I

103D CONGRESS

2D SESSION H. R. 4585

To promote freedom, fairness, and economic opportunity for families by

reducing the power and reach of the Federal establishment.

IN THE HOUSE OF REPRESENTATIVES

JUNE 16, 1994

Mr. ARMEY introduced the following bill; which was referred jointly to the

Committees on Ways and Means, Government Operations, and Rules

AUGUST 4, 1994

Additional sponsors: Mr. SMITH of Michigan, Mr. LINDER, Mr. YOUNG of

Alaska, Mr. BARTLETT of Maryland, Mr. DOOLITTLE, Mr. ROTH, Mr.

BURTON of Indiana, Mr. RAVENEL, and Mr. KLUG

A BILL

To promote freedom, fairness, and economic opportunity for

families by reducing the power and reach of the Federal

establishment.

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 ‘‘Freedom and Fairness

5 Restoration Act of 1994’’.
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1 TITLE I—TAX REDUCTION AND

2 SIMPLIFICATION

3 SEC. 101. INDIVIDUALS TAXED ONLY ON EARNED INCOME.

4 (a) IN GENERAL.—Section 1 of the Internal Revenue

5 Code of 1986 is amended to read as follows:

6 ‘‘SECTION 1. TAX IMPOSED.

7 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed

8 on the income of every individual a tax equal to 20 percent

9 (17 percent in the case of taxable years beginning after

10 December 31, 1996) of the excess (if any) of—

11 ‘‘(1) the taxable earned income received or ac12 crued during the taxable year, over

13 ‘‘(2) the standard deduction (as defined in sec14 tion 63) for such taxable year.

15 ‘‘(b) TAXABLE EARNED INCOME.—For purposes of

16 this section, the term ‘taxable earned income’ means the

17 excess (if any) of earned income (as defined in section

18 911(d)(2)) over the foreign earned income (as defined in

19 section 911(b)(1)).’’

20 (b) INCREASE IN STANDARD DEDUCTION.—Section

21 63 of such Code is amended to read as follows:

22 ‘‘SEC. 63. STANDARD DEDUCTION.

23 ‘‘(a) IN GENERAL.—For purposes of this subtitle, the

24 term ‘standard deduction’ means the sum of—

25 ‘‘(1) the basic standard deduction, plus
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1 ‘‘(2) the additional standard deduction.

2 ‘‘(b) BASIC STANDARD DEDUCTION.—For purposes

3 of subsection (a), the basic standard deduction is—

4 ‘‘(1) $24,700 in the case of—

5 ‘‘(A) a joint return, and

6 ‘‘(B) a surviving spouse (as defined in sec7 tion 2(a)),

8 ‘‘(2) $16,200 in the case of a head of household

9 (as defined in section 2(b)), and

10 ‘‘(3) $12,350 in the case of an individual—

11 ‘‘(A) who is not married and who is not a

12 surviving spouse or head of household, or

13 ‘‘(B) who is a married individual filing a

14 separate return.

15 ‘‘(c) ADDITIONAL STANDARD DEDUCTION.—For pur16 poses of subsection (a), the additional standard deduction

17 is $5,000 for each dependent (as defined in section 152)

18 described in section 151(c)(1) for the taxable year.

19 ‘‘(d) INFLATION ADJUSTMENT.—

20 ‘‘(1) IN GENERAL.—In the case of any taxable

21 year beginning in a calendar year after 1995, each

22 dollar amount contained in subsections (b) and (c)

23 shall be increased by an amount equal to—

24 ‘‘(A) such dollar amount, multiplied by
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1 ‘‘(B) the cost-of-living adjustment under

2 section 1(f)(3) for the calendar year in which

3 the taxable year begins, determined by sub4 stituting ‘calendar year 1994’ for ‘calendar year

5 1992’ in subparagraph (B) of such section.

6 ‘‘(2) ROUNDING.—If any increase determined

7 under paragraph (1) is not a multiple of $50, such

8 amount shall be rounded to the next lowest multiple

9 of $50.’’

10 SEC. 102. MODIFICATION OF TAX ON BUSINESS ACTIVITIES.

11 Section 11 of the Internal Revenue Code of 1986 (re12 lating to tax imposed on corporations) is amended to read

13 as follows:

14 ‘‘SEC. 11. TAX IMPOSED ON BUSINESS ACTIVITIES.

15 ‘‘(a) TAX IMPOSED.—There is hereby imposed on

16 every person engaged in a business activity a tax equal

17 to 20 percent (17 percent in the case of taxable years be18 ginning after December 31, 1996) of the business taxable

19 income of such person.

20 ‘‘(b) LIABILITY FOR TAX.—The tax imposed by this

21 section shall be paid by the person engaged in the business

22 activity, whether such person is an individual, partnership,

23 corporation, or otherwise.

24 ‘‘(c) BUSINESS TAXABLE INCOME.—
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1 ‘‘(1) IN GENERAL.—For purposes of this sec2 tion, the term ‘business taxable income’ means gross

3 active income reduced by the deductions specified in

4 subsection (d).

5 ‘‘(2) GROSS ACTIVE INCOME.—For purposes of

6 paragraph (1), the term ‘gross active income’ means

7 gross income other than investment income.

8 ‘‘(d) DEDUCTIONS.—

9 ‘‘(1) IN GENERAL.—The deductions specified in

10 this subsection are—

11 ‘‘(A) the cost of business inputs for the

12 business activity,

13 ‘‘(B) the compensation (including contribu14 tions to qualified retirement plans but not in15 cluding other fringe benefits) paid for employ16 ees performing services in such activity, and

17 ‘‘(C) the cost of tangible personal and real

18 property used in such activity.

19 ‘‘(2) BUSINESS INPUTS.—For purposes of sub20 paragraph (A), the term ‘cost of business inputs’

21 means—

22 ‘‘(A) the actual amount paid for goods,

23 services, and materials, whether or not resold

24 during the taxable year,
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1 ‘‘(B) the fair market value of business in2 puts brought into the United States, and

3 ‘‘(C) the actual cost, if reasonable, of trav4 el and entertainment expenses for business pur5 poses.

6 Such term shall not include purchases of goods and

7 services provided to employees or owners.

8 ‘‘(e) CARRYOVER OF EXCESS DEDUCTIONS.—

9 ‘‘(1) IN GENERAL.—If the aggregate deductions

10 for any taxable year exceed the gross active income

11 for such taxable year, the amount of the deductions

12 specified in subsection (d) for the succeeding taxable

13 year (determined without regard to this subsection)

14 shall be increased by the sum of—

15 ‘‘(A) such excess, plus

16 ‘‘(B) the product of such excess and the 3-

17 month Treasury rate for the last month of such

18 taxable year.

19 ‘‘(2) 3-MONTH TREASURY RATE.—For purposes

20 of paragraph (1), the 3-month Treasury rate is the

21 rate determined by the Secretary based on the aver22 age market yield (during any 1-month period se23 lected by the Secretary and ending in the calendar

24 month in which the determination is made) on out25 standing marketable obligations of the United States
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1 with remaining periods to maturity of 3 months or

2 less.’’

3 SEC. 103. REPEAL OF INCOME TAX WITHHOLDING.

4 Section 3402 of the Internal Revenue Code of 1986

5 (relating to collection of income tax at source on wages)

6 is amended by adding at the end the following new sub7 section:

8 ‘‘(t) TERMINATION.—This section shall not apply to

9 wages paid after December 31, 1994.’’

10 SEC. 104. EFFECTIVE DATE.

11 The amendments made by sections 101 and 102 shall

12 apply to taxable years beginning after December 31, 1994.

13 TITLE II—SPENDING RESTRAINT

14 AND BUDGET PROCESS REFORM

15 Subtitle A—Joint Budget

16 Resolution

17 SEC. 201. JOINT BUDGET RESOLUTION.

18 (a) DEFINITIONS.—Paragraph (4) of section 3 of the

19 Congressional Budget Act of 1974 is amended to read as

20 follows:

21 ‘‘(4) the term ‘joint resolution on the budget’

22 means—

23 ‘‘(A) a joint resolution setting forth the

24 congressional budget for the United States Gov-
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1 ernment for a fiscal year as provided in section

2 301; and

3 ‘‘(B) any other joint resolution revising the

4 congressional budget for the United States Gov5 ernment for a fiscal year as described in section

6 304.’’.

7 (b) JOINT RESOLUTION ON THE BUDGET.—(1) Sec8 tion 300 is amended by striking ‘‘concurrent resolution’’

9 each place it appears and inserting ‘‘joint resolution’’.

10 (2) Section 301(a) of the Congressional Budget Act

11 of 1974 is amended by striking ‘‘concurrent resolution’’

12 each place it appears including in the caption and insert13 ing ‘‘joint resolution’’.

14 (3) Section 301(b) is amended by striking ‘‘concur15 rent resolution’’ each place it appears including in the cap16 tion and inserting ‘‘joint resolution’’.

17 (4) Section 301(c) is amended by striking ‘‘concur18 rent resolution’’ each place it appears and inserting ‘‘joint

19 resolution’’.

20 (5) Section 301(e) is amended by striking ‘‘concur21 rent resolution’’ each place it appears and inserting ‘‘joint

22 resolution’’.

23 (6) Section 301(f) is amended by striking ‘‘concur24 rent resolution’’ each place it appears and inserting ‘‘joint

25 resolution’’.
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1 (7) Section 301(g) is amended by striking ‘‘concur2 rent resolution’’ each place it appears and inserting ‘‘joint

3 resolution’’.

4 (8) Section 301(h) is amended by striking ‘‘concur5 rent resolution’’ and inserting ‘‘joint resolution’’.

6 (9) Section 301(i) is amended by striking ‘‘concur7 rent resolution’’ each place it appears and inserting ‘‘joint

8 resolution’’.

9 (10) The section heading of section 301 is amended

10 by striking ‘‘ANNUAL ADOPTION OF CONCURRENT’’

11 and inserting ‘‘ANNUAL ADOPTION OF JOINT’’.

12 (11) The table of contents set forth in section 1(b)

13 of the Congressional Budget and Impoundment Control

14 Act of 1974 is amended by striking ‘‘Annual adoption of

15 the concurrent’’ in the item relating to section 301 and

16 inserting ‘‘Annual adoption of the joint’’.

17 (12) Section 302 is amended by striking ‘‘concurrent

18 resolution’’ each place it appears and inserting ‘‘joint reso19 lution’’.

20 (13) Section 303, including the heading, is amended

21 by striking ‘‘concurrent resolution’’ each place it appears

22 and inserting ‘‘joint resolution’’.

23 (14) The table of contents set forth in section 1(b)

24 of the Congressional Budget and Impoundment Control
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1 Act of 1974 is amended by striking ‘‘Concurrent’’ in the

2 item relating to section 303 and inserting ‘‘Joint’’.

3 (15) Section 304 is amended by striking ‘‘concurrent

4 resolution’’, including in the heading, each place it appears

5 and inserting ‘‘joint resolution’’.

6 (16) The table of contents set forth in section 1(b)

7 of the Congressional Budget and Impoundment Control

8 Act of 1974 is amended by striking ‘‘Concurrent’’ in the

9 item relating to section 304 and inserting ‘‘Joint’’.

10 (17) Section 305 is amended by striking ‘‘concurrent

11 resolution’’, including in the heading, each place it appears

12 and inserting ‘‘joint resolution’’.

13 (18) Section 308 is amended by striking ‘‘concurrent

14 resolution’’ each place it appears and inserting ‘‘joint reso15 lution’’.

16 (19) Section 310 is amended by striking ‘‘concurrent

17 resolution’’ each place it appears and inserting ‘‘joint reso18 lution’’.

19 (20) Section 311 is amended by striking ‘‘concurrent

20 resolution’’ each place it appears and inserting ‘‘joint reso21 lution’’.
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1 Subtitle B—Zero Based Budgeting

2 and Decennial Sunsetting

3 SEC. 211. REAUTHORIZATION OF DISCRETIONARY PRO4 GRAMS AND UNEARNED ENTITLEMENTS.

5 (a) FISCAL YEAR 1995.—Effective October 1, 1994,

6 spending authority for each unearned entitlement and

7 high-cost discretionary spending program is terminated

8 unless such spending authority is reauthorized after the

9 date of enactment of this Act.

10 (b) FISCAL YEAR 1996.—Effective October 1, 1995,

11 spending authority for each discretionary spending pro12 gram (not including high-cost discretionary spending pro13 grams) is terminated unless such spending authority is re14 authorized after the date of enactment of this Act.

15 (c) DEFINITIONS.—For purposes of this subtitle—

16 (1) the term ‘‘unearned entitlement’’ means an

17 entitlement not earned by service or paid for in total

18 or in part by assessments or contributions such as

19 Social Security, veterans’ benefits, retirement pro20 grams, and medicare; and

21 (2) the term ‘‘high-cost discretionary program’’

22 means the most expensive one-third of discretionary

23 program within each budget function account.
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1 SEC. 212. POINT OF ORDER.

2 (a) IN GENERAL.—It shall not be in order in the

3 House of Representatives or the Senate to consider any

4 bill, joint resolution, amendment, or conference report that

5 includes any provision that appropriates funds unless such

6 appropriation has been previously authorized by law.

7 (b) WAIVER OR SUSPENSION.—This section may be

8 waived or suspended in the House of Representatives or

9 the Senate only by the affirmative vote of three-fifths of

10 the Members, duly chosen and sworn.

11 SEC. 213. DECENNIAL SUNSETTING.

12 (a) FIRST DECENNIAL CENSUS YEAR.—Effective on

13 the first day of the fiscal year beginning in the first decen14 nial census year after the year 2000 and each 10 years

15 thereafter, the spending authority described in section

16 211(a) is terminated unless such spending authority is re17 authorized after the last date the spending authority was

18 required to be reauthorized under this subtitle.

19 (b) FIRST DECENNIAL CENSUS YEAR.—Effective on

20 the first day of the fiscal year beginning in the year after

21 the first decennial census year after the year 2000 and

22 each 10 years thereafter, the spending authority described

23 in section 211(b) is terminated unless such spending au24 thority is reauthorized after the last date the spending au25 thority was required to be reauthorized under this subtitle.
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1 Subtitle C—Spending Caps on the

2 Growth of Entitlements for Fis3 cal Years 1995 Through 2000

4 SEC. 221. SPENDING CAPS ON GROWTH OF ENTITLEMENTS

5 AND MANDATORIES.

6 (a) CAP ON GROWTH OF ENTITLEMENTS.—Effective

7 for each of the fiscal years 1995 through 2000, the total

8 level of entitlement and mandatory spending, excluding

9 Social Security, shall not exceed the total level for the pre10 vious fiscal year increased by the consumer price index,

11 and the growth in eligible population.

12 (b) SEQUESTRATION.—Within 15 days after Con13 gress adjourns to end a session, and on the same day as

14 a sequestration (if any) under section 253 of the Balanced

15 Budget and Emergency Deficit Control Act of 1985, there

16 shall be a sequestration to reduce the amount of entitle17 ment and mandatory spending for the fiscal year begin18 ning in the year the Congress adjourns by any amount

19 necessary to reduce such spending to the level set forth

20 in subsection (a) unless that amount is less than

21 $250,000,000.

22 (c) UNIFORM REDUCTIONS; LIMITATIONS.—The

23 amount required to be sequestered for the fiscal year

24 under subsection (a) shall be obtained from nonexempt di-
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1 rect spending accounts by actions taken in the following

2 order:

3 (1) FIRST.—The reductions in the programs

4 specified in section 223(a) (National Wool Act and

5 special milk), section 223(b) (guaranteed student

6 loans), and section 223(c) (foster care and adoption

7 assistance) shall be made.

8 (2) SECOND.—Any additional reductions that

9 may be required shall be achieved by reducing each

10 remaining nonexempt direct spending account by the

11 uniform percentage necessary to achieve those addi12 tional reductions, except that—

13 (A) the low-income programs specified in

14 section 223(d) shall not be reduced by more

15 than 1 percent;

16 (B) the retirement and veterans benefits

17 specified in section 223(e) shall not be reduced

18 by more than 2 percent in the manner specified

19 in that section; and

20 (C) the medicare programs shall not be re21 duced by more than 4 percent in the manner

22 specified in section 223(f).

23 The limitations set forth in subparagraphs (A), (B),

24 and (C) shall be applied iteratively, and after each

25 iteration the uniform percentage applicable to all
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1 other programs under this paragraph shall be in2 creased (if necessary) to a level sufficient to achieve

3 the reductions required by this paragraph.

4 SEC. 222. EXEMPT PROGRAMS AND ACTIVITIES.

5 (a) DESCRIPTIONS AND LISTS.—Except as provided

6 in subsection (b), the following budget accounts or activi7 ties shall be exempt from sequestration—

8 (1) net interest;

9 (2) all payments to trust funds from excise

10 taxes or other receipts or collections properly cred11 itable to those trust funds;

12 (3) all payments from one Federal direct spend13 ing budget account to another Federal budget ac14 count; and all intragovernmental funds including

15 those from which funding is derived primarily from

16 other Government accounts, except to the extent

17 that such funds are augmented by direct appropria18 tions for the fiscal year for which the order is in ef19 fect;

20 (4) activities resulting from private donations,

21 bequests, or voluntary contributions to the Govern22 ment;

23 (5) payments from any revolving fund or trust24 revolving fund (or similar activity) that provides de25 posit insurance or other Government insurance, Gov-
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1 ernment guarantees, or any other form of contingent

2 liability, to the extent those payments result from

3 contractual or other legally binding commitments of

4 the Government at the time of any sequestration;

5 (6) credit liquidating and financing accounts;

6 (7) the following accounts, which largely fulfill

7 requirements of the Constitution or otherwise make

8 payments to which the Government is committed—

9 Administration of Territories, Northern Mari10 ana Islands Covenant grants (14–0412–0–1–806);

11 Bureau of Indian Affairs, miscellaneous pay12 ments to Indians (14–2303–0–1–452);

13 Bureau of Indian Affairs, miscellaneous trust

14 funds, tribal trust funds (14–9973–0–7–999);

15 Claims, defense;

16 Claims, judgments, and relief act (20–1895–0–

17 1–806);

18 Compact of Free Association, economic assist19 ance pursuant to Public Law 99–658 (14–0415–0–

20 1–806);

21 Compensation of the President (11–0001–0–1–

22 802);

23 Customs Service, miscellaneous permanent ap24 propriations (20–9992–0–2–852);
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1 Eastern Indian land claims settlement fund

2 (14–2202–0–1–806);

3 Farm Credit System Financial Assistance Cor4 poration, interest payments (20–1850–0–1–351);

5 Internal Revenue collections of Puerto Rico

6 (20–5737–0–2–852);

7 Panama Canal Commission, operating expenses

8 and capital outlay (95–5190–0–2–403);

9 Payments of Vietnam and USS Pueblo pris10 oner-of-war claims (15–0104–0–1–153);

11 Payments to copyright owners (03–5175–0–2–

12 376);

13 Payments to the United States territories, fiscal

14 assistance (14–0418–0–1–801);

15 Payments to widows and heirs of deceased

16 Members of Congress (00–0215–0–1–801);

17 Salaries of Article III judges;

18 Soldier’s and Airmen’s Home, payment of

19 claims (84–8930–0–7–705);

20 Washington Metropolitan Area Transit Author21 ity, interest payments (46–0300–0–1–401).

22 (8) the following noncredit special, revolving, or

23 trust-revolving funds—

24 Coinage profit fund (20–5811–0–2–803);

25 Comptroller of the Currency;
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1 Director of the Office of Thrift Supervision;

2 Exchange Stabilization Fund (20–4444–0–3–

3 155);

4 Federal Housing Finance Board;

5 Foreign Military Sales trust fund (11–82232–

6 0–7–155);

7 (9) Thrift Savings Fund;

8 (10) appropriations for the District of Columbia

9 to the extent they are appropriations of locally

10 raised funds;

11 (11)(A) any amount paid as regular unemploy12 ment compensation by a State from its account in

13 the Unemployment Trust Fund (established by sec14 tion 904(a) of the Social Security Act);

15 (B) any advance made to a State from the Fed16 eral unemployment account (established by section

17 904(g) of such Act) under title XII of such Act and

18 any advance appropriated to the Federal unemploy19 ment account pursuant to section 1203 of such Act;

20 and

21 (C) any payment made from the Federal Em22 ployees Compensation Account (as established under

23 section 909 of such Act) for the purpose of carrying

24 out chapter 85 of title 5, United States Code, and
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1 funds appropriated or transferred to or otherwise

2 deposited in such Account;

3 (12) the earned income tax credit (payments to

4 individuals pursuant to section 32 of the Internal

5 Revenue Code of 1986).

6 (b) FEDERAL ADMINISTRATIVE EXPENSES.—

7 (1) Notwithstanding any provision of law other

8 than paragraph (3), administrative expenses in9 curred by the departments and agencies, including

10 independent agencies, of the Federal Government in

11 connection with any program, project, activity, or ac12 count shall be subject to reduction pursuant to any

13 sequestration order, without regard to any exemp14 tion, exception, limitation, or special rule otherwise

15 applicable with respect to such program, project, ac16 tivity, or account, and regardless of whether the pro17 gram, project, activity, or account is self-supporting

18 and does not receive appropriations.

19 (2) Payments made by the Federal Government

20 to reimburse or match administrative costs incurred

21 by a State or political subdivision under or in con22 nection with any program, project, activity, or ac23 count shall not be considered administrative ex24 penses of the Federal Government for purposes of

25 this section, and shall be subject to sequestration to
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1 the extent (and only to the extent) that other pay2 ments made by the Federal Government under or in

3 connection with that program, project, activity, or

4 account are subject to that reduction or sequestra5 tion; except that Federal payments made to a State

6 as reimbursement of administrative costs incurred

7 by that State under or in connection with the unem8 ployment compensation programs specified in sub9 section (a)(11) shall be subject to reduction or se10 questration under this part notwithstanding the ex11 emption otherwise granted to such programs under

12 that subsection.

13 (3) Notwithstanding any other provision of law,

14 the administrative expenses of the following pro15 grams shall be exempt from sequestration:

16 (A) Comptroller of the Currency.

17 (B) Federal Deposit Insurance Corpora18 tion.

19 (C) Office of Thrift Supervision.

20 (D) National Credit Union Administration.

21 (E) National Credit Union Administration,

22 central liquidity facility.

23 (F) Federal Retirement Thrift Investment

24 Board.

25 (G) Resolution Funding Corporation.
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1 (H) Resolution Trust Corporation.

2 (I) Board of Governors of the Federal Re3 serve System.

4 SEC. 223. EXCEPTIONS, LIMITATIONS, AND SPECIAL RULES.

5 (a) NATIONAL WOOL ACT AND THE SPECIAL MILK

6 PROGRAM.—Automatic spending increases are increases

7 in outlays due to changes in indexes in the following pro8 grams:

9 (1) National Wool Act; and

10 (2) Special milk program.

11 In those programs all amounts other than the automatic

12 spending increases shall be exempt from reduction under

13 any sequestration order.

14 (b) THE GUARANTEED STUDENT LOAN PROGRAM.—

15 (1) Any reductions which are required to be achieved from

16 the student loan programs operated pursuant to part B

17 of title IV of the Higher Education Act of 1965 under

18 any sequestration order shall be achieved only from loans

19 described in paragraphs (2) and (3) by the application of

20 the measures described in such paragraphs.

21 (2) For any loan made during the period beginning

22 on the date that a sequestration order takes effect with

23 respect to a fiscal year, the rate used in computing the

24 special allowance payment pursuant to section

25 438(b)(2)(A)(iii) of such Act for each of the first four spe-
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1 cial allowance payments for such loan shall be adjusted

2 by reducing such rate by the lesser of—

3 (A) 0.40 percent, or

4 (B) the percentage by which the rate specified

5 in such section exceeds 3 percent.

6 (3) For any loan made during the period beginning

7 on the date that a sequestration order takes effect with

8 respect to a fiscal year, the origination fee which is author9 ized to be collected pursuant to section 438(c)(2) of such

10 Act shall be increased by 0.50 percent.

11 (c) FOSTER CARE AND ADOPTION ASSISTANCE PRO12 GRAMS.—Any sequestration order shall make the reduc13 tion otherwise required under the foster care and adoption

14 assistance programs (established by part E of title IV of

15 the Social Security Act) only with respect to payments and

16 expenditures made by States in which increases in foster

17 care maintenance payment rates or adoption assistance

18 payment rates (or both) are to take effect during the fiscal

19 year involved, and only to the extent that the required re20 duction can be accomplished by applying a uniform per21 centage reduction to the Federal matching payments that

22 each such State would otherwise receive under section 474

23 of that Act (for such fiscal year) for that portion of the

24 State’s payments attributable to the increases taking ef25 fect during that year. No State’s matching payments from
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1 the Federal Government for foster care maintenance pay2 ments or for adoption assistance maintenance payments

3 may be reduced by a percentage exceeding the applicable

4 domestic sequestration percentage. No State may, after

5 the date of the enactment of this Act, make any change

6 in the timetable for making payments under a State plan

7 approved under part E of title IV of the Social Security

8 Act which has the effect of changing the fiscal year in

9 which expenditures under such part are made.

10 (d) LOW-INCOME ENTITLEMENTS.—(1) Benefit pay11 ments or payments to States or other entities for the pro12 grams listed in paragraph (2) shall not be reduced by

13 more than 1 percent under any sequestration order. When

14 reduced under an end-of-session sequestration order, those

15 benefit reductions shall occur starting with the payment

16 made at the start of January. When reduced under a with17 in-session sequestration order, those benefit reductions

18 shall occur starting with the next periodic payment.

19 (2) The programs referred to in paragraph (1) are

20 the following:

21 Aid to families with dependent children (75–

22 0412–0–1–609);

23 Child nutrition (12–3539–0–1–605);

24 Food stamp programs (12–3505–0–1–605) and

25 (12–3550–0–1–605);
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1 Grants to States for medicaid (75–0512–0–1–

2 551); and

3 Supplemental security income program (75–

4 0406–0–1–609).

5 (e) FEDERAL RETIREMENT AND VETERANS’ PRO6 GRAMS.—

7 (1) For each of the programs listed in para8 graph (2) and except as provided in paragraph (3),

9 monthly (or other periodic) benefit payments shall

10 be reduced by the uniform percentage applicable to

11 direct spending sequestrations for such programs

12 under section 221(c)(2), which shall in no case ex13 ceed 2 percent under any sequestration order. When

14 reduced under an end-of-session sequestration order,

15 those benefit reductions shall occur starting with the

16 payment made at the start of January or 7 weeks

17 after the order is issued, whichever is later. When

18 reduced under a within-session sequestration order,

19 those benefit reductions shall occur starting with the

20 next periodic payment.

21 (2) The programs subject to paragraph (1) are:

22 Benefits payable under sections 3(a),

23 3(f)(3), 4(a), or 4(f) of the Railroad Retirement

24 Act of 1974;
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1 Benefits under chapter 21 of title 38,

2 United States Code, relating to specially adapt3 ed housing and mortgage-protection life insur4 ance for certain veterans with service-connected

5 disabilities (36–0137–0–1–702);

6 Benefits under section 907 of title 38,

7 United States Code, relating to burial benefits

8 for veterans who die as a result of service-con9 nected disability (36–0155–0–1–701);

10 Benefits under chapter 39 of title 38,

11 United States Code, relating to automobiles and

12 adaptive equipment for certain disabled veter13 ans and members of the Armed Forces (36–

14 0137–0–1–702);

15 Black lung benefits (20–8144–0–7–601);

16 Central Intelligence Agency retirement and

17 disability system fund (56–3400–0–1–054);

18 Civil service retirement and disability fund

19 (24–8135–0–7–602);

20 Comptrollers general retirement system

21 (05–0107–0–1–801);

22 Foreign service retirement and disability

23 fund (19–8186–0–7–602);

24 Judicial survivors’ annuities fund (10–

25 8110–0–7–602);
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1 Longshoremen’s and harborworkers’ com2 pensation benefits (16–9971–0–7–601);

3 Military retirement fund (97–8097–0–7–

4 602);

5 National Oceanic and Atmospheric Admin6 istration retirement (13–1450–0–1–306);

7 Pensions for former Presidents (47–0105–

8 0–1–802);

9 Railroad retirement tier II (60–8011–0–7–

10 601);

11 Railroad supplemental annuity pension

12 fund (60–8012–0–7–602);

13 Retired pay, Coast Guard (69–0241–0–1–

14 403);

15 Retirement pay and medical benefits for

16 commissioned officers, Public Health Service

17 (75–0379–0–1–551);

18 Special benefits, Federal Employees’ Com19 pensation Act (16–1521–0–1–600);

20 Special benefits for disabled coal miners

21 (75–0409–0–1–601);

22 Tax Court judges survivors annuity fund

23 (23–8115–0–7–602);

24 Veterans’ compensation (36–0153–0–1–

25 701); and
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1 Veterans’ pensions (36–0154–0–1–701).

2 (f) MEDICARE PROGRAM.—

3 (1) CALCULATION OF REDUCTION IN INDIVID4 UAL PAYMENT AMOUNTS.—To achieve the total per5 centage reduction in those programs required by sec6 tion 221, the percentage reduction that shall apply

7 to payments under the health insurance programs

8 under title XVIII of the Social Security Act for serv9 ices furnished after any sequestration order is issued

10 shall be such that the reduction made in payments

11 under that order shall achieve the required total per12 centage reduction in those payments for that fiscal

13 year as determined on a 12-month basis.

14 (2) TIMING OF APPLICATION OF REDUC15 TIONS.—

16 (A) IN GENERAL.—Except as provided in

17 subparagraph (B), if a reduction is made under

18 paragraph (1) in payment amounts pursuant to

19 a sequestration order, the reduction shall be ap20 plied to payment for services furnished after the

21 effective date of the order. For purposes of the

22 previous sentence, in the case of inpatient serv23 ices furnished for an individual, the services

24 shall be considered to be furnished on the date
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1 of the individual’s discharge from the inpatient

2 facility.

3 (B) PAYMENT ON THE BASIS OF COST RE4 PORTING PERIODS.—In the case in which pay5 ment for services of a provider of services is

6 made under title XVIII of the Social Security

7 Act on a basis relating to the reasonable cost

8 incurred for the services during a cost reporting

9 period of the provider, if a reduction is made

10 under paragraph (1) in payment amounts pur11 suant to a sequestration order, the reduction

12 shall be applied to payment for costs for such

13 services incurred at any time during each cost

14 reporting period of the provider any part of

15 which occurs after the effective date of the

16 order, but only (for each such cost reporting pe17 riod) in the same proportion as the fraction of

18 the cost reporting period that occurs after the

19 effective date of the order.

20 (3) NO INCREASE IN BENEFICIARY CHARGES IN

21 ASSIGNMENT-RELATED CASES.—If a reduction in

22 payment amounts is made under paragraph (1) for

23 services for which payment under part B of title

24 XVIII of the Social Security Act is made on the

25 basis of an assignment described in section
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1 1842(b)(3)(B)(ii), in accordance with section

2 1842(b)(6)(B), or under the procedure described in

3 section 1870(f)(1) of such Act, the person furnishing

4 the services shall be considered to have accepted

5 payment of the reasonable charge for the services,

6 less any reduction in payment amount made pursu7 ant to a sequestration order, as payment in full.

8 (4) NO EFFECT ON COMPUTATION OF AAPCC.—

9 In computing the adjusted average per capita cost

10 for purposes of section 1876(a)(4) of the Social Se11 curity Act, the Secretary of Health and Human

12 Services shall not take into account any reductions

13 in payment amounts which have been or may be ef14 fected under this subtitle.

15 (g) FEDERAL PAY.—

16 (1) IN GENERAL.—Except as provided in sec17 tion 222(b)(3), new budget authority to pay Federal

18 personnel shall be reduced by the uniform percent19 age calculated under section 221(c), but no seques20 tration order may reduce or have the effect of reduc21 ing the rate of pay to which any individual is enti22 tled under any statutory pay system (as increased by

23 any amount payable under section 5304 of title 5,

24 United States Code, or section 302 of the Federal

25 Employees Pay Comparability Act of 1990) or the
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1 rate of any element of military pay to which any in2 dividual is entitled under title 37, United States

3 Code, or any increase in rates of pay which is sched4 uled to take effect under section 5303 of title 5,

5 United States Code, section 1009 of title 37, United

6 States Code, or any other provision of law.

7 (2) DEFINITIONS.—For purposes of this sub8 section:

9 (A) The term ‘‘statutory pay system’’ shall

10 have the meaning given that term in section

11 5302(1) of title 5, United States Code.

12 (B) The term ‘‘elements of military pay’’

13 means—

14 (i) the elements of compensation of

15 members of the uniformed services speci16 fied in section 1009 of title 37, United

17 States Code,

18 (ii) allowances provided members of

19 the uniformed services under sections 403a

20 and 405 of such title, and

21 (iii) cadet pay and midshipman pay

22 under section 203(c) of such title.

23 (C) The term ‘‘uniformed services’’ shall

24 have the meaning given that term in section

25 101(3) of title 37, United States Code.
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1 (h) CHILD SUPPORT ENFORCEMENT PROGRAM.—

2 Any sequestration order shall accomplish the full amount

3 of any required reduction in expenditures under sections

4 455 and 458 of the Social Security Act by reducing the

5 Federal matching rate for State administrative costs

6 under such program, as specified (for the fiscal year in7 volved) in section 455(a) of such Act, to the extent nec8 essary to reduce such expenditures by that amount.

9 (i) EXTENDED UNEMPLOYMENT COMPENSATION.—

10 (1) A State may reduce each weekly benefit payment made

11 under the Federal-State Extended Unemployment Com12 pensation Act of 1970 for any week of unemployment oc13 curring during any period with respect to which payments

14 are reduced under an order issued under this subtitle by

15 a percentage not to exceed the percentage by which the

16 Federal payment to the State under section 204 of such

17 Act is to be reduced for such week as a result of such

18 order.

19 (2) A reduction by a State in accordance with sub20 paragraph (A) shall not be considered as a failure to fulfill

21 the requirements of section 3304(a)(11) of the Internal

22 Revenue Code of 1954.

23 (j) COMMODITY CREDIT CORPORATION.—

24 (1) POWERS AND AUTHORITIES OF THE COM25 MODITY CREDIT CORPORATION.—This subtitle shall
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1 not restrict the Commodity Credit Corporation in

2 the discharge of its authority and responsibility as a

3 corporation to buy and sell commodities in world

4 trade, to use the proceeds as a revolving fund to

5 meet other obligations and otherwise operate as a

6 corporation, the purpose for which it was created.

7 (2) REDUCTION IN PAYMENTS MADE UNDER

8 CONTRACTS.—(A) Payments and loan eligibility

9 under any contract entered into with a person by the

10 Commodity Credit Corporation prior to the time any

11 sequestration order has been issued shall not be re12 duced by an order subsequently issued. Subject to

13 subparagraph (B), after any sequestration order is

14 issued for a fiscal year, any cash payments made by

15 the Commodity Credit Corporation—

16 (i) under the terms of any one-year con17 tract entered into in or after such fiscal year

18 and after the issuance of the order; and

19 (ii) out of an entitlement account,

20 to any person (including any producer, lender, or

21 guarantee entity) shall be subject to reduction under

22 the order.

23 (B) Each contract entered into with producers

24 or producer cooperatives with respect to a particular

25 crop of a commodity and subject to reduction under
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1 subparagraph (A) shall be reduced in accordance

2 with the same terms and conditions. If some, but

3 not all, contracts applicable to a crop of a commod4 ity have been entered into prior to the issuance of

5 any sequestration order, the order shall provide that

6 the necessary reduction in payments under contracts

7 applicable to the commodity be uniformly applied to

8 all contracts for succeeding crops of the commodity,

9 under the authority provided in paragraph (3).

10 (3) DELAYED REDUCTION IN OUTLAYS PERMIS11 SIBLE.—Notwithstanding any other provision of this

12 subtitle, if any sequestration order is issued with re13 spect to a fiscal year, any reduction under the order

14 applicable to contracts described in paragraph (2)

15 may provide for reductions in outlays for the ac16 count involved to occur in the fiscal years following

17 the fiscal year to which the order applies.

18 (4) UNIFORM PERCENTAGE RATE OF REDUC19 TION AND OTHER LIMITATIONS.—All reductions de20 scribed in paragraph (2) that are required to be

21 made in connection with any sequestration order

22 with respect to a fiscal year—

23 (A) shall be made so as to ensure that out24 lays for each program, project, activity, or ac25 count involved are reduced by a percentage rate
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1 that is uniform for all such programs, projects,

2 activities, and accounts, and may not be made

3 so as to achieve a percentage rate of reduction

4 in any such item exceeding the rate specified in

5 the order; and

6 (B) with respect to commodity price sup7 port and income protection programs, shall be

8 made in such manner and under such proce9 dures as will attempt to ensure that—

10 (i) uncertainty as to the scope of ben11 efits under any such program is mini12 mized;

13 (ii) any instability in market prices

14 for agricultural commodities resulting from

15 the reduction is minimized; and

16 (iii) normal production and marketing

17 relationships among agricultural commod18 ities (including both contract and non-con19 tract commodities) are not distorted.

20 In meeting the criterion set out in clause (iii)

21 of subparagraph (B) of the preceding sentence,

22 the President shall take into consideration that

23 reductions under an order may apply to pro24 grams for two or more agricultural commodities

25 that use the same type of production or market-
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1 ing resources or that are alternative commod2 ities among which a producer could choose in

3 making annual production decisions.

4 (5) CERTAIN AUTHORITY NOT TO BE LIM5 ITED.—Nothing in this subtitle shall limit or reduce

6 in any way any appropriation that provides the

7 Commodity Credit Corporation with funds to cover

8 the Corporation’s net realized losses.

9 (k) THE JOBS PORTION OF AFDC.—

10 (1) FULL AMOUNT OF SEQUESTRATION RE11 QUIRED.—Any sequestration order shall accomplish

12 the full amount of any required reduction of the job

13 opportunities and basic skills training program

14 under section 402(a)(19), and part F of title VI, of

15 the Social Security Act, in the manner specified in

16 this subsection. Such an order may not reduce any

17 Federal matching rate pursuant to section 403(l) of

18 the Social Security Act.

19 (2) NEW ALLOTMENT FORMULA.—

20 (A) GENERAL RULE.—Notwithstanding

21 section 403(k) of the Social Security Act, each

22 State’s percentage share of the amount avail23 able after sequestration for direct spending pur24 suant to section 403(l) of such Act shall be

25 equal to that percentage of the total amount
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1 paid to the States pursuant to such section

2 403(l) for the prior fiscal year that is rep3 resented by the amount paid to such State pur4 suant to such section 403(l) for the prior fiscal

5 year, except that a State may not be allotted an

6 amount under this subparagraph that exceeds

7 the amount that would have been allotted to

8 such State pursuant to such section 403(k) had

9 the sequestration not been in effect.

10 (B) REALLOTMENT OF AMOUNTS REMAIN11 ING UNALLOTTED AFTER APPLICATION OF GEN12 ERAL RULE.—Any amount made available after

13 sequestration for direct spending pursuant to

14 section 403(l) of the Social Security Act that

15 remains unallotted as a result of subparagraph

16 (A) of this paragraph shall be allotted among

17 the States in proportion to the absolute dif18 ference between the amount allotted, respec19 tively, to each State as a result of such sub20 paragraph and the amount that would have

21 been allotted to such State pursuant to section

22 403(k) of such Act had the sequestration not

23 been in effect, except that a State may not be

24 allotted an amount under this subparagraph

25 that results in a total allotment to the State
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1 under this paragraph of more than the amount

2 that would have been allotted to such State

3 pursuant to such section 403(k) had the seques4 tration not been in effect.

5 (l) POSTAL SERVICE FUND.—Notwithstanding any

6 other provision of law, any sequestration of the Postal

7 Service Fund shall be accomplished by a payment from

8 that Fund to the General Fund of the Treasury, and the

9 Postmaster General of the United States shall make the

10 full amount of that payment during the fiscal year to

11 which the presidential sequestration order applies.

12 (m) EFFECTS OF SEQUESTRATION.—The effects of

13 sequestration shall be as follows:

14 (1) Budgetary resources sequestered from any

15 account other than an entitlement trust, special, or

16 revolving fund account shall revert to the Treasury

17 and be permanently canceled.

18 (2) Except as otherwise provided, the same per19 centage sequestration shall apply to all programs,

20 projects, and activities within a budget account (with

21 programs, projects, and activities as delineated in

22 the appropriation Act or accompanying report for

23 the relevant fiscal year covering that account, or for

24 accounts not included in appropriation Acts, as de-
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1 lineated in the most recently submitted President’s

2 budget).

3 (3) Administrative regulations or similar ac4 tions implementing a sequestration shall be made

5 within 120 days of the sequestration order. To the

6 extent that formula allocations differ at different

7 levels of budgetary resources within an account, pro8 gram, project, or activity, the sequestration shall be

9 interpreted as producing a lower total appropriation,

10 with that lower appropriation being obligated as

11 though it had been the pre-sequestration appropria12 tion and no sequestration had occurred.

13 (4) Except as otherwise provided, obligations in

14 sequestered direct spending accounts shall be re15 duced in the fiscal year in which a sequestration oc16 curs and in all succeeding fiscal years.

17 (5) If an automatic spending increase is seques18 tered, the increase (in the applicable index) that was

19 disregarded as a result of that sequestration shall

20 not be taken into account in any subsequent fiscal

21 year.

22 (6) Except as otherwise provided, sequestration

23 in accounts for which obligations are indefinite shall

24 be taken in a manner to ensure that obligations in

25 the fiscal year of a sequestration and succeeding fis-
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1 cal years are reduced, from the level that would ac2 tually have occurred, by the applicable sequestration

3 percentage.

4 SEC. 224. POINT OF ORDER.

5 (a) IN GENERAL.—It shall not be in order in the

6 House of Representatives or the Senate to consider any

7 bill, joint resolution, amendment, or conference report that

8 includes any provision that has the effect of modifying the

9 application of this subtitle to any entitlement program

10 subject to sequestration or exempt from sequestration

11 under this subtitle.

12 (b) WAIVER OR SUSPENSION.—This section may be

13 waived or suspended in the House of Representatives or

14 the Senate only by the affirmative vote of three-fifths of

15 the Members, duly chosen and sworn.

16 Subtitle D—Balanced Budget by

17 Fiscal Year 2000

18 SEC. 231. MAXIMUM SPENDING AMOUNTS.

19 Section 601(a)(1) of the Congressional Budget Act

20 of 1974 is amended to read as follows:

21 ‘‘(1) MAXIMUM SPENDING AMOUNT.—The term

22 ‘maximum spending amount’ means—

23 ‘‘(A) with respect to fiscal year 1995,

24 $1,474,000,000,000 in outlays;
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1 ‘‘(B) with respect to fiscal year 1996,

2 $1,520,000,000,000 in outlays;

3 ‘‘(C) with respect to fiscal year 1997,

4 $1,567,000,000,000 in outlays;

5 ‘‘(D) with respect to fiscal year 1998,

6 $1,615,000,000,000 in outlays; and

7 ‘‘(E) with respect to fiscal year 1999,

8 $1,666,000,000,000 in outlays.’’.

9 SEC. 232. ENFORCING MAXIMUM SPENDING SEQUESTRA10 TION.

11 (a) SEQUESTRATION.—Section 253(a) of the Bal12 anced Budget and Emergency Deficit Control Act of 1985

13 is amended to read as follows:

14 ‘‘(a) SEQUESTRATION.—Within 15 days after Con15 gress adjourns to end a session (other than the One Hun16 dred Third Congress), and on the same day as sequestra17 tion (if any) under sections 251 and 252, but after any

18 sequestration required by those sections, there shall be a

19 sequestration (if necessary) to reduce total Federal spend20 ing to the maximum permissible level as set forth in sec21 tion 601(a)(1) of the Congressional Budget Act of 1974.’’.

22 (b) CONFORMING AMENDMENT TO HEADING.—The

23 section heading of section 253 of the Balanced Budget and

24 Emergency Deficit Control Act of 1985 is amended to

25 read as follows:
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1 ‘‘SEC. 253. ENFORCING MAXIMUM SPENDING LIMITS.’’.

2 (c) ADDITIONAL CONFORMING AMENDMENTS.—Sec3 tion 253 of the Balanced Budget and Emergency Deficit

4 Control Act of 1985 is amended—

5 (1) by repealing subsections (b), (g), and (h),

6 and by redesignating subsections (c), (d), (e), and

7 (f), as subsections (b), (c), (d), and (e), respectively;

8 (2) in subsection (b) (as redesignated), by

9 amending the first sentence to read as follows: ‘‘To

10 reduce total Federal spending to the maximum per11 missible level for a budget year, 20 percent of the

12 required outlay reductions shall be obtained from

13 non-exempt defense accounts (accounts designated

14 as function 050 in the President’s fiscal year 1995

15 budget submission) and 80 percent from non-ex16 empt, non-defense accounts (all other non-exempt

17 accounts).’’;

18 (3) in subsection (c) (as redesignated), by strik19 ing ‘‘subsection (c)’’ and inserting ‘‘subsection (b)’’;

20 and

21 (4) in subsection (e) (as redesignated), by strik22 ing ‘‘(b), (c), (d), and (e)’’ and inserting ‘‘(b), (c),

23 and (d)’’ and by striking ‘‘(d) or (e)’’ and inserting

24 ‘‘(c) or ‘‘(d)’’.

25 (d) LOOK-BACK SEQUESTER.—Section 253 of the

26 Balanced Budget and Emergency Deficit Control Act of
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1 1985 is amended by adding at the end the following new

2 subsection:

3 ‘‘(f) LOOK-BACK SEQUESTER.—

4 ‘‘(1) IN GENERAL.—On July 1 of each fiscal

5 year, the Director of OMB shall determine if laws

6 effective during the current fiscal year will cause

7 spending to exceed the maximum spending amount

8 for such fiscal year. If the limit is exceeded, there

9 shall be a preliminary sequester on July 1 to elimi10 nate the excess.

11 ‘‘(2) PERMANENT SEQUESTER.—Budget au12 thority sequestered on July 1 pursuant to paragraph

13 (1) shall be permanently canceled on July 15.

14 ‘‘(3) NO MARGIN.—The margin for determining

15 a sequester under this subsection shall be zero.

16 ‘‘(4) SEQUESTRATION PROCEDURES.—The pro17 vision of subsections (b), (c), and (d) of this section

18 shall apply to a sequester under this subsection.’’.

19 (e) REPORTS.—Section 254 of the Balanced Budget

20 and Emergency Deficit Control Act of 1985 is amended—

21 (1) by striking subsection (c);

22 (2) in subsection (d)(1), by striking ‘‘deficit se23 questration’’ and inserting ‘‘total spending seques24 tration’’;
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1 (3) in subsection (d) by repealing paragraph (4)

2 and inserting the following new paragraph:

3 ‘‘(4) TOTAL SPENDING SEQUESTRATION RE4 PORTS.—The preview reports shall set forth for the

5 budget year estimates for each of the following:

6 ‘‘(A) The amount of reductions required

7 from defense accounts and the reductions re8 quired from non-defense accounts.

9 ‘‘(B) The sequestration percentage nec10 essary to achieve the required reduction in de11 fense accounts under section 253(c).

12 ‘‘(C) The reductions required under sec13 tions 253(d)(1) and 253(d)(2).

14 ‘‘(D) The sequestration percentage nec15 essary to achieve the required reduction in non16 defense accounts under section 253(d)(3).’’; and

17 (4) in subsection (g)(3), by striking ‘‘DEFICIT’’

18 and inserting ‘‘TOTAL SPENDING’’ in the side head19 ing and in the first sentence by striking ‘‘deficit’’

20 and inserting ‘‘total spending’’.

21 (f) CONFORMING AMENDMENT TO TABLE OF CON22 TENTS.—The item relating to section 253 is amended by

23 striking ‘‘Enforcing deficit targets’’ and inserting ‘‘En24 forcing maximum spending limits’’.
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1 SEC. 233. TOTAL SPENDING POINT OF ORDER.

2 (a) TOTAL SPENDING POINT OF ORDER.—Section

3 605(b) of the Congressional Budget Act of 1974 is amend4 ed to read as follows:

5 ‘‘(b) TOTAL SPENDING POINT OF ORDER.—

6 ‘‘(1) IN GENERAL.—It shall not be in order in

7 the House of Representatives or the Senate to con8 sider any bill, joint resolution, amendment, or con9 ference report that includes any provision that would

10 result in total spending for a fiscal year that exceeds

11 the maximum permissible total spending amount for

12 such fiscal year as set forth in section 601(a)(1).

13 ‘‘(2) WAIVER OR SUSPENSION.—This subsection

14 may be waived or suspended in the House of Rep15 resentatives or the Senate only by the affirmative

16 vote of three-fifths of its Members, duly chosen and

17 sworn.’’.

18 TITLE III—REGULATORY RELIEF

19 Subtitle A—Private Property

20 Rights Protection and Com21 pensation

22 SEC. 311. COMPENSATION FOR TAKING OF PRIVATE PROP23 ERTY.

24 (a) ELIGIBILITY.—

25 (1) IN GENERAL.—A private property owner is

26 entitled to receive compensation in accordance with
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1 this section for any reduction in the value of prop2 erty owned by the private property owner, that—

3 (A) is a consequence of a limitation on an

4 otherwise lawful use of the property imposed by

5 a final agency action; and

6 (B) is measurable and not negligible.

7 (2) REDUCTIONS DEEMED NOT NEGLIGIBLE.—

8 For purposes of paragraph (1)(B), a reduction in

9 the value of property of 10 percent or more is

10 deemed not negligible.

11 (b) REQUEST FOR COMPENSATION.—Within 90 days

12 after receipt of notice of a final agency action with respect

13 to which compensation is required under subsection (a),

14 a private property owner may submit to the head of the

15 agency a request in writing for compensation under this

16 section.

17 (c) AGENCY OFFER.—Within 180 days after the re18 ceipt of a request for compensation submitted in accord19 ance with subsection (b) with respect to an agency action,

20 the head of the agency shall stay the agency action and

21 provide to the private property owner an offer to com22 pensate the private property owner for the difference be23 tween—
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1 (1) the fair market value of the property deter2 mined based on the value of the property if the

3 agency action were not implemented; minus

4 (2) the fair market value of the property deter5 mined based on the value of the property if the

6 agency action were implemented.

7 (d) PRIVATE PROPERTY OWNERS’ RESPONSE.—A

8 private property owner shall have 60 days after the date

9 of receipt of an offer under subsection (c) to accept or

10 to reject the offer.

11 (e) ARBITRATION.—If a private property owner re12 jects the offer under subsection (c), the private property

13 owner may submit the matter for arbitration to an arbitra14 tor appointed by the head of the agency from a list of

15 arbitrators submitted by the American Arbitration Asso16 ciation. The arbitrator shall determine the amount of com17 pensation to which the property owner is entitled under

18 this section, in accordance with subsection (c) (1) and (2).

19 The arbitration shall be conducted in accordance with the

20 real estate valuation arbitration rules of that association.

21 For purposes of this section, an arbitration is binding on

22 the head of an agency and the private property owner as

23 to the amount, if any, of compensation owed to the private

24 property owner under this section.
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1 (f) PAYMENT.—The head of an agency shall pay a

2 private property owner any compensation required under

3 the terms of an offer of the agency head that is accepted

4 by the private property owner in accordance with sub5 section (d), or under a decision of an arbiter under sub6 section (e), by not later than 60 days after the date of

7 the acceptance or the date of the issuance of the decision,

8 respectively.

9 SEC. 312. DEFINITIONS.

10 In this subtitle:

11 (1) The term ‘‘private property owner’’ means

12 a non-Federal person (other than an officer, em13 ployee, agent, department, or instrumentality of a

14 State, municipality, or political subdivision of a

15 State, or a State, municipality, or subdivision of a

16 State) that—

17 (A) owns property referred to in paragraph

18 (2) (A) or (B); or

19 (B) holds property referred to in para20 graph (2)(C).

21 (2) The term ‘‘property’’ means—

22 (A) land;

23 (B) any interest in land; and

24 (C) any proprietary water right.
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1 (3) The term ‘‘agency action’’ has the meaning

2 given that term in section 551(13) of title 5, United

3 States Code.

4 Subtitle B—Measuring Costs of

5 Federal Regulations

6 SEC. 321. OMB AND CBO PROJECTIONS OF COSTS OF COM7 PLYING WITH FEDERAL MANDATES.

8 (a) OMB REPORT.—Not later than December 31 of

9 each year, the Director of the Office of Management and

10 Budget shall submit to the President a report containing

11 the following information:

12 (1) A projection of the aggregate direct costs

13 that will be incurred in the next full fiscal year by

14 State and local governments in complying with all

15 mandates established by any Federal statutes and

16 regulations.

17 (2) A projection of the aggregate direct costs

18 that will be incurred in the next full fiscal year by

19 the private sector in complying with those mandates.

20 (3) A projection of the costs determined under

21 each of paragraphs (1) and (2) as a percentage of

22 the projected gross domestic product of the United

23 States for the next full fiscal year.

24 (b) CBO REPORT.—Not later than the date each year

25 by which the President is required to submit a budget to
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1 the Congress under section 1105 of title 31, United States

2 Code, the Director of the Congressional Budget Office

3 shall submit to the Congress a report containing the infor4 mation described in paragraphs (1), (2), and (3) of sub5 section (a).

6 SEC. 322. PRESIDENT’S RECOMMENDATIONS FOR FREEZ7 ING COSTS OF COMPLYING WITH FEDERAL

8 MANDATES.

9 The President shall submit to the Congress each year

10 with the budget submitted under section 1105 of title 31,

11 United States Code—

12 (1) the most recent report of the Director of

13 the Office of Management and Budget under sub14 section (a);

15 (2) any comments of the President with respect

16 to that report; and

17 (3) recommendations of such changes in Fed18 eral laws and regulations as are necessary and ap19 propriate to ensure that during the fiscal year cov20 ered by the budget, the costs referred to in each of

21 paragraphs (1), (2), and (3) of subsection (a) do not

22 exceed the corresponding baseline costs.

23 SEC. 323. DEFINITIONS.

24 In this subtitle:
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1 (1) BASELINE COSTS.—The term ‘‘baseline

2 costs’’ means the projection of costs referred to in

3 each of paragraphs (1), (2), and (3) of section

4 321(a) that is included in the first report of the Di5 rector of the Office of Management and Budget

6 under that subsection.

7 (2) DIRECT COSTS.—The term ‘‘direct costs’’

8 means all expenditures occurring as a direct result

9 of complying with a mandate established by a Fed10 eral statute or regulation.

11 Subtitle C—Risk Assessment and

12 Cost/Benefit Analyses and Reports

13 SEC. 331. ANALYSES AND REPORTS REQUIRED FOR PRO14 POSED LEGISLATION.

15 Section 403 of the Congressional Budget Act of 1974

16 is amended—

17 (1) by redesignating paragraphs (3) and (4) as

18 paragraphs (6) and (7), respectively, and by adding

19 after paragraph (2) the following new paragraphs:

20 ‘‘(3) an estimate of the costs which would be in21 curred by the private sector in carrying out or com22 plying with any significant bill or resolution in the

23 fiscal year in which it is to become effective and in

24 each of the 4 fiscal years following such fiscal year;
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1 ‘‘(4) an estimate of the risks to the public

2 health and safety which would result from any sig3 nificant bill or resolution;

4 ‘‘(5) an estimate of the effects of any signifi5 cant bill or resolution on the economy, including the

6 rate of gross domestic product growth, job loss, and

7 price stability;’’;

8 (2) in paragraph (6) (as redesignated), by strik9 ing ‘‘(1) and (2)’’ and inserting ‘‘(1), (2), and (3)’’.

Æ

HR 4585 SC——2

HR 4585 SC——3

HR 4585 SC——4