4 require with respect to any excess benefit trans5 action (as defined in section 4958),

6 ‘‘(13) the name of each disqualified person who

7 receives an economic benefit from an applicable tax8 exempt organization (as defined in section 4958(e))

9 and such other information as the Secretary may

10 prescribe with respect to such benefit, and’’.

11 (b) ORGANIZATIONS DESCRIBED IN SECTION

12 501(c)(4).—Section 6033 is amended by redesignating

13 subsection (f) as subsection (g) and by inserting after sub14 section (e) the following new subsection:

15 ‘‘(f) CERTAIN ORGANIZATIONS DESCRIBED IN SEC16 TION 501(c)(4).—Every organization described in section

17 501(c)(4) which is subject to the requirements of sub18 section (a) shall include on the return required under sub19 section (a) the information referred to in paragraphs (10),

20 (11), (12) and (13) of subsection (b) with respect to such

21 organization.’’

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

23 this section shall apply to returns for taxable years begin24 ning after the date of the enactment of this Act.
981

•HR 2517 IH

1 SEC. 13648. EXEMPT ORGANIZATIONS REQUIRED TO PRO2 VIDE COPY OF RETURN.

3 (a) GENERAL RULE.—

4 (1) Subparagraph (A) of section 6104(e)(1) (re5 lating to public inspection of annual returns) is

6 amended to read as follows:

7 ‘‘(A) IN GENERAL.—During the 3-year pe8 riod beginning on the filing date—

9 ‘‘(i) a copy of the annual return filed

10 under section 6033 (relating to returns by

11 exempt organizations) by any organization

12 to which this paragraph applies shall be

13 made available by such organization for in14 spection during regular business hours by

15 any individual at the principal office of

16 such organization and, if such organization

17 regularly maintains 1 or more regional or

18 district offices having 3 or more employees,

19 at each such regional or district office, and

20 ‘‘(ii) upon request of an individual

21 made at such principal office or such a re22 gional or district office, a copy of such an23 nual return shall be provided to such indi24 vidual without charge other than a reason25 able fee for any reproduction and mailing

26 costs.
982

•HR 2517 IH

1 If the request under clause (ii) is made in per2 son, such copy shall be provided immediately

3 and, if made other than in person, shall be pro4 vided within 30 days.’’

5 (2) Clause (ii) of section 6104(e)(2)(A) is

6 amended by inserting before the period at the end

7 thereof the following: ‘‘(and, upon request of an in8 dividual made at such principal office or such a re9 gional or district office, a copy of the material re10 quired to be available for inspection under this sub11 paragraph shall be provided (in accordance with the

12 last sentence of paragraph (1)(A)) to such individual

13 without charge other than a reasonable fee for any

14 reproduction and mailing costs)’’.

15 (3) Subsection (e) of section 6104 is amended

16 by adding at the end the following new paragraph:

17 ‘‘(3) LIMITATION.—Paragraph (1)(A)(ii) (and

18 the corresponding provision of paragraph (2)) shall

19 not apply to any request if the Secretary determines,

20 upon application by an organization, that such re21 quest is part of a harassment campaign and that

22 compliance with such request is not in the public in23 terest.’’

24 (b) ADVERTISEMENTS ETC., REQUIRED TO DIS25 CLOSE AVAILABILITY OF ANNUAL RETURN.—
983

•HR 2517 IH

1 (1) Paragraph (1) of section 6104(e) is amend2 ed by adding at the end thereof the following new

3 subparagraph:

4 ‘‘(E) ADVERTISEMENTS ETC., REQUIRED

5 TO DISCLOSE AVAILABILITY OF ANNUAL RE6 TURN.—In the case of an organization required

7 by subparagraph (A) to provide a copy of its

8 annual return under section 6033 upon request

9 to individuals, each written advertisement or so10 licitation by (or on behalf of) such organization

11 shall contain an express statement (in a con12 spicuous and easily recognizable format) that

13 such return shall be provided to individuals

14 upon request.’’

15 (2) Section 6716, as added by section 13649 of

16 this title, is amended—

17 (A) by striking ‘‘section 6116’’ each place

18 it appears and inserting ‘‘section 6116 or sec19 tion 6104(e)(1)(E)’’,

20 (B) by striking ‘‘$1,000’’ in subsection (a)

21 and inserting ‘‘$1,000 ($100 in the case of a

22 failure to meet the requirements of

23 6104(e)(1)(E))’’, and

24 (C) by inserting before the period at the

25 end of the section heading ‘‘; FAILURE OF
984

•HR 2517 IH

1 CERTAIN EXEMPT ORGANIZATIONS TO DIS2 CLOSE AVAILABILITY OF ANNUAL RE3 TURN’’.

4 (3) Subparagraph (C) of section 6652(c)(1) is

5 amended by striking ‘‘(e)(1)’’ and inserting ‘‘(e)(1)

6 (other than subparagraph (E))’’, by striking ‘‘$10’’

7 and inserting ‘‘$20’’, and by striking ‘‘$5,000’’ and

8 inserting ‘‘$10,000’’.

9 (4) Subparagraph (D) of section 6652(c)(1) is

10 amended by striking ‘‘$10’’ and inserting ‘‘$20’’.

11 (5) The item relating to section 6716 in the

12 table of sections for part I of subchapter B of chap13 ter 68 is amended by inserting before the period ‘‘;

14 failure of certain exempt organizations to disclose

15 availability of annual return’’.

16 (c) INCREASE IN PENALTY FOR WILLFUL FAILURE

17 TO ALLOW PUBLIC INSPECTION OF CERTAIN RETURNS,

18 ETC.—Section 6685 is amended by striking ‘‘$1,000’’ and

19 inserting ‘‘$5,000’’.

20 (d) COPIES OF RETURNS OF EXEMPT ORGANIZA21 TIONS AVAILABLE FROM SECRETARY IN CERTAIN

22 CASES.—Subsection (b) of section 6104 is amended to

23 read as follows:

24 ‘‘(b) INSPECTION OF ANNUAL INFORMATION RE25 TURNS.—
985

•HR 2517 IH

1 ‘‘(1) IN GENERAL.—The information required

2 to be furnished by sections 6033, 6034, and 6058,

3 together with the names and addresses of such orga4 nizations and trusts, shall be made available to the

5 public at such times and in such places as the Sec6 retary may prescribe. Nothing in this subsection

7 shall authorize the Secretary to disclose the name or

8 address of any contributor to any organization or

9 trust (other than a private foundation, as defined in

10 section 509(a)) which is required to furnish such in11 formation.

12 ‘‘(2) COPIES PROVIDED OF RETURNS FILED

13 UNDER SECTION 6033 AND APPLICATIONS FILED

14 UNDER SECTION 508 IN CERTAIN CASES.—The Sec15 retary shall provide copies of returns filed under sec16 tion 6033 and applications for exemption filed under

17 section 508 by any organization to which subsection

18 (d) or (e)(1) applies to any person who agrees (sub19 ject to such conditions as the Secretary shall pre20 scribe)—

21 ‘‘(A) to accept broad categories of such re22 turns and applications, and

23 ‘‘(B) to provide electronic access to the

24 provided returns and applications on an elec25 tronic network available to the general public.
986

•HR 2517 IH

1 Such copies shall be provided without charge if such

2 person agrees to provide such access without charge.

3 Otherwise, the Secretary may impose a reasonable

4 fee for any reproduction and mailing costs.

5 ‘‘(3) RETURNS AND APPLICATIONS FILED BE6 FORE 1996.—Paragraph (2) shall apply to returns

7 and applications filed before January 1, 1996, only

8 to the extent provided by the Secretary.’’

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

10 this section shall take effect on January 1, 1996 (or, if

11 later, the 90th day after the date of the enactment of this

12 Act).

13 SEC. 13649. CERTAIN ORGANIZATIONS REQUIRED TO DIS14 CLOSE NONEXEMPT STATUS.

15 (a) GENERAL RULE.—Subchapter B of chapter 61

16 (relating to miscellaneous provisions) is amended by redes17 ignating section 6116 as section 6117 and by inserting

18 after section 6115 the following new section:

19 ‘‘SEC. 6116. CERTAIN ORGANIZATIONS REQUIRED TO DIS20 CLOSE NONEXEMPT STATUS.

21 ‘‘(a) IN GENERAL.—If—

22 ‘‘(1) in an advertisement or solicitation by (or

23 on behalf of) an organization, such organization is

24 referred to as being nonprofit, and
987

•HR 2517 IH

1 ‘‘(2) such organization is not exempt from tax

2 under subtitle A,

3 such advertisement or solicitation shall contain an express

4 statement (in a conspicuous and easily recognizable for5 mat) that such organization is not exempt from Federal

6 income taxes.

7 ‘‘(b) CROSS REFERENCE.—

‘‘For penalties for violation of subsection (a), see

section 6716.’’

8 (b) PENALTY.—Part I of subchapter B of chapter 68

9 is amended by adding at the end thereof the following new

10 section:

11 ‘‘SEC. 6716. FAILURE TO DISCLOSE NONEXEMPT STATUS.

12 ‘‘(a) IMPOSITION OF PENALTY.—If there is a failure

13 to meet the requirements of section 6116 with respect to

14 any advertisement or solicitation by (or on behalf of) an

15 organization, such organization shall pay a penalty of

16 $1,000 for each day on which such a failure occurred. The

17 maximum penalty imposed under this subsection on fail18 ures by any organization during any calendar year shall

19 not exceed $10,000.

20 ‘‘(b) REASONABLE CAUSE EXEMPTION.—No penalty

21 shall be imposed under this section with respect to any

22 failure if it is shown that such failure is due to reasonable

23 cause.
988

•HR 2517 IH

1 ‘‘(c) $10,000 LIMITATION NOT TO APPLY WHERE

2 INTENTIONAL DISREGARD.—If any failure to which sub3 section (a) applies is due to intentional disregard of the

4 requirements of section 6116—

5 ‘‘(1) the penalty under subsection (a) for the

6 day on which failure occurred shall be the greater

7 of—

8 ‘‘(A) $1,000, or

9 ‘‘(B) 50 percent of the aggregate cost of

10 the advertisements and solicitations which oc11 curred on such day and with respect to which

12 there was such failure,

13 ‘‘(2) the $10,000 limitation of subsection (a)

14 shall not apply to any penalty under subsection (a)

15 for the day on which such failure occurred, and

16 ‘‘(3) such penalty shall not be taken into ac17 count in applying such limitation to other penalties

18 under subsection (a).

19 ‘‘(d) DAY ON WHICH FAILURE OCCURS.—For pur20 poses of this section, rules similar to the rules of section

21 6710(d) shall apply in determining the day on which any

22 failure occurs.’’

23 (c) CLERICAL AMENDMENTS.—
989

•HR 2517 IH

1 (1) The table of sections for subchapter B of

2 chapter 61 is amended by striking the item relating

3 to section 6116 and inserting the following:

‘‘Sec. 6116. Certain organizations required to disclose

nonexempt status.

‘‘Sec. 6117. Cross reference.’’

4 (2) The table of sections of part I of subchapter

5 B of chapter 68 is amended by adding at the end

6 thereof the following new item:

‘‘Sec. 6716. Failure to disclose nonexempt status.’’

7 (d) EFFECTIVE DATE.—The amendments made by

8 this section shall take effect on January 1, 1996 (or, if

9 later, the 90th day after the date of the enactment of this

10 Act).

11 SEC. 13650. INCREASE IN PENALTIES ON EXEMPT ORGANI12 ZATIONS FOR FAILURE TO FILE COMPLETE

13 AND TIMELY ANNUAL RETURNS.

14 (a) IN GENERAL.—Subparagraph (A) of section

15 6652(c)(1) (relating to annual returns under section

16 6033) is amended by striking ‘‘$10’’ and inserting ‘‘$20’’

17 and by striking ‘‘$5,000’’ and inserting ‘‘$10,000’’.

18 (b) LARGER PENALTY ON ORGANIZATIONS HAVING

19 GROSS RECEIPTS IN EXCESS OF $1,000,000.—Subpara20 graph (A) of section 6652(c)(1) is amended by adding at

21 the end the following new sentence: ‘‘In the case of an

22 organization having gross receipts exceeding $1,000,000

23 for any year, with respect to the return required under
990

•HR 2517 IH

1 section 6033 for such year, the first sentence of this sub2 paragraph shall be applied by substituting ‘$100’ for ‘$20’

3 and, in lieu of applying the second sentence of this sub4 paragraph, the maximum penalty under this subparagraph

5 shall not exceed $50,000.’’

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

7 this section shall apply to returns for taxable years ending

8 on or after December 31, 1995.

9 SEC. 13651. STUDIES.

10 (a) IN GENERAL.—The Secretary of the Treasury or

11 his delegate shall conduct a study of—

12 (1) whether the statutory prohibition on private

13 inurement, and the provisions of section 4958 of the

14 Internal Revenue Code of 1986 (as added by this

15 part), should apply to other tax-exempt organiza16 tions,

17 (2) whether State officials responsible for

18 overseeing charitable organizations should be pro19 vided with Federal tax information in addition to the

20 information available under section 6103 of such

21 Code for purposes of such oversight, and

22 (3) whether the return required to be filed by

23 section 6033 of such Code should be modified to as24 sure the return’s utility to such Secretary and to the
991

•HR 2517 IH

1 public and to reduce any unnecessary reporting bur2 dens.

3 (b) REPORT.—Not later than January 1, 1997, the

4 report of such study shall be submitted to the Committee

5 on Ways and Means of the House of Representatives and

6 the Committee on Finance of the Senate.

7 Subtitle G—Reform of the Earned

8 Income Tax Credit

9 SEC. 13701. REPEAL OF EARNED INCOME CREDIT FOR INDI10 VIDUALS WITHOUT QUALIFYING CHILDREN;

11 MODIFICATIONS TO CREDIT PHASEOUT.

12 (a) REPEAL OF CREDIT FOR INDIVIDUALS WITHOUT

13 CHILDREN.—Subparagraph (A) of section 32(c)(1) (defin14 ing eligible individual) is amended to read as follows:

15 ‘‘(A) IN GENERAL.—The term ‘eligible in16 dividual’ means any individual who has a quali17 fying child for the taxable year.’’

18 (b) MODIFICATIONS TO PHASEOUT.—

19 (1) Subsection (b) of section 32 is amended to

20 read as follows:

21 ‘‘(b) PERCENTAGES.—

22 ‘‘(1) IN GENERAL.—The credit percentage and

23 the phaseout percentage shall be determined as

24 follows:
992

•HR 2517 IH

‘‘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

1 ‘‘(2) AMOUNTS.—The earned income amount

2 and the phaseout amount shall be determined as

3 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.’’

4 (2) Subsection (j) of section 32 is amended—

5 (A) by striking ‘‘subsection (b)(2)(A)’’ and

6 inserting ‘‘subsection (b)(2)’’,

7 (B) by striking ‘‘1994’’ and inserting

8 ‘‘1996’’, and

9 (C) by striking ‘‘1993’’ and inserting

10 ‘‘1995’’.

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

12 this section shall apply to taxable years beginning after

13 December 31, 1995.

14 SEC. 13702. MODIFICATION OF ADJUSTED GROSS INCOME

15 USED FOR PHASEOUT.

16 (a) IN GENERAL.—Subsections (a)(2)(B), (c)(1)(C),

17 and (f)(2)(B) of section 32 are each amended by striking

18 ‘‘adjusted gross income’’ each place it appears and insert19 ing ‘‘modified adjusted gross income’’.
993

•HR 2517 IH

1 (b) MODIFIED ADJUSTED GROSS INCOME.—Sub2 section (c) of section 32 is amended by adding at the end

3 the following new paragraph:

4 ‘‘(5) MODIFIED ADJUSTED GROSS INCOME.—

5 For purposes of this section, the term ‘modified ad6 justed gross income’ means adjusted gross income

7 increased by—

8 ‘‘(A) any amount received as a pension or

9 annuity, and any distribution or payment re10 ceived from an individual retirement plan, by

11 the taxpayer during the taxable year to the ex12 tent not otherwise included in gross income,

13 and

14 ‘‘(B) the social security benefits (as de15 fined in section 86(d)) received by the taxpayer

16 during the taxable year to the extent not in17 cluded in gross income.

18 Any amount which is not includible in gross income

19 by reason of paragraph (3), (4), or (5) of section

20 408(d) or section 402(c), 403(a)(4), 403(b)(8), or

21 457(e)(10) shall be treated as not described in sub22 paragraph (A).’’

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

24 this section shall apply to taxable years beginning after

25 December 31, 1995.
994

•HR 2517 IH

1 SEC. 13703. EARNED INCOME TAX CREDIT DENIED TO INDI2 VIDUALS NOT AUTHORIZED TO BE EM3 PLOYED IN THE UNITED STATES.

4 (a) IN GENERAL.—Section 32(c)(1) (relating to indi5 viduals eligible to claim the earned income tax credit) is

6 amended by adding at the end the following new subpara7 graph:

8 ‘‘(F) IDENTIFICATION NUMBER REQUIRE9 MENT.—The term ‘eligible individual’ does not

10 include any individual who does not include on

11 the return of tax for the taxable year—

12 ‘‘(i) such individual’s taxpayer identi13 fication number, and

14 ‘‘(ii) if the individual is married (with15 in the meaning of section 7703), the tax16 payer identification number of such indi17 vidual’s spouse.’’

18 (b) SPECIAL IDENTIFICATION NUMBER.—Section 32

19 is amended by adding at the end the following new sub20 section:

21 ‘‘(l) IDENTIFICATION NUMBERS.—Solely for pur22 poses of subsections (c)(1)(F) and (c)(3)(D), a taxpayer

23 identification number means a social security number is24 sued to an individual by the Social Security Administra25 tion (other than a social security number issued pursuant

26 to clause (II) (or that portion of clause (III) that relates
995

•HR 2517 IH

1 to clause (II)) of section 205(c)(2)(B)(i) of the Social Se2 curity Act).’’

3 (c) EXTENSION OF PROCEDURES APPLICABLE TO

4 MATHEMATICAL OR CLERICAL ERRORS.—Section

5 6213(g)(2) (relating to the definition of mathematical or

6 clerical errors) is amended by striking ‘‘and’ at the end

7 of subparagraph (D), by striking the period at the end

8 of subparagraph (E) and inserting a comma, and by in9 serting after subparagraph (E) the following new subpara10 graphs:

11 ‘‘(F) an omission of a correct taxpayer

12 identification number required under section 32

13 (relating to the earned income tax credit) to be

14 included on a return, and

15 ‘‘(G) an entry on a return claiming the

16 credit under section 32 with respect to net

17 earnings from self-employment described in sec18 tion 32(c)(2)(A) to the extent the tax imposed

19 by section 1401 (relating to self-employment

20 tax) on such net earnings has not been paid.’’

21 (d) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to taxable years beginning after

23 December 31, 1995.
996

•HR 2517 IH

1 Subtitle H—Increase in Public

2 Debt Limit

3 SEC. 13801. INCREASE IN PUBLIC DEBT LIMIT.

4 Subsection (b) of section 3101 of title 31, United

5 States Code, is amended by striking the dollar amount

6 contained therein and inserting ‘‘$5,500,000,000,000’’.

7 Subtitle I—Coal Industry Retiree

8 Health Equity

9 SEC. 13901. REPEAL OF REACHBACK PROVISIONS OF COAL

10 INDUSTRY HEALTH BENEFIT SYSTEM.

11 (a) AMENDMENTS RELATED TO DEFINITIONS.—

12 (1) AGREEMENTS.—

13 (A) IN GENERAL.—Paragraph (1) of sec14 tion 9701(b) (relating to agreements) is amend15 ed to read as follows:

16 ‘‘(1) COAL WAGE AGREEMENTS.—

17 ‘‘(A) 1988 AGREEMENT.—The term ‘1988

18 agreement’ means the collective bargaining

19 agreement between the settlors which became

20 effective on February 1, 1988.

21 ‘‘(B) COAL WAGE AGREEMENT.—The term

22 ‘coal wage agreement’ means any predecessor to

23 the 1988 agreement.’’

24 (B) CONFORMING AMENDMENT.—Section

25 9701(b) is amended by striking paragraph (3).
997

•HR 2517 IH

1 (2) OPERATORS.—

2 (A) SIGNATORY OPERATOR.—Paragraph

3 (1) of section 9701(c) (relating to operators) is

4 amended to read as follows:

5 ‘‘(1) SIGNATORY OPERATOR.—The term ‘signa6 tory operator’ means a 1988 agreement operator.’’

7 (B) 1988 AGREEMENT OPERATOR.—Para8 graph (3) of section 9701(c) is amended to read

9 as follows:

10 ‘‘(3) 1988 AGREEMENT OPERATOR.—The term

11 ‘1988 agreement operator’ means—

12 ‘‘(A) an operator which was a signatory to

13 the 1988 agreement, or

14 ‘‘(B) a person in business which, during

15 the term of the 1988 agreement, was a signa16 tory to an agreement (other than the National

17 Coal Mine Construction Agreement and the

18 Coal Haulers’ Agreement) containing pension

19 and health care contribution and benefit provi20 sions which are the same as those contained in

21 the 1988 agreement.

22 Such term shall not include any operator who was

23 assessed, and did pay the full amount of, contractual

24 withdrawal liability to the 1950 UMWA Benefit
998

•HR 2517 IH

1 Plan, the 1974 UMWA Benefit Plan, or the Com2 bined Fund.’’

3 (C) LAST SIGNATORY OPERATOR.—Section

4 9701(c)(4) is amended by inserting ‘‘bitu5 minous’’ before ‘‘coal’’ each place it appears.

6 (b) COMBINED BENEFIT FUND.—Section 9702(b)(1)

7 is amended to read as follows:

8 ‘‘(b) BOARD OF TRUSTEES.—

9 ‘‘(1) IN GENERAL.—For purposes of subsection

10 (a), the board of trustees for the Combined Fund

11 shall be appointed as follows:

12 ‘‘(A) two individuals who represent employ13 ers in the coal mining industry shall be des14 ignated by the BCOA;

15 ‘‘(B) two individuals designated by the

16 United Mine Workers of America; and

17 ‘‘(C) three persons selected by the persons

18 appointed under subparagraphs (A) and (B).’’

19 (c) ASSIGNMENT OF ELIGIBLE BENEFICIARIES.—

20 Subsection (a) of section 9706 is amended by adding at

21 the end the following new flush sentence:

22 ‘‘For purposes of assessing premiums on or after October

23 1, 1995, under this chapter, the Commissioner of Social

24 Security shall, effective October 1, 1995, revoke all assign25 ments previously made (and shall make no further assign-
999

•HR 2517 IH

1 ments and shall terminate all unpaid liabilities for any

2 pending assignments) to all persons other than signatory

3 operators and shall deem each affected coal industry re4 tiree who is an eligible beneficiary to be an unassigned

5 beneficiary under section 9706. The preceding sentence

6 shall not be construed to prevent any transfer, or any

7 treatment of a successor as an assigned operator, under

8 subsection (b)(2).’’

9 (d) 1992 UMWA BENEFIT PLAN.—Section 9712(d)

10 is amended—

11 (1) by striking paragraph (3) and by redesig12 nating paragraphs (4), (5), and (6) as paragraphs

13 (3), (4), and (5), respectively, and

14 (2) by striking ‘‘or last signatory operator de15 scribed in paragraph (3),’’ in paragraph (3) (as re16 designated under paragraph (1)).

17 (e) INFORMATION REQUIREMENTS.—

18 (1) IN GENERAL.—Subsection (h) of section

19 9704 is amended by adding at the end the following

20 new paragraph:

21 ‘‘(2) INFORMATION TO CONTRIBUTORS.—

22 ‘‘(A) IN GENERAL.—The trustees of the

23 Combined Fund shall, within 30 days of a writ24 ten request, make available to any person re-
1000

•HR 2517 IH

1 quired to make contributions to the Combined

2 Fund, or their agent—

3 ‘‘(i) all documents which reflect its fi4 nancial and operational status, including

5 documents under which it is operated, and

6 ‘‘(ii) all documents prepared at the re7 quest of the trustees or staff of the Com8 bined Fund which form the basis for any

9 of its actions or reports, including the eli10 gibility of participants in predecessor

11 plans.

12 ‘‘(B) FEES.—The trustees may charge rea13 sonable fees (not in excess of actual expenses)

14 for providing documents under this paragraph.’’

15 (2) CONFORMING AMENDMENT.—Subsection (h)

16 of section 9704 is amended by striking ‘‘(h) INFOR17 MATION.—The’’ and inserting the following:

18 ‘‘(h) INFORMATION.—

19 ‘‘(1) INFORMATION TO SECRETARY.—The’’.

20 (f) EFFECTIVE DATE.—The amendments made by

21 this section shall apply to plan years beginning after Sep22 tember 30, 1995.
1001

•HR 2517 IH

1 TITLE XIV—COMMITTEE ON

2 WAYS AND MEANS—TAX SIM3 PLIFICATION

4 SEC. 14001. SHORT TITLE; AMENDMENT TO 1986 CODE.

5 (a) SHORT TITLE.—This title may be cited as the

6 ‘‘Tax Simplification Act of 1995’’.

7 (b) AMENDMENT OF 1986 CODE.—Except as other8 wise expressly provided, whenever in this title an amend9 ment or repeal is expressed in terms of an amendment

10 to, or repeal of, a section or other provision, the reference

11 shall be considered to be made to a section or other provi12 sion of the Internal Revenue Code of 1986.

13 (c) TABLE OF CONTENTS.—The table of contents for

14 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.

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.
1002

•HR 2517 IH

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.

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.
1003

•HR 2517 IH

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.

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).
1004

•HR 2517 IH

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.

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.
1005

•HR 2517 IH

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

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.
1006

•HR 2517 IH

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

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.
1007

•HR 2517 IH

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:

12 ‘‘(4) If the taxpayer, during the period de13 scribed in subsection (a), purchases more than 1 res14 idence which is used by him as his principal resi15 dence at some time within 2 years after the date of

16 the sale of the old residence, only the first of such
1008

•HR 2517 IH

1 residences so used by him after the date of such sale

2 shall constitute the new residence.’’

3 (3) Subsections (h)(1) and (k) of section 1034

4 are each amended by striking ‘‘(other than the 2

5 years referred to in subsection (c)(4))’’.

6 (b) EFFECTIVE DATE.—The amendments made by

7 this section shall apply to sales of old residences (within

8 the meaning of section 1034 of the Internal Revenue Code

9 of 1986) after the date of the enactment of this Act.

10 SEC. 14102. SPECIAL RULES IN CASE OF DIVORCE.

11 (a) IN GENERAL.—Subsection (c) of section 1034 is

12 amended by adding at the end the following new para13 graph:

14 ‘‘(5) If—

15 ‘‘(A) a residence is sold by an individual

16 pursuant to a divorce or marital separation,

17 and

18 ‘‘(B) the taxpayer used such residence as

19 his principal residence at any time during the

20 2-year period ending on the date of such sale,

21 for purposes of this section, such residence shall be

22 treated as the taxpayer’s principal residence at the

23 time of such sale.’’

24 (b) EFFECTIVE DATE.—The amendment made by

25 subsection (a) shall apply to sales of old residences (within
1009

•HR 2517 IH

1 the meaning of section 1034 of the Internal Revenue Code

2 of 1986) after the date of the enactment of this Act.

3 SEC. 14103. ONE-TIME EXCLUSION OF GAIN FROM SALE OF

4 PRINCIPAL RESIDENCE FOR CERTAIN

5 SPOUSES.

6 (a) IN GENERAL.—Paragraph (2) of section 121(b)

7 (relating to one-time exclusion of gain from sale of prin8 cipal residence by individual who has attained age 55) is

9 amended by adding at the end the following new sentence:

10 ‘‘For purposes of applying the preceding sentence to indi11 viduals who are married to each other, an election by one

12 individual with respect to a sale or exchange occurring be13 fore the marriage shall be disregarded for purposes of per14 mitting an election with respect to property owned and

15 used by the other individual as his principal residence

16 throughout the 3-year period ending on the date of the

17 marriage.’’

18 (b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall apply for purposes of determining

20 whether an election may be made under section 121 of

21 the Internal Revenue Code of 1986 with respect to a sale

22 or exchange occurring after September 13, 1995.
1010

•HR 2517 IH

1 PART II—OTHER PROVISIONS

2 SEC. 14111. PAYMENT OF TAX BY COMMERCIALLY ACCEPT3 ABLE MEANS.

4 (a) GENERAL RULE.—Section 6311 is amended to

5 read as follows:

6 ‘‘SEC. 6311. PAYMENT OF TAX BY COMMERCIALLY ACCEPT7 ABLE MEANS.

8 ‘‘(a) AUTHORITY TO RECEIVE.—It shall be lawful for

9 the Secretary to receive for internal revenue taxes (or in

10 payment for internal revenue stamps) any commercially

11 acceptable means that the Secretary deems appropriate to

12 the extent and under the conditions provided in regula13 tions prescribed by the Secretary.

14 ‘‘(b) ULTIMATE LIABILITY.—If a check, money

15 order, or other method of payment, including payment by

16 credit card, debit card, or charge card so received is not

17 duly paid, or is paid and subsequently charged back to

18 the Secretary, the person by whom such check, or money

19 order, or other method of payment has been tendered shall

20 remain liable for the payment of the tax or for the stamps,

21 and for all legal penalties and additions, to the same ex22 tent as if such check, money order, or other method of

23 payment had not been tendered.

24 ‘‘(c) LIABILITY OF BANKS AND OTHERS.—If any cer25 tified, treasurer’s, or cashier’s check (or other guaranteed

26 draft), or any money order, or any other means of pay-
1011

•HR 2517 IH

1 ment that has been guaranteed by a financial institution

2 (such as a credit card, debit card, or charge card trans3 action which has been guaranteed expressly by a financial

4 institution) so received is not duly paid, the United States

5 shall, in addition to its right to exact payment from the

6 party originally indebted therefor, have a lien for—

7 ‘‘(1) the amount of such check (or draft) upon

8 all assets of the financial institution on which

9 drawn,

10 ‘‘(2) the amount of such money order upon all

11 the assets of the issuer thereof, or

12 ‘‘(3) the guaranteed amount of any other trans13 action upon all the assets of the institution making

14 such guarantee,

15 and such amount shall be paid out of such assets in pref16 erence to any other claims whatsoever against such finan17 cial institution, issuer, or guaranteeing institution, except

18 the necessary costs and expenses of administration and

19 the reimbursement of the United States for the amount

20 expended in the redemption of the circulating notes of

21 such financial institution.

22 ‘‘(d) PAYMENT BY OTHER MEANS.—

23 ‘‘(1) AUTHORITY TO PRESCRIBE REGULA24 TIONS.—The Secretary shall prescribe such regula25 tions as the Secretary deems necessary to receive
1012

•HR 2517 IH

1 payment by commercially acceptable means, includ2 ing regulations that—

3 ‘‘(A) specify which methods of payment by

4 commercially acceptable means will be accept5 able,

6 ‘‘(B) specify when payment by such means

7 will be considered received,

8 ‘‘(C) identify types of nontax matters re9 lated to payment by such means that are to be

10 resolved by persons ultimately liable for pay11 ment and financial intermediaries, without the

12 involvement of the Secretary, and

13 ‘‘(D) ensure that tax matters will be re14 solved by the Secretary, without the involve15 ment of financial intermediaries.

16 ‘‘(2) AUTHORITY TO ENTER INTO CON17 TRACTS.—Notwithstanding section 3718(f) of title

18 31, United States Code, the Secretary is authorized

19 to enter into contracts to obtain services related to

20 receiving payment by other means where cost bene21 ficial to the Government. The Secretary may not pay

22 any fee or provide any other consideration under

23 such contracts.

24 ‘‘(3) SPECIAL PROVISIONS FOR USE OF CREDIT

25 CARDS.—If use of credit cards is accepted as a
1013

•HR 2517 IH

1 method of payment of taxes pursuant to subsection

2 (a)—

3 ‘‘(A) a payment of internal revenue taxes

4 (or a payment for internal revenue stamps) by

5 a person by use of a credit card shall not be

6 subject to section 161 of the Truth-in-Lending

7 Act (15 U.S.C. 1666), or to any similar provi8 sions of State law, if the error alleged by the

9 person is an error relating to the underlying tax

10 liability, rather than an error relating to the

11 credit card account such as a computational

12 error or numerical transposition in the credit

13 card transaction or an issue as to whether the

14 person authorized payment by use of the credit

15 card,

16 ‘‘(B) a payment of internal revenue taxes

17 (or a payment for internal revenue stamps)

18 shall not be subject to section 170 of the Truth19 in-Lending Act (15 U.S.C. 1666i), or to any

20 similar provisions of State law,

21 ‘‘(C) a payment of internal revenue taxes

22 (or a payment for internal revenue stamps) by

23 a person by use of a debit card shall not be

24 subject to section 908 of the Electronic Fund

25 Transfer Act (15 U.S.C. 1693f), or to any simi-
1014

•HR 2517 IH

1 lar provisions of State law, if the error alleged

2 by the person is an error relating to the under3 lying tax liability, rather than an error relating

4 to the debit card account such as a computa5 tional error or numerical transposition in the

6 debit card transaction or an issue as to whether

7 the person authorized payment by use of the

8 debit card,

9 ‘‘(D) the term ‘creditor’ under section

10 103(f) of the Truth-in-Lending Act (15 U.S.C.

11 1602(f)) shall not include the Secretary with re12 spect to credit card transactions in payment of

13 internal revenue taxes (or payment for internal

14 revenue stamps), and

15 ‘‘(E) notwithstanding any other provision

16 of law to the contrary, in the case of payment

17 made by credit card or debit card transaction of

18 an amount owed to a person as the result of the

19 correction of an error under section 161 of the

20 Truth-in-Lending Act (15 U.S.C. 1666) or sec21 tion 908 of the Electronic Fund Transfer Act

22 (15 U.S.C. 1693f), the Secretary is authorized

23 to provide such amount to such person as a

24 credit to that person’s credit card or debit card
1015

•HR 2517 IH

1 account through the applicable credit card or

2 debit card system.

3 ‘‘(e) CONFIDENTIALITY OF INFORMATION.—

4 ‘‘(1) IN GENERAL.—Except as otherwise au5 thorized by this subsection, no person may use or

6 disclose any information relating to credit or debit

7 card transactions obtained pursuant to section

8 6103(k)(8) other than for purposes directly related

9 to the processing of such transactions, or the billing

10 or collection of amounts charged or debited pursuant

11 thereto.

12 ‘‘(2) EXCEPTIONS.—

13 ‘‘(A) Debit or credit card issuers or others

14 acting on behalf of such issuers may also use

15 and disclose such information for purposes di16 rectly related to servicing an issuer’s accounts.

17 ‘‘(B) Debit or credit card issuers or others

18 directly involved in the processing of credit or

19 debit card transactions or the billing or collec20 tion of amounts charged or debited thereto may

21 also use and disclose such information for pur22 poses directly related to—

23 ‘‘(i) statistical risk and profitability

24 assessment;
1016

•HR 2517 IH

1 ‘‘(ii) transferring receivables, ac2 counts, or interest therein;

3 ‘‘(iii) auditing the account informa4 tion;

5 ‘‘(iv) complying with Federal, State,

6 or local law; and

7 ‘‘(v) properly authorized civil, crimi8 nal, or regulatory investigation by Federal,

9 State, or local authorities.

10 ‘‘(3) PROCEDURES.—Use and disclosure of in11 formation under this paragraph shall be made only

12 to the extent authorized by written procedures pro13 mulgated by the Secretary.

14 ‘‘(4) CROSS REFERENCE.—

‘‘For provision providing for civil damages for violation of paragraph (1), see section 7431.’’

15 (b) CLERICAL AMENDMENT.—The table of sections

16 for subchapter B of chapter 64 is amended by striking

17 the item relating to section 6311 and inserting the follow18 ing:

‘‘Sec. 6311. Payment of tax by commercially acceptable means.’’

19 (c) AMENDMENTS TO SECTIONS 6103 AND 7431

20 WITH RESPECT TO DISCLOSURE AUTHORIZATION.—

21 (1) Subsection (k) of section 6103 (relating to

22 confidentiality and disclosure of returns and return
1017

•HR 2517 IH

1 information) is amended by adding at the end the

2 following new paragraph:

3 ‘‘(8) DISCLOSURE OF INFORMATION TO ADMIN4 ISTER SECTION 6311.—The Secretary may disclose

5 returns or return information to financial institu6 tions and others to the extent the Secretary deems

7 necessary for the administration of section 6311.

8 Disclosures of information for purposes other than

9 to accept payments by checks or money orders shall

10 be made only to the extent authorized by written

11 procedures promulgated by the Secretary.’’

12 (2) Section 7431 (relating to civil damages for

13 unauthorized disclosure of returns and return infor14 mation) is amended by adding at the end the follow15 ing new subsection:

16 ‘‘(g) SPECIAL RULE FOR INFORMATION OBTAINED

17 UNDER SECTION 6103(k)(8).—For purposes of this sec18 tion, any reference to section 6103 shall be treated as in19 cluding a reference to section 6311(e).’’

20 (3) Section 6103(p)(3)(A) is amended by strik21 ing ‘‘or (6)’’ and inserting ‘‘(6), or (8)’’.

22 (d) EFFECTIVE DATE.—The amendments made by

23 this section shall take effect on the day 9 months after

24 the date of the enactment of this Act.
1018

•HR 2517 IH

1 SEC. 14112. SIMPLIFIED FOREIGN TAX CREDIT LIMITATION

2 FOR INDIVIDUALS.

3 (a) GENERAL RULE.—Section 904 (relating to limi4 tations on foreign tax credit) is amended by redesignating

5 subsection (j) as subsection (k) and by inserting after sub6 section (i) the following new subsection:

7 ‘‘(j) SIMPLIFIED LIMITATION FOR CERTAIN INDIVID8 UALS.—

9 ‘‘(1) IN GENERAL.—In the case of an individual

10 to whom this subsection applies for any taxable year,

11 the limitation of subsection (a) shall be the lesser

12 of—

13 ‘‘(A) 25 percent of such individual’s gross

14 income for the taxable year from sources with15 out the United States, or

16 ‘‘(B) the amount of the creditable foreign

17 taxes paid or accrued by the individual during

18 the taxable year (determined without regard to

19 subsection (c)).

20 No taxes paid or accrued by the individual during

21 such taxable year may be deemed paid or accrued in

22 any other taxable year under subsection (c).

23 ‘‘(2) INDIVIDUALS TO WHOM SUBSECTION AP24 PLIES.—This subsection shall apply to an individual

25 for any taxable year if—
1019

•HR 2517 IH

1 ‘‘(A) the entire amount of such individual’s

2 gross income for the taxable year from sources

3 without the United States consists of qualified

4 passive income,

5 ‘‘(B) the amount of the creditable foreign

6 taxes paid or accrued by the individual during

7 the taxable year does not exceed $200 ($400 in

8 the case of a joint return), and

9 ‘‘(C) such individual elects to have this

10 subsection apply for the taxable year.

11 ‘‘(3) DEFINITIONS.—For purposes of this sub12 section—

13 ‘‘(A) QUALIFIED PASSIVE INCOME.—The

14 term ‘qualified passive income’ means any item

15 of gross income if—

16 ‘‘(i) such item of income is passive in17 come (as defined in subsection (d)(2)(A)

18 without regard to clause (iii) thereof), and

19 ‘‘(ii) such item of income is shown on

20 a payee statement furnished to the individ21 ual.

22 ‘‘(B) CREDITABLE FOREIGN TAXES.—The

23 term ‘creditable foreign taxes’ means any taxes

24 for which a credit is allowable under section

25 901; except that such term shall not include
1020

•HR 2517 IH

1 any tax unless such tax is shown on a payee

2 statement furnished to such individual.

3 ‘‘(C) PAYEE STATEMENT.—The term

4 ‘payee statement’ has the meaning given to

5 such term by section 6724(d)(2).

6 ‘‘(D) ESTATES AND TRUSTS NOT ELIGI7 BLE.—This subsection shall not apply to any

8 estate or trust.’’

9 (b) EFFECTIVE DATE.—The amendment made by

10 subsection (a) shall apply to taxable years beginning after

11 December 31, 1995.

12 SEC. 14113. TREATMENT OF PERSONAL TRANSACTIONS BY

13 INDIVIDUALS UNDER FOREIGN CURRENCY

14 RULES.

15 (a) GENERAL RULE.—Subsection (e) of section 988

16 (relating to application to individuals) is amended to read

17 as follows:

18 ‘‘(e) APPLICATION TO INDIVIDUALS.—

19 ‘‘(1) IN GENERAL.—The preceding provisions of

20 this section shall not apply to any section 988 trans21 action entered into by an individual which is a per22 sonal transaction.

23 ‘‘(2) EXCLUSION FOR CERTAIN PERSONAL

24 TRANSACTIONS.—If—
1021

•HR 2517 IH

1 ‘‘(A) nonfunctional currency is disposed of

2 by an individual in any transaction, and

3 ‘‘(B) such transaction is a personal trans4 action,

5 no gain shall be recognized for purposes of this sub6 title by reason of changes in exchange rates after

7 such currency was acquired by such individual and

8 before such disposition. The preceding sentence shall

9 not apply if the gain which would otherwise be rec10 ognized exceeds $200.

11 ‘‘(3) PERSONAL TRANSACTIONS.—For purposes

12 of this subsection, the term ‘personal transaction’

13 means any transaction entered into by an individual,

14 except that such term shall not include any trans15 action to the extent that expenses properly allocable

16 to such transaction meet the requirements of section

17 162 or 212 (other than that part of section 212

18 dealing with expenses incurred in connection with

19 taxes).’’

20 (b) EFFECTIVE DATE.—The amendments made by

21 this section shall apply to taxable years beginning after

22 December 31, 1995.
1022

•HR 2517 IH

1 SEC. 14114. TREATMENT OF CERTAIN REIMBURSED EX2 PENSES OF RURAL MAIL CARRIERS.

3 (a) IN GENERAL.—Section 162 (relating to trade or

4 business expenses) is amended by redesignating subsection

5 (o) as subsection (p) and by inserting after subsection (n)

6 the following new subsection:

7 ‘‘(o) TREATMENT OF CERTAIN REIMBURSED EX8 PENSES OF RURAL MAIL CARRIERS.—

9 ‘‘(1) GENERAL RULE.—In the case of any em10 ployee of the United States Postal Service who per11 forms services involving the collection and delivery of

12 mail on a rural route and who receives qualified re13 imbursements for the expenses incurred by such em14 ployee for the use of a vehicle in performing such

15 services—

16 ‘‘(A) the amount allowable as a deduction

17 under this chapter for the use of a vehicle in

18 performing such services shall be equal to the

19 amount of such qualified reimbursements; and

20 ‘‘(B) such qualified reimbursements shall

21 be treated as paid under a reimbursement or

22 other expense allowance arrangement for pur23 poses of section 62(a)(2)(A) (and section 62(c)

24 shall not apply to such qualified reimburse25 ments).
1023

•HR 2517 IH

1 ‘‘(2) DEFINITION OF QUALIFIED REIMBURSE2 MENTS.—For purposes of this subsection, the term

3 ‘qualified reimbursements’ means the amounts paid

4 by the United States Postal Service to employees as

5 an equipment maintenance allowance under the

6 1991 collective bargaining agreement between the

7 United States Postal Service and the National Rural

8 Letter Carriers’ Association. Amounts paid as an

9 equipment maintenance allowance by such Postal

10 Service under later collective bargaining agreements

11 that supersede the 1991 agreement shall be consid12 ered qualified reimbursements if such amounts do

13 not exceed the amounts that would have been paid

14 under the 1991 agreement, adjusted for changes in

15 the Consumer Price Index (as defined in section

16 1(f)(5)) since 1991.’’

17 (b) TECHNICAL AMENDMENT.—Section 6008 of the

18 Technical and Miscellaneous Revenue Act of 1988 is here19 by repealed.

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

21 this section shall apply to taxable years beginning after

22 December 31, 1995.
1024

•HR 2517 IH

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.
1025

•HR 2517 IH

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.—
1026

•HR 2517 IH

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.—
1027

•HR 2517 IH

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).
1028

•HR 2517 IH

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
1029

•HR 2517 IH

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
1030

•HR 2517 IH

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
1031

•HR 2517 IH

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)).’’
1032

•HR 2517 IH

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
1033

•HR 2517 IH

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.
1034

•HR 2517 IH

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.
1035

•HR 2517 IH

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
1036

•HR 2517 IH

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
1037

•HR 2517 IH

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.
1038

•HR 2517 IH

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).’’
1039

•HR 2517 IH

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).
1040

•HR 2517 IH

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
1041

•HR 2517 IH

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-
1042

•HR 2517 IH

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
1043

•HR 2517 IH

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
1044

•HR 2517 IH

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
1045

•HR 2517 IH

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.—
1046

•HR 2517 IH

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-
1047

•HR 2517 IH

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
1048

•HR 2517 IH

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.
1049

•HR 2517 IH

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.
1050

•HR 2517 IH

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
1051

•HR 2517 IH

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-
1052

•HR 2517 IH

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.
1053

•HR 2517 IH

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
1054

•HR 2517 IH

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-
1055

•HR 2517 IH

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-
1056

•HR 2517 IH

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-
1057

•HR 2517 IH

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
1058

•HR 2517 IH

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
1059

•HR 2517 IH

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.—
1060

•HR 2517 IH

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
1061

•HR 2517 IH

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—
1062

•HR 2517 IH

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
1063

•HR 2517 IH

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.—
1064

•HR 2517 IH

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’’.
1065

•HR 2517 IH

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—
1066

•HR 2517 IH

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
1067

•HR 2517 IH

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
1068

•HR 2517 IH

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’’.
1069

•HR 2517 IH

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.
1070

•HR 2517 IH

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—
1071

•HR 2517 IH

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.
1072

•HR 2517 IH

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.—
1073

•HR 2517 IH

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
1074

•HR 2517 IH

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—
1075

•HR 2517 IH

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
1076

•HR 2517 IH

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-
1077

•HR 2517 IH

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.
1078

•HR 2517 IH

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).
1079

•HR 2517 IH

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.
1080

•HR 2517 IH

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.—
1081

•HR 2517 IH

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.
1082

•HR 2517 IH

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
1083

•HR 2517 IH

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.—
1084

•HR 2517 IH

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.
1085

•HR 2517 IH

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
1086

•HR 2517 IH

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
1087

•HR 2517 IH

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
1088

•HR 2517 IH

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.’’
1089

•HR 2517 IH

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
1090

•HR 2517 IH

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
1091

•HR 2517 IH

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-
1092

•HR 2517 IH

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
1093

•HR 2517 IH

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
1094

•HR 2517 IH

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
1095

•HR 2517 IH

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
1096

•HR 2517 IH

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-
1097

•HR 2517 IH

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
1098

•HR 2517 IH

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
1099

•HR 2517 IH

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,
1100

•HR 2517 IH

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.
1101

•HR 2517 IH

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.
1102

•HR 2517 IH

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
1103

•HR 2517 IH

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-
1104

•HR 2517 IH

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.
1105

•HR 2517 IH

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
1106

•HR 2517 IH

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),
1107

•HR 2517 IH

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
1108

•HR 2517 IH

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.
1109

•HR 2517 IH

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).
1110

•HR 2517 IH

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
1111

•HR 2517 IH

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
1112

•HR 2517 IH

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).
1113

•HR 2517 IH

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.
1114

•HR 2517 IH

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.
1115

•HR 2517 IH

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.’’
1116

•HR 2517 IH

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,
1117

•HR 2517 IH

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-
1118

•HR 2517 IH

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-
1119

•HR 2517 IH

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-
1120

•HR 2517 IH

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
1121

•HR 2517 IH

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.—
1122

•HR 2517 IH

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-
1123

•HR 2517 IH

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.
1124

•HR 2517 IH

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-
1125

•HR 2517 IH

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.’’
1126

•HR 2517 IH

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-
1127

•HR 2517 IH

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
1128

•HR 2517 IH

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.—
1129

•HR 2517 IH

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.’’
1130

•HR 2517 IH

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-
1131

•HR 2517 IH

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.
1132

•HR 2517 IH

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.
1133

•HR 2517 IH

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-
1134

•HR 2517 IH

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)’’.
1135

•HR 2517 IH

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:
1136

•HR 2517 IH

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’’.
1137

•HR 2517 IH

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
1138

•HR 2517 IH

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
1139

•HR 2517 IH

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:
1140

•HR 2517 IH

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.
1141

•HR 2517 IH

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.
1142

•HR 2517 IH

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
1143

•HR 2517 IH

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
1144

•HR 2517 IH

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.
1145

•HR 2517 IH

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.
1146

•HR 2517 IH

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:
1147

•HR 2517 IH

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.—
1148

•HR 2517 IH

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.—
1149

•HR 2517 IH

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
1150

•HR 2517 IH

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—
1151

•HR 2517 IH

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
1152

•HR 2517 IH

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-
1153

•HR 2517 IH

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,
1154

•HR 2517 IH

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
1155

•HR 2517 IH

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.
1156

•HR 2517 IH

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
1157

•HR 2517 IH

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
1158

•HR 2517 IH

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
1159

•HR 2517 IH

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.’’
1160

•HR 2517 IH

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
1161

•HR 2517 IH

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-
1162

•HR 2517 IH

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.
1163

•HR 2517 IH

1 SEC. 14412. MISCELLANEOUS MODIFICATIONS TO

2 SUBPART 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-
1164

•HR 2517 IH

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—
1165

•HR 2517 IH

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.
1166

•HR 2517 IH

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—
1167

•HR 2517 IH

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
1168

•HR 2517 IH

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
1169

•HR 2517 IH

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.
1170

•HR 2517 IH

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
1171

•HR 2517 IH

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
1172

•HR 2517 IH

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
1173

•HR 2517 IH

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.
1174

•HR 2517 IH

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.
1175

•HR 2517 IH

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
1176

•HR 2517 IH

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,
1177

•HR 2517 IH

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-
1178

•HR 2517 IH

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.—
1179

•HR 2517 IH

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
1180

•HR 2517 IH

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
1181

•HR 2517 IH

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.
1182

•HR 2517 IH

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:
1183

•HR 2517 IH

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.
1184

•HR 2517 IH

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.
1185

•HR 2517 IH

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
1186

•HR 2517 IH

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
1187

•HR 2517 IH

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.
1188

•HR 2517 IH

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
1189

•HR 2517 IH

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-
1190

•HR 2517 IH

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—
1191

•HR 2517 IH

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.
1192

•HR 2517 IH

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:
1193

•HR 2517 IH

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:
1194

•HR 2517 IH

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,
1195

•HR 2517 IH

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
1196

•HR 2517 IH

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),
1197

•HR 2517 IH

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:
1198

•HR 2517 IH

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
1199

•HR 2517 IH

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
1200

•HR 2517 IH

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.—
1201

•HR 2517 IH

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—
1202

•HR 2517 IH

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
1203

•HR 2517 IH

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.
1204

•HR 2517 IH

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
1205

•HR 2517 IH

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-
1206

•HR 2517 IH

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:
1207

•HR 2517 IH

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.’’
1208

•HR 2517 IH

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,
1209

•HR 2517 IH

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:
1210

•HR 2517 IH

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
1211

•HR 2517 IH

1 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-
1212

•HR 2517 IH

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
1213

•HR 2517 IH

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)’’.
1214

•HR 2517 IH

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.
1215

•HR 2517 IH

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.
1216

•HR 2517 IH

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-
1217

•HR 2517 IH

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’’.
1218

•HR 2517 IH

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-
1219

•HR 2517 IH

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
1220

•HR 2517 IH

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:
1221

•HR 2517 IH

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
1222

•HR 2517 IH

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-
1223

•HR 2517 IH

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
1224

•HR 2517 IH

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
1225

•HR 2517 IH

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-
1226

•HR 2517 IH

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.’’
1227

•HR 2517 IH

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),
1228

•HR 2517 IH

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)’’.
1229

•HR 2517 IH

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—
1230

•HR 2517 IH

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:
1231

•HR 2517 IH

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-
1232

•HR 2517 IH

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
1233

•HR 2517 IH

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
1234

•HR 2517 IH

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.
1235

•HR 2517 IH

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.
1236

•HR 2517 IH

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
1237

•HR 2517 IH

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’’.
1238

•HR 2517 IH

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
1239

•HR 2517 IH

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
1240

•HR 2517 IH

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.
1241

•HR 2517 IH

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—
1242

•HR 2517 IH

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.—
1243

•HR 2517 IH

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
1244

•HR 2517 IH

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.
1245

•HR 2517 IH

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-
1246

•HR 2517 IH

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-
1247

•HR 2517 IH

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 individuals’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.
1248

•HR 2517 IH

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,
1249

•HR 2517 IH

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).
1250

•HR 2517 IH

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-
1251

•HR 2517 IH

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 purpose 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
1252

•HR 2517 IH

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-
1253

•HR 2517 IH

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-
1254

•HR 2517 IH

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.—
1255

•HR 2517 IH

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
1256

•HR 2517 IH

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:
1257

•HR 2517 IH

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.
1258

•HR 2517 IH

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.
1259

•HR 2517 IH

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
1260

•HR 2517 IH

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—
1261

•HR 2517 IH

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),
1262

•HR 2517 IH

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.
1263

•HR 2517 IH

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
1264

•HR 2517 IH

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.
1265

•HR 2517 IH

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

9 of the Revenue Reconciliation Act of 1993 is amended by

10 inserting ‘‘, 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.
1266

•HR 2517 IH

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
1267

•HR 2517 IH

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
1268

•HR 2517 IH

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.’’
1269

•HR 2517 IH

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.
1270

•HR 2517 IH

1 SEC. 14603. SEPARATE SHARE RULES AVAILABLE TO

2 ESTATES.

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
1271

•HR 2517 IH

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.
1272

•HR 2517 IH

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
1273

•HR 2517 IH

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:
1274

•HR 2517 IH

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,
1275

•HR 2517 IH

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
1276

•HR 2517 IH

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
1277

•HR 2517 IH

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.’’
1278

•HR 2517 IH

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
1279

•HR 2517 IH

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),
1280

•HR 2517 IH

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.
1281

•HR 2517 IH

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-
1282

•HR 2517 IH

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.
1283

•HR 2517 IH

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.
1284

•HR 2517 IH

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.
1285

•HR 2517 IH

1 SEC. 14616. UNIFIED CREDIT OF DECEDENT INCREASED BY

2 UNIFIED CREDIT OF SPOUSE USED ON SPLIT

3 GIFT INCLUDED IN DECEDENT’S GROSS

4 ESTATE.

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.
1286

•HR 2517 IH

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)
1287

•HR 2517 IH

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.
1288

•HR 2517 IH

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—
1289

•HR 2517 IH

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-
1290

•HR 2517 IH

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.—
1291

•HR 2517 IH

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.—
1292

•HR 2517 IH

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
1293

•HR 2517 IH

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’
1294

•HR 2517 IH

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:
1295

•HR 2517 IH

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.’’
1296

•HR 2517 IH

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.’’
1297

•HR 2517 IH

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-
1298

•HR 2517 IH

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).
1299

•HR 2517 IH

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.
1300

•HR 2517 IH

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.
1301

•HR 2517 IH

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—
1302

•HR 2517 IH

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.—
1303

•HR 2517 IH

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’’.
1304

•HR 2517 IH

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.
1305

•HR 2517 IH

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-
1306

•HR 2517 IH

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.
1307

•HR 2517 IH

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
1308

•HR 2517 IH

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’’.
1309

•HR 2517 IH

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
1310

•HR 2517 IH

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.
1311

•HR 2517 IH

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
1312

•HR 2517 IH

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
1313

•HR 2517 IH

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
1314

•HR 2517 IH

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-
1315

•HR 2517 IH

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.—
1316

•HR 2517 IH

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.
1317

•HR 2517 IH

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
1318

•HR 2517 IH

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.’’
1319

•HR 2517 IH

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
1320

•HR 2517 IH

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.’’
1321

•HR 2517 IH

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—
1322

•HR 2517 IH

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-
1323

•HR 2517 IH

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).’’
1324

•HR 2517 IH

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—PRESERVING, PRO5 TECTING, AND STRENGTHEN6 ING MEDICARE

7 H.R. 2425 as passed the House of Representatives

8 is hereby enacted into law.

9 TITLE XVI—TRANSFORMATION

10 OF THE MEDICAID PROGRAM

11 SEC. 16000. SHORT TITLE.

12 This title may be cited as the ‘‘Medicaid Trans13 formation Act of 1995’’.

14 SEC. 16001. TRANSFORMATION OF MEDICAID PROGRAM.

15 The Social Security Act is amended by adding at the

16 end the following new title:

17 ‘‘TITLE XXI—MEDIGRANT PROGRAM FOR LOW18 INCOME INDIVIDUALS AND FAMILIES

19 ‘‘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
1325

•HR 2517 IH

‘‘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. Preventing spousal impoverishment.

‘‘Sec. 2116. Construction.

‘‘Sec. 2117. 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
1326

•HR 2517 IH

1 State has submitted to the Secretary under part E a plan

2 (in this title referred to as a ‘MediGrant plan’) that—

3 ‘‘(1) sets forth how the State intends to use the

4 funds provided under this title to provide medical as5 sistance to needy individuals and families consistent

6 with the provisions of this title, and

7 ‘‘(2) is approved under such part.

8 ‘‘(c) CONTINUED APPROVAL.—An approved

9 MediGrant plan shall continue in effect unless and until—

10 ‘‘(1) the State amends the plan under section

11 2152,

12 ‘‘(2) the State terminates participation under

13 this title under section 2153, or

14 ‘‘(3) the Secretary finds substantial noncompli15 ance of the plan with the requirements of this title

16 under section 2154.

17 ‘‘(d) STATE ENTITLEMENT.—This title constitutes

18 budget authority in advance of appropriations Acts, and

19 represents the obligation of the Federal Government to

20 provide for the payment to States of amounts provided

21 under part C.
1327

•HR 2517 IH

1 ‘‘PART A—OBJECTIVES, GOALS, AND PERFORMANCE

2 UNDER STATE PLANS

3 ‘‘SEC. 2101. DESCRIPTION OF STRATEGIC OBJECTIVES AND

4 PERFORMANCE GOALS.

5 ‘‘(a) DESCRIPTION.—A MediGrant plan shall include

6 a description of the strategic objectives and performance

7 goals the State has established for providing health care

8 services to low-income populations under this title, includ9 ing a general description of the manner in which the plan

10 is designed to meet these objectives and goals.

11 ‘‘(b) CERTAIN OBJECTIVES AND GOALS RE12 QUIRED.—A MediGrant plan shall include strategic objec13 tives and performance goals relating to rates of childhood

14 immunizations and reductions in infant mortality and

15 morbidity.

16 ‘‘(c) CONSIDERATIONS.—In specifying these objec17 tives and goals the State may consider factors such as the

18 following:

19 ‘‘(1) The State’s priorities with respect to such

20 areas as providing assistance to low-income popu21 lations.

22 ‘‘(2) The State’s priorities with respect to the

23 general public health and the health status of indi24 viduals eligible for assistance under the MediGrant

25 plan.
1328

•HR 2517 IH

1 ‘‘(3) The State’s financial resources, the par2 ticular economic conditions in the State, and relative

3 adequacy of the health care infrastructure in dif4 ferent regions of the State.

5 ‘‘(d) PERFORMANCE MEASURES.—To the extent

6 practicable—

7 ‘‘(1) one or more performance goals shall be es8 tablished by the State for each strategic objective

9 identified in the MediGrant plan; and

10 ‘‘(2) the MediGrant plan shall describe, how

11 program performance will be—

12 ‘‘(A) measured through objective, inde13 pendently verifiable means, and

14 ‘‘(B) compared against performance goals,

15 in order to determine the State’s performance

16 under this title.

17 ‘‘(e) PERIOD COVERED.—

18 ‘‘(1) STRATEGIC OBJECTIVES.—The strategic

19 objectives shall cover a period of not less than 5

20 years and shall be updated and revised at least every

21 3 years.

22 ‘‘(2) PERFORMANCE GOALS.—The performance

23 goals shall be established for dates that are not more

24 than 3 years apart.
1329

•HR 2517 IH

1 ‘‘SEC. 2102. ANNUAL REPORTS.

2 ‘‘(a) IN GENERAL.—In the case of a State with a

3 MediGrant plan that is in effect for part or all of a fiscal

4 year, no later than March 31 following such fiscal year

5 (or March 31, 1998, in the case of fiscal year 1996) the

6 State shall prepare and submit to the Secretary and the

7 Congress a report on program activities and performance

8 under this title for such fiscal year.

9 ‘‘(b) CONTENTS.—Each annual report under this sec10 tion for a fiscal year shall include the following:

11 ‘‘(1) EXPENDITURE AND BENEFICIARY SUM12 MARY.—

13 ‘‘(A) INITIAL SUMMARY.—For the report

14 for fiscal year 1997 (and, if applicable, fiscal

15 year 1996), a summary of all expenditures

16 under the MediGrant plan during the fiscal

17 year (and during any portions of fiscal year

18 1996 during which the MediGrant plan was in

19 effect under this title) as follows:

20 ‘‘(i) Aggregate medical assistance ex21 penditures, disaggregated to the extent re22 quired to determine compliance with the

23 set-aside requirements of subsections (a)

24 through (c) section 2112 and to compute

25 the case mix index under section

26 2121(d)(3).
1330

•HR 2517 IH

1 ‘‘(ii) For each general category of eli2 gible individuals (specified in subsection

3 (c)(1), aggregate medical assistance ex4 penditures and the total and average num5 ber of eligible individuals under the

6 MediGrant plan.

7 ‘‘(iii) By each general category of eli8 gible individuals, total expenditures for

9 each of the categories of health care items

10 and services (specified in subsection (c)(2))

11 which are covered under the MediGrant

12 plan and provided on a fee-for-service

13 basis.

14 ‘‘(iv) By each general category of eli15 gible individuals, total expenditures for

16 payments to capitated health care organi17 zations (as defined in section 2114(c)(1)).

18 ‘‘(v) Total administrative expendi19 tures.

20 ‘‘(B) SUBSEQUENT SUMMARIES.—For re21 ports for each succeeding fiscal year, a sum22 mary of—

23 ‘‘(i) all expenditures under the

24 MediGrant plan consistent with the report-
1331

•HR 2517 IH

1 ing format specified by the MediGrant

2 Task Force under section 2106(d)(1), and

3 ‘‘(ii) the total and average number of

4 eligible individuals under the MediGrant

5 plan for each general category of eligible

6 individuals.

7 ‘‘(2) UTILIZATION SUMMARY.—

8 ‘‘(A) INITIAL SUMMARY.—For the report

9 for fiscal year 1997 (and, if applicable, fiscal

10 year 1996), summary statistics on the utiliza11 tion of health care services under the

12 MediGrant plan during the year (and during

13 any portions of fiscal year 1996 during which

14 the MediGrant plan was in effect under this

15 title) as follows:

16 ‘‘(i) For each general category of eli17 gible individuals and for each of the cat18 egories of health care items and services

19 which are covered under the MediGrant

20 plan and provided on a fee-for-service

21 basis, the number and percentage of per22 sons who received such a type of service or

23 item during the period covered by the re24 port.
1332

•HR 2517 IH

1 ‘‘(ii) Summary of health care utiliza2 tion data reported to the State by

3 capitated health care organizations.

4 ‘‘(B) SUBSEQUENT SUMMARIES.—For re5 ports for each succeeding fiscal year, summary

6 statistics on the utilization of health care serv7 ices under the MediGrant plan consistent with

8 the reporting format specified by the

9 MediGrant Task Force under section

10 2106(d)(1).

11 ‘‘(3) ACHIEVEMENT OF PERFORMANCE

12 GOALS.—With respect to each performance goal es13 tablished under section 2101 and applicable to the

14 year involved—

15 ‘‘(A) a brief description of the goal;

16 ‘‘(B) data on the actual performance with

17 respect to the goal;

18 ‘‘(C) a review of the extent to which the

19 goal was achieved, based on such data; and

20 ‘‘(D) where a performance goal has not

21 been met—

22 ‘‘(i) why the goal was not met, and

23 ‘‘(ii) actions to be taken in response

24 to such performance (including adjust-
1333

•HR 2517 IH

1 ments in performance goals or program ac2 tivities for subsequent years).

3 ‘‘(4) PROGRAM EVALUATIONS.—A summary of

4 the findings of evaluations under section 2103 com5 pleted during the fiscal year covered by the report.

6 ‘‘(5) FRAUD AND ABUSE AND QUALITY CON7 TROL ACTIVITIES.—A general description of the

8 State’s activities under part D to detect and deter

9 fraud and abuse and to assure quality of services

10 provided under the program.

11 ‘‘(6) PLAN ADMINISTRATION.—

12 ‘‘(A) A description of the administrative

13 roles and responsibilities of entities in the State

14 responsible for administration of this title.

15 ‘‘(B) Organizational charts for each entity

16 in the State primarily responsible for activities

17 under this title.

18 ‘‘(C) A brief description of each interstate

19 compact (if any) the State has entered into

20 with other States with respect to activities

21 under this title.

22 ‘‘(D) General citations to the State stat23 utes and administrative rules governing the

24 State’s activities under this title.
1334

•HR 2517 IH

1 ‘‘(7) INPATIENT HOSPITAL PAYMENTS.—With

2 respect to inpatient hospital services provided under

3 the MediGrant plan on a fee-for-service basis, a de4 scription of the average amount paid per discharge

5 in the fiscal year compared either to the average

6 charge for such services or to the State’s estimate

7 of the average amount paid per discharge by com8 mercial health insurers in the State.

9 ‘‘(c) DEFINITIONS.—In this section:

10 ‘‘(1) Each of the following is a general category

11 of eligible individuals:

12 ‘‘(A) Children.

13 ‘‘(B) Blind or disabled adults under 65

14 years of age.

15 ‘‘(C) Persons 65 years of age or older.

16 ‘‘(D) Other adults.

17 ‘‘(2) The health care items and services de18 scribed in each subparagraph of section 2171(a)(1)

19 shall be considered a separate category of health

20 care items and services.

21 ‘‘SEC. 2103. PERIODIC, INDEPENDENT EVALUATIONS.

22 ‘‘(a) IN GENERAL.—During fiscal year 1998 and

23 every third fiscal year thereafter, each State shall provide

24 for an evaluation of the operation of its MediGrant plan

25 under this title.
1335

•HR 2517 IH

1 ‘‘(b) INDEPENDENT.—Each such evaluation with re2 spect to an activity under the MediGrant plan shall be con3 ducted by an entity that is neither responsible under State

4 law for the submission of the State plan (or part thereof)

5 nor responsible for administering (or supervising the ad6 ministration of) the activity. If consistent with the pre7 vious sentence, such an entity may be a college or univer8 sity, a State agency, a legislative branch agency in a State,

9 or an independent contractor.

10 ‘‘(c) RESEARCH DESIGN.—Each such evaluation

11 shall be conducted in accordance with a research design

12 that is based on generally accepted models of survey de13 sign and sampling and statistical analysis.

14 ‘‘SEC. 2104. DESCRIPTION OF PROCESS FOR MEDIGRANT

15 PLAN DEVELOPMENT.

16 ‘‘Each MediGrant plan shall include a description of

17 the process under which the plan shall be developed and

18 implemented in the State (consistent with section 2105).

19 ‘‘SEC. 2105. CONSULTATION IN MEDIGRANT PLAN DEVELOP20 MENT.

21 ‘‘(a) PUBLIC NOTICE PROCESS.—

22 ‘‘(1) IN GENERAL.—Before submitting a

23 MediGrant plan or a plan amendment described in

24 paragraph (3) to the Secretary under part E, a

25 State shall provide—
1336

•HR 2517 IH

1 ‘‘(A) public notice respecting the submittal

2 of the proposed plan or amendment, including

3 a general description of the plan or amendment;

4 ‘‘(B) a means for the public to inspect or

5 obtain a copy (at reasonable charge) of the pro6 posed plan or amendment; and

7 ‘‘(C) an opportunity for submittal and con8 sideration of public comments on the proposed

9 plan or amendment.

10 The previous sentence shall not apply to a revision

11 of a MediGrant plan (or revision of an amendment

12 to a plan) made by a State under section 2154(c)(1)

13 or to a plan amendment withdrawal described in sec14 tion 2152(c)(4).

15 ‘‘(2) CONTENTS OF NOTICE.—A notice under

16 paragraph (1)(A) for a proposed plan or amendment

17 shall include a description of—

18 ‘‘(A) the general purpose of the proposed

19 plan or amendment (including applicable effec20 tive dates),

21 ‘‘(B) where the public may inspect the pro22 posed plan or amendment,

23 ‘‘(C) how the public may obtain a copy of

24 the proposed plan or amendment and the appli25 cable charge (if any) for the copy, and
1337

•HR 2517 IH

1 ‘‘(D) how the public may submit comments

2 on the proposed plan or amendment, including

3 any deadlines applicable to consideration of

4 such comments.

5 ‘‘(3) AMENDMENTS DESCRIBED.—An amend6 ment to a MediGrant plan described in this para7 graph is an amendment which makes a material and

8 substantial change in eligibility under the MediGrant

9 plan or the benefits provided under the plan.

10 ‘‘(4) PUBLICATION.—Notices under this sub11 section may be published (as selected by the State)

12 in one or more daily newspapers of general circula13 tion in the State or in any publication used by the

14 State to publish State statutes or rules.

15 ‘‘(5) COMPARABLE PROCESS.—A separate no16 tice, or notices, shall not be required under this sub17 section for a State if notice of the MediGrant plan

18 or an amendment to the plan will be provided under

19 a process specified in State law that is substantially

20 equivalent to the notice process specified in this sub21 section.

22 ‘‘(b) ADVISORY COMMITTEE.—

23 ‘‘(1) IN GENERAL.—Each State with a

24 MediGrant plan shall establish and maintain an ad25 visory committee.
1338

•HR 2517 IH

1 ‘‘(2) CONSULTATION.—The State shall periodi2 cally consult with the advisory committee in the de3 velopment, revision, and monitoring the performance

4 of the MediGrant plan, including—

5 ‘‘(A) the development of strategic objec6 tives and performance goals under section

7 2101,

8 ‘‘(B) the annual report under section

9 2102, and

10 ‘‘(C) the research design under section

11 2103(c).

12 ‘‘(3) GEOGRAPHIC DIVERSITY.—The composi13 tion of the advisory committee shall be chosen in a

14 manner that assures some representation on the ad15 visory committee of the different general geographic

16 regions of the State. Nothing in the previous sen17 tence shall be construed as requiring proportional

18 representation of geographic areas in a State.

19 ‘‘(4) CONSTRUCTION.—Nothing in this title

20 shall be construed as preventing a State from estab21 lishing more than one advisory committee, including

22 specialized advisory committees that represent the

23 interests of specific population groups, provider

24 groups, or geographic areas.
1339

•HR 2517 IH

1 ‘‘SEC. 2106. MEDIGRANT TASK FORCE.

2 ‘‘(a) IN GENERAL.—The Secretary shall provide for

3 the establishment of a MediGrant Task Force (in this sec4 tion referred to as the ‘Task Force’).

5 ‘‘(b) COMPOSITION.—The Task Force shall consist of

6 6 members appointed by the chair of the National Gov7 ernors Association and 6 members appointed by the vice

8 chair of the National Governors Association.

9 ‘‘(c) ADVISORY GROUP FOR TASK FORCE.—The Sec10 retary shall provide for the establishment of an advisory

11 group to assist the Task Force in carrying out its duties

12 under this section, consisting of one representative ap13 pointed by each of the following associations:

14 ‘‘(1) National Committee for Quality Assur15 ance.

16 ‘‘(2) Joint Commission for the Accreditation of

17 Healthcare Organizations.

18 ‘‘(3) Group Health Association of America.

19 ‘‘(4) American Managed Care and Review Asso20 ciation.

21 ‘‘(5) Association of State and Territorial Health

22 Officers.

23 ‘‘(6) American Medical Association.

24 ‘‘(7) American Hospital Association.

25 ‘‘(8) American Dental Association.

26 ‘‘(9) American College of Gerontology.
1340

•HR 2517 IH

1 ‘‘(10) American Health Care Association.

2 ‘‘(11) An association identified by the Secretary

3 as representing the interests of disabled individuals.

4 ‘‘(12) An association identified by the Secretary

5 as representing the interests of children.

6 ‘‘(13) An association identified by the Secretary

7 as representing the interests of the elderly.

8 ‘‘(14) An association identified by the Secretary

9 as representing the interests of mentally ill individ10 uals.

11 Any reference in this subsection to a particular group shall

12 be deemed a reference to any successor to such group.

13 ‘‘(d) DUTIES.—

14 ‘‘(1) FORMAT FOR EXPENDITURE AND UTILIZA15 TION SUMMARIES.—The Task Force shall specify, by

16 not later than December 31, 1996, the format of ex17 penditure summaries and utilization summaries re18 quired under section 2102. Such format may provide

19 for the reporting of different information from that

20 required under section 2102(a), but shall include the

21 reporting of at least the information described in

22 section 2102(b)(1)(A)(i).

23 ‘‘(2) MODELS AND SUGGESTIONS.—The Task

24 Force shall study and report to Congress and the
1341

•HR 2517 IH

1 States, by not later than April 1, 1997, rec2 ommendations on the following:

3 ‘‘(A) Recommended models for strategic

4 objectives and performance goals for consider5 ation by States in the development of such ob6 jectives and goals under section 2102, including

7 alternative models for each of the objectives and

8 goals described in section 2101(b).

9 ‘‘(B) For each suggested model for a stra10 tegic objective or performance goal suggested

11 methodologies for States to consider in measur12 ing and verifying the objective or goal.

13 ‘‘(C) An assessment of the potential useful14 ness to States of quality assurance safeguards,

15 utilization data sets, and accreditation pro16 grams that are used or under development in

17 the private sector.

18 ‘‘(D) Recommended designs and evaluation

19 methodologies for consideration by States in

20 providing for independent evaluations under

21 section 2103.

22 ‘‘(3) CONSTRUCTION.—Nothing in this sub23 section shall be construed as requiring a State to

24 adopt any of the strategic objectives or performance

25 goals suggested under paragraph (2).
1342

•HR 2517 IH

1 ‘‘(e) ADMINISTRATIVE ASSISTANCE.—Administrative

2 support for the Task Force shall be provided by the Agen3 cy for Health Care Policy and Research (or, in the absence

4 of such Agency, the Secretary).

5 ‘‘PART B—ELIGIBILITY, BENEFITS, AND SET-ASIDES

6 ‘‘SEC. 2111. GENERAL DESCRIPTION OF ELIGIBILITY AND

7 BENEFITS.

8 ‘‘(a) IN GENERAL.—Each MediGrant plan shall in9 clude a description (consistent with this title) of the fol10 lowing:

11 ‘‘(1) ELIGIBLE POPULATION.—The population

12 eligible for medical assistance under the plan, in13 cluding—

14 ‘‘(A) any limitations on categories of such

15 individuals;

16 ‘‘(B) any limitations as to the duration of

17 eligibility;

18 ‘‘(C) any eligibility standards relating to

19 age, income (including any standards relating

20 to spenddowns), residency, resources, disability

21 status, immigration status, or employment sta22 tus of individuals;

23 ‘‘(D) methods of establishing (and continu24 ing) eligibility and enrollment (including the

25 methodology for computing family income);
1343

•HR 2517 IH

1 ‘‘(E) the eligibility standards in the plan

2 that protect the income and resources of a mar3 ried individual who is living in the community

4 and whose spouse is residing in an institution

5 in order to prevent the impoverishment of the

6 community spouse; and

7 ‘‘(F) any other standards relating to eligi8 bility for medical assistance under the plan.

9 ‘‘(2) SCOPE OF ASSISTANCE.—The amount, du10 ration, and scope of health care services and items

11 covered under the plan, including differences among

12 different eligible population groups.

13 ‘‘(3) DELIVERY METHOD.—The State’s ap14 proach to delivery of medical assistance, including a

15 general description of—

16 ‘‘(A) the use (or intended use) of vouchers,

17 fee-for-service, or managed care arrangements

18 (such as capitated health care plans, case man19 agement, and case coordination), and

20 ‘‘(B) utilization control systems.

21 ‘‘(4) FEE-FOR-SERVICE BENEFITS.—To the ex22 tent that medical assistance is furnished on a fee23 for-service basis—
1344

•HR 2517 IH

1 ‘‘(A) how the State determines the quali2 fications of health care providers eligible to pro3 vide such assistance, and

4 ‘‘(B) how the State determines rates of re5 imbursement for providing such assistance.

6 ‘‘(5) COST-SHARING.—Beneficiary cost-sharing

7 (if any), including variations in such cost-sharing by

8 population group or type of service and financial re9 sponsibilities of parents of recipients under 21 years

10 of age and the spouses of recipients.

11 ‘‘(6) UTILIZATION INCENTIVES.—Incentives or

12 requirements (if any) to encourage the appropriate

13 utilization of services.

14 ‘‘(7) TREATMENT OF HEALTH CENTERS.—

15 ‘‘(A) IN GENERAL.—In the case of a State

16 in which one or more health centers is located,

17 the MediGrant plan shall include a description

18 of—

19 ‘‘(i) what provision (if any) has been

20 made for payment for items and services

21 furnished by health centers, and

22 ‘‘(ii) the manner in which medical as23 sistance for low-income eligible individuals

24 who received health care services at health

25 centers on or before the date of the enact-
1345

•HR 2517 IH

1 ment of this title may be provided, as de2 termined by the State in consultation with

3 the health centers in the State.

4 ‘‘(B) HEALTH CENTER DEFINED.—For

5 purposes of subparagraph (A), the term ‘health

6 center’ means an entity that—

7 ‘‘(i) is receiving a grant under section

8 329, 330, 340, or 340A of the Public

9 Health Service Act; or

10 ‘‘(ii) based on the recommendation of

11 the Health Resources and Services Admin12 istration within the Public Health Service,

13 was determined by the Secretary to meet

14 the requirements to receive such a grant.

15 ‘‘(8) SUPPORT FOR CERTAIN HOSPITALS.—

16 ‘‘(A) IN GENERAL.—With respect to hos17 pitals described in subparagraph (B) located in

18 the State, the MediGrant plan shall includes a

19 description—

20 ‘‘(i) of the extent to which provisions

21 have been made for expenditures for items

22 and services furnished by such hospitals

23 and covered under the plan, and

24 ‘‘(ii) for individuals who (I) are en25 rolled for benefits for covered services
1346

•HR 2517 IH

1 under the MediGrant plan and (II) were

2 previously receiving benefits for such serv3 ices under the medicaid program by or

4 through such hospitals, where or how they

5 will receive benefits for such services under

6 the MediGrant plan if the MediGrant plan

7 does not permit such individuals to obtain

8 benefits for those services by or through

9 such hospitals.

10 ‘‘(B) HOSPITALS DESCRIBED.—For pur11 poses of subparagraph (A), a hospital described

12 in this subparagraph is a subsection (d) hos13 pital (as defined in section 1886(d)(1)(B)) that

14 is described in clauses (i) and (ii) of section

15 340B(a)(4)(L) of the Public Health Service

16 Act.

17 ‘‘(b) IMMUNIZATIONS FOR CHILDREN.—The

18 MediGrant plan shall provide medical assistance for im19 munizations for children eligible for any medical assist20 ance under the MediGrant plan, in accordance with a

21 schedule for immunizations established by the Health De22 partment of the State in consultation with the individuals

23 and entities in the State responsible for the administration

24 of the plan.
1347

•HR 2517 IH

1 ‘‘(c) EQUAL PAYMENT RATES FOR RURAL PROVID2 ERS.—A State with a MediGrant plan shall establish pay3 ment rates for all services of rural providers that are com4 parable to the payment rates established for like services

5 of such type of providers not in rural areas; except that

6 a State may provide for incentive payments to attract and

7 retain providers to medically underserved areas.

8 ‘‘(d) PREEXISTING CONDITION EXCLUSIONS.—Not9 withstanding any other provision of this title—

10 ‘‘(1) a MediGrant plan may not deny or exclude

11 coverage of any item or service for an eligible indi12 vidual for benefits under the MediGrant plan for

13 such item or service on the basis of a preexisting

14 condition; and

15 ‘‘(2) if a State contracts or makes other ar16 rangements (through the eligible individual or

17 through another entity) with a capitated health care

18 organization, insurer, or other entity, for the provi19 sion of items or services to eligible individuals under

20 the MediGrant plan and the State permits such or21 ganization, insurer, or other entity to exclude cov22 erage of a covered item or service on the basis of a

23 preexisting condition, the State shall provide,

24 through its MediGrant plan, for such coverage

25 (through direct payment or otherwise) for any such
1348

•HR 2517 IH

1 covered item or service denied or excluded on the

2 basis of a preexisting condition.

3 ‘‘(e) FAMILY RESPONSIBILITY.—A MediGrant plan

4 may not require an adult child of moderate means (as de5 termined by the Secretary) to contribute to the cost of

6 covered nursing facility services and other long-term care

7 services for the child’s parent under the plan.

8 ‘‘SEC. 2112. SET-ASIDES OF FUNDS FOR POPULATION

9 GROUPS.

10 ‘‘(a) FOR TARGETED LOW-INCOME FAMILIES.—

11 ‘‘(1) IN GENERAL.—Subject to subsection (e), a

12 MediGrant plan shall provide that the amount of

13 funds expended under the plan for medical assist14 ance for targeted low-income families (as defined in

15 paragraph (3)) for a fiscal year shall be not less

16 than the minimum low-income-family percentage

17 specified in paragraph (2) of the total funds ex18 pended under the plan for all medical assistance for

19 the fiscal year.

20 ‘‘(2) MINIMUM LOW-INCOME-FAMILY PERCENT21 AGE.—The minimum low-income-family percentage

22 specified in this paragraph for a State is equal to 85

23 percent of the average percentage of the expendi24 tures under title XIX for medical assistance in the

25 State during Federal fiscal years 1992 through 1994
1349

•HR 2517 IH

1 which were attributable to expenditures for medical

2 assistance for mandated benefits (as defined in sub3 section (h)) furnished to individuals—

4 ‘‘(A) who (at the time of furnishing the as5 sistance) were under 65 years of age,

6 ‘‘(B) whose coverage (at such time) under

7 a State plan under title XIX was required

8 under Federal law, and

9 ‘‘(C) whose eligibility for such coverage (at

10 such time) was not on a basis directly related

11 to disability status (including being blind).

12 ‘‘(3) TARGETED LOW-INCOME FAMILY DE13 FINED.—In this subsection, the term ‘targeted low14 income family’ means a family (which may be an in15 dividual)—

16 ‘‘(A) which includes a child or a pregnant

17 woman, and

18 ‘‘(B) the income of which does not exceed

19 185 percent of the poverty line applicable to a

20 family of the size involved.

21 ‘‘(b) FOR LOW-INCOME ELDERLY.—

22 ‘‘(1) SET-ASIDES.—Subject to subsection (e)—

23 ‘‘(A) GENERAL SET-ASIDE.—A MediGrant

24 plan shall provide that the amount of funds ex25 pended under the plan for medical assistance
1350

•HR 2517 IH

1 for eligible low-income individuals 65 years of

2 age or older for a fiscal year shall be not less

3 than the minimum low-income-elderly percent4 age specified in paragraph (2)(A) of the total

5 funds expended under the plan for all medical

6 assistance for the fiscal year.

7 ‘‘(B) SET-ASIDE FOR MEDICARE PREMIUM

8 ASSISTANCE.—A MediGrant plan shall provide

9 that the amount of funds expended under the

10 plan for medical assistance for medicare cost11 sharing described in section 2171(c)(1) for a

12 fiscal year shall be not less than the minimum

13 medicare premium assistance percentage speci14 fied in paragraph (2)(B) of the total funds ex15 pended under the plan for all medical assistance

16 for the fiscal year. The MediGrant plan shall

17 provide priority for such making such assist18 ance available for targeted low-income elderly

19 individuals (as defined in paragraph (3)).

20 ‘‘(2) MINIMUM PERCENTAGES.—

21 ‘‘(A) FOR GENERAL SET-ASIDE.—The min22 imum low-income-elderly percentage specified in

23 this subparagraph for a State is equal to 85

24 percent of the average percentage of the ex25 penditures under title XIX for medical assist-
1351

•HR 2517 IH

1 ance in the State during Federal fiscal years

2 1992 through 1994 which was attributable to

3 expenditures for medical assistance for man4 dated benefits furnished to individuals—

5 ‘‘(i) whose eligibility for such assist6 ance was based on their being 65 years of

7 age or older; and

8 ‘‘(ii)(I) whose coverage (at such time)

9 under a State plan under title XIX was re10 quired under Federal law, or (II) who (at

11 such time) were residents of a nursing fa12 cility.

13 ‘‘(B) FOR SET-ASIDE FOR MEDICARE PRE14 MIUM ASSISTANCE.—The minimum medicare

15 premium assistance percentage specified in this

16 subparagraph for a State is equal to 90 percent

17 of the average percentage of the expenditures

18 under title XIX for medical assistance in the

19 State during Federal fiscal years 1993 through

20 1995 which was attributable to expenditures for

21 medical assistance for medicare premiums de22 scribed in section 1905(p)(3)(A) for individuals

23 whose coverage (at such time) for such assist24 ance for such premiums under a State plan
1352

•HR 2517 IH

1 under title XIX was required under Federal

2 law.

3 ‘‘(3) TARGETED LOW-INCOME ELDERLY INDI4 VIDUAL DEFINED.—In this subsection, the term ‘tar5 geted low-income elderly individual’ means an indi6 vidual who is 65 years of age or older and whose in7 come does not exceed 100 percent of the poverty line

8 applicable to a family of the size involved.

9 ‘‘(c) FOR LOW-INCOME DISABLED PERSONS.—

10 ‘‘(1) IN GENERAL.—Subject to subsection (e), a

11 MediGrant plan shall provide that the percentage of

12 funds expended under the plan for medical assist13 ance for eligible low-income individuals who are

14 under 65 years of age and are eligible for such as15 sistance on the basis of a disability (including being

16 blind) for a fiscal year is not less than the minimum

17 low-income-disabled percentage specified in para18 graph (2) of the total funds expended under the plan

19 for medical assistance for the fiscal year.

20 ‘‘(2) MINIMUM LOW-INCOME-DISABLED PER21 CENTAGE.—The minimum low-income-disabled per22 centage specified in this paragraph for a State is

23 equal to 85 percent of the average percentage of the

24 expenditures under title XIX for medical assistance

25 in the State during Federal fiscal years 1992
1353

•HR 2517 IH

1 through 1994 which was attributable to expenditures

2 for medical assistance for mandated benefits fur3 nished to individuals—

4 ‘‘(A) whose coverage (at such time) under

5 a State plan under title XIX was required

6 under Federal law, and

7 ‘‘(B) whose coverage (at such time) was on

8 a basis directly related to disability status (in9 cluding being blind).

10 ‘‘(d) USE OF RESIDUAL FUNDS.—

11 ‘‘(1) IN GENERAL.—Subject to limitations on

12 payment under section 2123, any funds not required

13 to be expended under the set-asides under the pre14 vious subsections may be expended under the

15 MediGrant plan for any of the following:

16 ‘‘(A) ADDITIONAL MEDICAL ASSISTANCE.—

17 Medical assistance for eligible low-income indi18 viduals (as defined in section 2171(b)), in addi19 tion to any medical assistance made available

20 under a previous subsection.

21 ‘‘(B) MEDICALLY-RELATED SERVICES.—

22 Payment for medically-related services (as de23 fined in paragraph (2)).

24 ‘‘(C) ADMINISTRATION.—Payment for the

25 administration of the MediGrant plan.
1354

•HR 2517 IH

1 ‘‘(2) MEDICALLY-RELATED SERVICES DE2 FINED.—In this title, the term ‘medically-related

3 services’ means services reasonably related to, or in

4 direct support of, the State’s attainment of one or

5 more of the strategic objectives and performance

6 goals established under section 2101, but does not

7 include items and services included on the list under

8 section 2171(a)(1) (relating to the definition of med9 ical assistance).

10 ‘‘(e) EXCEPTIONS TO MINIMUM SET-ASIDES.—

11 ‘‘(1) ALTERNATIVE MINIMUM SET-ASIDES.—

12 ‘‘(A) IN GENERAL.—A State may provide

13 in its MediGrant plan (through an amendment

14 to the plan) for a lower dollar amount of ex15 penditures than the minimum amounts specified

16 in any (or all) of paragraphs (2) of subsections

17 (a), (b), and (c) if State determines (and cer18 tifies to the Secretary) that—

19 ‘‘(i) the health care needs of the low20 income populations described in paragraph

21 (1) of the respective subsection who are eli22 gible for medical assistance under the plan

23 during the previous fiscal year (or medi24 care premium assistance needs described in

25 subsection (b)(1)(B)) can be reasonably
1355

•HR 2517 IH

1 met without the expenditure of the

2 amounts otherwise required to be ex3 pended, and

4 ‘‘(ii) the performance goals estab5 lished under section 2101 relating to the

6 respective population can reasonably be

7 met with such lower amount of funds ex8 pended.

9 ‘‘(B) PERIOD OF APPLICATION.—The de10 termination and certification under subpara11 graph (A) shall be made for such period as a

12 State may request, but may not be made for a

13 period of more than 3 consecutive Federal fiscal

14 years (beginning with the first fiscal year for

15 which the lower amount is sought). A new de16 termination and certification must be made

17 under such paragraph for any subsequent pe18 riod.

19 ‘‘(C) NO EXCEPTION PERMITTED BEFORE

20 FISCAL YEAR 1998.—This paragraph may not

21 apply with respect to a State for a fiscal year

22 before fiscal year 1998.

23 ‘‘(2) INDEPENDENT CERTIFICATION OF COMPLI24 ANCE WITH GOALS.—
1356

•HR 2517 IH

1 ‘‘(A) IN GENERAL.—For purposes of sec2 tion 2151(c), a MediGrant plan shall not be

3 considered to be in substantial violation of the

4 requirements of this section if the amount of

5 actual State expenditures specified in any (or

6 all) of paragraphs (1) of subsections (a), (b),

7 and (c) is lower than the minimum amounts

8 specified in any (or all) of paragraphs (2) of

9 subsections (a), (b), and (c) if an independent

10 actuary determines and certifies to the State

11 that the MediGrant plan is reasonably designed

12 to result in a level of expenditures which is con13 sistent with the requirements of such sub14 sections.

15 ‘‘(B) LIMIT ON VARIATION.—Subpara16 graph (A) shall not apply in the case of a

17 MediGrant plan for which the actual State ex18 penditures described in any (or all) of para19 graphs (1) of subsections (a), (b), and (c) are

20 less than 95 percent of the expenditures which

21 would be made if the amount of State expendi22 tures specified in any (or all) of such para23 graphs was equal to the applicable minimum

24 amount specified in any (or all) of paragraphs

25 (2) of subsections (a), (b), and (c).
1357

•HR 2517 IH

1 ‘‘(3) TREATMENT OF STATES WITH NO OP2 TIONAL BENEFITS.—In the case of a State for which

3 all expenditures under title XIX for medical assist4 ance in the State during Federal fiscal years 1992

5 through 1994 were expenditures for medical assist6 ance for mandated benefits, ‘75 percent’ shall be

7 substituted for ‘85 percent’ each place it appears in

8 paragraphs (2) of subsections (a), (b), and (c).

9 ‘‘(f) COMPUTATIONS.—

10 ‘‘(1) MINIMUM PERCENTAGES.—States shall

11 calculate the minimum percentages under sub12 sections (a)(2), (b)(2), and (c)(2) in a reasonable

13 manner consistent with reports submitted to the

14 Secretary for the fiscal years involved.

15 ‘‘(2) EXCLUSION OF PAYMENTS FOR CERTAIN

16 ALIENS.—For purposes of this section, medical as17 sistance attributable to the exception provided under

18 section 1903(v)(2) shall not be considered to be ex19 penditures for medical assistance.

20 ‘‘(g) BENEFITS INCLUDED FOR PURPOSES OF COM21 PUTING SET-ASIDES.—In this section, the term ‘man22 dated benefits’—

23 ‘‘(1) means medical assistance for items and

24 services described in section 1905(a) to the extent
1358

•HR 2517 IH

1 such assistance with respect to such items and serv2 ices was required to be provided under title XIX,

3 ‘‘(2) includes medical assistance for medicare

4 cost-sharing only to the extent such assistance was

5 required to be provided under section

6 1902(a)(10)(E), and

7 ‘‘(3) does not include medical assistance attrib8 utable to disproportionate share payment adjust9 ments described in section 1923.

10 ‘‘SEC. 2113. PREMIUMS AND COST-SHARING.

11 ‘‘(a) IN GENERAL.—Subject to subsection (b), if any

12 charges are imposed under the MediGrant plan for cost13 sharing (as defined in subsection (d)), such cost-sharing

14 shall be pursuant to a public cost-sharing schedule.

15 ‘‘(b) LIMITATION ON PREMIUM AND CERTAIN COST16 SHARING FOR LOW-INCOME FAMILIES INCLUDING CHIL17 DREN OR PREGNANT WOMEN.—

18 ‘‘(1) IN GENERAL.—In the case of a family de19 scribed in paragraph (2)—

20 ‘‘(A) the plan shall not impose any pre21 mium, and

22 ‘‘(B) the plan shall not (except as provided

23 in subsection (c)(1)) impose any cost-sharing

24 with respect to primary and preventive care

25 services (as defined by the State) covered under
1359

•HR 2517 IH

1 the MediGrant plan for children or pregnant

2 women unless such cost-sharing is nominal in

3 nature.

4 ‘‘(2) FAMILY DESCRIBED.—A family described

5 in this paragraph is a family (which may be an indi6 vidual) which—

7 ‘‘(A) includes a child or a pregnant

8 woman,

9 ‘‘(B) is made eligible for medical assistance

10 under the MediGrant plan, and

11 ‘‘(C) the income of which does not exceed

12 100 percent of the poverty line applicable to a

13 family of the size involved.

14 ‘‘(c) CERTAIN COST-SHARING PERMITTED.—Nothing

15 in this section shall be construed as preventing a

16 MediGrant plan (consistent with subsection (b))—

17 ‘‘(1) from imposing cost-sharing to discourage

18 the inappropriate use of emergency medical services

19 (delivered through a hospital emergency room, a

20 medical transportation provider, or otherwise);

21 ‘‘(2) from imposing premiums and cost-sharing

22 differentially in order to encourage the use of pri23 mary and preventive care and discourage unneces24 sary or less economical care;
1360

•HR 2517 IH

1 ‘‘(3) from scaling cost-sharing in a manner that

2 reflects economic factors, employment status, and

3 family size;

4 ‘‘(4) from scaling cost-sharing based on the

5 availability to the individual or family of other

6 health insurance coverage; or

7 ‘‘(5) from scaling cost-sharing based on partici8 pation in employment training program, drug or al9 cohol abuse treatment, counseling programs, or

10 other programs promoting personal responsibility.

11 ‘‘(d) COST-SHARING DEFINED.—In this section, the

12 term ‘cost-sharing’ includes copayments, deductibles, coin13 surance, and other charges for the provision of health care

14 services.

15 ‘‘SEC. 2114. DESCRIPTION OF PROCESS FOR DEVELOPING

16 CAPITATION PAYMENT RATES.

17 ‘‘(a) IN GENERAL.—If a State contracts (or intends

18 to contract) with a capitated health care organization (as

19 defined in subsection (c)(1)) under which the State makes

20 a capitation payment (as defined in subsection (c)(2)) to

21 the organization for providing or arranging for the provi22 sion of medical assistance under the MediGrant plan for

23 a group of services (including at least inpatient hospital

24 services and physicians’ services), the plan shall include

25 a description of the following:
1361

•HR 2517 IH

1 ‘‘(1) USE OF ACTUARIAL SCIENCE.—The extent

2 and manner in which the State uses actuarial

3 science—

4 ‘‘(A) to analyze and project health care ex5 penditures and utilization for individuals en6 rolled (or to be enrolled) in such an organiza7 tion under the MediGrant plan, and

8 ‘‘(B) to develop capitation payment rates,

9 including a brief description of the general

10 methodologies used by actuaries.

11 ‘‘(2) QUALIFICATIONS OF ORGANIZATIONS.—

12 The general qualifications (including any accredita13 tion, State licensure or certification, or provider net14 work standards) required by the State for participa15 tion of capitated health care organizations under the

16 MediGrant plan.

17 ‘‘(3) DISSEMINATION PROCESS.—The process

18 used by the State under subsection (b) and other19 wise to disseminate, before entering into contracts

20 with capitated health care organizations, actuarial

21 information to such organizations on the historical

22 fee-for-service costs (or, if not available, other recent

23 financial data associated with providing covered

24 services) and utilization associated with individuals

25 described in paragraph (1)(A).
1362

•HR 2517 IH

1 ‘‘(b) PUBLIC NOTICE AND COMMENT.—Under the

2 MediGrant plan the State shall provide a process for pro3 viding, before the beginning of each contract year—

4 ‘‘(1) public notice of—

5 ‘‘(A) the amounts of the capitation pay6 ments (if any) made under the plan for the con7 tract year preceding the public notice, and

8 ‘‘(B)(i) the information described under

9 subsection (a)(1) with respect to capitation pay10 ments for the contract year involved or (ii) the

11 amounts of the capitation payments the State

12 expects to make for the contract year involved,

13 unless such information is designated as proprietary

14 and not subject to public disclosure under State law;

15 and

16 ‘‘(2) an opportunity for receiving public com17 ment on the amounts and information for which no18 tice is provided under paragraph (1).

19 ‘‘(c) DEFINITIONS.—In this title:

20 ‘‘(1) CAPITATED HEALTH CARE ORGANIZA21 TION.—The term ‘capitated health care organiza22 tion’ means a health maintenance organization or

23 any other entity (including a health insuring organi24 zation, managed care organization, prepaid health

25 plan, integrated service network, or similar entity)
1363

•HR 2517 IH

1 which under State law is permitted to accept capita2 tion payments for providing (or arranging for the

3 provision of) a group of items and services including

4 at least inpatient hospital services and physicians’

5 services.

6 ‘‘(2) CAPITATION PAYMENT.—The term ‘capita7 tion payment’ means, with respect to payment, pay8 ment on a prepaid capitation basis or any other risk

9 basis to an entity for the entity’s provision (or ar10 ranging for the provision) of a group of items and

11 services (including at least inpatient hospital services

12 and physicians’ services).

13 ‘‘SEC. 2115. PREVENTING SPOUSAL IMPOVERISHMENT.

14 ‘‘(a) SPECIAL TREATMENT FOR INSTITUTIONALIZED

15 SPOUSES.—

16 ‘‘(1) SUPERSEDES OTHER PROVISIONS.—In de17 termining the eligibility for medical assistance of an

18 institutionalized spouse (as defined in subsection

19 (h)(1)), the provisions of this section supersede any

20 other provision of this title which is inconsistent

21 with them.

22 ‘‘(2) DOES NOT AFFECT CERTAIN DETERMINA23 TIONS.—Except as this section specifically provides,

24 this section does not apply to—
1364

•HR 2517 IH

1 ‘‘(A) the determination of what constitutes

2 income or resources, or

3 ‘‘(B) the methodology and standards for

4 determining and evaluating income and re5 sources.

6 ‘‘(3) NO APPLICATION IN COMMONWEALTHS

7 AND TERRITORIES.—This section shall only apply to

8 a State that is one of the 50 States or the District

9 of Columbia.

10 ‘‘(b) RULES FOR TREATMENT OF INCOME.—

11 ‘‘(1) SEPARATE TREATMENT OF INCOME.—Dur12 ing any month in which an institutionalized spouse

13 is in the institution, except as provided in paragraph

14 (2), no income of the community spouse shall be

15 deemed available to the institutionalized spouse.

16 ‘‘(2) ATTRIBUTION OF INCOME.—In determin17 ing the income of an institutionalized spouse or com18 munity spouse for purposes of the post-eligibility in19 come determination described in subsection (d), ex20 cept as otherwise provided in this section and re21 gardless of any State laws relating to community

22 property or the division of marital property, the fol23 lowing rules apply:

24 ‘‘(A) NON-TRUST PROPERTY.—Subject to

25 subparagraphs (C) and (D), in the case of in-
1365

•HR 2517 IH

1 come not from a trust, unless the instrument

2 providing the income otherwise specifically pro3 vides—

4 ‘‘(i) if payment of income is made

5 solely in the name of the institutionalized

6 spouse or the community spouse, the in7 come shall be considered available only to

8 that respective spouse;

9 ‘‘(ii) if payment of income is made in

10 the names of the institutionalized spouse

11 and the community spouse, one-half of the

12 income shall be considered available to

13 each of them; and

14 ‘‘(iii) if payment of income is made in

15 the names of the institutionalized spouse

16 or the community spouse, or both, and to

17 another person or persons, the income

18 shall be considered available to each spouse

19 in proportion to the spouse’s interest (or,

20 if payment is made with respect to both

21 spouses and no such interest is specified,

22 one-half of the joint interest shall be con23 sidered available to each spouse).

24 ‘‘(B) TRUST PROPERTY.—In the case of a

25 trust—
1366

•HR 2517 IH

1 ‘‘(i) except as provided in clause (ii),

2 income shall be attributed in accordance

3 with the provisions of this title, and

4 ‘‘(ii) income shall be considered avail5 able to each spouse as provided in the

6 trust, or, in the absence of a specific provi7 sion in the trust—

8 ‘‘(I) if payment of income is

9 made solely to the institutionalized

10 spouse or the community spouse, the

11 income shall be considered available

12 only to that respective spouse;

13 ‘‘(II) if payment of income is

14 made to both the institutionalized

15 spouse and the community spouse,

16 one-half of the income shall be consid17 ered available to each of them; and

18 ‘‘(III) if payment of income is

19 made to the institutionalized spouse

20 or the community spouse, or both,

21 and to another person or persons, the

22 income shall be considered available to

23 each spouse in proportion to the

24 spouse’s interest (or, if payment is

25 made with respect to both spouses
1367

•HR 2517 IH

1 and no such interest is specified, one2 half of the joint interest shall be con3 sidered available to each spouse).

4 ‘‘(C) PROPERTY WITH NO INSTRUMENT.—

5 In the case of income not from a trust in which

6 there is no instrument establishing ownership,

7 subject to subparagraph (D), one-half of the in8 come shall be considered to be available to the

9 institutionalized spouse and one-half to the

10 community spouse.

11 ‘‘(D) REBUTTING OWNERSHIP.—The rules

12 of subparagraphs (A) and (C) are superseded to

13 the extent that an institutionalized spouse can

14 establish, by a preponderance of the evidence,

15 that the ownership interests in income are other

16 than as provided under such subparagraphs.

17 ‘‘(c) RULES FOR TREATMENT OF RESOURCES.—

18 ‘‘(1) COMPUTATION OF SPOUSAL SHARE AT

19 TIME OF INSTITUTIONALIZATION.—

20 ‘‘(A) TOTAL JOINT RESOURCES.—There

21 shall be computed (as of the beginning of the

22 first continuous period of institutionalization of

23 the institutionalized spouse)—

24 ‘‘(i) the total value of the resources to

25 the extent either the institutionalized
1368

•HR 2517 IH

1 spouse or the community spouse has an

2 ownership interest, and

3 ‘‘(ii) a spousal share which is equal to

1 4 ⁄2 of such total value.

5 ‘‘(B) ASSESSMENT.—At the request of an

6 institutionalized spouse or community spouse,

7 at the beginning of the first continuous period

8 of institutionalization of the institutionalized

9 spouse and upon the receipt of relevant docu10 mentation of resources, the State shall promptly

11 assess and document the total value described

12 in subparagraph (A)(i) and shall provide a copy

13 of such assessment and documentation to each

14 spouse and shall retain a copy of the assess15 ment for use under this section. If the request

16 is not part of an application for medical assist17 ance under this title, the State may, at its op18 tion as a condition of providing the assessment,

19 require payment of a fee not exceeding the rea20 sonable expenses of providing and documenting

21 the assessment. At the time of providing the

22 copy of the assessment, the State shall include

23 a notice indicating that the spouse will have a

24 right to a fair hearing under subsection (e)(2).
1369

•HR 2517 IH

1 ‘‘(2) ATTRIBUTION OF RESOURCES AT TIME OF

2 INITIAL ELIGIBILITY DETERMINATION.—In deter3 mining the resources of an institutionalized spouse

4 at the time of application for medical assistance

5 under this title, regardless of any State laws relating

6 to community property or the division of marital

7 property—

8 ‘‘(A) except as provided in subparagraph

9 (B), all the resources held by either the institu10 tionalized spouse, community spouse, or both,

11 shall be considered to be available to the insti12 tutionalized spouse, and

13 ‘‘(B) resources shall be considered to be

14 available to an institutionalized spouse, but only

15 to the extent that the amount of such resources

16 exceeds the amount computed under subsection

17 (f)(2)(A) (as of the time of application for med18 ical assistance).

19 ‘‘(3) ASSIGNMENT OF SUPPORT RIGHTS.—The

20 institutionalized spouse shall not be ineligible by rea21 son of resources determined under paragraph (2) to

22 be available for the cost of care where—

23 ‘‘(A) the institutionalized spouse has as24 signed to the State any rights to support from

25 the community spouse;
1370

•HR 2517 IH

1 ‘‘(B) the institutionalized spouse lacks the

2 ability to execute an assignment due to physical

3 or mental impairment but the State has the

4 right to bring a support proceeding against a

5 community spouse without such assignment; or

6 ‘‘(C) the State determines that denial of

7 eligibility would work an undue hardship.

8 ‘‘(4) SEPARATE TREATMENT OF RESOURCES

9 AFTER ELIGIBILITY FOR MEDICAL ASSISTANCE ES10 TABLISHED.—During the continuous period in which

11 an institutionalized spouse is in an institution and

12 after the month in which an institutionalized spouse

13 is determined to be eligible for medical assistance

14 under this title, no resources of the community

15 spouse shall be deemed available to the institutional16 ized spouse.

17 ‘‘(5) RESOURCES DEFINED.—In this section,

18 the term ‘resources’ does not include—

19 ‘‘(A) resources excluded under subsection

20 (a) or (d) of section 1613, and

21 ‘‘(B) resources that would be excluded

22 under section 1613(a)(2)(A) but for the limita23 tion on total value described in such section.

24 ‘‘(d) PROTECTING INCOME FOR COMMUNITY

25 SPOUSE.—
1371

•HR 2517 IH

1 ‘‘(1) ALLOWANCES TO BE OFFSET FROM IN2 COME OF INSTITUTIONALIZED SPOUSE.—After an

3 institutionalized spouse is determined or redeter4 mined to be eligible for medical assistance, in deter5 mining the amount of the spouse’s income that is to

6 be applied monthly to payment for the costs of care

7 in the institution, there shall be deducted from the

8 spouse’s monthly income the following amounts in

9 the following order:

10 ‘‘(A) A personal needs allowance (described

11 in paragraph (6)(A)), in an amount not less

12 than the amount specified in paragraph (6)(C).

13 ‘‘(B) A community spouse monthly income

14 allowance (as defined in paragraph (2)), but

15 only to the extent income of the institutional16 ized spouse is made available to (or for the ben17 efit of) the community spouse.

18 ‘‘(C) A family allowance, for each family

member, equal to at least 1 19 ⁄3 of the amount by

20 which the amount described in paragraph

21 (3)(A)(i) exceeds the amount of the monthly in22 come of that family member.

23 ‘‘(D) Amounts for incurred expenses for

24 medical or remedial care for the institutional25 ized spouse (as provided under paragraph (7)).
1372

•HR 2517 IH

1 In subparagraph (C), the term ‘family member’ only

2 includes minor or dependent children, dependent

3 parents, or dependent siblings of the institutional4 ized or community spouse who are residing with the

5 community spouse.

6 ‘‘(2) COMMUNITY SPOUSE MONTHLY INCOME

7 ALLOWANCE DEFINED.—In this section (except as

8 provided in paragraph (5)), the ‘community spouse

9 monthly income allowance’ for a community spouse

10 is an amount by which—

11 ‘‘(A) except as provided in subsection (e),

12 the minimum monthly maintenance needs allow13 ance (established under and in accordance with

14 paragraph (3)) for the spouse, exceeds

15 ‘‘(B) the amount of monthly income other16 wise available to the community spouse (deter17 mined without regard to such an allowance).

18 ‘‘(3) ESTABLISHMENT OF MINIMUM MONTHLY

19 MAINTENANCE NEEDS ALLOWANCE.—

20 ‘‘(A) IN GENERAL.—Each State shall es21 tablish a minimum monthly maintenance needs

22 allowance for each community spouse which,

23 subject to subparagraph (B), is equal to or ex24 ceeds—
1373

•HR 2517 IH

‘‘(i) 150 percent of 1 1 ⁄12 of the income

2 official poverty line (defined by the Office

3 of Management and Budget and revised

4 annually in accordance with section

5 673(2)) for a family unit of 2 members;

6 plus

7 ‘‘(ii) an excess shelter allowance (as

8 defined in paragraph (4)).

9 A revision of the official poverty line referred to

10 in clause (i) shall apply to medical assistance

11 furnished during and after the second calendar

12 quarter that begins after the date of publication

13 of the revision.

14 ‘‘(B) CAP ON MINIMUM MONTHLY MAINTE15 NANCE NEEDS ALLOWANCE.—The minimum

16 monthly maintenance needs allowance estab17 lished under subparagraph (A) may not exceed

18 $1,500 (subject to adjustment under sub19 sections (e) and (g)).

20 ‘‘(4) EXCESS SHELTER ALLOWANCE DE21 FINED.—In paragraph (3)(A)(ii), the term ‘excess

22 shelter allowance’ means, for a community spouse,

23 the amount by which the sum of—

24 ‘‘(A) the spouse’s expenses for rent or

25 mortgage payment (including principal and in-
1374

•HR 2517 IH

1 terest), taxes and insurance and, in the case of

2 a condominium or cooperative, required mainte3 nance charge, for the community spouse’s prin4 cipal residence, and

5 ‘‘(B) the standard utility allowance (used

6 by the State under section 5(e) of the Food

7 Stamp Act of 1977) or, if the State does not

8 use such an allowance, the spouse’s actual util9 ity expenses,

10 exceeds 30 percent of the amount described in para11 graph (3)(A)(i), except that, in the case of a con12 dominium or cooperative, for which a maintenance

13 charge is included under subparagraph (A), any al14 lowance under subparagraph (B) shall be reduced to

15 the extent the maintenance charge includes utility

16 expenses.

17 ‘‘(5) COURT ORDERED SUPPORT.—If a court

18 has entered an order against an institutionalized

19 spouse for monthly income for the support of the

20 community spouse, the community spouse monthly

21 income allowance for the spouse shall be not less

22 than the amount of the monthly income so ordered.

23 ‘‘(6) PERSONAL NEEDS ALLOWANCE.—

24 ‘‘(A) IN GENERAL.—The State MediGrant

25 plan must provide that, in the case of an insti-
1375

•HR 2517 IH

1 tutionalized individual or couple described in

2 subparagraph (B), in determining the amount

3 of the individual’s or couple’s income to be ap4 plied monthly to payment for the cost of care

5 in an institution, there shall be deducted from

6 the monthly income (in addition to other allow7 ances otherwise provided under the plan) a

8 monthly personal needs allowance—

9 ‘‘(i) which is reasonable in amount for

10 clothing and other personal needs of the

11 individual (or couple) while in an institu12 tion, and

13 ‘‘(ii) which is not less (and may be

14 greater) than the minimum monthly per15 sonal needs allowance described in sub16 paragraph (C).

17 ‘‘(B) INSTITUTIONALIZED INDIVIDUAL OR

18 COUPLE DEFINED.—In this paragraph, the

19 term ‘institutionalized individual or couple’

20 means an individual or married couple—

21 ‘‘(i) who is an inpatient (or who are

22 inpatients) in a medical institution or

23 nursing facility for which payments are

24 made under this title throughout a month,

25 and
1376

•HR 2517 IH

1 ‘‘(ii) who is or are determined to be

2 eligible for medical assistance under the

3 State MediGrant plan.

4 ‘‘(C) MINIMUM ALLOWANCE.—The mini5 mum monthly personal needs allowance de6 scribed in this subparagraph is $40 for an insti7 tutionalized individual and $80 for an institu8 tionalized couple (if both are aged, blind, or dis9 abled, and their incomes are considered avail10 able to each other in determining eligibility).

11 ‘‘(7) TREATMENT OF INCURRED EXPENSES.—

12 With respect to the post-eligibility treatment of in13 come under this section, there shall be taken into ac14 count amounts for incurred expenses for medical or

15 remedial care that are not subject to payment by a

16 third party, including—

17 ‘‘(A) medicare and other health insurance

18 premiums, deductibles, or coinsurance, and

19 ‘‘(B) necessary medical or remedial care

20 recognized under State law but not covered

21 under the State MediGrant plan under this

22 title, subject to reasonable limits the State may

23 establish on the amount of these expenses.

24 ‘‘(e) NOTICE AND HEARING.—

25 ‘‘(1) NOTICE.—Upon—
1377

•HR 2517 IH

1 ‘‘(A) a determination of eligibility for med2 ical assistance of an institutionalized spouse, or

3 ‘‘(B) a request by either the institutional4 ized spouse, or the community spouse, or a rep5 resentative acting on behalf of either spouse,

6 each State shall notify both spouses (in the case de7 scribed in subparagraph (A)) or the spouse making

8 the request (in the case described in subparagraph

9 (B)) of the amount of the community spouse month10 ly income allowance (described in subsection

11 (d)(1)(B)), of the amount of any family allowances

12 (described in subsection (d)(1)(C)), of the method

13 for computing the amount of the community spouse

14 resources allowance permitted under subsection (f),

15 and of the spouse’s right to a hearing under the

16 MediGrant plan respecting ownership or availability

17 of income or resources, and the determination of the

18 community spouse monthly income or resource al19 lowance.

20 ‘‘(2) RESULTS OF HEARING.—

21 ‘‘(A) REVISION OF MINIMUM MONTHLY

22 MAINTENANCE NEEDS ALLOWANCE.—If either

23 such spouse establishes in a hearing under this

24 subsection that the community spouse needs in25 come, above the level otherwise provided by the
1378

•HR 2517 IH

1 minimum monthly maintenance needs allow2 ance, due to exceptional circumstances resulting

3 in significant financial duress, there shall be

4 substituted, for the minimum monthly mainte5 nance needs allowance in subsection (d)(2)(A),

6 an amount adequate to provide such additional

7 income as is necessary.

8 ‘‘(B) REVISION OF COMMUNITY SPOUSE

9 RESOURCE ALLOWANCE.—If either such spouse

10 establishes in such a hearing that the commu11 nity spouse resource allowance (in relation to

12 the amount of income generated by such an al13 lowance) is inadequate to raise the community

14 spouse’s income to the minimum monthly main15 tenance needs allowance, there shall be sub16 stituted, for the community spouse resource al17 lowance under subsection (f)(2), an amount

18 adequate to provide such a minimum monthly

19 maintenance needs allowance.

20 ‘‘(f) PERMITTING TRANSFER OF RESOURCES TO

21 COMMUNITY SPOUSE.—

22 ‘‘(1) IN GENERAL.—An institutionalized spouse

23 may, without regard to any other provision of the

24 MediGrant plan to contrary, transfer an amount

25 equal to the community spouse resource allowance
1379

•HR 2517 IH

1 (as defined in paragraph (2)), but only to the extent

2 the resources of the institutionalized spouse are

3 transferred to (or for the sole benefit of) the com4 munity spouse. The transfer under the preceding

5 sentence shall be made as soon as practicable after

6 the date of the initial determination of eligibility,

7 taking into account such time as may be necessary

8 to obtain a court order under paragraph (3).

9 ‘‘(2) COMMUNITY SPOUSE RESOURCE ALLOW10 ANCE DEFINED.—In paragraph (1), the ‘community

11 spouse resource allowance’ for a community spouse

12 is an amount (if any) by which—

13 ‘‘(A) the greatest of—

14 ‘‘(i) $12,000 (subject to adjustment

15 under subsection (g)), or, if greater (but

16 not to exceed the amount specified in

17 clause (ii)(II)) an amount specified under

18 the State plan,

19 ‘‘(ii) the lesser of (I) the spousal

20 share computed under subsection (c)(1), or

21 (II) $60,000 (subject to adjustment under

22 subsection (g)),

23 ‘‘(iii) the amount established under

24 subsection (e)(2); or
1380

•HR 2517 IH

1 ‘‘(iv) the amount transferred under a

2 court order under paragraph (3);

3 exceeds

4 ‘‘(B) the amount of the resources other5 wise available to the community spouse (deter6 mined without regard to such an allowance).

7 ‘‘(g) INDEXING DOLLAR AMOUNTS.—For services

8 furnished during a calendar year after 1989, the dollar

9 amounts specified in subsections (d)(3)(C), (f)(2)(A)(i),

10 and (f)(2)(A)(ii)(II) shall be increased by the same per11 centage as the percentage increase in the consumer price

12 index for all urban consumers (all items; U.S. city aver13 age) between September 1988 and the September before

14 the calendar year involved.

15 ‘‘(h) DEFINITIONS.—In this section:

16 ‘‘(1) The term ‘institutionalized spouse’ means

17 an individual—

18 ‘‘(A)(i) who is in a medical institution or

19 nursing facility, or

20 ‘‘(ii) at the option of the State (I) who

21 would be eligible under the MediGrant plan

22 under this title if they were in a medical insti23 tution, (II) with respect to whom there has

24 been a determination that but for the provision

25 of home or community-based services they
1381

•HR 2517 IH

1 would require the level of care provided in a

2 hospital, nursing facility or intermediate care

3 facility for the mentally retarded the cost of

4 which could be reimbursed under the plan, and

5 (III) who will receive home or community-based

6 services pursuant the plan, and

7 ‘‘(B) is married to a spouse who is not in

8 a medical institution or nursing facility;

9 but does not include any such individual who is not

10 likely to meet the requirements of subparagraph (A)

11 for at least 30 consecutive days.

12 ‘‘(2) The term ‘community spouse’ means the

13 spouse of an institutionalized spouse.

14 ‘‘SEC. 2116. CONSTRUCTION.

15 ‘‘(a) NO FEDERAL ENTITLEMENT.—Nothing in this

16 title (including section 2112) shall be construed as creat17 ing an entitlement under Federal law in any individual

18 or category of individuals for medical assistance under a

19 MediGrant plan.

20 ‘‘(b) STATE FLEXIBILITY IN BENEFITS, PROVIDER

21 PAYMENTS, GEOGRAPHICAL COVERAGE AREA, AND SE22 LECTION OF PROVIDERS.—Nothing in this title (other

23 than section 2111(b)) shall be construed as requiring a

24 State—
1382

•HR 2517 IH

1 ‘‘(1) to provide medical assistance for any par2 ticular items or services;

3 ‘‘(2) subject to section 2111(c), to provide for

4 any payments with respect to any specific health

5 care providers or any level of payments for any serv6 ices;

7 ‘‘(3) to provide for the same medical assistance

8 in all geographical areas or political subdivisions of

9 the State;

10 ‘‘(4) to provide that the medical assistance

11 made available to any individual eligible for medical

12 assistance must not be less in amount, duration, or

13 scope than the medical assistance made available to

14 any other such individual; or

15 ‘‘(5) to provide that any individual eligible for

16 medical assistance with respect to an item or service

17 may choose to obtain such assistance from any insti18 tution, agency, or person qualified to provide the

19 item or service.

20 ‘‘(c) STATE FLEXIBILITY WITH RESPECT TO MAN21 AGED CARE.—Nothing in this title shall be construed—

22 ‘‘(1) to limit a State’s ability to contract with,

23 on a capitated basis or otherwise, health care plans

24 or individual health care providers for the provision

25 or arrangement of medical assistance;
1383

•HR 2517 IH

1 ‘‘(2) to limit a State’s ability to contract with

2 health care plans or other entities for case manage3 ment services or for coordination of medical assist4 ance; or

5 ‘‘(3) to restrict a State from establishing capi6 tation rates on the basis of competition among

7 health care plans or negotiations between the State

8 and one or more health care plans.

9 ‘‘SEC. 2117. LIMITATIONS ON CAUSES OF ACTION.

10 ‘‘(a) IN GENERAL.—Notwithstanding any other pro11 vision of this Act (including section 1130A), no person (in12 cluding an applicant, beneficiary, provider, or health plan)

13 shall have a cause of action under Federal law against

14 a State in relation to a State’s compliance (or failure to

15 comply) with the provisions of this title or of a MediGrant

16 plan.

17 ‘‘(b) NO EFFECT ON STATE LAW.—Nothing in sub18 section (a) may be construed as affecting any actions

19 brought under State law.

20 ‘‘PART C—PAYMENTS TO STATES

21 ‘‘SEC. 2121. ALLOTMENT OF FUNDS AMONG STATES.

22 ‘‘(a) ALLOTMENTS.—

23 ‘‘(1) COMPUTATION.—The Secretary shall pro24 vide for the computation of State obligation and out-
1384

•HR 2517 IH

1 lay allotments in accordance with this section for

2 each fiscal year beginning with fiscal year 1996.

3 ‘‘(2) LIMITATION ON OBLIGATIONS.—

4 ‘‘(A) IN GENERAL.—Subject to subpara5 graph (B), the Secretary shall not enter into

6 obligations with any State under this title for a

7 fiscal year in excess of the obligation allotment

8 for that State for the fiscal year under para9 graph (4). The sum of such obligation allot10 ments for all States in any fiscal year (exclud11 ing amounts carried over under subparagraph

12 (B) and excluding changes in allotments ef13 fected under paragraph (4)(D)) shall not exceed

14 the aggregate limit on new obligation authority

15 specified in paragraph (3) for that fiscal year.

16 ‘‘(B) ADJUSTMENTS.—

17 ‘‘(i) CARRYOVER OF ALLOTMENT PER18 MITTED.—If the amount of obligations en19 tered into under this part with a State for

20 quarters in a fiscal year is less than the

21 amount of the obligation allotment under

22 this section to the State for the fiscal year,

23 the amount of the difference shall be added

24 to the amount of the State obligation allot-
1385

•HR 2517 IH

1 ment otherwise provided under this section

2 for the succeeding fiscal year.

3 ‘‘(ii) REDUCTION FOR POST-ENACT4 MENT NEW OBLIGATIONS UNDER TITLE

5 XIX IN FISCAL YEAR 1996.—The amount of

6 the obligation allotment otherwise provided

7 under this section for fiscal year 1996 for

8 a State shall be reduced by the amount of

9 the obligations entered into with respect to

10 the State under section 1903(a) after the

11 date of the enactment of this Act.

12 ‘‘(3) AGGREGATE LIMIT ON NEW OBLIGATION

13 AUTHORITY.—

14 ‘‘(A) IN GENERAL.—For purposes of this

15 subsection, subject to subparagraph (C), the

16 ‘aggregate limit on new obligation authority’,

17 for a fiscal year, is the pool amount under sub18 section (b) for the fiscal year, divided by the

19 payout adjustment factor (described in subpara20 graph (B)) for the fiscal year.

21 ‘‘(B) PAYOUT ADJUSTMENT FACTOR.—For

22 purposes of this subsection, the ‘payout adjust23 ment factor’—

24 ‘‘(i) for fiscal year 1996 is .950,

25 ‘‘(ii) for fiscal year 1997 is .986, and
1386

•HR 2517 IH

1 ‘‘(iii) for a subsequent fiscal year is

2 .998.

3 ‘‘(C) TRANSITIONAL ADJUSTMENT FOR

4 PRE-ENACTMENT-OBLIGATION OUTLAYS.—In

5 order to account for pre-enactment-obligation

6 outlays described in paragraph (4)(C)(iv), in

7 determining the aggregate limit on new obliga8 tion authority under subparagraph (A) for fis9 cal year 1996, the pool amount for such fiscal

10 year is equal to—

11 ‘‘(i) the pool amount for such year,

12 reduced by

13 ‘‘(ii) $24.624 billion.

14 ‘‘(4) OBLIGATION ALLOTMENTS.—

15 ‘‘(A) GENERAL RULE FOR 50 STATES AND

16 THE DISTRICT OF COLUMBIA.—Except as pro17 vided in this paragraph, the ‘obligation allot18 ment’ for any of the 50 States or the District

19 of Columbia for a fiscal year (beginning with

20 fiscal year 1997) is an amount that bears the

21 same ratio to the outlay allotment under sub22 section (c)(2) for such State or District (not

23 taking into account any adjustment due to an

24 election under paragraph (4)) for the fiscal year

25 as the ratio of—
1387

•HR 2517 IH

1 ‘‘(i) the aggregate limit on new obliga2 tion authority (less the total of the obliga3 tion allotments under subparagraph (B))

4 for the fiscal year, to

5 ‘‘(ii) the pool amount (less the sum of

6 the outlay allotments for the territories)

7 for such fiscal year.

8 ‘‘(B) TERRITORIES.—The obligation allot9 ment for each of the Commonwealths and terri10 tories for a fiscal year is the outlay allotment

11 for such Commonwealth or territory (as deter12 mined under subsection (c)(5)) for the fiscal

13 year divided by the payout adjustment factor

14 for the fiscal year (as defined in paragraph

15 (3)(B)).

16 ‘‘(C) TRANSITIONAL RULE FOR FISCAL

17 YEAR 1996.—

18 ‘‘(i) IN GENERAL.—The obligation

19 amount for fiscal year 1996 for any State

20 (including the District, a Commonwealth,

21 or territory) is determined according to the

22 formula: A=(B-C)/D, where—

23 ‘‘(I) ‘A’ is the obligation amount

24 for such State;
1388

•HR 2517 IH

1 ‘‘(II) ‘B’ is the outlay allotment

2 of such State for fiscal year 1996, as

3 determined under subsection (c);

4 ‘‘(III) ‘C’ is the amount of the

5 pre-enactment-obligation outlays (as

6 established for such State under

7 clause (ii)); and

8 ‘‘(IV) ‘D’ is the payout adjust9 ment factor for such fiscal year (as

10 defined in paragraph (3)(B)).

11 ‘‘(ii) PRE-ENACTMENT-OBLIGATION

12 OUTLAY AMOUNTS.—Within 30 days after

13 the date of the enactment of this title, the

14 Secretary shall estimate (based on the best

15 data available) and publish in the Federal

16 Register the amount of the pre-enactment17 obligation outlays (as defined in clause

18 (iv)) for each State (including the District,

19 Commonwealths, and territories). The total

20 of such amounts shall equal the dollar

21 amount specified in paragraph (3)(C)(ii).

22 ‘‘(iii) AGREEMENT.—The submission

23 of a MediGrant plan by a State under this

24 title is deemed to constitute the State’s ac25 ceptance of the obligation allotment limita-
1389

•HR 2517 IH

1 tions under this subsection (including the

2 formula for computing the amount of such

3 obligation allotment).

4 ‘‘(iv) PRE-ENACTMENT-OBLIGATION

5 OUTLAYS DEFINED.—In this subsection,

6 the term ‘pre-enactment-obligation outlays’

7 means, for a State, the outlays of the Fed8 eral Government that result from obliga9 tions that have been incurred under title

10 XIX with respect to the State before the

11 date of the enactment of this title, but for

12 which payments to States have not been

13 made as of such date of enactment.

14 ‘‘(D) ADJUSTMENT TO REFLECT ADOPTION

15 OF ALTERNATIVE GROWTH FORMULA.—Any

16 State that has elected an alternative growth

17 formula under subsection (c)(4) which increases

18 or decreases the dollar amount of an outlay al19 lotment for a fiscal year is deemed to have in20 creased or decreased, respectively, its obligation

21 amount for such fiscal year by the amount of

22 such increase or decrease.

23 ‘‘(b) POOL OF AVAILABLE FUNDS.—

24 ‘‘(1) IN GENERAL.—For purposes of this sec25 tion, the ‘pool amount’ under this subsection for—
1390

•HR 2517 IH

1 ‘‘(A) fiscal year 1996 is $95.673 billion;

2 ‘‘(B) fiscal year 1997 is $102.135 billion;

3 ‘‘(C) fiscal year 1998 is $106.221 billion;

4 ‘‘(D) fiscal year 1999 is $110.469 billion;

5 ‘‘(E) fiscal year 2000 is $114.888 billion;

6 ‘‘(F) fiscal year 2001 is $119.483 billion;

7 ‘‘(G) fiscal year 2002 is $124.263 billion;

8 and

9 ‘‘(H) each subsequent fiscal year is the

10 pool amount under this paragraph for the pre11 vious fiscal year increased by the lesser of 4

12 percent or the annual percentage increase in

13 the consumer price index for all urban consum14 ers (U.S. city average) for the 12-month period

15 ending in June before the beginning of that

16 subsequent fiscal year.

17 ‘‘(2) NATIONAL MEDIGRANT GROWTH PERCENT18 AGE.—For purposes of this section for a fiscal year

19 (beginning with fiscal year 1997), the ‘national

20 MediGrant growth percentage’ is the percentage by

21 which—

22 ‘‘(A) the pool amount under paragraph (1)

23 for the fiscal year, exceeds

24 ‘‘(B) such pool amount for the previous

25 fiscal year.
1391

•HR 2517 IH

1 ‘‘(c) STATE OUTLAY ALLOTMENTS.—

2 ‘‘(1) FISCAL YEAR 1996.—

3 ‘‘(A) IN GENERAL.—For each of the 50

4 States and the District of Columbia, the

5 amount of the State outlay allotment under this

6 subsection for fiscal year 1996 is, subject to

7 paragraph (4), equal to—

8 ‘‘(i) the total amount of Federal ex9 penditures made to the State under title

10 XIX for the 4 quarters in fiscal year 1994,

11 increased by

12 ‘‘(ii) the percentage by which (I)

13 $95,529,490,500 (which represents the

14 total amount of outlay allotments for such

15 States and District for fiscal year 1996),

16 exceeds (II) $83,213,431,458 (which rep17 resents Federal medicaid expenditures for

18 such States and District for fiscal year

19 1994).

20 ‘‘(B) COMPUTATION OF EXPENDITURES.—

21 The amount of Federal expenditures described

22 in subparagraph (A)(i) shall be computed, using

23 data reported on the HCFA Form 64 as of

24 September 1, 1995, based on—
1392

•HR 2517 IH

1 ‘‘(i) the amount reported on line 11,

2 or

3 ‘‘(ii) on the amount reported on line 6

4 multiplied by the ratio of (I) the sum of

5 the amounts so reported on line 11 of such

6 Form for fiscal year 1994 for the 50

7 States and the District of Columbia, to

8 (II) the sum of the amounts so reported on

9 line 6 of such Form for fiscal year 1994

10 for such States and District,

11 whichever is greater.

12 ‘‘(C) LIMITATION ON ADJUSTMENT.—The

13 amount computed under subparagraph (B)

14 shall not be subject to adjustment (based on

15 any subsequent disallowances or otherwise).

16 ‘‘(2) COMPUTATION OF STATE OUTLAY ALLOT17 MENTS.—

18 ‘‘(A) IN GENERAL.—Subject to the suc19 ceeding provisions of this subsection, the

20 amount of the State outlay allotment under this

21 subsection for one of the 50 States and the Dis22 trict of Columbia for a fiscal year (beginning

23 with fiscal year 1997) is equal to the product

24 of—
1393

•HR 2517 IH

1 ‘‘(i) the needs-based amount deter2 mined under subparagraph (B) for the

3 State for the fiscal year, and

4 ‘‘(ii) the scalar factor described in

5 subparagraph (C) for the fiscal year.

6 ‘‘(B) NEEDS-BASED AMOUNT.—The needs7 based amount under this subparagraph for a

8 State for a fiscal year is equal to the product

9 of—

10 ‘‘(i) the State’s aggregate expenditure

11 need for the fiscal year (as determined

12 under subsection (d)), and

13 ‘‘(ii) the State’s old Federal medical

14 assistance percentage (as defined in section

15 2122(d)) for the previous fiscal year (or, in

16 the case of fiscal year 1997, the Federal

17 medical assistance percentage determined

18 under section 1905(b) for fiscal year

19 1996).

20 ‘‘(C) SCALAR FACTOR.—The scalar factor

21 under this subparagraph for a fiscal year is

22 such proportion so that, when it is applied

23 under subparagraph (A)(ii) for the fiscal year

24 (taking into account the floors and ceilings

25 under paragraph (3)), the total of the outlay al-
1394

•HR 2517 IH

1 lotments under this subsection for all the 50

2 States and the District of Columbia for the fis3 cal year (not taking into account any increase

4 in an outlay allotment for a fiscal year attrib5 utable to the election of an alternative growth

6 formula under paragraph (4)) is equal to the

7 amount by which (i) the pool amount for the

8 fiscal year (as determined under subsection

9 (b)), exceeds (ii) the sum of the outlay allot10 ments provided under paragraph (5) for the

11 Commonwealths and territories for the fiscal

12 year.

13 ‘‘(3) FLOORS AND CEILINGS.—

14 ‘‘(A) FLOORS.—In no case shall the

15 amount of the State outlay allotment under

16 paragraph (2) for a fiscal year be less than the

17 following:

18 ‘‘(i) FLOOR BASED ON PREVIOUS

19 YEAR’S OUTLAY ALLOTMENT.—102 percent

20 of the amount of the State outlay allot21 ment under this subsection for the pre22 vious fiscal year.

23 ‘‘(ii) FLOOR BASED ON OUTLAY AL24 LOTMENT GROWTH RATE IN FIRST

25 YEAR.—Beginning with fiscal year 1998,
1395

•HR 2517 IH

1 in the case of a State for which the outlay

2 allotment under this subsection for fiscal

3 year 1997 exceeded its outlay allotment

4 under this subsection for the previous fis5 cal year by—

6 ‘‘(I) more than 125 percent of

7 the national MediGrant growth per8 centage for fiscal year 1997, 104 per9 cent of the amount of the State outlay

10 allotment under this subsection for

11 the previous fiscal year; or

12 ‘‘(II) less than 125 percent (but

13 more than 75 percent) of the national

14 MediGrant growth percentage for fis15 cal year 1997, 103 percent of the

16 amount of the State outlay allotment

17 under this subsection for the previous

18 fiscal year.

19 ‘‘(B) CEILING.—

20 ‘‘(i) IN GENERAL.—Subject to clause

21 (ii), in no case shall the amount of the

22 State outlay allotment under paragraph

23 (2) for a fiscal year be greater than the

24 product of—
1396

•HR 2517 IH

1 ‘‘(I) the State outlay allotment

2 under this subsection for the State for

3 the preceding fiscal year, and

4 ‘‘(II) 133 percent of the national

5 MediGrant growth percentage (as de6 termined under subsection (b)(2)) for

7 the fiscal year involved.

8 ‘‘(ii) SPECIAL RULE.—For a fiscal

9 year after fiscal year 1997, in the case of

10 a State (among the 50 States and the Dis11 trict of Columbia) that is one of the 10

12 States with the lowest Federal MediGrant

13 spending per resident-in-poverty rates (as

14 determined under clause (iii)) for the fiscal

15 year, the reference in clause (i)(II) to ‘133

16 percent’ is deemed a reference to ‘150 per17 cent’.

18 ‘‘(iii) DETERMINATION OF FEDERAL

19 MEDIGRANT SPENDING PER RESIDENT-IN20 POVERTY RATE.—For purposes of clause

21 (ii), the ‘Federal MediGrant spending per

22 resident-in-poverty rate’ for a State for a

23 fiscal year is equal to—

24 ‘‘(I) the State’s outlay allotment

25 under this subsection for the previous
1397

•HR 2517 IH

1 fiscal year (determined without regard

2 to paragraph (4)), divided by

3 ‘‘(II) the average annual number

4 of residents of the State in poverty

5 (as defined in subsection (d)(2)) with

6 respect to the fiscal year.

7 ‘‘(4) ELECTION OF ALTERNATIVE GROWTH

8 FORMULA.—

9 ‘‘(A) ELECTION.—In order to reduce vari10 ations in increases in outlay allotments over

11 time, any of the 50 States or the District of Co12 lumbia may elect (by notice provided to the Sec13 retary by not later than April 1, 1996) to adopt

14 an alternative growth rate formula under this

15 paragraph for the determination of the State’s

16 outlay allotment in fiscal year 1996 and for the

17 increase in the amount of such allotment in

18 subsequent fiscal years.

19 ‘‘(B) FORMULA.—The alternative growth

20 formula under this paragraph may be any for21 mula under which a portion of the State outlay

22 allotment for fiscal year 1996 under paragraph

23 (1) is deferred and applied to increase the

24 amount of its outlay allotment for one or more

25 subsequent fiscal years, so long as the total
1398

•HR 2517 IH

1 amount of such increases for all such subse2 quent fiscal years does not exceed the amount

3 of the outlay allotment deferred from fiscal year

4 1996.

5 ‘‘(5) COMMONWEALTHS AND TERRITORIES.—

6 The outlay allotment for each of the Commonwealths

7 and territories for a fiscal year is the maximum

8 amount that could have been certified under section

9 1108(c) with respect to the Commonwealth or terri10 tory for the fiscal year with respect to title XIX, if

11 the national MediGrant growth percentage (as deter12 mined under subsection (b)(2)) for the fiscal year

13 had been substituted (beginning with fiscal year

14 1997) for the percentage increase referred to in sec15 tion 1108(c)(1)(B).

16 ‘‘(d) STATE AGGREGATE EXPENDITURE NEED DE17 TERMINED.—

18 ‘‘(1) IN GENERAL.—For purposes of subsection

19 (c), the ‘State aggregate expenditure need’ for a

20 State for a fiscal year is equal to the product of the

21 following 4 factors:

22 ‘‘(A) RESIDENTS IN POVERTY.—The aver23 age annual number of residents in poverty of

24 the State with respect to the fiscal year (as de25 termined under paragraph (2)).
1399

•HR 2517 IH

1 ‘‘(B) CASE MIX INDEX.—The average of

2 the case mix indexes for the State (as deter3 mined under paragraph (3)) for the 3 most re4 cent fiscal years for which data are available,

5 but in no case less than .9 or greater than 1.15.

6 ‘‘(C) INPUT COST INDEX.—The average of

7 the input cost indexes for the State (as deter8 mined under paragraph (4)) for the 3 most re9 cent fiscal years for which data are available.

10 ‘‘(D) NATIONAL AVERAGE SPENDING PER

11 RESIDENT IN POVERTY.—The national average

12 spending per resident in poverty (as determined

13 under paragraph (5)).

14 ‘‘(2) RESIDENTS IN POVERTY.—In this sec15 tion—

16 ‘‘(A) IN GENERAL.—The term ‘average an17 nual number of residents in poverty’ means,

18 with respect to a State and a fiscal year, the

19 average annual number of residents in poverty

20 (as defined in subparagraph (B)) in the State

21 (based on data made generally available by the

22 Bureau of the Census from the Current Popu23 lation Survey) for the most recent 3-calendar24 year period (ending before the fiscal year) for

25 which such data are available.
1400

•HR 2517 IH

1 ‘‘(B) RESIDENT IN POVERTY DEFINED.—

2 The term ‘resident in poverty’ means an indi3 vidual whose family income does not exceed the

4 poverty threshold (as such terms are defined by

5 the Office of Management and Budget and are

6 generally interpreted and applied by the Bureau

7 of the Census for the year involved).

8 ‘‘(3) CASE MIX INDEX.—

9 ‘‘(A) IN GENERAL.—In this subsection, the

10 ‘case mix index’ for a State for a fiscal year is

11 equal to—

12 ‘‘(i) the sum of—

13 ‘‘(I) the projected per recipient

14 expenditures with respect to elderly

15 individuals in the State for the fiscal

16 year (determined under subparagraph

17 (B)),

18 ‘‘(II) the projected per recipient

19 expenditures with respect to the blind

20 and disabled individuals in the State

21 for the fiscal year (determined under

22 subparagraph (C)), and

23 ‘‘(III) the projected per recipient

24 expenditures with respect to other in-
1401

•HR 2517 IH

1 dividuals in the State (determined

2 under subparagraph (D));

3 divided by—

4 ‘‘(ii) the national average spending

5 per recipient determined under subpara6 graph (E) for the fiscal year involved.

7 ‘‘(B) PROJECTED PER RECIPIENT EXPEND8 ITURES FOR THE ELDERLY.—For purposes of

9 subparagraph (A)(I)(i), the ‘projected per recip10 ient expenditures with respect to elderly individ11 uals’ in a State for a fiscal year is equal to the

12 product of—

13 ‘‘(i) the national average per recipient

14 expenditures under this title in the 50

15 States and the District of Columbia for the

16 most recent fiscal year for which data are

17 available for individuals who are 65 years

18 of age or older, and

19 ‘‘(ii) the proportion, of all individuals

20 who received medical assistance under this

21 title in the State in the most recent fiscal

22 year referred to in clause (i), that were in23 dividuals described in such clause.

24 ‘‘(C) PROJECTED PER RECIPIENT EXPEND25 ITURES FOR THE BLIND AND DISABLED.—For
1402

•HR 2517 IH

1 purposes of subparagraph (A)(i)(II), the ‘pro2 jected per recipient expenditures with respect to

3 blind and disabled individuals’ in a State for a

4 fiscal year is equal to the product of—

5 ‘‘(i) the national average per recipient

6 expenditures under this title in the 50

7 States and the District of Columbia for the

8 most recent fiscal year for which data are

9 available for individuals who are eligible

10 for medical assistance because they are

11 blind or disabled and under 65 years of

12 age, and

13 ‘‘(ii) the proportion, of all individuals

14 who received medical assistance under this

15 title in the State in the most recent fiscal

16 year referred to in clause (i), that were in17 dividuals described in such clause.

18 ‘‘(D) PROJECTED PER RECIPIENT EX19 PENDITURES FOR OTHER INDIVIDUALS.—For

20 purposes of subparagraph (A)(i)(III), the ‘pro21 jected per recipient expenditures with respect to

22 other individuals’ in a State for a fiscal year is

23 equal to the product of—

24 ‘‘(i) the national average per recipient

25 expenditures under this title in the 50
1403

•HR 2517 IH

1 States and the District of Columbia for the

2 most recent fiscal year for which data are

3 available for individuals who are not de4 scribed in subparagraph (B)(i) or (C)(i),

5 and

6 ‘‘(ii) the proportion, of all individuals

7 who received medical assistance under this

8 title in the State in the most recent fiscal

9 year referred to in clause (i), that were in10 dividuals described in such clause.

11 ‘‘(E) NATIONAL AVERAGE SPENDING PER

12 RECIPIENT.—For purposes of this paragraph,

13 the ‘national average expenditures per recipient’

14 for a fiscal year is equal to the sum of—

15 ‘‘(i) the product of (I) the national av16 erage described in subparagraph (B)(i),

17 and (II) the proportion, of all individuals

18 who received medical assistance under this

19 title in any of the 50 States or the District

20 of Columbia in the fiscal year referred to

21 in such subparagraph, who are described

22 in such subparagraph;

23 ‘‘(ii) the product of (I) the national

24 average described in subparagraph (C)(i),

25 and (II) the proportion, of all individuals
1404

•HR 2517 IH

1 who received medical assistance under this

2 title in any of the 50 States or the District

3 of Columbia in the fiscal year referred to

4 in such subparagraph, who are described

5 in such subparagraph; and

6 ‘‘(iii) the product of (I) the national

7 average described in subparagraph (D)(i),

8 and (II) the proportion, of all individuals

9 who received medical assistance under this

10 title in any of the 50 States or the District

11 of Columbia in the fiscal year referred to

12 in such subparagraph, who are described

13 in such subparagraph.

14 ‘‘(F) DETERMINATION OF NATIONAL AVER15 AGES AND PROPORTIONS.—

16 ‘‘(i) IN GENERAL.—The national aver17 ages per recipient and the proportions re18 ferred to in clauses (i) and (ii), respec19 tively, of subparagraphs (B), (C), and (D)

20 and subparagraph (E) shall be determined

21 by the Secretary using the most recent

22 data available.

23 ‘‘(ii) USE OF MEDICAID DATA.—If for

24 a fiscal year there is inadequate data to

25 compute such averages and proportions
1405

•HR 2517 IH

1 based on expenditures and numbers of in2 dividuals receiving medical assistance

3 under this title, the Secretary may com4 pute such averages based on expenditures

5 and numbers of such individuals under

6 title XIX for the most recent fiscal year

7 for which data are available and, for this

8 purpose—

9 ‘‘(I) any reference in subpara10 graph (B)(i) to ‘individuals 65 years

11 of age or older’ is deemed a reference

12 to ‘individuals whose eligibility for

13 medical assistance is based on being

14 65 years of age or older’,

15 ‘‘(II) the reference in subpara16 graph (C)(i) to ‘and under 65 years of

17 age’ shall be considered to be deleted,

18 and

19 ‘‘(III) individuals whose basis for

20 eligibility for medical assistance was

21 reported as unknown shall not be

22 counted as individuals under subpara23 graph (D)(i).

24 ‘‘(4) INPUT COST INDEX.—
1406

•HR 2517 IH

1 ‘‘(A) IN GENERAL.—In this section, the

2 ‘input cost index’ for a State for a fiscal year

3 is the sum of—

4 ‘‘(i) 0.15, and

5 ‘‘(ii) 0.85 multiplied by the ratio of

6 (I) the annual average wages for hospital

7 employees in the State for the fiscal year

8 (as determined under subparagraph (B)),

9 to (II) the annual average wages for hos10 pital employees in the 50 States and the

11 District of Columbia for such year (as de12 termined under such subparagraph).

13 ‘‘(B) DETERMINATION OF ANNUAL AVER14 AGE WAGES OF HOSPITAL EMPLOYEES.—The

15 Secretary shall provide for the determination of

16 annual average wages for hospital employees in

17 a State and, collectively, in the 50 States and

18 the District of Columbia for a fiscal year based

19 on the area wage index applicable to hospitals

20 under 1886(d)(2)(E) (or, if such index no

21 longer exists, a comparable index of hospital

22 wages) for discharges occurring during the fis23 cal year involved.

24 ‘‘(5) NATIONAL AVERAGE SPENDING PER RESI25 DENT IN POVERTY.—For purposes of this sub-
1407

•HR 2517 IH

1 section, the ‘national average spending per resident

2 in poverty’—

3 ‘‘(A) for fiscal year 1997 is equal to—

4 ‘‘(i) the sum (for each of the 50

5 States and the District of Columbia) of the

6 total of the Federal and State expenditures

7 under title XIX for calendar quarters in

8 fiscal year 1994, increased by the percent9 age specified in subsection (c)(1)(A)(ii), di10 vided by

11 ‘‘(ii) the sum of the number of resi12 dents in poverty (as defined in paragraph

13 (2)(A)) for all of the 50 States and the

14 District of Columbia for fiscal year 1994;

15 ‘‘(B) for a succeeding fiscal year is equal

16 to the national average spending per resident in

17 poverty under this paragraph for the preceding

18 fiscal year increased by the national MediGrant

19 growth percentage (as defined in subsection

20 (b)(2)) for the fiscal year involved.

21 ‘‘(e) PUBLICATION OF OBLIGATION AND OUTLAY AL22 LOTMENTS.—

23 ‘‘(1) NOTICE OF PRELIMINARY ALLOTMENTS.—

24 Not later than April 1 before the beginning of each

25 fiscal year (beginning with fiscal year 1997), the
1408

•HR 2517 IH

1 Secretary shall initially compute, after consultation

2 with the Comptroller General, and publish in the

3 Federal Register notice of the proposed obligation

4 and outlay allotments for each State under this sec5 tion (not taking into account subsection (a)(2)(B))

6 for the fiscal year. The Secretary shall include in the

7 notice a description of the methodology and data

8 used in deriving such allotments for the year.

9 ‘‘(2) REVIEW BY GAO.—The Comptroller Gen10 eral shall submit to Congress by not later than May

11 15 of each such fiscal year, a report analyzing such

12 allotments and the extent to which they comply with

13 the precise requirements of this section.

14 ‘‘(3) NOTICE OF FINAL ALLOTMENTS.—Not

15 later than July 1 before the beginning of each such

16 fiscal year, the Secretary, taking into consideration

17 the analysis contained in the report of the Comptrol18 ler General under paragraph (2), shall compute and

19 publish in the Federal Register notice of the final al20 lotments under this section (both taking into ac21 count and not taking into account subsection

22 (a)(2)(B)) for the fiscal year. The Secretary shall in23 clude in the notice a description of any changes in

24 such allotments from the initial allotments published

25 under paragraph (1) for the fiscal year and the rea-
1409

•HR 2517 IH

1 sons for such changes. Once published under this

2 paragraph, the Secretary is not authorized to change

3 such allotments.

4 ‘‘(4) GAO REPORT ON FINAL ALLOTMENTS.—

5 The Comptroller General shall submit to Congress

6 by not later than August 1 of each such fiscal year,

7 a report analyzing the final allotments under para8 graph (3) and the extent to which they comply with

9 the precise requirements of this section.

10 ‘‘SEC. 2122. PAYMENTS TO STATES.

11 ‘‘(a) AMOUNT OF PAYMENT.—From the allotment of

12 a State under section 2121 for a fiscal year, subject to

13 the succeeding provisions of this title, the Secretary shall

14 pay to each State which has a MediGrant plan approved

15 under part E, for each quarter in the fiscal year—

16 ‘‘(1) an amount equal to the applicable Federal

17 medical assistance percentage (as defined in sub18 section (c)) of the total amount expended during

19 such quarter as medical assistance under the plan;

20 plus

21 ‘‘(2) an amount equal to the applicable Federal

22 medical assistance percentage of the total amount

23 expended during such quarter for medically-related

24 services (as defined in section 2112(e)(2)); plus

25 ‘‘(3) subject to section 2123(c)—
1410

•HR 2517 IH

1 ‘‘(A) an amount equal to 90 percent of the

2 amounts expended during such quarter for the

3 design, development, and installation of infor4 mation systems and for providing incentives to

5 promote the enforcement of medical support or6 ders, plus

7 ‘‘(B) an amount equal to 75 percent of the

8 amounts expended during such quarter for

9 medical personnel, administrative support of

10 medical personnel, operation and maintenance

11 of information systems, modification of infor12 mation systems, quality assurance activities,

13 utilization review, medical and peer review,

14 anti-fraud activities, independent evaluations,

15 coordination of benefits, and meeting reporting

16 requirements under this title, plus

17 ‘‘(C) an amount equal to 50 percent of so

18 much of the remainder of the amounts ex19 pended during such quarter as are expended by

20 the State in the administration of the State

21 plan.

22 ‘‘(b) PAYMENT PROCESS.—

23 ‘‘(1) QUARTERLY ESTIMATES.—Prior to the be24 ginning of each quarter, the Secretary shall estimate

25 the amount to which a State will be entitled under
1411

•HR 2517 IH

1 subsection (a) for such quarter, such estimates to be

2 based on (A) a report filed by the State containing

3 its estimate of the total sum to be expended in such

4 quarter in accordance with the provisions of such

5 subsections, and stating the amount appropriated or

6 made available by the State and its political subdivi7 sions for such expenditures in such quarter, and if

8 such amount is less than the State’s proportionate

9 share of the total sum of such estimated expendi10 tures, the source or sources from which the dif11 ference is expected to be derived, and (B) such other

12 investigation as the Secretary may find necessary.

13 ‘‘(2) PAYMENT.—

14 ‘‘(A) IN GENERAL.—The Secretary shall

15 then pay to the State, in such installments as

16 the Secretary may determine and in accordance

17 with section 6503(a) of title 31, United States

18 Code, the amount so estimated, reduced or in19 creased to the extent of any overpayment or

20 underpayment which the Secretary determines

21 was made under this section (or section 1903)

22 to such State for any prior quarter and with re23 spect to which adjustment has not already been

24 made under this subsection (or under section

25 1903(d)).
1412

•HR 2517 IH

1 ‘‘(B) TREATMENT AS OVERPAYMENTS.—

2 Expenditures for which payments were made to

3 the State under subsection (a) shall be treated

4 as an overpayment to the extent that the State

5 or local agency administering such plan has

6 been reimbursed for such expenditures by a

7 third party pursuant to the provisions of its

8 plan in compliance with section 2135.

9 ‘‘(C) RECOVERY OF OVERPAYMENTS.—For

10 purposes of this subsection, when an overpay11 ment is discovered, which was made by a State

12 to a person or other entity, the State shall have

13 a period of 60 days in which to recover or at14 tempt to recover such overpayment before ad15 justment is made in the Federal payment to

16 such State on account of such overpayment.

17 Except as otherwise provided in subparagraph

18 (D), the adjustment in the Federal payment

19 shall be made at the end of the 60 days, wheth20 er or not recovery was made.

21 ‘‘(D) NO ADJUSTMENT FOR

22 UNCOLLECTABLES.—In any case where the

23 State is unable to recover a debt which rep24 resents an overpayment (or any portion thereof)

25 made to a person or other entity on account of
1413

•HR 2517 IH

1 such debt having been discharged in bankruptcy

2 or otherwise being uncollectable, no adjustment

3 shall be made in the Federal payment to such

4 State on account of such overpayment (or por5 tion thereof).

6 ‘‘(3) FEDERAL SHARE OF RECOVERIES.—The

7 pro rata share to which the United States is equi8 tably entitled, as determined by the Secretary, of the

9 net amount recovered during any quarter by the

10 State or any political subdivision thereof with re11 spect to medical assistance furnished under the

12 State plan shall be considered an overpayment to be

13 adjusted under this subsection.

14 ‘‘(4) TIMING OF OBLIGATION OF FUNDS.—

15 Upon the making of any estimate by the Secretary

16 under this subsection, any appropriations available

17 for payments under this section shall be deemed ob18 ligated.

19 ‘‘(5) DISALLOWANCES.—In any case in which

20 the Secretary estimates that there has been an over21 payment under this section to a State on the basis

22 of a claim by such State that has been disallowed by

23 the Secretary under section 1116(d), and such State

24 disputes such disallowance, the amount of the Fed25 eral payment in controversy shall, at the option of
1414

•HR 2517 IH

1 the State, be retained by such State or recovered by

2 the Secretary pending a final determination with re3 spect to such payment amount. If such final deter4 mination is to the effect that any amount was prop5 erly disallowed, and the State chose to retain pay6 ment of the amount in controversy, the Secretary

7 shall offset, from any subsequent payments made to

8 such State under this title, an amount equal to the

9 proper amount of the disallowance plus interest on

10 such amount disallowed for the period beginning on

11 the date such amount was disallowed and ending on

12 the date of such final determination at a rate (deter13 mined by the Secretary) based on the average of the

14 bond equivalent of the weekly 90-day treasury bill

15 auction rates during such period.

16 ‘‘(c) APPLICABLE FEDERAL MEDICAL ASSISTANCE

17 PERCENTAGE DEFINED.—In this section, except as pro18 vided in subsection (f), the term ‘applicable Federal medi19 cal assistance percentage’ means, with respect to one of

20 the 50 States or the District of Columbia, at the State’s

21 or District’s option—

22 ‘‘(1) the old Federal medical assistance percent23 age (as determined in subsection (d)), or

24 ‘‘(2) the new Federal medical assistance per25 centage (as determined under subsection (e)) or, if
1415

•HR 2517 IH

1 less, the old Federal medical assistance percentage

2 plus 10 percentage points.

3 ‘‘(d) OLD FEDERAL MEDICAL ASSISTANCE PER4 CENTAGE.—

5 ‘‘(1) IN GENERAL.—Except as provided in para6 graph (2) and subsection (f), the term ‘old Federal

7 medical assistance percentage’ for any State is 100

8 percent less the State percentage; and the State per9 centage is that percentage which bears the same

10 ratio to 45 percent as the square of the per capita

11 income of such State bears to the square of the per

12 capita income of the continental United States (in13 cluding Alaska) and Hawaii.

14 ‘‘(2) LIMITATION ON RANGE.—In no case shall

15 the old Federal medical assistance percentage be less

16 than 50 percent or more than 83 percent.

17 ‘‘(3) PROMULGATION.—The old Federal medical

18 assistance percentage for any State shall be deter19 mined and promulgated in accordance with the pro20 visions of section 1101(a)(8)(B).

21 ‘‘(e) NEW FEDERAL MEDICAL ASSISTANCE PER22 CENTAGE DEFINED.—

23 ‘‘(1) IN GENERAL.—

24 ‘‘(A) TERM DEFINED.—Except as provided

25 in paragraph (3) and subsection (f), the term
1416

•HR 2517 IH

1 ‘new Federal medical assistance percentage’

2 means, for each of the 50 States and the Dis3 trict of Columbia, 100 percent reduced by the

4 product 0.39 and the ratio of—

5 ‘‘(i)(I) for each of the 50 States, the

6 total taxable resources (TTR) ratio of the

7 State specified in subparagraph (B), or

8 ‘‘(II) for the District of Columbia, the

9 per capita income ratio specified in sub10 paragraph (C),

11 to—

12 ‘‘(ii) the aggregate expenditure need

13 ratio of the State or District, as described

14 in subparagraph (D).

15 ‘‘(B) TOTAL TAXABLE RESOURCES (TTR)

16 RATIO.—For purposes of subparagraph

17 (A)(i)(I), the total taxable resources (TTR)

18 ratio for each of the 50 States is—

19 ‘‘(i) an amount equal to the most re20 cent 3-year average of the total taxable re21 sources (TTR) of the State, as determined

22 by the Secretary of the Treasury, divided

23 by
1417

•HR 2517 IH

1 ‘‘(ii) an amount equal to the sum of

2 the 3-year averages determined under

3 clause (i) for each of the 50 States.

4 ‘‘(C) PER CAPITA INCOME RATIO.—For

5 purposes of subparagraph (A)(i)(II), the per

6 capita income ratio of the District of Columbia

7 is—

8 ‘‘(i) an amount equal to the most re9 cent 3-year average of the total personal

10 income of the District of Columbia, as de11 termined in accordance with the provisions

12 of section 1101(a)(8)(B), divided by

13 ‘‘(ii) an amount equal to the total per14 sonal income of the continental United

15 States (including Alaska) and Hawaii, as

16 determined under section 1101(a)(8)(B).

17 ‘‘(D) AGGREGATE EXPENDITURE NEED

18 RATIO.—For purposes of subparagraph (A),

19 with respect to each of the 50 States and the

20 District of Columbia for a fiscal year, the ag21 gregate expenditure need ratio is—

22 ‘‘(i) the State aggregate expenditure

23 need (as defined in section 2121(d)) for

24 the State for the fiscal year, divided by
1418

•HR 2517 IH

1 ‘‘(ii) the such of such State aggregate

2 expenditure needs for the 50 States and

3 the District of Columbia for the fiscal year.

4 ‘‘(2) LIMITATION ON RANGE.—Except as pro5 vided in subsection (f), the new Federal medical as6 sistance percentage shall in no case be less than 40

7 percent or greater than 83 percent.

8 ‘‘(3) PROMULGATION.—The new Federal medi9 cal assistance percentage for any State shall be pro10 mulgated in a timely manner consistent with the

11 promulgation of the old Federal medical assistance

12 percentage under section 1101(a)(8)(B).

13 ‘‘(f) SPECIAL RULES.—For purposes of this title—

14 ‘‘(1) COMMONWEALTHS AND TERRITORIES.—In

15 the case of Puerto Rico, the Virgin Islands, Guam,

16 the Northern Mariana Islands, and American

17 Samoa, the old and new Federal medical assistance

18 percentages are 50 percent.

19 ‘‘(2) INDIAN HEALTH SERVICE FACILITIES.—

20 ‘‘(A) IN GENERAL.—The old and new Fed21 eral medical assistance percentages shall be 100

22 percent with respect to the amounts expended

23 as medical assistance for services which are re24 ceived through a facility described in subpara25 graph (B) of an Indian tribe or tribal organiza-
1419

•HR 2517 IH

1 tion or through an Indian Health Service facil2 ity whether operated by the Indian Health

3 Service or by an Indian tribe or tribal organiza4 tion (as defined in section 4 of the Indian

5 Health Care Improvement Act).

6 ‘‘(B) FACILITY DESCRIBED.—For purposes

7 of subparagraph (A), a facility described in this

8 subparagraph is a facility of an Indian tribe

9 if—

10 ‘‘(i) the facility is located in a State

11 which, as of the date of the enactment of

12 this title, was not operating its State plan

13 under title XIX pursuant to a Statewide

14 waiver approved under section 1115,

15 ‘‘(ii) the facility is not an Indian

16 Health Service facility,

17 ‘‘(iii) the tribe owns at least 2 such

18 facilities, and

19 ‘‘(iv) the tribe has at least 50,000

20 members (as of the date of the enactment

21 of this title).

22 ‘‘(3) NO STATE MATCHING REQUIRED FOR CER23 TAIN EXPENDITURES.—In applying subsection (a)(1)

24 with respect to medical assistance provided to unlaw25 ful aliens pursuant to the exception specified in sec-
1420

•HR 2517 IH

1 tion 2123(e)(2), payment shall be made for the

2 amount of such assistance without regard to any

3 need for a State match.

4 ‘‘SEC. 2123. LIMITATION ON USE OF FUNDS; DISALLOW5 ANCE.

6 ‘‘(a) IN GENERAL.—Funds provided to a State under

7 this title shall only be used to carry out the purposes of

8 this title.

9 ‘‘(b) DISALLOWANCES FOR EXCLUDED PROVID10 ERS.—

11 ‘‘(1) IN GENERAL.—Payment shall not be made

12 to a State under this part for expenditures for items

13 and services furnished—

14 ‘‘(A) by a provider who was excluded from

15 participation under title V, XVIII, or XX or

16 under this title pursuant to section 1128,

17 1128A, 1156, or 1842(j)(2), or

18 ‘‘(B) under the medical direction or on the

19 prescription of a physician who was so excluded,

20 if the provider of the services knew or had rea21 son to know of the exclusion.

22 ‘‘(2) EXCEPTION FOR EMERGENCY SERVICES.—

23 Paragraph (1) shall not apply to emergency items or

24 services, not including hospital emergency room serv25 ices.
1421

•HR 2517 IH

1 ‘‘(c) LIMITATIONS.—

2 ‘‘(1) IN GENERAL.—No Federal financial assist3 ance is available for expenditures under the

4 MediGrant plan for—

5 ‘‘(A) medically-related services for a quar6 ter to the extent such expenditures exceed 5

7 percent of the total expenditures under the plan

8 for the quarter; or

9 ‘‘(B) total administrative expenses (other

10 than expenses described in paragraph (2) dur11 ing the first 8 quarters in which the plan is in

12 effect under this title) for quarters in a fiscal

13 year to the extent such expenditures exceed the

14 sum of $20,000,000 plus 10 percent of the total

15 expenditures under the plan for the year.

16 ‘‘(2) ADMINISTRATIVE EXPENSES NOT SUBJECT

17 TO LIMITATION.—The administrative expenses re18 ferred to in this paragraph are expenditures under

19 the MediGrant plan for the following activities:

20 ‘‘(A) Quality assurance.

21 ‘‘(B) The development and operation of the

22 certification program for nursing facilities and

23 intermediate care facilities for the mentally re24 tarded under section 2137(a)(2).
1422

•HR 2517 IH

1 ‘‘(C) Utilization review activities, including

2 medical activities and activities of peer review

3 organizations.

4 ‘‘(D) Inspection and oversight of providers

5 and capitated health care organizations.

6 ‘‘(E) Anti-fraud activities.

7 ‘‘(F) Independent evaluations.

8 ‘‘(G) Activities required to meet reporting

9 requirements under this title.

10 ‘‘(d) TREATMENT OF THIRD PARTY LIABILITY.—No

11 payment shall be made to a State under this part for ex12 penditures for medical assistance provided for an individ13 ual under its MediGrant plan to the extent that a private

14 insurer (as defined by the Secretary by regulation and in15 cluding a group health plan (as defined in section 607(1)

16 of the Employee Retirement Income Security Act of

17 1974), a service benefit plan, and a health maintenance

18 organization) would have been obligated to provide such

19 assistance but for a provision of its insurance contract

20 which has the effect of limiting or excluding such obliga21 tion because the individual is eligible for or is provided

22 medical assistance under the plan.

23 ‘‘(e) LIMITATION ON PAYMENTS TO EMERGENCY

24 SERVICES FOR NONLAWFUL ALIENS.—
1423

•HR 2517 IH

1 ‘‘(1) IN GENERAL.—Notwithstanding the pre2 ceding provisions of this section, except as provided

3 in paragraph (2), no payment may be made to a

4 State under this part for medical assistance fur5 nished to an alien who is not lawfully admitted for

6 permanent residence or otherwise permanently resid7 ing in the United States under color of law.

8 ‘‘(2) EXCEPTION FOR EMERGENCY SERVICES.—

9 Payment may be made under this section for care

10 and services that are furnished to an alien described

11 in paragraph (1) only if—

12 ‘‘(A) such care and services are necessary

13 for the treatment of an emergency medical con14 dition of the alien,

15 ‘‘(B) such alien otherwise meets the eligi16 bility requirements for medical assistance under

17 the MediGrant plan (other than a requirement

18 of the receipt of aid or assistance under title

19 IV, supplemental security income benefits under

20 title XVI, or a State supplementary payment),

21 and

22 ‘‘(C) such care and services are not related

23 to an organ transplant procedure.

24 ‘‘(3) EMERGENCY MEDICAL CONDITION DE25 FINED.—For purposes of this subsection, the term
1424

•HR 2517 IH

1 ‘emergency medical condition’ means a medical con2 dition (including emergency labor and delivery)

3 manifesting itself by acute symptoms of sufficient

4 severity (including severe pain) such that the ab5 sence of immediate medical attention could reason6 ably be expected to result in—

7 ‘‘(A) placing the patient’s health in serious

8 jeopardy,

9 ‘‘(B) serious impairment to bodily func10 tions, or

11 ‘‘(C) serious dysfunction of any bodily

12 organ or part.

13 ‘‘(f) LIMITATION ON PAYMENT FOR CERTAIN OUT14 PATIENT PRESCRIPTION DRUGS.—

15 ‘‘(1) IN GENERAL.—No payment may be made

16 to a State under this part for medical assistance for

17 covered outpatient drugs (as defined in section

18 2175(i)(2)) of a manufacturer provided under the

19 MediGrant plan unless the manufacturer (as defined

20 in section 2175(i)(4)) of the drug—

21 ‘‘(A) has entered into a MediGrant master

22 rebate agreement with the Secretary under sec23 tion 2175; and

24 ‘‘(B) is complying with the provisions of

25 section 8126 of title 38, United States Code, in-
1425

•HR 2517 IH

1 cluding the requirement of entering into a mas2 ter agreement with the Secretary of Veterans

3 Affairs under such section.

4 ‘‘(2) CONSTRUCTION.—Nothing in this sub5 section shall be construed as requiring a State to

6 participate in the MediGrant master rebate agree7 ment under section 2175.

8 ‘‘(3) EFFECT OF SUBSEQUENT AMEND9 MENTS.—For purposes of paragraph (1)(B), in de10 termining whether a manufacturer is in compliance

11 with the requirements of section 8126 of title 38,

12 United States Code—

13 ‘‘(A) the Secretary shall not take into ac14 count any amendments to such section that are

15 enacted after the enactment of title VI of the

16 Veterans Health Care Act of 1992; and

17 ‘‘(B) a manufacturer is deemed to meet

18 such requirements if the manufacturer estab19 lishes to the satisfaction of the Secretary that

20 the manufacturer would comply (and has of21 fered to comply) with the provisions of section

22 8126 of title 38, United States Code (as in ef23 fect immediately after the enactment of the

24 Veterans Health Care Act of 1992) and would

25 have entered into an agreement under such sec-
1426

•HR 2517 IH

1 tion (as such section was in effect at such

2 time), but for a legislative change in such sec3 tion after the date of the enactment of the Vet4 erans Health Care Act of 1992.

5 ‘‘(g) LIMITATION ON PAYMENT FOR ABORTIONS.—

6 ‘‘(1) IN GENERAL.—Payment shall not be made

7 to a State under this part for any amount expended

8 under the MediGrant plan to pay for any abortion

9 or to assist in the purchase, in whole or in part, of

10 health benefit coverage that includes coverage of

11 abortion.

12 ‘‘(2) EXCEPTION.—Paragraph (1) shall not

13 apply to an abortion—

14 ‘‘(A) if the pregnancy is the result of an

15 act of rape or incest, or

16 ‘‘(B) in the case where a woman suffers

17 from a physical disorder, illness, or injury that

18 would, as certified by a physician, place the

19 woman in danger of death unless an abortion is

20 performed.

21 ‘‘(h) LIMITATION ON PAYMENT FOR ASSISTING

22 DEATHS.—Payment shall not be made to a State under

23 this part for amounts expended under the MediGrant plan

24 to pay for, or to assist in the purchase, in whole or in

25 part, of health benefit coverage that includes payment for
1427

•HR 2517 IH

1 any drug, biological product, or service which was fur2 nished for the purpose of causing, or assisting in causing,

3 the death, suicide, euthanasia, or mercy killing of a per4 son.

5 ‘‘PART D—PROGRAM INTEGRITY AND QUALITY

6 ‘‘SEC. 2131. USE OF AUDITS TO ACHIEVE FISCAL INTEGRITY.

7 ‘‘(a) FINANCIAL AUDITS OF PROGRAM.—

8 ‘‘(1) IN GENERAL.—Each MediGrant plan shall

9 provide for an annual audit of the State’s expendi10 tures from amounts received under this title, in com11 pliance with chapter 75 of title 31, United States

12 Code.

13 ‘‘(2) VERIFICATION AUDITS.—If, after consulta14 tion with the State and the Comptroller General and

15 after a fair hearing, the Secretary determines that

16 a State’s audit under paragraph (1) was performed

17 in substantial violation of chapter 75 of title 31,

18 United States Code, the Secretary may—

19 ‘‘(A) require that the State provide for a

20 verification audit in compliance with such chap21 ter, or

22 ‘‘(B) conduct such a verification audit.

23 ‘‘(3) AVAILABILITY OF AUDIT REPORTS.—With24 in 30 days after completion of each audit or verifica25 tion audit under this subsection, the State shall—
1428

•HR 2517 IH

1 ‘‘(A) provide the Secretary with a copy of

2 the audit report, including the State’s response

3 to any recommendations of the auditor, and

4 ‘‘(B) make the audit report available for

5 public inspection in the same manner as pro6 posed MediGrant plan amendments are made

7 available under section 2105.

8 ‘‘(b) FISCAL CONTROLS.—

9 ‘‘(1) IN GENERAL.—With respect to the ac10 counting and expenditure of funds under this title,

11 each State shall adopt and maintain such fiscal con12 trols, accounting procedures, and data processing

13 safeguards as the State deems reasonably necessary

14 to assure the fiscal integrity of the State’s activities

15 under this title.

16 ‘‘(2) CONSISTENCY WITH GENERALLY ACCEPT17 ED ACCOUNTING PRINCIPLES.—Such controls and

18 procedures shall be generally consistent with gen19 erally accepted accounting principles as recognized

20 by the Governmental Accounting Standards Board

21 or the Comptroller General.

22 ‘‘(c) AUDITS OF PROVIDERS.—Each MediGrant plan

23 shall provide that the records of any entity providing items

24 or services for which payment may be made under the plan
1429

•HR 2517 IH

1 may be audited as necessary to ensure that proper pay2 ments are made under the plan.

3 ‘‘SEC. 2132. FRAUD PREVENTION PROGRAM.

4 ‘‘(a) ESTABLISHMENT.—Each MediGrant plan shall

5 provide for the establishment and maintenance of an effec6 tive program for the detection and prevention of fraud and

7 abuse by beneficiaries, providers, and others in connection

8 with the operation of the program.

9 ‘‘(b) PROGRAM REQUIREMENTS.—The program es10 tablished pursuant to subsection (a) shall include at least

11 the following requirements:

12 ‘‘(1) DISCLOSURE OF INFORMATION.—Any dis13 closing entity (as defined in section 1124(a)) receiv14 ing payments under the MediGrant plan shall com15 ply with the requirements of section 1124.

16 ‘‘(2) SUPPLY OF INFORMATION.—An entity

17 (other than an individual practitioner or a group of

18 practitioners) that furnishes, or arranges for the fur19 nishing of, an item or service under the MediGrant

20 plan shall supply upon request specifically addressed

21 to the entity by the Secretary or the State agency

22 the information described in section 1128(b)(9).

23 ‘‘(3) EXCLUSION.—

24 ‘‘(A) IN GENERAL.—The MediGrant plan

25 shall exclude any specified individual or entity
1430

•HR 2517 IH

1 from participation in the plan for the period

2 specified by the Secretary when required by the

3 Secretary to do so pursuant to section 1128 or

4 section 1128A, and provide that no payment

5 may be made under the plan with respect to

6 any item or service furnished by such individual

7 or entity during such period.

8 ‘‘(B) AUTHORITY.—In addition to any

9 other authority, a State may exclude any indi10 vidual or entity for purposes of participating

11 under the MediGrant plan for any reason for

12 which the Secretary could exclude the individual

13 or entity from participation in a program under

14 title XVIII or under section 1128, 1128A, or

15 1866(b)(2).

16 ‘‘(4) NOTICE.—The MediGrant plan shall pro17 vide that whenever a provider of services or any

18 other person is terminated, suspended, or otherwise

19 sanctioned or prohibited from participating under

20 the plan, the State agency responsible for admin21 istering the plan shall promptly notify the Secretary

22 and, in the case of a physician, the State medical li23 censing board of such action.

24 ‘‘(5) ACCESS TO INFORMATION.—The

25 MediGrant plan shall provide that the State will pro-
1431

•HR 2517 IH

1 vide information and access to certain information

2 respecting sanctions taken against health care prac3 titioners and providers by State licensing authorities

4 in accordance with section 2133.

5 ‘‘SEC. 2133. INFORMATION CONCERNING SANCTIONS TAKEN

6 BY STATE LICENSING AUTHORITIES AGAINST

7 HEALTH CARE PRACTITIONERS AND PROVID8 ERS.

9 ‘‘(a) INFORMATION REPORTING REQUIREMENT.—

10 The requirement referred to in section 2132(b)(5) is that

11 the State must provide for the following:

12 ‘‘(1) INFORMATION REPORTING SYSTEM.—The

13 State must have in effect a system of reporting the

14 following information with respect to formal proceed15 ings (as defined by the Secretary in regulations)

16 concluded against a health care practitioner or entity

17 by any authority of the State (or of a political sub18 division thereof) responsible for the licensing of

19 health care practitioners (or any peer review organi20 zation or private accreditation entity reviewing the

21 services provided by health care practitioners) or en22 tities:

23 ‘‘(A) Any adverse action taken by such li24 censing authority as a result of the proceeding,

25 including any revocation or suspension of a li-
1432

•HR 2517 IH

1 cense (and the length of any such suspension),

2 reprimand, censure, or probation.

3 ‘‘(B) Any dismissal or closure of the pro4 ceedings by reason of the practitioner or entity

5 surrendering the license or leaving the State or

6 jurisdiction.

7 ‘‘(C) Any other loss of the license of the

8 practitioner or entity, whether by operation of

9 law, voluntary surrender, or otherwise.

10 ‘‘(D) Any negative action or finding by

11 such authority, organization, or entity regard12 ing the practitioner or entity.

13 ‘‘(2) ACCESS TO DOCUMENTS.—The State must

14 provide the Secretary (or an entity designated by the

15 Secretary) with access to such documents of the au16 thority described in paragraph (1) as may be nec17 essary for the Secretary to determine the facts and

18 circumstances concerning the actions and determina19 tions described in such paragraph for the purpose

20 of carrying out this Act.

21 ‘‘(b) FORM OF INFORMATION.—The information de22 scribed in subsection (a)(1) shall be provided to the Sec23 retary (or to an appropriate private or public agency,

24 under suitable arrangements made by the Secretary with

25 respect to receipt, storage, protection of confidentiality,
1433

•HR 2517 IH

1 and dissemination of information) in such a form and

2 manner as the Secretary determines to be appropriate in

3 order to provide for activities of the Secretary under this

4 Act and in order to provide, directly or through suitable

5 arrangements made by the Secretary, information—

6 ‘‘(1) to agencies administering Federal health

7 care programs, including private entities administer8 ing such programs under contract,

9 ‘‘(2) to licensing authorities described in sub10 section (a)(1),

11 ‘‘(3) to State agencies administering or super12 vising the administration of State health care pro13 grams (as defined in section 1128(h)),

14 ‘‘(4) to utilization and quality control peer re15 view organizations described in part B of title XI

16 and to appropriate entities with contracts under sec17 tion 1154(a)(4)(C) with respect to eligible organiza18 tions reviewed under the contracts,

19 ‘‘(5) to State MediGrant fraud control units (as

20 defined in section 2134),

21 ‘‘(6) to hospitals and other health care entities

22 (as defined in section 431 of the Health Care Qual23 ity Improvement Act of 1986), with respect to physi24 cians or other licensed health care practitioners that

25 have entered (or may be entering) into an employ-
1434

•HR 2517 IH

1 ment or affiliation relationship with, or have applied

2 for clinical privileges or appointments to the medical

3 staff of, such hospitals or other health care entities

4 (and such information shall be deemed to be dis5 closed pursuant to section 427 of, and be subject to

6 the provisions of, that Act),

7 ‘‘(7) to the Attorney General and such other

8 law enforcement officials as the Secretary deems ap9 propriate, and

10 ‘‘(8) upon request, to the Comptroller General,

11 in order for such authorities to determine the fitness

12 of individuals to provide health care services, to pro13 tect the health and safety of individuals receiving

14 health care through such programs, and to protect

15 the fiscal integrity of such programs.

16 ‘‘(c) CONFIDENTIALITY OF INFORMATION PRO17 VIDED.—The Secretary shall provide for suitable safe18 guards for the confidentiality of the information furnished

19 under subsection (a). Nothing in this subsection shall pre20 vent the disclosure of such information by a party which

21 is otherwise authorized, under applicable State law, to

22 make such disclosure.

23 ‘‘(d) APPROPRIATE COORDINATION.—The Secretary

24 shall provide for the maximum appropriate coordination

25 in the implementation of subsection (a) of this section and
1435

•HR 2517 IH

1 section 422 of the Health Care Quality Improvement Act

2 of 1986.

3 ‘‘SEC. 2134. STATE MEDIGRANT FRAUD CONTROL UNITS.

4 ‘‘(a) IN GENERAL.—Each MediGrant plan shall pro5 vide for a State MediGrant fraud control unit described

6 in subsection (b) that effectively carries out the functions

7 and requirements described in such subsection, unless the

8 State demonstrates to the satisfaction of the Secretary

9 that the effective operation of such a unit in the State

10 would not be cost-effective because minimal fraud exists

11 in connection with the provision of covered services to eli12 gible individuals under the plan, and that beneficiaries

13 under the plan will be protected from abuse and neglect

14 in connection with the provision of medical assistance

15 under the plan without the existence of such a unit

16 ‘‘(b) UNITS DESCRIBED.—For purposes of this sub17 section, the term ‘State MediGrant fraud control unit’

18 means a single identifiable entity of the State government

19 which meets the following requirements:

20 ‘‘(1) ORGANIZATION.—The entity—

21 ‘‘(A) is a unit of the office of the State At22 torney General or of another department of

23 State government which possesses statewide au24 thority to prosecute individuals for criminal vio25 lations;
1436

•HR 2517 IH

1 ‘‘(B) is in a State the constitution of which

2 does not provide for the criminal prosecution of

3 individuals by a statewide authority and has

4 formal procedures that—

5 ‘‘(i) assure its referral of suspected

6 criminal violations relating to the program

7 under this title to the appropriate author8 ity or authorities in the State for prosecu9 tion, and

10 ‘‘(ii) assure its assistance of, and co11 ordination with, such authority or authori12 ties in such prosecutions; or

13 ‘‘(C) has a formal working relationship

14 with the office of the State Attorney General

15 and has formal procedures (including proce16 dures for its referral of suspected criminal vio17 lations to such office) which provide effective

18 coordination of activities between the entity and

19 such office with respect to the detection, inves20 tigation, and prosecution of suspected criminal

21 violations relating to the program under this

22 title.

23 ‘‘(2) INDEPENDENCE.—The entity is separate

24 and distinct from any State agency that has prin-
1437

•HR 2517 IH

1 cipal responsibilities for administering or supervising

2 the administration of the MediGrant plan.

3 ‘‘(3) FUNCTION.—The entity’s function is con4 ducting a statewide program for the investigation

5 and prosecution of violations of all applicable State

6 laws regarding any and all aspects of fraud in con7 nection with any aspect of the provision of medical

8 assistance and the activities of providers of such as9 sistance under the MediGrant plan.

10 ‘‘(4) REVIEW OF COMPLAINTS.—The entity has

11 procedures for reviewing complaints of the abuse

12 and neglect of patients of health care facilities which

13 receive payments under the MediGrant plan under

14 this title, and, where appropriate, for acting upon

15 such complaints under the criminal laws of the State

16 or for referring them to other State agencies for ac17 tion.

18 ‘‘(5) OVERPAYMENTS.—The entity provides for

19 the collection, or referral for collection to a single

20 State agency, of overpayments that are made under

21 the MediGrant plan to health care providers and

22 that are discovered by the entity in carrying out its

23 activities.

24 ‘‘(6) PERSONNEL.—The entity employs such

25 auditors, attorneys, investigators, and other nec-
1438

•HR 2517 IH

1 essary personnel and is organized in such a manner

2 as is necessary to promote the effective and efficient

3 conduct of the entity’s activities.

4 ‘‘SEC. 2135. RECOVERIES FROM THIRD PARTIES AND OTH5 ERS.

6 ‘‘(a) THIRD PARTY LIABILITY.—Each MediGrant

7 plan shall provide for reasonable steps—

8 ‘‘(1) to ascertain the legal liability of third par9 ties to pay for care and services available under the

10 plan, including the collection of sufficient informa11 tion to enable States to pursue claims against third

12 parties; and

13 ‘‘(2) to seek reimbursement for medical assist14 ance provided to the extent legal liability is establish

15 where the amount expected to be recovered exceeds

16 the costs of the recovery.

17 ‘‘(b) BENEFICIARY PROTECTION.—

18 ‘‘(1) IN GENERAL.—Each MediGrant plan shall

19 provide that in the case of a person furnishing serv20 ices under the plan for which a third party may be

21 liable for payment—

22 ‘‘(A) the person may not seek to collect

23 from the individual (or financially responsible

24 relative) payment of an amount for the service
1439

•HR 2517 IH

1 more than could be collected under the plan in

2 the absence of such third party liability, and

3 ‘‘(B) may not refuse to furnish services to

4 such an individual because of a third party’s

5 potential liability for payment for the service.

6 ‘‘(2) PENALTY.—A MediGrant plan may pro7 vide for a reduction of any payment amount other8 wise due with respect to a person who furnishes

9 services under the plan in an amount equal to up to

10 three times the amount of any payment sought to be

11 collected by that person in violation of paragraph

12 (1)(A).

13 ‘‘(c) GENERAL LIABILITY.—The State shall prohibit

14 any health insurer (including a group health plan as de15 fined in section 607 of the Employee Retirement Income

16 Security Act of 1974, a service benefit plan, or a health

17 maintenance organization), in enrolling an individual or

18 in making any payments for benefits to the individual or

19 on the individual’s behalf, from taking into account that

20 the individual is eligible for or is provided medical assist21 ance under a MediGrant plan for any State.

22 ‘‘(d) ACQUISITION OF RIGHTS OF BENEFICIARIES.—

23 To the extent that payment has been made under a

24 MediGrant plan in any case where a third party has a

25 legal liability to make payment for such assistance, the
1440

•HR 2517 IH

1 State shall have in effect laws under which, to the extent

2 that payment has been made under the plan for health

3 care items or services furnished to an individual, the State

4 is considered to have acquired the rights of such individual

5 to payment by any other party for such health care items

6 or services.

7 ‘‘(e) ASSIGNMENT OF MEDICAL SUPPORT RIGHTS.—

8 The MediGrant plan shall provide for mandatory assign9 ment of rights of payment for medical support and other

10 medical care owed to recipients in accordance with section

11 2136.

12 ‘‘(f) REQUIRED LAWS RELATING TO MEDICAL CHILD

13 SUPPORT.—

14 ‘‘(1) IN GENERAL.—Each State with a

15 MediGrant plan shall have in effect the following

16 laws:

17 ‘‘(A) A law that prohibits an insurer from

18 denying enrollment of a child under the health

19 coverage of the child’s parent on the ground

20 that—

21 ‘‘(i) the child was born out of wedlock,

22 ‘‘(ii) the child is not claimed as a de23 pendent on the parent’s Federal income

24 tax return, or
1441

•HR 2517 IH

1 ‘‘(iii) the child does not reside with

2 the parent or in the insurer’s service area.

3 ‘‘(B) In any case in which a parent is re4 quired by a court or administrative order to

5 provide health coverage for a child and the par6 ent is eligible for family health coverage

7 through an insurer, a law that requires such in8 surer—

9 ‘‘(i) to permit such parent to enroll

10 under such family coverage any such child

11 who is otherwise eligible for such coverage

12 (without regard to any enrollment season

13 restrictions);

14 ‘‘(ii) if such a parent is enrolled but

15 fails to make application to obtain cov16 erage of such child, to enroll such child

17 under such family coverage upon applica18 tion by the child’s other parent or by the

19 State agency administering the program

20 under this title or part D of title IV; and

21 ‘‘(iii) not to disenroll (or eliminate

22 coverage of) such a child unless the insurer

23 is provided satisfactory written evidence

24 that—
1442

•HR 2517 IH

1 ‘‘(I) such court or administrative

2 order is no longer in effect, or

3 ‘‘(II) the child is or will be en4 rolled in comparable health coverage

5 through another insurer which will

6 take effect not later than the effective

7 date of such disenrollment.

8 ‘‘(C) In any case in which a parent is re9 quired by a court or administrative order to

10 provide health coverage for a child and the par11 ent is eligible for family health coverage

12 through an employer doing business in the

13 State, a law that requires such employer—

14 ‘‘(i) to permit such parent to enroll

15 under such family coverage any such child

16 who is otherwise eligible for such coverage

17 (without regard to any enrollment season

18 restrictions);

19 ‘‘(ii) if such a parent is enrolled but

20 fails to make application to obtain cov21 erage of such child, to enroll such child

22 under such family coverage upon applica23 tion by the child’s other parent or by the

24 State agency administering the program

25 under this title or part D of title IV; and
1443

•HR 2517 IH

1 ‘‘(iii) not to disenroll (or eliminate

2 coverage of) any such child unless—

3 ‘‘(I) the employer is provided sat4 isfactory written evidence that such

5 court or administrative order is no

6 longer in effect, or the child is or will

7 be enrolled in comparable health cov8 erage which will take effect not later

9 than the effective date of such

10 disenrollment, or

11 ‘‘(II) the employer has eliminated

12 family health coverage for all of its

13 employees; and

14 ‘‘(iv) to withhold from such employ15 ee’s compensation the employee’s share (if

16 any) of premiums for health coverage (ex17 cept that the amount so withheld may not

18 exceed the maximum amount permitted to

19 be withheld under section 303(b) of the

20 Consumer Credit Protection Act), and to

21 pay such share of premiums to the insurer,

22 except that the Secretary may provide by

23 regulation for appropriate circumstances

24 under which an employer may withhold
1444

•HR 2517 IH

1 less than such employee’s share of such

2 premiums.

3 ‘‘(D) A law that prohibits an insurer from

4 imposing requirements on a State agency,

5 which has been assigned the rights of an indi6 vidual eligible for medical assistance under this

7 title and covered for health benefits from the

8 insurer, that are different from requirements

9 applicable to an agent or assignee of any other

10 individual so covered.

11 ‘‘(E) A law that requires an insurer, in

12 any case in which a child has health coverage

13 through the insurer of a noncustodial parent—

14 ‘‘(i) to provide such information to the

15 custodial parent as may be necessary for

16 the child to obtain benefits through such

17 coverage;

18 ‘‘(ii) to permit the custodial parent

19 (or provider, with the custodial parent’s

20 approval) to submit claims for covered

21 services without the approval of the

22 noncustodial parent; and

23 ‘‘(iii) to make payment on claims sub24 mitted in accordance with clause (ii) di-
1445

•HR 2517 IH

1 rectly to such custodial parent, the pro2 vider, or the State agency.

3 ‘‘(F) A law that permits the State agency

4 under this title to garnish the wages, salary, or

5 other employment income of, and requires with6 holding amounts from State tax refunds to, any

7 person who—

8 ‘‘(i) is required by court or adminis9 trative order to provide coverage of the

10 costs of health services to a child who is el11 igible for medical assistance under this

12 title,

13 ‘‘(ii) has received payment from a

14 third party for the costs of such services to

15 such child, but

16 ‘‘(iii) has not used such payments to

17 reimburse, as appropriate, either the other

18 parent or guardian of such child or the

19 provider of such services,

20 to the extent necessary to reimburse the State

21 agency for expenditures for such costs under its

22 plan under this title, but any claims for current

23 or past-due child support shall take priority

24 over any such claims for the costs of such serv25 ices.
1446

•HR 2517 IH

1 ‘‘(2) DEFINITION.—For purposes of this sub2 section, the term ‘insurer’ includes a group health

3 plan, as defined in section 607(1) of the Employee

4 Retirement Income Security Act of 1974, a health

5 maintenance organization, and an entity offering a

6 service benefit plan.

7 ‘‘(g) ESTATE RECOVERIES AND LIENS PER8 MITTED.—A State may take such actions as it considers

9 appropriate to adjust or recover from the individual or the

10 individual’s estate any amounts paid as medical assistance

11 to or on behalf of the individual under the MediGrant

12 plan, including through the imposition of liens against the

13 property or estate of the individual.

14 ‘‘SEC. 2136. ASSIGNMENT OF RIGHTS OF PAYMENT.

15 ‘‘(a) IN GENERAL.—For the purpose of assisting in

16 the collection of medical support payments and other pay17 ments for medical care owed to recipients of medical as18 sistance under the MediGrant plan, each MediGrant plan

19 shall—

20 ‘‘(1) provide that, as a condition of eligibility

21 for medical assistance under the plan to an individ22 ual who has the legal capacity to execute an assign23 ment for himself, the individual is required—

24 ‘‘(A) to assign the State any rights, of the

25 individual or of any other person who is eligible
1447

•HR 2517 IH

1 for medical assistance under the plan and on

2 whose behalf the individual has the legal au3 thority to execute an assignment of such rights,

4 to support (specified as support for the purpose

5 of medical care by a court or administrative

6 order) and to payment for medical care from

7 any third party,

8 ‘‘(B) to cooperate with the State (i) in es9 tablishing the paternity of such person (referred

10 to in subparagraph (A)) if the person is a child

11 born out of wedlock, and (ii) in obtaining sup12 port and payments (described in subparagraph

13 (A)) for himself and for such person, unless (in

14 either case) the individual is a pregnant woman

15 or the individual is found to have good cause

16 for refusing to cooperate as determined by the

17 State, and

18 ‘‘(C) to cooperate with the State in identi19 fying, and providing information to assist the

20 State in pursuing, any third party who may be

21 liable to pay for care and services available

22 under the plan, unless such individual has good

23 cause for refusing to cooperate as determined

24 by the State; and
1448

•HR 2517 IH

1 ‘‘(2) provide for entering into cooperative ar2 rangements (including financial arrangements), with

3 any appropriate agency of any State (including, with

4 respect to the enforcement and collection of rights of

5 payment for medical care by or through a parent,

6 with a State’s agency established or designated

7 under section 454(3)) and with appropriate courts

8 and law enforcement officials, to assist the agency or

9 agencies administering the plan with respect to—

10 ‘‘(A) the enforcement and collection of

11 rights to support or payment assigned under

12 this section, and

13 ‘‘(B) any other matters of common con14 cern.

15 ‘‘(b) USE OF AMOUNTS COLLECTED.—Such part of

16 any amount collected by the State under an assignment

17 made under the provisions of this section shall be retained

18 by the State as is necessary to reimburse it for medical

19 assistance payments made on behalf of an individual with

20 respect to whom such assignment was executed (with ap21 propriate reimbursement of the Federal Government to

22 the extent of its participation in the financing of such

23 medical assistance), and the remainder of such amount

24 collected shall be paid to such individual.
1449

•HR 2517 IH

1 ‘‘SEC. 2137. QUALITY ASSURANCE STANDARDS FOR NURS2 ING FACILITIES.

3 ‘‘(a) STANDARDS FOR AND CERTIFICATION OF CER4 TAIN FACILITIES.—

5 ‘‘(1) STANDARDS FOR FACILITIES.—

6 ‘‘(A) IN GENERAL.—Each MediGrant plan

7 shall provide for the establishment and mainte8 nance of standards consistent with the contents

9 described in subparagraph (B) for nursing fa10 cilities which furnish services under the plan.

11 Such standards shall provide that nursing fa12 cilities must care for residents in such a man13 ner and in such an environment as will promote

14 maintenance or enhancement of the quality of

15 life of each resident.

16 ‘‘(B) CONTENTS OF STANDARDS.—The

17 standards established for facilities under this

18 paragraph shall contain provisions relating to

19 the following items:

20 ‘‘(i) The treatment of resident medical

21 records.

22 ‘‘(ii) Policies, procedures, and bylaws

23 for operation.

24 ‘‘(iii) Quality assurance systems.
1450

•HR 2517 IH

1 ‘‘(iv) Resident assessment procedures,

2 including care planning and outcome eval3 uation.

4 ‘‘(v) The assurance of a safe and ade5 quate physical plant for the facility.

6 ‘‘(vi) Qualifications for staff sufficient

7 to provide adequate care, as defined by the

8 State.

9 ‘‘(vii) Utilization review.

10 ‘‘(viii) The protection and enforce11 ment of resident rights described in para12 graph (2)(A).

13 ‘‘(C) PROCESS FOR ESTABLISHMENT.—

14 The standards established by the State for fa15 cilities under this paragraph shall be promul16 gated either through the State’s legislative, reg17 ulatory, or other process, and may only take ef18 fect after the State has provided the public with

19 notice and an opportunity for comment.

20 ‘‘(2) RESIDENTS’ RIGHTS.—

21 ‘‘(A) IN GENERAL.—The resident rights

22 described in this paragraph are the rights of

23 residents to the following:
1451

•HR 2517 IH

1 ‘‘(i) To exercise the individual’s rights

2 as a resident of the facility and as a citizen

3 or resident of the United States.

4 ‘‘(ii) To receive notice of rights and

5 services.

6 ‘‘(iii) To be protected against the mis7 use of resident funds.

8 ‘‘(iv) To be provided privacy and con9 fidentiality.

10 ‘‘(v) To voice grievances.

11 ‘‘(vi) To examine the results of State

12 certification program inspections.

13 ‘‘(vii) To refuse to perform services

14 for the facility.

15 ‘‘(viii) To be provided privacy in com16 munications and to receive mail.

17 ‘‘(ix) To have the facility provide im18 mediate access to any resident by any rep19 resentative of the certification program,

20 the resident’s individual physician, the

21 State long term care ombudsman, and any

22 person the resident has designated as a

23 visitor.

24 ‘‘(x) To retain and use personal prop25 erty.
1452

•HR 2517 IH

1 ‘‘(xi) To be free from abuse, including

2 verbal, sexual, physical and mental abuse,

3 corporal punishment, and involuntary se4 clusion and not to have any physical or

5 chemical restraints imposed for purposes of

6 discipline or convenience unless required to

7 treat the resident’s medical symptoms.

8 ‘‘(xii) To be provided with prior writ9 ten notice of a pending transfer or dis10 charge.

11 ‘‘(xiii) To organize and participate in

12 resident groups in the facility and to have

13 family members meet in the facility with

14 the families of other residents in the facil15 ity.

16 ‘‘(xiv) To participate in social, reli17 gious, and community activities that do not

18 interfere with the rights of other residents

19 in the facility.

20 ‘‘(xv) To choose a personal attending

21 physician, to be fully informed in advance

22 about care and treatment, and (except with

23 respect to a resident adjudged incom24 petent) to participate in planning care and
1453

•HR 2517 IH

1 treatment or changes in care and treat2 ment.

3 ‘‘(xvi) To not have psycho4 pharmacologic drugs administered except

5 under the orders of a physician and as

6 part of a plan designed to eliminate or

7 modify the symptoms for which the drugs

8 are prescribed.

9 ‘‘(B) RIGHTS OF INCOMPETENT RESI10 DENTS.—In the case of a resident adjudged in11 competent under the laws of a State, the rights

12 of the resident under the MediGrant plan shall

13 devolve upon, and, to the extent judged nec14 essary by a court of competent jurisdiction, be

15 exercised by, the person appointed under State

16 law to act on the resident’s behalf.

17 ‘‘(3) CERTIFICATION PROGRAM.—

18 ‘‘(A) IN GENERAL.—Each MediGrant plan

19 shall provide for the establishment and oper20 ation of a program consistent with the require21 ments of subparagraph (B) for the certification

22 of nursing facilities which meet the standards

23 established under paragraph (1) and the decer24 tification of facilities which fail to meet such

25 standards.
1454

•HR 2517 IH

1 ‘‘(B) REQUIREMENTS FOR PROGRAM.—In

2 addition to any other requirements the State

3 may impose, in establishing and operating the

4 certification program under subparagraph (A),

5 the State shall ensure the following:

6 ‘‘(i) The State shall ensure public ac7 cess (as defined by the State) to the cer8 tification program’s evaluations of partici9 pating facilities, including compliance

10 records and enforcement actions and other

11 reports by the State regarding the owner12 ship, compliance histories, and services

13 provided by certified facilities.

14 ‘‘(ii) Not less often than every 4

15 years, the State shall audit its expendi16 tures under the program, through an en17 tity designated by the State which is not

18 affiliated with the program, as designated

19 by the State.

20 ‘‘(b) INTERMEDIATE SANCTION AUTHORITY.—

21 ‘‘(1) AUTHORITY.—In addition to any other au22 thority under State law, where a State determines

23 that a nursing facility which is certified for partici24 pation under the MediGrant plan no longer substan25 tially meets the requirements for such a facility
1455

•HR 2517 IH

1 under this title and further determines that the fa2 cility’s deficiencies—

3 ‘‘(A) immediately jeopardize the health and

4 safety of its residents, the State shall at least

5 provide for the termination of the facility’s cer6 tification for participation under the plan, or

7 ‘‘(B) do not immediately jeopardize the

8 health and safety of its residents, the State

9 may, in lieu of providing for terminating the fa10 cility’s certification for participation under the

11 plan, provide lesser sanctions including one that

12 provides that no payment will be made under

13 the plan with respect to any individual admitted

14 to such facility after a date specified by the

15 State.

16 ‘‘(2) NOTICE.—The State shall not make such

17 a decision with respect to a facility until the facility

18 has had a reasonable opportunity, following the ini19 tial determination that it no longer substantially

20 meets the requirements for such a facility under the

21 plan, to correct its deficiencies, and, following this

22 period, has been given reasonable notice and oppor23 tunity for a hearing.

24 ‘‘(3) EFFECTIVENESS.—The State’s decision to

25 deny payment may be made effective only after such
1456

•HR 2517 IH

1 notice to the public and to the facility as may be

2 provided for by the State, and its effectiveness shall

3 terminate (A) when the State finds that the facility

4 is in substantial compliance (or is making good faith

5 efforts to achieve substantial compliance) with the

6 requirements for such a facility under this title, or

7 (B) in the case described in paragraph (1)(B), with

8 the end of the eleventh month following the month

9 such decision is made effective, whichever occurs

10 first. If a facility to which clause (B) of the previous

11 sentence applies still fails to substantially meet the

12 provisions of the respective section on the date speci13 fied in such clause, the State shall terminate such

14 facility’s certification for participation under the

15 MediGrant plan effective with the first day of the

16 first month following the month specified in such

17 clause.

18 ‘‘SEC. 2138. OTHER PROVISIONS PROMOTING PROGRAM IN19 TEGRITY.

20 ‘‘(a) PUBLIC ACCESS TO SURVEY RESULTS.—Each

21 MediGrant plan shall provide that upon completion of a

22 survey of any health care facility or organization by a

23 State agency to carry out the plan, the agency shall make

24 public in readily available form and place the pertinent
1457

•HR 2517 IH

1 findings of the survey relating to the compliance of the

2 facility or organization with requirements of law.

3 ‘‘(b) RECORD KEEPING.—Each MediGrant plan shall

4 provide for agreements with persons or institutions provid5 ing services under the plan under which the person or in6 stitution agrees—

7 ‘‘(1) to keep such records (including ledgers,

8 books, and original evidence of costs) as are nec9 essary to fully disclose the extent of the services pro10 vided to individuals receiving assistance under the

11 plan; and

12 ‘‘(2) to furnish the State agency with such in13 formation regarding any payments claimed by such

14 person or institution for providing services under the

15 plan, as the State agency may from time to time re16 quest.

17 ‘‘PART E—ESTABLISHMENT AND AMENDMENT OF

18 MEDIGRANT PLANS

19 ‘‘SEC. 2151. SUBMITTAL AND APPROVAL OF MEDIGRANT

20 PLANS.

21 ‘‘(a) SUBMITTAL.—As a condition of receiving fund22 ing under part C, each State shall submit to the Secretary

23 a MediGrant plan that meets the applicable requirements

24 of this title.
1458

•HR 2517 IH

1 ‘‘(b) APPROVAL.—Except as the Secretary may pro2 vide under section 2154, a MediGrant plan submitted

3 under subsection (a)—

4 ‘‘(1) shall be approved for purposes of this title,

5 and

6 ‘‘(2) shall be effective beginning with a calendar

7 quarter that is specified in the plan, but in no case

8 earlier than the first calendar quarter that begins at

9 least 60 days after the date the plan is submitted.

10 ‘‘(c) APPROVAL OF LEGISLATURE FOR SUBMIT11 TAL.—In the case of a State which has a State allotment

12 under section 2121(c)(1) for fiscal year 1996 of more than

13 $10 billion, the State may not submit a MediGrant plan

14 under this section unless the State legislature, by law, has

15 specifically authorized such submittal.

16 ‘‘SEC. 2152. SUBMITTAL AND APPROVAL OF PLAN AMEND17 MENTS.

18 ‘‘(a) SUBMITTAL OF AMENDMENTS.—A State may

19 amend, in whole or in part, its MediGrant plan at any

20 time through transmittal of a plan amendment under this

21 section.

22 ‘‘(b) APPROVAL.—Except as the Secretary may pro23 vide under section 2154, an amendment to a MediGrant

24 plan submitted under subsection (a)—
1459

•HR 2517 IH

1 ‘‘(1) shall be approved for purposes of this title,

2 and

3 ‘‘(2) shall be effective as provided in subsection

4 (c).

5 ‘‘(c) EFFECTIVE DATES FOR AMENDMENTS.—

6 ‘‘(1) IN GENERAL.—Subject to the succeeding

7 provisions of this subsection, an amendment to

8 MediGrant plan shall take effect on one or more ef9 fective dates specified in the amendment.

10 ‘‘(2) AMENDMENTS RELATING TO ELIGIBILITY

11 OR BENEFITS.—Except as provided in paragraph

12 (4)—

13 ‘‘(A) NOTICE REQUIREMENT.—Any plan

14 amendment that eliminates or restricts eligi15 bility or benefits under the plan may not take

16 effect unless the State certifies that it has pro17 vided prior or contemporaneous public notice of

18 the change, in a form and manner provided

19 under applicable State law.

20 ‘‘(B) TIMELY TRANSMITTAL.—Any plan

21 amendment that eliminates or restricts eligi22 bility or benefits under the plan shall not be

23 effective for longer than a 60 day period unless

24 the amendment has been transmitted to the

25 Secretary before the end of such period.
1460

•HR 2517 IH

1 ‘‘(3) OTHER AMENDMENTS.—Subject to para2 graph (4), any plan amendment that is not described

3 in paragraph (2) becomes effective in a State fiscal

4 year may not remain in effect after the end of such

5 fiscal year (or, if later, the end of the 90-day period

6 on which it becomes effective) unless the amendment

7 has been transmitted to the Secretary.

8 ‘‘(4) EXCEPTION.—The requirements of para9 graphs (2) and (3) shall not apply to a plan amend10 ment that is submitted on a timely basis pursuant

11 to a court order or an order of the Secretary.

12 ‘‘SEC. 2153. PROCESS FOR STATE WITHDRAWAL FROM PRO13 GRAM.

14 ‘‘(a) IN GENERAL.—A State may rescind its

15 MediGrant plan and discontinue participation in the pro16 gram under this title at any time after providing—

17 ‘‘(1) the public with 90 days prior notice in a

18 publication in one or more daily newspapers of gen19 eral circulation in the State or in any publication

20 used by the State to publish State statutes or rules,

21 and

22 ‘‘(2) the Secretary with 90 days prior written

23 notice.

24 ‘‘(b) EFFECTIVE DATE.—Such discontinuation shall

25 not apply to payments under part C for expenditures made
1461

•HR 2517 IH

1 for items and services furnished under the MediGrant plan

2 before the effective date of the discontinuation.

3 ‘‘(c) PRORATION OF ALLOTMENTS.—In the case of

4 any withdrawal under this section other than at the end

5 of a Federal fiscal year, notwithstanding any provision of

6 section 2121 to the contrary, the Secretary shall provide

7 for such appropriate proration of the application of allot8 ments under section 2121 as is appropriate.

9 ‘‘SEC. 2154. SANCTIONS FOR SUBSTANTIAL NONCOMPLI10 ANCE.

11 ‘‘(a) PROMPT REVIEW OF PLAN SUBMITTALS.—The

12 Secretary shall promptly review MediGrant plans and plan

13 amendments submitted under this part to determine if

14 they substantially comply with the requirements of this

15 title.

16 ‘‘(b) DETERMINATIONS OF SUBSTANTIAL NON17 COMPLIANCE.—

18 ‘‘(1) AT TIME OF PLAN OR AMENDMENT SUB19 MITTAL.—

20 ‘‘(A) IN GENERAL.—If the Secretary, dur21 ing the 30-day period beginning on the date of

22 submittal of a MediGrant plan or plan amend23 ment—

24 ‘‘(i) determines that the plan or

25 amendment substantially violates (within
1462

•HR 2517 IH

1 the meaning of subsection (c)) a require2 ment of this title, and

3 ‘‘(ii) provides written notice of such

4 determination to the State,

5 the Secretary shall issue an order specifying

6 that the plan or amendment, insofar as it is in

7 substantial violation of such a requirement,

8 shall not be effective, except as provided in sub9 section (c), beginning at the end of a period of

10 not less than 30 days, or 120 days in the case

11 of the initial submission of the MediGrant plan)

12 specified in the order beginning on the date of

13 the notice of the determination.

14 ‘‘(B) EXTENSION OF TIME PERIODS.—The

15 time periods specified in subparagraph (A) may

16 be extended by written agreement of the Sec17 retary and the State involved.

18 ‘‘(2) VIOLATIONS IN ADMINISTRATION OF

19 PLAN.—

20 ‘‘(A) IN GENERAL.—If the Secretary deter21 mines, after reasonable notice and opportunity

22 for a hearing for the State, that in the adminis23 tration of a MediGrant plan there is a substan24 tial violation of a requirement of this title, the

25 Secretary shall provide the State with written
1463

•HR 2517 IH

1 notice of the determination and with an order

2 to remedy such violation. Such an order shall

3 become effective prospectively, as specified in

4 the order, after the date of receipt of such writ5 ten notice. Such an order may include the with6 holding of funds, consistent with subsection (f),

7 for parts of the MediGrant plan affected by

8 such violation, until the Secretary is satisfied

9 that the violation has been corrected.

10 ‘‘(B) EFFECTIVENESS.—If the Secretary

11 issues an order under paragraph (1), the order

12 shall become effective, except as provided in

13 subsection (c), beginning at the end of a period

14 (of not less than 30 days) specified in the order

15 beginning on the date of the notice of the deter16 mination to the State.

17 ‘‘(C) TIMELINESS OF DETERMINATIONS

18 RELATING TO REPORT-BASED COMPLIANCE.—

19 The Secretary shall make determinations under

20 this paragraph respecting violations relating to

21 information contained in an annual report

22 under section 2102, an independent evaluation

23 under section 2103, or an audit report under

24 section 2131 not later than 30 days after the
1464

•HR 2517 IH

1 date of transmittal of the report or evaluation

2 to the Secretary.

3 ‘‘(3) CONSULTATION WITH STATE.—Before

4 making a determination adverse to a State under

5 this section, the Secretary shall (within any time pe6 riods provided under this section)—

7 ‘‘(A) reasonably consult with the State in8 volved,

9 ‘‘(B) offer the State a reasonable oppor10 tunity to clarify the submission and submit fur11 ther information to substantiate compliance

12 with the requirements of this title, and

13 ‘‘(C) reasonably consider any such clari14 fications and information submitted.

15 ‘‘(4) JUSTIFICATION OF ANY INCONSISTENCIES

16 IN DETERMINATIONS.—If the Secretary makes a de17 termination under this section that is, in whole or in

18 part, inconsistent with any previous determination

19 issued by the Secretary under this title, the Sec20 retary shall include in the determination a detailed

21 explanation and justification for any such difference.

22 ‘‘(5) SUBSTANTIAL VIOLATION DEFINED.—For

23 purposes of this title, a MediGrant plan (or amend24 ment to such a plan) or the administration of the

25 MediGrant plan is considered to ‘substantially vio-
1465

•HR 2517 IH

1 late’ a requirement of this title if a provision of the

2 plan or amendment (or an omission from the plan

3 or amendment) or the administration of the plan—

4 ‘‘(A) is material and substantial in nature

5 and effect, and

6 ‘‘(B) is inconsistent with an express re7 quirement of this title.

8 A failure to meet a strategic objective or perform9 ance goal (as described in section 2101) shall not be

10 considered to substantially violate a requirement of

11 this title.

12 ‘‘(c) STATE RESPONSE TO ORDERS.—

13 ‘‘(1) STATE RESPONSE BY REVISING PLAN.—

14 ‘‘(A) IN GENERAL.—Insofar as an order

15 under subsection (b)(1) relates to a substantial

16 violation by a MediGrant plan or plan amend17 ment, a State may respond (before the date the

18 order becomes effective) to such an order by

19 submitting a written revision of the plan or

20 plan amendment to substantially comply with

21 the requirements of this part.

22 ‘‘(B) REVIEW OF REVISION.—In the case

23 of submission of such a revision, the Secretary

24 shall promptly review the submission and shall
1466

•HR 2517 IH

1 withhold any action on the order during the pe2 riod of such review.

3 ‘‘(C) SECRETARIAL RESPONSE.—The revi4 sion shall be considered to have corrected the

5 deficiency (and the order rescinded insofar as it

6 relates to such deficiency) unless the Secretary

7 determines and notifies the State in writing,

8 within 15 days after the date the Secretary re9 ceives the revision, that the plan or amendment,

10 as proposed to be revised, still substantially vio11 lates a requirement of this title. In such case

12 the State may respond by seeking reconsider13 ation or a hearing under paragraph (2).

14 ‘‘(D) REVISION RETROACTIVE.—If the re15 vision provides for substantial compliance, the

16 revision may be treated, at the option of the

17 State, as being effective either as of the effec18 tive date of the provision to which it relates or

19 such later date as the State and Secretary may

20 agree.

21 ‘‘(2) STATE RESPONSE BY SEEKING RECONSID22 ERATION OR AN ADMINISTRATIVE HEARING.—A

23 State may respond to an order under subsection (b)

24 by filing a request with the Secretary for—
1467

•HR 2517 IH

1 ‘‘(A) a reconsideration of the determina2 tion, pursuant to subsection (d)(1), or

3 ‘‘(B) a review of the determination through

4 an administrative hearing, pursuant to sub5 section (d)(2).

6 In such case, the order shall not take effect before

7 the completion of the reconsideration or hearing.

8 ‘‘(3) STATE RESPONSE BY CORRECTIVE ACTION

9 PLAN.—

10 ‘‘(A) IN GENERAL.—In the case of an

11 order described in subsection (b)(2) that relates

12 to a substantial violation in the administration

13 of the MediGrant plan, a State may respond to

14 such an order by submitting a corrective action

15 plan with the Secretary to correct deficiencies

16 in the administration of the plan which are the

17 subject of the order.

18 ‘‘(B) REVIEW OF CORRECTIVE ACTION

19 PLAN.—In such case, the Secretary shall with20 hold any action on the order for a period (not

21 to exceed 30 days) during which the Secretary

22 reviews the corrective action plan.

23 ‘‘(C) SECRETARIAL RESPONSE.—The cor24 rective action plan shall be considered to have

25 corrected the deficiency (and the order re-
1468

•HR 2517 IH

1 scinded insofar as it relates to such deficiency)

2 unless the Secretary determines and notifies the

3 State in writing, within 15 days after the date

4 the Secretary receives the corrective action

5 plan, that the State’s administration of the

6 MediGrant plan, as proposed to be corrected in

7 the plan, will still substantially violate a re8 quirement of this title. In such case the State

9 may respond by seeking reconsideration or a

10 hearing under paragraph (2).

11 ‘‘(4) STATE RESPONSE BY WITHDRAWAL OF

12 PLAN AMENDMENT; FAILURE TO RESPOND.—Insofar

13 as an order relates to a substantial violation in a

14 plan amendment submitted, a State may respond to

15 such an order by withdrawing the plan amendment

16 and the MediGrant plan shall be treated as though

17 the amendment had not been made.

18 ‘‘(d) ADMINISTRATIVE REVIEW AND HEARING.—

19 ‘‘(1) RECONSIDERATION.—Within 30 days after

20 the date of receipt of a request under subsection

21 (b)(2)(A), the Secretary shall notify the State of the

22 time and place at which a hearing will be held for

23 the purpose of reconsidering the Secretary’s deter24 mination. The hearing shall be held not less than 20

25 days nor more than 60 days after the date notice of
1469

•HR 2517 IH

1 the hearing is furnished to the State, unless the Sec2 retary and the State agree in writing to holding the

3 hearing at another time. The Secretary shall affirm,

4 modify, or reverse the original determination within

5 60 days of the conclusion of the hearing.

6 ‘‘(2) ADMINISTRATIVE HEARING.—Within 30

7 days after the date of receipt of a request under

8 subsection (b)(2)(B), an administrative law judge

9 shall schedule a hearing for the purpose of reviewing

10 the Secretary’s determination. The hearing shall be

11 held not less than 20 days nor more than 60 days

12 after the date notice of the hearing is furnished to

13 the State, unless the Secretary and the State agree

14 in writing to holding the hearing at another time.

15 The administrative law judge shall affirm, modify, or

16 reverse the determination within 60 days of the con17 clusion of the hearing.

18 ‘‘(e) JUDICIAL REVIEW.—

19 ‘‘(1) IN GENERAL.—A State which is dissatis20 fied with a final determination made by the Sec21 retary under subsection (d)(1) or a final determina22 tion of an administrative law judge under subsection

23 (d)(2) may, within 60 days after it has been notified

24 of such determination, file with the United States

25 court of appeals for the circuit in which the State
1470

•HR 2517 IH

1 is located a petition for review of such determina2 tion. A copy of the petition shall be forthwith trans3 mitted by the clerk of the court to the Secretary

4 and, in the case of a determination under subsection

5 (d)(2), to the administrative law judge involved. The

6 Secretary (or judge involved) thereupon shall file in

7 the court the record of the proceedings on which the

8 final determination was based, as provided in section

9 2112 of title 28, United States Code.

10 ‘‘(2) STANDARD FOR REVIEW.—The findings of

11 fact by the Secretary or administrative law judge, if

12 supported by substantial evidence, shall be conclu13 sive, but the court, for good cause shown, may re14 mand the case to the Secretary or judge to take fur15 ther evidence, and the Secretary or judge may there16 upon make new or modified findings of fact and may

17 modify a previous determination, and shall certify to

18 the court the transcript and record of the further

19 proceedings. Such new or modified findings of fact

20 shall likewise be conclusive if supported by substan21 tial evidence.

22 ‘‘(3) JURISDICTION OF APPELLATE COURT.—

23 The court shall have jurisdiction to affirm the action

24 of the Secretary or judge or to set it aside, in whole

25 or in part. The judgment of the court shall be sub-
1471

•HR 2517 IH

1 ject to review by the Supreme Court of the United

2 States upon certiorari or certification as provided in

3 section 1254 of title 28, United States Code.

4 ‘‘(f) WITHHOLDING OF FUNDS.—

5 ‘‘(1) IN GENERAL.—Any order under this sec6 tion relating to the withholding of funds shall be ef7 fective not earlier than the effective date of the

8 order and shall only relate to the portions of a

9 MediGrant plan or administration thereof which sub10 stantially violate a requirement of this title. In the

11 case of a failure to meet a set-aside requirement

12 under section 2112, any withholding shall only apply

13 to the extent of such failure.

14 ‘‘(2) SUSPENSION OF WITHHOLDING.—The Sec15 retary may suspend withholding of funds under

16 paragraph (1) during the period reconsideration or

17 administrative and judicial review is pending under

18 subsection (d) or (e).

19 ‘‘(3) RESTORATION OF FUNDS.—Any funds

20 withheld under this subsection under an order shall

21 be immediately restored to a State—

22 ‘‘(A) to the extent and at the time the

23 order is—

24 ‘‘(i) modified or withdrawn by the

25 Secretary upon reconsideration,
1472

•HR 2517 IH

1 ‘‘(ii) modified or reversed by an ad2 ministrative law judge, or

3 ‘‘(iii) set aside (in whole or in part) by

4 an appellate court; or

5 ‘‘(B) when the Secretary determines that

6 the deficiency which was the basis for the order

7 is corrected;

8 ‘‘(C) when the Secretary determines that

9 violation which was the basis for the order is

10 resolved or the amendment which was the basis

11 for the order is withdrawn; or

12 ‘‘(D) at any time upon the initiative of the

13 Secretary.

14 ‘‘SEC. 2155. SECRETARIAL AUTHORITY.

15 ‘‘(a) NEGOTIATED AGREEMENT AND DISPUTE RESO16 LUTION.—

17 ‘‘(1) NEGOTIATIONS.—Nothing in this part

18 shall be construed as preventing the Secretary and

19 a State from at any time negotiating a satisfactory

20 resolution to any dispute concerning the approval of

21 a MediGrant plan (or amendments to a MediGrant

22 plan) or the compliance of a MediGrant plan (in23 cluding its administration) with requirements of this

24 title.
1473

•HR 2517 IH

1 ‘‘(2) COOPERATION.—The Secretary shall act in

2 a cooperative manner with the States in carrying out

3 this title. In the event of a dispute between a State

4 and the Secretary, the Secretary shall, whenever

5 practicable, engage in informal dispute resolution ac6 tivities in lieu of formal enforcement or sanctions

7 under section 2154.

8 ‘‘(b) LIMITATIONS ON DELEGATION OF DECISION9 MAKING AUTHORITY.—The Secretary may not delegate

10 (other than to the Administrator of the Health Care Fi11 nancing Administration) the authority to make determina12 tions or reconsiderations respecting the approval of

13 MediGrant plans (or amendments to such plans) or the

14 compliance of a MediGrant plan (including its administra15 tion) with requirements of this title. Such Administrator

16 may not further delegate such authority to any individual,

17 including any regional official of such Administration.

18 ‘‘(c) REQUIRING FORMAL RULEMAKING FOR

19 CHANGES IN SECRETARIAL ADMINISTRATION.—The Sec20 retary shall carry out the administration of the program

21 under this title only through a prospective formal rule22 making process, including issuing notices of proposed rule

23 making, publishing proposed rules or modifications to

24 rules in the Federal Register, and soliciting public com25 ment.
1474

•HR 2517 IH

1 ‘‘PART F—GENERAL PROVISIONS

2 ‘‘SEC. 2171. DEFINITIONS.

3 ‘‘(a) MEDICAL ASSISTANCE.—

4 ‘‘(1) IN GENERAL.—For purposes of this title,

5 except as provided in paragraph (2), the term ‘medi6 cal assistance’ means payment of part or all the cost

7 of any of the following for eligible low-income indi8 viduals (as defined in subsection (b)) as specified

9 under the MediGrant plan:

10 ‘‘(A) Inpatient hospital services.

11 ‘‘(B) Outpatient hospital services.

12 ‘‘(C) Physician services.

13 ‘‘(D) Surgical services.

14 ‘‘(E) Clinic services and other ambulatory

15 health care services.

16 ‘‘(F) Nursing facility services.

17 ‘‘(G) Intermediate care facility services for

18 the mentally retarded.

19 ‘‘(H) Prescription drugs and biologicals.

20 ‘‘(I) Over-the-counter medications.

21 ‘‘(J) Laboratory and radiological services.

22 ‘‘(K) Family planning services and sup23 plies.

24 ‘‘(L) Inpatient mental health services, in25 cluding services furnished in a State-operated
1475

•HR 2517 IH

1 mental hospital and including residential or

2 other 24-hour therapeutically planned struc3 tured services in the case of a child.

4 ‘‘(M) Outpatient mental health services, in5 cluding services furnished in a State-operated

6 mental hospital and including community-based

7 services in the case of a child.

8 ‘‘(N) Durable medical equipment and other

9 medically-related or remedial devices (such as

10 prosthetic devices, implants, eyeglasses, hearing

11 aids, dental devices, and adaptive devices).

12 ‘‘(O) Disposable medical supplies.

13 ‘‘(P) Home and community-based health

14 care services and related supportive services

15 (such as home health nursing services, home

16 health aide services, personal care, assistance

17 with activities of daily living, chore services, day

18 care services, respite care services, and training

19 for family members).

20 ‘‘(Q) Community supported living arrange21 ments.

22 ‘‘(R) Nursing care services (such as private

23 duty nursing care, nurse midwife services, res24 piratory care services, pediatric nurse services,
1476

•HR 2517 IH

1 and advanced practice nurse services) in a

2 home, school, or other setting.

3 ‘‘(S) Dental services.

4 ‘‘(T) Inpatient substance abuse treatment

5 services and residential substance abuse treat6 ment services.

7 ‘‘(U) Outpatient substance abuse treat8 ment services.

9 ‘‘(V) Case management services.

10 ‘‘(W) Care coordination services.

11 ‘‘(X) Physical therapy, occupational ther12 apy, and services for individuals with speech,

13 hearing, and language disorders.

14 ‘‘(Y) Hospice care.

15 ‘‘(Z) Any other medical, diagnostic, screen16 ing, preventive, restorative, remedial, thera17 peutic, or rehabilitative services (whether in a

18 facility, home, school, or other setting) if recog19 nized by State law and if the service is—

20 ‘‘(i) prescribed by or furnished by a

21 physician or other licensed or registered

22 practitioner within the scope of practice as

23 defined by State law,
1477

•HR 2517 IH

1 ‘‘(ii) performed under the general su2 pervision or at the direction of a physician,

3 or

4 ‘‘(iii) furnished by a health care facil5 ity that is operated by a State or local gov6 ernment or is licensed under State law and

7 operating within the scope of the license.

8 ‘‘(AA) Premiums for private health care

9 insurance coverage, including private long-term

10 care insurance coverage.

11 ‘‘(BB) Medical transportation.

12 ‘‘(CC) Medicare cost-sharing (as defined in

13 subsection (c)).

14 ‘‘(DD) Enabling services (such as trans15 portation, translation, and outreach services)

16 designed to increase the accessibility of primary

17 and preventive health care services for eligible

18 low-income individuals.

19 ‘‘(EE) Any other health care services or

20 items specified by the Secretary.

21 ‘‘(2) EXCLUSION OF CERTAIN PAYMENTS.—

22 Such term does not include the payment with re23 spect to care or services for—
1478

•HR 2517 IH

1 ‘‘(A) any individual who is an inmate of a

2 public institution (except as a patient in a State

3 psychiatric hospital); and

4 ‘‘(B) any individual who is not an eligible

5 low-income individual.

6 ‘‘(b) ELIGIBLE LOW-INCOME INDIVIDUAL.—The

7 term ‘eligible low-income individual’ means an individual

8 who has been determined eligible by the State for medical

9 assistance under the MediGrant plan and whose family in10 come (as determined under the plan) does not exceed a

11 percentage (specified in the MediGrant plan and not to

12 exceed 300 percent) of the poverty line for a family of

13 the size involved. In determining the amount of income

14 under the previous sentence, a State may exclude costs

15 incurred for medical care or other types of remedial care

16 recognized by the State.

17 ‘‘(c) MEDICARE COST-SHARING.—For purposes of

18 this title, the term ‘medicare cost-sharing’ means any of

19 the following:

20 ‘‘(1)(A) Premiums under section 1839.

21 ‘‘(B) Premiums under section 1818 or 1818A.

22 ‘‘(2) Coinsurance under title XVIII (including

23 coinsurance described in section 1813).
1479

•HR 2517 IH

1 ‘‘(3) Deductibles established under title XVIII

2 (including those described in section 1813 and sec3 tion 1833(b)).

4 ‘‘(4) The difference between the amount that is

5 paid under section 1833(a) and the amount that

6 would be paid under such section if any reference to

7 ‘80 percent’ therein were deemed a reference to ‘100

8 percent’.

9 ‘‘(5) Premiums for enrollment of an individual

10 with an eligible organization under section 1876 or

11 with a MedicarePlus organization under part C of

12 title XVIII.

13 ‘‘(d) ADDITIONAL DEFINITIONS.—For purposes of

14 this title:

15 ‘‘(1) CHILD.—The term ‘child’ means an indi16 vidual under 19 years of age.

17 ‘‘(2) POVERTY LINE DEFINED.—The term ‘pov18 erty line’ means the income official poverty line (as

19 defined by the Office of Management and Budget

20 and revised annually in accordance with section

21 673(2) of the Omnibus Budget Reconciliation Act of

22 1981).

23 ‘‘(3) PREGNANT WOMAN.—The term ‘pregnant

24 woman’ includes a woman during the 60-day period

25 beginning on the last day of the pregnancy.
1480

•HR 2517 IH

1 ‘‘SEC. 2172. TREATMENT OF TERRITORIES.

2 ‘‘Notwithstanding any other requirement of this title,

3 the Secretary may waive or modify any requirement of this

4 title with respect to the medical assistance program a

5 State other than the 50 States and the District of Colum6 bia, other than a waiver of—

7 ‘‘(1) the applicable Federal medical assistance

8 percentage,

9 ‘‘(2) the limitation on total payments in a fiscal

10 year to the amount of the allotment under section

11 2121(c), or

12 ‘‘(3) the requirement that payment may be

13 made for medical assistance only with respect to

14 amounts expended by the State for care and services

15 described in paragraph (1) of section 2171(a) and

16 medically-related services (as defined in section

17 2112(e)(2)).

18 ‘‘SEC. 2173. DESCRIPTION OF TREATMENT OF INDIAN

19 HEALTH SERVICE FACILITIES.

20 ‘‘In the case of a State in which one or more facilities

21 of the Indian Health Service are located, the MediGrant

22 plan shall include a description of—

23 ‘‘(1) what provision (if any) has been made for

24 payment for items and services furnished by such fa25 cilities, and
1481

•HR 2517 IH

1 ‘‘(2) the manner in which medical assistance for

2 low-income eligible individuals who are Indians will

3 be provided, as determined by the State in consulta4 tion with the appropriate Indian tribes and tribal or5 ganizations.

6 ‘‘SEC. 2174. APPLICATION OF CERTAIN GENERAL PROVI7 SIONS.

8 ‘‘The following sections in part A of title XI shall

9 apply to States under this title in the same manner as

10 they applied to a State under title XIX:

11 ‘‘(1) Section 1101(a)(1) (relating to definition

12 of State).

13 ‘‘(2) Section 1116 (relating to administrative

14 and judicial review), but only insofar as consistent

15 with the provisions of part C.

16 ‘‘(3) Section 1124 (relating to disclosure of

17 ownership and related information).

18 ‘‘(4) Section 1126 (relating to disclosure of in19 formation about certain convicted individuals).

20 ‘‘(5) Section 1132 (relating to periods within

21 which claims must be filed).

22 ‘‘SEC. 2175. MEDIGRANT MASTER DRUG REBATE AGREE23 MENTS.

24 ‘‘(a) REQUIREMENT FOR MANUFACTURER TO ENTER

25 INTO AGREEMENT.—
1482

•HR 2517 IH

1 ‘‘(1) IN GENERAL.—Pursuant to section

2 2123(f), in order for payment to be made to a State

3 under part C for medical assistance for covered out4 patient drugs of a manufacturer, the manufacturer

5 shall enter into and have in effect an MediGrant

6 master rebate agreement described in subsection (b)

7 with the Secretary on behalf of States electing to

8 participate in the agreement.

9 ‘‘(2) STATE PARTICIPATION IN MASTER AGREE10 MENT OPTIONAL.—Nothing in this section shall be

11 construed to—

12 ‘‘(A) require a State to participate in an

13 MediGrant master rebate agreement under this

14 section; or

15 ‘‘(B) prohibit a State from entering into

16 an agreement with a manufacturer of covered

17 outpatient drugs (under such terms as the

18 State and manufacturer may agree upon) re19 garding the amount of payment for such drugs

20 under the MediGrant plan.

21 ‘‘(3) COVERAGE OF DRUGS NOT COVERED

22 UNDER REBATE AGREEMENTS.—Nothing in this sec23 tion shall be construed to prohibit a State in its dis24 cretion from providing coverage under its MediGrant
1483

•HR 2517 IH

1 plan of a covered outpatient drug for which no re2 bate agreement is in effect under this section.

3 ‘‘(4) EFFECT ON EXISTING AGREEMENTS.—If a

4 State has a rebate agreement in effect with a manu5 facturer on the date of the enactment of this section

6 which provides for a minimum aggregate rebate

7 equal to or greater than the minimum aggregate re8 bate which would otherwise be paid under the

9 MediGrant master agreement under this section, at

10 the option of the State—

11 ‘‘(A) such agreement shall be considered to

12 meet the requirements of the MediGrant master

13 rebate agreement; and

14 ‘‘(B) the State shall be considered to have

15 elected to participate in the MediGrant master

16 rebate agreement.

17 ‘‘(b) TERMS OF REBATE AGREEMENT.—

18 ‘‘(1) PERIODIC REBATES.—The MediGrant

19 master rebate agreement under this section shall re20 quire the manufacturer to provide, to the MediGrant

21 plan of each State participating in the agreement, a

22 rebate for a rebate period in an amount specified in

23 subsection (c) for covered outpatient drugs of the

24 manufacturer dispensed after the effective date of

25 the agreement, for which payment was made under
1484

•HR 2517 IH

1 the plan for such period. Such rebate shall be paid

2 by the manufacturer not later than 30 days after the

3 date of receipt of the information described in para4 graph (2) for the period involved.

5 ‘‘(2) STATE PROVISION OF INFORMATION.—

6 ‘‘(A) STATE RESPONSIBILITY.—Each State

7 participating in the MediGrant master rebate

8 agreement shall report to each manufacturer

9 not later than 60 days after the end of each re10 bate period and in a form consistent with a

11 standard reporting format established by the

12 Secretary, information on the total number of

13 units of each dosage form and strength and

14 package size of each covered outpatient drug,

15 for which payment was made under the

16 MediGrant plan for the period, and shall

17 promptly transmit a copy of such report to the

18 Secretary.

19 ‘‘(B) AUDITS.—A manufacturer may audit

20 the information provided (or required to be pro21 vided) under subparagraph (A). Adjustments to

22 rebates shall be made to the extent that infor23 mation indicates that utilization was greater or

24 less than the amount previously specified.
1485

•HR 2517 IH

1 ‘‘(3) MANUFACTURER PROVISION OF PRICE IN2 FORMATION.—

3 ‘‘(A) IN GENERAL.—Each manufacturer

4 which is subject to the MediGrant master re5 bate agreement under this section shall report

6 to the Secretary—

7 ‘‘(i) not later than 30 days after the

8 last day of each rebate period under the

9 agreement (beginning on or after January

10 1, 1991), on the average manufacturer

11 price (as defined in subsection (i)(1)) and,

12 for single source drugs and innovator mul13 tiple source drugs, the manufacturer’s best

14 price (as defined in subsection (c)(1)(C))

15 for each covered outpatient drug for the

16 rebate period under the agreement, and

17 ‘‘(ii) not later than 30 days after the

18 date of entering into an agreement under

19 this section, on the average manufacturer

20 price (as defined in subsection (i)(1)) as of

21 October 1, 1990, for each of the manufac22 turer’s covered outpatient drugs.

23 ‘‘(B) VERIFICATION SURVEYS OF AVERAGE

24 MANUFACTURER PRICE.—The Secretary may

25 survey wholesalers and manufacturers that di-
1486

•HR 2517 IH

1 rectly distribute their covered outpatient drugs,

2 when necessary, to verify manufacturer prices

3 reported under subparagraph (A). The Sec4 retary may impose a civil monetary penalty in

5 an amount not to exceed $10,000 on a whole6 saler, manufacturer, or direct seller, if the

7 wholesaler, manufacturer, or direct seller of a

8 covered outpatient drug refuses a request for

9 information by the Secretary in connection with

10 a survey under this subparagraph. The provi11 sions of section 1128A (other than subsections

12 (a) (with respect to amounts of penalties or ad13 ditional assessments) and (b)) shall apply to a

14 civil money penalty under this subparagraph in

15 the same manner as such provisions apply to

16 a penalty or proceeding under section

17 1128A(a).

18 ‘‘(C) PENALTIES.—

19 ‘‘(i) FAILURE TO PROVIDE TIMELY IN20 FORMATION.—In the case of a manufac21 turer which is subject to the MediGrant

22 master rebate agreement that fails to pro23 vide information required under subpara24 graph (A) on a timely basis, the amount of

25 the penalty shall be $10,000 for each day
1487

•HR 2517 IH

1 in which such information has not been

2 provided and such amount shall be paid to

3 the Treasury. If such information is not

4 reported within 90 days of the deadline im5 posed, the agreement shall be suspended

6 for services furnished after the end of such

7 90-day period and until the date such in8 formation is reported (but in no case shall

9 such suspension be for a period of less

10 than 30 days).

11 ‘‘(ii) FALSE INFORMATION.—Any

12 manufacturer which is subject to the

13 MediGrant master rebate agreement, or a

14 wholesaler or direct seller, that knowingly

15 provides false information under subpara16 graph (A) or (B) is subject to a civil

17 money penalty in an amount not to exceed

18 $100,000 for each item of false informa19 tion. Any such civil money penalty shall be

20 in addition to other penalties as may be

21 prescribed by law. The provisions of sec22 tion 1128A (other than subsections (a) and

23 (b)) shall apply to a civil money penalty

24 under this subparagraph in the same man-
1488

•HR 2517 IH

1 ner as such provisions apply to a penalty

2 or proceeding under section 1128A(a).

3 ‘‘(D) CONFIDENTIALITY OF INFORMA4 TION.—Notwithstanding any other provision of

5 law, information disclosed by manufacturers or

6 wholesalers under this paragraph or under an

7 agreement with the Secretary of Veterans Af8 fairs described in section 2123(f) is confidential

9 and shall not be disclosed by the Secretary or

10 the Secretary of Veterans Affairs or a State

11 agency (or contractor therewith) in a form

12 which discloses the identity of a specific manu13 facturer or wholesaler or the prices charged for

14 drugs by such manufacturer or wholesaler, ex15 cept—

16 ‘‘(i) as the Secretary determines to be

17 necessary to carry out this section,

18 ‘‘(ii) to permit the Comptroller Gen19 eral to review the information provided,

20 and

21 ‘‘(iii) to permit the Director of the

22 Congressional Budget Office to review the

23 information provided.

24 ‘‘(4) LENGTH OF AGREEMENT.—
1489

•HR 2517 IH

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.
1490

•HR 2517 IH

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.
1491

•HR 2517 IH

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

21 an innovator multiple source drug shall be equal

22 to the product of—

23 ‘‘(i) the total number of units of each

24 dosage form and strength paid for under
1492

•HR 2517 IH

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,
1493

•HR 2517 IH

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’—
1494

•HR 2517 IH

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
1495

•HR 2517 IH

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-
1496

•HR 2517 IH

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
1497

•HR 2517 IH

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
1498

•HR 2517 IH

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
1499

•HR 2517 IH

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
1500

•HR 2517 IH

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)).
1501

•HR 2517 IH

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
1502

•HR 2517 IH

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 a 72-hour supply

23 of a covered outpatient prescription drug in an

24 emergency situation (as defined by the Sec25 retary).
1503

•HR 2517 IH

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
1504

•HR 2517 IH

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;
1505

•HR 2517 IH

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-
1506

•HR 2517 IH

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
1507

•HR 2517 IH

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
1508

•HR 2517 IH

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-
1509

•HR 2517 IH

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
1510

•HR 2517 IH

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.—
1511

•HR 2517 IH

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
1512

•HR 2517 IH

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
1513

•HR 2517 IH

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.
1514

•HR 2517 IH

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
1515

•HR 2517 IH

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).
1516

•HR 2517 IH

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
1517

•HR 2517 IH

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
1518

•HR 2517 IH

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-
1519

•HR 2517 IH

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 (f) FINAL EXTENSION OF MEDICAID WAIVER FOR

22 DAYTON AREA HEALTH PLAN.—Section 2 of Public Law

23 102–276, as amended by section 13644 of the Omnibus

24 Budget Reconciliation Act of 1993, is amended by striking

25 ‘‘December 31, 1995’’ and inserting ‘‘the last day of the
1520

•HR 2517 IH

1 last calendar quarter in which a State medicaid plan is

2 in effect in Ohio under title XIX of the Social Security

3 Act’’.

4 TITLE XVII—ABOLISHMENT OF

5 DEPARTMENT OF COMMERCE

6 SEC. 17001. SHORT TITLE.

7 This title may be cited as the ‘‘Department of Com8 merce Dismantling Act’’.

9 SEC. 17002. TABLE OF CONTENTS.

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

TITLE XVII—ABOLISHMENT OF DEPARTMENT OF COMMERCE

Sec. 17001. Short title.

Sec. 17002. Table of contents.

Subtitle A—Abolishment of Department of Commerce

Sec. 17101. Abolishment of Department of Commerce.

Sec. 17102. Resolution and termination of Department functions.

Sec. 17103. Responsibilities of the Director of the Office of Management and

Budget.

Sec. 17104. Office of Programs Resolution.

Sec. 17105. Personnel.

Sec. 17106. Plans and reports.

Sec. 17107. GAO audit and access to records.

Sec. 17108. Conforming amendments.

Sec. 17109. Privatization framework.

Sec. 17110. Priority placement programs for Federal employees affected by a

reduction in force attributable to this title.

Sec. 17111. Funding reductions for transferred functions.

Sec. 17112. Definitions.

Subtitle B—Disposition of Various Programs, Functions, and Agencies of

Department of Commerce

Sec. 17201. Abolishment of Economic Development Administration and transfer of functions.

Sec. 17202. Technology Administration.

Sec. 17203. Reorganization of the Bureau of the Census.

Sec. 17204. Bureau of Economic Analysis.

Sec. 17205. Terminated functions of NTIA.

Sec. 17206. National Oceanic and Atmospheric Administration.

Sec. 17207. National Institute for Science and Technology.

Sec. 17208. Miscellaneous terminations; moratorium on program activities.
1521

•HR 2517 IH

Sec. 17209. Effective date.

Subtitle C—Office of United States Trade Representative

CHAPTER 1—GENERAL PROVISIONS

Sec. 17301. Definitions.

CHAPTER 2—OFFICE OF UNITED STATES TRADE REPRESENTATIVE

SUBCHAPTER A—ESTABLISHMENT

Sec. 17311. Establishment of the Office.

Sec. 17312. Functions of the USTR.

SUBCHAPTER B—OFFICERS

Sec. 17321. Deputy Administrator of the Office.

Sec. 17322. Deputy United States Trade Representatives.

Sec. 17323. Assistant Administrators.

Sec. 17324. Director General for Export Promotion.

Sec. 17325. General Counsel.

Sec. 17326. Inspector General.

Sec. 17327. Chief Financial Officer.

SUBCHAPTER C—TRANSFERS TO THE OFFICE

Sec. 17331. Office of the United States Trade Representative.

Sec. 17332. Transfers from the Department of Commerce.

Sec. 17333. Trade and Development Agency.

Sec. 17334. Export-Import Bank.

Sec. 17335. Overseas Private Investment Corporation.

Sec. 17336. Consolidation of export promotion and financing activities.

Sec. 17337. Additional trade functions.

SUBCHAPTER D—ADMINISTRATIVE PROVISIONS

Sec. 17341. Personnel provisions.

Sec. 17342. Delegation and assignment.

Sec. 17343. Succession.

Sec. 17344. Reorganization.

Sec. 17345. Rules.

Sec. 17346. Funds transfer.

Sec. 17347. Contracts, grants, and cooperative agreements.

Sec. 17348. Use of facilities.

Sec. 17349. Gifts and bequests.

Sec. 17350. Working capital fund.

Sec. 17351. Service charges.

Sec. 17352. Seal of Office.

SUBCHAPTER E—RELATED AGENCIES

Sec. 17361. Interagency Trade Organization.

Sec. 17362. National Security Council.

Sec. 17363. International Monetary Fund.

SUBCHAPTER F—CONFORMING AMENDMENTS

Sec. 17371. Amendments to general provisions.

Sec. 17372. Repeals.
1522

•HR 2517 IH

Sec. 17373. Conforming amendments relating to Executive Schedule positions.

SUBCHAPTER G—MISCELLANEOUS

Sec. 17381. Effective date.

Sec. 17382. Interim appointments.

Sec. 17383. Funding reductions resulting from reorganization.

Subtitle D—Patent and Trademark Office Corporation

Sec. 17401. Short title.

CHAPTER 1—PATENT AND TRADEMARK OFFICE

Sec. 17411. Establishment of Patent and Trademark Office as a corporation.

Sec. 17412. Powers and duties.

Sec. 17413. Organization and management.

Sec. 17414. Management Advisory Board.

Sec. 17415. Independence from Department of Commerce.

Sec. 17416. Trademark trial and appeal board.

Sec. 17417. Board of patent appeals and interferences.

Sec. 17418. Suits by and against the corporation.

Sec. 17419. Annual report of Commissioner.

Sec. 17420. Suspension or exclusion from practice.

Sec. 17421. Funding.

Sec. 17422. Audits.

Sec. 17423. Transfers.

CHAPTER 2—EFFECTIVE DATE; TECHNICAL AMENDMENTS

Sec. 17431. Effective date.

Sec. 17432. Technical and conforming amendments.

Subtitle E—Miscellaneous Provisions

Sec. 17501. References.

Sec. 17502. Exercise of authorities.

Sec. 17503. Savings provisions.

Sec. 17504. Transfer of assets.

Sec. 17505. Delegation and assignment.

Sec. 17506. Authority of director of the office of management and budget with

respect to functions transferred.

Sec. 17507. Certain vesting of functions considered transfers.

Sec. 17508. Availability of existing funds.

Sec. 17509. Definitions.
1523

•HR 2517 IH

1 Subtitle A—Abolishment of

2 Department of Commerce

3 SEC. 17101. ABOLISHMENT OF DEPARTMENT OF COM4 MERCE.

5 (a) ABOLISHMENT OF DEPARTMENT.—The Depart6 ment of Commerce is abolished effective on the abolish7 ment date specified in subsection (c).

8 (b) TRANSFER OF DEPARTMENT FUNCTIONS TO

9 OMB.—Except as otherwise provided in this title, all func10 tions that immediately before the abolishment date speci11 fied in subsection (c) are authorized to be performed by

12 the Secretary of Commerce, any other officer or employee

13 of the Department acting in that capacity, or any agency

14 or office of the Department, are transferred to the Direc15 tor of the Office of Management and Budget effective on

16 that abolishment date.

17 (c) ABOLISHMENT DATE.—The abolishment date re18 ferred to in subsections (a) and (b) is the earlier of—

19 (1) the last day of the 6-month period begin20 ning on the date of the enactment of this Act; or

21 (2) September 30, 1996.

22 SEC. 17102. RESOLUTION AND TERMINATION OF DEPART23 MENT FUNCTIONS.

24 (a) RESOLUTION OF FUNCTIONS.—During the period

25 beginning on the date of enactment of this Act and ending
1524

•HR 2517 IH

1 on the functions termination date specified in subsection

2 (c)—

3 (1) the disposition and resolution of functions

4 of the Department of Commerce shall be completed

5 in accordance with this title; and

6 (2) the Director shall resolve all functions that

7 are transferred to the Director under section

8 17101(b) and are not otherwise continued under this

9 title.

10 (b) TERMINATION OF FUNCTIONS.—All functions

11 that are transferred to the Director under section

12 17101(b) that are not otherwise continued by this title

13 shall terminate on the functions termination date specified

14 in subsection (c).

15 (c) FUNCTIONS TERMINATION DATE.—The functions

16 termination date referred to in subsections (a) and (b) is

17 the last day of the 3-year period beginning on the date

18 of the enactment of this Act.

19 SEC. 17103. RESPONSIBILITIES OF THE DIRECTOR OF THE

20 OFFICE OF MANAGEMENT AND BUDGET.

21 The Director of the Office of Management and Budg22 et, acting through the Administrator of the Office of Pro23 grams Resolution, shall be responsible for the implementa24 tion of this subtitle, including—
1525

•HR 2517 IH

1 (1) the administration and wind-up, during the

2 wind-up period, of all functions transferred to the

3 Director under section 17101(b);

4 (2) the administration and wind-up, during the

5 wind-up period, of any outstanding obligations of the

6 Federal Government under any programs terminated

7 by this title; and

8 (3) taking such other actions as may be nec9 essary to wind-up any outstanding affairs of the De10 partment of Commerce before the end of the wind11 up period.

12 SEC. 17104. OFFICE OF PROGRAMS RESOLUTION.

13 (a) ESTABLISHMENT OF OFFICE.—There is estab14 lished in the Office of Management and Budget an office

15 to be known as the Office of Programs Resolution.

16 (b) ADMINISTRATOR.—There shall be at the head of

17 the Office an Administrator who shall be appointed by the

18 President, by and with the advice and consent of the Sen19 ate. The Administrator shall receive compensation at the

20 rate prescribed for level III of the Executive Schedule

21 under section 5314 of title 5, United States Code. The

22 Administrator shall serve as principal adviser to the Direc23 tor on Government organization and reorganization mat24 ters, and shall report directly to the Director.
1526

•HR 2517 IH

1 (c) FUNCTIONS.—The Administrator shall perform

2 such functions as are vested in the Administrator by this

3 title or delegated to the Administrator by the Director.

4 (d) AUTHORITIES OF THE ADMINISTRATOR.—For

5 purposes of performing the functions of the Administrator

6 under subsection (c) and subject to the availability of ap7 propriations, the Administrator may—

8 (1) enter into contracts;

9 (2) employ experts and consultants in accord10 ance with section 3109 of title 5, United States

11 Code, at rates for individuals not to exceed the per

12 diem rate equivalent to the rate for level IV of the

13 Executive Schedule; and

14 (3) utilize, on a reimbursable basis, the services,

15 facilities, and personnel of other Federal agencies.

16 (e) AUDITOR GENERAL.—

17 (1) IN GENERAL.—There shall be in the Office

18 an Auditor General, who shall be appointed by and

19 report to the Administrator.

20 (2) FUNCTIONS.—The Auditor General shall—

21 (A) conduct audits and investigations with

22 respect to activities of the Office; and

23 (B) submit to the Administrator and the

24 Director reports on the findings of those audits

25 and investigations.
1527

•HR 2517 IH

1 (f) REORGANIZATION.—The Administrator may allo2 cate or reallocate among the officers of the Office any

3 function vested in the Administrator or the Office, and

4 may establish, consolidate, alter, or discontinue in the Of5 fice any organizational entities that were entities of the

6 Department of Commerce, as the Administrator considers

7 necessary or appropriate.

8 (g) ANNUAL AUTHORIZATION REQUIRED.—No sums

9 may be appropriated for any fiscal year for the Office ex10 cept as specifically authorized for that fiscal year by law.

11 SEC. 17105. PERSONNEL.

12 Effective on the abolishment date specified in section

13 17101(c), there are transferred to the Office all individ14 uals who—

15 (1) immediately before the abolishment date,

16 were officers or employees of the Department of

17 Commerce; and

18 (2) in their capacity as such an officer or em19 ployee, performed functions that are transferred to

20 the Director under section 17101(b).

21 SEC. 17106. PLANS AND REPORTS.

22 (a) INITIAL IMPLEMENTATION PLAN.—

23 (1) IN GENERAL.—Not later than 90 days after

24 the date of enactment of this Act, the Director shall

25 submit a report, through the President, to the Con-
1528

•HR 2517 IH

1 gress specifying those actions taken and necessary to

2 be taken—

3 (A) to resolve those programs and func4 tions terminated on the date of enactment of

5 this Act; and

6 (B) to implement the additional transfers

7 and other program dispositions provided for in

8 this title.

9 (2) CONTENTS.—The report shall include—

10 (A) a description of the anticipated size

11 and composition of the Programs Resolution

12 Office,

13 (B) recommendations for additional legisla14 tion, if any, needed to reflect or otherwise to

15 implement the abolishments, transfers, termi16 nations, and other dispositions of programs and

17 functions under this title; and

18 (C) a description of actions planned and

19 taken to comply with limitations imposed by

20 this Act on future spending for continued func21 tions.

22 (b) ANNUAL STATUS REPORTS.—At the end of each

23 of the first, second, and third years following the date of

24 enactment of this Act, the Director shall submit a report,

25 through the President, to the Congress which—
1529

•HR 2517 IH

1 (1) specifies the status and progress of actions

2 taken to implement this title and to wind-up the af3 fairs of the Department of Commerce by the func4 tions termination date specified in section 17102(c);

5 (2) includes a summary of reports submitted to

6 the Director under section 17104(e)(2)(B) during

7 the period covered by the report by the Auditor Gen8 eral of the Office;

9 (3) includes any recommendations the Director

10 may have for additional legislation; and

11 (4) describes actions taken to comply with limi12 tations imposed by this Act on future spending for

13 continued functions.

14 (c) GAO REPORTS.—Not later than 60 days after is15 suance of each report under subsections (a) and (b), the

16 Comptroller General of the United States shall submit to

17 the Congress a report which—

18 (1) evaluates the report under that subsection;

19 and

20 (2) includes any recommendations the Comp21 troller General considers appropriate.

22 SEC. 17107. GAO AUDIT AND ACCESS TO RECORDS.

23 (a) AUDIT OF PERSONS PERFORMING FUNCTIONS

24 PURSUANT TO THIS ACT.—All agencies, corporations, or25 ganizations, and other persons of any description which
1530

•HR 2517 IH

1 under the authority of the United States perform any

2 function or activity pursuant to this title shall be subject

3 to audit by the Comptroller General of the United States

4 with respect to such function or activity.

5 (b) AUDIT OF PERSONS PROVIDING CERTAIN GOODS

6 OR SERVICES.—All persons and organizations which, by

7 contract, grant, or otherwise, provide goods or services to,

8 or receive financial assistance from, any agency or other

9 person performing functions or activities under or referred

10 to by this title shall be subject to audit by the Comptroller

11 General of the United States with respect to such provi12 sion of goods or services or receipt of financial assistance.

13 (c) PROVISIONS APPLICABLE TO AUDITS UNDER

14 THIS SECTION.—

15 (1) NATURE AND SCOPE OF AUDIT.—The

16 Comptroller General of the United States shall de17 termine the nature, scope, terms, and conditions of

18 audits conducted under this section.

19 (2) COORDINATION WITH OTHER PROVISIONS

20 OF LAW.—The authority of the Comptroller General

21 of the United States under this section shall be in

22 addition to any audit authority available to the

23 Comptroller General under other provisions of this

24 title or any other law.
1531

•HR 2517 IH

1 (3) RIGHTS OF ACCESS, EXAMINATION, AND

2 COPYING.—The Comptroller General of the United

3 States, and any duly authorized representative of the

4 Comptroller General, shall have access to, and the

5 right to examine and copy, all records and other re6 corded information in any form, and to examine any

7 property within the possession or control of any

8 agency or person which is subject to audit under this

9 section, which the Comptroller General considers rel10 evant to an audit conducted under this section.

11 (4) ENFORCEMENT OF RIGHT OF ACCESS.—The

12 right of access of the Comptroller General of the

13 United States to information under this section shall

14 be enforceable under section 716 of title 31, United

15 States Code.

16 (5) MAINTENANCE OF CONFIDENTIAL

17 RECORDS.—Section 716(e) of title 31, United States

18 Code, shall apply to information obtained by the

19 Comptroller General under this section.

20 SEC. 17108. CONFORMING AMENDMENTS.

21 (a) PRESIDENTIAL SUCCESSION.—Section 19(d)(1)

22 of title 3, United States Code, is amended by striking

23 ‘‘Secretary of Commerce,’’.
1532

•HR 2517 IH

1 (b) EXECUTIVE DEPARTMENTS.—Section 101 of title

2 5, United States Code, is amended by striking the follow3 ing item: ‘‘The Department of Commerce.’’.

4 (c) SECRETARY’S COMPENSATION.—Section 5312 of

5 title 5, United States Code, is amended by striking the

6 following item: ‘‘Secretary of Commerce.’’.

7 (d) COMPENSATION FOR POSITIONS AT LEVEL III.—

8 Section 5314 of title 5, United States Code, is amended—

9 (1) by striking the following item:

10 ‘‘Under Secretary of Commerce, Under Secretary of

11 Commerce for Economic Affairs, Under Secretary of Com12 merce for Export Administration and Under Secretary of

13 Commerce for Travel and Tourism.’’;

14 (2) by striking the following item:

15 ‘‘Under Secretary of Commerce for Oceans and At16 mosphere, the incumbent of which also serves as Adminis17 trator of the National Oceanic and Atmospheric Adminis18 tration.’’;

19 (3) by striking the following item:

20 ‘‘Under Secretary of Commerce for Technology.’’;

21 and

22 (4) by adding at the end the following item:

23 ‘‘Administrator, Office of Programs Resolution’’.

24 (e) COMPENSATION FOR POSITIONS AT LEVEL IV.—

25 Section 5315 of title 5, United States Code, is amended—
1533

•HR 2517 IH

1 (1) by striking the following item:

2 ‘‘Assistant Secretaries of Commerce (11).’’;

3 (2) by striking the following item:

4 ‘‘General Counsel of the Department of Commerce.’’;

5 (3) by striking the following item:

6 ‘‘Assistant Secretary of Commerce for Oceans and

7 Atmosphere, the incumbent of which also serves as Deputy

8 Administrator of the National Oceanic and Atmospheric

9 Administration.’’;

10 (4) by striking the following item:

11 ‘‘Director, National Institute of Standards and Tech12 nology, Department of Commerce.’’;

13 (5) by striking the following item:

14 ‘‘Inspector General, Department of Commerce.’’;

15 (6) by striking the following item:

16 ‘‘Chief Financial Officer, Department of Com17 merce.’’; and

18 (7) in the item relating to the Bureau of the

19 Census, by striking ‘‘, Department of Commerce’’.

20 (f) COMPENSATION FOR POSITIONS AT LEVEL V.—

21 Section 5316 of title 5, United States Code, is amended—

22 (1) by striking the following item:

23 ‘‘Director, United States Travel Service, Department

24 of Commerce.’’; and

25 (2) by striking the following item:
1534

•HR 2517 IH

1 ‘‘National Export Expansion Coordinator, Depart2 ment of Commerce.’’.

3 (g) INSPECTOR GENERAL ACT OF 1978.—The In4 spector General Act of 1978 (5 U.S.C. App.) is amend5 ed—

6 (1) in section 9(a)(1), by striking subparagraph

7 (B);

8 (2) in section 11(1), by striking ‘‘Commerce,’’;

9 and

10 (3) in section 11(2), by striking ‘‘Commerce,’’.

11 (h) EFFECTIVE DATE.—The amendments made by

12 this section shall be effective on the abolishment date spec13 ified in section 17101(c).

14 SEC. 17109. PRIVATIZATION FRAMEWORK.

15 (a) IN GENERAL.—The Office of Management and

16 Budget shall privatize each function designated for privat17 ization under subtitle B within 18 months of the date the

18 transfer of such function to the Office. The Office shall

19 pursue such forms of privatization arrangements as the

20 Office considers appropriate to best serve the interests of

21 the United States. If the Office is unable to privatize a

22 function within 18 months, the Office shall report its in23 ability to the Congress with its recommendations as to the

24 appropriate disposition of the function and its assets.
1535

•HR 2517 IH

1 (b) ROLE OF THE FEDERAL GOVERNMENT.—No pri2 vatization arrangement made under subsection (a) shall

3 include any future role for, or accountability to, the Fed4 eral Government unless it is necessary to assure the con5 tinued accomplishment of a specific Federal objective. The

6 Federal role should be the minimum necessary to accom7 plish Federal objectives.

8 (c) ASSETS.—In privatizing a function, the Office of

9 Management and Budget shall take any action necessary

10 to preserve the value of the assets of a function during

11 the period the Office holds such assets and to continue

12 the performance of the function to the extent necessary

13 to preserve the value of the assets or to accomplish core

14 Federal objectives.

15 SEC. 17110. PRIORITY PLACEMENT PROGRAMS FOR FED16 ERAL EMPLOYEES AFFECTED BY A REDUC17 TION IN FORCE ATTRIBUTABLE TO THIS

18 TITLE.

19 (a) IN GENERAL.—Subchapter I of chapter 33 of title

20 5, United States Code, is amended by adding at the end

21 the following:
1536

•HR 2517 IH

1 ‘‘§ 3329b. Priority placement programs for employees

2 affected by a reduction in force attrib3 utable to the Department of Commerce

4 Dismantling Act

5 ‘‘(a)(1) For the purpose of this section, the term ‘af6 fected agency’—

7 ‘‘(A) except as provided in subparagraph (B),

8 means an Executive agency to which personnel are

9 transferred in connection with a transfer of function

10 under the Department of Commerce Dismantling

11 Act, and

12 ‘‘(B) with respect to employees of the Depart13 ment of Commerce in general administration, the In14 spector General’s office, or the General Council’s of15 fice, or who provided overhead support to other com16 ponents of the Department on a reimbursable basis,

17 means all agencies to which functions of those em18 ployees are transferred under the Department of

19 Commerce Dismantling Act.

20 ‘‘(2) This section applies with respect to any reduc21 tion in force that—

22 ‘‘(A) occurs within 12 months after the date of

23 the enactment of this section; and

24 ‘‘(B) is due to—
1537

•HR 2517 IH

1 ‘‘(i) the termination of any function of the

2 Department of Commerce or the Office of Pro3 grams Resolution, as the case may be; or

4 ‘‘(ii) the agency’s having excess personnel

5 as a result of a transfer of function described

6 in paragraph (1), as determined by—

7 ‘‘(I) the Administrator of the Office of

8 Programs Resolution, in the case of a

9 function transferred to the Office of Man10 agement and Budget; or

11 ‘‘(II) the head of the agency, in the

12 case of any other function.

13 ‘‘(b) As soon as practicable after the date of the en14 actment of this section, each affected agency shall estab15 lish an agencywide priority placement program to facili16 tate employment placement for employees who—

17 ‘‘(1) are scheduled to be separated from service

18 due to a reduction in force described in subsection

19 (a)(2); or

20 ‘‘(2) are separated from service due to such a

21 reduction in force.

22 ‘‘(c)(1) Each agencywide priority placement program

23 shall include provisions under which a vacant position

24 shall not be filled by the appointment or transfer of any

25 individual from outside of that agency if—
1538

•HR 2517 IH

1 ‘‘(A) there is then available any individual de2 scribed in paragraph (2) who is qualified for the po3 sition; and

4 ‘‘(B) the position—

5 ‘‘(i) is at the same grade (or pay level) or

6 not more than 1 grade (or pay level) below that

7 of the position last held by such individual be8 fore placement in the new position; and

9 ‘‘(ii) is within the same commuting area as

10 the individual’s last-held position (as referred to

11 in clause (i)) or residence.

12 ‘‘(2) For purposes of an agencywide priority place13 ment program, an individual shall be considered to be de14 scribed in this paragraph if such individual’s most recent

15 performance evaluation was at least fully successful (or

16 the equivalent), and such individual is either—

17 ‘‘(A) an employee of such agency who is sched18 uled to be separated, as described in subsection

19 (b)(1); or

20 ‘‘(B) an individual who became a former em21 ployee of such agency as a result of a separation, as

22 described in subsection (b)(2).

23 ‘‘(d)(1) Nothing in this section shall affect any prior24 ity placement program of the Department of Defense
1539

•HR 2517 IH

1 which is in operation as of the date of the enactment of

2 this section.

3 ‘‘(2) Nothing in this section shall impair placement

4 programs within agencies subject to reductions in force re5 sulting from causes other than the Department of Com6 merce Dismantling Act.

7 ‘‘(e) An individual shall cease to be eligible to partici8 pate in a program under this section on the earlier of—

9 ‘‘(1) the conclusion of the 12-month period be10 ginning on the date on which that individual first

11 became eligible to participate under subsection

12 (c)(2); or

13 ‘‘(2) the date on which the individual declines

14 a bona fide offer (or if the individual does not act

15 on the offer, the last day for accepting such offer)

16 from the affected agency of a position described in

17 subsection (c)(1)(B).’’.

18 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

19 (1) Title 5, United States Code, is amended by redesignat20 ing the second section which is designated as section 3329

21 as section 3329a.

22 (2) The table of sections for chapter 33 of title 5,

23 United States Code, is amended by striking the item relat24 ing to the second section which is designated as section

25 3329 and inserting the following:
1540

•HR 2517 IH

‘‘3329a. Government-wide list of vacant positions.

‘‘3329b. Priority placement programs for employees affected by a reduction

in force attributable to the Department of Commerce Dismantling Act.’’.

1 SEC. 17111. FUNDING REDUCTIONS FOR TRANSFERRED

2 FUNCTIONS.

3 (a) FUNDING REDUCTIONS.—Except as provided in

4 subsection (b), for each fiscal year that begins on or after

5 the date of the enactment of this Act, the total amount

6 obligated or expended by the United States in performing

7 functions transferred under this title to the Director or

8 to the Office from the Department of Commerce, or any

9 of its officers or components, may not exceed 75 percent

10 of the total amount obligated or expended by the United

11 States in performing such functions for fiscal year 1995.

12 (b) EXCEPTIONS.—Subsection (a) shall not apply

13 to—

14 (1) functions transferred to the Director under

15 section 17203 (relating to the Bureau of the Cen16 sus); or

17 (2) obligations or expenditures incurred as a di18 rect consequence of the termination, transfer, or

19 other disposition of functions described in subsection

20 (a) pursuant to this title.

21 (c) RULE OF CONSTRUCTION.—This section shall

22 take precedence over any other provision of law unless
1541

•HR 2517 IH

1 such provision explicitly refers to this section and makes

2 an exception to it.

3 (d) RESPONSIBILITIES OF THE DIRECTOR.—The Di4 rector shall—

5 (1) ensure compliance with the requirements of

6 this section; and

7 (2) include in each report under sections 17106

8 (a) and (b) a description of actions taken to comply

9 with such requirements.

10 SEC. 17112. DEFINITIONS.

11 For purposes of this subtitle, the following definitions

12 apply:

13 (1) ADMINISTRATOR.—The term ‘‘Adminis14 trator’’ means the Administrator of the Office of

15 Programs Resolution.

16 (2) DIRECTOR.—The term ‘‘Director’’ means

17 the Director of the Office of Management and Budg18 et.

19 (3) OFFICE.—The term ‘‘Office’’ means the Of20 fice of Programs Resolution.

21 (4) WIND-UP PERIOD.—The term ‘‘wind-up pe22 riod’’ means the period beginning on the date of the

23 enactment of this Act and ending on the functions

24 termination date specified in section 17102(c).
1542

•HR 2517 IH

1 Subtitle B—Disposition of Various

2 Programs, Functions, and Agen3 cies of Department of Com4 merce

5 SEC. 17201. ABOLISHMENT OF ECONOMIC DEVELOPMENT

6 ADMINISTRATION AND TRANSFER OF FUNC7 TIONS.

8 (a) IN GENERAL.—The Public Works and Economic

9 Development Act of 1965 (40 U.S.C. 3131 et seq.) is

10 amended by striking all after the first section and insert11 ing the following:

12 ‘‘SEC. 2. ADMINISTRATOR DEFINED.

13 ‘‘In this Act, the term ‘Administrator’ means the Ad14 ministrator of the Small Business Administration.

15 ‘‘TITLE I—STATEMENT OF

16 PURPOSE

17 ‘‘SEC. 101. FINDINGS AND DECLARATION.

18 ‘‘(a) FINDINGS.—Congress finds that—

19 ‘‘(1) the maintenance of the national economy

20 at a high level is vital to the best interests of the

21 United States, but that some of our regions, coun22 ties, and communities are suffering substantial and

23 persistent unemployment and underemployment that

24 cause hardship to many individuals and their fami25 lies, and waste invaluable human resources;
1543

•HR 2517 IH

1 ‘‘(2) to overcome this problem the Federal Gov2 ernment, in cooperation with the States, should help

3 areas and regions of substantial and persistent un4 employment and underemployment to take effective

5 steps in planning and financing their public works

6 and economic development;

7 ‘‘(3) Federal financial assistance, including

8 grants for public works and development facilities to

9 communities, industries, enterprises, and individuals

10 in areas needing development should enable such

11 areas to help themselves achieve lasting improve12 ment and enhance the domestic prosperity by the es13 tablishment of stable and diversified local economies

14 and improved local conditions, if such assistance is

15 preceded by and consistent with sound, long-range

16 economic planning; and

17 ‘‘(4) under the provisions of this Act, new em18 ployment opportunities should be created by develop19 ing and expanding new and existing public works

20 and other facilities and resources rather than by

21 merely transferring jobs from one area of the United

22 States to another.

23 ‘‘(b) DECLARATION.—Congress declares that, in fur24 therance of maintaining the national economy at a high

25 level—
1544

•HR 2517 IH

1 ‘‘(1) the assistance authorized by this Act

2 should be made available to both rural and urban

3 areas;

4 ‘‘(2) such assistance should be made available

5 for planning for economic development prior to the

6 actual occurrences of economic distress in order to

7 avoid such condition; and

8 ‘‘(3) such assistance should be used for long9 term economic rehabilitation in areas where long10 term economic deterioration has occurred or is tak11 ing place.

12 ‘‘TITLE II—GRANTS FOR PUBLIC

13 WORKS AND DEVELOPMENT

14 FACILITIES

15 ‘‘SEC. 201. DIRECT AND SUPPLEMENTARY GRANTS.

16 ‘‘(a) IN GENERAL.—Upon the application of any eli17 gible recipient, the Administrator may—

18 ‘‘(1) make direct grants for the acquisition or

19 development of land and improvements for public

20 works, public service, or development facility usage,

21 and the acquisition, design and engineering, con22 struction, rehabilitation, alteration, expansion, or im23 provement of such facilities, including related ma24 chinery and equipment, within an area described in

25 section 502(a), if the Administrator finds that—
1545

•HR 2517 IH

1 ‘‘(A) the project for which financial assist2 ance is sought will directly or indirectly—

3 ‘‘(i) tend to improve the opportunities,

4 in the area where such project is or will be

5 located, for the successful establishment or

6 expansion of industrial or commercial

7 plants or facilities;

8 ‘‘(ii) otherwise assist in the creation

9 of additional long-term employment oppor10 tunities for such area; or

11 ‘‘(iii) primarily benefit the long-term

12 unemployed and members of low-income

13 families;

14 ‘‘(B) the project for which a grant is re15 quested will fulfill a pressing need of the area,

16 or part thereof, in which it is, or will be, lo17 cated; and

18 ‘‘(C) the area for which a project is to be

19 undertaken has an approved investment strat20 egy as provided by section 503 and such project

21 is consistent with such strategy;

22 ‘‘(2) make supplementary grants in order to en23 able the States and other entities within areas de24 scribed in section 502(a) to take maximum advan25 tage of designated Federal grant-in-aid programs (as
1546

•HR 2517 IH

1 defined in subsection (c)(4)), direct grants-in-aid au2 thorized under this section, and Federal grant-in-aid

3 programs authorized by the Watershed Protection

4 and Flood Prevention Act (68 Stat. 666), and the

5 11 watersheds authorized by the Flood Control Act

6 of December 22, 1944 (58 Stat. 887), for which

7 they are eligible but for which, because of their eco8 nomic situation, they cannot supply the required

9 matching share.

10 ‘‘(b) COST SHARING.—Subject to subsection (c), the

11 amount of any direct grant under this subsection for any

12 project shall not exceed 50 percent of the cost of such

13 project.

14 ‘‘(c) REQUIREMENTS APPLICABLE TO SUPPLE15 MENTARY GRANTS.—

16 ‘‘(1) AMOUNT OF SUPPLEMENTARY GRANTS.—

17 ‘‘(A) IN GENERAL.—Except as provided by

18 subparagraph (B), the amount of any supple19 mentary grant under this section for any

20 project shall not exceed the applicable percent21 age established by regulations promulgated by

22 the Administrator, but in no event shall the

23 non-Federal share of the aggregate cost of any

24 such project (including assumptions of debt) be

25 less than 20 percent of such cost.
1547

•HR 2517 IH

1 ‘‘(B) EXCEPTION.—Notwithstanding sub2 paragraph (A), in the case of an Indian tribe,

3 a State (or a political subdivision of the State),

4 or a community development corporation which

5 the Administrator determines has exhausted its

6 effective taxing and borrowing capacity, the Ad7 ministrator shall reduce the non-Federal share

8 below the percentage specified in subparagraph

9 (A) or shall waive the non-Federal share in the

10 case of such a grant for a project in an area

11 described in section 502(a)(4).

12 ‘‘(2) FORM OF SUPPLEMENTARY GRANTS.—

13 Supplementary grants shall be made by the Admin14 istrator, in accordance with such regulations as the

15 Administrator may prescribe, by increasing the

16 amounts of direct grants authorized under this sec17 tion or by the payment of funds appropriated under

18 this Act to the heads of the departments, agencies,

19 and instrumentalities of the Federal Government re20 sponsible for the administration of the applicable

21 Federal programs.

22 ‘‘(3) FEDERAL SHARE LIMITATIONS SPECIFIED

23 IN OTHER LAWS.—Notwithstanding any requirement

24 as to the amount or sources of non-Federal funds

25 that may otherwise be applicable to the Federal pro-
1548

•HR 2517 IH

1 gram involved, funds provided under this subsection

2 shall be used for the sole purpose of increasing the

3 Federal contribution to specific projects in areas de4 scribed in section 502(a) under such programs above

5 the fixed maximum portion of the cost of such

6 project otherwise authorized by the applicable law.

7 ‘‘(4) DESIGNATED FEDERAL GRANT-IN-AID

8 PROGRAMS DEFINED.—In this subsection, the term

9 ‘designated Federal grant-in-aid programs’ means

10 such existing or future Federal grant-in-aid pro11 grams assisting in the construction or equipping of

12 facilities as the Administrator may, in furtherance of

13 the purposes of this Act, designate as eligible for al14 location of funds under this section.

15 ‘‘(5) CONSIDERATION OF RELATIVE NEED IN

16 DETERMINING AMOUNT.—In determining the

17 amount of any supplementary grant available to any

18 project under this section, the Administrator shall

19 take into consideration the relative needs of the area

20 and the nature of the projects to be assisted.

21 ‘‘(d) REGULATIONS.—The Administrator shall pre22 scribe rules, regulations, and procedures to carry out this

23 section which will assure that adequate consideration is

24 given to the relative needs of eligible areas. In prescribing
1549

•HR 2517 IH

1 such rules, regulations, and procedures the Administrator

2 shall consider among other relevant factors—

3 ‘‘(1) the severity of the rates of unemployment

4 in the eligible areas and the duration of such unem5 ployment; and

6 ‘‘(2) the income levels of families and the extent

7 of underemployment in eligible areas.

8 ‘‘(e) REVIEW AND COMMENT UPON PROJECTS BY

9 LOCAL GOVERNMENTAL AUTHORITIES.—The Adminis10 trator shall prescribe regulations which will assure that

11 appropriate local governmental authorities have been given

12 a reasonable opportunity to review and comment upon

13 proposed projects under this section.

14 ‘‘SEC. 202. CONSTRUCTION COST INCREASES.

15 ‘‘In any case where a grant (including a supplemental

16 grant) has been made by the Administrator under this

17 title for a project and after such grant has been made

18 but before completion of the project, the cost of such

19 project based upon the designs and specifications which

20 were the basis of the grant has been increased because

21 of increases in costs, the amount of such grant may be

22 increased by an amount equal to the percentage increase,

23 as determined by the Administrator, in such costs, but in

24 no event shall the percentage of the Federal share of such

25 project exceed that originally provided for in such grant.
1550

•HR 2517 IH

1 ‘‘SEC. 203. USE OF FUNDS IN PROJECTS CONSTRUCTED

2 UNDER PROJECTED COST.

3 ‘‘In any case where a grant (including a supplemental

4 grant) has been made by the Administrator under this

5 title for a project, and after such grant has been made

6 but before completion of the project, the cost of such

7 project based upon the designs and specifications which

8 were the basis of the grant has decreased because of de9 creases in costs, such underrun funds may be used to im10 prove the project either directly or indirectly as deter11 mined by the Administrator.

12 ‘‘SEC. 204. CHANGED PROJECT CIRCUMSTANCES.

13 ‘‘In any case where a grant (including a supplemental

14 grant) has been made by the Administrator under this

15 title for a project, and after such grant has been made

16 but before completion of the project, the purpose or scope

17 of such project based upon the designs and specifications

18 which were the basis of the grant has changed, the Admin19 istrator may approve the use of grant funds on such

20 changed project if the Administrator determines that such

21 changed project meets the requirements of this title and

22 that such changes are necessary to enhance economic de23 velopment in the area.
1551

•HR 2517 IH

1 ‘‘TITLE III—SPECIAL ECONOMIC

2 DEVELOPMENT AND ADJUST3 MENT ASSISTANCE

4 ‘‘SEC. 301. STATEMENT OF PURPOSE.

5 ‘‘The purpose of this title to provide special economic

6 development and adjustment assistance programs to help

7 State and local areas meet special needs arising from ac8 tual or threatened severe unemployment arising from eco9 nomic dislocation (including unemployment arising from

10 actions of the Federal Government, from defense base clo11 sures and realignments, and from compliance with envi12 ronmental requirements which remove economic activities

13 from a locality) and economic adjustment problems result14 ing from severe changes in economic conditions (including

15 long-term economic deterioration), and to encourage coop16 erative intergovernmental action to prevent or solve eco17 nomic adjustment problems. Nothing in this title is in18 tended to replace the efforts of the economic adjustment

19 program of the Department of Defense.

20 ‘‘SEC. 302. SPECIAL ECONOMIC DEVELOPMENT AND AD21 JUSTMENT ASSISTANCE.

22 ‘‘(a) IN GENERAL.—The Administrator is authorized

23 to make grants directly to any eligible recipient in an area

24 which the Administrator determines, in accordance with
1552

•HR 2517 IH

1 criteria to be established by the Administrator by regula2 tion—

3 ‘‘(1) has experienced, or may reasonably be

4 foreseen to be about to experience, a special need to

5 meet an expected rise in unemployment, or other

6 economic adjustment problems (including those

7 caused by any action or decision of the Federal Gov8 ernment); or

9 ‘‘(2) has demonstrated long-term economic de10 terioration.

11 ‘‘(b) PURPOSES.—Amounts from grants under sub12 section (a) shall be used by an eligible recipient to carry

13 out or develop an investment strategy which—

14 ‘‘(1) meets the requirements of section 503; and

15 ‘‘(2) is approved by the Administrator.

16 ‘‘(c) TYPES OF ASSISTANCE.—In carrying out an in17 vestment strategy using amounts from grants under sub18 section (a), an eligible recipient may provide assistance for

19 any of the following:

20 ‘‘(1) Public facilities.

21 ‘‘(2) Public services.

22 ‘‘(3) Business development.

23 ‘‘(4) Planning.

24 ‘‘(5) Research and technical assistance.

25 ‘‘(6) Administrative expenses.
1553

•HR 2517 IH

1 ‘‘(7) Training.

2 ‘‘(8) Relocation of individuals and businesses.

3 ‘‘(9) Other assistance which demonstrably fur4 thers the economic adjustment objectives of this

5 title.

6 ‘‘(d) DIRECT EXPENDITURE OR REDISTRIBUTION BY

7 RECIPIENT.—Amounts from grants under subsection (a)

8 may be used in direct expenditures by the eligible recipient

9 or through redistribution by the eligible recipient to public

10 and private entities in grants, loans, loan guarantees, pay11 ments to reduce interest on loan guarantees, or other ap12 propriate assistance, but no grant shall be made by an

13 eligible recipient to a private profit-making entity.

14 ‘‘(e) COORDINATION.—The Administrator to the ex15 tent practicable shall coordinate the activities relating to

16 the requirements for investment strategies and making

17 grants and loans under this title with other Federal pro18 grams, States, economic development districts, and other

19 appropriate planning and development organizations.

20 ‘‘(f) BASE CLOSINGS AND REALIGNMENTS.—

21 ‘‘(1) LOCATION OF PROJECTS.—In any case in

22 which the Administrator determines a need for as23 sistance under subsection (a) due to the closure or

24 realignment of a military installation, the Adminis25 trator may make such assistance available for
1554

•HR 2517 IH

1 projects to be carried out on the military installation

2 and for projects to be carried out in communities ad3 versely affected by the closure or realignment.

4 ‘‘(2) INTEREST IN PROPERTY.—Notwithstand5 ing any other provision of law, the Administrator

6 may provide to an eligible recipient any assistance

7 available under this Act for a project to be carried

8 out on a military installation that is closed or sched9 uled for closure or realignment without requiring

10 that the eligible recipient have title to the property

11 or a leasehold interest in the property for any speci12 fied term.

13 ‘‘SEC. 303. ANNUAL REPORTS BY RECIPIENT.

14 ‘‘Each eligible recipient which receives assistance

15 under this title from the Administrator shall annually dur16 ing the period such assistance continue to make a full and

17 complete report to the Administrator, in such manner as

18 the Administrator shall prescribe, and such report shall

19 contain an evaluation of the effectiveness of the economic

20 assistance provided under this title in meeting the need

21 it was designed to alleviate and the purposes of this title.

22 ‘‘SEC. 304. SALE OF FINANCIAL INSTRUMENTS IN REVOLV23 ING LOAN FUNDS.

24 ‘‘Any loan, loan guarantee, equity, or other financial

25 instrument in the portfolio of a revolving loan fund, in-
1555

•HR 2517 IH

1 cluding any financial instrument made available using

2 amounts from a grant made before the effective date speci3 fied in section 802, may be sold, encumbered, or pledged

4 at the discretion of the grantee of the Fund, to a third

5 party provided that the net proceeds of the transaction—

6 ‘‘(1) shall be deposited into the Fund and may

7 only be used for activities which are consistent with

8 the purposes of this title; and

9 ‘‘(2) shall be subject to the financial manage10 ment, accounting, reporting, and auditing standards

11 which were originally applicable to the grant.

12 ‘‘SEC. 305. TREATMENT OF REVOLVING LOAN FUNDS.

13 ‘‘(a) IN GENERAL.—Amounts from grants made

14 under this title which are used by an eligible recipient to

15 establish a revolving loan fund shall not be treated, except

16 as provided by subsection (b), as amounts derived from

17 Federal funds for the purposes of any Federal law after

18 such amounts are loaned from the fund to a borrower and

19 repaid to the fund.

20 ‘‘(b) EXCEPTIONS.—Amounts described in subsection

21 (a) which are loaned from a revolving loan fund to a bor22 rower and repaid to the fund—

23 ‘‘(1) may only be used for activities which are

24 consistent with the purposes of this title; and
1556

•HR 2517 IH

1 ‘‘(2) shall be subject to the financial manage2 ment, accounting, reporting, and auditing standards

3 which were originally applicable to the grant.

4 ‘‘(c) REGULATIONS.—Not later than 30 days after

5 the effective date specified in section 802, the Adminis6 trator shall issue regulations to carry out subsection (a).

7 ‘‘(d) PUBLIC REVIEW AND COMMENT.—Before issu8 ing any final guidelines or administrative manuals govern9 ing the operation of revolving loan funds established using

10 amounts from grants under this title, the Administrator

11 shall provide reasonable opportunity for public review of

12 and comment on such guidelines and administrative

13 manuals.

14 ‘‘(e) APPLICABILITY TO PAST GRANTS.—The re15 quirements of this section applicable to amounts from

16 grants made under this title shall also apply to amounts

17 from grants made, before the effective date specified in

18 section 802, under title I of this Act, as in effect on the

19 day before such effective date.

20 ‘‘TITLE IV—TECHNICAL ASSIST21 ANCE, RESEARCH, AND IN22 FORMATION

23 ‘‘SEC. 401. TECHNICAL ASSISTANCE.

24 ‘‘(a) IN GENERAL.—In carrying out its duties under

25 this Act, the Administrator may provide technical assist-
1557

•HR 2517 IH

1 ance which would be useful in alleviating or preventing

2 conditions of excessive unemployment or

3 underemployment to areas which the Administrator finds

4 have substantial need for such assistance. Such assistance

5 shall include project planning and feasibility studies, man6 agement and operational assistance, establishment of busi7 ness outreach centers, and studies evaluating the needs

8 of, and development potentialities for, economic growth of

9 such areas.

10 ‘‘(b) PROCEDURES AND TERMS.—

11 ‘‘(1) MANNER OF PROVIDING ASSISTANCE.—As12 sistance may be provided by the Administrator

13 through—

14 ‘‘(A) members of the Administrator’s staff;

15 ‘‘(B) the payment of funds authorized for

16 this section to departments or agencies of the

17 Federal Government;

18 ‘‘(C) the employment of private individ19 uals, partnerships, firms, corporations, or suit20 able institutions under contracts entered into

21 for such purposes; or

22 ‘‘(D) grants-in-aid to appropriate public or

23 private nonprofit State, area, district, or local

24 organizations.
1558

•HR 2517 IH

1 ‘‘(2) REPAYMENT TERMS.—The Administrator,

2 in the Administrator’s discretion, may require the

3 repayment of assistance provided under this sub4 section and prescribe the terms and conditions of

5 such repayment.

6 ‘‘(c) GRANTS COVERING ADMINISTRATIVE EX7 PENSES.—

8 ‘‘(1) IN GENERAL.—The Administrator may

9 make grants to defray not to exceed 50 percent of

10 the administrative expenses of organizations which

11 the Administrator determines to be qualified to re12 ceive grants-in-aid under subsections (a) and (b); ex13 cept that in the case of a grant under this sub14 section to an Indian tribe, the Administrator is au15 thorized to defray up to 100 percent of such ex16 penses.

17 ‘‘(2) DETERMINATION OF NON-FEDERAL

18 SHARE.—In determining the amount of the non-Fed19 eral share of such costs or expenses, the Adminis20 trator shall give due consideration to all contribu21 tions both in cash and in kind, fairly evaluated, in22 cluding contributions of space, equipment, and serv23 ices.

24 ‘‘(3) USE OF GRANTS WITH PLANNING

25 GRANTS.—Where practicable, grants-in-aid author-
1559

•HR 2517 IH

1 ized under this subsection shall be used in conjunc2 tion with other available planning grants to assure

3 adequate and effective planning and economical use

4 of funds.

5 ‘‘(d) AVAILABILITY OF TECHNICAL INFORMATION;

6 FEDERAL PROCUREMENT.—The Administrator shall aid

7 areas described in section 502(a) and other areas by fur8 nishing to interested individuals, communities, industries,

9 and enterprises within such areas any assistance, technical

10 information, market research, or other forms of assist11 ance, information, or advice which would be useful in alle12 viating or preventing conditions of excessive unemploy13 ment or underemployment within such areas. The Admin14 istrator may furnish the procurement divisions of the var15 ious departments, agencies, and other instrumentalities of

16 the Federal Government with a list containing the names

17 and addresses of business firms which are located in areas

18 described in section 502(a) and which are desirous of ob19 taining Government contracts for the furnishing of sup20 plies or services, and designating the supplies and services

21 such firms are engaged in providing.

22 ‘‘SEC. 402. ECONOMIC DEVELOPMENT PLANNING.

23 ‘‘(a) DIRECT GRANTS.—

24 ‘‘(1) IN GENERAL.—The Administrator may

25 make, upon application of any State, or city, or
1560

•HR 2517 IH

1 other political subdivision of a State, or sub-State

2 planning and development organization (including an

3 area described in section 502(a) or an economic de4 velopment district), direct grants to such State, city,

5 or other political subdivision, or organization to pay

6 up to 50 percent of the cost for economic develop7 ment planning.

8 ‘‘(2) PLANNING PROJECTS SPECIFICALLY IN9 CLUDED.—The planning for cities, other political

10 subdivisions, and sub-State planning and develop11 ment organizations (including areas described in sec12 tion 502(a) and economic development districts) as13 sisted under this section shall include systematic ef14 forts to reduce unemployment and increase incomes.

15 ‘‘(3) PLANNING PROCESS.—The planning shall

16 be a continuous process involving public officials and

17 private citizens in analyzing local economies, defin18 ing development goals, determining project opportu19 nities, and formulating and implementing a develop20 ment program.

21 ‘‘(4) COORDINATION OF ASSISTANCE UNDER

22 SECTION 401(c).—The assistance available under

23 this section may be provided in addition to assist24 ance available under section 401(c) but shall not

25 supplant such assistance.
1561

•HR 2517 IH

1 ‘‘(b) COMPLIANCE WITH REVIEW PROCEDURE.—The

2 planning assistance authorized under this title shall be

3 used in conjunction with any other available Federal plan4 ning assistance to assure adequate and effective planning

5 and economical use of funds.

6 ‘‘TITLE V—ELIGIBILITY AND

7 INVESTMENT STRATEGIES

8 ‘‘PART A—ELIGIBILITY

9 ‘‘SEC. 501. ELIGIBLE RECIPIENT DEFINED.

10 ‘‘In this Act, the term ‘eligible recipient’ means an

11 area described in section 502(a), an economic development

12 district designated under section 510, an Indian tribe, a

13 State, a city or other political subdivision of a State, or

14 a consortium of such political subdivisions, or a public or

15 private nonprofit organization or association acting in co16 operation with officials of such political subdivisions.

17 ‘‘SEC. 502. AREA ELIGIBILITY.

18 ‘‘(a) CERTIFICATION.—In order to be eligible for as19 sistance under title II, an applicant seeking assistance to

20 undertake a project in an area shall certify, as part of

21 an application for such assistance, that the area on the

22 date of submission of such application meets 1 or more

23 of the following criteria:

24 ‘‘(1) The area has a per capita income of 80

25 percent or less of the national average.
1562

•HR 2517 IH

1 ‘‘(2) The area has an unemployment rate 1 per2 cent above the national average percentage for the

3 most recent 24-month period for which statistics are

4 available.

5 ‘‘(3) The area has experienced or is about to

6 experience a sudden economic dislocation resulting

7 in job loss that is significant both in terms of the

8 number of jobs eliminated and the effect upon the

9 employment rate of the area.

10 ‘‘(4) The area is a community or neighborhood

11 (defined without regard to political or other subdivi12 sions or boundaries) which the Administrator deter13 mines has one or more of the following conditions:

14 ‘‘(A) A large concentration of low-income

15 persons.

16 ‘‘(B) Rural areas having substantial out17 migration.

18 ‘‘(C) Substantial unemployment.

19 ‘‘(b) DOCUMENTATION.—A certification made under

20 subsection (a) shall be supported by Federal data, when

21 available, and in other cases by data available through the

22 State government. Such documentation shall be accepted

23 by the Administrator unless it is determined to be inac24 curate. The most recent statistics available shall be used.
1563

•HR 2517 IH

1 ‘‘(c) PRIOR DESIGNATIONS.—Any designation of a

2 redevelopment area made before the effective date speci3 fied in section 802 shall not be effective after such effec4 tive date.

5 ‘‘SEC. 503. INVESTMENT STRATEGY.

6 ‘‘The Administrator may provide assistance under ti7 tles II and III to an applicant for a project only if the

8 applicant submits to the Administrator, as part of an ap9 plication for such assistance, and the Administrator ap10 proves an investment strategy which—

11 ‘‘(1) identifies the economic development prob12 lems to be addressed using such assistance;

13 ‘‘(2) identifies past, present, and projected fu14 ture economic development investments in the area

15 receiving such assistance and public and private par16 ticipants and sources of funding for such invest17 ments;

18 ‘‘(3) sets forth a strategy for addressing the

19 economic problems identified pursuant to paragraph

20 (1) and describes how the strategy will solve such

21 problems;

22 ‘‘(4) provides a description of the project nec23 essary to implement the strategy, estimates of costs,

24 and timetables; and
1564

•HR 2517 IH

1 ‘‘(5) provides a summary of public and private

2 resources expected to be available for the project.

3 ‘‘SEC. 504. APPROVAL OF PROJECTS.

4 ‘‘Only applications for grants or other assistance

5 under this Act for specific projects shall be approved which

6 are certified by the State representing such applicant and

7 determined by the Administrator—

8 ‘‘(1) to be included in a State investment strat9 egy;

10 ‘‘(2) to have adequate assurance that the

11 project will be properly administered, operated, and

12 maintained; and

13 ‘‘(3) to otherwise meet the requirements for as14 sistance under this Act.

15 ‘‘PART B—ECONOMIC DEVELOPMENT DISTRICTS

16 ‘‘SEC. 510. DESIGNATION OF ECONOMIC DEVELOPMENT

17 DISTRICTS AND ECONOMIC DEVELOPMENT

18 CENTERS.

19 ‘‘(a) IN GENERAL.—In order that economic develop20 ment projects of broader geographic significance may be

21 planned and carried out, the Administrator may—

22 ‘‘(1) designate appropriate ‘economic develop23 ment districts’ within the United States with the

24 concurrence of the States in which such districts will

25 be wholly or partially located, if—
1565

•HR 2517 IH

1 ‘‘(A) the proposed district is of sufficient

2 size or population, and contains sufficient re3 sources, to foster economic development on a

4 scale involving more than a single area de5 scribed in section 502(a);

6 ‘‘(B) the proposed district contains at least

7 1 area described in section 502(a);

8 ‘‘(C) the proposed district contains 1 or

9 more areas described in section 502(a) or eco10 nomic development centers identified in an ap11 proved district investment strategy as having

12 sufficient size and potential to foster the eco13 nomic growth activities necessary to alleviate

14 the distress of the areas described in section

15 502(a) within the district; and

16 ‘‘(D) the proposed district has a district

17 investment strategy which includes adequate

18 land use and transportation planning and con19 tains a specific program for district cooperation,

20 self-help, and public investment and is approved

21 by the State or States affected and by the Ad22 ministrator;

23 ‘‘(2) designate as ‘economic development cen24 ters’, in accordance with such regulations as the Ad-
1566

•HR 2517 IH

1 ministrator shall prescribe, such areas as the Admin2 istrator may deem appropriate, if—

3 ‘‘(A) the proposed center has been identi4 fied and included in an approved district invest5 ment strategy and recommended by the State

6 or States affected for such special designation;

7 ‘‘(B) the proposed center is geographically

8 and economically so related to the district that

9 its economic growth may reasonably be expected

10 to contribute significantly to the alleviation of

11 distress in the areas described in section 502(a)

12 of the district; and

13 ‘‘(C) the proposed center does not have a

14 population in excess of 250,000 according to

15 the most recent Federal census.

16 ‘‘(3) provide financial assistance in accordance

17 with the criteria of this Act, except as may be herein

18 otherwise provided, for projects in economic develop19 ment centers designated under subsection (a)(2),

20 if—

21 ‘‘(A) the project will further the objectives

22 of the investment strategy of the district in

23 which it is to be located;

24 ‘‘(B) the project will enhance the economic

25 growth potential of the district or result in ad-
1567

•HR 2517 IH

1 ditional long-term employment opportunities

2 commensurate with the amount of Federal fi3 nancial assistance requested; and

4 ‘‘(C) the amount of Federal financial as5 sistance requested is reasonably related to the

6 size, population, and economic needs of the dis7 trict;

8 ‘‘(4) subject to the 50 percent non-Federal

9 share required for any project by section 201(c), in10 crease the amount of grant assistance authorized by

11 section 201 for projects within areas described in

12 section 502(a), by an amount not to exceed 10 per13 cent of the aggregate cost of any such project, in ac14 cordance with such regulations as the Administrator

15 shall prescribe if—

16 ‘‘(A) the area described in section 502(a)

17 is situated within a designated economic devel18 opment district and is actively participating in

19 the economic development activities of the dis20 trict; and

21 ‘‘(B) the project is consistent with an ap22 proved investment strategy.

23 ‘‘(b) AUTHORITIES.—In designating economic devel24 opment districts and approving district investment strate-
1568

•HR 2517 IH

1 gies under subsection (a), the Administrator may, under

2 regulations prescribed by the Administrator—

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 Administrator shall by regulation prescribe

17 standards for the termination or modification of economic

18 development districts and economic development centers

19 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-
1569

•HR 2517 IH

1 propriate, designated economic development centers

2 and neighboring counties or communities, which has

3 been designated by the Administrator as an eco4 nomic development district. Such term includes any

5 economic development district designated under sec6 tion 403 of this Act, as in effect on the day before

7 the effective date specified in section 802.

8 ‘‘(2) ECONOMIC DEVELOPMENT CENTER.—The

9 term ‘economic development center’ refers to any

10 area within the United States which has been identi11 fied as an economic development center in an ap12 proved investment strategy and which has been des13 ignated by the Administrator as eligible for financial

14 assistance under this Act in accordance with the

15 provisions of this section.

16 ‘‘(3) LOCAL GOVERNMENT.—The term ‘local

17 government’ means any city, county, town, parish,

18 village, or other general-purpose political subdivision

19 of a State.

20 ‘‘(e) PARTS OF ECONOMIC DEVELOPMENT DISTRICTS

21 NOT WITHIN AREAS DESCRIBED IN SECTION 502(a).—

22 The Administrator is authorized to provide the financial

23 assistance which is available to an area described in sec24 tion 502(a) under this Act to those parts of an economic

25 development district which are not within an area de-
1570

•HR 2517 IH

1 scribed in section 502(a), when such assistance will be of

2 a substantial direct benefit to an area described in section

3 502(a) within such district. Such financial assistance shall

4 be provided in the same manner and to the same extent

5 as is provided in this Act for an area described in section

6 502(a); except that nothing in this subsection shall be con7 strued to permit such parts to receive the increase in the

8 amount of grant assistance authorized in subsection

9 (a)(4).

10 ‘‘TITLE VI—ADMINISTRATION

11 ‘‘SEC. 601. APPOINTMENT OF ASSOCIATE ADMINISTRATOR;

12 FULL TIME EQUIVALENT EMPLOYEES.

13 ‘‘(a) APPOINTMENT.—The Administrator shall carry

14 out the duties vested in the Administrator by this Act act15 ing through an Associate Administrator of the Small Busi16 ness Administration, who shall be appointed by the Presi17 dent by and with the advice and consent of the Senate.

18 ‘‘(b) PAY.—The Associate Administrator shall be

19 compensated by the Federal Government at the rate pre20 scribed for level V of the Executive Schedule under section

21 5316 of title 5, United States Code.

22 ‘‘(c) FULL TIME EQUIVALENT EMPLOYEES.—The

23 Administrator shall assign not to exceed 25 full time

24 equivalent employees of the Small Business Administra25 tion (excluding the Associate Administrator) to assist the
1571

•HR 2517 IH

1 Administrator in the carrying out the duties vested in the

2 Administrator by this Act.

3 ‘‘SEC. 602. REGIONAL COOPERATIVE AGREEMENTS.

4 ‘‘(a) IN GENERAL.—The Administrator shall make

5 grants and carry out such other functions under this Act

6 as the Administrator considers appropriate by entering

7 into cooperative agreements with 1 or more States on a

8 regional basis. Each State entering into such an agree9 ment shall be represented by the chief executive officer

10 of the State.

11 ‘‘(b) TERMS AND CONDITIONS.—A cooperative agree12 ment entered into under subsection (a) shall include such

13 terms and conditions as the Administrator determines are

14 necessary to carry out the provisions of this Act. Such

15 terms and conditions at a minimum shall provide that no

16 decision concerning regional policies or approval of project

17 or grant applications may be made without the consent

18 of the Administrator and a majority of the States partici19 pating in the cooperative agreement.

20 ‘‘(c) PARTICIPATION NOT REQUIRED.—No State

21 shall be required to enter into a cooperative agreement

22 under this section or to participate in any program estab23 lished by this Act.
1572

•HR 2517 IH

1 ‘‘SEC. 603. ADMINISTRATIVE EXPENSES.

2 ‘‘(a) PAYMENT BY STATES.—Fifty percent of the ad3 ministrative expenses incurred by States in participating

4 in a cooperative agreement entered into under section 602

5 shall be paid by such States and the remaining 50 percent

6 of such expenses shall be paid by the Federal Government.

7 ‘‘(b) DETERMINATION OF STATE SHARE.—The share

8 of the administrative expenses to be paid by each State

9 participating in a cooperative agreement shall be deter10 mined by a majority vote of such States. The Adminis11 trator may not participate or vote in such determination.

12 ‘‘(c) DELINQUENT PAYMENTS.—No assistance au13 thorized by this Act shall be furnished to any State or

14 to any political subdivision or resident of a State, nor shall

15 the State participate or vote in any decision described in

16 section 602(b), while such State is delinquent in the pay17 ment of such State’s share of the administrative expenses

18 described in subsection (a).

19 ‘‘SEC. 604. FEDERAL SHARE.

20 ‘‘Except as otherwise expressly provided by this Act,

21 the Federal share of the cost of any project funded with

22 amounts made available under this Act shall not exceed

23 50 percent of such cost.

24 ‘‘SEC. 605. COOPERATION OF FEDERAL AGENCIES.

25 ‘‘Each Federal department and agency, in accordance

26 with applicable laws and within the limits of available
1573

•HR 2517 IH

1 funds, shall cooperate with the Administrator in order to

2 assist the Administrator in carrying out the functions of

3 the Administrator.

4 ‘‘SEC. 606. CONSULTATION WITH OTHER PERSONS AND

5 AGENCIES.

6 ‘‘(a) CONSULTATION ON PROBLEMS RELATING TO

7 EMPLOYMENT.—The Administrator is authorized from

8 time to time to call together and confer with any persons,

9 including representatives of labor, management, agri10 culture, and government, who can assist in meeting the

11 problems of area and regional unemployment or

12 underemployment.

13 ‘‘(b) CONSULTATION ON ADMINISTRATION OF ACT.—

14 The Administrator may make provisions for such consulta15 tion with interested departments and agencies as the Ad16 ministrator may deem appropriate in the performance of

17 the functions vested in the Administrator by this Act.

18 ‘‘SEC. 607. ADMINISTRATION, OPERATION, AND MAINTE19 NANCE.

20 ‘‘No Federal assistance shall be approved under this

21 Act unless the Administrator is satisfied that the project

22 for which Federal assistance is granted will be properly

23 and efficiently administered, operated, and maintained.
1574

•HR 2517 IH

1 ‘‘TITLE VII—MISCELLANEOUS

2 ‘‘SEC. 701. POWERS OF ADMINISTRATOR.

3 ‘‘(a) IN GENERAL.—In performing the Administra4 tor’s duties under this Act, the Administrator is author5 ized to—

6 ‘‘(1) adopt, alter, and use a seal, which shall be

7 judicially noticed;

8 ‘‘(2) subject to the civil-service and classifica9 tion laws, select, employ, appoint, and fix the com10 pensation of such personnel as may be necessary to

11 carry out the provisions of this Act;

12 ‘‘(3) hold such hearings, sit and act at such

13 times and places, and take such testimony, as the

14 Administrator may deem advisable;

15 ‘‘(4) request directly from any executive depart16 ment, bureau, agency, board, commission, office,

17 independent establishment, or instrumentality infor18 mation, suggestions, estimates, and statistics needed

19 to carry out the purposes of this Act; and each de20 partment, bureau, agency, board, commission, office,

21 establishment, or instrumentality is authorized to

22 furnish such information, suggestions, estimates,

23 and statistics directly to the Administrator;

24 ‘‘(5) under regulations prescribed by the Ad25 ministrator, assign or sell at public or private sale,
1575

•HR 2517 IH

1 or otherwise dispose of for cash or credit, in the Ad2 ministrator’s discretion and upon such terms and

3 conditions and for such consideration as the Admin4 istrator determines to be reasonable, any evidence of

5 debt, contract, claim, personal property, or security

6 assigned to or held by the Administrator in connec7 tion with assistance extended under this Act, and

8 collect or compromise all obligations assigned to or

9 held by the Administrator in connection with such

10 assistance until such time as such obligations may

11 be referred to the Attorney General for suit or col12 lection;

13 ‘‘(6) deal with, complete, renovate, improve,

14 modernize, insure, rent, or sell for cash or credit,

15 upon such terms and conditions and for such consid16 eration as the Administrator determines to be rea17 sonable, any real or personal property conveyed to,

18 or otherwise acquired by the Administrator in con19 nection with assistance extended under this Act;

20 ‘‘(7) pursue to final collection, by way of com21 promise or other administrative action, prior to ref22 erence to the Attorney General, all claims against

23 third parties assigned to the Administrator in con24 nection with assistance extended this Act;
1576

•HR 2517 IH

1 ‘‘(8) acquire, in any lawful manner and in ac2 cordance with the requirements of the Federal Prop3 erty and Administrative Services Act of 1949, any

4 property (real, personal, or mixed, tangible or intan5 gible), whenever necessary or appropriate to the con6 duct of the activities authorized under this Act;

7 ‘‘(9) in addition to any powers, functions, privi8 leges, and immunities otherwise vested in the Ad9 ministrator, take any action, including the procure10 ment of the services of attorneys by contract, deter11 mined by the Administrator to be necessary or desir12 able in making, purchasing, servicing, compromising,

13 modifying, liquidating, or otherwise administratively

14 dealing with assets held in connection with financial

15 assistance extended under this Act;

16 ‘‘(10) employ experts and consultants or organi17 zations as authorized by section 3109 of title 5,

18 United States Code, compensate individuals so em19 ployed at rates not in excess of $100 per diem, in20 cluding travel time, and allow them, while away from

21 their homes or regular places of business, travel ex22 penses (including per diem in lieu of subsistence) as

23 authorized by section 5703 of title 5, United States

24 Code, for persons in the Government service em25 ployed intermittently, while so employed, except that
1577

•HR 2517 IH

1 contracts for such employment may be renewed an2 nually;

3 ‘‘(11) sue and be sued in any court of record

4 of a State having general jurisdiction or in any Unit5 ed States district court, and jurisdiction is conferred

6 upon such district court to determine such con7 troversies without regard to the amount in con8 troversy; but no attachment, injunction, garnish9 ment, or other similar process, mesne or final, shall

10 be issued against the Administrator or the Adminis11 trator’s property;

12 ‘‘(12) make discretionary grants, pursuant to

13 authorities otherwise available to the Administrator

14 under this Act and without regard to the require15 ments of section 504, to implement significant re16 gional initiatives, to take advantage of special devel17 opment opportunities, or to respond to emergency

18 economic distress in a region from the funds with19 held from distribution by the Administrator; except

20 that the aggregate amount of such discretionary

21 grants in any fiscal year may not exceed 10 percent

22 of the amounts appropriated under title VIII for

23 such fiscal year;

24 ‘‘(13) allow a State to use not to exceed 5 per25 cent of the total of amounts received by the State
1578

•HR 2517 IH

1 in a fiscal year in grants under this Act for reason2 able expenses incurred by the State in administering

3 such amounts; and

4 ‘‘(14) establish such rules, regulations, and pro5 cedures as the Administrator considers appropriate

6 in carrying out the provisions of this Act.

7 ‘‘(b) DEFICIENCY JUDGMENTS.—The authority

8 under subsection (a)(7) to pursue claims shall include the

9 authority to obtain deficiency judgments or otherwise in

10 the case of mortgages assigned to the Administrator.

11 ‘‘(c) INAPPLICABILITY OF CERTAIN OTHER RE12 QUIREMENTS.—Section 3709 of the Revised Statutes of

13 the United States shall not apply to any contract of haz14 ard insurance or to any purchase or contract for services

15 or supplies on account of property obtained by the Admin16 istrator as a result of assistance extended under this Act

17 if the premium for the insurance or the amount of the

18 insurance does not exceed $1,000.

19 ‘‘(d) POWERS OF CONVEYANCE AND EXECUTION.—

20 The power to convey and to execute, in the name of the

21 Administrator, deeds of conveyance, deeds of release, as22 signments and satisfactions of mortgages, and any other

23 written instrument relating to real or personal property

24 or any interest therein acquired by the Administrator pur25 suant to the provisions of this Act may be exercised by
1579

•HR 2517 IH

1 the Administrator, or by any officer or agent appointed

2 by the Administrator for such purpose, without the execu3 tion of any express delegation of power or power of attor4 ney.

5 ‘‘SEC. 702. ESTABLISHMENT OF CLEARINGHOUSE.

6 ‘‘In carrying out the Administrator’s duties under

7 this Act, the Administrator shall ensure that the Small

8 Business Administration—

9 ‘‘(1) serves as a central information clearing10 house on matters relating to economic development,

11 economic adjustment, disaster recovery, and defense

12 conversion programs and activities of the Federal

13 and State governments, including political subdivi14 sions of the States; and

15 ‘‘(2) helps potential and actual applicants for

16 economic development, economic adjustment, disas17 ter recovery, and defense conversion assistance

18 under Federal, State, and local laws in locating and

19 applying for such assistance, including financial and

20 technical assistance.

21 ‘‘SEC. 703. PERFORMANCE MEASURES.

22 ‘‘The Administrator shall establish performance

23 measures for grants and other assistance provided under

24 this Act. Such performance measures shall be used to
1580

•HR 2517 IH

1 evaluate project proposals and conduct evaluations of

2 projects receiving such assistance.

3 ‘‘SEC. 704. MAINTENANCE OF STANDARDS.

4 ‘‘The Administrator shall continue to implement and

5 enforce the provisions of section 712 of this Act, as in

6 effect on the day before the effective date specified in sec7 tion 802.

8 ‘‘SEC. 705. TRANSFER OF FUNCTIONS.

9 ‘‘The functions, powers, duties, and authorities and

10 the assets, funds, contracts, loans, liabilities, commit11 ments, authorizations, allocations, and records which are

12 vested in or authorized to be transferred to the Secretary

13 of the Treasury under section 29(b) of the Area Redevel14 opment Act, and all functions, powers, duties, and authori15 ties under section 29(c) of such Act are hereby vested in

16 the Administrator.

17 ‘‘SEC. 706. DEFINITION OF STATE.

18 ‘‘In this Act, the terms ‘State’, ‘States’, and ‘United

19 States’ include the several States, the District of Colum20 bia, Puerto Rico, the Virgin Islands, American Samoa,

21 Guam, the Marshall Islands, Micronesia, and the North22 ern Mariana Islands.

23 ‘‘SEC. 707. ANNUAL REPORT TO CONGRESS.

24 ‘‘The Administrator shall transmit to Congress a

25 comprehensive and detailed annual report of the Adminis-
1581

•HR 2517 IH

1 trator’s operations under this Act for each fiscal year be2 ginning with the fiscal year ending September 30, 1996.

3 Such report shall be printed and shall be transmitted to

4 Congress not later than April 1 of the year following the

5 fiscal year with respect to which such report is made.

6 ‘‘SEC. 708. USE OF OTHER FACILITIES.

7 ‘‘(a) DELEGATION OF FUNCTIONS TO OTHER FED8 ERAL DEPARTMENTS AND AGENCIES.—The Adminis9 trator may delegate to the heads of other departments and

10 agencies of the Federal Government any of the Adminis11 trator’s functions, powers, and duties under this Act as

12 the Administrator may deem appropriate, and to authorize

13 the redelegation of such functions, powers, and duties by

14 the heads of such departments and agencies.

15 ‘‘(b) DEPARTMENT AND AGENCY EXECUTION OF

16 DELEGATED AUTHORITY.—Departments and agencies of

17 the Federal Government shall exercise their powers, du18 ties, and functions in such manner as will assist in carry19 ing out the objectives of this Act.

20 ‘‘(c) TRANSFER BETWEEN DEPARTMENTS.—Funds

21 authorized to be appropriated under this Act may be

22 transferred between departments and agencies of the Gov23 ernment, if such funds are used for the purposes for which

24 they are specifically authorized and appropriated.
1582

•HR 2517 IH

1 ‘‘(d) FUNDS TRANSFERRED FROM OTHER DEPART2 MENTS AND AGENCIES.—In order to carry out the objec3 tives of this Act, the Administrator may accept transfers

4 of funds from other departments and agencies of the Fed5 eral Government if the funds are used for the purposes

6 for which (and in accordance with the terms under which)

7 the funds are specifically authorized and appropriated.

8 Such transferred funds shall remain available until ex9 pended, and may be transferred to and merged with the

10 appropriations under the heading ‘salaries and expenses’

11 by the Administrator to the extent necessary to administer

12 the program.

13 ‘‘SEC. 709. EMPLOYMENT OF EXPEDITERS AND ADMINIS14 TRATIVE EMPLOYEES.

15 ‘‘No financial assistance shall be extended by the Ad16 ministrator under this Act to any business enterprise un17 less the owners, partners, or officers of such business en18 terprise—

19 ‘‘(1) certify to the Administrator the names of

20 any attorneys, agents, and other persons engaged by

21 or on behalf of such business enterprise for the pur22 pose of expediting applications made to the Adminis23 trator for assistance of any sort, under this Act, and

24 the fees paid or to be paid to any such person; and
1583

•HR 2517 IH

1 ‘‘(2) execute an agreement binding such busi2 ness enterprise, for a period of 2 years after such

3 assistance is rendered by the Administrator to such

4 business enterprise, to refrain from employing, ten5 dering any office or employment to, or retaining for

6 professional services, any person who, on the date

7 such assistance or any part thereof was rendered, or

8 within the 1-year period ending on such date, shall

9 have served as an officer, attorney, agent, or em10 ployee, occupying a position or engaging in activities

11 which the Administrator determines involves discre12 tion with respect to the granting of assistance under

13 this Act.

14 ‘‘SEC. 710. MAINTENANCE OF RECORDS OF APPROVED AP15 PLICATIONS FOR FINANCIAL ASSISTANCE;

16 PUBLIC INSPECTION.

17 ‘‘(a) MAINTENANCE OF RECORD REQUIRED.—The

18 Administrator shall maintain as a permanent part of the

19 records of the Small Business Administration a list of ap20 plications approved for financial assistance under this Act,

21 which shall be kept available for public inspection during

22 the regular business hours of the Small Business Adminis23 tration.
1584

•HR 2517 IH

1 ‘‘(b) POSTING TO LIST.—The following information

2 shall be posted in such list as soon as each application

3 is approved:

4 ‘‘(1) The name of the applicant and, in the case

5 of corporate applications, the names of the officers

6 and directors thereof.

7 ‘‘(2) The amount and duration of the financial

8 assistance for which application is made.

9 ‘‘(3) The purposes for which the proceeds of the

10 financial assistance are to be used.

11 ‘‘SEC. 711. RECORDS AND AUDIT.

12 ‘‘(a) RECORDKEEPING AND DISCLOSURE REQUIRE13 MENTS.—Each recipient of assistance under this Act shall

14 keep such records as the Administrator shall prescribe, in15 cluding records which fully disclose the amount and the

16 disposition by such recipient of the proceeds of such assist17 ance, the total cost of the project or undertaking in con18 nection with which such assistance is given or used, and

19 the amount and nature of that portion of the cost of the

20 project or undertaking supplied by other sources, and such

21 other records as will facilitate an effective audit.

22 ‘‘(b) ACCESS TO BOOKS FOR EXAMINATION AND

23 AUDIT.—The Administrator and the Comptroller General

24 of the United States, or any of their duly authorized rep25 resentatives, shall have access for the purpose of audit and
1585

•HR 2517 IH

1 examination to any books, documents, papers, and records

2 of the recipient that are pertinent to assistance received

3 under this Act.

4 ‘‘SEC. 712. PROHIBITION AGAINST A STATUTORY CON5 STRUCTION WHICH MIGHT CAUSE DIMINU6 TION IN OTHER FEDERAL ASSISTANCE.

7 ‘‘All financial and technical assistance authorized

8 under this Act shall be in addition to any Federal assist9 ance previously authorized, and no provision of this Act

10 shall be construed as authorizing or permitting any reduc11 tion or diminution in the proportional amount of Federal

12 assistance to which any State or other entity eligible under

13 this Act would otherwise be entitled under the provisions

14 of any other Act.

15 ‘‘SEC. 713. ACCEPTANCE OF APPLICANTS’ CERTIFICATIONS.

16 ‘‘The Administrator may accept, when deemed appro17 priate, the applicants’ certifications to meet the require18 ments of this Act.

19 ‘‘TITLE VIII—FUNDING;

20 EFFECTIVE DATE

21 ‘‘SEC. 801. AUTHORIZATION OF APPROPRIATIONS

22 ‘‘There is authorized to be appropriated to carry out

23 this Act $340,000,000 per fiscal year for each of fiscal

24 years 1996, 1997, 1998, 1999, and 2000. Such sums shall

25 remain available until expended.
1586

•HR 2517 IH

1 ‘‘SEC. 802. EFFECTIVE DATE.

2 ‘‘The effective date specified in this section is the

3 abolishment date specified in section 17101(c) of the De4 partment of Commerce Dismantling Act.’’.

5 (b) CONFORMING AMENDMENTS TO TITLE 5.—Sec6 tion 5316 of title 5, United States Code, is amended—

7 (1) by striking ‘‘Associate Administrators of the

8 Small Business Administration (4)’’ and inserting

9 ‘‘Associate Administrators of the Small Business

10 Administration (5)’’; and

11 (2) by striking ‘‘Administrator for Economic

12 Development.’’.

13 (c) GAO STUDY.—On or before December 30, 1996,

14 the Comptroller General shall submit to Congress a plan

15 or plans for consolidating economic development programs

16 throughout the Federal Government. The plan or plans

17 shall focus on, but not be limited to, consolidating pro18 grams included in the Catalogue of Federal Domestic As19 sistance with similar purposes and target populations. The

20 plan or plans shall detail how consolidation can lead to

21 improved grant or program management, improvements in

22 achieving program goals, and reduced costs.

23 SEC. 17202. TECHNOLOGY ADMINISTRATION.

24 (a) TECHNOLOGY ADMINISTRATION.—
1587

•HR 2517 IH

1 (1) GENERAL RULE.—Except as otherwise pro2 vided in this section, the Technology Administration

3 is terminated.

4 (2) OFFICE OF TECHNOLOGY POLICY.—The Of5 fice of Technology Policy is terminated.

6 (b) NATIONAL INSTITUTE OF STANDARDS AND

7 TECHNOLOGY.—

8 (1) REDESIGNATION.—The National Institute

9 of Standards and Technology is hereby redesignated

10 as the National Bureau of Standards, and all ref11 erences to the National Institute of Standards and

12 Technology in Federal law or regulations are deemed

13 to be references to the National Bureau of Stand14 ards.

15 (2) GENERAL RULE.—The National Bureau of

16 Standards (in this subsection referred to as the

17 ‘‘Bureau’’) is transferred to the National Institute

18 for Science and Technology, established under sec19 tion 17207.

20 (3) FUNCTIONS OF DIRECTOR.—Except as oth21 erwise provided in this section or section 17208,

22 upon the transfer under paragraph (2), the Director

23 of the Bureau shall perform all functions relating to

24 the Bureau that, immediately before the effective

25 date specified in section 17209(a), were functions of
1588

•HR 2517 IH

1 the Secretary of Commerce or the Under Secretary

2 of Commerce for Technology.

3 (c) NATIONAL TECHNICAL INFORMATION SERV4 ICE.—All functions of the National Technical Information

5 Service are transferred to the Director of Office of Man6 agement and Budget for privatization in accordance with

7 section 17109.

8 (d) AMENDMENTS.—

9 (1) NATIONAL INSTITUTE OF STANDARDS AND

10 TECHNOLOGY ACT.—The National Institute of

11 Standards and Technology Act (15 U.S.C. 271 et

12 seq.) is amended—

13 (A) in section 2(b), by striking paragraph

14 (1) and redesignating paragraphs (2) through

15 (11) as paragraphs (1) through (10), respec16 tively;

17 (B) in section 2(d), by striking ‘‘, including

18 the programs established under sections 25, 26,

19 and 28 of this Act’’;

20 (C) in section 10, by striking ‘‘Advanced’’

21 in both the section heading and subsection (a),

22 and inserting in lieu thereof ‘‘Standards and’’;

23 and

24 (D) by striking sections 24, 25, 26, and

25 28.
1589

•HR 2517 IH

1 (2) STEVENSON-WYDLER TECHNOLOGY INNOVA2 TION ACT OF 1980.—The Stevenson-Wydler Tech3 nology Innovation Act of 1980 (15 U.S.C. 3701 et

4 seq.) is amended—

5 (A) in section 3, by striking paragraph (2)

6 and redesignating paragraphs (3) through (5)

7 as paragraphs (2) through (4), respectively;

8 (B) in section 4, by striking paragraphs

9 (1), (4), and (13) and redesignating paragraphs

10 (2), (3), (5), (6), (7), (8), (9), (10), (11), and

11 (12) as paragraphs (1) through (10), respec12 tively;

13 (C) by striking sections 5, 6, 7, 8, 9, and

14 10;

15 (D) in section 11—

16 (i) by striking ‘‘, the Federal Labora17 tory Consortium for Technology Transfer,’’

18 in subsection (c)(3);

19 (ii) by striking ‘‘and the Federal Lab20 oratory Consortium for Technology Trans21 fer’’ in subsection (d)(2);

22 (iii) by striking ‘‘, and refer such re23 quests’’ and all that follows through ‘‘avail24 able to the Service’’ in subsection (d)(3);

25 and
1590

•HR 2517 IH

1 (iv) by striking subsection (e); and

2 (E) in section 17—

3 (i) by striking ‘‘Subject to paragraph

4 (2), separate’’ in subsection (c)(1) and in5 serting in lieu thereof ‘‘Separate’’;

6 (ii) by striking paragraph (2) of sub7 section (c) and redesignating paragraph

8 (3) as paragraph (2);

9 (iii) by striking ‘‘funds to carry out’’

10 in subsection (f), and inserting in lieu

11 thereof ‘‘funds only to pay the salary of

12 the Director of the Office of Quality Pro13 grams, who shall be responsible for carry14 ing out’’; and

15 (iv) by adding at the end the following

16 new subsection:

17 ‘‘(h) VOLUNTARY AND UNCOMPENSATED SERV18 ICES.—The Director of the Office of Quality Programs

19 may accept voluntary and uncompensated services not20 withstanding the provisions of section 1342 of title 31,

21 United States Code.’’.

22 (3) MISCELLANEOUS AMENDMENTS.—Section 3

23 of Public Law 94–168 (15 U.S.C. 205b) is amend24 ed—

25 (A) by striking paragraph (2);
1591

•HR 2517 IH

1 (B) by redesignating paragraphs (3) and

2 (4) as paragraphs (2) and (3), respectively; and

3 (C) in paragraph (3), as so redesignated

4 by subparagraph (B) of this paragraph, by

5 striking ‘‘in nonbusiness activities’’.

6 SEC. 17203. REORGANIZATION OF THE BUREAU OF THE

7 CENSUS.

8 (a) PROVISIONS RELATING TO INTERIM PERIOD.—

9 (1) FUNCTIONS OF THE SECRETARY OF COM10 MERCE.—During the 6-month period beginning on

11 the abolishment date specified in section 17101(c),

12 the Director of the Office of Management and Budg13 et shall perform all functions that, immediately be14 fore such effective date, were functions of the Sec15 retary of Commerce under title 13, United States

16 Code.

17 (2) REORGANIZATION AUTHORITY UNDER SEC18 TION 17104(f) NOT TO APPLY.—Section 17104(f)

19 shall not apply with respect to the Bureau of the

20 Census or any function to be performed by the ap21 propriate official pursuant to paragraph (1).

22 (b) TRANSFER OF FUNCTIONS.—

23 (1) IN GENERAL.—Notwithstanding any provi24 sion of section 17209, effective as of the first day
1592

•HR 2517 IH

1 following the end of the 6-month period referred to

2 in subsection (a)(1)—

3 (A) the Bureau of the Census shall be

4 transferred to the Department of Labor; and

5 (B) all functions that, immediately before

6 such first day, were functions of the Director of

7 the Office of Management and Budget by rea8 son of subsection (a)(1) shall be transferred to

9 the Secretary of Labor.

10 (2) CONTINUATION OF SERVICE OF THE DIREC11 TOR OF THE CENSUS.—The individual serving as the

12 Director of the Census at the end of the 6-month pe13 riod referred to in subsection (a)(1) may continue

14 serving in that capacity, after the end of such pe15 riod, until a successor has taken office.

16 (c) AMENDMENTS.—Effective as of the first day fol17 lowing the end of the 6-month period referred to in sub18 section (a)(1)—

19 (1) TRANSFER OF THE BUREAU OF THE CEN20 SUS TO THE DEPARTMENT OF LABOR.—(A) Section

21 2 of title 13, United States Code, is amended by

22 striking ‘‘is continued as’’ through the period and

23 inserting ‘‘is an agency within, and under the juris24 diction of, the Department of Labor.’’.
1593

•HR 2517 IH

1 (B) Subsection (e) of section 12 of the Act of

2 February 14, 1903 (15 U.S.C. 1511(e)) is repealed.

3 (2) DEFINITION OF SECRETARY.—Title 13,

4 United States Code, is amended in section 1(2) by

5 striking ‘‘Secretary of Commerce’’ and inserting

6 ‘‘Secretary of Labor’’.

7 (3) REFERENCES TO THE DEPARTMENT OF

8 COMMERCE.—Title 13, United States Code, is

9 amended in sections 4, 9(a), 23(b), 24(e), 44, 103,

10 132, 211, 213(b)(2), 221, 222, 223, 224, 225(a),

11 and 241 by striking ‘‘Department of Commerce’’

12 each place it appears and inserting ‘‘Department of

13 Labor’’.

14 (4) REFERENCES TO THE SECRETARY OF COM15 MERCE.—(A) Section 304(a) of title 13, United

16 States Code, is amended by striking ‘‘Secretary of

17 Commerce’’ and inserting ‘‘Secretary of Labor’’.

18 (B)(i) Section 401(a) of title 13, United States

19 Code, is amended by striking ‘‘Secretary of Com20 merce’’ and inserting ‘‘Secretary’’.

21 (ii) Section 8(e) of the Foreign Direct Invest22 ment and International Financial Data Improve23 ments Act of 1990 (22 U.S.C. 3144(e)) is amended

24 by striking ‘‘Secretary of Commerce’’ and inserting

25 ‘‘Secretary of Labor’’.
1594

•HR 2517 IH

1 (iii) Section 401(a) of title 13, United States

2 Code, is amended by striking ‘‘Department of Com3 merce’’ and inserting ‘‘Federal Reserve System’’.

4 (5) COMPENSATION FOR THE POSITION OF DI5 RECTOR OF THE CENSUS.—Section 5315 of title 5,

6 United States Code, as amended by section

7 17108(e)(7), is further amended by striking ‘‘Cen8 sus.’’ and inserting ‘‘Census, Department of

9 Labor.’’.

10 (6) CONFIDENTIALITY.—Section 9 of title 13,

11 United States Code, is amended by adding at the

12 end the following:

13 ‘‘(c)(1) Nothing in subsection (a)(3) shall be consid14 ered to permit the disclosure of any matter or information

15 to an officer or employee of the Department of Labor who

16 is not referred to in subchapter II if, immediately before

17 the start of the 6-month period referred to in section

18 17203(a)(1) of the Department of Commerce Dismantling

19 Act, such disclosure (if then made by an officer or em20 ployee of the Department of Commerce) would have been

21 impermissible under this section (as then in effect).

22 ‘‘(2) Paragraph (1) shall not apply with respect to

23 any disclosure made to the Secretary.’’.

24 (d) SENSE OF THE CONGRESS.—It is the sense of

25 the Congress that the Bureau of the Census should—
1595

•HR 2517 IH

1 (1) make appropriate use of any authority af2 forded to it by the Census Address List Improve3 ment Act of 1994 (Public Law 103–430; 108 Stat.

4 4393), and take measures to ensure the timely im5 plementation of such Act; and

6 (2) streamline census questionnaires to promote

7 savings in the collection and tabulation of data.

8 (e) RULE OF CONSTRUCTION.—For purposes of sub9 title E, the reorganization of the Bureau of the Census

10 pursuant to subsections (b) and (c) shall be treated as

11 if it involved a transfer of functions.

12 SEC. 17204. BUREAU OF ECONOMIC ANALYSIS.

13 (a) IN GENERAL.—(1) The functions of the Bureau

14 of Economic Analysis are transferred to the Secretary of

15 Labor.

16 (2) All functions which, immediately before such date,

17 are functions of the Secretary of Commerce with respect

18 to the Bureau of Economic Analysis are transferred to the

19 Secretary of Labor.

20 (b) CONSOLIDATION WITH THE BUREAU OF LABOR

21 STATISTICS.—The Secretary of Labor shall consolidate

22 the functions transferred under subsection (a) with the

23 Bureau of Labor Statistics within the Department of

24 Labor.
1596

•HR 2517 IH

1 (c) REPORTS.—Not later than 18 months after the

2 date of the enactment of this Act, the Secretary of Labor,

3 after consultation with the Director of the Office of Man4 agement and Budget, shall submit to the Congress a writ5 ten report on—

6 (1) the availability of any private sector re7 sources that may be capable of performing any or all

8 of the functions of the Bureau of Economic Analy9 sis, and the feasibility of having any such functions

10 so performed; and

11 (2) the feasibility of implementing a system

12 under which fees may be assessed by the Bureau of

13 Economic Analysis in order to defray the costs of

14 any services performed by the Bureau of Economic

15 Analysis, when such services are performed other

16 than on behalf of the Federal Government or an

17 agency or instrumentality thereof.

18 (d) RULE OF CONSTRUCTION.—For purposes of sub19 title E, the reorganization of the Bureau of Economic

20 Analysis under this section shall be treated as if it involved

21 a transfer of functions.

22 (e) LIMITATION ON ANNUAL OBLIGATIONS AND EX23 PENDITURES FOR CONTINUED FUNCTIONS.—

24 (1) IN GENERAL.—Except as provided in para25 graph (2), for each fiscal year that begins on or
1597

•HR 2517 IH

1 after the effective date of this section, the total of

2 amounts obligated or expended by the United States

3 each fiscal year for performance of functions which

4 immediately before the date of the enactment of this

5 Act were authorized to be performed by the Sec6 retary of Commerce with respect to the Bureau of

7 Economic Analysis, or by or an agency, officer, or

8 employee of the Department of Commerce with re9 spect to that bureau, may not exceed 75 percent of

10 the total of amounts obligated or expended by the

11 United States for performance of such functions for

12 fiscal year 1995.

13 (2) EXCEPTION.—Paragraph (1) shall not

14 apply to obligations or expenditures incurred as a di15 rect consequence of the termination, transfer, or

16 other disposition of funtions pursuant to this sec17 tion.

18 (3) RULE OF CONSTRUCTION.—This subsection

19 shall take precedence over any other provision of law

20 unless such provision explicitly refers to this section

21 and makes an exception to it.

22 (4) RESPONSIBILITIES OF THE DIRECTOR OF

23 THE OFFICE OF MANAGEMENT AND BUDGET.—The

24 Director of the Office of Management and Budget

25 shall—
1598

•HR 2517 IH

1 (A) ensure compliance with the require2 ments of this subsection; and

3 (B) include in each report under sections

4 17106(a) and (b) a description of actions taken

5 to comply with such requirements.

6 SEC. 17205. TERMINATED FUNCTIONS OF NTIA.

7 (a) REPEALS.—The following provisions of law are

8 repealed:

9 (1) Subpart A of part IV of title III of the

10 Communications Act of 1934 (47 U.S.C. 390 et

11 seq.), relating to assistance for public telecommuni12 cations facilities.

13 (2) Subpart B of part IV of title III of the

14 Communications Act of 1934 (47 U.S.C. 394 et

15 seq.), relating to the Endowment for Children’s

16 Educational Television.

17 (3) Subpart C of part IV of title III of the

18 Communications Act of 1934 (47 U.S.C. 395 et

19 seq.), relating to Telecommunications Demonstration

20 grants.

21 (b) DISPOSAL OF NTIA LABORATORIES.—

22 (1) PRIVATIZATION.—All laboratories of the

23 National Telecommunications and Information Ad24 ministration are transferred to the Director of the
1599

•HR 2517 IH

1 Office of Management and Budget for privatization

2 in accordance with section 17109.

3 (2) TRANSFER OF FUNCTIONS.—The functions

4 of the National Telecommunications and Informa5 tion Administration concerning research and analy6 sis of the electromagnetic spectrum described in sec7 tion 5112(b) of the Omnibus Trade and Competi8 tiveness Act of 1988 (15 U.S.C. 1532) are trans9 ferred to the Director of the National Bureau of

10 Standards.

11 (c) TRANSFER OF NATIONAL TELECOMMUNICATIONS

12 AND INFORMATION ADMINISTRATION FUNCTIONS.—

13 (1) TRANSFER TO USTR.—Except as provided

14 in subsection (b)(2), the functions of the National

15 Telecommunications and Information Administra16 tion, and of the Secretary of Commerce and the As17 sistant Secretary for Communications and Informa18 tion of the Department of Commerce with respect to

19 the National Telecommunications and Information

20 Administration, are transferred to the United States

21 Trade Representative.

22 (2) REFERENCES.—References in any provision

23 of law (including the National Telecommunications

24 and Information Administration Organization Act)

25 to the Secretary of Commerce or the Assistant Sec-
1600

•HR 2517 IH

1 retary for Communications and Information of the

2 Department of Commerce—

3 (A) with respect to a function vested pur4 suant to this section in the United States Trade

5 Representative shall be deemed to refer to the

6 United States Trade Representative; and

7 (B) with respect to a function vested pur8 suant to this section in the Director of the Na9 tional Bureau of Standards shall be deemed to

10 refer to the Director of the National Bureau of

11 Standards.

12 (3) TERMINATION OF NTIA.—Effective on the

13 abolishment date specified in section 17101(c), the

14 National Telecommunications and Information Ad15 ministration is abolished.

16 SEC. 17206. NATIONAL OCEANIC AND ATMOSPHERIC AD17 MINISTRATION.

18 (a) TERMINATION OF MISCELLANEOUS RESEARCH

19 PROGRAMS AND ACCOUNTS.—

20 (1) IN GENERAL.—No funds may be appro21 priated in any fiscal year for the following programs

22 and accounts of the National Oceanic and Atmos23 pheric Administration:

24 (A) The National Undersea Research Pro25 gram.
1601

•HR 2517 IH

1 (B) The Fleet Modernization Program.

2 (C) The Charleston, South Carolina, Spe3 cial Management Plan.

4 (D) Chesapeake Bay Observation Buoys

5 (as of September 30, 1996).

6 (E) Federal/State Weather Modification

7 Grants.

8 (F) The Southeast Storm Research Ac9 count.

10 (G) The Southeast United States Carib11 bean Fisheries Oceanographic Coordinated In12 vestigations Program.

13 (H) National Institute for Environmental

14 Renewal.

15 (I) The Lake Champlain Study.

16 (J) The Maine Marine Research Center.

17 (K) The South Carolina Cooperative Geo18 detic Survey Account.

19 (L) Pacific Island Technical Assistance.

20 (M) Sea Grant Oyster Disease Account.

21 (N) Sea Grant Zebra Mussel Account.

22 (O) VENTS program.

23 (P) National Weather Service non-Federal,

24 non-wildfire Weather Service.
1602

•HR 2517 IH

1 (Q) National Weather Service Regional

2 Climate Centers.

3 (R) National Weather Service Samoa

4 Weather Forecast Office Repair and Upgrade

5 Account.

6 (S) Dissemination of Weather Charts (Ma7 rine Facsimile Service).

8 (T) The Climate and Global Change Ac9 count.

10 (U) The Global Learning and Observations

11 to Benefit the Environment Program.

12 (V) Great Lakes nearshore research.

13 (W) Mussel watch.

14 (2) REPEALS.—The following provisions of law

15 are repealed:

16 (A) The Ocean Thermal Conversion Act of

17 1980 (42 U.S.C. 9101 et seq.).

18 (B) Title IV of the Marine Protection, Re19 search, and Sanctuaries Act of 1972 (16 U.S.C.

20 1447 et seq.).

21 (C) Title V of the Marine Protection, Re22 search, and Sanctuaries Act of 1972 (33 U.S.C.

23 2801 et seq.).

24 (D) The Great Lakes Shoreline Mapping

25 Act of 1987 (33 U.S.C. 883a note).
1603

•HR 2517 IH

1 (E) The Great Lakes Fish and Wildlife

2 Tissue Bank Act (16 U.S.C. 943 et seq.).

3 (F) The Nonindigenous Aquatic Nuisance

4 Prevention and Control Act of 1990 (16 U.S.C.

5 4701 et seq.), except for those provisions affect6 ing the Assistant Secretary of the Army (civil

7 works) and the Secretary of the department in

8 which the Coast Guard is operating.

9 (G) Section 3 of the Sea Grant Program

10 Improvement Act of 1976 (33 U.S.C. 1124a).

11 (H) Section 208(c) of the National Sea

12 Grant College Program Act (33 U.S.C.

13 1127(c)).

14 (I) Section 305 of the Coastal Zone Man15 agement Act of 1972 (16 U.S.C. 1454) is re16 pealed effective October 1, 1998.

17 (J) The NOAA Fleet Modernization Act

18 (33 U.S.C. 891 et seq.).

19 (K) Public Law 85–342 (72 Stat. 35; 16

20 U.S.C. 778 et seq.), relating to fish research

21 and experimentation.

22 (L) The first section of the Act of August

23 8, 1956 (70 Stat. 1126; 16 U.S.C. 760d), relat24 ing to grants for commercial fishing education.
1604

•HR 2517 IH

1 (M) Public Law 86–359 (16 U.S.C. 760e

2 et seq.), relating to the study of migratory ma3 rine gamefish.

4 (N) The Act of August 15, 1914 (Chapter

5 253; 38 Stat. 692; 16 U.S.C. 781 et seq.), pro6 hibiting the taking of sponges in the Gulf of

7 Mexico and the Straits of Florida.

8 (b) AERONAUTICAL MAPPING AND CHARTING.—

9 (1) IN GENERAL.—The aeronautical mapping

10 and charting functions of the National Oceanic and

11 Atmospheric Administration are transferred to the

12 Defense Mapping Agency.

13 (2) TERMINATION OF CERTAIN FUNCTIONS.—

14 The Defense Mapping Agency shall terminate any

15 functions transferred under paragraph (1) that are

16 performed by the private sector.

17 (3) FUNCTIONS REQUESTED BY FEDERAL AVIA18 TION ADMINISTRATION.—(A) Notwithstanding para19 graph (2), the Director of the Defense Mapping

20 Agency shall carry out such aeronautical charting

21 functions as may be requested by the Administrator

22 of the Federal Aviation Administration.

23 (B) In carrying out aeronautical mapping func24 tions requested by the Administrator under subpara25 graph (A), the Director shall—
1605

•HR 2517 IH

1 (i) publish and distribute to the public and

2 to the Administrator any aeronautical charts re3 quested by the Administrator; and

4 (ii) provide to the Administrator such

5 other air traffic control products and services as

6 may be requested by the Administrator,

7 in such manner and including such information as

8 the Administrator determines is necessary for, or

9 will promote, the safe and efficient movement of air10 craft in air commerce.

11 (4) CONTINUING APPLICABILITY.—The require12 ments of section 1307 of title 44, United States

13 Code, shall continue to apply with respect to all

14 aeronautical products created or published by the

15 Director of the Defense Mapping Agency in carrying

16 out the functions transferred to the Director under

17 this paragraph; except that the prices for such prod18 ucts shall be established jointly by the Director and

19 the Secretary of Transportation on an annual basis.

20 (c) TRANSFER OF MAPPING, CHARTING, AND GEOD21 ESY FUNCTIONS TO THE UNITED STATES GEOLOGICAL

22 SURVEY.—

23 (1) IN GENERAL.—Except as provided in sub24 section (b), there are hereby transferred to the Di25 rector of the United States Geological Survey the
1606

•HR 2517 IH

1 functions relating to mapping, charting, and geodesy

2 authorized under the Act of August 7, 1947 (61

3 Stat. 787; 33 U.S.C. 883a).

4 (2) TERMINATION OF CERTAIN FUNCTIONS.—

5 The Director of the United States Geological Survey

6 shall terminate any functions transferred under

7 paragraph (1) that are performed by the private sec8 tor.

9 (d) NESDIS.—There are transferred to the National

10 Institute for Science and Technology all functions and as11 sets of the National Oceanic and Atmospheric Administra12 tion that on the date immediately before the effective date

13 of this section were authorized to be performed by the Na14 tional Environmental Satellite, Data, and Information

15 System.

16 (e) OAR.—There are transferred to the National In17 stitute for Science and Technology all functions and assets

18 of the National Oceanic and Atmospheric Administration

19 (including global programs) that on the date immediately

20 before the effective date of this section were authorized

21 to be performed by the Office of Oceanic and Atmospheric

22 Research.

23 (f) NWS.—

24 (1) IN GENERAL.—There are transferred to the

25 National Institute for Science and Technology all
1607

•HR 2517 IH

1 functions and assets of the National Oceanic and At2 mospheric Administration that on the date imme3 diately before the effective date of this section were

4 authorized to be performed by the National Weather

5 Service.

6 (2) DUTIES.—To protect life and property and

7 enhance the national economy, the Administrator of

8 Science and Technology, through the National

9 Weather Service, except as outlined in paragraph

10 (3), shall be responsible for the following:

11 (A) Forecasts. The Administrator of

12 Science and Technology, through the National

13 Weather Service, shall serve as the sole official

14 source of severe weather warnings.

15 (B) Issuance of storm warnings.

16 (C) The collection, exchange, and distribu17 tion of meteorological, hydrological, climatic,

18 and oceanographic data and information.

19 (D) The preparation of hydro-meteorologi20 cal guidance and core forecast information.

21 (3) LIMITATIONS ON COMPETITION.—The Na22 tional Weather Service may not compete, or assist

23 other entities to compete, with the private sector to

24 provide a service when that service is currently pro-
1608

•HR 2517 IH

1 vided or can be provided by a commercial enterprise

2 unless—

3 (A) the Administrator of Science and

4 Technology finds that the private sector is un5 willing or unable to provide the service; or

6 (B) the Administrator of Science and

7 Technology finds that the service provides vital

8 weather warnings and forecasts for the protec9 tion of lives and property of the general public.

10 (4) ORGANIC ACT AMENDMENTS.—

11 (A) AMENDMENTS.—The Act of 1890 is

12 amended—

13 (i) by striking section 3 (15 U.S.C.

14 313); and

15 (ii) in section 9 (15 U.S.C. 317), by

16 striking ‘‘Department of’’ and all that fol17 lows thereafter and inserting ‘‘National In18 stitute for Science and Technology.’’.

19 (B) DEFINITION.—For purposes of this

20 paragraph, the term ‘‘Act of 1890’’ means the

21 Act entitled ‘‘An Act to increase the efficiency

22 and reduce the expenses of the Signal Corps of

23 the Army, and to transfer the Weather Bureau

24 to the Department of Agriculture’’, approved

25 October 1, 1890 (26 Stat. 653).
1609

•HR 2517 IH

1 (5) REPEAL.—Sections 706 and 707 of the

2 Weather Service Modernization Act (15 U.S.C. 313

3 note) are repealed.

4 (6) CONFORMING AMENDMENTS.—The Weather

5 Service Modernization Act (15 U.S.C. 313 note) is

6 amended—

7 (A) in section 702, by striking paragraph

8 (3) and redesignating paragraphs (4) through

9 (10) as paragraphs (3) through (9), respec10 tively; and

11 (B) in section 703—

12 (i) by striking ‘‘(a) NATIONAL IMPLE13 MENTATION PLAN.—’’;

14 (ii) by striking paragraph (3) and re15 designating paragraphs (4), (5), and (6) as

16 paragraphs (3), (4), and (5), respectively;

17 and

18 (iii) by striking subsections (b) and

19 (c).

20 (g) TERMINATION OF THE NATIONAL OCEANIC AND

21 ATMOSPHERIC ADMINISTRATION CORPS OF COMMIS22 SIONED OFFICERS.—

23 (1) NUMBER OF OFFICERS.—Notwithstanding

24 section 8 of the Act of June 3, 1948 (33 U.S.C.

25 853g), the total number of commissioned officers on
1610

•HR 2517 IH

1 the active list of the National Oceanic and Atmos2 pheric Administration shall not exceed 358 for fiscal

3 year 1996. No commissioned officers are authorized

4 for any fiscal year after fiscal year 1996.

5 (2) SEPARATION PAY.—(A) Commissioned offi6 cers may be separated from the active list of the Na7 tional Oceanic and Atmospheric Administration. Any

8 officer so separated because of paragraph (1) shall,

9 subject to subparagraph (B) and the availability of

10 appropriations, be eligible for separation pay under

11 section 9 of the Act of June 3, 1948 (33 U.S.C.

12 853h) to the same extent as if such officer had been

13 separated under section 8 of such Act (33 U.S.C.

14 853g).

15 (B) Any officer who, under paragraph (4),

16 transfers to another of the uniformed services or be17 comes employed in a civil service position shall not

18 be eligible for separation pay under this paragraph.

19 (C)(i) Any officer who receives separation pay

20 under this paragraph shall be required to repay the

21 amount received if, within 1 year after the date of

22 the separation on which the payment is based, such

23 officer is reemployed in a civil service position in the

24 National Oceanic and Atmospheric Administration,

25 the duties of which position would formerly have
1611

•HR 2517 IH

1 been performed by a commissioned officer, as deter2 mined by the Administrator of the National Oceanic

3 and Atmospheric Administration.

4 (ii) A repayment under this subparagraph shall

5 be made in a lump sum or in such installments as

6 the Administrator may specify.

7 (D) In the case of any officer who makes a re8 payment under subparagraph (C)—

9 (i) the National Oceanic and Atmospheric

10 Administration shall pay into the Civil Service

11 Retirement and Disability Fund, on such offi12 cer’s behalf, any deposit required under section

13 8422(e)(1) of title 5, United States Code, with

14 respect to any prior service performed by that

15 individual as such an officer; and

16 (ii) if the amount paid under clause (i) is

17 less than the amount of the repayment under

18 subparagraph (C), the National Oceanic and

19 Atmospheric Administration shall pay into the

20 Government Securities Investment Fund (estab21 lished under section 8438(b)(1)(A) of title 5,

22 United States Code), on such individual’s be23 half, an amount equal to the difference.
1612

•HR 2517 IH

1 The provisions of paragraph (5)(C)(iv) shall apply

2 with respect to any contribution to the Thrift Sav3 ings Plan made under clause (ii).

4 (3) PRIORITY PLACEMENT PROGRAM.—A prior5 ity placement program similar to the programs de6 scribed in section 3329b of title 5, United States

7 Code, as amended by section 17110, shall be estab8 lished by the National Oceanic and Atmospheric Ad9 ministration to assist commissioned officers who are

10 separated from the active list of the National Oce11 anic and Atmospheric Administration because of

12 paragraph (1).

13 (4) TRANSFER.—(A) Subject to the approval of

14 the Secretary of Defense and under terms and con15 ditions specified by the Secretary, commissioned offi16 cers subject to paragraph (1) may transfer to the

17 Armed Forces under section 716 of title 10, United

18 States Code.

19 (B) Subject to the approval of the Secretary of

20 Transportation and under terms and conditions

21 specified by the Secretary, commissioned officers

22 subject to paragraph (1) may transfer to the United

23 States Coast Guard under section 716 of title 10,

24 United States Code.
1613

•HR 2517 IH

1 (C) Subject to the approval of the Adminis2 trator of the National Oceanic and Atmospheric Ad3 ministration and under terms and conditions speci4 fied by that Administrator, commissioned officers

5 subject to paragraph (1) may be employed by the

6 National Oceanic and Atmospheric Administration

7 as members of the civil service.

8 (5) RETIREMENT PROVISIONS.—(A) For com9 missioned officers who transfer under paragraph

10 (4)(A) to the Armed Forces, the National Oceanic

11 and Atmospheric Administration shall pay into the

12 Department of Defense Military Retirement Fund

13 an amount, to be calculated by the Secretary of De14 fense in consultation with the Secretary of the

15 Treasury, equal to the actuarial present value of any

16 retired or retainer pay they will draw upon retire17 ment, including full credit for service in the NOAA

18 Corps. Any payment under this subparagraph shall,

19 for purposes of paragraph (2) of section 17207(g),

20 be considered to be an expenditure described in such

21 paragraph.

22 (B) For commissioned officers who transfer

23 under paragraph (4)(B) to the United States Coast

24 Guard, full credit for service in the NOAA Corps

25 shall be given for purposes of any annuity or other
1614

•HR 2517 IH

1 similar benefit under the retirement system for

2 members of the United States Coast Guard, entitle3 ment to which is based on the separation of such of4 ficer.

5 (C)(i) For a commissioned officer who becomes

6 employed in a civil service position pursuant to para7 graph (4)(C) and thereupon becomes subject to the

8 Federal Employees’ Retirement System, the Na9 tional Oceanic and Atmospheric Administration shall

10 pay, on such officer’s behalf—

11 (I) into the Civil Service Retirement and

12 Disability Fund, the amounts required under

13 clause (ii); and

14 (II) into the Government Securities Invest15 ment Fund, the amount required under clause

16 (iii).

17 (ii)(I) The amount required under this

18 subclause is the amount of any deposit required

19 under section 8422(e)(1) of such title 5 with respect

20 to any prior service performed by the individual as

21 a commissioned officer of the National Oceanic and

22 Atmospheric Administration.

23 (II) To determine the amount required under

24 this subclause, first determine, for each year of serv25 ice with respect to which the deposit under subclause
1615

•HR 2517 IH

1 (I) relates, the product of the normal-cost percent2 age for such year (as determined under the last sen3 tence of this subclause) multiplied by basic pay re4 ceived by the individual for any such service per5 formed in such year. Second, take the sum of the

6 amounts determined for the respective years under

7 the first sentence. Finally, subtract from such sum

8 the amount of the deposit under subclause (I). For

9 purposes of the first sentence, the normal-cost per10 centage for any year shall be as determined for such

11 year under the provisions of section 8423(a)(1) of

12 title 5, United States Code, except that, in the case

13 of any year before the first year for which any nor14 mal-cost percentage was determined under such pro15 visions, the normal-cost percentage for such first

16 year shall be used.

17 (iii) The amount required under this clause is

18 the amount by which the separation pay to which

19 the officer would have been entitled under the sec20 ond sentence of paragraph (2)(A) (assuming the

21 conditions for receiving such separation pay have

22 been met) exceeds the amount of the deposit under

23 clause (ii)(I), if at all.

24 (iv)(I) Any contribution made under this sub25 paragraph to the Thrift Savings Plan shall not be
1616

•HR 2517 IH

1 subject to any otherwise applicable limitation on con2 tributions contained in the Internal Revenue Code of

3 1986, and shall not be taken into account in apply4 ing any such limitation to other contributions or

5 benefits under the Thrift Savings Plan, with respect

6 to the year in which the contribution is made.

7 (II) Such plan shall not be treated as failing to

8 meet any nondiscrimination requirement by reason

9 of the making of such contribution.

10 (6) REPEALS.—(A) The following provisions of

11 law are repealed:

12 (i) The Coast and Geodetic Survey Com13 missioned Officers’ Act of 1948 (33 U.S.C.

14 853a–853o, 853p–853u).

15 (ii) The Act of February 16, 1929 (Chap16 ter 221, section 5; 45 Stat. 1187; 33 U.S.C.

17 852a).

18 (iii) The Act of January 19, 1942 (Chap19 ter 6; 56 Stat. 6).

20 (iv) Section 9 of Public Law 87–649 (76

21 Stat. 495).

22 (v) The Act of May 22, 1917 (Chapter 20,

23 section 16; 40 Stat. 87; 33 U.S.C. 854 et seq.).

24 (vi) The Act of December 3, 1942 (Chap25 ter 670; 56 Stat. 1038.
1617

•HR 2517 IH

1 (vii) Sections 1 through 5 of Public Law

2 91–621 (84 Stat. 1863; 33 U.S.C. 857–1 et

3 seq.).

4 (viii) The Act of August 10, 1956 (Chapter

5 1041, section 3; 70A Stat. 619; 33 U.S.C.

6 857a).

7 (ix) The Act of May 18, 1920 (Chapter

8 190, section 11; 41 Stat. 603; 33 U.S.C. 864).

9 (x) The Act of July 22, 1947 (Chapter

10 286; 61 Stat. 400; 33 U.S.C. 873, 874).

11 (xi) The Act of August 3, 1956 (Chapter

12 932; 70 Stat. 988; 33 U.S.C. 875, 876).

13 (xii) All other Acts inconsistent with this

14 subsection.

15 No repeal under this subparagraph shall affect any

16 annuity or other similar benefit payable, under any

17 provision of law so repealed, based on the separation

18 of any individual from the NOAA Corps on or before

19 September 30, 1996. Any authority exercised by the

20 Secretary of Commerce or his designee with respect

21 to any such benefits shall be exercised by the Ad22 ministrator of the National Oceanic and Atmos23 pheric Administration, and any authorization of ap24 propriations relating to those benefits, which is in
1618

•HR 2517 IH

1 effect as of September 30, 1996, shall be considered

2 to have remained in effect.

3 (B) The effective date of the repeals under sub4 paragraph (A) shall be October 1, 1996.

5 (7) CREDITABILITY OF NOAA SERVICE FOR

6 PURPOSES RELATING TO REDUCTIONS IN FORCE.—

7 A commissioned officer who is separated from the

8 active list of the National Oceanic and Atmospheric

9 Administration because of paragraph (1) shall, for

10 purposes of any subsequent reduction in force, re11 ceive credit for any period of service performed as

12 such an officer before separation from such list to

13 the same extent and in the same manner as if it had

14 been a period of active service in the Armed Forces.

15 (8) ABOLITION.—The Office of the National

16 Oceanic and Atmospheric Administration Corps of

17 Operations and the Commissioned Personnel Center

18 are abolished effective September 30, 1996.

19 (h) NOAA FLEET.—

20 (1) SERVICE CONTRACTS.—Notwithstanding

21 any other provision of law and subject to the avail22 ability of appropriations, the Administrator of the

23 National Institute for Science and Technology shall

24 enter into contracts, including multiyear contracts,

25 subject to paragraph (3), for the use of vessels to
1619

•HR 2517 IH

1 conduct oceanographic research and fisheries re2 search, monitoring, enforcement, and management,

3 and to acquire other data necessary to carry out the

4 missions of the National Oceanic and Atmospheric

5 Administration. The Administrator of the National

6 Institute for Science and Technology shall enter into

7 these contracts unless—

8 (A) the cost of the contract is more than

9 the cost (including the cost of vessel operation,

10 maintenance, and all personnel) to the National

11 Oceanic and Atmospheric Administration of ob12 taining those services on vessels of the National

13 Oceanic and Atmospheric Administration;

14 (B) the contract is for more than 7 years;

15 or

16 (C) the data is acquired through a vessel

17 agreement pursuant to paragraph (4).

18 (2) VESSELS.—The Administrator of the Na19 tional Institute for Science and Technology may not

20 enter into any contract for the construction, lease21 purchase, upgrade, or service life extension of any

22 vessel.

23 (3) MULTIYEAR CONTRACTS.—

24 (A) IN GENERAL.—Subject to subpara25 graphs (B) and (C), and notwithstanding sec-
1620

•HR 2517 IH

1 tion 1341 of title 31, United States Code, and

2 section 11 of title 41, United States Code, the

3 Administrator of the National Institute for

4 Science and Technology may acquire data

5 under multiyear contracts.

6 (B) REQUIRED FINDINGS.—The Adminis7 trator of the National Institute for Science and

8 Technology may not enter into a contract pur9 suant to this paragraph unless such Adminis10 trator finds with respect to that contract that

11 there is a reasonable expectation that through12 out the contemplated contract period the Ad13 ministrator will request from Congress funding

14 for the contract at the level required to avoid

15 contract termination.

16 (C) REQUIRED PROVISIONS.—The Admin17 istrator of the National Institute for Science

18 and Technology may not enter into a contract

19 pursuant to this paragraph unless the contract

20 includes—

21 (i) a provision under which the obliga22 tion of the United States to make pay23 ments under the contract for any fiscal

24 year is subject to the availability of appro-
1621

•HR 2517 IH

1 priations provided in advance for those

2 payments;

3 (ii) a provision that specifies the term

4 of effectiveness of the contract; and

5 (iii) appropriate provisions under

6 which, in case of any termination of the

7 contract before the end of the term speci8 fied pursuant to clause (ii), the United

9 States shall only be liable for the lesser

10 of—

11 (I) an amount specified in the

12 contract for such a termination; or

13 (II) amounts that were appro14 priated before the date of the termi15 nation for the performance of the con16 tract or for procurement of the type

17 of acquisition covered by the contract

18 and are unobligated on the date of the

19 termination.

20 (4) VESSEL AGREEMENTS.—The Administrator

21 of the National Institute for Science and Technology

22 shall use excess capacity of University National

23 Oceanographic Laboratory System vessels where ap24 propriate and may enter into memoranda of agree-
1622

•HR 2517 IH

1 ment with the operators of these vessels to carry out

2 this requirement.

3 (5) TRANSFER OF EXCESS VESSELS.—The Ad4 ministrator of the National Institute for Science and

5 Technology shall transfer any vessels that are excess

6 to the needs of the National Oceanic and Atmos7 pheric Administration to the National Defense Re8 serve Fleet. Notwithstanding any other provision of

9 law, these vessels may be scrapped in accordance

10 with section 510(i) of the Merchant Marine Act,

11 1936 (46 App. U.S.C. 1160(i)).

12 (i) NATIONAL MARINE FISHERIES SERVICE.—(1)

13 There are transferred to the National Institute for Science

14 and Technology all functions that on the day before the

15 effective date of this section were authorized by law to be

16 performed by the National Marine Fisheries Service.

17 (2) Notwithstanding any other provision of law, the

18 National Marine Fisheries Service may not affect on-land

19 activities under the Endangered Species Act of 1973 for

20 salmon recovery in the State of Idaho (16 U.S.C. 1531

21 et seq.).

22 (j) NATIONAL OCEAN SERVICE.—Except as otherwise

23 provided in this title, there are transferred to the National

24 Institute for Science and Technology all functions and as25 sets of the National Oceanic and Atmospheric Administra-
1623

•HR 2517 IH

1 tion that on the date immediately before the effective date

2 of this section were authorized to be performed by the Na3 tional Ocean Service (including the Coastal Ocean Pro4 gram).

5 (k) TRANSFER OF COASTAL NONPOINT POLLUTION

6 CONTROL FUNCTIONS.—There are transferred to the Ad7 ministrator of the Environmental Protection Agency the

8 functions under section 6217 of the Omnibus Budget Rec9 onciliation Act of 1990 (16 U.S.C. 1455b) that on the day

10 before the effective date of this section were vested in the

11 Secretary of Commerce.

12 SEC. 17207. NATIONAL INSTITUTE FOR SCIENCE AND TECH13 NOLOGY.

14 (a) ESTABLISHMENT.—There is established as an

15 independent agency in the Executive Branch the National

16 Institute for Science and Technology (in this section re17 ferred to as the ‘‘Institute’’). The Institute, and all func18 tions and offices transferred to it under this title, shall

19 be administered under the supervision and direction of an

20 Administrator of Science and Technology. The Adminis21 trator of Science and Technology shall be appointed by

22 the President, by and with the advice and consent of the

23 Senate, and shall receive basic pay at the rate payable for

24 level II of the Executive Schedule under section 5313 of

25 title 5, United States Code.
1624

•HR 2517 IH

1 (b) PRINCIPAL OFFICERS.—There shall be in the In2 stitute, on the transfer of functions and offices under this

3 title—

4 (1) an Administrator of the National Oceanic

5 and Atmospheric Administration, who shall be ap6 pointed by the President, by and with the advice and

7 consent of the Senate, and who shall receive basic

8 pay at the rate payable for level III of the Executive

9 Schedule under section 5314 of title 5, United

10 States Code; and

11 (2) a Director of the National Bureau of Stand12 ards, who shall be appointed by the President, by

13 and with the advice and consent of the Senate, and

14 who shall receive basic pay at the rate payable for

15 level IV of the Executive Schedule under section

16 5315 of title 5, United States Code.

17 (c) ADDITIONAL OFFICERS.—There shall be in the

18 Institute—

19 (1) a Chief Financial Officer of the Institute, to

20 be appointed by the President, by and with the ad21 vice and consent of the Senate;

22 (2) a Chief of External Affairs, to be appointed

23 by the President, by and with the advice and consent

24 of the Senate;
1625

•HR 2517 IH

1 (3) a General Counsel, to be appointed by the

2 President, by and with the advice and consent of the

3 Senate; and

4 (4) an Inspector General, to be appointed in ac5 cordance with the Inspector General Act of 1978.

6 Each Officer appointed under this subsection shall receive

7 basic pay at the rate payable for level IV of the Executive

8 Schedule under section 5315 of title 5, United States

9 Code.

10 (d) TRANSFER OF FUNCTIONS AND OFFICES.—Ex11 cept as otherwise provided in this title, there are trans12 ferred to the Institute—

13 (1) the National Oceanic and Atmospheric Ad14 ministration, along with its functions and offices, as

15 provided in section 17206;

16 (2) the National Bureau of Standards, along

17 with its functions and offices, as provided in section

18 17202; and

19 (3) the Office of Space Commerce, along with

20 its functions and offices.

21 (e) ELIMINATION OF POSITIONS.—The Adminis22 trator of Science and Technology may eliminate positions

23 that are no longer necessary because of the termination

24 of functions under this section, section 17202, and section

25 17206.
1626

•HR 2517 IH

1 (f) AGENCY TERMINATIONS.—

2 (1) TERMINATIONS.—On the date specified in

3 section 17209(a), the following shall terminate:

4 (A) The Office of the Deputy Adminis5 trator and Assistant Secretary of the National

6 Oceanic and Atmospheric Administration.

7 (B) The Office of the Deputy Under Sec8 retary of the National Oceanic and Atmospheric

9 Administration.

10 (C) The Office of the Chief Scientist of the

11 National Oceanic and Atmospheric Administra12 tion.

13 (D) The position of Deputy Assistant Sec14 retary for Oceans and Atmosphere.

15 (E) The position of Deputy Assistant Sec16 retary for International Affairs.

17 (F) Any office of the National Oceanic and

18 Atmospheric Administration or the National

19 Bureau of Standards whose primary purpose is

20 to perform high performance computing com21 munications, legislative, personnel, public rela22 tions, budget, constituent, intergovernmental,

23 international, policy and strategic planning,

24 sustainable development, administrative, finan25 cial, educational, legal and coordination func-
1627

•HR 2517 IH

1 tions. These functions shall, as necessary, be

2 performed only by officers described in sub3 section (c).

4 (G) The position of Associate Director of

5 the National Institute of Standards and Tech6 nology.

7 (2) TERMINATION OF EXECUTIVE SCHEDULE

8 POSITIONS.—Each position which was expressly au9 thorized by law, or the incumbent of which was au10 thorized to receive compensation at the rate pre11 scribed for levels I through V of the Executive

12 Schedule under sections 5312 through 5315 of title

13 5, United States Code, in an office terminated pur14 suant to this section, section 17202, and section

15 17206 shall also terminate.

16 (g) FUNDING REDUCTIONS RESULTING FROM REOR17 GANIZATION.—

18 (1) FUNDING REDUCTIONS.—For each fiscal

19 year that begins on or after the effective date of this

20 section, the amount obligated or expended by the

21 United States in performing all functions vested in

22 the National Institute for Science and Technology

23 pursuant to this subtitle may not exceed 75 percent

24 of the total of the amounts obligated or expended by

25 the United States in performing, during fiscal year
1628

•HR 2517 IH

1 1995, all functions vested in the National Oceanic

2 and Atmospheric Administration, the National Insti3 tute of Standards and Technology, and the Office of

4 Space Commerce, except for those functions trans5 ferred under section 17206 to agencies or depart6 ments other than the National Institute for Science

7 and Technology.

8 (2) EXCEPTION.—Paragraph (1) shall not

9 apply to obligations or expenditures incurred as a di10 rect consequence of the termination, transfer, or

11 other disposition of functions described in paragraph

12 (1) pursuant to this subtitle.

13 (3) RULE OF CONSTRUCTION.—This subsection

14 shall take precedence over any other provision of law

15 unless such provision explicitly refers to this section

16 and makes an exception to it.

17 (4) RESPONSIBILITIES OF THE DIRECTOR OF

18 THE OFFICE OF MANAGEMENT AND BUDGET.—The

19 Director of the Office of Management and Budget

20 shall—

21 (A) ensure compliance with the require22 ments of this subsection; and

23 (B) include in each report under section

24 17106 (a) and (b) of this title a description of
1629

•HR 2517 IH

1 actions taken to comply with such require2 ments.

3 SEC. 17208. MISCELLANEOUS TERMINATIONS; MORATO4 RIUM ON PROGRAM ACTIVITIES.

5 (a) TERMINATIONS.—The following agencies and pro6 grams of the Department of Commerce are terminated:

7 (1) The Minority Business Development Admin8 istration.

9 (2) The United States Travel and Tourism Ad10 ministration.

11 (3) The programs and activities of the National

12 Telecommunications and Information Administration

13 referred to in section 17205(a).

14 (4) The Advanced Technology Program under

15 section 28 of the National Institute of Standards

16 and Technology Act (15 U.S.C. 278n).

17 (5) The Manufacturing Extension Programs

18 under sections 25 and 26 of the National Institute

19 of Standards and Technology Act (15 U.S.C. 278k

20 and 278l).

21 (6) The National Institute of Standards and

22 Technology METRIC Program.

23 (b) MORATORIUM ON PROGRAM ACTIVITIES.—The

24 authority to make grants, enter into contracts, provide as25 sistance, incur obligations, or provide commitments (in-
1630

•HR 2517 IH

1 cluding any enlargement of existing obligations or commit2 ments, except if required by law) with respect to the agen3 cies and programs described in subsection (a) is termi4 nated effective on the date of the enactment of this title.

5 SEC. 17209. EFFECTIVE DATE.

6 (a) IN GENERAL.—Except as provided in subsection

7 (b), this subtitle shall take effect on the abolishment date

8 specified in section 17101(c).

9 (b) PROVISIONS EFFECTIVE ON DATE OF ENACT10 MENT.—The following provisions of this subtitle shall take

11 effect on the date of the enactment of this Act:

12 (1) Section 17201.

13 (2) Section 17206(g), except as otherwise pro14 vided in that section.

15 (3) Section 17208(b).

16 (4) This section.

17 Subtitle C—Office of United States

18 Trade Representative

19 CHAPTER 1—GENERAL PROVISIONS

20 SEC. 17301. DEFINITIONS.

21 For purposes of this subtitle—

22 (1) the term ‘‘Office’’ means the Office of the

23 United States Trade Representative;
1631

•HR 2517 IH

1 (2) the term ‘‘Federal agency’’ has the meaning

2 given to the term ‘‘agency’’ by section 551(1) of title

3 5, United States Code; and

4 (3) the term ‘‘USTR’’ means the United States

5 Trade Representative as provided for under section

6 17311.

7 CHAPTER 2—OFFICE OF UNITED STATES

8 TRADE REPRESENTATIVE

9 Subchapter A—Establishment

10 SEC. 17311. ESTABLISHMENT OF THE OFFICE.

11 (a) IN GENERAL.—The Office of the United States

12 Trade Representative is established as an independent es13 tablishment in the executive branch of Government as de14 fined under section 104 of title 5, United States Code.

15 The United States Trade Representative shall be the head

16 of the Office and shall be appointed by the President, by

17 and with 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 Office.

22 (c) CONTINUED SERVICE OF CURRENT USTR.—The

23 individual serving as United States Trade Representative

24 on the date immediately preceding the effective date of
1632

•HR 2517 IH

1 this subtitle may continue to serve as USTR under sub2 section (a).

3 (d) SUCCESSOR TO THE DEPARTMENT OF COM4 MERCE.—The Office shall be the successor to the Depart5 ment of Commerce for purposes of protocol.

6 SEC. 17312. FUNCTIONS OF THE USTR.

7 (a) IN GENERAL.—In addition to the functions trans8 ferred to the USTR by this subtitle, such other functions

9 as the President may assign or delegate to the USTR, and

10 such other functions as the USTR may, after the effective

11 date of this subtitle, be required to carry out by law, the

12 USTR shall—

13 (1) serve as the principal advisor to the Presi14 dent on international trade policy and advise the

15 President on the impact of other policies of the

16 United States Government on international trade;

17 (2) exercise primary responsibility, with the ad18 vice of the interagency organization established

19 under section 242 of the Trade Expansion Act of

20 1962, for developing and implementing international

21 trade policy, including commodity matters and, to

22 the extent related to international trade policy, di23 rect investment matters and, in exercising such re24 sponsibility, advance and implement, as the primary
1633

•HR 2517 IH

1 mandate of the Office, the goals of the United

2 States to—

3 (A) maintain United States leadership in

4 international trade liberalization and expansion

5 efforts;

6 (B) reinvigorate the ability of the United

7 States economy to compete in international

8 markets and to respond flexibly to changes in

9 international competition; and

10 (C) expand United States participation in

11 international trade through aggressive pro12 motion and marketing of goods and services

13 that are products of the United States;

14 (3) exercise lead responsibility for the conduct

15 of international trade negotiations, including nego16 tiations relating to commodity matters and, to the

17 extent that such negotiations are related to inter18 national trade, direct investment negotiations;

19 (4) exercise lead responsibility for the establish20 ment of a national export strategy, including policies

21 designed to implement such strategy;

22 (5) with the advice of the interagency organiza23 tion established under section 242 of the Trade Ex24 pansion Act of 1962, issue policy guidance to other

25 Federal agencies on international trade, commodity,
1634

•HR 2517 IH

1 and direct investment functions to the extent nec2 essary to assure the coordination of international

3 trade policy;

4 (6) seek and promote new opportunities for

5 United States products and services to compete in

6 the world marketplace;

7 (7) assist small businesses in developing export

8 markets;

9 (8) enforce the laws of the United States relat10 ing to trade;

11 (9) analyze economic trends and developments;

12 (10) report directly to the Congress—

13 (A) on the administration of, and matters

14 pertaining to, the trade agreements program

15 under the Omnibus Trade and Competitiveness

16 Act of 1988, the Trade Act of 1974, the Trade

17 Expansion Act of 1962, section 350 of the Tar18 iff Act of 1930, and any other provision of law

19 enacted after this Act; and

20 (B) with respect to other important issues

21 pertaining to international trade;

22 (11) keep each official adviser to the United

23 States delegations to international conferences,

24 meetings, and negotiation sessions relating to trade

25 agreements who is appointed from the Committee on
1635

•HR 2517 IH

1 Finance of the Senate or the Committee on Ways

2 and Means of the House of Representatives under

3 section 161 of the Trade Act of 1974 currently in4 formed on United States negotiating objectives with

5 respect to trade agreements, the status of negotia6 tions in progress with respect to such agreements,

7 and the nature of any changes in domestic law or

8 the administration thereof which the USTR may

9 recommend to the Congress to carry out any trade

10 agreement;

11 (12) consult and cooperate with State and local

12 governments and other interested parties on inter13 national trade matters of interest to such govern14 ments and parties, and to the extent related to inter15 national trade matters, on investment matters, and,

16 when appropriate, hold informal public hearings;

17 (13) serve as the principal advisor to the Presi18 dent on Government policies designed to contribute

19 to enhancing the ability of United States industry

20 and services to compete in international markets;

21 (14) develop recommendations for national

22 strategies and specific policies intended to enhance

23 the productivity and international competitiveness of

24 United States industries;
1636

•HR 2517 IH

1 (15) serve as the principal advisor to the Presi2 dent in identifying and assessing the consequences

3 of any Government policies that adversely affect, or

4 have the potential to adversely affect, the inter5 national competitiveness of United States industries

6 and services;

7 (16) promote cooperation between business,

8 labor, and Government to improve industrial per9 formance and the ability of United States industries

10 to compete in international markets and to facilitate

11 consultation and communication between the Gov12 ernment and the private sector about domestic in13 dustrial performance and prospects and the perform14 ance and prospects of foreign competitors; and

15 (17) monitor and enforce foreign government

16 compliance with international trade agreements to

17 protect United States interests.

18 (b) INTERAGENCY ORGANIZATION.—The USTR shall

19 be the chairperson of the interagency organization estab20 lished under section 242 of the Trade Expansion Act of

21 1962.

22 (c) NATIONAL SECURITY COUNCIL.—The USTR

23 shall be a member of the National Security Council.

24 (d) ADVISORY COUNCIL.—The USTR shall be Dep25 uty Chairman of the National Advisory Council on Inter-
1637

•HR 2517 IH

1 national Monetary and Financial Policies established

2 under Executive Order 11269, issued February 14, 1966.

3 (e) AGRICULTURE.—(1) The USTR shall consult

4 with the Secretary of Agriculture or the designee of the

5 Secretary of Agriculture on all matters that potentially in6 volve international trade in agricultural products.

7 (2) If an international meeting for negotiation or con8 sultation includes discussion of international trade in agri9 cultural products, the USTR or the designee of the USTR

10 shall be Chairman of the United States delegation to such

11 meeting and the Secretary of Agriculture or the designee

12 of such Secretary shall be Vice Chairman. The provisions

13 of this paragraph shall not limit the authority of the

14 USTR under subsection (h) to assign to the Secretary of

15 Agriculture responsibility for the conduct of, or participa16 tion in, any trade negotiation or meeting.

17 (f) TRADE PROMOTION.—The USTR shall be the

18 chairperson of the Trade Promotion Coordinating Com19 mittee.

20 (g) NATIONAL ECONOMIC COUNCIL.—The USTR

21 shall be a member of the National Economic Council es22 tablished under Executive Order No. 12835, issued Janu23 ary 25, 1993.

24 (h) INTERNATIONAL TRADE NEGOTIATIONS.—Ex25 cept where expressly prohibited by law, the USTR, at the
1638

•HR 2517 IH

1 request or with the concurrence of the head of any other

2 Federal agency, may assign the responsibility for conduct3 ing or participating in any specific international trade ne4 gotiation or meeting to the head of such agency whenever

5 the USTR determines that the subject matter of such

6 international trade negotiation is related to the functions

7 carried out by such agency.

8 Subchapter B—Officers

9 SEC. 17321. DEPUTY ADMINISTRATOR OF THE OFFICE.

10 (a) ESTABLISHMENT.—There shall be in the Office

11 the Deputy Administrator of the Office of the United

12 States Trade Representative, who shall be appointed by

13 the President, by and with the advice and consent of the

14 Senate.

15 (b) ABSENCE, DISABILITY, OR VACANCY OF

16 USTR.—The Deputy Administrator of the Office of the

17 United States Trade Representative shall act for and exer18 cise the functions of the USTR during the absence or dis19 ability of the USTR or in the event the office of the USTR

20 becomes vacant. The Deputy Administrator shall act for

21 and exercise the functions of the USTR until the absence

22 or disability of the USTR no longer exists or a successor

23 to the USTR has been appointed by the President and

24 confirmed by the Senate.
1639

•HR 2517 IH

1 (c) FUNCTIONS OF DEPUTY ADMINISTRATOR.—The

2 Deputy Administrator of the Office of the United States

3 Trade Representative shall exercise all functions, under

4 the direction of the USTR, transferred to or established

5 in the Office, except those functions exercised by the Dep6 uty United States Trade Representatives, the Director

7 General for Export Promotion, the Inspector General, and

8 the General Counsel of the Office, as provided by this sub9 title.

10 SEC. 17322. DEPUTY UNITED STATES TRADE REPRESENTA11 TIVES.

12 (a) ESTABLISHMENT.—There shall be in the Office

13 2 Deputy United States Trade Representatives, who shall

14 be appointed by the President, by and with the advice and

15 consent of the Senate. The Deputy United States Trade

16 Representatives shall exercise all functions under the di17 rection of the USTR, and shall include—

18 (1) the Deputy United States Trade Represent19 ative for Negotiations; and

20 (2) the Deputy United States Trade Represent21 ative to the World Trade Organization.

22 (b) FUNCTIONS OF DEPUTY UNITED STATES TRADE

23 REPRESENTATIVES.—(1) The Deputy United States

24 Trade Representative for Negotiations shall exercise all
1640

•HR 2517 IH

1 functions transferred under section 17331 and shall have

2 the rank and status of Ambassador.

3 (2) The Deputy United States Trade Representative

4 to the World Trade Organization shall exercise all func5 tions relating to representation to the World Trade Orga6 nization and shall have the rank and status of Ambas7 sador.

8 SEC. 17323. ASSISTANT ADMINISTRATORS.

9 (a) ESTABLISHMENT.—There shall be in the Office

10 3 Assistant Administrators, who shall be appointed by the

11 President, by and with the advice and consent of the Sen12 ate. The Assistant Administrators shall exercise all func13 tions under the direction of the Deputy Administrator of

14 the Office of the United States Trade Representative and

15 include—

16 (1) the Assistant Administrator for Export Ad17 ministration;

18 (2) the Assistant Administrator for Import Ad19 ministration; and

20 (3) the Assistant Administrator for Trade and

21 Policy Analysis.

22 (b) FUNCTIONS OF ASSISTANT ADMINISTRATORS.—

23 (1) The Assistant Administrator for Export Administra24 tion shall exercise all functions transferred under section

25 17332(1)(C).
1641

•HR 2517 IH

1 (2) The Assistant Administrator for Import Adminis2 tration shall exercise all functions transferred under sec3 tion 17332(1)(D).

4 (3) The Assistant Administrator for Trade and Policy

5 Analysis shall exercise all functions transferred under sec6 tion 17332(1)(B) and all functions transferred under sec7 tion 17332(2).

8 SEC. 17324. DIRECTOR GENERAL FOR EXPORT PROMOTION.

9 (a) ESTABLISHMENT.—There shall be a Director

10 General for Export Promotion, who shall be appointed by

11 the President, by and with the advice and consent of the

12 Senate.

13 (b) FUNCTIONS.—The Director General for Export

14 Promotion shall exercise, under the direction of the

15 USTR, all functions transferred under sections

16 17332(1)(A) (relating to functions of the United States

17 and Foreign Commercial Service) and 17333 and shall

18 have the rank and status of Ambassador.

19 SEC. 17325. GENERAL COUNSEL.

20 There shall be in the Office a General Counsel, who

21 shall be appointed by the President, by and with the advice

22 and consent of the Senate. The General Counsel shall pro23 vide legal assistance to the USTR concerning the activi24 ties, programs, and policies of the Office.
1642

•HR 2517 IH

1 SEC. 17326. INSPECTOR GENERAL.

2 There shall be in the Office an Inspector General who

3 shall be appointed in accordance with the Inspector Gen4 eral Act of 1978, as amended by section 17371(b) of this

5 Act.

6 SEC. 17327. CHIEF FINANCIAL OFFICER.

7 There shall be in the Office a Chief Financial Officer

8 who shall be appointed in accordance with section 901 of

9 title 31, United States Code, as amended by section

10 17371(e) of this Act. The Chief Financial Officer shall

11 perform all functions prescribed by the Deputy Adminis12 trator of the Office of the United States Trade Represent13 ative, under the direction of the Deputy Administrator.

14 Subchapter C—Transfers to the Office

15 SEC. 17331. OFFICE OF THE UNITED STATES TRADE REP16 RESENTATIVE.

17 There are transferred to the USTR all functions of

18 the United States Trade Representative and the Office of

19 the United States Trade Representative in the Executive

20 Office of the President and all functions of any officer or

21 employee of such Office.

22 SEC. 17332. TRANSFERS FROM THE DEPARTMENT OF COM23 MERCE.

24 There are transferred to the USTR the following

25 functions:
1643

•HR 2517 IH

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, and the Director General

6 of the United States and Foreign Commercial

7 Service, relating to all functions exercised by

8 the Service.

9 (B) The Assistant Secretary of Commerce

10 for International Economic Policy and the As11 sistant Secretary of Commerce for Trade Devel12 opment.

13 (C) The Under Secretary of Commerce for

14 Export Administration.

15 (D) The Assistant Secretary of Commerce

16 for Import Administration.

17 (2) All functions of the Secretary of Commerce

18 relating to the National Trade Data Bank.

19 (3) All functions of the Secretary of Commerce

20 under the Tariff Act of 1930, the Uruguay Round

21 Agreements Act, the Trade Act of 1974, and other

22 trade-related Acts for which responsibility is not oth23 erwise assigned under this subtitle.
1644

•HR 2517 IH

1 SEC. 17333. TRADE AND DEVELOPMENT AGENCY.

2 There are transferred to the Director General for Ex3 port Promotion all functions of the Director of the Trade

4 and Development Agency. There are transferred to the Of5 fice of the Director General for Export Promotion all func6 tions of the Trade and Development Agency.

7 SEC. 17334. EXPORT-IMPORT BANK.

8 (a) IN GENERAL.—(1) There are transferred to the

9 USTR all functions of the Secretary of Commerce relating

10 to the Export-Import Bank of the United States.

11 (2) Section 3(c)(1) of the Export-Import Bank Act

12 of 1945 (12 U.S.C. 635a(c)(1)) is amended to read as fol13 lows:

14 ‘‘(c)(1) There shall be a Board of Directors of the

15 Bank consisting of the United States Trade Representa16 tive (who shall serve as Chairman), the President of the

17 Export-Import Bank of the United States (who shall serve

18 as Vice Chairman), the first Vice President, and 2 addi19 tional persons appointed by the President of the United

20 States, by and with the advice and consent of the Sen21 ate.’’.

22 (b) EX OFFICIO MEMBER OF EXPORT-IMPORT BANK

23 BOARD OF DIRECTORS.—The Director General for Export

24 Promotion shall serve as an ex officio nonvoting member

25 of the Board of Directors of the Export-Import Bank.
1645

•HR 2517 IH

1 (c) AMENDMENTS TO RELATED BANKING AND

2 TRADE ACTS.—Section 2301(h) of the Omnibus Trade

3 and Competitiveness Act of 1988 (15 U.S.C. 4721(h)) is

4 amended to read as follows:

5 ‘‘(h) ASSISTANCE TO EXPORT-IMPORT BANK.—The

6 Commercial Service shall provide such services as the Di7 rector General for Export Promotion of the Office of the

8 United States Trade Representative determines necessary

9 to assist the Export-Import Bank of the United States to

10 carry out the lending, loan guarantee, insurance, and

11 other activities of the Bank.’’.

12 SEC. 17335. OVERSEAS PRIVATE INVESTMENT CORPORA13 TION.

14 (a) BOARD OF DIRECTORS.—The second and third

15 sentences of section 233(b) of the Foreign Assistance Act

16 of 1961 (22 U.S.C. 2193(b)) are amended to read as fol17 lows: ‘‘The United States Trade Representative shall be

18 the Chairman of the Board. The Administrator of the

19 Agency for International Development (who shall serve as

20 Vice Chairman) shall serve on the Board.’’.

21 (b) EX OFFICIO MEMBER OF OVERSEAS PRIVATE IN22 VESTMENT CORPORATION BOARD OF DIRECTORS.—The

23 Director General for Export Promotion shall serve as an

24 ex officio nonvoting member of the Board of Directors of

25 the Overseas Private Investment Corporation.
1646

•HR 2517 IH

1 SEC. 17336. CONSOLIDATION OF EXPORT PROMOTION AND

2 FINANCING ACTIVITIES.

3 (a) SUBMISSION OF PLAN.—Within 180 days after

4 the date of the enactment of this Act, the President shall

5 transmit to the Congress a comprehensive plan to consoli6 date Federal nonagricultural export promotion activities

7 and export financing activities and to transfer those func8 tions to the Office. The plan shall provide for—

9 (1) the elimination of the overlap and duplica10 tion among all Federal nonagricultural export pro11 motion activities and export financing activities;

12 (2) a unified budget for Federal nonagricultural

13 export promotion activities which eliminates funding

14 for the areas of overlap and duplication identified

15 under paragraph (1); and

16 (3) a long-term agenda for developing better co17 operation between local, State and Federal programs

18 and activities designed to stimulate or assist United

19 States businesses in exporting nonagricultural goods

20 or services that are products of the United States,

21 including sharing of facilities, costs, and export mar22 ket research data.

23 (b) PLAN ELEMENTS.—The plan under subsection

24 (a) shall—
1647

•HR 2517 IH

1 (1) place all Federal nonagricultural export pro2 motion activities and export financing activities with3 in the Office;

4 (2) provide clear authority for the USTR to use

5 the expertise and assistance of other United States

6 Government agencies;

7 (3) achieve an overall 25 percent reduction in

8 the amount of funding for all Federal non9 agricultural export promotion activities within 2

10 years after the enactment of this Act; and

11 (4) include any functions of the Department of

12 Commerce not transferred by this subtitle, or of

13 other Federal departments the transfer of which to

14 the Office would be necessary to the competitiveness

15 of the United States in international trade.

16 (c) DEFINITION.—As used in this section, the term

17 ‘‘Federal nonagricultural export promotion activities’’

18 means all programs or activities of any department or

19 agency of the Federal Government (including, but not lim20 ited to, departments and agencies with representatives on

21 the Trade Promotion Coordinating Committee established

22 under section 2312 of the Export Enhancement Act of

23 1988 (15 U.S.C. 4727)) that are designed to stimulate

24 or assist United States businesses in exporting non-
1648

•HR 2517 IH

1 agricultural goods or services that are products of the

2 United States, including trade missions.

3 SEC. 17337. ADDITIONAL TRADE FUNCTIONS.

4 (a) TERMINATION OF AUTHORIZATIONS OF APPRO5 PRIATIONS.—

6 (1) NAFTA SECRETARIAT.—Section 105(b) of

7 the North American Free Trade Agreement Imple8 mentation Act (19 U.S.C. 3315(b)) is amended by

9 striking ‘‘each fiscal year after fiscal year 1993’’ and

10 inserting ‘‘each of fiscal years 1994 and 1995’’.

11 (2) BORDER ENVIRONMENT COOPERATION COM12 MISSION.—Section 533(a)(2) of the North American

13 Free Trade Agreement Implementation Act (19

14 U.S.C. 3473(a)(2)) is amended by striking ‘‘and

15 each fiscal year thereafter’’ and inserting ‘‘fiscal

16 year 1995’’.

17 (b) FUNCTIONS RELATED TO TEXTILE AGREE18 MENTS.—

19 (1) FUNCTIONS OF CITA.—(A) Subject to sub20 paragraph (B), those functions delegated to the

21 Committee for the Implementation of Textile Agree22 ments established under Executive Order 11651 (7

23 U.S.C. 1854 note) (hereafter in this subsection re24 ferred to as ‘‘CITA’’) are transferred to the USTR.
1649

•HR 2517 IH

1 (B) Those functions delegated to CITA that re2 late to the assessment of the impact of textile im3 ports on domestic industry are transferred to the

4 International Trade Commission.

5 (2) ABOLITION OF CITA.—CITA is abolished.

6 Subchapter D—Administrative Provisions

7 SEC. 17341. PERSONNEL PROVISIONS.

8 (a) APPOINTMENTS.—The USTR may appoint and

9 fix the compensation of such officers and employees, in10 cluding investigators, attorneys, and administrative law

11 judges, as may be necessary to carry out the functions

12 of the USTR and the Office. Except as otherwise provided

13 by law, such officers and employees shall be appointed in

14 accordance with the civil service laws and their compensa15 tion fixed in accordance with title 5, United 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 Office equal to

22 the number of positions in that grade level which were

23 used primarily for the performance of functions and of24 fices transferred by this subtitle and which were assigned
1650

•HR 2517 IH

1 and filled on the day before the effective date of this sub2 title.

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
1651

•HR 2517 IH

1 rate of pay for a position above GS–15 of the General

2 Schedule under section 5332 of such title. The USTR may

3 pay experts and consultants who are serving away from

4 their homes or regular place of business travel expenses

5 and per diem in lieu of subsistence at rates authorized

6 by sections 5702 and 5703 of such title for persons in

7 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-
1652

•HR 2517 IH

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 Office, with

11 the concurrence of the USTR, to such positions in nations

12 which are major trade competitors of the United States.

13 The Secretary of State shall obtain and use the rec14 ommendations of the USTR with respect to the number

15 of positions to be so classified under this subsection.

16 SEC. 17342. 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 Office as the USTR may des23 ignate, and may authorize successive redelegations of such

24 functions as may be necessary or appropriate. No delega25 tion of functions by the USTR under this section or under
1653

•HR 2517 IH

1 any other provision of this subtitle shall relieve the USTR

2 of responsibility for the administration of such functions.

3 SEC. 17343. SUCCESSION.

4 (a) ORDER OF SUCCESSION.—Subject to the author5 ity of the President, and except as provided in section

6 17321(b), the USTR shall prescribe the order by which

7 officers of the Office who are appointed by the President,

8 by and with the advice and consent of the Senate, shall

9 act for, and perform the functions of, the USTR or any

10 other officer of the Office appointed by the President, by

11 and with the advice and consent of the Senate, during the

12 absence or disability of the USTR or such other officer,

13 or in the event of a vacancy in the office of the USTR

14 or such other officer.

15 (b) CONTINUATION.—Notwithstanding any other pro16 vision of law, and unless the President directs otherwise,

17 an individual acting for the USTR or another officer of

18 the Office pursuant to subsection (a) shall continue to

19 serve in that capacity until the absence or disability of

20 the USTR or such other officer no longer exists or a suc21 cessor to the USTR or such other officer has been ap22 pointed by the President and confirmed by the Senate.

23 SEC. 17344. REORGANIZATION.

24 (a) IN GENERAL.—Subject to subsection (b), the

25 USTR is authorized to allocate or reallocate functions
1654

•HR 2517 IH

1 among the officers of the Office, and to establish, consoli2 date, alter, or discontinue such organizational entities in

3 the Office as may be necessary or appropriate.

4 (b) EXCEPTION.—The USTR may not exercise the

5 authority under subsection (a) to establish, consolidate,

6 alter, or discontinue any organizational entity in the Office

7 or allocate or reallocate any function of an officer or em8 ployee of the Office that is inconsistent with any specific

9 provision of this subtitle.

10 SEC. 17345. RULES.

11 The USTR is authorized to prescribe, in accordance

12 with the provisions of chapters 5 and 6 of title 5, United

13 States Code, such rules and regulations as the USTR de14 termines necessary or appropriate to administer and man15 age the functions of the USTR or the Office.

16 SEC. 17346. FUNDS TRANSFER.

17 The USTR may, when authorized in an appropriation

18 Act in any fiscal year, transfer funds from one appropria19 tion to another within the Office, except that no appro20 priation for any fiscal year shall be either increased or

21 decreased by more than 10 percent and no such transfer

22 shall result in increasing any such appropriation above the

23 amount authorized to be appropriated therefor.
1655

•HR 2517 IH

1 SEC. 17347. CONTRACTS, GRANTS, AND COOPERATIVE

2 AGREEMENTS.

3 (a) IN GENERAL.—Subject to the provisions of the

4 Federal Property and Administrative Services Act of

5 1949, the USTR may make, enter into, and perform such

6 contracts, leases, cooperative agreements, grants, or other

7 similar transactions with public agencies, private organiza8 tions, and persons, and make payments (in lump sum or

9 installments, and by way of advance or reimbursement,

10 and, in the case of any grant, with necessary adjustments

11 on account of overpayments and underpayments) as the

12 USTR considers necessary or appropriate to carry out the

13 functions of the USTR or the Office.

14 (b) EXCEPTION.—Notwithstanding any other provi15 sion of this subtitle, the authority to enter into contracts

16 or to make payments under this subchapter shall be effec17 tive only to such extent or in such amounts as are provided

18 in advance in appropriation Acts. This subsection does not

19 apply with respect to the authority granted under section

20 17349.

21 SEC. 17348. USE OF FACILITIES.

22 (a) USE BY USTR.—With their consent, the USTR,

23 with or without reimbursement, may use the research,

24 services, equipment, and facilities of—

25 (1) an individual,
1656

•HR 2517 IH

1 (2) any public or private nonprofit agency or

2 organization, including any agency or instrumental3 ity of the United States or of any State, the District

4 of Columbia, the Commonwealth of Puerto Rico, or

5 any territory or possession of the United States,

6 (3) any political subdivision of any State, the

7 District of Columbia, the Commonwealth of Puerto

8 Rico, or any territory or possession of the United

9 States, or

10 (4) any foreign government,

11 in carrying out any function of the USTR or the Office.

12 (b) USE OF USTR FACILITIES.—The USTR, under

13 terms, at rates, and for periods that the USTR considers

14 to be in the public interest, may permit the use by public

15 and private agencies, corporations, associations or other

16 organizations, or individuals, of any real property, or any

17 facility, structure or other improvement thereon, under the

18 custody of the USTR. The USTR may require permittees

19 under this section to maintain or recondition, at their own

20 expense, the real property, facilities, structures, and im21 provements used by such permittees.

22 SEC. 17349. GIFTS AND BEQUESTS.

23 (a) IN GENERAL.—The USTR is authorized to ac24 cept, hold, administer, and utilize gifts and bequests of

25 property, both real and personal, for the purpose of aiding
1657

•HR 2517 IH

1 or facilitating the work of the Office. Gifts and bequests

2 of money and the proceeds from sales of other property

3 received as gifts or bequests shall be deposited in the Unit4 ed States Treasury in a separate fund and shall be dis5 bursed on order of the USTR. Property accepted pursuant

6 to this subsection, and the proceeds thereof, shall be used

7 as nearly as possible in accordance with the terms of the

8 gift or bequest.

9 (b) TAX TREATMENT.—For the purpose of Federal

10 income, estate, and gift taxes, and State taxes, property

11 accepted under subsection (a) shall be considered a gift

12 or bequest to or for the use of the United States.

13 (c) INVESTMENT.—Upon the request of the USTR,

14 the Secretary of the Treasury may invest and reinvest in

15 securities of the United States or in securities guaranteed

16 as to principal and interest by the United States any mon17 eys contained in the fund provided for in subsection (a).

18 Income accruing from such securities, and from any other

19 property held by the USTR pursuant to subsection (a),

20 shall be deposited to the credit of the fund, and shall be

21 disbursed upon order of the USTR.

22 SEC. 17350. WORKING CAPITAL FUND.

23 (a) ESTABLISHMENT.—The USTR is authorized to

24 establish for the Office a working capital fund, to be avail25 able without fiscal year limitation, for expenses necessary
1658

•HR 2517 IH

1 for the maintenance and operation of such common ad2 ministrative services as the USTR shall find to be desir3 able in the interest of economy and efficiency, including—

4 (1) a central supply service for stationery and

5 other supplies and equipment for which adequate

6 stocks may be maintained to meet in whole or in

7 part the requirements of the Office and its compo8 nents;

9 (2) central messenger, mail, and telephone serv10 ice and other communications services;

11 (3) office space and central services for docu12 ment reproduction and for graphics and visual aids;

13 (4) a central library service; and

14 (5) such other services as may be approved by

15 the Director of the Office of Management and Budg16 et.

17 (b) OPERATION OF FUND.—The capital of the fund

18 shall consist of any appropriations made for the purpose

19 of providing working capital and the fair and reasonable

20 value of such stocks of supplies, equipment, and other as21 sets and inventories on order as the USTR may transfer

22 to the fund, less the related liabilities and unpaid obliga23 tions. The fund shall be reimbursed in advance from avail24 able funds of agencies and offices in the Office, or from

25 other sources, for supplies and services at rates which will
1659

•HR 2517 IH

1 approximate the expense of operation, including the ac2 crual of annual leave and the depreciation of equipment.

3 The fund shall also be credited with receipts from sale or

4 exchange of property and receipts in payment for loss or

5 damage to property owned by the fund. There shall be cov6 ered into the United States Treasury as miscellaneous re7 ceipts any surplus of the fund (all assets, liabilities, and

8 prior losses considered) above the amounts transferred or

9 appropriated to establish and maintain the fund. There

10 shall be transferred to the fund the stocks of supplies,

11 equipment, other assets, liabilities, and unpaid obligations

12 relating to those services which the USTR determines will

13 be performed.

14 SEC. 17351. SERVICE CHARGES.

15 (a) AUTHORITY.—Notwithstanding any other provi16 sion of law, the USTR may establish reasonable fees and

17 commissions with respect to applications, documents,

18 awards, loans, grants, research data, services, and assist19 ance administered by the Office, and the USTR may

20 change and abolish such fees and commissions. Before es21 tablishing, changing, or abolishing any schedule of fees or

22 commissions under this section, the USTR may submit

23 such schedule to the Congress.

24 (b) DEPOSITS.—The USTR is authorized to require

25 a deposit before the USTR provides any item, information,
1660

•HR 2517 IH

1 service, or assistance for which a fee or commission is re2 quired under this section.

3 (c) DEPOSIT OF MONEYS.—Moneys received under

4 this section shall be deposited in the Treasury in a special

5 account for use by the USTR and are authorized to be

6 appropriated and made available until expended.

7 (d) FACTORS IN ESTABLISHING FEES AND COMMIS8 SIONS.—In establishing reasonable fees or commissions

9 under this section, the USTR may take into account—

10 (1) the actual costs which will be incurred in

11 providing the items, information, services, or assist12 ance concerned;

13 (2) the efficiency of the Government in provid14 ing such items, information, services, or assistance;

15 (3) the portion of the cost that will be incurred

16 in providing such items, information, services, or as17 sistance which may be attributed to benefits for the

18 general public rather than exclusively for the person

19 to whom the items, information, services, or assist20 ance is provided;

21 (4) any public service which occurs through the

22 provision of such items, information, services, or as23 sistance; and

24 (5) such other factors as the USTR considers

25 appropriate.
1661

•HR 2517 IH

1 (e) REFUNDS OF EXCESS PAYMENTS.—In any case

2 in which the USTR determines that any person has made

3 a payment which is not required under this section or has

4 made a payment which is in excess of the amount required

5 under this section, the USTR, upon application or other6 wise, may cause a refund to be made from applicable

7 funds.

8 SEC. 17352. SEAL OF OFFICE.

9 The USTR shall cause a seal of office to be made

10 for the Office of such design as the USTR shall approve.

11 Judicial notice shall be taken of such seal.

12 Subchapter E—Related Agencies

13 SEC. 17361. INTERAGENCY TRADE ORGANIZATION.

14 Section 242(a)(3) of the Trade Expansion Act of

15 1962 (19 U.S.C. 1872(a)(3)) is amended to read as fol16 lows:

17 ‘‘(3)(A) The interagency organization estab18 lished under subsection (a) shall be composed of—

19 ‘‘(i) the United States Trade Representa20 tive, who shall be the chairperson,

21 ‘‘(ii) the Secretary of Agriculture,

22 ‘‘(iii) the Secretary of the Treasury,

23 ‘‘(iv) the Secretary of Labor,

24 ‘‘(v) the Secretary of State, and
1662

•HR 2517 IH

1 ‘‘(vi) the representatives of such other de2 partments and agencies as the United States

3 Trade Representative shall designate.

4 ‘‘(B) The United States Trade Representative

5 may invite representatives from other agencies, as

6 appropriate, to attend particular meetings if subject

7 matters of specific functional interest to such agen8 cies are under consideration. It shall meet at such

9 times and with respect to such matters as the Presi10 dent or the chairperson shall direct.’’.

11 SEC. 17362. NATIONAL SECURITY COUNCIL.

12 The fourth paragraph of section 101(a) of the Na13 tional Security Act of 1947 (50 U.S.C. 402(a)) is amend14 ed—

15 (1) by redesignating clauses (5), (6), and (7) as

16 clauses (6), (7), and (8), respectively; and

17 (2) by inserting after clause (4) the following

18 new clause:

19 ‘‘(5) the United States Trade Representative;’’.

20 SEC. 17363. INTERNATIONAL MONETARY FUND.

21 Section 3 of the Bretton Woods Agreement Act is

22 amended by adding at the end the following new sub23 section:

24 ‘‘(e) The United States executive director of the Fund

25 shall consult with the United States Trade Representative
1663

•HR 2517 IH

1 with respect to matters under consideration by the Fund

2 which relate to trade.’’.

3 Subchapter F—Conforming Amendments

4 SEC. 17371. AMENDMENTS TO GENERAL PROVISIONS.

5 (a) INSPECTOR GENERAL.—The Inspector General

6 Act of 1978 is amended—

7 (1) in subsection 9(a)(1) by inserting after sub8 paragraph (W) the following:

9 ‘‘(X) of the United States Trade Rep10 resentative, all functions of the Inspector Gen11 eral of the Department of Commerce and the

12 Office of the Inspector General of the Depart13 ment of Commerce relating to the functions

14 transferred to the United States Trade Rep15 resentative by section 17332 of the Department

16 of Commerce Dismantling Act; and’’; and

17 (2) in section 11—

18 (A) in paragraph (1) by inserting ‘‘the

19 United States Trade Representative;’’ after

20 ‘‘the Attorney General;’’; and

21 (B) in paragraph (2) by inserting ‘‘the Of22 fice of the United States Trade Representa23 tive,’’ after ‘‘Treasury;’’.
1664

•HR 2517 IH

1 (b) AMENDMENT TO THE TRADE ACT OF 1974.—(1)

2 Chapter 4 of title I of the Trade Act of 1974 is amended

3 to read as follows:

4 ‘‘CHAPTER 4—REPRESENTATION IN

5 TRADE NEGOTIATIONS

6 ‘‘SEC. 141. FUNCTIONS OF THE UNITED STATES TRADE REP7 RESENTATIVE.

8 ‘‘The United States Trade Representative established

9 under section 17311 of the Department of Commerce Dis10 mantling Act shall—

11 ‘‘(1) be the chief representative of the United

12 States for each trade negotiation under this title or

13 chapter 1 of title III of this Act, or subtitle A of

14 title I of the Omnibus Trade and Competitiveness

15 Act of 1988, or any other provision of law enacted

16 after the Department of Commerce Dismantling Act;

17 ‘‘(2) report directly to the President and the

18 Congress, and be responsible to the President and

19 the Congress for the administration of trade agree20 ments programs under this Act, the Omnibus Trade

21 and Competitiveness Act of 1988, the Trade Expan22 sion Act of 1962, section 350 of the Tariff Act of

23 1930, and any other provision of law enacted after

24 the Department of Commerce Dismantling Act;
1665

•HR 2517 IH

1 ‘‘(3) advise the President and the Congress

2 with respect to nontariff barriers to international

3 trade, international commodity agreements, and

4 other matters which are related to the trade agree5 ments programs; and

6 ‘‘(4) be responsible for making reports to Con7 gress with respect to the matters set forth in para8 graphs (1) and (2).’’.

9 (2) The table of contents in the first section of the

10 Trade Act of 1974 is amended by striking the items relat11 ing to chapter 4 and section 141 and inserting the follow12 ing:

‘‘CHAPTER 4—REPRESENTATION IN TRADE NEGOTIATIONS

‘‘Sec. 141. Functions of the United States Trade Representative.’’.

13 (d) FOREIGN SERVICE PERSONNEL.—The Foreign

14 Service Act of 1980 is amended by striking paragraph (3)

15 of section 202(a) (22 U.S.C. 3922(a)) and inserting the

16 following:

17 ‘‘(3) The United States Trade Representative

18 may utilize the Foreign Service personnel system in

19 accordance with this Act—

20 ‘‘(A) with respect to the personnel per21 forming functions—

22 ‘‘(i) which were transferred to the De23 partment of Commerce from the Depart-
1666

•HR 2517 IH

1 ment of State by Reorganization Plan No.

2 3 of 1979; and

3 ‘‘(ii) which were subsequently trans4 ferred to the United States Trade Rep5 resentative by section 17332 of the De6 partment of Commerce Dismantling Act;

7 and

8 ‘‘(B) with respect to other personnel of the

9 Office of United States Trade Representative to

10 the extent the President determines to be nec11 essary in order to enable the Office of the Unit12 ed States Trade Representative to carry out

13 functions which require service abroad.’’.

14 (e) CHIEF FINANCIAL OFFICERS.—Section 901(b)(1)

15 of title 31, United States Code, is amended by adding at

16 the end the following:

17 ‘‘(Q) The Office of the United States

18 Trade Representative.’’.

19 SEC. 17372. REPEALS.

20 Sections 1 and 2 of the Act of June 5, 1939 (15

21 U.S.C. 1502 and 1503; 53 Stat. 808), relating to the

22 Under Secretary of Commerce, are repealed.
1667

•HR 2517 IH

1 SEC. 17373. CONFORMING AMENDMENTS RELATING TO EX2 ECUTIVE SCHEDULE POSITIONS.

3 (a) POSITIONS AT LEVEL I.—Section 5312 of title

4 5, United States Code, is amended by amending the item

5 relating to the United States Trade Representative to read

6 as follows:

7 ‘‘United States Trade Representative, Office of

8 the United States Trade Representative.’’.

9 (b) POSITIONS AT LEVEL II.—Section 5313 of title

10 5, United States Code, is amended by adding at the end

11 the following:

12 ‘‘Deputy Administrator of the Office of the

13 United States Trade Representative.

14 ‘‘Deputy United States Trade Representatives,

15 Office of the United States Trade Representative

16 (2).’’.

17 (c) POSITIONS AT LEVEL III.—Section 5314 of title

18 5, United States Code, is amended by adding at the end

19 the following:

20 ‘‘Assistant Administrators, Office of the United

21 States Trade Representative (3).

22 ‘‘Director General for Export Promotion, Office

23 of the United States Trade Representative.’’.

24 (d) POSITIONS AT LEVEL IV.—Section 5315 of title

25 5, United States Code, is amended—
1668

•HR 2517 IH

1 (1) by striking the item relating to the Assist2 ant Secretary of Commerce and Director General of

3 the United States and Foreign Commercial Service;

4 and

5 (2) by adding at the end the following:

6 ‘‘General Counsel, Office of the United States

7 Trade Representative.

8 ‘‘Inspector General, Office of the United States

9 Trade Representative.

10 ‘‘Chief Financial Officer, Office of the United

11 States Trade Representative.’’.

12 Subchapter G—Miscellaneous

13 SEC. 17381. EFFECTIVE DATE.

14 (a) IN GENERAL.—This subtitle shall take effect on

15 the effective date specified in section 17209(a), except

16 that—

17 (1) section 17336 shall take effect on the date

18 of the enactment of this Act; and

19 (2) at any time after the date of the enactment

20 of this Act the officers provided for in subchapter B

21 may be nominated and appointed, as provided in

22 such subchapter.

23 (b) INTERIM COMPENSATION AND EXPENSES.—

24 Funds available to the Department of Commerce or the

25 Office of the United States Trade Representative (or any
1669

•HR 2517 IH

1 official or component thereof), with respect to the func2 tions transferred by this subtitle, may be used, with ap3 proval of the Director of the Office of Management and

4 Budget, to pay the compensation and expenses of an offi5 cer appointed under subsection (a) who will carry out such

6 functions until funds for that purpose are otherwise avail7 able.

8 SEC. 17382. INTERIM APPOINTMENTS.

9 (a) IN GENERAL.—If one or more officers required

10 by this subtitle to be appointed by and with the advice

11 and consent of the Senate have not entered upon office

12 on the effective date of this subtitle and notwithstanding

13 any other provision of law, the President may designate

14 any officer who was appointed by and with the advice and

15 consent of the Senate, and who was such an officer on

16 the day before the effective date of this subtitle, to act

17 in the office until it is filled as provided by this subtitle.

18 (b) COMPENSATION.—Any officer acting in an office

19 pursuant to subsection (a) shall receive compensation at

20 the rate prescribed by this subtitle for such office.

21 SEC. 17383. FUNDING REDUCTIONS RESULTING FROM RE22 ORGANIZATION.

23 (a) FUNDING REDUCTIONS.—Except as provided in

24 subsection (b), for each fiscal year that begins on or after

25 the effective date of this section, the total of amounts obli-
1670

•HR 2517 IH

1 gated or expended by the United States in performing all

2 functions vested in the USTR and the Office pursuant to

3 this subtitle may not exceed 75 percent of the total

4 amount obligated or expended by the United States in per5 forming all such functions for fiscal year 1995.

6 (b) EXCEPTION.—Subsection (a) shall not apply to

7 obligations or expenditures incurred as a direct con8 sequence of the termination, transfer, or other disposition

9 of functions described in subsection (a) pursuant to this

10 title.

11 (c) RULE OF CONSTRUCTION.—This section shall

12 take precedence over any other provision of law unless

13 such provision explicitly refers to this section and makes

14 an exception to it.

15 (d) RESPONSIBILITIES OF THE DIRECTOR OF THE

16 OFFICE OF MANAGEMENT AND BUDGET.—The Director

17 of the Office of Management and Budget shall—

18 (1) ensure compliance with the requirements of

19 this section; and

20 (2) include in each report under sections

21 17106(a) and (b) a description of actions taken to

22 comply with such requirements.
1671

•HR 2517 IH

1 Subtitle D—Patent and Trademark

2 Office Corporation

3 SEC. 17401. SHORT TITLE.

4 This subtitle may be cited as the ‘‘Patent and Trade5 mark Office Corporation Act of 1995’’.

6 CHAPTER 1—PATENT AND TRADEMARK

7 OFFICE

8 SEC. 17411. ESTABLISHMENT OF PATENT AND TRADEMARK

9 OFFICE AS A CORPORATION.

10 Section 1 of title 35, United States Code, is amended

11 to read as follows:

12 ‘‘§ 1. Establishment

13 ‘‘(a) ESTABLISHMENT.—The Patent and Trademark

14 Office is established as a wholly owned Government cor15 poration subject to chapter 91 of title 31, except as other16 wise provided in this title.

17 ‘‘(b) OFFICES.—The Patent and Trademark Office

18 shall maintain an office in the District of Columbia, or

19 the metropolitan area thereof, for the service of process

20 and papers and shall be deemed, for purposes of venue

21 in civil actions, to be a resident of the district in which

22 its principal office is located. The Patent and Trademark

23 Office may establish offices in such other places as it con24 siders necessary or appropriate in the conduct of its busi25 ness.
1672

•HR 2517 IH

1 ‘‘(c) REFERENCE.—For purposes of this title, the

2 Patent and Trademark Office shall also be referred to as

3 the ‘Office’.’’.

4 SEC. 17412. POWERS AND DUTIES.

5 Section 2 of title 35, United States Code, is amended

6 to read as follows:

7 ‘‘§ 2. Powers and Duties

8 ‘‘(a) IN GENERAL.—The Patent and Trademark Of9 fice shall be responsible for—

10 ‘‘(1) the granting and issuing of patents and

11 the registration of trademarks;

12 ‘‘(2) conducting studies, programs, or ex13 changes of items or services regarding domestic and

14 international patent and trademark law or the ad15 ministration of the Office, including programs to

16 recognize, identify, assess, and forecast the tech17 nology of patented inventions and their utility to in18 dustry;

19 ‘‘(3) authorizing or conducting studies and pro20 grams cooperatively with foreign patent and trade21 mark offices and international organizations, in con22 nection with the granting and issuing of patents and

23 the registration of trademarks; and

24 ‘‘(4) disseminating to the public information

25 with respect to patents and trademarks.
1673

•HR 2517 IH

1 ‘‘(b) SPECIFIC POWERS.—The Office—

2 ‘‘(1) shall have perpetual succession;

3 ‘‘(2) shall adopt and use a corporate seal, which

4 shall be judicially noticed and with which letters pat5 ent, certificates of trademark registrations, and pa6 pers issued by the Office shall be authenticated;

7 ‘‘(3) may sue and be sued in its corporate name

8 and be represented by its own attorneys in all judi9 cial and administrative proceedings, subject to the

10 provisions of section 8 of this title;

11 ‘‘(4) may indemnify the Commissioner of Pat12 ents and Trademarks, and other officers, attorneys,

13 agents, and employees (including members of the

14 Management Advisory Board established in section

15 5) of the Office for liabilities and expenses incurred

16 within the scope of their employment;

17 ‘‘(5) may adopt, amend, and repeal bylaws,

18 rules, and regulations, governing the manner in

19 which its business will be conducted and the powers

20 granted to it by law will be exercised;

21 ‘‘(6) may acquire, construct, purchase, lease,

22 hold, manage, operate, improve, alter, and renovate

23 any real, personal, or mixed property, or any interest

24 therein, as it considers necessary to carry out its

25 functions;
1674

•HR 2517 IH

1 ‘‘(7)(A) may make such purchases, contracts

2 for the construction, maintenance, or management

3 and operation of facilities, and contracts for supplies

4 or services, without regard to section 111 of the

5 Federal Property and Administrative Services Act of

6 1949 (40 U.S.C. 759); and

7 ‘‘(B) may enter into and perform such pur8 chases and contracts for printing services, including

9 the process of composition, platemaking, presswork,

10 silk screen processes, binding, microform, and the

11 products of such processes, as it considers necessary

12 to carry out the functions of the Office, without re13 gard to sections 501 through 517 and 1101 through

14 1123 of title 44;

15 ‘‘(8) may use, with their consent, services,

16 equipment, personnel, and facilities of other depart17 ments, agencies, and instrumentalities of the Fed18 eral Government, on a reimbursable basis, and co19 operate with such other departments, agencies, and

20 instrumentalities in the establishment and use of

21 services, equipment, and facilities of the Office;

22 ‘‘(9) may obtain from the Administrator of

23 General Services such services as the Administrator

24 is authorized to provide to other agencies of the
1675

•HR 2517 IH

1 United States, on the same basis as those services

2 are provided to other agencies of the United States;

3 ‘‘(10) may use, with the consent of the United

4 States and the agency, government, or international

5 organization concerned, the services, records, facili6 ties, or personnel of any State or local government

7 agency or instrumentality or foreign government or

8 international organization to perform functions on

9 its behalf;

10 ‘‘(11) may determine the character of and the

11 necessity for its obligations and expenditures and

12 the manner in which they shall be incurred, allowed,

13 and paid, subject to the provisions of this title and

14 the Act of July 5, 1946 (commonly referred to as

15 the ‘Trademark Act of 1946’);

16 ‘‘(12) may retain and use all of its revenues

17 and receipts, including revenues from the sale, lease,

18 or disposal of any real, personal, or mixed property,

19 or any interest therein, of the Office, in carrying out

20 the functions of the Office, including for research

21 and development and capital investment, subject to

22 the provisions of section 10101 of the Omnibus

23 Budget Reconciliation Act of 1990 (35 U.S.C. 41

24 note);
1676

•HR 2517 IH

1 ‘‘(13) shall have the priority of the United

2 States with respect to the payment of debts from

3 bankrupt, insolvent, and decedents’ estates;

4 ‘‘(14) may accept monetary gifts or donations

5 of services, or of real, personal, or mixed property,

6 in order to carry out the functions of the Office;

7 ‘‘(15) may execute, in accordance with its by8 laws, rules, and regulations, all instruments nec9 essary and appropriate in the exercise of any of its

10 powers;

11 ‘‘(16) may provide for liability insurance and

12 insurance against any loss in connection with its

13 property, other assets, or operations either by con14 tract or by self-insurance; and

15 ‘‘(17) shall pay any settlement or judgment en16 tered against it from the funds of the Office and not

17 from amounts available under section 1304 of title

18 31.’’.

19 SEC. 17413. ORGANIZATION AND MANAGEMENT.

20 Section 3 of title 35, United States Code, is amended

21 to read as follows:

22 ‘‘§ 3. Officers and employees

23 ‘‘(a) COMMISSIONER.—

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

25 Patent and Trademark Office shall be vested in a
1677

•HR 2517 IH

1 Commissioner of Patents and Trademarks (hereafter

2 in this title referred to as the ‘Commissioner’), who

3 shall be a citizen of the United States and who shall

4 be appointed by the President, by and with the ad5 vice and consent of the Senate. The Commissioner

6 shall be a person who, by reason of professional

7 background and experience in patent and trademark

8 law, is especially qualified to manage the Office.

9 ‘‘(2) DUTIES.—

10 ‘‘(A) IN GENERAL.—The Commissioner

11 shall be responsible for the management and di12 rection of the Office, including the issuance of

13 patents and the registration of trademarks.

14 ‘‘(B) ADVISING THE PRESIDENT.—The

15 Commissioner shall advise the President of all

16 activities of the Patent and Trademark Office

17 undertaken in response to obligations of the

18 United States under treaties and executive

19 agreements, or which relate to cooperative pro20 grams with those authorities of foreign govern21 ments that are responsible for granting patents

22 or registering trademarks. The Commissioner

23 shall also recommend to the President changes

24 in law or policy which may improve the ability

25 of United States citizens to secure and enforce
1678

•HR 2517 IH

1 patent rights or trademark rights in the United

2 States or in foreign countries.

3 ‘‘(C) CONSULTING WITH THE MANAGE4 MENT ADVISORY BOARD.—The Commissioner

5 shall consult with the Management Advisory

6 Board established in section 5 on a regular

7 basis on matters relating to the operation of the

8 Patent and Trademark Office, and shall consult

9 with the Board before submitting budgetary

10 proposals to the Office of Management and

11 Budget or changing or proposing to change pat12 ent or trademark user fees or patent or trade13 mark regulations.

14 ‘‘(D) SECURITY CLEARANCES.—The Com15 missioner, in consultation with the Director of

16 the Office of Personnel Management, shall

17 maintain a program for identifying national se18 curity positions and providing for appropriate

19 security clearances.

20 ‘‘(3) TERM.—The Commissioner shall serve a

21 term of 5 years, and may continue to serve after the

22 expiration of the Commissioner’s term until a suc23 cessor is appointed and assumes office. The Com24 missioner may be reappointed to subsequent terms.
1679

•HR 2517 IH

1 ‘‘(4) OATH.—The Commissioner shall, before

2 taking office, take an oath to discharge faithfully the

3 duties of the Office.

4 ‘‘(5) COMPENSATION.—The Commissioner shall

5 receive compensation at the rate of pay in effect for

6 Level III of the Executive Schedule under section

7 5314 of title 5.

8 ‘‘(6) REMOVAL.—The Commissioner may be re9 moved from office by the President only for cause.

10 ‘‘(7) DESIGNEE OF COMMISSIONER.—The Com11 missioner shall designate an officer of the Office who

12 shall be vested with the authority to act in the ca13 pacity of the Commissioner in the event of the ab14 sence or incapacity of the Commissioner.

15 ‘‘(b) OFFICERS AND EMPLOYEES OF THE OFFICE.—

16 ‘‘(1) DEPUTY COMMISSIONERS.—The Commis17 sioner shall appoint a Deputy Commissioner for Pat18 ents and a Deputy Commissioner for Trademarks

19 for terms that shall expire on the date on which the

20 Commissioner’s term expires. The Deputy Commis21 sioner for Patents shall be a person with dem22 onstrated experience in patent law and the Deputy

23 Commissioner for Trademarks shall be a person with

24 demonstrated experience in trademark law. The

25 Deputy Commissioner for Patents and the Deputy
1680

•HR 2517 IH

1 Commissioner for Trademarks shall be the principal

2 policy advisors to the Commissioner on all aspects of

3 the activities of the Office that affect the adminis4 tration of patent and trademark operations, respec5 tively.

6 ‘‘(2) OTHER OFFICERS AND EMPLOYEES.—The

7 Commissioner shall—

8 ‘‘(A) appoint an Inspector General and

9 such other officers, employees (including attor10 neys), and agents of the Office as the Commis11 sioner considers necessary to carry out its func12 tions;

13 ‘‘(B) fix the compensation of such officers

14 and employees; and

15 ‘‘(C) define the authority and duties of

16 such officers and employees and delegate to

17 them such of the powers vested in the Office as

18 the Commissioner may determine.

19 The Office shall not be subject to any administra20 tively or statutorily imposed limitation on positions

21 or personnel, and no positions or personnel of the

22 Office shall be taken into account for purposes of

23 applying any such limitation, except to the extent

24 otherwise specifically provided by statute with re25 spect to the Office.
1681

•HR 2517 IH

1 ‘‘(c) LIMITS ON COMPENSATION.—Except as other2 wise provided in this title or any other provision of law,

3 the basic pay of an officer or employee of the Office for

4 any calendar year may not exceed the annual rate of basic

5 pay in effect for level IV of the Executive Schedule under

6 section 5315 of title 5. The Commissioner shall by regula7 tion establish a limitation on the total compensation pay8 able to officers or employees of the Office, which may not

9 exceed the annual rate of basic pay in effect for level I

10 of the Executive Schedule under section 5312 of title 5.

11 ‘‘(d) INAPPLICABILITY OF TITLE 5 GENERALLY.—

12 Except as otherwise provided in this section, officers and

13 employees of the Office shall not be subject to the provi14 sions of title 5 relating to Federal employees.

15 ‘‘(e) CONTINUED APPLICABILITY OF CERTAIN PRO16 VISION OF TITLE 5.—The following provisions of title 5

17 shall apply to the Office and its officers and employees:

18 ‘‘(1) Section 3110 (relating to employment of

19 relatives; restrictions).

20 ‘‘(2) Subchapter II of chapter 55 (relating to

21 withholding pay).

22 ‘‘(3) Subchapter II of chapter 73 (relating to

23 employment limitations).

24 ‘‘(f) PROVISIONS OF TITLE 5 RELATING TO CERTAIN

25 BENEFITS.—
1682

•HR 2517 IH

1 ‘‘(1) RETIREMENT.—(A)(i) Any individual who

2 becomes an officer or employee of the Office pursu3 ant to subsection (h) shall, if such individual has at

4 least 3 years of creditable service (within the mean5 ing of section 8332 or 8411 of title 5) as of the ef6 fective date of the Patent and Trademark Office

7 Corporation Act of 1995, remain subject to sub8 chapter III of chapter 83 or chapter 84 of such title,

9 as the case may be, so long as such individual con10 tinues to hold an office or position in or under the

11 Office without a break in service.

12 ‘‘(ii)(I) Except as provided in subclause (II),

13 with respect to an individual described in clause (i),

14 the Office shall make the appropriate withholding

15 from pay and shall pay the contributions required of

16 an employing agency into the Civil Service Retire17 ment and Disability Fund and, if applicable, the

18 Thrift Savings Fund in accordance with applicable

19 provisions of subchapter III of chapter 83 or chapter

20 84 of title 5, as the case may be.

21 ‘‘(II) In the case of an officer or employee who

22 remains subject to subchapter III of chapter 83 of

23 such title by virtue of this subparagraph, the Office

24 shall, instead of the amount which would otherwise

25 be required under the second sentence of section
1683

•HR 2517 IH

1 8334(a)(1) of title 5, contribute an amount equal to

2 the normal-cost percentage (determined with respect

3 to officers and employees of the Office using dy4 namic assumptions, as defined by section 8401(9) of

5 such title) of the individual’s basic pay, minus the

6 amount required to be withheld from such pay under

7 such section 8334(a)(1).

8 ‘‘(B)(i) Notwithstanding subsection (d), the

9 provisions of subchapter III of chapter 83 or chapter

10 84 of title 5 (as applicable) which relate to disability

11 shall be considered to remain in effect, with respect

12 to an individual who becomes an officer or employee

13 of the Office pursuant to subsection (h), until the

14 end of the 2-year period beginning on the effective

15 date of the Patent and Trademark Office Corpora16 tion Act of 1995 or, if earlier, until such individual

17 satisfies the prerequisites for coverage under any

18 program offered by the Office to replace the disabil19 ity retirement program under chapter 83 or 84 of

20 title 5.

21 ‘‘(ii) This clause applies with respect to any of22 ficer or employee of the Office who is receiving dis23 ability coverage under this subparagraph and has

24 completed the service requirement specified in the

25 first sentence of section 8337(a) or 8451(a)(1)(A) of
1684

•HR 2517 IH

1 title 5 (as applicable), but who is not described in

2 subparagraph (A)(i). In the case of any individual to

3 whom this clause applies, the Office shall pay into

4 the Civil Service Retirement and Disability Fund an

5 amount equal to that portion of the normal-cost per6 centage (determined in the same manner as under

7 subparagraph (A)(ii)(II)) of the basic pay of such

8 individual (for service performed during the period

9 during which such individual is receiving such cov10 erage) allocable to such coverage. Any amounts pay11 able under this clause shall be paid at such time and

12 in such manner as mutually agreed to by the Office

13 and the Office of Personnel Management, and shall

14 be in lieu of any individual or agency contributions

15 otherwise required.

16 ‘‘(2) HEALTH BENEFITS.—(A) Officers and em17 ployees of the Office shall not become ineligible to

18 participate in the health benefits program under

19 chapter 89 of title 5 by reason of subsection (d)

20 until the effective date of elections made during the

21 first election period (under section 8905(f) of title 5)

22 beginning after the end of the 2-year period begin23 ning on the effective date of the the Patent and

24 Trademark Office Corporation Act of 1995.
1685

•HR 2517 IH

1 ‘‘(B)(i) With respect to any individual who be2 comes an officer or employee of the Office pursuant

3 to subsection (h), the eligibility of such individual to

4 participate in such program as an annuitant (or of

5 any other person to participate in such program as

6 an annuitant based on the death of such individual)

7 shall be determined disregarding the requirements of

8 section 8905(b) of title 5. The preceding sentence

9 shall not apply if the individual ceases to be an offi10 cer or employee of the Office for any period of time

11 after becoming an officer or employee of the Office

12 pursuant to subsection (h) and before separation.

13 ‘‘(ii) The Government contributions authorized

14 by section 8906 for health benefits for anyone par15 ticipating in the health benefits program pursuant to

16 this subparagraph shall be made by the Office in the

17 same manner as provided under section 8906(g)(2)

18 of title 5 with respect to the United States Postal

19 Service for individuals associated therewith.

20 ‘‘(iii) For purposes of this subparagraph, the

21 term ‘annuitant’ has the meaning given such term

22 by section 8901(3) of title 5.

23 ‘‘(3) LIFE INSURANCE.—(A) Officers and em24 ployees of the Office shall not become ineligible to

25 participate in the life insurance program under
1686

•HR 2517 IH

1 chapter 87 of title 5 by reason of subsection (d)

2 until the first day after the end of the 2-year period

3 beginning on the effective date of the the Patent and

4 Trademark Office Corporation Act of 1995.

5 ‘‘(B)(i) Eligibility for life insurance coverage

6 after retirement or while in receipt of compensation

7 under subchapter I of chapter 81 of title 5 shall be

8 determined, in the case of any individual who be9 comes an officer or employee of the Office pursuant

10 to subsection (h), without regard to the require11 ments of section 8706(b) (1) or (2), but subject to

12 the condition specified in the last sentence of para13 graph (2)(B)(i) of this subsection.

14 ‘‘(ii) Government contributions under section

15 8708(d) on behalf of any such individual shall be

16 made by the Office in the same manner as provided

17 under paragraph (3) thereof with respect to the

18 United States Postal Service for individuals associ19 ated therewith.

20 ‘‘(4) EMPLOYEES’ COMPENSATION FUND.—The

21 Office shall remain responsible for reimbursing the

22 Employees’ Compensation Fund, pursuant to section

23 8147 of title 5, for compensation paid or payable

24 after the effective date of the Patent and Trademark

25 Office Corporation Act of 1995 in accordance with
1687

•HR 2517 IH

1 chapter 81 of title 5 with regard to any injury, dis2 ability, or death due to events arising before such

3 date, whether or not a claim has been filed or is

4 final on such date.

5 ‘‘(5) REQUIREMENT THAT THE OFFICE OFFER

6 CERTAIN MINIMUM NUMBER OF LIFE AND HEALTH

7 INSURANCE POLICIES.—The Office shall offer at

8 least 1 life insurance policy and at least 3 health in9 surance policies to its officers and employees, com10 parable to existing Federal benefits, beginning on

11 the first day after the end of the 2-year period be12 ginning on the effective date of the Patent and

13 Trademark Office Corporation Act of 1995.

14 ‘‘(g) LABOR-MANAGEMENT RELATIONS.—

15 ‘‘(1) LABOR RELATIONS AND EMPLOYEE RELA16 TIONS PROGRAMS.—The Office shall develop labor

17 relations and employee relations programs with the

18 objective of improving productivity and efficiency, in19 corporating the following principles:

20 ‘‘(A) Such programs shall be consistent

21 with the merit principles in section 2301(b) of

22 title 5.

23 ‘‘(B) Such programs shall provide veterans

24 preference protections equivalent to those estab-
1688

•HR 2517 IH

1 lished by sections 2801, 3308–3318, and 3320

2 of title 5.

3 ‘‘(C)(i) In order to maximize individual

4 freedom of choice in the pursuit of employment

5 and to encourage an economic climate condu6 cive to economic growth, the right to work shall

7 not be subject to undue restraint or coercion.

8 The right to work shall not be infringed or re9 stricted in any way based on membership in, af10 filiation with, or financial support of a labor or11 ganization.

12 ‘‘(ii) No person shall be required, as a con13 dition of employment or continuation of employ14 ment:

15 ‘‘(I) To resign or refrain from vol16 untary membership in, voluntary affiliation

17 with, or voluntary financial support of a

18 labor organization.

19 ‘‘(II) To become or remain a member

20 of a labor organization.

21 ‘‘(III) To pay any dues, fees, assess22 ments, or other charges of any kind or

23 amount to a labor organization.

24 ‘‘(IV) To pay to any charity or other

25 third party, in lieu of such payments, any
1689

•HR 2517 IH

1 amount equivalent to or a pro-rata portion

2 of dues, fees, assessments, or other charges

3 regularly required of members of a labor

4 organization.

5 ‘‘(V) To be recommended, approved,

6 referred, or cleared by or through a labor

7 organization.

8 ‘‘(iii) This subparagraph shall not apply to

9 a person described in section 7103(a)(2)(v) of

10 title 5 or a ‘supervisor’, ‘management official’,

11 or ‘confidential employee’ as those terms are

12 defined in 7103(a)(10), (11), and (13) of such

13 title.

14 ‘‘(iv) Any labor organization recognized by

15 the Office as the exclusive representative of a

16 unit of employees of the Office shall represent

17 the interests of all employees in that unit with18 out discrimination and without regard to labor

19 organization membership.

20 ‘‘(2) ADOPTION OF EXISTING LABOR AGREE21 MENTS.—The Office shall adopt all labor agreements

22 which are in effect, as of the day before the effective

23 date of the Patent and Trademark Office Corpora24 tion Act of 1995, with respect to such Office (as

25 then in effect). Each such agreement shall remain in
1690

•HR 2517 IH

1 effect for the 2-year period commencing on such

2 date, unless the agreement provides for a shorter du3 ration or the parties agree otherwise before such pe4 riod ends.

5 ‘‘(h) CARRYOVER OF PERSONNEL.—

6 ‘‘(1) FROM PTO.—Effective as of the effective

7 date of the Patent and Trademark Office Corpora8 tion Act of 1995, all officers and employees of the

9 Patent and Trademark Office on the day before

10 such effective date shall become officers and employ11 ees of the Office, without a break in service.

12 ‘‘(2) OTHER PERSONNEL.—Any individual who,

13 on the day before the effective date of the Patent

14 and Trademark Office Corporation Act of 1995, is

15 an officer or employee of the Department of Com16 merce (other than an officer or employee under

17 paragraph (1)) shall be transferred to the Office if—

18 ‘‘(A) such individual serves in a position

19 for which a major function is the performance

20 of work reimbursed by the Patent and Trade21 mark Office, as determined by the Secretary of

22 Commerce;

23 ‘‘(B) such individual serves in a position

24 that performed work in support of the Patent

25 and Trademark Office during at least half of
1691

•HR 2517 IH

1 the incumbent’s work time, as determined by

2 the Secretary of Commerce; or

3 ‘‘(C) such transfer would be in the interest

4 of the Office, as determined by the Secretary of

5 Commerce in consultation with the Commis6 sioner of Patents and Trademarks.

7 Any transfer under this paragraph shall be effective

8 as of the same effective date as referred to in para9 graph (1), and shall be made without a break in

10 service.

11 ‘‘(3) ACCUMULATED LEAVE.—The amount of

12 sick and annual leave and compensatory time accu13 mulated under title 5 before the effective date de14 scribed in paragraph (1), by officers or employees of

15 the Patent and Trademark Office who so become of16 ficers or employees of the Office, are obligations of

17 the Office.

18 ‘‘(4) TERMINATION RIGHTS.—Any employee re19 ferred to in paragraph (1) or (2) of this subsection

20 whose employment with the Office is terminated

21 during the 2-year period beginning on the effective

22 date of the Patent and Trademark Office Corpora23 tion Act of 1995 shall be entitled to rights and bene24 fits, to be afforded by the Office, similar to those

25 such employee would have had under Federal law if
1692

•HR 2517 IH

1 termination had occurred immediately before such

2 date. An employee who would have been entitled to

3 appeal any such termination to the Merit Systems

4 Protection Board, if such termination had occurred

5 immediately before such effective date, may appeal

6 any such termination occurring within this 2-year

7 period to the Board under such procedures as it may

8 prescribe.

9 ‘‘(5) CONTINUATION IN OFFICE OF CERTAIN

10 OFFICERS.—(A) The individual serving as the Com11 missioner of Patents and Trademarks on the day be12 fore the effective date of the Patent and Trademark

13 Office Corporation Act of 1995 may serve as the

14 Commissioner until the earlier of 1 year after the ef15 fective date of that Act or the date on which a Com16 missioner is appointed under subsection (a).

17 ‘‘(B) The individual serving as the Assistant

18 Commissioner for Patents on the day before the ef19 fective date of the Patent and Trademark Office

20 Corporation Act of 1995 may serve as the Deputy

21 Commissioner for Patents until the earlier of 1 year

22 after the effective date of that Act or the date on

23 which a Deputy Commissioner for Patents is ap24 pointed under subsection (b).
1693

•HR 2517 IH

1 ‘‘(C) The individual serving as the Assistant

2 Commissioner for Trademarks on the day before the

3 effective date of the Patent and Trademark Office

4 Corporation Act of 1995 may serve as the Deputy

5 Commissioner for Trademarks until the earlier of 1

6 year after the effective date of that Act or the date

7 on which a Deputy Commissioner for Trademarks is

8 appointed under subsection (b).

9 ‘‘(i) COMPETITIVE STATUS.—For purposes of ap10 pointment to a position in the competitive service for

11 which an officer or employee of the Office is qualified,

12 such officer or employee shall not forfeit any competitive

13 status, acquired by such officer or employee before the ef14 fective date of the Patent and Trademark Office Corpora15 tion Act of 1995, by reason of becoming an officer or em16 ployee of the Office pursuant to subsection (h).

17 ‘‘(j) SAVINGS PROVISIONS.—All orders, determina18 tions, rules, and regulations regarding compensation and

19 benefits and other terms and conditions of employment,

20 in effect for the Office and its officers and employees im21 mediately before the effective date of the Patent and

22 Trademark Office Corporation Act of 1995, shall continue

23 in effect with respect to the Office and its officers and

24 employees until modified, superseded, or set aside by the
1694

•HR 2517 IH

1 Office or a court of appropriate jurisdiction or by oper2 ation of law.’’.

3 SEC. 17414. MANAGEMENT ADVISORY BOARD.

4 Chapter 1 of part I of title 35, United States Code,

5 is amended by inserting after section 4 the following:

6 ‘‘§ 5. Patent and Trademark Office Management Advi7 sory Board

8 ‘‘(a) ESTABLISHMENT OF MANAGEMENT ADVISORY

9 BOARD.—

10 ‘‘(1) APPOINTMENT.—The Patent and Trade11 mark Office shall have a Management Advisory

12 Board (hereafter in this title referred to as the

13 ‘Board’) of 12 members, 4 of whom shall be ap14 pointed by the President, 4 of whom shall be ap15 pointed by the Speaker of the House of Representa16 tives, and 4 of whom shall be appointed by the

17 President pro tempore of the Senate. Not more than

18 3 of the 4 members appointed by each appointing

19 authority shall be members of the same political

20 party.

21 ‘‘(2) TERMS.—Members of the Board shall be

22 appointed for a term of 4 years each, except that of

23 the members first appointed by each appointing au24 thority, 1 shall be for a term of 1 year, 1 shall be
1695

•HR 2517 IH

1 for a term of 2 years, and 1 shall be for a term of

2 3 years. No member may serve more than 1 term.

3 ‘‘(3) CHAIR.—The President shall designate the

4 chair of the Board, whose term as chair shall be for

5 3 years.

6 ‘‘(4) TIMING OF APPOINTMENTS.—Initial ap7 pointments to the Board shall be made within 3

8 months after the effective date of the Patent and

9 Trademark Office Corporation Act of 1995, and va10 cancies shall be filled within 3 months after they

11 occur.

12 ‘‘(5) VACANCIES.—Vacancies shall be filled in

13 the manner in which the original appointment was

14 made under this subsection. Members appointed to

15 fill a vacancy occurring before the expiration of the

16 term for which the member’s predecessor was ap17 pointed shall be appointed only for the remainder of

18 that term. A member may serve after the expiration

19 of that member’s term until a successor is ap20 pointed.

21 ‘‘(b) BASIS FOR APPOINTMENTS.—Members of the

22 Board shall be citizens of the United States who shall be

23 chosen so as to represent the interests of diverse users

24 of the Patent and Trademark Office, and shall include in-
1696

•HR 2517 IH

1 dividuals with substantial background and achievement in

2 corporate finance and management.

3 ‘‘(c) APPLICABILITY OF CERTAIN ETHICS LAWS.—

4 Members of the Board shall be special Government em5 ployees within the meaning of section 202 of title 18.

6 ‘‘(d) MEETINGS.—The Board shall meet at the call

7 of the chair to consider an agenda set by the chair.

8 ‘‘(e) DUTIES.—The Board shall—

9 ‘‘(1) review the policies, goals, performance,

10 budget, and user fees of the Patent and Trademark

11 Office, and advise the Commissioner on these mat12 ters; and

13 ‘‘(2) within 60 days after the end of each fiscal

14 year, prepare an annual report on the matters re15 ferred to in paragraph (1), transmit the report to

16 the President and the Committees on the Judiciary

17 of the Senate and the House of Representatives, and

18 publish the report in the Patent and Trademark Of19 fice Official Gazette.

20 ‘‘(f) STAFF.—The Board shall employ a staff of not

21 more than 10 members and shall procure support services

22 for the staff adequate to enable the Board to carry out

23 its functions, using funds available to the Commissioner

24 under section 42 of this title. The Board shall ensure that

25 members of the staff, other than clerical staff, are espe-
1697

•HR 2517 IH

1 cially qualified in the areas of patents, trademarks, or

2 management of public agencies. Persons employed by the

3 Board shall receive compensation as determined by the

4 Board, which may not exceed the limitations set forth in

5 section 3(c) of this title, shall serve in accordance with

6 terms and conditions of employment established by the

7 Board, and shall be subject solely to the direction of the

8 Board, notwithstanding any other provision of law.

9 ‘‘(g) COMPENSATION.—Members of the Board shall

10 be compensated for each day (including travel time) dur11 ing which they are attending meetings or conferences of

12 the Board or otherwise engaged in the business of the

13 Board, at the rate which is the daily equivalent of the an14 nual rate of basic pay in effect for level III of the Execu15 tive Schedule under section 5314 of title 5, and while away

16 from their homes or regular places of business they may

17 be allowed travel expenses, including per diem in lieu of

18 subsistence, as authorized by section 5703 of title 5.

19 ‘‘(h) ACCESS TO INFORMATION.—Members of the

20 Board shall be provided access to records and information

21 in the Patent and Trademark Office, except for personnel

22 or other privileged information and information concern23 ing patent applications required to be kept in confidence

24 by section 122 of this title.’’.
1698

•HR 2517 IH

1 SEC. 17415. INDEPENDENCE FROM DEPARTMENT OF COM2 MERCE.

3 (a) DUTIES OF COMMISSIONER.—Section 6 of title

4 35, United States Code, is amended—

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 (b) REGULATIONS FOR AGENTS AND ATTORNEYS.—

10 Section 31 of title 35, United States Code, is amended

11 by striking ‘‘, subject to the approval of the Secretary of

12 Commerce,’’.

13 SEC. 17416. TRADEMARK TRIAL AND APPEAL BOARD.

14 Section 17 of the Act of July 5, 1946 (commonly re15 ferred to as the ‘‘Trademark Act of 1946’’) (15 U.S.C.

16 1067) is amended to read as follows:

17 ‘‘SEC. 17. (a) In every case of interference, opposition

18 to registration, application to register as a lawful concur19 rent user, or application to cancel the registration of a

20 mark, the Commissioner shall give notice to all parties and

21 shall direct a Trademark Trial and Appeal Board to deter22 mine and decide the respective rights of registration.

23 ‘‘(b) The Trademark Trial and Appeal Board shall

24 include the Commissioner, the Deputy Commissioner for

25 Patents, the Deputy Commissioner for Trademarks, and
1699

•HR 2517 IH

1 members competent in trademark law who are appointed

2 by the Commissioner.’’.

3 SEC. 17417. BOARD OF PATENT APPEALS AND INTER4 FERENCES.

5 Section 7 of title 35, United States Code, is amended

6 to read as follows:

7 ‘‘§ 7. Board of Patent Appeals and Interferences

8 ‘‘(a) ESTABLISHMENT AND COMPOSITION.—There

9 shall be in the Patent and Trademark Office a Board of

10 Patent Appeals and Interferences. The Commissioner, the

11 Deputy Commissioner for Patents, the Deputy Commis12 sioner for Trademarks, and the examiners-in-chief shall

13 constitute the Board. The examiners-in-chief shall be per14 sons of competent legal knowledge and scientific ability.

15 ‘‘(b) DUTIES.—The Board of Patent Appeals and

16 Interferences shall, on written appeal of an applicant, re17 view adverse decisions of examiners upon applications for

18 patents and shall determine priority and patentability of

19 invention in interferences declared under section 135(a)

20 of this title. Each appeal and interference shall be heard

21 by at least 3 members of the Board, who shall be des22 ignated by the Commissioner. Only the Board of Patent

23 Appeals and Interferences may grant rehearings.’’.
1700

•HR 2517 IH

1 SEC. 17418. 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 or proceeding to which the Patent

12 and Trademark Office is a party is deemed to arise

13 under the laws of the United States. The Federal

14 courts shall have exclusive jurisdiction over all civil

15 actions by or against the Office.

16 ‘‘(2) CONTRACT CLAIMS.—Any action or pro17 ceeding against the Office in which any claim is cog18 nizable under the Contract Disputes Act of 1978 (41

19 U.S.C. 601 and following) shall be subject to that

20 Act. For purposes of that Act, the Commissioner

21 shall be deemed to be the agency head with respect

22 to contract claims arising with respect to the Office.

23 Any other action or proceeding against the Office

24 founded upon contract may be brought in an appro25 priate district court, notwithstanding any provision

26 of title 28.
1701

•HR 2517 IH

1 ‘‘(3) TORT CLAIMS.—(A) Any action or pro2 ceeding against the Office in which any claim is cog3 nizable under the provisions of section 1346(b) and

4 chapter 171 of title 28, shall be governed by those

5 provisions.

6 ‘‘(B) Any other action or proceeding against the

7 Office founded upon tort may be brought in an ap8 propriate district court without regard to the provi9 sions of section 1346(b) and chapter 171 of title 28.

10 ‘‘(4) PROHIBITION ON ATTACHMENT, LIENS,

11 ETC.—No attachment, garnishment, lien, or similar

12 process, intermediate or final, in law or equity, may

13 be issued against property of the Office.

14 ‘‘(5) SUBSTITUTION OF OFFICE AS PARTY.—

15 The Office shall be substituted as defendant in any

16 civil action or proceeding against an officer or em17 ployee of the Office, if the Office determines that the

18 officer or employee was acting within the scope of

19 his or her employment with the Office. If the Office

20 refuses to certify scope of employment, the officer or

21 employee may at any time before trial petition the

22 court to find and certify that the officer or employee

23 was acting within the scope of his or her employ24 ment. Upon certification by the court, the Office

25 shall be substituted as the party defendant. A copy
1702

•HR 2517 IH

1 of the petition shall be served upon the Office. In

2 any such civil action or proceeding to which para3 graph (3)(A) applies, the provisions of section

4 1346(b) and chapter 171 of title 28 shall apply in

5 lieu of this paragraph.

6 ‘‘(b) RELATIONSHIP WITH JUSTICE DEPARTMENT.—

7 ‘‘(1) EXERCISE BY OFFICE OF ATTORNEY GEN8 ERAL’S AUTHORITIES.—Except as provided in this

9 section, with respect to any action or proceeding in

10 which the Office is a party or an officer or employee

11 thereof is a party in his or her official capacity, the

12 Office, officer, or employee may exercise, without

13 prior authorization from the Attorney General, the

14 authorities and duties that otherwise would be exer15 cised by the Attorney General on behalf of the Of16 fice, officer, or employee under title 28 and other

17 laws.

18 ‘‘(2) APPEARANCES BY ATTORNEY GENERAL.—

19 Notwithstanding paragraph (1), at any time the At20 torney General may, in any action or proceeding de21 scribed in paragraph (1), file an appearance on be22 half of the Office or the officer or employee involved,

23 without the consent of the Office or the officer or

24 employee. Upon such filing, the Attorney General

25 shall represent the Office or such officer or employee
1703

•HR 2517 IH

1 with exclusive authority in the conduct, settlement,

2 or compromise of that action or proceeding.

3 ‘‘(3) CONSULTATIONS WITH AND ASSISTANCE

4 BY ATTORNEY GENERAL.—The Office may consult

5 with the Attorney General concerning any legal mat6 ter, and the Attorney General shall provide advice

7 and assistance to the Office, including representing

8 the Office in litigation, if requested by the Office.

9 ‘‘(4) REPRESENTATION BEFORE SUPREME

10 COURT.—The Attorney General shall represent the

11 Office in all cases before the United States Supreme

12 Court.

13 ‘‘(5) QUALIFICATIONS OF ATTORNEYS.—An at14 torney admitted to practice to the bar of the highest

15 court of at least one State in the United States or

16 the District of Columbia and employed by the Office

17 may represent the Office in any legal proceeding in

18 which the Office or an officer or employee of the Of19 fice is a party or interested, regardless of whether

20 the attorney is a resident of the jurisdiction in which

21 the proceeding is held and notwithstanding any

22 other prerequisites of qualification or appearance re23 quired by the court or administrative body before

24 which the proceeding is conducted.’’.
1704

•HR 2517 IH

1 SEC. 17419. ANNUAL REPORT OF COMMISSIONER.

2 Section 15 of title 35, United States Code, as redesig3 nated by section 17418 of this Act, is amended to read

4 as follows:

5 ‘‘§ 15. Annual report to Congress

6 ‘‘The Commissioner shall report to the Congress, not

7 later than 180 days after the end of each fiscal year, the

8 moneys received and expended by the Office, the purposes

9 for which the moneys were spent, the quality and quantity

10 of the work of the Office, and other information relating

11 to the Office. The report under this section shall also meet

12 the requirements of section 9106 of title 31, to the extent

13 that such requirements are not inconsistent with the pre14 ceding sentence. The report required under this section

15 shall be deemed to be the report of the Patent and Trade16 mark Office under section 9106 of title 31, and the Com17 missioner shall not file a separate report under such sec18 tion.’’.

19 SEC. 17420. SUSPENSION OR EXCLUSION FROM PRACTICE.

20 Section 32 of title 35, United States Code, is amend21 ed by inserting before the last sentence the following: ‘‘The

22 Commissioner shall have the discretion to designate any

23 attorney who is an officer or employee of the Patent and

24 Trademark Office to conduct the hearing required by this

25 section.’’.
1705

•HR 2517 IH

1 SEC. 17421. FUNDING.

2 Section 42 of title 35, United States Code, is amend3 ed to read as follows:

4 ‘‘§ 42. Patent and Trademark Office funding

5 ‘‘(a) FEES PAYABLE TO THE OFFICE.—All fees for

6 services performed by or materials furnished by the Patent

7 and Trademark Office shall be payable to the Office.

8 ‘‘(b) USE OF MONEYS.—Moneys of the Patent and

9 Trademark Office not otherwise used to carry out the

10 functions of the Office shall be kept in cash on hand or

11 on deposit, or invested in obligations of the United States

12 or guaranteed by the United States, or in obligations or

13 other instruments which are lawful investments for fidu14 ciary, trust, or public funds. Fees available to the Commis15 sioner under this title shall be used exclusively for the

16 processing of patent applications and for other services

17 and materials relating to patents. Fees available to the

18 Commissioner under section 31 of the Act of July 5, 1946

19 (commonly referred to as the ‘Trademark Act of 1946’;

20 15 U.S.C. 1113), shall be used exclusively for the process21 ing of trademark registrations and for other services and

22 materials relating to trademarks.

23 ‘‘(c) BORROWING AUTHORITY.—The Patent and

24 Trademark Office is authorized to issue from time to time

25 for purchase by the Secretary of the Treasury its deben26 tures, bonds, notes, and other evidences of indebtedness
1706

•HR 2517 IH

1 (hereafter in this subsection referred to as ‘obligations’)

2 to assist in financing its activities. Borrowing under this

3 subsection shall be subject to prior approval in appropria4 tion Acts. Such borrowing shall not exceed amounts ap5 proved in appropriation Acts. Any such borrowing shall

6 be repaid only from fees paid to the Office and surcharges

7 appropriated by the Congress. Such obligations shall be

8 redeemable at the option of the Office before maturity in

9 the manner stipulated in such obligations and shall have

10 such maturity as is determined by the Office with the ap11 proval of the Secretary of the Treasury. Each such obliga12 tion issued to the Treasury shall bear interest at a rate

13 not less than the current yield on outstanding marketable

14 obligations of the United States of comparable maturity

15 during the month preceding the issuance of the obligation

16 as determined by the Secretary of the Treasury. The Sec17 retary of the Treasury shall purchase any obligations of

18 the Office issued under this subsection and for such pur19 pose the Secretary of the Treasury is authorized to use

20 as a public-debt transaction the proceeds of any securities

21 issued under chapter 31 of title 31, and the purposes for

22 which securities may be issued under that chapter are ex23 tended to include such purpose. Payment under this sub24 section of the purchase price of such obligations of the
1707

•HR 2517 IH

1 Patent and Trademark Office shall be treated as public

2 debt transactions of the United States.’’.

3 SEC. 17422. AUDITS.

4 Chapter 4 of part I of title 35, United States Code,

5 is amended by adding at the end the following new section:

6 ‘‘§ 43. Audits

7 ‘‘(a) IN GENERAL.—Financial statements of the Pat8 ent and Trademark Office shall be prepared on an annual

9 basis in accordance with generally accepted accounting

10 principles. Such statements shall be audited by an inde11 pendent certified public accountant chosen by the Com12 missioner. The audit shall be conducted in accordance with

13 standards that are consistent with generally accepted Gov14 ernment auditing standards and other standards estab15 lished by the Comptroller General, and with the generally

16 accepted auditing standards of the private sector, to the

17 extent feasible. The Commissioner shall transmit to the

18 Committees on the Judiciary of the House of Representa19 tives and the Senate the results of each audit under this

20 subsection.

21 ‘‘(b) REVIEW BY COMPTROLLER GENERAL.—The

22 Comptroller General may review any audit of the financial

23 statement of the Patent and Trademark Office that is con24 ducted under subsection (a). The Comptroller General

25 shall report to the Congress and the Office the results of
1708

•HR 2517 IH

1 any such review and shall include in such report appro2 priate recommendations.

3 ‘‘(c) AUDIT BY COMPTROLLER GENERAL.—The

4 Comptroller General may audit the financial statements

5 of the Office and such audit shall be in lieu of the audit

6 required by subsection (a). The Office shall reimburse the

7 Comptroller General for the cost of any audit conducted

8 under this subsection.

9 ‘‘(d) ACCESS TO OFFICE RECORDS.—All books, fi10 nancial records, report files, memoranda, and other prop11 erty that the Comptroller General deems necessary for the

12 performance of any audit shall be made available to the

13 Comptroller General.

14 ‘‘(e) APPLICABILITY IN LIEU OF TITLE 31 PROVI15 SIONS.—This section applies to the Office in lieu of the

16 provisions of section 9105 of title 31.’’.

17 SEC. 17423. TRANSFERS.

18 (a) TRANSFER OF FUNCTIONS.—Except as otherwise

19 provided in this Act, there are transferred to, and vested

20 in, the Patent and Trademark Office all functions, powers,

21 and duties vested by law in the Secretary of Commerce

22 or the Department of Commerce or in the officers or com23 ponents in the Department of Commerce with respect to

24 the authority to grant patents and register trademarks,

25 and in the Patent and Trademark Office, as in effect on
1709

•HR 2517 IH

1 the day before the effective date of this subtitle, and in

2 the officers and components of such Office.

3 (b) TRANSFER OF FUNDS AND PROPERTY.—The

4 Secretary of Commerce shall transfer to the Patent and

5 Trademark Office, on the effective date of this subtitle,

6 so much of the assets, liabilities, contracts, property,

7 records, and unexpended and unobligated balances of ap8 propriations, authorizations, allocations, and other funds

9 employed, held, used, arising from, available to, or to be

10 made available to the Department of Commerce, including

11 funds set aside for accounts receivable which are related

12 to functions, powers, and duties which are vested in the

13 Patent and Trademark Office by this subtitle.

14 CHAPTER 2—EFFECTIVE DATE;

15 TECHNICAL AMENDMENTS

16 SEC. 17431. EFFECTIVE DATE.

17 This subtitle shall take effect 6 months after the date

18 of the enactment of this Act.

19 SEC. 17432. TECHNICAL AND CONFORMING AMENDMENTS.

20 (a) AMENDMENTS TO TITLE 35.—

21 (1) The table of contents for part I of title 35,

22 United States Code, is amended by amending the

23 item relating to chapter 1 to read as follows:

‘‘1. Establishment, Officers and Employees, Functions ........................... 1.’’
1710

•HR 2517 IH

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 500(e) of title 5, United States

15 Code, is amended by striking ‘‘Patent Office’’ and

16 inserting ‘‘Patent and Trademark Office’’.
1711

•HR 2517 IH

1 (3) Section 5102(c)(23) of title 5, United

2 States Code, is amended by striking ‘‘Department of

3 Commerce’’.

4 (4) Section 5316 of title 5, United States Code

5 (5 U.S.C. 5316) is amended by striking ‘‘Commis6 sioner of Patents, Department of Commerce.’’,

7 ‘‘Deputy Commissioner of Patents and Trade8 marks.’’, ‘‘Assistant Commissioner for Patents.’’,

9 and ‘‘Assistant Commissioner for Trademarks.’’.

10 (5) Section 12 of the Act of February 14, 1903

11 (15 U.S.C. 1511) is amended by striking ‘‘(d) Pat12 ent and Trademark Office;’’ and redesignating sub13 sections (a) through (g) as paragraphs (1) through

14 (6), respectively.

15 (6) The Act of April 12, 1892 (27 Stat. 395;

16 20 U.S.C. 91) is amended by striking ‘‘Patent Of17 fice’’ and inserting ‘‘Patent and Trademark Office’’.

18 (7) Sections 505(m) and 512(o) of the Federal

19 Food, Drug, and Cosmetic Act (21 U.S.C. 355(m)

20 and 360b(o)) are each amended by striking ‘‘of the

21 Department of Commerce’’.

22 (8) Section 105(e) of the Federal Alcohol Ad23 ministration Act (27 U.S.C. 205(e)) is amended by

24 striking ‘‘Patent Office’’ and inserting ‘‘Patent and

25 Trademark Office’’.
1712

•HR 2517 IH

1 (9) Section 1744 of title 28, United States

2 Code is amended—

3 (A) by striking ‘‘Patent Office’’ each place

4 it appears and inserting ‘‘Patent and Trade5 mark Office’’; and

6 (B) by striking ‘‘Commissioner of Patents’’

7 and inserting ‘‘Commissioner of Patents and

8 Trademarks’’.

9 (10) Section 1745 of title 28, United States

10 Code, is amended by striking ‘‘United States Patent

11 Office’’ and inserting ‘‘Patent and Trademark Of12 fice’’.

13 (11) Section 1928 of title 28, United States

14 Code, is amended by striking ‘‘Patent Office’’ and

15 inserting ‘‘Patent and Trademark Office’’.

16 (12) Section 160 of the Atomic Energy Act of

17 1954 (42 U.S.C. 2190) is amended—

18 (A) by striking ‘‘United States Patent Of19 fice’’ and inserting ‘‘Patent and Trademark Of20 fice’’; and

21 (B) by striking ‘‘Commissioner of Patents’’

22 and inserting ‘‘Commissioner of Patents and

23 Trademarks’’.

24 (13) Section 305(c) of the National Aeronautics

25 and Space Act of 1958 (42 U.S.C. 2457(c)) is
1713

•HR 2517 IH

1 amended by striking ‘‘Commissioner of Patents’’ and

2 inserting ‘‘Commissioner of Patents and Trade3 marks’’.

4 (14) Section 12(a) of the Solar Heating and

5 Cooling Demonstration Act of 1974 (42 U.S.C.

6 5510(a)) is amended by striking ‘‘Commissioner of

7 the Patent Office’’ and inserting ‘‘Commissioner of

8 Patents and Trademarks’’.

9 (15) Section 1111 of title 44, United States

10 Code, is amended by striking ‘‘the Commissioner of

11 Patents,’’.

12 (16) Section 1114 of title 44, United States

13 Code, is amended by striking ‘‘the Commissioner of

14 Patents,’’.

15 (17) Section 1123 of title 44, United States

16 Code, is amended by striking ‘‘the Patent Office.’’.

17 (18) Sections 1337 and 1338 of title 44, United

18 States Code, and the items relating to those sections

19 in the table of contents for chapter 13 of such title,

20 are repealed.

21 (19) Section 10(i) of the Trading With the

22 Enemy Act (50 U.S.C. App. 10(i)) is amended by

23 striking ‘‘Commissioner of Patents’’ and inserting

24 ‘‘Commissioner of Patents and Trademarks’’.
1714

•HR 2517 IH

1 (20) Section 8G(a)(2) of the Inspector General

2 Act of 1978 (5 U.S.C. App.) is amended by inserting

3 ‘‘the Patent and Trademark Office,’’, after ‘‘the

4 Panama Canal Commission,’’.

5 Subtitle E—Miscellaneous

6 Provisions

7 SEC. 17501. REFERENCES.

8 Any reference in any other Federal law, Executive

9 order, rule, regulation, or delegation of authority, or any

10 document of or pertaining to a department or office from

11 which a function is transferred by this title—

12 (1) to the head of such department or office is

13 deemed to refer to the head of the department or of14 fice to which such function is transferred; or

15 (2) to such department or office is deemed to

16 refer to the department or office to which such func17 tion is transferred.

18 SEC. 17502. 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
1715

•HR 2517 IH

1 immediately before the effective date of the transfer of the

2 function under this title.

3 SEC. 17503. 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, the United States Trade Rep10 resentative, any officer or employee of any office

11 transferred by this title, or any other Government

12 official, or by a court of competent jurisdiction, in

13 the performance of any function that is transferred

14 by this title, and

15 (2) that are in effect on the effective date of

16 such transfer (or become effective after such date

17 pursuant to their terms as in effect on such effective

18 date),

19 shall continue in effect according to their terms until

20 modified, terminated, superseded, set aside, or revoked in

21 accordance with law by the President, any other author22 ized official, a court of competent jurisdiction, or operation

23 of law.

24 (b) PROCEEDINGS.—This title shall not affect any

25 proceedings or any application for any benefits, service,
1716

•HR 2517 IH

1 license, permit, certificate, or financial assistance pending

2 on the date of the enactment of this Act before an office

3 transferred by this title, but such proceedings and applica4 tions shall be continued. Orders shall be issued in such

5 proceedings, appeals shall be taken therefrom, and pay6 ments shall be made pursuant to such orders, as if this

7 Act had not been enacted, and orders issued in any such

8 proceeding shall continue in effect until modified, termi9 nated, superseded, or revoked by a duly authorized official,

10 by a court of competent jurisdiction, or by operation of

11 law. Nothing in this subsection shall be considered to pro12 hibit the discontinuance or modification of any such pro13 ceeding under the same terms and conditions and to the

14 same extent that such proceeding could have been discon15 tinued or modified if this title had not been enacted.

16 (c) SUITS.—This title shall not affect suits com17 menced before the date of the enactment of this Act, and

18 in all such suits, proceeding shall be had, appeals taken,

19 and judgments rendered in the same manner and with the

20 same effect as if this title had not been enacted.

21 (d) NONABATEMENT OF ACTIONS.—No suit, action,

22 or other proceeding commenced by or against the Depart23 ment of Commerce or the Secretary of Commerce, or by

24 or against any individual in the official capacity of such

25 individual as an officer or employee of an office trans-
1717

•HR 2517 IH

1 ferred by this title, shall abate by reason of the enactment

2 of this title.

3 (e) CONTINUANCE OF SUITS.—If any Government of4 ficer in the official capacity of such officer is party to a

5 suit with respect to a function of the officer, and under

6 this title such function is transferred to any other officer

7 or office, then such suit shall be continued with the other

8 officer or the head of such other office, as applicable, sub9 stituted or added as a party.

10 (f) ADMINISTRATIVE PROCEDURE AND JUDICIAL RE11 VIEW.—Except as otherwise provided by this title, any

12 statutory requirements relating to notice, hearings, action

13 upon the record, or administrative or judicial review that

14 apply to any function transferred by this title shall apply

15 to the exercise of such function by the head of the Federal

16 agency, and other officers of the agency, to which such

17 function is transferred by this title.

18 SEC. 17504. TRANSFER OF ASSETS.

19 Except as otherwise provided in this title, so much

20 of the personnel, property, records, and unexpended bal21 ances of appropriations, allocations, and other funds em22 ployed, used, held, available, or to be made available in

23 connection with a function transferred to an official or

24 agency by this title shall be available to the official or the

25 head of that agency, respectively, at such time or times
1718

•HR 2517 IH

1 as the Director of the Office of Management and Budget

2 directs for use in connection with the functions trans3 ferred.

4 SEC. 17505. DELEGATION AND ASSIGNMENT.

5 Except as otherwise expressly prohibited by law or

6 otherwise provided in this title, an official to whom func7 tions are transferred under this title (including the head

8 of any office to which functions are transferred under this

9 title) may delegate any of the functions so transferred to

10 such officers and employees of the office of the official as

11 the official may designate, and may authorize successive

12 redelegations of such functions as may be necessary or ap13 propriate. No delegation of functions under this section

14 or under any other provision of this title shall relieve the

15 official to whom a function is transferred under this title

16 of responsibility for the administration of the function.

17 SEC. 17506. AUTHORITY OF DIRECTOR OF THE OFFICE OF

18 MANAGEMENT AND BUDGET WITH RESPECT

19 TO FUNCTIONS TRANSFERRED.

20 (a) DETERMINATIONS.—If necessary, the Director

21 shall make any determination of the functions that are

22 transferred under this title.

23 (b) INCIDENTAL TRANSFERS.—The Director, at such

24 time or times as the Director shall provide, may make

25 such determinations as may be necessary with regard to
1719

•HR 2517 IH

1 the functions transferred by this title, and to make such

2 additional incidental dispositions of personnel, assets, li3 abilities, grants, contracts, property, records, and unex4 pended balances of appropriations, authorizations, alloca5 tions, and other funds held, used, arising from, available

6 to, or to be made available in connection with such func7 tions, as may be necessary to carry out the provisions of

8 this title. The Director shall provide for the termination

9 of the affairs of all entities terminated by this title and

10 for such further measures and dispositions as may be nec11 essary to effectuate the purposes of this title.

12 SEC. 17507. CERTAIN VESTING OF FUNCTIONS CONSIDERED

13 TRANSFERS.

14 For purposes of this title, the vesting of a function

15 in a department or office pursuant to reestablishment of

16 an office shall be considered to be the transfer of the

17 function.

18 SEC. 17508. AVAILABILITY OF EXISTING FUNDS.

19 Existing appropriations and funds available for the

20 performance of functions, programs, and activities termi21 nated pursuant to this title shall remain available, for the

22 duration of their period of availability, for necessary ex23 penses in connection with the termination and resolution

24 of such functions, programs, and activities.
1720

•HR 2517 IH

1 SEC. 17509. DEFINITIONS.

2 For purposes of this title—

3 (1) the term ‘‘function’’ includes any duty, obli4 gation, power, authority, responsibility, right, privi5 lege, activity, or program; and

6 (2) the term ‘office’ includes any office, admin7 istration, agency, bureau, institute, council, unit, or8 ganizational entity, or component thereof.

9 TITLE XVIII—WELFARE REFORM

10 SEC. 18001. ENACTMENT OF THE PERSONAL RESPONSIBIL11 ITY ACT OF 1995.

12 H.R. 4, as passed by the House of Representatives

13 on March 24, 1995, is hereby enacted with the following

14 amendments:

15 (1) In section 101, insert

16 ‘‘(a) IN GENERAL.—’’ before ‘‘Title IV of the Social

17 Security Act’’.

18 (2) At the end of section 101, add the follow19 ing:

20 (b) SUBMISSION OF STATE PLAN FOR FISCAL YEAR

21 1996 DEEMED ACCEPTANCE OF GRANT LIMITATIONS

22 AND FORMULA.—The submission of a plan by a State

23 under section 402(a) of the Social Security Act (as in ef24 fect pursuant to the amendment made by subsection (a)

25 of this section) for fiscal year 1996 is deemed to constitute

26 the State’s acceptance of the grant limitations under sec-
1721

•HR 2517 IH

1 tion 403(a)(1)(A)(i) of such Act (as so in effect) for fiscal

2 year 1996 (including the formula for computing the

3 amount of the grant).

4 (3) Strike section 403(a)(1)(A) of the Social

5 Security Act, as proposed to be added by section

6 101, and insert the following:

7 ‘‘(A) IN GENERAL.—Each eligible State

8 shall be entitled to receive from the Secretary—

9 ‘‘(i) for fiscal year 1996, a grant in

10 an amount equal to—

11 ‘‘(I) the State family assistance

12 grant for fiscal year 1996; minus

13 ‘‘(II) the total amount of obliga14 tions to the State under part A of this

15 title (as in effect before the effective

16 date of this part) for fiscal year 1996,

17 other than with respect to amounts

18 expended for child care pursuant to

19 subsection (g) or (i) of section 402 of

20 this title (as so in effect); and

21 ‘‘(ii) for each of fiscal years 1997,

22 1998, 1999, and 2000, a grant in an

23 amount equal to the State family assist24 ance grant for the fiscal year.

25 (4) In section 201, insert
1722

•HR 2517 IH

1 ‘‘(a) IN GENERAL.—’’ before ‘‘Part B of title IV of

2 the Social Security Act’’.

3 (5) At the end of section 201, add the follow4 ing:

5 (b) SUBMISSION OF STATE PLAN FOR FISCAL YEAR

6 1996 DEEMED ACCEPTANCE OF GRANT LIMITATIONS

7 AND FORMULA.—The submission of a plan by a State

8 under section 422(a) of the Social Security Act (as in ef9 fect pursuant to the amendment made by subsection (a)

10 of this section) for fiscal year 1996 is deemed to constitute

11 the State’s acceptance of the grant limitations under sec12 tion 423(a)(1)(A) of such Act (as so in effect) for fiscal

13 year 1996 (including the formula for computing the

14 amount of the grant).

15 (6) Strike section 423(a)(1) of the Social Secu16 rity Act, as proposed to be added by section 201,

17 and insert the following:

18 ‘‘(1) IN GENERAL.—Each eligible State shall be

19 entitled to receive from the Secretary—

20 ‘‘(A) for fiscal year 1996, a grant in an

21 amount equal to—

22 ‘‘(i) the State share of the child pro23 tection amount for fiscal year 1996; minus

24 ‘‘(ii) the total amount of obligations to

25 the State under parts B and E of this title
1723

•HR 2517 IH

1 (as in effect before the effective date of

2 this part) for fiscal year 1996; and

3 ‘‘(B) for each subsequent fiscal year speci4 fied in subsection (b)(1), a grant in an amount

5 equal to the State share of the child protection

6 amount for the fiscal year.

7 (7) Strike section 301(b) and insert the follow8 ing:

9 (b) AUTHORIZATION OF APPROPRIATIONS.—Section

10 658B of the Child Care and Development Block Grant Act

11 of 1990 (42 U.S.C. 9858B) is amended to read as follows:

12 ‘‘SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.

13 ‘‘There are authorized to be appropriated to carry out

14 this subchapter $1,804,000,000 for fiscal year 1996 and

15 $2,093,000,000 for each of the fiscal years 1997, 1998,

16 1999, 2000, 2001, and 2002.’’.

17 (8) In the matter preceding paragraph (1) of

18 section 3 of the Child Nutrition Act of 1966, as pro19 posed to be amended by section 321, strike ‘‘The

20 Secretary’’ and insert ‘‘(a) IN GENERAL.—The Sec21 retary’’.

22 (9) At the end of section 3 of the Child Nutri23 tion Act of 1966, as proposed to be amended by sec24 tion 321, add the following:

25 ‘‘(b) ADDITIONAL REQUIREMENTS.—
1724

•HR 2517 IH

1 ‘‘(1) RESTRICTION ON ALLOTMENTS.—

2 ‘‘(A) COMPUTATION.—The Secretary shall

3 provide for the computation of State obligation

4 allotments in accordance with this section for

5 each of the fiscal years 1996 through 2000.

6 ‘‘(B) LIMITATION ON OBLIGATIONS.—The

7 Secretary shall not enter into obligations with

8 any State under this Act for a fiscal year in ex9 cess of the obligation allotment for that State

10 for the fiscal year, as determined under sub11 section (a). The sum of such obligation allot12 ments for all States in any fiscal year shall not

13 exceed the amount appropriated to carry out

14 this Act for that fiscal year.

15 ‘‘(2) AGREEMENT.—The submission of an ap16 plication by a State under section 4 is deemed to

17 constitute the State’s acceptance of the obligation al18 lotment limitations under this section (including the

19 formula for computing the amount of such obligation

20 allotment).

21 (10) In the matter preceding paragraph (1) of

22 section 3 of the National School Lunch Act, as pro23 posed to be amended by section 341, strike ‘‘The

24 Secretary’’ and insert ‘‘(a) IN GENERAL.—The Sec25 retary’’.
1725

•HR 2517 IH

1 (11) At the end of section 3 of the National

2 School Lunch Act, as proposed to be amended by

3 section 341, add the following:

4 ‘‘(b) ADDITIONAL REQUIREMENTS.—

5 ‘‘(1) RESTRICTION ON ALLOTMENTS.—

6 ‘‘(A) COMPUTATION.—The Secretary shall

7 provide for the computation of State obligation

8 allotments in accordance with this section for

9 each of the fiscal years 1996 through 2000.

10 ‘‘(B) LIMITATION ON OBLIGATIONS.—

11 ‘‘(i) IN GENERAL.—Subject to clause

12 (ii), the Secretary shall not enter into obli13 gations with any State under this Act for

14 a fiscal year in excess of the obligation al15 lotment for that State for the fiscal year,

16 as determined under subsection (a). The

17 sum of such obligation allotments for all

18 States in any fiscal year shall not exceed

19 the school-based nutrition amount for that

20 fiscal year.

21 ‘‘(ii) REDUCTION FOR POST-ENACT22 MENT NEW OBLIGATIONS IN FISCAL YEAR

23 1996.—

24 ‘‘(I) IN GENERAL.—The amount

25 of the obligation allotment otherwise
1726

•HR 2517 IH

1 provided under this section for fiscal

2 year 1996 for a State under this Act

3 (as in effect on and after the date of

4 the enactment of the Personal Re5 sponsibility Act of 1995) shall be re6 duced by the amount of the obliga7 tions described in subclause (II) that

8 are entered into under this Act or

9 under the Child Nutrition Act of 1966

10 on or after October 1, 1995, but prior

11 to the date of the enactment of the

12 Personal Responsibility Act of 1995.

13 ‘‘(II) AMOUNT OF OBLIGATIONS

14 DESCRIBED.—(aa) Except as provided

15 in division (bb), the amount of the ob16 ligations described in this subclause

17 are 100 percent of the amount of the

18 obligations entered into under this Act

19 and under the Child Nutrition Act of

20 1966 (except obligations entered into

21 under section 17 of such Act).

22 ‘‘(bb) For purposes of obligations

23 entered into under the summer food

24 service program for children under

25 section 13 of this Act, the child and
1727

•HR 2517 IH

1 adult care food program under section

2 17 of this Act, and the special milk

3 program under section 3 of the Child

4 Nutrition Act of 1966, the amount of

5 the obligations described in this

6 subclause are 12.5 percent of the

7 amount the obligations entered into

8 under each such program.

9 ‘‘(2) AGREEMENT.—The submission of an ap10 plication by a State under section 4 is deemed to

11 constitute the State’s acceptance of the obligation al12 lotment limitations under this section (including the

13 formula for computing the amount of such obligation

14 allotment).

15 ‘‘(3) TERMINATION OF PROGRAMS; LIMITATION

16 ON NEW OBLIGATION AUTHORITY.—

17 ‘‘(A) ELIMINATION OF INDIVIDUAL ENTI18 TLEMENT.—Effective on the date of the enact19 ment of the Personal Responsibility Act of

20 1995—

21 ‘‘(i) except as provided in subpara22 graph (B), the Federal Government has no

23 obligation to provide payment with respect

24 to items and services provided under this

25 Act (as in effect on and after the date of
1728

•HR 2517 IH

1 the enactment of the Personal Responsibil2 ity Act of 1995); and

3 ‘‘(ii) this Act (as in effect on and

4 after the date of the enactment of the Per5 sonal Responsibility Act of 1995) shall not

6 be construed as providing for an entitle7 ment, under Federal law in relation to the

8 Federal Government, in an individual or

9 person at the time of provision or receipt

10 of services.

11 ‘‘(B) LIMITATION ON OBLIGATION AU12 THORITY.—Notwithstanding any other provision

13 of this Act, the Secretary is authorized to enter

14 into obligations with any State under this Act

15 for expenses incurred after the date of the en16 actment of the Personal Responsibility Act and

17 during fiscal year 1996, but not in excess of the

18 obligation allotment for that State for fiscal

19 year 1996, as determined under subsection (a).

20 TITLE XIX—CONTRACT WITH

21 AMERICA-TAX RELIEF

22 SEC. 19001. ENACTMENT OF CONTRACT WITH AMERICA TAX

23 RELIEF ACT OF 1995.

24 (a) IN GENERAL.—Title VI of H.R. 1215 of the

25 104th Congress, as passed by the House of Representa-
1729

•HR 2517 IH

1 tives, is hereby enacted with the following modifications

2 to such title:

3 (1) Strike subtitle E (relating to social security

4 earnings test) and redesignate subtitles F and G as

5 subtitles E and F, respectively.

6 (2) Strike subsections (c)(2) and (d)(2) of sec7 tion 6201.

8 (3) Strike the amendment contained in para9 graph (2) of section 6301(d) and insert the follow10 ing: ‘‘Subsection (h) of section 1 is amended by add11 ing at the end the following new sentence: ‘For pur12 poses of this subsection, taxable income shall be

13 computed without regard to the deduction allowed

14 by section 1202.’ ’’

15 (4) Strike section 6321 (relating to depreciation

16 adjustment for certain property placed in service

17 after December 31, 1994).

18 (5) Strike part III of subtitle C (relating to al19 ternative minimum tax relief).

20 (6) Strike subtitle F (as redesignated by para21 graph (1)) and insert the following:
1730

•HR 2517 IH

1 ‘‘Subtitle F—Tax Reduction

2 Contingent on Deficit Reduction

3 ‘‘SEC. 6701. TAX REDUCTION CONTINGENT ON DEFICIT RE4 DUCTION.

5 ‘‘This title, which is contained within the Act that—

6 ‘‘(1) carries out the concurrent resolution on

7 the budget for fiscal year 1996 that provides that

8 the budget of the United States will be in balance

9 by fiscal year 2002; and

10 ‘‘(2) achieves a level of deficit reduction pursu11 ant to the reconciliation instructions of that concur12 rent resolution that will result in a budget of the

13 United States that will be in balance by fiscal year

14 2002; and

15 ‘‘(B) is certified pursuant to the requirements

16 set forth in section 210 of that concurrent resolu17 tion,

18 shall take effect as so provided by its effective date provi19 sions.

20 ‘‘SEC. 6702. MONITORING.

21 ‘‘The Committees on the Budget of the House of

22 Representatives and the Senate shall each monitor

23 progress on achieving a balanced budget consistent with

24 the most recently agreed to concurrent resolution on the

25 budget for fiscal year 1996 or any subsequent fiscal year
1731

•HR 2517 IH

1 (and the reconciliation Act for that resolution) or the most

2 recently agreed to concurrent resolution on the budget

3 that would achieve a balanced budget by fiscal year 2002

4 (and the reconciliation Act for that resolution). After con5 sultation with the Director of the Congressional Budget

6 Office, each such committee shall submit a report of its

7 findings to its House and the President on or before De8 cember 15, 1995, and annually thereafter. Each such re9 port shall contain the following:

10 ‘‘(1) Estimates of the deficit levels (based on

11 legislation enacted through the date of the report)

12 for each fiscal year through fiscal year 2002.

13 ‘‘(2) An analysis of the variance (if any) be14 tween those estimated deficit levels and the levels set

15 forth in the concurrent resolution on the budget for

16 fiscal year 1996 or the most recently agreed to con17 current resolution on the budget that would achieve

18 a balanced budget by fiscal year 2002.

19 ‘‘(3) Policy options to achieve the additional

20 levels of deficit reduction necessary to balance the

21 budget of the United States by fiscal year 2002.

22 ‘‘SEC. 6703. CONGRESSIONAL ACTION.

23 ‘‘Each House of Congress shall incorporate the policy

24 options included in the report of its Committee on the

25 Budget under section 6702(a)(3) (or other policy options)
1732

•HR 2517 IH

1 in developing a concurrent resolution on the budget for

2 any fiscal year that achieves the additional levels of deficit

3 reduction necessary to balance the budget of the United

4 States by fiscal year 2002.

5 ‘‘SEC. 6704. PRESIDENTIAL ACTION.

6 ‘‘If the President submits a budget under section

7 1105(a) of title 31, United States Code, that does not pro8 vide for a balanced budget for the United States by fiscal

9 year 2002, then the President shall include with that sub10 mission a complete budget that balances the budget by

11 that fiscal year.’’

12 (7) Conform the table of contents accordingly.

13 (b) TECHNICAL CORRECTION.—Effective with re14 spect to taxable years ending after December 31, 1994,

15 paragraph (1) of section 1201(b) of the Internal Revenue

16 Code of 1986, as added by such title VI, is amended to

17 read as follows:

18 ‘‘(1) IN GENERAL.—In the case of any taxable

19 year ending after December 31, 1994, and beginning

20 before January 1, 1996, in applying subsection (a),

21 net capital gain for such taxable year shall not ex22 ceed such net capital gain determined by taking into

23 account only gain or loss properly taken into account

24 for the portion of the taxable year after December

25 31, 1994.’’
1733

•HR 2517 IH

1 SEC. 19002. COMPLIANCE WITH CONCURRENT RESOLUTION

2 ON THE BUDGET.

3 (a) IN GENERAL.—For purposes of the Internal Rev4 enue Code of 1986, the taxpayer’s net modified chapter

5 1 liability for any taxable year shall be such liability deter6 mined without regard to this section—

7 (1) increased by 27 percent of the excess (if

8 any) of—

9 (A) the amount which would be the tax10 payer’s net modified chapter 1 liability for such

11 year if such liability were determined without

12 regard to the amendments made by subtitles A,

13 B, C, and D of title VI of H.R. 1215 of the

14 104th Congress, as passed by the House of

15 Representatives, over

16 (B) the taxpayer’s net modified chapter 1

17 liability for such year determined without re18 gard to this section, or

19 (2) reduced by 27 percent of the excess (if any)

20 of the amount described in paragraph (1)(B) over

21 the liability described in paragraph (1)(A).

22 (b) NET MODIFIED CHAPTER 1 LIABILITY.—For

23 purposes of subsection (a), the term ‘‘net modified chapter

24 1 liability’’ means the liability for tax under chapter 1 of

25 the Internal Revenue Code of 1986 determined—
1734

•HR 2517 IH

1 (1) without regard to sections 1201 and 1202

2 of such Code, as amended by such title VI,

3 (2) without regard to the amendments made by

4 sections 6103 and 6104 of such title VI,

5 (3) after the application of any credit against

6 such tax other than the credits under sections 31,

7 33, and 34 of such Code, and

8 (4) before crediting any payment of estimated

9 tax for the taxable year.

10 (c) CAPITAL GAINS.—

11 (1) CAPITAL GAINS DEDUCTION FOR TAX12 PAYERS OTHER THAN CORPORATIONS.—For pur13 poses of applying section 1202 of the Internal Reve14 nue Code of 1986, as added by such title VI—

15 (A) in the case of taxable years ending be16 fore January 1, 1996, ‘‘42.5 percent’’ shall be

17 substituted for ‘‘50 percent’’ in subsection (a)

18 thereof, and

19 (B) in the case of taxable years ending

20 after December 31, 1995, ‘‘34.5 percent’’ shall

21 be substituted for ‘‘50 percent’’ in subsection

22 (a) thereof.

23 (2) ALTERNATIVE CAPITAL GAINS TAX FOR

24 CORPORATIONS.—
1735

•HR 2517 IH

1 (A) For purposes of applying section 1201

2 of such Code, as amended by such title VI—

3 (i) in the case of taxable years ending

4 before January 1, 1996, ‘‘26.5 percent’’

5 shall be substituted for ‘‘25 percent’’ in

6 subsection (a)(2) thereof, and

7 (ii) in the case of taxable years ending

8 after December 31, 1995, ‘‘31.9 percent’’

9 shall be substituted for ‘‘25 percent’’ in

10 subsection (a)(2) thereof.

11 (B) For purposes of applying section

12 852(b)(3)(D)(iii) of such Code, as amended by

13 such title VI—

14 (i) in the case of taxable years ending

15 before January 1, 1996, ‘‘73.5 percent’’

16 shall be substituted for ‘‘75 percent’’ in

17 subsection (a)(2) thereof, and

18 (ii) in the case of taxable years ending

19 after December 31, 1995, ‘‘68.1 percent’’

20 shall be substituted for ‘‘75 percent’’ in

21 subsection (a)(2) thereof.

22 (3) INDEXING.—For purposes of applying sec23 tion 1022 of such Code, as added by such title VI,

24 only 69 percent of the applicable inflation adjust-
1736

•HR 2517 IH

1 ment under subsection (c)(2) of such section 1022

2 shall be taken into account.

3 (4) CONFORMING CHANGES.—Proper adjust4 ments shall be made to the percentages and frac5 tions in the following provisions to reflect the per6 centages in paragraphs (1) and (2):

7 (A) Sections 170(c), 1445(e), and

8 7518(g)(6)(A) of such Code.

9 (B) Section 607(h)(6)(A) of the Merchant

10 Marine Act, 1936.

11 (d) AMERICAN DREAM SAVINGS ACCOUNTS.—For

12 purposes of applying section 408A of such Code, as added

13 by such title VI—

14 (1) only 69 percent of the income on the assets

15 held in an American Dream Savings Account (which

16 would otherwise be includible in gross income) shall

17 be excludible from gross income,

18 (2) only 69 percent of any distribution attrib19 utable to amounts not previously included in gross

20 income shall be entitled to the treatment described

21 in subsection (d)(1) of such section 408A, and

22 (3) only 69 percent of any payment or distribu23 tion referred to in subsection (d)(3)(B) of such sec24 tion 408A shall be entitled to the treatment de25 scribed in such subsection.
1737

•HR 2517 IH

1 (e) SPOUSAL INDIVIDUAL RETIREMENT AC2 COUNTS.—For purposes of applying sections 219 and 408

3 of such Code—

4 (1) only 69 percent of the contributions to an

5 individual retirement plan which are allowable as a

6 deduction solely by reason of the amendments made

7 by section 6104 of such title VI shall be allowed as

8 a deduction, and

9 (2) only 69 percent of the income on the assets

10 held in an individual retirement plan which are at11 tributable to contributions permitted solely by reason

12 of the amendments made by section 6104 of such

13 title VI (which would otherwise be includible in gross

14 income) shall be excludible from gross income.

15 (f) ALTERNATIVE MINIMUM TAX.—

16 (1) IN GENERAL.—In the case of taxable years

17 beginning after December 31, 1994—

18 (A) in the case of a taxpayer other than a

19 corporation, the tax imposed by section 55 of

20 such Code shall be determined without regard

21 to paragraph (1) of section 56(a) of such Code,

22 and

23 (B) in the case of a corporation, the ten24 tative minimum tax under section 55 of such

25 Code shall be zero.
1738

•HR 2517 IH

1 (2) DELAY IN BENEFIT OF REPEAL FOR TAX2 ABLE YEARS 1995 AND 1996.—

3 (A) IN GENERAL.—Paragraph (1) shall not

4 apply to any taxable year beginning before Jan5 uary 1, 1997, but there shall be allowed as a

6 credit against the tax imposed by subtitle A of

7 such Code for each taxable year referred to in

8 subparagraph (C) an amount equal to the credit

9 determined under subparagraph (B).

10 (B) AMOUNT OF CREDIT.—The credit de11 termined under this subparagraph for any tax12 able year to which this paragraph applies is an

amount equal to 1 13 ⁄3 of the excess (if any) of—

14 (i) the aggregate tax paid under sec15 tion 55 of such Code for taxable years be16 ginning after December 31, 1994, and be17 fore January 1, 1997, over

18 (ii) the amount of tax which would

19 have been imposed by such section 55 for

20 such taxable years had paragraph (1) ap21 plied to such taxable years.

22 (C) YEARS CREDIT ALLOWED.—The tax23 able years referred to in this subparagraph are

24 the first 3 taxable years of the taxpayer begin25 ning after December 31, 1996.
1739

•HR 2517 IH

1 (D) COORDINATION WITH OTHER PROVI2 SIONS.—For purposes of the Internal Revenue

3 Code of 1986, the credit allowed under para4 graph (1) shall be treated as a credit allowed

5 under subpart C of part IV of subchapter A of

6 chapter 1 of such Code and as referred to in

7 paragraph (2) of 1324(b) of title 31, United

8 States Code, immediately before the period at

9 the end thereof.

10 (g) COMPARABLE TREATMENT FOR ESTATE AND

11 GIFT TAX CHANGES.—A rule similar to the rule of sub12 section (a) shall apply to any reduction in liability for tax

13 under subtitle B of such Code by reason of the amend14 ments made by section 6351 of such title VI.

15 TITLE XX—BUDGET

16 ENFORCEMENT

17 SEC. 20001. SHORT TITLE; PURPOSE.

18 (a) SHORT TITLE.—This title may be cited as the

19 ‘‘Seven-Year Balanced Budget Enforcement Act of 1995’’.

20 (b) PURPOSE.—This title extends and reduces the

21 discretionary spending limits and extends the pay-as-you22 go requirements.

23 SEC. 20002. DISCRETIONARY SPENDING LIMITS.

24 (a) LIMITS.—Section 601(a)(2) of the Congressional

25 Budget Act of 1974 is amended by striking subparagraphs
1740

•HR 2517 IH

1 (A), (B), (C), (D), and (F), by redesignating subpara2 graph (E) as subparagraph (A) and by striking ‘‘and’’ at

3 the end of that subparagraph, and by inserting after sub4 paragraph (A) the following new subparagraphs:

5 ‘‘(B) with respect to fiscal year 1996, for

6 the discretionary category: $485,074,000,000 in

7 new budget authority and $531,768,000,000 in

8 outlays;

9 ‘‘(C) with respect to fiscal year 1997, for

10 the discretionary category: $482,430,000,000 in

11 new budget authority and $520,295,000,000 in

12 outlays;

13 ‘‘(D) with respect to fiscal year 1998, for

14 the discretionary category: $490,692,000,000 in

15 new budget authority and $512,632,000,000 in

16 outlays;

17 ‘‘(E) with respect to fiscal year 1999, for

18 the discretionary category: $482,207,000,000 in

19 new budget authority and $510,482,000,000 in

20 outlays;

21 ‘‘(F) with respect to fiscal year 2000, for

22 the discretionary category: $489,379,000,000 in

23 new budget authority and $514,234,000,000 in

24 outlays;
1741

•HR 2517 IH

1 ‘‘(G) with respect to fiscal year 2001, for

2 the discretionary category: $496,601,000,000 in

3 new budget authority and $516,403,000,000 in

4 outlays; and

5 ‘‘(H) with respect to fiscal year 2002, for

6 the discretionary category: $498,837,000,000 in

7 new budget authority and $515,075,000,000 in

8 outlays;’’.

9 (b) COMMITTEE ALLOCATIONS AND ENFORCE10 MENT.—Section 602 of the Congressional Budget Act of

11 1974 is amended—

12 (1) in subsection (c), by striking ‘‘1995’’ and

13 inserting ‘‘2002’’ and by striking the last sentence;

14 and

15 (2) in subsection (d), by striking ‘‘1992 TO

16 1995’’ in the side heading and inserting ‘‘1996 TO

17 2002’’ and by striking ‘‘1992 through 1995’’ and in18 serting ‘‘1996 through 2002’’.

19 (c) TERM OF BUDGET RESOLUTIONS.—Section 606

20 of the Congressional Budget Act of 1974 is amended—

21 (1) in its section heading by striking ‘‘5-year’’

22 and inserting ‘‘term of’’;

23 (2) in the sideheading of subsection (a), by

24 striking ‘‘5-YEAR’’ and inserting ‘‘TERM OF’’;
1742

•HR 2517 IH

1 (3) in subsection (a), by striking ‘‘1992, 1993,

2 1994, or 1995’’ and inserting ‘‘1996 or any fiscal

3 year thereafter through 2002’’ and by inserting ‘‘at

4 least’’ before ‘‘each’’; and

5 (4) in subsection (d)(1), by striking ‘‘1992,

6 1993, 1994, and 1995’’ and inserting ‘‘1996 or any

7 fiscal year thereafter through 2002’’, and by striking

8 ‘‘(i) and (ii)’’.

9 (d) EFFECTIVE DATE.—Section 607 of the Congres10 sional Budget Act of 1974 is amended by striking ‘‘1991

11 to 1998’’ and inserting ‘‘1996 to 2002’’.

12 (e) SEQUESTRATION REGARDING VIOLENT CRIME

13 REDUCTION TRUST FUND.—(1) Section 251A(b)(1) of

14 the Balanced Budget and Emergency Deficit Control Act

15 of 1985 is amended by striking subparagraphs (B), (C),

16 and (D) and its last sentence and inserting the following:

17 ‘‘(B) For fiscal year 1996,

18 $2,227,000,000.

19 ‘‘(C) For fiscal year 1997, $3,846,000,000.

20 ‘‘(D) For fiscal year 1998,

21 $4,901,000,000.

22 ‘‘(E) For fiscal year 1999,

23 $5,639,000,000.

24 ‘‘(F) For fiscal year 2000,

25 $6,225,000,000.’’.
1743

•HR 2517 IH

1 (2) Section 310002 of the Violent Crime Control and

2 Law Enforcement Act of 1994 (42 U.S.C. 14212) is re3 pealed.

4 (f) CONFORMING AMENDMENT.—The item relating

5 to section 606 in the table of contents set forth in section

6 1(b) of the Congressional Budget and Impoundment Con7 trol Act of 1974 is amended by striking ‘‘5-year’’ and in8 serting ‘‘Term of’’.

9 SEC. 20003. GENERAL STATEMENT AND DEFINITIONS.

10 (a) GENERAL STATEMENT.—Section 250(b) of the

11 Balanced Budget and Emergency Deficit Control Act of

12 1985 is amended by striking the first two sentences and

13 inserting the following: ‘‘This part provides for the en14 forcement of deficit reduction by reducing and extending

15 the discretionary spending limits though fiscal year 2002

16 and permanently extending pay-as-you-go requirements.’’.

17 (b) DEFINITIONS.—Section 250(c) of the Balanced

18 Budget and Emergency Deficit Control Act of 1985 is

19 amended—

20 (1) by striking paragraph (4) and inserting the

21 following:

22 ‘‘(4) The term ‘category’ means:

23 ‘‘(A) For fiscal years 1996 through 2000,

24 all discretionary appropriations except those

25 subject to section 251A; and
1744

•HR 2517 IH

1 ‘‘(B) For fiscal year 2001 and any subse2 quent fiscal year, all discretionary appropria3 tions.’’;

4 (2) by striking paragraph (6) and inserting the

5 following:

6 ‘‘(6) The term ‘budgetary resources’ means new

7 budget authority, unobligated balances, direct spend8 ing authority, and obligation limitations.’’;

9 (3) in paragraph (9), by striking ‘‘1992’’ and

10 inserting ‘‘1996’’; and

11 (4) in paragraph (14), by striking ‘‘through fis12 cal year 1995’’.

13 SEC. 20004. ENFORCING DISCRETIONARY SPENDING LIM14 ITS.

15 Section 251 of the Balanced Budget and Emergency

16 Deficit Control Act of 1985 is amended—

17 (1) in the side heading of subsection (a), by

18 striking ‘‘1991–1998’’ and inserting ‘‘1996–2002’’;

19 (2) in the first sentence of subsection (b)(1), by

20 striking ‘‘1992, 1993, 1994, 1995, 1996, 1997 or

21 1998’’ and inserting ‘‘1997 or any fiscal year there22 after through 2002’’ and by striking ‘‘through

23 1998’’ and inserting ‘‘through 2002’’;

24 (3) in subsection (b)(1), by striking ‘‘the follow25 ing:’’ and all that follows through ‘‘The adjust-
1745

•HR 2517 IH

1 ments’’ and inserting ‘‘the following: the adjust2 ments’’ and by striking subparagraphs (B) and (C);

3 (4) in subsection (b)(2), by striking ‘‘1991,

4 1992, 1993, 1994, 1995, 1996, 1997, or 1998’’ and

5 inserting ‘‘1996 or any fiscal year thereafter through

6 2002’’ and by striking ‘‘through 1998’’ and insert7 ing ‘‘through 2002’’;

8 (5) in subsection (b)(2)(E), by striking clauses

9 (i), (ii), and (iii) and by striking ‘‘(iv) if, for fiscal

10 years 1994, 1995, 1996, 1997, and 1998’’ and in11 serting ‘‘If, for fiscal years 1996 through 2002’’;

12 and

13 (6) in subsection (b)(2)(F), by striking every14 thing after ‘‘the adjustment in outlays’’ and insert15 ing ‘‘for a category for a fiscal year is the amount

16 of the excess but not to exceed 0.5 percent of the

17 adjusted discretionary spending limit on outlays for

18 that fiscal year in fiscal year 1996 or any fiscal year

19 thereafter through 2002.’’.

20 SEC. 20005. ENFORCING PAY-AS-YOU-GO.

21 (a) EXTENSION.—(1) Section 252 of the Balanced

22 Budget and Emergency Deficit Control Act of 1985 is

23 amended—

24 (A) in the side heading of subsection (a), by

25 striking ‘‘FISCAL YEARS 1992–1998’’; and
1746

•HR 2517 IH

1 (B) in subsection (e), by striking ‘‘, for any fis2 cal year from 1991 through 1998,’’ and by striking

3 ‘‘through 1995’’.

4 (b) ROLLING PAY-AS-YOU-GO SCORECARD.—Section

5 252(d) of the Balanced Budget and Emergency Deficit

6 Control Act of 1985 is amended by striking ‘‘each fiscal

7 year through fiscal year 1998’’ each place it appears and

8 inserting ‘‘the current year (if applicable), the budget

9 year, and each of the first 4 outyears’’.

10 SEC. 20006. REPORTS AND ORDERS.

11 Section 254 of the Balanced Budget and Emergency

12 Deficit Control Act of 1985 is amended—

13 (1) in subsection (d)(2), by striking

14 ‘‘1998’’ and inserting ‘‘2002’’; and

15 (2)(A) in subsection (g)(2)(A), by striking

16 ‘‘1998’’ and inserting ‘‘2002’’; and

17 (B) in subsection (g)(3), by striking ‘‘in each

18 outyear through 1998’’ and inserting ‘‘in each of the

19 4 ensuing outyears’’.

20 SEC. 20007. TECHNICAL CORRECTION.

21 Section 258 of the Balanced Budget and Emergency

22 Deficit Control Act of 1985, entitled ‘‘Modification of

23 Presidential Order’’, is repealed.
1747

•HR 2517 IH

1 SEC. 20008. SPECIAL RULE ON INTERRELATIONSHIP BE2 TWEEN CHANGES IN DISCRETIONARY SPEND3 ING LIMITS AND PAY-AS-YOU-GO REQUIRE4 MENTS.

5 (a)(1) Section 252 of the Balanced Budget and

6 Emergency Deficit Control Act of 1985 is amended by

7 adding at the end the following new subsection:

8 ‘‘(f) SPECIAL RULE ON INTERRELATIONSHIP BE9 TWEEN SECTIONS 251, 251A, and 252.—Whenever legis10 lation is enacted during the 104th Congress that decreases

11 the discretionary spending limits for budget authority and

12 outlays for a fiscal year under section 601(a)(2) of the

13 Congressional Budget Act of 1974 or in section 251A(b)

14 of the Balanced Budget and Emergency Deficit Control

15 Act of 1985, or both, then, for purposes of subsection (b),

16 an amount equal to that decrease in the discretionary

17 spending limit for outlays shall be treated as direct spend18 ing legislation decreasing the deficit for that fiscal year.’’.

19 (2) Section 310(a) of the Congressional Budget Act

20 of 1974 is amended by striking ‘‘or’’ at the end of para21 graph (3), by redesignating paragraph (4) as paragraph

22 (5) and by striking ‘‘and (3)’’ in such redesignated para23 graph (5) and inserting ‘‘(3), and (4)’’, and by inserting

24 after paragraph (3) the following new paragraph:
1748

•HR 2517 IH

1 ‘‘(4) carry out section 252(f) of the Balanced

2 Budget and Emergency Deficit Control Act of 1985;

3 or’’.

4 (b) For purposes of section 252(f) of the Balanced

5 Budget and Emergency Deficit Control Act of 1985 (as

6 amended by subsection (a)(1))—

7 (1) reductions in the discretionary spending

8 limit for outlays under section 601(a)(2) of the Con9 gressional Budget Act of 1974 for each of fiscal

10 years 1999 through 2002 under section 20002 shall

11 be measured as reductions from the discretionary

12 spending limit for outlays for fiscal year 1998 as in

13 effect immediately before the enactment of this Act;

14 and

15 (2) reductions in the discretionary spending

16 limit for outlays under section 251A(b) of the Bal17 anced Budget and Emergency Deficit Control Act of

18 1985 for each of fiscal years 1996 through 2000

19 under section 20002 shall be measured as reductions

20 in outlays for that fiscal year under section 251A(b)

21 as in effect immediately before the enactment of this

22 Act.
1749

•HR 2517 IH

1 SEC. 20009. MEDICARE SAVINGS CANNOT BE USED TO PAY

2 FOR TAX CUTS.

3 Any net savings in direct spending and receipts in

4 the Medicare program for any fiscal year resulting from

5 the enactment of this Act or H.R. 2425 (as applicable)

6 shall not be counted for purposes of section 252 of the

7 Balanced Budget and Emergency Deficit Control Act of

8 1985.

9 SEC. 20010. EFFECTIVE DATE.

10 (a) EXPIRATION.—Section 275(b) of the Balanced

11 Budget and Emergency Deficit Control Act of 1985 is

12 amended—

13 (1) by striking ‘‘Part C of this title, section’’

14 and inserting ‘‘Sections 251, 253, 258B, and’’; and

15 (2) by striking ‘‘1995’’ and inserting ‘‘2002’’.

16 (b) EXPIRATION.—Section 14002(c)(3) of the Omni17 bus Budget Reconciliation Act of 1993 (2 U.S.C. 900

18 note) is repealed.

19 SEC. 20011. APPLICATION OF SECTION 251 ADJUSTMENTS.

20 Section 251(b)(2) of the Balanced Budget and Emer21 gency Deficit Control Act of 1985 is amended by adding

22 at the end the following new subparagraph:

23 ‘‘(H) SPECIAL ALLOWANCE FOR WELFARE RE24 FORM.—If, for any fiscal year, appropriations are

25 enacted for accounts specified in clauses (i) and (ii),

26 the adjustment shall be the sum of:
1750

•HR 2517 IH

1 ‘‘(i) the excess of the appropriation for the

2 fiscal year for the Child Care and Development

3 Block Grant over $1,082,000,000, but not to

4 exceed $722,000,000 in fiscal year 1996 or

5 $1,011,000,000 in fiscal year 1997 through

6 2002; and

7 ‘‘(ii) the excess of the appropriation for the

8 fiscal year for the Family Nutrition Block

9 Grant Program over $3,470,000,000, but not to

10 exceed $692,000,000 in fiscal year 1996,

11 $1,307,000,000 in fiscal year 1997,

12 $1,466,000,000 in fiscal year 1998,

13 $1,650,000,000 in fiscal year 1999,

14 $1,838,000,000 in fiscal year 2000,

15 $2,075,000,000 in fiscal year 2001, or

16 $2,324,000,000 in fiscal year 2002;

17 and the outlays flowing in all years from such excess

18 appropriations (as reduced pursuant to the limita19 tions in clauses (i) and (ii).’’.

20 SEC. 20012. SPECIAL RULES APPLICABLE TO DEPARTMENT

21 OF DEFENSE SEQUESTRATION.

22 Section 255 of the Balanced Budget and Emergency

23 Deficit Control Act of 1985 is amended by striking sub24 section (h) (relating to optional exemption of military per-
1751

•HR 2517 IH

1 sonnel) and adding at the end the following new sub2 section:

3 ‘‘(j) OPTIONAL EXEMPTION FOR MILITARY PERSON4 NEL.—

5 ‘‘(1) AUTHORITY FOR EXEMPTION.—The Presi6 dent may, with respect to any military personnel ac7 count, exempt that account from sequestration or

8 provide for a lower uniform percentage reduction

9 than would otherwise apply.

10 ‘‘(B) The President may not use the au11 thority provided by subparagraph (A) unless he

12 notifies the Congress of the manner in which

13 such authority will be exercised on or before the

14 initial snapshot date for the budget year.

15 ‘‘(2) AUTHORITY FOR MILITARY TECHNICIANS

16 AND MEDICAL PERSONNEL.—

17 ‘‘(A) Whenever the President exempts a

18 military personnel account from sequestration

19 under paragraph (1) and after all other seques20 trations to Department of Defense account have

21 been made, the Secretary of Defense may trans22 fer amounts to any appropriation for operation

23 and maintenance for the current fiscal year

24 from amounts available under any other appro25 priation to the Department of Defense, but—
1752

•HR 2517 IH

1 ‘‘(i) amounts so transferred shall be

2 available only for the pay of military tech3 nicians, the pay of medical personnel, and

4 other expenses of medical programs (in5 cluding CHAMPUS); and

6 ‘‘(ii) the total amount transferred to

7 any operations and maintenance appropria8 tion shall not exceed the amount seques9 tered from such appropriation.

10 ‘‘(C) The authority to make transfers pur11 suant to subparagraph (A) is in addition to any

12 authority of the Secretary of Defense to make

13 transfers of appropriated funds under any other

14 provision of law.

15 ‘‘(D) The Secretary of Defense may carry

16 out a transfer of funds under subparagraph (A)

17 only after notifying the Committees on Appro18 priations of the Senate and House of Rep19 resentatives of the proposed transfer and a pe20 riod of 20 calendar days in session has elapsed

21 after such notice is received.’’.

22 SEC. 20013. TREATMENT OF DIRECT STUDENT LOANS.

23 Section 504 of the Federal Credit Reform Act of

24 1990 is amended by adding at the end the following new

25 subsection:
1753

•HR 2517 IH

1 ‘‘(h) TREATMENT OF DIRECT STUDENT LOANS.—

2 The cost of a direct loan under the Federal direct student

3 loan program shall be the net present value, at the time

4 when the direct loan is disbursed, of the following cash

5 flows for the estimated life of the loan:

6 ‘‘(1) Loan disbursements.

7 ‘‘(2) Repayments of principal.

8 ‘‘(3) Payments of interest and other payments

9 by or to the Government over the life of the loan

10 after adjusting for estimated defaults, prepayments,

11 fees, penalties, and other recoveries.

12 ‘‘(4) Direct expenses, including—

13 ‘‘(A) activities related to credit extension,

14 loan origination, loan servicing, management of

15 contractors, and payments to contractors, other

16 government entities, and program participants;

17 ‘‘(B) collection of delinquent loans; and

18 ‘‘(C) writeoff and closeout of loans.’’.

19 SEC. 20014. DEFINITION OF PROGRAMS, PROJECTS, AND

20 ACTIVITIES FOR DEPARTMENT OF DEFENSE

21 APPROPRIATIONS.

22 For purposes of the Balanced Budget and Emergency

23 Deficit Control Act of 1985, the term program, project,

24 and activity for appropriations contained in any Depart25 ment of Defense appropriation Act shall be defined as the
1754

•HR 2517 IH

1 most specific level of budget items identified in the most

2 recent Department of Defense appropriation Act, the ac3 companying House and Senate Committee reports, the

4 conference report and accompanying joint explanatory

5 statement of the managers of the committee of conference,

6 the related classified annexes and reports, and the P–1

7 and R–1 budget justification documents as subsequently

8 modified by congressional action: Provided, That the fol9 lowing exception to the above definition shall apply:

10 For the Military Personnel and the Operation and

11 Maintenance accounts, the term ‘‘program, project, and

12 activity’’ is defined as the appropriation accounts con13 tained in the most recent Department of Defense appro14 priation Act: Provided further, That at the time the Presi15 dent submits his budget for any fiscal year, the Depart16 ment of Defense shall transmit to the Committees on Ap17 propriations and the Committees on Armed Services of the

18 Senate and the House of Representatives a budget jus19 tification document to be known as the ‘‘O–1’’ which shall

20 identify, at the budget activity, activity group, and sub21 activity group level, the amounts requested by the Presi22 dent to be appropriated to the Department of Defense for

23 operation and maintenance in any budget request, or

24 amended budget request, for that fiscal year.
1755

•HR 2517 IH

Æ

HR 2517 IH——2

HR 2517 IH——3

HR 2517 IH——4

HR 2517 IH——5

HR 2517 IH——6

HR 2517 IH——7

HR 2517 IH——8

HR 2517 IH——9

HR 2517 IH——10

HR 2517 IH——11

HR 2517 IH——12

HR 2517 IH——13

HR 2517 IH——14

HR 2517 IH——15

HR 2517 IH——16

HR 2517 IH——17

HR 2517 IH——18

HR 2517 IH——19

HR 2517 IH——20

HR 2517 IH——21

HR 2517 IH——22

HR 2517 IH——23

HR 2517 IH——24

HR 2517 IH——25
1756

•HR 2517 IH

HR 2517 IH——26

HR 2517 IH——27

HR 2517 IH——28

HR 2517 IH——29

HR 2517 IH——30

HR 2517 IH——31

HR 2517 IH——32

HR 2517 IH——33

HR 2517 IH——34

HR 2517 IH——35

HR 2517 IH——36

HR 2517 IH——37

HR 2517 IH——38

HR 2517 IH——39

HR 2517 IH——40

HR 2517 IH——41

HR 2517 IH——42

HR 2517 IH——43

HR 2517 IH——44

HR 2517 IH——45

HR 2517 IH——46

HR 2517 IH——47

HR 2517 IH——48

HR 2517 IH——49

HR 2517 IH——50
1757

•HR 2517 IH

HR 2517 IH——51

HR 2517 IH——52

HR 2517 IH——53

HR 2517 IH——54

HR 2517 IH——55

HR 2517 IH——56

HR 2517 IH——57

HR 2517 IH——58

HR 2517 IH——59

HR 2517 IH——60

HR 2517 IH——61

HR 2517 IH——62

HR 2517 IH——63

HR 2517 IH——64

HR 2517 IH——65

HR 2517 IH——66

HR 2517 IH——67

HR 2517 IH——68

HR 2517 IH——69

HR 2517 IH——70

HR 2517 IH——71

HR 2517 IH——72

HR 2517 IH——73

HR 2517 IH——74

HR 2517 IH——75
1758

•HR 2517 IH

HR 2517 IH——76

HR 2517 IH——77

HR 2517 IH——78

HR 2517 IH——79

HR 2517 IH——80

HR 2517 IH——81

HR 2517 IH——82

HR 2517 IH——83

HR 2517 IH——84

HR 2517 IH——85

HR 2517 IH——86

HR 2517 IH——87

HR 2517 IH——88

HR 2517 IH——89

HR 2517 IH——90

HR 2517 IH——91

HR 2517 IH——92

HR 2517 IH——93

HR 2517 IH——94

HR 2517 IH——95

HR 2517 IH——96

HR 2517 IH——97

HR 2517 IH——98

HR 2517 IH——99

HR 2517 IH——100
1759

•HR 2517 IH

HR 2517 IH——101

HR 2517 IH——102

HR 2517 IH——103

HR 2517 IH——104

HR 2517 IH——105

HR 2517 IH——106

HR 2517 IH——107

HR 2517 IH——108

HR 2517 IH——109

HR 2517 IH——110

HR 2517 IH——111

HR 2517 IH——112

HR 2517 IH——113

HR 2517 IH——114

HR 2517 IH——115

HR 2517 IH——116

HR 2517 IH——117

HR 2517 IH——118

HR 2517 IH——119

HR 2517 IH——120

HR 2517 IH——121

HR 2517 IH——122

HR 2517 IH——123

HR 2517 IH——124

HR 2517 IH——125
1760

•HR 2517 IH

HR 2517 IH——126

HR 2517 IH——127

HR 2517 IH——128

HR 2517 IH——129

HR 2517 IH——130

HR 2517 IH——131

HR 2517 IH——132

HR 2517 IH——133

HR 2517 IH——134

HR 2517 IH——135

HR 2517 IH——136

HR 2517 IH——137

HR 2517 IH——138

HR 2517 IH——139

HR 2517 IH——140

HR 2517 IH——141

HR 2517 IH——142

HR 2517 IH——143

HR 2517 IH——144

HR 2517 IH——145

HR 2517 IH——146

HR 2517 IH——147

HR 2517 IH——148

HR 2517 IH——149

HR 2517 IH——150