```

[Journal of the House of Representatives, 1995]
[Thursday October 26, 1995 (135), Para 135.11 Roll No. 741]
[Pages 1599-1795]
[From the U.S. Government Publishing Office, www.gpo.gov]

para.135.11                  [Roll No. 741]

                                AYES--72

     Andrews
     Baesler
     Baldacci
     Barcia
     Barrett (WI)
     Beilenson
     Bentsen
     Bishop
     Blute
     Brewster
     Browder
     Brown (CA)
     Cardin
     Chapman
     Clayton
     Condit
     Cramer
     de la Garza
     Dicks
     Dingell
     Dooley
     Duncan
     Eshoo
     Fazio
     Flake
     Furse
     Geren
     Hall (OH)
     Hall (TX)
     Hamilton
     Harman
     Hayes
     Hoyer
     Klug
     Lincoln
     Luther
     Martinez
     Matsui
     McCarthy
     McHale
     Meehan
     Minge
     Montgomery
     Moran
     Morella
     Murtha
     Ortiz
     Orton
     Payne (VA)
     Peterson (FL)
     Peterson (MN)
     Pomeroy
     Poshard
     Richardson
     Roemer
     Sabo
     Sawyer
     Schroeder
     Scott
     Skaggs
     Skelton
     Spratt
     Stenholm
     Tanner
     Taylor (MS)
     Thornton
     Torres
     Vento
     Visclosky
     Volkmer
     Ward
     Wilson

                                NOES--356

     Abercrombie
     Ackerman
     Allard
     Archer
     Armey
     Bachus
     Baker (CA)
     Baker (LA)
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Barton
     Bass
     Bateman
     Becerra
     Bereuter
     Berman
     Bevill
     Bilbray
     Bilirakis
     Bliley
     Boehlert
     Boehner
     Bonilla
     Bonior
     Bono
     Borski
     Boucher
     Brown (FL)
     Brown (OH)
     Brownback
     Bryant (TN)
     Bryant (TX)
     Bunn
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Chrysler
     Clay
     Clement
     Clinger
     Clyburn
     Coble
     Coburn
     Coleman
     Collins (GA)
     Collins (IL)
     Collins (MI)
     Combest
     Conyers
     Cooley
     Costello
     Cox
     Coyne
     Crane
     Crapo
     Cremeans
     Cubin
     Cunningham
     Danner
     Davis
     Deal
     DeFazio
     DeLauro
     DeLay
     Dellums
     Deutsch
     Diaz-Balart
     Dickey
     Dixon
     Doggett
     Doolittle
     Dornan
     Doyle
     Dreier
     Dunn
     Durbin
     Edwards
     Ehlers
     Ehrlich
     Emerson
     Engel
     English
     Ensign
     Evans
     Everett
     Ewing
     Farr
     Fattah
     Fawell
     Fields (LA)
     Fields (TX)
     Filner
     Flanagan
     Foglietta
     Foley
     Forbes
     Ford
     Fowler
     Fox
     Frank (MA)
     Franks (CT)
     Franks (NJ)
     Frelinghuysen
     Frisa
     Frost
     Funderburk
     Gallegly
     Ganske
     Gejdenson
     Gekas
     Gephardt
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gonzalez
     Goodlatte
     Goodling
     Gordon
     Goss
     Graham
     Green
     Greenwood
     Gunderson
     Gutierrez
     Gutknecht
     Hancock
     Hansen
     Hastert
     Hastings (FL)
     Hastings (WA)
     Hayworth
     Hefley
     Hefner
     Heineman
     Herger
     Hilleary
     Hilliard
     Hinchey
     Hobson
     Hoekstra
     Hoke
     Holden
     Horn
     Hostettler
     Houghton
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Jackson-Lee
     Jacobs
     Jefferson
     Johnson (CT)
     Johnson (SD)
     Johnson, E. B.
     Johnson, Sam
     Johnston
     Jones
     Kanjorski
     Kasich
     Kelly
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kim
     King
     Kingston
     Kleczka
     Klink
     Knollenberg
     Kolbe
     LaFalce
     LaHood
     Lantos
     Largent
     Latham
     LaTourette
     Laughlin
     Lazio
     Leach
     Levin
     Lewis (CA)
     Lewis (GA)
     Lewis (KY)
     Lightfoot
     Linder
     Lipinski
     Livingston
     LoBiondo
     Lofgren
     Longley
     Lowey
     Lucas
     Maloney
     Manton
     Manzullo
     Markey
     Martini
     Mascara
     McCollum
     McCrery
     McDade
     McDermott
     McHugh
     McInnis
     McIntosh
     McKeon
     McKinney
     McNulty
     Meek
     Menendez
     Metcalf
     Meyers
     Mfume
     Mica
     Miller (CA)
     Miller (FL)
     Mink
     Moakley
     Molinari
     Mollohan
     Moorhead
     Myers
     Myrick
     Nadler
     Neal
     Nethercutt
     Neumann
     Ney
     Norwood
     Nussle
     Oberstar
     Obey
     Olver
     Owens
     Oxley
     Packard
     Pallone
     Parker
     Pastor

[[Page 1600]]

     Paxon
     Payne (NJ)
     Pelosi
     Petri
     Pickett
     Pombo
     Porter
     Portman
     Pryce
     Quillen
     Quinn
     Radanovich
     Rahall
     Ramstad
     Rangel
     Reed
     Regula
     Riggs
     Rivers
     Roberts
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Rose
     Roth
     Roukema
     Roybal-Allard
     Royce
     Rush
     Salmon
     Sanders
     Sanford
     Saxton
     Scarborough
     Schaefer
     Schiff
     Schumer
     Seastrand
     Sensenbrenner
     Serrano
     Shadegg
     Shaw
     Shays
     Shuster
     Skeen
     Slaughter
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Solomon
     Souder
     Spence
     Stark
     Stearns
     Stockman
     Stokes
     Studds
     Stump
     Stupak
     Talent
     Tate
     Tauzin
     Taylor (NC)
     Tejeda
     Thomas
     Thompson
     Thornberry
     Thurman
     Tiahrt
     Torkildsen
     Torricelli
     Towns
     Traficant
     Upton
     Velazquez
     Vucanovich
     Waldholtz
     Walker
     Walsh
     Wamp
     Waters
     Watt (NC)
     Watts (OK)
     Waxman
     Weldon (FL)
     Weller
     White
     Whitfield
     Wicker
     Williams
     Wise
     Wolf
     Woolsey
     Wyden
     Wynn
     Yates
     Young (AK)
     Young (FL)
     Zeliff
     Zimmer

                         ANSWERED ``PRESENT''--1

       
     Kaptur
       

                              NOT VOTING--3

     Sisisky
       Tucker
     Weldon (PA)
  So the amendment in the nature of a substitute was not agreed to.
  The SPEAKER pro tempore, Mr. DREIER, assumed the Chair.
  When Mr. BOEHNER, Chairman, pursuant to House Resolution 245, reported 
the bill, as amended, back to the House.
  The previous question having been ordered by said resolution.
  Pursuant to House Resolution 245, the following amendment was 
considered adopted in the House and in the Committee of the Whole House 
on the state of the Union:

       Strike out all after the enacting clause and insert:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Seven-Year Balanced Budget 
     Reconciliation Act of 1995''.

     SEC. 2. TABLE OF TITLES.

       This Act is organized into titles as follows:

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
                   TITLE I--COMMITTEE ON AGRICULTURE

     SEC. 1001. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This title may be cited as the 
     ``Agricultural Reconciliation Act of 1995''.
       (b) Table of Contents.--The table of contents of 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.
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.
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.
                      Subtitle A--Freedom to Farm

     SEC. 1101. SHORT TITLE.

       This subtitle may be cited as the ``Freedom to Farm Act of 
     1995''.

     SEC. 1102. SEVEN-YEAR CONTRACTS TO IMPROVE FARMING CERTAINTY 
                   AND FLEXIBILITY.

       (a) Contracts Authorized.--Section 102 of the Agricultural 
     Act of 1949 (7 U.S.C. 1443), which is obsolete, is amended to 
     read as follows:

     ``SEC. 102. SEVEN-YEAR MARKET TRANSITION CONTRACTS.

       ``(a) Contracts Authorized.--
       ``(1) Offer and main terms.--Beginning as soon as possible 
     after the date of the enactment of this section, the 
     Secretary shall offer to enter into a contract (to be known 
     as a `market transition contract') with eligible owners and 
     operators described in paragraph (2) on a farm containing 
     eligible farmland. Under the terms of a market transition 
     contract, the owner or operator shall agree, in exchange for 
     annual payments under the contract, to comply with the 
     conservation compliance plan for the farm prepared in 
     accordance with section 1212 of the Food Security Act of 1985 
     (16 U.S.C. 3812) and wetland protection requirements 
     applicable to the farm under subtitle C of title XII of such 
     Act (16 U.S.C. 3821 et seq.).
       ``(2) Eligible owners and operators described.--The 
     following persons shall be considered to be an owner or 
     operator eligible to enter into a market transition contract:
       ``(A) An owner of eligible farmland who assumes all of the 
     risk of producing a crop.
       ``(B) An owner of eligible farmland who shares in the risk 
     of producing a crop.
       ``(C) An operator of eligible farmland with a share-rent 
     lease of the eligible farmland, regardless of the length of 
     the lease, if the owner enters into the same market 
     transition contract.
       ``(D) An operator of eligible farmland who cash rents the 
     eligible farmland under a lease expiring on or after 
     September 30, 2002, in which case the consent of the owner is 
     not required.
       ``(E) An operator of eligible farmland who cash rents the 
     eligible farmland under a lease expiring before September 30, 
     2002, if the owner consents to the contract.
       ``(F) An owner of eligible farmland who cash rents the 
     eligible farmland and the lease term expires before September 
     30, 2002, but only if the actual operator of the farm

[[Page 1601]]

     declines to enter into a market transition contract. In the 
     case of an owner covered by this subparagraph, payments will 
     not begin under a market transition contract until the fiscal 
     year following the fiscal year in which the lease held by the 
     nonparticipating operator expires.
       ``(3) Tenants and sharecroppers.--The Secretary shall 
     provide adequate safeguards to protect the interests of 
     operators who are tenants and sharecroppers.
       ``(b) Elements of Contracting.--
       ``(1) Time for contracting.--
       ``(A) Deadline.--Except as provided in subparagraph (B), 
     the Secretary may not enter into a market transition contract 
     after April 15, 1996.
       ``(B) Special rule for conservation reserve lands.--
     Eligible owners and operators on farms covered by a 
     conservation reserve contract under section 1231 of the Food 
     Security Act of 1985 (16 U.S.C. 3831) that expires after 
     April 15, 1996, may enter into or expand a market transition 
     contract to cover the acreage equal to the quantity of the 
     farm's crop acreage bases restored with respect to the farm 
     under the terms and conditions of the conservation reserve 
     program. The Secretary shall annually conduct an enrollment 
     for such conservation reserve program acreage for the fiscal 
     years 1997 through 2002.
       ``(2) Duration of contract.--The term of each market 
     transition contract shall--
       ``(A) begin with the 1996 crop year, or the crop year in 
     which the contract is entered into in the case of a contract 
     entered into after April 15, 1996; and
       ``(B) extend through the 2002 crop year.
       ``(3) Estimation of payments.--At the time the Secretary 
     enters into a market transition contract, the Secretary shall 
     provide an estimate of the minimum payments anticipated to be 
     made under the contract during at least the first fiscal year 
     for which payments will be made. If the actual payment under 
     the contract for the first fiscal year is less than 95 
     percent of the estimated payment, the owner or operator 
     subject to the contract may terminate the contract without 
     penalty.
       ``(4) Report on contracting.--Not later than 90 days after 
     the date of the enactment of this section, the Secretary 
     shall submit to the Committee on Agriculture of the House of 
     Representatives and the Committee on Agriculture, Nutrition, 
     and Forestry of the Senate a report describing the manner in 
     which the Secretary proposes to enter into market transition 
     contracts, the number of persons and acreage covered by such 
     contracts, and the total amount of anticipated payments to be 
     made under such contracts (consistent with the limitations 
     specified in subsection (e)).
       ``(c) Eligible Farmland Described.--Land shall be 
     considered to be farmland eligible for coverage under a 
     market transition contract only if the land has crop acreage 
     base attributable to the land and--
       ``(1) for at least one of the 1991 through 1995 crop years, 
     at least a portion of the land was enrolled in the acreage 
     reduction program authorized for a crop of rice, upland 
     cotton, feed grains, or wheat under section 101B, 103B, 105B, 
     or 107B or was considered planted to rice, upland cotton, 
     feed grains, or wheat, as certified under section 503(c)(7);
       ``(2) was subject to a conservation reserve contract under 
     section 1231 of the Food Security Act of 1985 (16 U.S.C. 
     3831) whose term expired on or after January 1, 1995; or
       ``(3) is released from coverage under a conservation 
     reserve contract by the Secretary during the period beginning 
     on January 1, 1995, and ending on April 15, 1996.
       ``(d) Time for Payment.--
       ``(1) In general.--An annual payment under a market 
     transition contract shall be made not later than September 30 
     of each of the fiscal years 1996 through 2002.
       ``(2) Advance payments.--Beginning in fiscal year 1997, 
     half of the annual payment may be made on March 15 at the 
     option of the owner or operator subject to the contract. At 
     the option of the owner or operator, half of the annual 
     payment for fiscal year 1996 may be made within 90 days of 
     the date on which the owner or operator enters into the 
     market transition contract.
       ``(e) Total Amounts Available for Payments Under All 
     Contracts.--
       ``(1) Total payments.--Total payments under all market 
     transition contracts for fiscal years 1996 through 2002 shall 
     not exceed $38,733,000,000.
       ``(2) Total payments per fiscal year.--Beginning in fiscal 
     year 1996, the Secretary shall expend on a fiscal year basis 
     the following amounts to satisfy the obligations of the 
     Secretary under market transition contracts:
       ``(A) For fiscal year 1996,
     $6,014,000,000.
       ``(B) For fiscal year 1997,
     $5,829,000,000.
       ``(C) For fiscal year 1998,
     $6,244,000,000.
       ``(D) For fiscal year 1999,
     $6,047,000,000.
       ``(E) For fiscal year 2000,
     $5,573,000,000.
       ``(F) For fiscal year 2001,
     $4,574,000,000.
       ``(G) For fiscal year 2002,
     $4,453,000,000.
       ``(3) Adjustment of payment amounts.--The Secretary shall 
     adjust the amount specified in paragraph (1), and the amount 
     specified in paragraph (2) for a particular fiscal year, as 
     follows:
       ``(A) Subtracting an amount equal to the amount, if any, 
     necessary during that fiscal year to satisfy payment 
     requirements under sections 101B, 103B, 105B, and 107B for 
     the 1994 and 1995 crop years.
       ``(B) Adding an amount equal to the sum of all producer 
     repayments of deficiency payments received during that fiscal 
     year under section 114(a)(2).
       ``(C) Adding an amount equal to the sum of all market 
     transition contract payments withheld by the Secretary, at 
     the request of producers, during the preceding fiscal year as 
     an offset against producer repayments of deficiency payments 
     otherwise required under section 114(a)(2).
       ``(D) Adding an amount equal to the sum of all refunds of 
     market transition contract payments received during the 
     preceding fiscal year under subsection (i).
       ``(f) Contract Payments to be Based on Historic Expenditure 
     Levels.--
       ``(1) Contract commodity defined.--For purposes of this 
     section, the term `contract commodity' means rice, upland 
     cotton, feed grains, or wheat.
       ``(2) Calculation of historic expenditure levels.--
       ``(A) In general.--For each contract commodity, the 
     Secretary shall calculate the total expenditures that were 
     required for the 1991 through 1995 crops of that contract 
     commodity under section 101B, 103B, 105B, or 107B, including 
     expenditures in the form of deficiency payments, loan 
     deficiency payments, gains realized from repaying loans at a 
     level less than the original level, and marketing 
     certificates.
       ``(B) Special rule for 1995 crop year.--In the absence of 
     information regarding actual expenditures for the 1995 crop 
     of each contract commodity, the Secretary may use an estimate 
     of expenditures under section 101B, 103B, 105B, or 107B for 
     that crop year. The Secretary shall base such estimate on 
     information contained in the President's budget for fiscal 
     year 1997 submitted to the Congress under section 1105 of 
     title 31, United States Code.
       ``(3) Amounts available for each contract commodity.--The 
     amount available for a fiscal year for payments with respect 
     to crop acreage base of a contract commodity included in 
     market transition contracts in effect during that fiscal year 
     shall be equal to the product of--
       ``(A) the ratio of the amount calculated under paragraph 
     (2) for that contract commodity to the total amount 
     calculated for all contract commodities under such paragraph; 
     and
       ``(B) the amount specified in paragraph (2) of subsection 
     (e) for that fiscal year, as adjusted under paragraph (3) of 
     such subsection.
       ``(g) Determination of Payments Under Particular 
     Contract.--
       ``(1) Individual production of contract commodities.--For 
     each market transition contract, the amount of production of 
     a contract commodity covered by the contract shall be equal 
     to the product of--
       ``(A) the crop acreage base of that contract commodity 
     attributable to the eligible farmland subject to the 
     contract; and
       ``(B) the farm program payment yield in effect for the 1995 
     crop of that contract commodity for the farm containing that 
     eligible farmland.
       ``(2) Annual total production of contract commodities.--For 
     each of the fiscal years 1996 through 2002, the total 
     production of each contract commodity covered by all market 
     transition contracts shall be equal to the sum of the amounts 
     calculated under paragraph (1) for each individual market 
     transition contract in effect during that fiscal year.
       ``(3) Annual payment rate.--The payment rate for a contract 
     commodity for a fiscal year shall be equal to--
       ``(A) the amount made available under subsection (f)(3) for 
     that contract commodity for that fiscal year; divided by
       ``(B) the amount determined under paragraph (2) for that 
     fiscal year.
       ``(4) Annual payment amount.--For each of the fiscal years 
     1996 through 2002, the amount to be paid under a particular 
     market transition contract in effect during that fiscal year 
     with respect to a contract commodity shall be equal to the 
     product of--
       ``(A) the amount of production determined under paragraph 
     (1) for that contract for that contract commodity; and
       ``(B) the payment rate in effect under paragraph (3) for 
     that fiscal year for that contract commodity.
       ``(5) Assignment of payments.--The provisions of section 
     8(g) of the Soil Conservation and Domestic Allotment Act (16 
     U.S.C. 590h(g)) (relating to assignment of payments) shall 
     apply to payments under this subsection. The owner or 
     operator making the assignment, or the assignee, shall 
     provide the Secretary with notice, in such manner as the 
     Secretary may require in the market transition contract, of 
     any assignment made under this paragraph.
       ``(6) Sharing of payments.--The Secretary shall provide for 
     the sharing of payments made under a market transition 
     contract among the owners and operators subject to the 
     contract on a fair and equitable basis.
       ``(h) Limitation on Total Amount of Payment.--The total 
     amount of payments made to a person under a market transition 
     contract during any fiscal year may not exceed $50,000. The 
     Secretary shall issue regulations defining the term `person' 
     as used in this section, which shall conform, to the extent 
     practicable, to the regulations defining the term `person' 
     issued under section 1001 of the Food Security Act of 1985 (7 
     U.S.C. 1308). In the case of payments under a market 
     transition contract provided to corporations and

[[Page 1602]]

      other persons described in paragraph (5)(B)(i)(II) of such 
     section, the Secretary shall comply with the attribution 
     requirements specified in paragraph (5)(C) of such section.
       ``(i) Effect of Violation.--
       ``(1) Termination of contract.--If an owner or operator 
     subject to a market transition contract violates the 
     conservation compliance plan for the farm containing eligible 
     farmland under the contract or wetland protection 
     requirements applicable to the farm, the Secretary may 
     terminate the market transition contract with respect to that 
     owner or operator. Upon such termination, the owner or 
     operator shall forfeit all rights to receive future payments 
     under the contract and shall refund to the Secretary all 
     payments under the contract received by the owner or operator 
     during the period of the violation, together with interest 
     thereon as determined by the Secretary.
       ``(2) Refund or adjustment.--If the Secretary determines 
     that a violation of a market transition contract does not 
     warrant termination of the contract under paragraph (1), the 
     Secretary may require the owner or operator subject to the 
     contract--
       ``(A) to refund to the Secretary that part of the payments 
     received by the owner or operator during the period of the 
     violation, together with interest thereon as determined by 
     the Secretary; or
       ``(B) to accept an adjustment in the amount of future 
     payments otherwise required under the contract.
       ``(3) Foreclosure.--An owner or operator subject to a 
     market transition contract may not be required to make 
     repayments to the Secretary of amounts received under the 
     contract if the eligible farm land that is subject to the 
     contract has been foreclosed upon and the Secretary 
     determines that forgiving such repayments is appropriate in 
     order to provide fair and equitable treatment. This paragraph 
     shall not void the responsibilities of such an owner or 
     operator under the contract if the owner or operator 
     continues or resumes operation, or control, of the property 
     that is subject to the contract. Upon the resumption of 
     operation or control over the property by the owner or 
     operator, the provisions of the contract in effect on the 
     date of the foreclosure shall apply.
       ``(4) Review.--A determination of the Secretary under this 
     subsection shall be considered to be an adverse decision for 
     purposes of the availability of administrative review of the 
     determination.
       ``(j) Transfer of Interest in Lands Subject to Contract.--
       ``(1) Effect of transfer.--Except as provided in paragraph 
     (2), the transfer by an owner or operator subject to a market 
     transition contract of the right and interest of the owner or 
     operator in the eligible farmland under the contract shall 
     result in the termination of the contract with respect to 
     that farmland, effective on the date of the transfer, unless 
     the transferee of the land agrees with the Secretary to 
     assume all obligations of the contract. At the request of the 
     transferee, the Secretary may modify the contract if the 
     modifications are consistent with the objectives of this 
     section as determined by the Secretary.
       ``(2) Exception.--If an owner or operator who is entitled 
     to a payment under a market transition contract dies, becomes 
     incompetent, or is otherwise unable to receive such payment, 
     the Secretary shall make such payment, in accordance with 
     regulations prescribed by the Secretary and without regard to 
     any other provision of law, in such manner as the Secretary 
     determines is fair and reasonable in light of all of the 
     circumstances.
       ``(k) Planting Flexibility.--
       ``(1) Permitted crops.--In the case of acreage on a farm 
     that serves as the basis for payments under a market 
     transition contract, an owner or operator on the farm may 
     plant for harvest on the acreage--
       ``(A) rice, upland cotton, feed grains, and wheat;
       ``(B) any oilseed;
       ``(C) any industrial or experimental crop designated by the 
     Secretary;
       ``(D) mung beans, lentils, and dry peas; and
       ``(E) any other crop, except any fruit or vegetable crop 
     (including potatoes and dry edible beans) not covered by 
     subparagraph (D), unless such fruit or vegetable crop is 
     designated by the Secretary as--
       ``(i) an industrial or experimental crop; or
       ``(ii) a crop for which no substantial domestic production 
     or market exists.
       ``(2) Limitation.--At the discretion of the Secretary, the 
     Secretary may prohibit the planting of any crop specified in 
     paragraph (1) on acreage on a farm that serves as the basis 
     for payments under a market transition contract.
       ``(3) Notification.--With regard to commodities that may be 
     planted pursuant to this subsection, the Secretary shall make 
     a determination in each crop year of the commodities that may 
     not be planted pursuant to this subsection and shall make 
     available a list of the commodities.
       ``(4) Conservation uses.--In lieu of planting any crop 
     specified in paragraph (1), the owner or operator on a farm 
     may devote to conservation uses all or part of the eligible 
     farmland subject to a market transition contract, in 
     accordance with regulations issued by the Secretary.
       ``(5) Haying and grazing.--Haying and grazing of eligible 
     farmland subject to a market transition contract shall be 
     permitted, except during any consecutive five-month period 
     that is established by the State committee established under 
     section 8(b) of the Soil Conservation and Domestic Allotment 
     Act (16 U.S.C. 590h(b)) for a State. The 5-month period shall 
     be established during the period beginning April 1, and 
     ending October 31, of a year. In the case of a natural 
     disaster, the Secretary may permit unlimited haying and 
     grazing on the eligible farmland. The Secretary may not 
     exclude irrigated or irrigable acreage not planted in alfalfa 
     when exercising the authority under the preceding sentence.
       ``(l) Market Transition Contracts.--Notwithstanding any 
     other provision of law, no order issued for any fiscal year 
     under section 252 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 (2 U.S.C. 902) shall affect any 
     payment under any market transition contract.
       ``(m) Commodity Credit Corporation.--The Secretary shall 
     carry out this section through the Commodity Credit 
     Corporation, except that no funds of the Corporation shall be 
     used for any salary or expense of any officer or employee of 
     the Department of Agriculture in connection with the 
     administration of market transition payments or loans under 
     this Act.
       ``(n) Regulations.--The Secretary may issue such 
     regulations as the Secretary determines necessary to carry 
     out this section.''.
       (b) Conforming Amendments.--
       (1) Wheat 0/85 program.--Section 107B(c)(1)(E) of the 
     Agricultural Act of 1949 (7 U.S.C. 1445b-3a(c)(1)(E)) is 
     amended by striking ``through 1997'' in clauses (i) and (vii) 
     each place it appears and inserting ``and 1995''.
       (2) Feed grains 0/85 program.--Section 105B(c)(1)(E) of 
     such Act (7 U.S.C. 1444f(c)(1)(E)) is amended by striking 
     ``through 1997'' in clauses (i) and (vii) each place it 
     appears and inserting ``and 1995''.
       (3) Cotton program.--Section 103B of such Act (7 U.S.C. 
     1444-2) is amended--
       (A) in the section heading, by striking ``1997'' and 
     inserting ``1995'';
       (B) in subsections (a)(1), (b)(1), (c)(1)(A), 
     (c)(1)(B)(ii), and (o), by striking ``1997'' each place it 
     appears and inserting ``1995'';
       (C) in subsections (c)(1)(D)(i) and (c)(1)(D)(v)(II) by 
     striking ``through 1997'' each place it appears and inserting 
     ``and 1995'';
       (D) in the heading of subsection (c)(1)(D)(v)(II), by 
     striking ``through 1997 crops'' and inserting ``and 1995 
     crops'';
       (E) in subsection (e)(1)(D), by striking ``29\1/2\ percent 
     for each of the 1995 and 1996 crops, and 29 percent for the 
     1997 crop'' and inserting ``and 29\1/2\ percent for the 1995 
     crop''; and
       (F) in subparagraphs (B)(i), (D)(i), (E)(i), and (F)(i) of 
     subsection (a)(5), by striking ``1998'' each place it appears 
     and inserting ``1996''.
       (4) Rice 50/85 program.--Section 101B of such Act (7 U.S.C. 
     1441-2) is amended--
       (A) in subsections (c)(1)(D)(i) and (c)(1)(D)(v)(II), by 
     striking ``through 1997'' each place it appears and inserting 
     ``and 1995''; and
       (B) in the heading of subsection (c)(1)(D)(v)(II), by 
     striking ``through 1997 crops'' and inserting ``and 1995 
     crops''.
       (5) Oilseeds.--Section 205(c) of such Act (7 U.S.C. 
     1446f(c)) is amended by striking ``through 1997'' both places 
     it appears and inserting ``and 1995''.
       (6) Crop acreage base.--Section 509 of such Act (7 U.S.C. 
     1469) is amended by striking ``effective only for the 1991 
     through 1997 program crops'' and inserting ``effective only 
     until January 1, 1996''.

     SEC. 1103. AVAILABILITY OF NONRECOURSE MARKETING ASSISTANCE 
                   LOANS FOR WHEAT, FEED GRAINS, COTTON, RICE, AND 
                   OILSEEDS.

       (a) Nonrecourse Loans Available.--The Agricultural Act of 
     1949 is amended by inserting after section 102, as amended by 
     section 1102, the following new section:

     ``SEC. 102A. NONRECOURSE MARKETING ASSISTANCE LOANS FOR 
                   CERTAIN CROPS.

       ``(a) Nonrecourse Loans Available.--For each of the 1996 
     through 2002 crops of wheat, feed grains, upland cotton, 
     extra long staple cotton, rice, and oilseeds, the Secretary 
     shall make available to eligible producers on a farm 
     nonrecourse marketing assistance loans under terms and 
     conditions that are prescribed by the Secretary and at a loan 
     rate calculated under subsection (c). A marketing assistance 
     loan shall have a term of nine months beginning on the first 
     day of the first month after the month in which the loan is 
     made. The Secretary may not extend the term of a marketing 
     assistance loan.
       ``(b) Announcement of Loan Rate.--The Secretary shall 
     announce the loan rate for each commodity specified in 
     subsection (a) not later than the start of the marketing year 
     of the commodity for which the loan rate is to be in effect.
       ``(c) Calculation of Loan Rate.--
       ``(1) Calculation.--Subject to adjustment under paragraph 
     (2), the loan rate for marketing assistance loans under 
     subsection (a) for a particular commodity specified in such 
     subsection shall be equal to 70 percent of the simple average 
     price received by producers of that commodity during the 
     marketing years for the immediately preceding five crops of 
     that commodity.
       ``(2) Required budgetary adjustments.--If the Secretary 
     estimates for one of the marketing years for the 1996 through 
     2002 crops of a particular commodity specified in subsection 
     (a) that the average price to be received by producers of 
     that commodity is likely to be less that the loan rate 
     calculated under paragraph (1) for that marketing year, the 
     Secretary shall reduce the loan rate for

[[Page 1603]]

      that commodity for that marketing year by an amount 
     sufficient to enable the Secretary to provide marketing 
     assistance loans at no net cost to the Federal Government by 
     preventing the accumulation of that commodity by the 
     Commodity Credit Corporation through loan forfeitures and by 
     limiting producer gains under the marketing loan provision 
     under subsection (d).
       ``(3) Simple average price.--The Secretary shall be 
     responsible for determining the simple average price received 
     by producers of a commodity specified in subsection (a). In 
     determining the simple average price a commodity for a five-
     year period, the Secretary shall exclude the year in which 
     the average price was the highest and the year in which the 
     average price was the lowest during the period.
       ``(d) Marketing Loan Provision.--If during the marketing 
     year, the Secretary determines that the market price of a 
     commodity subject to a marketing assistance loan under this 
     section falls below the lower of (1) the loan rate, or (2) 
     the loan rate as adjusted by subsection (c)(2), the Secretary 
     shall allow such loan to be repaid at such market price. This 
     subsection shall not apply in the case of marketing 
     assistance loans for extra long staple cotton, rye, or 
     oilseeds.
       ``(e) Adjustments for Grade, Type, Quality, Location, and 
     Other Factors.--The Secretary may make such adjustments in 
     the announced loan rate for a 1 commodity specified in 
     subsection (a) as the Secretary considers appropriate to 
     reflect differences in grade, type, quality, location, and 
     other factors.
       ``(f) Producers Eligible for Loans.--Only the following 
     producers shall be eligible for a marketing assistance loan 
     under this section:
       ``(1) In the case of a marketing assistance loan for a crop 
     of wheat, feed grains (other than rye), upland cotton, or 
     rice, a producer whose land on which the crop is raised is 
     subject to a market transition contract under section 102.
       ``(2) In the case of a marketing assistance loan for a crop 
     of extra long staple cotton, rye, or oilseeds, any producer.
       ``(g) Prohibition on Storage Payments.--The Secretary may 
     not make payments to producers to cover storage charges 
     incurred in connection with marketing assistance loans made 
     under this section.
       ``(h) Definitions.--For purposes of this section:
       ``(1) The term `feed grains' means corn, grain sorghums, 
     barley, oats, and rye.
       ``(2) The term `oilseeds' means soybeans, sunflower seed, 
     rapeseed, canola, safflower, flaxseed, mustard seed, and, if 
     designated by the Secretary, other oilseeds.
       ``(i) Regulations.--The Secretary may issue such 
     regulations as the Secretary determines necessary to carry 
     out this section.''.
       (b) Repeal of Current Adjustment Authority.--Section 403 of 
     the Agricultural Act of 1949 (7 U.S.C. 1423) is repealed.

     SEC. 1104. REFORM OF PAYMENT LIMITATION PROVISIONS OF FOOD 
                   SECURITY ACT OF 1985.

       (a) Attribution of Payments Made to Corporations and Other 
     Entities.--Paragraph (5)(C) of section 1001 of the Food 
     Security Act of 1985 (7 U.S.C. 1308) is amended to read as 
     follows:
       ``(C)(i) In the case of payments to corporations and other 
     entities described in subparagraph (B)(i)(II), the Secretary 
     shall attribute payments to individuals in proportion to 
     their ownership interests in the corporation or entity 
     receiving the payment or in any other corporation or entity 
     that has a substantial beneficial interest in the corporation 
     or entity actually receiving the payment. This subparagraph 
     shall apply to individuals who hold or acquire, directly or 
     through another corporation or entity, a substantial 
     beneficial interest in the corporation or entity actually 
     receiving the payment.
       ``(ii) In the case of payments to corporations and other 
     entities described in subparagraph (B)(i)(II), the Secretary 
     shall also attribute payments to any State (or political 
     subdivision or agency thereof) or other corporation or entity 
     that has a substantial beneficial interest in the corporation 
     or entity actually receiving the payment in proportion to 
     their ownership interests in the corporation or entity 
     receiving the payment. This subparagraph shall apply even if 
     the payments are also attributable to individuals under 
     clause (i).
       ``(iii) For purposes of this subparagraph, the term 
     `substantial beneficial interest' means not less than five 
     percent of all beneficial interests in the corporation or 
     entity actually receiving the payment, except that the 
     Secretary may set a lower percentage in order to ensure that 
     the provisions of this section and the scheme or device 
     provisions in section 1001B are not circumvented.''.
       (b) Tracking of Payments.--Paragraph (3) of section 
     1001A(a) of the Food Security Act of 1985 (7 U.S.C. 1308-
     1(a)) is amended to read as follows:
       ``(3) Notification.--To facilitate administration of this 
     section, each entity or individual receiving payments as a 
     separate person shall notify each individual or other entity 
     that acquires or holds a substantial beneficial interest in 
     it of the requirements and limitations under this subsection. 
     Each such entity or individual receiving payments shall 
     provide to the Secretary, at such times and in such manner as 
     prescribed by the Secretary, the name and social security 
     number of each individual, or the name and taxpayer 
     identification number of each entity, that holds or acquires 
     a substantial beneficial interest.''.
       (c) Conforming Amendment.--Paragraph (2) of such section is 
     amended to read as follows:
       ``(2) Substantial beneficial interest.--For purposes of 
     this subsection, the term `substantial beneficial interest' 
     has the meaning given such term in section 
     1001(5)(C)(iii).''.

     SEC. 1105. SUSPENSION OF CERTAIN PROVISIONS REGARDING PROGRAM 
                   CROPS.

       (a) Wheat.--
       (1) Nonapplicability of certificate requirements.--Sections 
     379d through 379j of the Agricultural Adjustment Act of 1938 
     (7 U.S.C. 1379d-1379j) (relating to marketing certificate 
     requirements for processors and exporters) shall not be 
     applicable to wheat processors or exporters during the period 
     June 1, 1996, through May 31, 2003.
       (2) Suspension of land use, wheat marketing allocation, and 
     producer certificate provisions.--Sections 331 through 339, 
     379b, and 379c of the Agricultural Adjustment Act of 1938 (7 
     U.S.C. 1331 through 1339, 1379b, and 1379c) shall not be 
     applicable to the 1996 through 2002 crops of wheat.
       (3) Suspension of certain quota provisions.--The joint 
     resolution entitled ``A joint resolution relating to corn and 
     wheat marketing quotas under the Agricultural Adjustment Act 
     of 1938, as amended'', approved May 26, 1941 (7 U.S.C. 1330 
     and 1340) shall not be applicable to the crops of wheat 
     planted for harvest in the calendar years 1996 through 2002.
       (4) Nonapplicability of section 107 program.--Section 107 
     of the Agricultural Act of 1949 (7 U.S.C. 1445a) shall not be 
     applicable to the 1996 through 2002 crops of wheat.
       (b) Feed Grains.--Section 105 of the Agricultural Act of 
     1949 (7 U.S.C. 1444b) shall not be applicable to the 1996 
     through 2002 crops of feed grains.
       (c) Cotton.--
       (1) Suspension of base acreage allotments, marketing 
     quotas, and related provisions.--Sections 342, 343, 344, 345, 
     346, and 377 of the Agricultural Adjustment Act of 1938 (7 
     U.S.C. 1342-1346 and 1377) shall not be applicable to any of 
     the 1996 through 2002 crops of upland cotton.
       (2) Nonapplicability of section 103 program.--Section 
     103(a) of the Agricultural Act of 1949 (7 U.S.C. 1444(a)) 
     shall not be applicable to the 1996 through 2002 crops of 
     upland cotton.
                           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.

       (a) Contracts Authorized.--Section 204 of the Agricultural 
     Act of 1949 (7 U.S.C. 1446e) is amended to read as follows:

     ``SEC. 204. SEVEN-YEAR MARKET TRANSITION CONTRACTS FOR MILK 
                   PRODUCERS AND RELATED PROVISIONS.

       ``(a) Market Transition Contracts Authorized.--
       ``(1) Offer and main terms.--The Secretary shall offer to 
     enter into a contract (to be known as a `market transition 
     contract') with willing milk producers, under which the milk 
     producers agree, in exchange for seven payments under the 
     contract, to comply with--
       ``(A) governmental animal waste management regulations 
     otherwise applicable to the milk producer; and
       ``(B) any wetland protection requirements applicable to the 
     farm under subtitle C of title XII of such Act (16 U.S.C. 
     3821 et seq.).
       ``(2) Milk producer defined.--For purposes of this section, 
     the term `milk producer' means a person that was engaged in 
     the production of cow's milk in the 48 contiguous States on 
     September 15, 1995, and that received a payment during the 
     45-day period before that date for cow's milk marketed for 
     commercial use. Such term includes a person considered to be 
     a producer-handler that satisfies the requirements of the 
     preceding sentence.
       ``(b) Time for Contracting; Duration.--The Secretary shall 
     begin to offer to enter into market transition contracts as 
     soon as possible after the date of the enactment of this 
     section. The Secretary may not enter into a market transition 
     contract after April 15, 1996. The term of each market 
     transition contract shall extend through December 31, 2001.
       ``(c) Estimation of Payments.--At the time the Secretary 
     enters into a market transition contract, the Secretary shall 
     provide an estimate of the payments anticipated to be made 
     under the contract for at least fiscal year 1996.
       ``(d) Time for Payment.--The fiscal year 1996 payment under 
     a market transition contract shall be made on April 15, 1996, 
     or as soon thereafter as practicable. The Secretary shall 
     make subsequent payments not later than October 15 of each of 
     the fiscal years 1997 through 2002.
       ``(e) Payment Rate.--The Secretary shall use the following 
     payment rates to calculate payments under a market transition 
     contract for a fiscal year:
       ``(1) For fiscal year 1996, 10 cents per hundredweight.
       ``(2) For fiscal year 1997, 15 cents per hundredweight.
       ``(3) For fiscal year 1998, 13 cents per hundredweight.
       ``(4) For fiscal year 1999, 11 cents per hundredweight.
       ``(5) For fiscal year 2000, 9 cents per hundredweight.
       ``(6) For fiscal year 2001, 7 cents per hundredweight.

[[Page 1604]]

       ``(7) For fiscal year 2002, 5 cents per hundredweight.
       ``(f) Contract Payments To Be Based on Production 
     History.--
       ``(1) In general.--The Secretary shall determine the 
     historic annual milk production for each milk producer that 
     enters into a market transition contract on the basis of milk 
     checks reflecting payments for commercial marketings of cow's 
     milk or such other records of commercial marketings or 
     product sales as may be acceptable to the Secretary. Each 
     milk producer's historic annual milk production shall be 
     expressed in terms of hundredweights of milk.
       ``(2) Producers with three or more years of production.--In 
     the case of a milk producer that has been engaged in the 
     production of milk for at least three of the calendar years 
     1991 through 1995, the milk producer's historic annual milk 
     production shall be equal to the average quantity of milk 
     marketed by the milk producer during the three years of such 
     period in which the largest quantities of milk were marketed 
     by the milk producer.
       ``(3) Producers with fewer years of production.--In the 
     case of a milk producer not covered by paragraph (2), the 
     Secretary shall assign the milk producer an historic annual 
     milk production equal to an annualized average of the monthly 
     quantity of milk marketed by the milk producer during the 
     period in which the milk producer has been engaged in milk 
     production. The Secretary shall not consider months of 
     production after December 31, 1995.
       ``(g) Calculation of Payment Amount.--The total amount to 
     be paid to a milk producer under a market transition contract 
     for a fiscal year shall be equal to the product of--
       ``(1) the payment rate in effect for that fiscal year under 
     subsection (e); and
       ``(2) the historic annual milk production for the milk 
     producer determined under subsection (f).
       ``(h) Assignment of Payments.--The right of a milk producer 
     to a payment under a market transition contract shall be 
     freely assignable by the milk producer. The milk producer or 
     assignee shall provide the Secretary with notice, in such 
     manner as the Secretary may require in the market transition 
     contract, of any assignment made under this subsection.
       ``(i) Effect of Violation.--
       ``(1) Termination of contract.--If a milk producer subject 
     to a market transition contract violates any governmental 
     animal waste management regulation that applies to the 
     producer or wetland protection requirements applicable to the 
     producer, the Secretary may terminate the producer's market 
     transition contract. Upon such termination, the milk producer 
     shall forfeit all rights to receive future payments under the 
     contract and shall refund to the Secretary any payment under 
     the contract received by the producer after notification of 
     the violation, together with interest thereon as determined 
     by the Secretary. The Secretary shall make a determination 
     regarding violations of animal waste management regulations 
     under this paragraph in consultation with the appropriate 
     State governmental authority.
       ``(2) Refund or adjustment.--If the Secretary determines 
     that a violation of a market transition contract does not 
     warrant termination of the contract under paragraph (1), the 
     Secretary may require the milk producer subject to the 
     contract--
       ``(A) to refund to the Secretary any payment under the 
     contract received by the producer after notification of the 
     violation, together with interest thereon as determined by 
     the Secretary; or
       ``(B) to accept an adjustment in the amount of future 
     payments otherwise required under the contract.
       ``(j) Market Transition Contracts.--Notwithstanding any 
     other provision of law, no order issued for any fiscal year 
     under section 252 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 (2 U.S.C. 902) shall affect any 
     payment under any market transition contract.''.
       (b) Continued Operation of Existing Program Through 1995.--
       (1) Price support operations.--Until December 31, 1995, the 
     Secretary of Agriculture shall continue to use section 204 of 
     the Agricultural Act of 1949 (7 U.S.C. 1446e), as in effect 
     on the day before the date of the enactment of this Act, to 
     support the price of milk produced in the 48 contiguous 
     States.
       (2) Price Reduction.--Subsection (h) of such section, 
     relating to a reduction in the price received by milk 
     producers for all milk produced in the 48 contiguous States 
     and marketed for commercial use, shall continue to apply with 
     respect to milk marketed through December 31, 1995. In the 
     case of milk producers that did not increase milk marketings 
     in 1995 when compared to 1994 milk marketings, the Secretary 
     of Agriculture shall make refunds available in 1996 to such 
     milk producers in the manner provided in paragraph (3) of 
     such subsection.
       (c) Conforming Repeal of General Authority to Provide Price 
     Support for Milk.--
       (1) Designated nonbasic agricultural commodity.--Section 
     201(a) of the Agricultural Act of 1949 (7 U.S.C. 1446(a)) is 
     amended by striking ``milk,''.
       (2) Other nonbasic agricultural commodities.--Section 301 
     of the Agricultural Act of 1949 (7 U.S.C. 1447) is amended by 
     inserting ``(other than milk)'' after ``title II''.

     SEC. 1202. RECOURSE LOANS FOR COMMERCIAL PROCESSORS OF DAIRY 
                   PRODUCTS.

       The Agricultural Act of 1949 is amended by striking section 
     424 (7 U.S.C. 1433c), as added by section 1003 of the Food 
     Security Act of 1985 and effective for 1986 through 1990 
     crops, and inserting the following new section:

     ``SEC. 424. RECOURSE LOANS FOR COMMERCIAL PROCESSORS OF DAIRY 
                   PRODUCTS.

       ``(a) Recourse Loans Available.--On and after January 1, 
     1996, the Secretary may make recourse loans available to 
     commercial processors of eligible dairy products to assist 
     such processors to manage inventories of eligible dairy 
     products to assure a greater degree of price stability for 
     the dairy industry during the year. Recourse loans may be 
     made available under such reasonable terms and conditions as 
     the Secretary may prescribe.
       ``(b) Amount of Loan.--The Secretary shall establish the 
     amount of a loan for eligible dairy products, which shall 
     reflect 90 percent of the reference price for that product. 
     The rate of interest charged participants in this program 
     shall not be less than the rate of interest charged the 
     Commodity Credit Corporation by the United States Treasury.
       ``(c) Period of Loans.--A recourse loan made under this 
     section may not extend beyond the end of the fiscal year 
     during which the loan is made, except that the Secretary may 
     extend the loan for an additional period not to exceed the 
     end of the next fiscal year.
       ``(d) Definitions.--For purposes of this section:
       ``(1) The term `eligible dairy products' means cheddar 
     cheese, butter, and nonfat dry milk.
       ``(2) The term `reference price' means--
       ``(A) for cheddar cheese, the average National Cheese 
     Exchange price for 40 pound blocks of cheddar cheese for the 
     previous three months;
       ``(B) for butter the average Chicago Mercantile Exchange 
     price for butter for the previous three months; and
       ``(C) for nonfat dry milk, the Western States price for 
     nonfat dry milk for the previous three months.''.

                    CHAPTER 2--DAIRY EXPORT PROGRAMS

     SEC. 1211. DAIRY EXPORT INCENTIVE PROGRAM.

       (a) In General.--Section 153(c) of the Food Security Act of 
     1985 (15 U.S.C. 713a-14(c)) is amended--
       (1) by striking ``and'' at the end of paragraph (1);
       (2) by striking the period at the end of paragraph (2) and 
     inserting ``; and''; and
       (3) by adding at the end the following new paragraphs:
       ``(3) the maximum volume of dairy product exports allowable 
     consistent with the obligations of the United States as a 
     member of the World Trade Organization are exported under the 
     program each year (minus the volume sold under section 1163 
     of the Food Security Act of 1985 (7 U.S.C. 1731 note) during 
     that year), except to the extent that the export of such a 
     volume under the program would, in the judgment of the 
     Secretary, exceed the limitations on the value set forth in 
     subsection (f); and
       ``(4) payments may be made under the program for exports to 
     any destination in the world for the purpose of market 
     development, except a destination in a country with respect 
     to which shipments from the United States are otherwise 
     restricted by law.''.
       (b) Sole Discretion.--Section 153(b) of the Food Security 
     Act of 1985 (15 U.S.C. 713a-14(b)) is amended by inserting 
     ``sole'' before ``discretion''.
       (c) Market Development.--Section 153(e)(1) of the Food 
     Security Act of 1985 (15 U.S.C. 713a-14(e)(1)) is amended--
       (1) by striking ``and'' and inserting ``the''; and
       (2) by inserting before the period the following: ``, and 
     any additional amount that may be required to assist in the 
     development of world markets for United States dairy 
     products''.
       (d) Maximum Allowable Amounts.--Section 153 of the Food 
     Security Act of 1985 (15 U.S.C. 713a-14) is amended by adding 
     at the end the following:
       ``(f) Required Funding.--The Commodity Credit Corporation 
     shall in each year use money and commodities for the program 
     under this section in the maximum amount consistent with the 
     obligations of the United States as a member of the World 
     Trade Organization, minus the amount expended under section 
     1163 of the Food Security Act of 1985 (7 U.S.C. 1731 note) 
     during that year. However, the Commodity Credit Corporation 
     may not exceed the limitations specified in subsection (c)(3) 
     on the volume of allowable dairy product exports.''.
       (e) Conforming Amendment.--Section 153(a) of the Food 
     Security Act of 1985 (15 U.S.C. 713a-14(a)) is amended by 
     striking ``2001'' and inserting ``2002''.

     SEC. 1212. AUTHORITY TO ASSIST IN ESTABLISHMENT AND 
                   MAINTENANCE OF EXPORT TRADING COMPANY.

       The Secretary of Agriculture shall, consistent with the 
     obligations of the United States as a member of the World 
     Trade Organization, provide such advice and assistance to the 
     United States dairy industry as may be necessary to enable 
     that industry to establish and maintain an export trading 
     company under the Export Trading Company Act of 1982 (15 
     U.S.C. 4001 et seq.) for the purpose of facilitating the 
     international market development for and exportation of dairy 
     products produced in the United States.

[[Page 1605]]

     SEC. 1213. STANDBY AUTHORITY TO INDICATE ENTITY BEST SUITED 
                   TO PROVIDE INTERNATIONAL MARKET DEVELOPMENT AND 
                   EXPORT SERVICES.

       (a) Indication of Entity Best Suited to Assist 
     International Market Development for and Export of United 
     States Dairy Products.--If--
       (1) the United States dairy industry has not established an 
     export trading company under the Export Trading Company Act 
     of 1982 (15 U.S.C. 4001 et seq.) for the purpose of 
     facilitating the international market development for and 
     exportation of dairy products produced in the United States 
     on or before June 30, 1996; or
       (2) the quantity of exports of United States dairy products 
     during the 12-month period preceding July 1, 1997 does not 
     exceed the quantity of exports of United States dairy 
     products during the 12-month period preceding July 1, 1996 by 
     1.5 billion pounds (milk equivalent, total solids basis);
     the Secretary of Agriculture is directed to indicate which 
     entity autonomous of the Government of the United States is 
     best suited to facilitate the international market 
     development for and exportation of United States dairy 
     products.
       (b) Funding of Export Activities.--The Secretary shall 
     assist the entity in identifying sources of funding for the 
     activities specified in subsection (a) from within the dairy 
     industry and elsewhere.
       (c) Application of Section.--This section shall apply only 
     during the period beginning on July 1, 1997 and ending on 
     September 30, 2000.

     SEC. 1214. STUDY AND REPORT REGARDING POTENTIAL IMPACT OF 
                   URUGUAY ROUND ON PRICES, INCOME AND GOVERNMENT 
                   PURCHASES.

       (a) Study.--The Secretary of Agriculture shall conduct a 
     study, on a variety by variety of cheese basis, to determine 
     the potential impact on milk prices in the United States, 
     dairy producer income, and Federal dairy program costs, of 
     the allocation of additional cheese granted access to the 
     United States as a result of the obligations of the United 
     States as a member of the World Trade Organization.
       (b) Report.--Not later than September 30, 1996, the 
     Secretary shall report to the Committees on Agriculture of 
     the Senate and the House of Representatives the results of 
     the study conducted under this section.
       (c) Rule of Construction.--Any limitation imposed by Act of 
     Congress on the conduct or completion of studies or reports 
     to Congress shall not apply to the study and report required 
     under this section unless such limitation explicitly 
     references this section in doing so.

                  CHAPTER 3--DAIRY PROMOTION PROGRAMS

     SEC. 1221. RESEARCH AND PROMOTION ACTIVITIES UNDER FLUID MILK 
                   PROMOTION ACT OF 1990.

       (a) Extension of Order.--Section 1999O of the Fluid Milk 
     Promotion Act of 1990 (subtitle H of title XIX of Public Law 
     101-624; 7 U.S.C. 6414(a)) is amended--
       (1) by striking subsection (a); and
       (2) by redesignating subsections (b) and (c) as subsections 
     (a) and (b), respectively.
       (b) Definition of Research.--Paragraph (6) of section 1999C 
     of such Act (7 U.S.C. 6402) is amended to read as follows:
       ``(6) Research.--The term `research' means--
       ``(A) market research to support and increase the 
     effectiveness of industry advertising, promotion, and 
     educational activities; and
       ``(B) other research to expand sales of fluid milk 
     products, including research regarding the development of new 
     products, new product characteristics, and improved 
     technology in the production, manufacturing, or processing of 
     milk and the products of milk.''.
       (c) Conforming Amendments Regarding Marketing Orders.--
     Section 1999J(b) of such Act (7 U.S.C. 6409(b)) is amended--
       (1) by striking paragraph (1);
       (2) in paragraph (2), by striking ``(2) otherwise'' and 
     inserting ``(1)''; and
       (3) by redesignating paragraph (3) as paragraph (2).
       (d) Clarification of Referendum Requirements.--
       (1) Suspension or termination.--Subsection (b) of section 
     1999O of such Act (7 U.S.C. 6414), as redesignated by 
     subsection (a)(2), is amended--
       (A) in paragraph (1), by striking ``all processors'' and 
     inserting ``all fluid milk processors''; and
       (B) in paragraph (2)(B), by striking ``all processors'' and 
     inserting ``all fluid milk processors voting in the 
     referendum''.
       (2) Conforming amendment.--Section 1999N(b)(2) of such Act 
     (7 U.S.C. 6413(b)(2)) is amended by striking ``all 
     processors'' and inserting ``all fluid milk processors voting 
     in the referendum''.

     SEC. 1222. EXPANSION OF DAIRY PROMOTION PROGRAM TO COVER 
                   DAIRY PRODUCTS IMPORTED INTO THE UNITED STATES.

       (a) Declaration of Policy.--Section 110(b) of the Dairy 
     Production Stabilization Act of 1983 (7 U.S.C. 4501(b)) is 
     amended by inserting after ``commercial use'' the following: 
     ``and dairy products imported into the United States''.
       (b) Definitions.--
       (1) Milk.--Subsection (d) of section 111 of such Act (7 
     U.S.C. 4502) is amended by inserting before the period at the 
     end the following: ``or cow's milk imported into the United 
     States in the form of dairy products intended for consumption 
     in the United States''.
       (2) Dairy products.--Subsection (e) of such section is 
     amended by inserting before the semicolon the following: 
     ``and casein (except casein imported under sections 
     3501.90.20 (casein glue) and 3501.90.50 (other) of the 
     Harmonized Tariff Schedule)''.
       (3) Research.--Subsection (j) of such section is amended by 
     inserting before the semicolon the following: ``or to reduce 
     the costs associated with processing or marketing those 
     products''.
       (4) United states.--Subsection (l) of such section is 
     amended to read as follows:
       ``(l) the term `United States' means the several States and 
     the District of Columbia;''.
       (5) Importers and exporters.--Such section is further 
     amended--
       (A) in subsection (k), by striking ``and'' at the end of 
     such subsection; and
       (B) by adding at the end the following new subsections:
       ``(m) the term `importer' means the first person to take 
     title to dairy products imported into the United States for 
     domestic consumption; and
       ``(n) the term `exporter' means any person who exports 
     dairy products from the United States.''.
       (c) Membership of Board.--Section 113(b) of such Act (7 
     U.S.C. 4504(b)) is amended--
       (1) in the first sentence, by striking ``thirty-six 
     members'' and inserting ``38 members, including one 
     representative of importers and one representative of 
     exporters to be appointed by the Secretary'';
       (2) in the second sentence, by striking ``Members'' and 
     inserting ``The remaining members''; and
       (3) in the third sentence, by striking ``United States'' 
     and inserting ``United States, including Alaska and Hawaii''.
       (d) Assessment.--Section 113(g) of such Act (7 U.S.C. 
     4504(g)) is amended--
       (1) by inserting ``(1)'' after ``(g)''; and
       (2) by adding at the end the following new paragraph:
       ``(2) The order shall provide that each importer of dairy 
     products intended for consumption in the United States shall 
     remit to the Board, in the manner prescribed by the order, an 
     assessment equal to 1.2 cents per pound of total milk solids 
     contained in the imported dairy products, or 15 cents per 
     hundredweight of milk contained in the imported dairy 
     products, whichever is less. If an importer can establish 
     that it is participating in active, ongoing qualified State 
     or regional dairy product promotion or nutrition programs 
     intended to increase the consumption of milk and dairy 
     products, the importer shall receive credit in determining 
     the assessment due from that importer for contributions to 
     such programs of up to .8 cents per pound of total milk 
     solids contained in the imported dairy products, or 10 cents 
     per hundredweight of milk contained in the imported dairy 
     products, whichever is less. The assessment collected under 
     this paragraph shall be used for the purpose specified in 
     paragraph (1).''.
       (e) Records.--Section 113(k) of such Act (7 U.S.C. 4504(k)) 
     is amended in the first sentence by inserting after 
     ``commercial use,'' the following: ``each importer of dairy 
     products,''.
       (f) Termination or Suspension of Order.--Section 116(b) of 
     such Act (7 U.S.C. 4507(b)) is amended--
       (1) by inserting ``and importers'' after ``producers'' each 
     place it appears;
       (2) by striking ``who, during a representative period (as 
     determined by the Secretary), have been engaged in the 
     production of milk for commercial use''; and
       (3) by adding at the end the following new sentences: ``A 
     producer shall be eligible to vote in the referendum if the 
     producer, during a representative period (as determined by 
     the Secretary), has been engaged in the production of milk 
     for commercial use. An importer shall be eligible to vote in 
     the referendum if the importer, during a representative 
     period (as determined by the Secretary), has been engaged in 
     the importation of dairy products into the United States 
     intended for consumption in the 
     United States.''.

     SEC. 1223. PROMOTION OF UNITED STATES DAIRY PRODUCTS IN 
                   INTERNATIONAL MARKETS THROUGH DAIRY PROMOTION 
                   PROGRAM.

       Section 113(e) of the Dairy Production Stabilization Act of 
     1983 (7 U.S.C. 4504(e)) is amended by adding at the end the 
     following new sentence: ``For each of the fiscal years 1996 
     through 2000, the Board's budget shall provide for the 
     expenditure of not less than 10 percent of the anticipated 
     revenues available to the Board to develop international 
     markets for, and to promote within such markets, the 
     consumption of dairy products produced in the United States 
     from milk produced in the United States.''.

     SEC. 1224. ISSUANCE OF AMENDED ORDER UNDER DAIRY PRODUCTION 
                   STABILIZATION ACT OF 1983.

       (a) Implementation of Amendments.--To implement the 
     amendments made by sections 1222 and 1223, the Secretary of 
     Agriculture shall issue an amended dairy products promotion 
     and research order under section 112 of the Dairy Production 
     Stabilization Act of 1983 (7 U.S.C. 4504) reflecting such 
     amendments, and no other changes, in the order in existence 
     on the date of the enactment of this Act.
       (b) Proposal of Amended Order.--Not later than 60 days 
     after the date of the enactment of this Act, the Secretary of 
     Agriculture shall publish a proposed dairy prod

[[Page 1606]]

     ucts promotion and research order reflecting the amendments 
     made by sections 1222 and 1223. The Secretary shall provide 
     notice and an opportunity for public comment on the proposed 
     order.
       (c) Issuance of Amended Order.--After notice and 
     opportunity for public comment are provided in accordance 
     with subsection (b), the Secretary of Agriculture shall issue 
     a final dairy products promotion and research order, taking 
     into consideration the comments received and including in the 
     order such provisions as are necessary to ensure that the 
     order is in conformity with the amendments made by sections 
     1222 and 1223.
       (d) Effective Date.--The final dairy products promotion and 
     research order shall be issued and become effective not later 
     than 120 days after publication of the proposed order.
       (e) Referendum on Amendments.--Section 115 of Dairy 
     Production Stabilization Act of 1983 (7 U.S.C. 4506) is 
     amended--
       (1) by redesignating subsection (b) as subsection (c); and
       (2) by inserting after subsection (a) the following new 
     subsection:
       ``(b) Referendum.--Not later than 36 months after the 
     issuance of the order reflecting the amendments made by 
     sections 1222 and 1223 of the Agricultural Reconciliation Act 
     of 1995, the Secretary shall conduct a referendum under this 
     section for the sole purpose of determining whether the 
     requirements of such amendments shall be continued. The 
     Secretary shall conduct the referendum among persons who have 
     been producers or importers during a representative period as 
     determined by the Secretary. The requirements of such 
     amendments shall be continued only if the Secretary 
     determines that such requirements have been approved by not 
     less than a majority of the persons voting in the referendum. 
     If continuation of the amendments is not approved, the 
     Secretary shall issue a new order, within six months after 
     the announcement of the results of the referendum, that is 
     identical to the order in effect on the date of the enactment 
     of the Agricultural Reconciliation Act of 1995. The new order 
     shall become effective upon issuance and shall not be subject 
     to referendum for approval.''.

                CHAPTER 4--VERIFICATION OF MILK RECEIPTS

     SEC. 1231. PROGRAM TO VERIFY RECEIPTS OF MILK.

       (a) Establishment of Verification Program.--Section 204 of 
     the Agricultural Act of 1949 (7 U.S.C. 1446e), as amended by 
     section 1201, is further amended by adding at the end the 
     following new subsection:
       ``(k) Verification of Receipts of Milk.--
       ``(1) Verification program required.--The Secretary shall 
     establish a program through which the verification of 
     receipts of all cow's milk marketed in the 48 contiguous 
     States and the auditing of marketing agreements with respect 
     to receipts of such milk may be accomplished. The Secretary 
     shall prescribe regulations to establish the program required 
     by this subsection.
       ``(2) Administrative services.--The program shall provide a 
     means by which (A) processors, associations of producers, and 
     other persons engaged in the handling of milk and milk 
     products file reports with the Secretary regarding receipts 
     of milk, prices paid for milk, and the purposes for which 
     milk was used by handlers, (B) authorized deductions from 
     payments to producers, including assessments for research and 
     promotion programs, are collected, (C) assurance of proper 
     payment by handlers for milk purchased is achieved, and (D) 
     the reports, records, and facilities of handlers are reviewed 
     and inspected to assure their accuracy. The regulations shall 
     provide for the publication of statistics regarding receipts, 
     prices, and uses of milk. Statistics published by the 
     Secretary shall include information regarding payments 
     received by producers for milk on a component basis, 
     including payments for milkfat, protein and other solids. The 
     Secretary shall collect an assessment from handlers required 
     to file reports under this paragraph to cover any expenses 
     associated with the collection and publication of such 
     statistics. Assessments shall be based on the relative volume 
     of receipts of milk by each handler and shall not exceed the 
     total cost of such expenses.
       ``(3) Marketing services.--The program shall further 
     provide a means by which the weighing, sampling, and testing 
     of milk purchased from producers is accomplished and 
     verified. This paragraph shall not apply to producers for 
     whom such marketing services are rendered by a cooperative 
     marketing association qualified under the provisions of the 
     Act of February 18, 1922 (7 U.S.C. 291-292), commonly known 
     as the `Co-operative Marketing Associations Act'. An 
     assessment may be levied on producers for whom such services 
     are performed to cover the expenses of the Secretary or the 
     cooperative marketing association providing the services. 
     Assessments shall be based on the relative marketings of milk 
     by each producer and shall not exceed the total cost of 
     providing such services.
       ``(4) Marketing agreements.--Producers or associations of 
     producers, including cooperative marketing associations 
     qualified under the provisions of the Act of February 18, 
     1922 (7 U.S.C. 291-292), commonly known as the `Co-operative 
     Marketing Associations Act', may negotiate and enter into 
     marketing agreements or other private contracts with handlers 
     for the marketing and receipt of milk. Upon the request of 
     either or both of the parties, the Secretary may perform an 
     audit of the agreement or contract to assure compliance with 
     its terms, except that the Secretary shall be reimbursed for 
     any costs associated with the audit in the manner provided in 
     the agreement or contract. If there is no provision for the 
     reimbursement of the Secretary in the agreement or contract, 
     the party or parties requesting the audit shall provide such 
     reimbursement.
       ``(5) Prohibition on marketing limitations.--No marketing 
     agreement or Government order or regulation applicable to 
     milk and its products in any marketing area or jurisdiction 
     shall prohibit or in any manner limit the marketing in that 
     area of any milk or product of milk produced in any 
     production area in the United States.
       ``(6) Effect on existing marketing orders.--Effective July 
     1, 1996, the program established under this subsection shall 
     supersede any Federal marketing order issued under section 8c 
     of the Agricultural Adjustment Act (7 U.S.C. 608c), reenacted 
     with amendments by the Agricultural Marketing Agreement Act 
     of 1937, with respect to milk or its products.''.
       (b) Time for Issuance.--Not later than July 1, 1996, the 
     Secretary of Agriculture shall issue final regulations under 
     subsection (k) of section 204 of the Agricultural Act of 
     1949, as added by this section, to establish the verification 
     program required by such subsection. The regulations shall 
     take effect on that date.
       (c) Process.--In preparation for the issuance of the 
     regulations under subsection (k) of section 204 of the 
     Agricultural Act of 1949, as added by this section, the 
     Secretary shall comply with the following:
       (1) The Secretary shall issue proposed regulations not 
     later than April 1, 1996.
       (2) The Secretary shall provide for a comment period on the 
     regulations, as proposed under paragraph (1). However, the 
     comment period shall not exceed 60 days nor extend past May 
     31, 1996.

     SEC. 1232. VERIFICATION PROGRAM TO SUPERSEDE MULTIPLE 
                   EXISTING FEDERAL ORDERS.

       (a) Termination of Milk Marketing Orders.--Section 8c of 
     the Agricultural Adjustment Act (7 U.S.C. 608c), reenacted 
     with amendments by the Agricultural Marketing Agreement Act 
     of 1937, is amended by striking paragraphs (5) and (18) 
     relating to milk and its products.
       (b) Prohibition on Subsequent Orders Regarding Milk.--
     Paragraph (2) of such section is amended--
       (1) by striking ``Milk, fruits'' and inserting ``Fruits''; 
     and
       (2) by inserting ``milk,'' after ``honey,'' in subparagraph 
     (B).
       (c) Conforming Amendments.--(1) Section 2(3) of such Act (7 
     U.S.C. 602(3) is amended by striking ``, other than milk and 
     its products,''.
       (2) Section 8c of such Act (7 U.S.C. 608c) is amended--
       (A) in paragraph (6), by striking ``, other than milk and 
     its products,'';
       (B) in paragraph (7)(B), by striking ``(except for milk and 
     cream to be sold for consumption in fluid form)'';
       (C) in paragraph (11)(B), by striking ``Except in the case 
     of milk and its products, orders'' and inserting ``Orders'';
       (D) in paragraph (13)(A), by striking ``, except to a 
     retailer in his capacity as a retailer of milk and its 
     products''; and
       (E) in paragraph (17), by striking the second proviso, 
     which relates to milk orders.
       (3) Section 8d(2) of such Act (7 U.S.C. 608d(2)) is amended 
     by striking the second sentence, which relates to information 
     from milk handlers.
       (4) Section 10(b)(2) of such Act (7 U.S.C. 610(b)(2)) is 
     amended--
       (A) by striking clause (i);
       (B) by redesignating clauses (ii) and (iii) as clauses (i) 
     and (ii), respectively; and
       (C) in clause (i) (as so redesignated), by striking ``other 
     commodity'' in the first sentence and inserting 
     ``commodity''.
       (5) Section 11 of such Act (7 U.S.C. 611) is amended by 
     striking ``and milk, and its products,''.
       (6) Section 715 of the Agriculture, Rural Development, Food 
     and Drug Administration, and Related Agencies Appropriations 
     Act, 1994 (Public Law 103-111; 107 Stat. 1079; 7 U.S.C. 608d 
     note), is amended by striking the third proviso, which 
     relates to information from milk handlers.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on July 1, 1996.

          CHAPTER 5--MISCELLANEOUS PROVISIONS RELATED TO DAIRY

     SEC. 1241. EXTENSION OF TRANSFER AUTHORITY REGARDING MILITARY 
                   AND VETERANS HOSPITALS.

       Subsections (a) and (b) of section 202 of the Agricultural 
     Act of 1949 (7 U.S.C. 1446a) are amended by striking ``1995'' 
     both places it appears and inserting ``2002''.

     SEC. 1242. EXTENSION OF DAIRY INDEMNITY PROGRAM.

       Section 3 of Public Law 90-484 (7 U.S.C. 450l) is amended 
     by striking ``1995'' and inserting ``2002''.

     SEC. 1243. EXTENSION OF REPORT REGARDING EXPORT SALES OF 
                   DAIRY PRODUCTS.

       Section 1163(c) of the Food Security Act of 1985 is amended 
     by striking ``1995'' and inserting ``2002''.

     SEC. 1244. STATUS OF PRODUCER-HANDLERS.

       The legal status of producer-handlers of milk under the 
     Agricultural Adjustment Act (7 U.S.C. 601 et seq.), reenacted 
     with amendments by the Agricultural Marketing Agree

[[Page 1607]]

     ment Act of 1937, shall be the same after the amendments made 
     by this title take effect as it was before the effective date 
     of the amendments.
                     Subtitle C--Other Commodities

     SEC. 1301. EXTENSION AND MODIFICATION OF PRICE SUPPORT AND 
                   QUOTA PROGRAMS FOR PEANUTS.

       (a) Extension of Price Support Program.--Section 108B of 
     the Agricultural Act of 1949 (7 U.S.C. 1445c-3) is amended--
       (1) in the section heading, by striking ``1991 through 1997 
     crops of'';
       (2) in subsections (a)(1), (b)(1), and (h), by striking 
     ``1997'' each place it appears and inserting ``2002'';
       (3) in subsection (g)(1)--
       (A) by striking ``1997 crops'' the first place it appears 
     and inserting ``2002 crops''; and
       (B) by striking ``1997 crop'' both places it appears and 
     inserting ``1997 through 2002 crops''; and
       (4) in subsection (g)(2)(A)--
       (A) by striking ``1997 crop'' in clause (i)(IV) and 
     inserting ``1997 through 2002 crops''; and
       (B) by striking ``1997'' in clause (ii)(II) and inserting 
     ``2002''.
       (b) Changes to Price Support Program.--
       (1) Quota support rate.--
       (A) Support rate for 1996 through 2002 crops.--Subsection 
     (a)(2) of section 108B of the Agricultural Act of 1949 (7 
     U.S.C. 1445c-3) is amended to read as follows:
       ``(2) Support rate.--The national average quota support 
     rate for quota peanuts shall be equal to $610 per ton for 
     each of the 1996 through 2002 crops of quota peanuts.''.
       (B) Effect of amendment on current crop.--The national 
     average quota support rate in effect under section 108B(a)(2) 
     of the Agricultural Act of 1949 (7 U.S.C. 1445c-3) on the day 
     before the date of the enactment of this Act shall continue 
     to apply with respect to the 1995 crop of quota peanuts.
       (2) Offers from handlers.--Subsection (a) of such section 
     is amended--
       (A) by redesignating paragraphs (4) and (5) as paragraphs 
     (5) and (6), respectively; and
       (B) by inserting after paragraph (3) the following new 
     paragraph:
       ``(4) Offers from handlers.--The Secretary shall reduce the 
     support rate by 15 percent for any producer on a farm who had 
     available to the producer an offer from a handler to purchase 
     quota peanuts from the farm at a price equal to or greater 
     than the applicable quota support rate.''.
       (3) Covering losses.--Subsection (d)(2) of such section is 
     amended to read as follows:
       ``(2) Quota loan pools.--Losses in quota area pools shall 
     be covered using the following sources in the following order 
     of priority:
       ``(A) Transfers from additional loan pools.--The proceeds 
     due any producer from any pool shall be reduced by the amount 
     of any loss that is incurred with respect to peanuts 
     transferred from an additional loan pool to a quota loan pool 
     by such producer under section 358-1(b)(8) of the 
     Agricultural Adjustment Act of 1938.
       ``(B) Other producers in same pool.--Further losses in an 
     area quota pool shall be offset by reducing the gain of any 
     producer in such pool by the amount of pool gains attributed 
     to the same producer from the sale of additional peanuts for 
     domestic and export edible use.
       ``(C) Use of marketing assessments.--The Secretary shall 
     use funds collected under subsection (g) (except funds 
     attributable to handlers) to offset further losses in area 
     quota pools. The Secretary shall transfer to the Treasury 
     those funds collected under subsection (g) and available for 
     use under this paragraph that the Secretary determines are 
     not required to cover losses in area quota pools.
       ``(D) Cross compliance.--Further losses in area quota 
     pools, other than losses incurred as a result of transfers 
     from additional loan pools to quota loan pools under section 
     358-1(b)(8) of the Agricultural Adjustment Act of 1938, shall 
     be offset by any gains or profits from quota pools in other 
     production areas (other than separate type pools established 
     under subsection (c)(2)(A) for Valencia peanuts produced in 
     New Mexico) in such manner as the Secretary shall by 
     regulation prescribe.
       ``(E) Increased assessments.--If use of the authorities 
     provided in the preceding subparagraphs is not sufficient to 
     cover losses in an area quota pool, the Secretary shall 
     increase the marketing assessment established under 
     subsection (g) by such an amount as the Secretary considers 
     necessary to cover the losses. The increased assessment shall 
     apply only to quota peanuts marketed in the production area 
     covered by that pool. Amounts collected under subsection (g) 
     as a result of the increased assessment shall be retained by 
     the Secretary to cover losses in that pool.''.
       (c) Extension of National Poundage Quota Program.--Part VI 
     of subtitle B of title III of the Agricultural Adjustment Act 
     of 1938 is amended--
       (1) in section 358-1 (7 U.S.C. 1358-1)--
       (A) in the section heading, by striking ``1991 through 1997 
     crops of'';
       (B) in subsection (a)(3), by striking ``1990'' and 
     inserting ``1990, for the 1991 through 1995 marketing years, 
     and 1995, for the 1996 through 2002 marketing years'';
       (C) in subsection (b)(1)(A)--
       (i) by striking ``1997'' and inserting ``2002''; and
       (ii) in clause (i), by inserting before the semicolon the 
     following: ``, in the case of the 1991 through 1995 marketing 
     years, and the 1995 marketing year, in the case of the 1996 
     through 2002 marketing years''; and
       (D) in subsections (b)(1)(B), (b)(2)(A), (b)(2)(C), 
     (b)(3)(A), and (f), by striking ``1997'' each place it 
     appears and inserting ``2002'';
       (2) in section 358b (7 U.S.C. 1358b)--
       (A) in the section heading, by striking ``1991 through 1995 
     crops of''; and
       (B) in subsection (c), by striking ``1995'' and inserting 
     ``2002'';
       (3) in section 358c(d) (7 U.S.C. 1358c(d)), by striking 
     ``1995'' and inserting ``2002''; and
       (4) in section 358e (7 U.S.C. 1359a)--
       (A) in the section heading, by striking ``1991 through 
     1997'' and inserting ``certain''; and
       (B) in subsection (i), by striking ``1997'' and inserting 
     ``2002''.
       (d) Prioritized Quota Reductions.--Section 358-1(b)(2)(C) 
     of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-
     1(b)(2)(C)) is amended--
       (1) by striking ``all the''; and
       (2) by adding at the end the following new sentence: 
     ``Rather than allocating the decrease among all the farms in 
     a State, the Secretary shall allocate the decrease among 
     farms in the following order of priority:
       ``(i) Farms owned or controlled by municipalities, airport 
     authorities, schools, colleges, refuges, and other public 
     entities (not including universities for research purposes).
       ``(ii) Farms for which the quota holder is not a producer 
     and resides in another State.
       ``(iii) Farms for which the quota holder, although a 
     resident of the State, is not a producer.
       ``(iv) Other farms described in the first sentence of this 
     subparagraph.''.
       (e) Elimination of Quota Floor.--Section 358-1(a)(1) of the 
     Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-1(a)(1)) 
     is amended by striking the second sentence.
       (f) Spring and Fall Transfers Within a State.--Section 
     358b(a)(1) of the Agricultural Adjustment Act of 1938 (7 
     U.S.C. 1358b(a)(1)) is amended--
       (1) by striking ``any such lease'' in the matter preceding 
     the subparagraphs and inserting ``any such sale or lease''; 
     and
       (2) by striking ``in the fall or after the normal planting 
     season--'' and subparagraphs (A) and (B) and inserting the 
     following: ``in the spring (or before the normal planting 
     season) or in the fall (or after the normal planting season) 
     with the owner or operator of a farm located within any 
     county in the same State. In the case of a fall transfer or a 
     transfer after the normal planting season, the transfer may 
     be made only if not less than 90 percent of the basic quota 
     (the farm quota exclusive of temporary quota transfers), plus 
     any poundage quota transferred to the farm under this 
     subsection, has been planted or considered planted on the 
     farm from which the quota is to be leased.''.
       (g) Transfers in Counties With Small Quotas.--Section 
     358b(a) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
     1358b(a)) is amended by adding at the end the following new 
     paragraph:
       ``(4) Transfers in counties with small quotas.--
     Notwithstanding paragraphs (1) and (2), in the case of any 
     county for which the poundage quota allocated to the county 
     was less than 10,000 tons for the preceding year's crop, all 
     or any part of a farm poundage quota for a farm in that 
     county may be transferred by sale or lease or otherwise to a 
     farm in any other county in the same State.''.
       (h) Undermarketings.--
       (1) Elimination.--Subsection (b) of section 358-1 of the 
     Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-1) is 
     amended by striking paragraphs (8) and (9).
       (2) Conforming amendments.--(A) Such subsection is further 
     amended--
       (i) in paragraph (1)(B), by striking ``including--'' and 
     clauses (i) and (ii) and inserting ``including any increases 
     resulting from the allocation of quotas voluntarily released 
     for 1 year under paragraph (7).''; and
       (ii) in paragraph (3)(B), by striking ``include--'' and 
     clauses (i) and (ii) and inserting ``include any increase 
     resulting from the allocation of quotas voluntarily released 
     for 1 year under paragraph (7).''.
       (B) Section 358b(a) of the Agricultural Adjustment Act of 
     1938 (7 U.S.C. 1358b(a)) is amended--
       (i) in paragraph (1) (as amended by subsection (f)), by 
     striking ``(including any applicable under marketings)'' both 
     places it appears;
       (ii) in paragraph (2), by striking ``(including any 
     applicable under marketings)''; and
       (iii) in paragraph (3), by striking ``(including any 
     applicable undermarketings)''.
       (i) Limitation on Payments for Disaster Transfers.--Section 
     358-1(b) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
     1358-1(b)), as amended by subsection (h), is further amended 
     by adding at the end the following new paragraph:
       ``(8) Transfer of additional peanuts.--Additional peanuts 
     on a farm from which the quota poundage was not harvested and 
     marketed because of drought, flood, or any other natural 
     disaster, or any other condition beyond the control of the 
     producer, may be transferred to the quota loan pool for 
     pricing purposes on such basis as the Secretary shall by 
     regulation provide, except that the poundage of such peanuts 
     so transferred shall not exceed the difference in the total 
     peanuts meeting quality requirements for domestic edible use 
     as determined by the Secretary marketed from the farm and the 
     total farm poundage quota, excluding quota pounds transferred 
     to the farm in the fall. Peanuts transferred under this 
     paragraph shall be supported at a total of not more than 70 
     percent of the quota support rate for

[[Page 1608]]

      the marketing years in which such transfers occur and such 
     transfers for a farm shall not exceed 25 percent of the total 
     farm quota pounds, excluding pounds transferred in the 
     fall.''.
       (j) Temporary Quota Allocation.--
       (1) Annual allocation.--Subsection (b)(2) of section 358-1 
     of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-1) 
     is amended--
       (A) in subparagraph (A), by striking ``subparagraph (B) and 
     subject to''; and
       (B) by striking subparagraph (B) and inserting the 
     following new subparagraph:
       ``(B) Temporary quota allocation.--
       ``(i) Allocation related to seed peanuts.--Temporary 
     allocation of quota pounds for the marketing year only in 
     which the crop is planted shall be made to producers for each 
     of the 1996 through 2002 marketing years as provided in this 
     subparagraph. The temporary quota allocation shall be equal 
     to the pounds of seed peanuts planted on the farm, as may be 
     adjusted under regulations prescribed by the Secretary. The 
     temporary allocation of quota pounds under this paragraph 
     shall be in addition to the farm poundage quota otherwise 
     established under this subsection and shall be credited for 
     the applicable marketing year only, in total to the producer 
     of the peanuts on the farm in a manner prescribed by the 
     Secretary.
       ``(ii) Effect of other requirements.--Nothing in this 
     section shall alter or change in any way the requirements 
     regarding the use of quota and additional peanuts established 
     by section 359a(b) of the Agricultural Adjustment Act of 1938 
     (7 U.S.C. 1359a(b)), as added by section 804 of the Food, 
     Agriculture, Conservation, and Trade Act of 1990.''.
       (2) Conforming amendment.--Subsection (a)(1) of such 
     section is amended by striking ``domestic edible, seed,'' and 
     inserting ``domestic edible use''.
       (k) Suspension of Marketing Quotas and Acreage 
     Allotments.--The following provisions of the Agricultural 
     Adjustment Act of 1938 shall not apply to the 1996 through 
     2002 crops of peanuts:
       (1) Subsections (a) through (j) of section 358 (7 U.S.C. 
     1358).
       (2) Subsections (a) through (h) of section 358a (7 U.S.C. 
     1358a).
       (3) Subsections (a), (b), (d), and (e) of section 358d (7 
     U.S.C. 1359).
       (4) Part I of subtitle C of title III (7 U.S.C. 1361 et 
     seq.).
       (5) Section 371 (7 U.S.C. 1371).
       (l) Extension of Reporting and Recordkeeping 
     Requirements.--Section 373(a) of the Agricultural Adjustment 
     Act of 1938 (7 U.S.C. 1373(a)) is amended by inserting after 
     the first sentence the following new sentence: ``In the case 
     of the 1996 through 2002 crops of peanuts, this subsection 
     shall also apply to all producers engaged in the production 
     of peanuts.''.
       (m) Suspension of Certain Price Support Provisions.--
     Section 101 of the Agricultural Act of 1949 (7 U.S.C. 1441) 
     shall not apply to the 1996 through 2002 crops of peanuts.

     SEC. 1302. AVAILABILITY OF LOANS FOR PROCESSORS OF SUGARCANE 
                   AND SUGAR BEETS.

       (a) Sugar Loans.--Section 206 of the Agricultural Act of 
     1949 (7 U.S.C. 1446g) is amended to read as follows:

     ``SEC. 206. ASSURANCE OF ADEQUATE SUGAR SUPPLY.

       ``(a) Sugarcane Processor Loans.--For the 1996 through 2002 
     crops of domestically grown sugarcane, the Secretary shall 
     make loans available to sugarcane processors on raw cane 
     sugar processed from such crops. Subject to subsection (c), 
     loans under this subsection shall be made at a rate equal to 
     the rate provided under this section, as in effect on the day 
     before the date of the enactment of the Agricultural 
     Reconciliation Act of 1995, for raw cane sugar produced from 
     the 1995 crop of domestically grown sugarcane.
       ``(b) Sugar Beets.--For the 1996 through 2002 crops of 
     domestically grown sugar beets, the Secretary shall make 
     loans available to sugar beet processors on refined beet 
     sugar processed from such crops. Subject to subsection (c), 
     loans under this subsection shall be made at a rate equal to 
     the rate provided under this section, as in effect on the day 
     before the date of the enactment of the Agricultural 
     Reconciliation Act of 1995, for refined beet sugar produced 
     from the 1995 crop of domestically grown sugar beets.
       ``(c) Reduction in Loan Rates.--
       ``(1) Reduction required.--The Secretary shall reduce the 
     loan rate specified in subsection (a) for domestically grown 
     sugarcane and subsection (b) for domestically grown sugar 
     beets if the Secretary determines that negotiated reductions 
     in export subsidies and domestic subsidies provided for sugar 
     of the European Union and other major sugar growing, 
     producing, and exporting countries in the aggregate exceed 
     the commitments made as part of the Agreement on Agriculture.
       ``(2) Extent of reduction.--The Secretary shall not reduce 
     the loan rate under subsection (a) or (b) below a rate that 
     provides an equal measure of support to that provided by the 
     European Union and other major sugar growing, producing, and 
     exporting countries, based on an examination of both domestic 
     and export subsidies subject to reduction in the Agreement on 
     Agriculture.
       ``(3) Announcement of reduction.--The Secretary shall 
     announce any loan rate reduction to be made under this 
     subsection as far in advance as is practicable.
       ``(4) Major sugar countries defined.--For purposes of this 
     subsection, the term `major sugar growing, producing, and 
     exporting countries' means--
       ``(A) the countries of the European Union; and
       ``(B) the ten foreign countries not covered by subparagraph 
     (A) that the Secretary determines produce the greatest amount 
     of sugar.
       ``(5) Agreement on agriculture defined.--For purposes of 
     this subsection and subsection (d), the term `Agreement on 
     Agriculture' means the Agreement on Agriculture referred to 
     in section 101(d)(2) of the Uruguay Round Agreements Act (19 
     U.S.C. 3511(d)(2)).
       ``(d) Loan Type; Processor Assurances.--
       ``(1) Recourse loans.--Subject to paragraph (2), the 
     Secretary shall carry out this section through the use of 
     recourse loans.
       ``(2) Switch to nonrecourse loans.--
       ``(A) In general.--During any fiscal year in which the 
     tariff rate quota for imports of sugar into the United States 
     is set at, or is increased to, a level that exceeds the loan 
     modification threshold, the Secretary shall carry out this 
     section by making available nonrecourse loans. Any recourse 
     loan previously made available by the Secretary under this 
     section during such fiscal year shall be modified by the 
     Secretary into a nonrecourse loan.
       ``(B) Loan modification threshold defined.--For the 
     purposes of this subsection, the term `loan modification 
     threshold' means--
       ``(i) for fiscal years 1996 and 1997, 1,257,000 short tons 
     raw value; and
       ``(ii) for fiscal years after fiscal year 1997, 103 percent 
     of the loan modification threshold for the previous fiscal 
     year.
       ``(3) Processor assurances.--If the Secretary is required 
     under paragraph (2) to make nonrecourse loans available 
     during a fiscal year or to modify recourse loans into 
     nonrecourse loans, the Secretary shall obtain from each 
     processor that receives a loan under this section such 
     assurances as the Secretary considers adequate that the 
     processor will provide an appropriate minimum payment for 
     sugar beets and sugarcane delivered by producers served by 
     the processor. The Secretary may establish appropriate 
     minimum payments for purposes of this paragraph.
       ``(4) Announcement of threshold.--As soon as practicable, 
     but not later than September 1 of each fiscal year, the 
     Secretary shall announce the loan modification threshold that 
     shall apply under paragraph (2) for the subsequent fiscal 
     year.
       ``(e) Length of Loans.--Each loan made under this section 
     shall be for a term of three months, and may be extended for 
     additional three-month terms, except that--
       ``(1) no loan may have a cumulative term in excess of nine 
     months or a term that extends beyond September 30 of the 
     fiscal year in which the loan is made; and
       ``(2) a processor may terminate a loan and redeem the 
     collateral for the loan at any time by payment in full of 
     principal, interest, and fees then owing.
       ``(f) Use of Commodity Credit Corporation.--The Secretary 
     shall use the funds, facilities, and authorities of the 
     Commodity Credit Corporation to carry out this section.
       ``(g) Marketing Assessment.--
       ``(1) Sugarcane.--Effective only for marketings of raw cane 
     sugar during fiscal years 1996 through 2003, the first 
     processor of sugarcane shall remit to the Commodity Credit 
     Corporation a nonrefundable marketing assessment for each 
     pound of raw cane sugar, processed by the processor from 
     domestically produced sugarcane or sugarcane molasses, that 
     has been marketed. The assessment rate per pound is equal to 
     1.5 percent of the loan rate for raw cane sugar under this 
     section.
       ``(2) Sugar beets.--Effective only for marketings of beet 
     sugar during fiscal years 1996 through 2003, the first 
     processor of sugar beets shall remit to the Commodity Credit 
     Corporation a nonrefundable marketing assessment for each 
     pound of beet sugar, processed by the processor from 
     domestically produced sugar beets or sugar beet molasses, 
     that has been marketed. The assessment rate per pound is 
     equal to 1.6083 percent of the loan rate for raw cane sugar 
     under this section.
       ``(3) Collection.--
       ``(A) Timing.--Marketing assessments required under this 
     subsection shall be collected on a monthly basis and shall be 
     remitted to the Commodity Credit Corporation within 30 days 
     after the end of each month. Any cane sugar or beet sugar 
     processed during a fiscal year that has not been marketed by 
     September 30 of that year shall be subject to assessment on 
     that date. The sugar shall not be subject to a second 
     assessment at the time that it is marketed.
       ``(B) Manner.--Subject to subparagraph (A), marketing 
     assessments shall be collected under this subsection in the 
     manner prescribed by the Secretary and shall be 
     nonrefundable.
       ``(4) Penalties.--If any person fails to remit the 
     assessment required by this subsection or fails to comply 
     with such requirements for recordkeeping or otherwise as are 
     required by the Secretary to carry out this subsection, the 
     person shall be liable to the Secretary for a civil penalty 
     up to an amount determined by multiplying--
       ``(A) the quantity of cane sugar or beet sugar involved in 
     the violation; by
       ``(B) the loan rate in effect at the time of the violation.
       ``(5) Enforcement.--The Secretary may enforce this 
     subsection in the courts of the United States.

[[Page 1609]]

       ``(6) Definition of market.--For purposes of this 
     subsection, the term `market' means to sell or otherwise 
     dispose of in commerce in the United States (including, with 
     respect to any integrated processor and refiner, the movement 
     of raw cane sugar into the refining process) and to deliver 
     to a buyer.
       ``(h) Information Reporting.--
       ``(1) Duty of processors and refiners to report.--All 
     sugarcane processors, cane sugar refiners, and sugar beet 
     processors shall furnish the Secretary, on a monthly basis, 
     such information as the Secretary may require to administer 
     sugar programs, including the quantity of purchases of 
     sugarcane, sugar beets, and sugar, and production, 
     importation, distribution, and stock levels of sugar.
       ``(2) Duty of producers to report.--In order to efficiently 
     and effectively carry out the program under this section, the 
     Secretary may require a producer of sugarcane or sugar beets 
     to report, in the manner prescribed by the Secretary, the 
     producer's sugarcane or sugar beet yields and acres planted 
     to sugarcane or sugar beets, respectively.
       ``(3) Penalty.--Any person willfully failing or refusing to 
     furnish the information, or furnishing willfully any false 
     information, shall be subject to a civil penalty of not more 
     than $10,000 for each such violation.
       ``(4) Monthly reports.--Taking into consideration the 
     information received under paragraph (1), the Secretary shall 
     publish on a monthly basis composite data on production, 
     imports, distribution, and stock levels of sugar.
       ``(i) Sugar Estimates.--
       ``(1) Domestic requirement.--Before the beginning of each 
     fiscal year, the Secretary shall estimate the United States 
     demand for sugar for that fiscal year, which shall be equal 
     to--
       ``(A) the quantity of sugar, that will be consumed in the 
     United States during the fiscal year (other than sugar 
     imported for the production of polyhydric alcohol or to be 
     refined and reexported in refined form or in sugar containing 
     products); plus
       ``(B) the quantity of sugar that would provide for adequate 
     carryover stocks; minus
       ``(C) the quantity of sugar that will be available from 
     carry-in stocks.
       ``(2) Quarterly reestimates.--The Secretary shall make 
     quarterly reestimates of sugar consumption, stocks, 
     production, and imports for a fiscal year no later than the 
     beginning of each of the second through fourth quarters of 
     the fiscal year.
       ``(j) Regulations.--The Secretary shall issue such 
     regulations as the Secretary determines necessary to carry 
     out this section.''.
       (b) Effect on Existing Loans for Sugar.--Section 206 of the 
     Agricultural Act of 1949 (7 U.S.C. 1446g), as in effect on 
     the day before the date of the enactment of this Act, shall 
     continue to apply with respect to the 1991 through 1995 crops 
     of sugarcane and sugar beets.
       (c) Termination of Marketing Quotas and Allotments.--
       (1) Termination.--Part VII of subtitle B of title III of 
     the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359aa-
     1359jj) is repealed.
       (2) Conforming amendment.--Section 344(f)(2) of such Act (7 
     U.S.C. 1344(f)(2)) is amended by striking ``sugar cane for 
     sugar; sugar beets for sugar;''.

     SEC. 1303. REPEAL OF OBSOLETE AUTHORITY FOR PRICE SUPPORT FOR 
                   COTTONSEED AND COTTONSEED PRODUCTS.

       (a) Repeal.--Section 301(b) of the Disaster Assistance Act 
     of 1988 (7 U.S.C. 1464 note) is amended by striking paragraph 
     (1).
       (b) Conforming Repeal.--Section 420 of the Agricultural Act 
     of 1949 (7 U.S.C. 1432) is repealed.
               Subtitle D--Miscellaneous Program Changes

     SEC. 1401. LIMITATIONS ON ASSISTANCE UNDER EMERGENCY 
                   LIVESTOCK FEED ASSISTANCE PROGRAM.

       Section 609 of the Emergency Livestock Feed Assistance Act 
     of 1988 (7 U.S.C. 1471g) is amended by striking subsections 
     (c) and (d) and inserting the following new subsection:
       ``(c) No person may receive benefits under this title 
     attributable to lost production of a feed commodity due to a 
     natural disaster if crop insurance protection or noninsured 
     crop disaster assistance for the loss of feed produced on the 
     farm is available to the person under the Federal Crop 
     Insurance Act (7 U.S.C. 1501 et seq.).''.

     SEC. 1402. CONSERVATION RESERVE PROGRAM.

       (a) Limitations on Acreage Enrollments.--
       (1) Limitation.--Section 1231(d) of the Food Security Act 
     of 1985 (16 U.S.C. 3831(d)) is amended by striking 
     ``38,000,000 acres'' and inserting ``36,400,000 acres''.
       (2) Prohibition on 1997 increase.--Section 727 of the 
     Agriculture, Rural Development, Food and Drug Administration, 
     and Related Agencies Appropriations Act, 1996, is amended by 
     striking the proviso relating to enrollment of new acres in 
     1997.
       (b) Optional Contract Termination by Producers.--Section 
     1235 of such Act (16 U.S.C. 3835), is amended by adding at 
     the end the following new subsection:
       ``(e) Termination by Owner or Operator.--
       ``(1) Notice of termination.--An owner or operator of land 
     subject to a contract entered into under this subchapter may 
     terminate the contract by submitting to the Secretary written 
     notice of the intention of the owner or operator to terminate 
     the contract.
       ``(2) Effective date.--The contract termination shall take 
     effect 60 days after the date on which the owner or operator 
     submits the written notice under paragraph (1).
       ``(3) Pro-rated rental payment.--If a contract entered into 
     under this subchapter is terminated under this subsection 
     before the end of the fiscal year for which a rental payment 
     is due, the Secretary shall provide a prorated rental payment 
     covering the portion of the fiscal year during which the 
     contract was in effect.
       ``(4) Renewed enrollment.--The termination of a contract 
     entered into under this subchapter shall not affect the 
     ability of the owner or operator who requested such 
     termination to submit a subsequent bid to enroll the land 
     that was subject to the contract into the conservation 
     reserve.
       ``(5) Conservation requirements.--If land that was subject 
     to a contract is returned to production of an agricultural 
     commodity, the Secretary may impose conservation requirements 
     under subtitle A on the use of the land that are similar to 
     the requirements imposed on other lands subject to such 
     subtitle, but in no case shall such requirements be more 
     onerous that the requirements imposed on other lands.''.
       (c) Limitation on Rental Rates.--Section 1234(c) of such 
     Act (16 U.S.C. 3834) is amended by adding at the end the 
     following new paragraph:
       ``(5) In the case of the extension of a contract, or a new 
     contract covering land which was previously enrolled in the 
     conservation reserve, annual rental payments under the new or 
     extended contract may not exceed 75 percent of the annual 
     rental payment under the previous contract.''.

     SEC. 1403. CROP INSURANCE.

       (a) Conversion of Catastrophic Risk Protection Program to 
     Voluntary Program.--Subsection (b)(7) of section 508 of the 
     Federal Crop Insurance Act (7 U.S.C. 1508) is amended--
       (1) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (2) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) Exception to mandatory participation requirement.--
     Notwithstanding subparagraph (A), a producer may decline to 
     obtain catastrophic risk protection beginning with spring-
     planted 1996 crops and in any subsequent crop year, yet 
     remain eligible for any market transition contract or 
     marketing assistance loan, the conservation reserve program, 
     or any benefit described in section 371 of the Consolidated 
     Farm and Rural Development Act, if the producer agrees in 
     writing to waive any eligibility for emergency crop loss 
     assistance in connection with losses to any crop for which 
     the producer declines to obtain catastrophic risk 
     protection.''.
       (b) Delivery of Voluntary Catastrophic Protection.--
     Subsection (b)(4) of such section is amended by adding at the 
     end the following new subparagraphs:
       ``(C) Elimination of secretarial option.--For crop years 
     beginning after the implementation of the exception under 
     paragraph (7)(B) to the mandatory participation requirement, 
     the option for delivery of catastrophic risk protection 
     provided in subparagraph (A)(ii) shall not be available to 
     the Secretary. All risk protection policies written by the 
     Department prior to that date shall be transferred, including 
     all fees collected for the crop year in which the private 
     sector will assume the policies, in an orderly manner to the 
     private sector for performance of all service and loss 
     adjustment functions.
       ``(D) Guarantee of private sector service.--In full 
     consultation and cooperation with approved insurance 
     providers, the Corporation shall develop a plan to ensure 
     that each producer of an insured crop has the opportunity to 
     be serviced by an approved insurance provider if insurance is 
     available for that crop in that county. Not later than May 1, 
     1996, the Corporation shall submit to the Committee on 
     Agriculture of the House of Representatives and the Committee 
     on Agriculture, Nutrition, and Forestry of the Senate the 
     plan in the form it is to be implemented by the Secretary.''.
       (c) Establishment of the Office of Risk Management.--
       (1) Establishment.--The Department of Agriculture 
     Reorganization Act of 1994 is amended by inserting after 
     section 226 (7 U.S.C. 6932) the following new section:

     ``SEC. 226A. OFFICE OF RISK MANAGEMENT.

       ``(a) Establishment.--Subject to subsection (e), the 
     Secretary shall establish and maintain in the Department an 
     independent Office of Risk Management.
       ``(b) Functions of the Office of Risk Management.--The 
     Office of Risk Management shall have jurisdiction over the 
     following functions:
       ``(1) Supervision of the Federal Crop Insurance 
     Corporation.
       ``(2) Administration and oversight of all aspects, 
     including delivery through local offices of the Department, 
     of all programs authorized under the Federal Crop Insurance 
     Act (7 U.S.C. 1501 et seq.).
       ``(3) Any pilot or other programs involving revenue 
     insurance, risk management savings accounts, or the use of 
     the futures market to manage risk and support farm income 
     that may be established under the Federal Crop Insurance Act 
     or other law.
       ``(4) Such other functions as the Secretary considers 
     appropriate.
       ``(c) Administrator.--
       ``(1) The Office of Risk Management shall be headed by an 
     Administrator who shall be appointed by the Secretary.
       ``(2) The Administrator of the Office of Risk Management 
     shall also serve as Manager of the Federal Crop Insurance 
     Corporation.

[[Page 1610]]

       ``(d) Resources.--
       ``(1) Functional coordination.--Certain functions of the 
     Office of Risk Management, such as human resources, public 
     affairs, and legislative affairs, may be provided by a 
     consolidation of such functions under the Under Secretary of 
     Agriculture for Farm and Foreign Agricultural Services.
       ``(2) Minimum provisions.--Notwithstanding paragraph (1) or 
     any other provision of law or order of the Secretary, the 
     Secretary shall provide the Office of Risk Management with 
     human and capital resources sufficient for the Office to 
     carry out its functions in a timely and efficient manner.
       ``(3) Fiscal year 1996 funding.--Not less than $88,500,000 
     of the appropriation provided for the salaries and expenses 
     of the Consolidated Farm Services Agency in the Agricultural, 
     Rural Development, Food and Drug Administration, and Related 
     Agencies Appropriations Act, 1996 shall be provided to the 
     Office of Risk Management for the salaries and expenses of 
     the Office.''.
       (2) Conforming amendment.--Section 226(b) of such Act (7 
     U.S.C. 6932(b)) is amended by striking paragraph (2).
       (d) Reconfiguration of Board of Directors.--Section 505 of 
     the Federal Crop Insurance Act (7 U.S.C. 1505) is amended to 
     read as follows:

     ``SEC. 505. BOARD OF DIRECTORS.

       ``(a) Authority.--The management of the Corporation shall 
     be vested in a Board of Directors subject to the general 
     supervision of the Secretary.
       ``(b) Membership.--
       ``(1) In general.--The Board shall consist of the Manager 
     of the Corporation, the Under Secretary of Agriculture for 
     Farm and Foreign Agricultural Services, one person who is an 
     officer or employee of an approved insurance provider, one 
     person who is a licensed crop insurance agent, one person 
     experienced in the reinsurance business who is not otherwise 
     employed by the Federal Government, and four active producers 
     who are not otherwise employed by the Federal Government. The 
     Secretary shall not be a member of the Board.
       ``(2) Producer members.--In appointing the four active 
     producers who are not otherwise employed by the Federal 
     Government, the Secretary shall ensure that three such 
     members are policyholders and are from different geographic 
     areas of the United States, in order that diverse 
     agricultural interests in the United States are at all times 
     represented on the Board. The Secretary shall ensure that the 
     fourth active producer, who may also be a policyholder, 
     receives a significant portion of crop income from crops 
     covered by the noninsured crop disaster assistance program 
     established under section 519.
       ``(c) Appointment.--
       ``(1) Manager.--The Administrator of the Office of Risk 
     Management appointed by the Secretary under section 226A(c) 
     of the Department of Agriculture Reorganization Act of 1994 
     shall serve as Manager of the Corporation.
       ``(2) Terms of other members.--Other than the Manager of 
     the Corporation and the Under Secretary of Agriculture for 
     Farm and Foreign Agricultural Services, the members of the 
     Board shall be appointed by the Secretary for a term of three 
     years. However, in the initial appointment of such members, 
     the Secretary shall appoint two members for one year, two 
     members for two years, and two members for three years in 
     order to provide greater continuity to the Board.
       ``(3) Succession.--A member of the Board appointed under 
     paragraph (2) may serve after the expiration of the term of 
     office of such member until the successor for such member has 
     taken office.
       ``(d) Quorum.--Five of the members in office shall 
     constitute a quorum for the transaction of the business of 
     the Board.
       ``(e) Impairment of Powers.--The powers of the Board to 
     execute the functions of the Corporation shall be impaired at 
     any time there are not six members of the Board in office. 
     Any impairment of the powers of the Board shall also serve to 
     impair the powers of the Manager to act under any delegation 
     of power provided under subsection (g).
       ``(f) Compensation.--
       ``(1) Employees of the department.--The members of the 
     Board who are employed in the Department shall receive no 
     additional compensation for their services as members, but 
     may be allowed necessary traveling and subsistence expenses 
     when engaged in business of the Corporation outside of the 
     District of Columbia.
       ``(2) Nonemployees of the federal government.--The members 
     of the Board who are not employed by the Federal Government 
     shall be paid such compensation for their services as members 
     as the Secretary shall determine, but such compensation shall 
     not exceed the daily equivalent of the rate prescribed for 
     positions a level V of the Executive Schedule under section 
     5316 of title 5, United States Code, when actually employed. 
     Such members may also receive actual necessary traveling and 
     subsistence expenses, or a per diem allowance in lieu of 
     subsistence expenses, as authorized by section 5703 of such 
     title for persons in Government service employed 
     intermittently, when on the business of the Corporation away 
     from their homes or regular places of business. Any such 
     compensation shall be paid from the insurance fund 
     established under section 516(c).
       ``(g) Chief Executive Officer.--The Manager of the 
     Corporation shall be its chief executive officer, with such 
     power and authority as may be conferred by the Board.''.

     SEC. 1404. REPEAL OF FARMER OWNED RESERVE PROGRAM.

       (a) Repeal.--Section 110 of the Agricultural Act of 1949 (7 
     U.S.C. 1445e) is repealed.
       (b) Effect of Repeal on Existing Loans.--The repeal of 
     section 110 of the Agricultural Act of 1949 by subsection (a) 
     shall not affect the validity or terms and conditions of any 
     extended price support loan provided under such section 
     before the date of the enactment of this Act.

     SEC. 1405. REDUCTION IN FUNDING LEVELS FOR EXPORT ENHANCEMENT 
                   PROGRAM.

       Section 301(e) of the Agricultural Trade Act of 1978 (7 
     U.S.C. 5651(e)) is amended by striking paragraph (1) and 
     inserting the following new paragraph:
       ``(1) In general.--To carry out the program established 
     under this section, the Commodity Credit Corporation shall 
     make available--
       ``(A) for each of the fiscal years 1991 through 1995, not 
     more than $500,000,000 of the funds or commodities of the 
     Commodity Credit Corporation;
       ``(B) for each of the fiscal years 1996 and 1997, not more 
     than $400,000,000 of the funds or commodities of the 
     Commodity Credit Corporation;
       ``(C) for fiscal year 1998, not more than $500,000,000 of 
     the funds or commodities of the Commodity Credit Corporation;
       ``(D) for fiscal year 1999, not more than $550,000,000 of 
     the funds or commodities of the Commodity Credit Corporation;
       ``(E) for fiscal year 2000, not more than $579,000,000 of 
     the funds or commodities of the Commodity Credit Corporation; 
     and
       ``(F) for each of the fiscal years 2001 and 2002, not more 
     than $478,000,000 of the funds or commodities of the 
     Commodity Credit Corporation.''.

     SEC. 1406. BUSINESS INTERRUPTION INSURANCE PROGRAM.

       (a) Establishment of Program.--Not later than December 31, 
     1996, the Secretary of Agriculture shall implement a program 
     (to be known as the ``Business Interruption Insurance 
     Program''), under which the producer of a program crop could 
     elect to obtain revenue insurance coverage to ensure that the 
     producer receives an indemnity payment if the producer 
     suffers a loss of revenue. The nature and extent of the 
     program and the manner of determining the amount of an 
     indemnity payment shall be established by the Secretary.
       (b) Report on Progress and Proposed Expansion.--Not later 
     than January 1, 1998, the Secretary shall submit to the 
     Commission on the 21st Century Production Agriculture the 
     data and results of the program through October 1, 1997. In 
     addition, the Secretary shall submit information and 
     recommendations to the Commission with respect to the program 
     that will serve as the basis for the Secretary to offer 
     revenue insurance to agricultural producers, at one or more 
     levels of coverage, that--
       (1) is in addition to, or in lieu of, catastrophic and 
     higher levels of crop insurance;
       (2) is offered through reinsurance arrangements with 
     private insurance companies;
       (3) is actuarially sound; and
       (4) requires the payment of premiums and administrative 
     fees by participating producers.
       (c) Program Crop Defined.--For purposes of this section, 
     the term ``program crop'' means a crop of wheat, corn, grain 
     sorghums, oats, barley, upland cotton, or rice.
     Subtitle E--Commission on 21st Century Production Agriculture

     SEC. 1501. ESTABLISHMENT.

       There is hereby established a commission to be known as the 
     ``Commission on 21st Century Production Agriculture'' 
     (hereinafter in this title referred to as the 
     ``Commission'').

     SEC. 1502. COMPOSITION.

       (a) Membership and Appointment.--The Commission shall be 
     composed of 11 members, appointed as follows:
       (1) Three members shall be appointed by the President.
       (2) Four members shall be appointed by the Chairman of the 
     Committee on Agriculture of the House of Representatives in 
     consultation with the ranking minority member of the 
     Committee.
       (3) Four members shall be appointed by the Chairman of the 
     Committee on Agriculture, Nutrition, and Forestry of the 
     Senate in consultation with the ranking minority member of 
     the Committee.
       (b) Qualifications.--At least one of the members appointed 
     under each of the paragraphs (1), (2), and (3) of subsection 
     (a) shall be an individual who is primarily involved in 
     production agriculture. All other members of the Commission 
     shall be appointed from among individuals having knowledge 
     and experience in agricultural production, marketing, 
     finance, or trade.
       (c) Term of Members; Vacancies.--Members of the Commission 
     shall be appointed for the life of the Commission. A vacancy 
     on the Commission shall not affect its powers, but shall be 
     filled in the same manner as the original appointment was 
     made.
       (d) Time for Appointment; First Meeting.--The members of 
     the Commission shall be appointed not later than October 1, 
     1997. The Commission shall convene its first meeting to carry 
     out its duties under this title 30 days after six members of 
     the Commission have been appointed.
       (e) Chairman.--The chairman of the Commission shall be 
     designated jointly by the Chairman of the Committee on 
     Agriculture

[[Page 1611]]

      of the House of Representatives and the Chairman of the 
     Committee on Agriculture, Nutrition, and Forestry of the 
     Senate from among the members of the Commission.

     SEC. 1503. COMPREHENSIVE REVIEW OF PAST AND FUTURE OF 
                   PRODUCTION AGRICULTURE.

       (a) Initial Review.--The Commission shall conduct a 
     comprehensive review of changes in the condition of 
     production agriculture in the United States since the date of 
     the enactment of this Act and the extent to which such 
     changes are the result of the amendments made by this Act. 
     The review shall include the following:
       (1) An assessment of the initial success of market 
     transition contracts under section 102 of the Agricultural 
     Act of 1949 in supporting the economic viability of farming 
     in the United States.
       (2) An assessment of the food security situation in the 
     United States in the areas of trade, consumer prices, 
     international competitiveness of United States production 
     agriculture, food supplies, and humanitarian relief.
       (3) An assessment of the changes in farmland values and 
     agricultural producer incomes since the date of the enactment 
     of this Act.
       (4) An assessment of the extent to which regulatory relief 
     for agricultural producers has been enacted and implemented, 
     including the application of cost/benefit principles in the 
     issuance of agricultural regulations.
       (5) An assessment of the extent to which tax relief for 
     agricultural producers has been enacted in the form of 
     capital gains tax reductions, estate tax exemptions, and 
     mechanisms to average tax loads over high and low income 
     years.
       (6) An assessment of the effect of any Government 
     interference in agricultural export markets, such as the 
     imposition of trade embargoes, and the degree of 
     implementation and success of international trade agreements.
       (7) An assessment of the likely affect of the sale, lease, 
     or transfer of farm poundage quota for peanuts across State 
     lines.
       (b) Subsequent Review.--The Commission shall conduct a 
     comprehensive review of the future of production agriculture 
     in the United States and the appropriate role of the Federal 
     Government in support of production agriculture. The review 
     shall include the following:
       (1) An assessment of changes in the condition of production 
     agriculture in the United States since the initial review 
     conducted under subsection (a).
       (2) Identification of the appropriate future relationship 
     of the Federal Government with production agriculture after 
     2002.
       (3) An assessment of the personnel and infrastructure 
     requirements of the Department of Agriculture necessary to 
     support the future relationship of the Federal Government 
     with production agriculture.
       (c) Recommendations.--In carrying out the subsequent review 
     under subsection (b), the Commission shall develop specific 
     recommendations for legislation to achieve the appropriate 
     future relationship of the Federal Government with production 
     agriculture identified under subsection (a)(2).

     SEC. 1504. REPORTS.

       (a) Report on Initial Review.--Not later than June 1, 1998, 
     the Commission shall submit to the President, the Committee 
     on Agriculture of the House of Representatives, and the 
     Committee on Agriculture, Nutrition, and Forestry of the 
     Senate a report containing the results of the initial review 
     conducted under section 1503(a).
       (b) Report on Subsequent Review.--Not later than January 1, 
     2001, the Commission shall submit to the President and the 
     congressional committees specified in subsection (a) a report 
     containing the results of the subsequent review conducted 
     under section 1503(b).

     SEC. 1505. POWERS.

       (a) Hearings.--The Commission may, for the purpose of 
     carrying out this title, conduct such hearings, sit and act 
     at such times, take such testimony, and receive such 
     evidence, as the Commission considers appropriate.
       (b) Assistance From Other Agencies.--The Commission may 
     secure directly from any department or agency of the Federal 
     Government such information as may be necessary for the 
     Commission to carry out its duties under this title. Upon 
     request of the chairman of the Commission, the head of the 
     department or agency shall, to the extent permitted by law, 
     furnish such information to the Commission.
       (c) Mail.--The Commission may use the United States mails 
     in the same manner and under the same conditions as the 
     departments and agencies of the Federal Government.
       (d) Assistance From Secretary.--The Secretary of 
     Agriculture shall provide to the Commission appropriate 
     office space and such reasonable administrative and support 
     services as the Commission may request.

     SEC. 1506. COMMISSION PROCEDURES.

       (a) Meetings.--The Commission shall meet on a regular basis 
     (as determined by the chairman) and at the call of the 
     chairman or a majority of its members.
       (b) Quorum.--A majority of the members of the Commission 
     shall constitute a quorum for the transaction of business.

     SEC. 1507. PERSONNEL MATTERS.

       (a) Compensation.--Each member of the Commission shall 
     serve without compensation, but shall be allowed travel 
     expenses including per diem in lieu of subsistence, as 
     authorized by section 5703 of title 5, United States Code, 
     when engaged in the performance of Commission duties.
       (b) Staff.--The Commission shall appoint a staff director, 
     who shall be paid at a rate not to exceed the maximum rate of 
     basic pay under section 5376 of title 5, United States Code, 
     and such professional and clerical personnel as may be 
     reasonable and necessary to enable the Commission to carry 
     out its duties under this title without regard to the 
     provisions of title 5, United States Code, governing 
     appointments in the competitive service, and without regard 
     to the provisions of chapter 51 and subchapter III of chapter 
     53 of such title, or any other provision of law, relating to 
     the number, classification, and General Schedule rates. No 
     employee appointed under this subsection (other than the 
     staff director) may be compensated at a rate to exceed the 
     maximum rate applicable to level GS-15 of the General 
     Schedule.
       (c) Detailed Personnel.--Upon request of the chairman of 
     the Commission, the head of any department or agency of the 
     Federal Government is authorized to detail, without 
     reimbursement, any personnel of such department or agency to 
     the Commission to assist the Commission in carrying out its 
     duties under this section. The detail of any such personnel 
     may not result in the interruption or loss of civil service 
     status or privilege of such personnel.

     SEC. 1508. TERMINATION OF COMMISSION.

       The Commission shall terminate upon submission of the final 
     report required by section 1504.
         TITLE II--COMMITTEE ON BANKING AND FINANCIAL SERVICES

     SEC. 2001. TABLE OF CONTENTS.

       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.
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.

[[Page 1612]]

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.
                     Subtitle A--Housing Provisions

     SEC. 2101. TERMINATION OF RTC AND FDIC AFFORDABLE HOUSING 
                   PROGRAMS.

       (a) Repeal of Unified Program and Transfer of RTC Windup 
     Authority to HUD.--Section 21A(c) of the Federal Home Loan 
     Bank Act (12 U.S.C. 1441a(c)) is amended by striking 
     paragraph (17) and inserting the following new paragraph:
       ``(17) Transfer of authority.--The Secretary shall assume, 
     not later than December 31, 1995, and thereafter shall carry 
     out, any remaining authority and responsibilities of the 
     Corporation to recapture excess proceeds from resale of 
     properties and to monitor and enforce low-income occupancy 
     requirements or rent limitations under this subsection and 
     shall assume any direct or contingent liability of the 
     Corporation to carry out such authority and 
     responsibilities.''.
       (b) Termination of RTC Affordable Housing Program.--Section 
     21A(c) of the Federal Home Loan Bank Act (12 U.S.C. 1441a(c)) 
     is amended by adding at the end the following new paragraph:
       ``(18) Termination.--
       ``(A) In general.--On and after the date of the enactment 
     of the Seven-Year Balanced Budget Reconciliation Act of 1995, 
     the provisions of this subsection (other than paragraph (17)) 
     shall not apply with respect to any eligible residential 
     property or eligible condominium property.
       ``(B) Savings provision.--Notwithstanding subparagraph (A), 
     the provisions of this subsection shall continue to apply on 
     and after such date of enactment to any eligible residential 
     property or eligible condominium property that--
       ``(i) has been sold or otherwise disposed of by the 
     Corporation before such date of enactment; or
       ``(ii) is subject to a contract of sale or other 
     disposition entered into before such date of enactment.''.
       (c) Termination of Affordable Housing Advisory Board.--
     Section 14(b)(9) of the Resolution Trust Corporation 
     Completion Act (12 U.S.C. 1831q note) is amended by striking 
     ``September 30, 1998'' and inserting ``September 30, 1995''.
       (d) Repeal of FDIC Program and Transfer of Windup Authority 
     to HUD.--
       (1) Repeal.--Section 40 of the Federal Deposit Insurance 
     Act (12 U.S.C. 1831q) is hereby repealed.
       (2) Transfer of windup authority.--Notwithstanding 
     paragraph (1)--
       (A) effective December 31, 1995, the Secretary shall carry 
     out any remaining authority and responsibilities of the 
     Federal Deposit Insurance Corporation under section 40 of the 
     Federal Deposit Insurance Act to recapture excess proceeds 
     from resale of properties and to monitor and enforce low-
     income occupancy requirements or rent limitations under such 
     section and shall assume any direct or contingent liability 
     of the Corporation to carry out such authority and 
     responsibilities; and
       (B) the Federal Deposit Insurance Corporation shall 
     consummate any sales of property under section 40 of such Act 
     that were pending under contracts of sale on September 30, 
     1995.
       (e) FDIC Disposition of Assets as Conservator or 
     Receiver.--Section 11(d)(13)(E) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(d)(13)(E)) is amended--
       (1) in clause (iii), by inserting ``and'' after the 
     semicolon;
       (2) in clause (iv), by striking ``; and'' and inserting a 
     period; and
       (3) by striking clause (v).
       (f) Disposition of FDIC Assets.--Section 13(d)(3)(D) of the 
     Federal Deposit Insurance Act (12 U.S.C. 1823(d)(3)(D)) is 
     amended--
       (1) in clause (iii), by inserting ``and'' after the 
     semicolon;
       (2) in clause (iv), by striking ``; and'' and inserting a 
     period; and
       (3) by striking clause (v).

     SEC. 2102. FORECLOSURE AVOIDANCE AND BORROWER ASSISTANCE.

       (a) Foreclosure Avoidance.--The last sentence of section 
     204(a) of the National Housing Act (12 U.S.C. 1710(a)) is 
     amended by inserting before the period the following: ``: And 
     provided further, That the Secretary may pay insurance 
     benefits to the mortgagee to recompense the mortgagee for its 
     actions to provide an alternative to foreclosure of a 
     mortgage that is in default, which actions may include such 
     actions as special forbearance, loan modification, and deeds 
     in lieu of foreclosure, all upon such terms and conditions as 
     the mortgagee shall determine in the mortgagee's sole 
     discretion within guidelines provided by the Secretary, but 
     which may not include assignment of a mortgage to the 
     Secretary: And provided further, That for purposes of the 
     preceding proviso, no action authorized by the Secretary and 
     no action taken, nor any failure to act, by the Secretary or 
     the mortgagee shall be subject to judicial review''.
       (b) Authority to Assist Mortgagors in Default.--Section 230 
     of the National Housing Act (12 U.S.C. 1715u) is amended to 
     read as follows:

              ``authority to assist mortgagors in default

       ``Sec. 230. (a) Payment of Partial Claim.--The Secretary 
     may establish a program for payment of a partial insurance 
     claim to a mortgagee that agrees to apply the claim amount to 
     payment of a mortgage on a 1- to 4-family residence that is 
     in default. Any such payment under such program to the 
     mortgagee shall be made in the Secretary's sole discretion 
     and on terms and conditions acceptable to the Secretary, 
     except that--
       ``(1) the amount of the payment shall be in an amount 
     determined by the Secretary, which shall not exceed an amount 
     equivalent to 12 monthly mortgage payments and any costs 
     related to the default that are approved by the Secretary; 
     and
       ``(2) the mortgagor shall agree to repay the amount of the 
     insurance claim to the Secretary upon terms and conditions 
     acceptable to the Secretary.
     The Secretary may pay the mortgagee, from the appropriate 
     insurance fund, in connection with any activities that the 
     mortgagee is required to undertake concerning repayment by 
     the mortgagor of the amount owed to the Secretary.
       ``(b) Assignment.--
       ``(1) Program authority.--The Secretary may establish a 
     program for assignment to the Secretary, upon request of the 
     mortgagee, of a mortgage on a 1- to 4-family residence 
     insured under this Act.
       ``(2) Program requirements.--The Secretary may accept 
     assignment of a mortgage under a program under this 
     subsection only if--
       ``(A) the mortgage was in default;
       ``(B) the mortgagee has modified the mortgage to cure the 
     default and provide for mortgage payments within the 
     reasonable ability of the mortgagor to pay at interest rates 
     not exceeding current market interest rates; and
       ``(C) the Secretary arranges for servicing of the assigned 
     mortgage by a mortgagee (which may include the assigning 
     mortgagee) through procedures that the Secretary has 
     determined to be in the best interests of the appropriate 
     insurance fund.
       ``(3) Payment of insurance benefits.--Upon accepting 
     assignment of a mortgage under the program under this 
     subsection, the Secretary may pay insurance benefits to the 
     mortgagee from the appropriate insurance fund in an amount 
     that the Secretary determines to be appropriate, but which 
     may not exceed the amount necessary to compensate the 
     mortgagee for the assignment and any losses and expenses 
     resulting from the mortgage modification.
       ``(c) Prohibition of Judicial Review.--No decision by the 
     Secretary to exercise or forego exercising any authority 
     under this section shall be subject to judicial review.''.
       (c) Savings Provision.--Any mortgage for which the 
     mortgagor has applied to the Secretary of Housing and Urban 
     Development, before the date of the enactment of this Act, 
     for assignment pursuant to section 230(b) of the National 
     Housing Act shall continue to be governed by the provisions 
     of such section, as in effect immediately before such date of 
     enactment.
       (d) Applicability of Other Laws.--No provision of the 
     National Housing Act or any other law shall be construed to 
     require the Secretary of Housing and Urban Development to 
     provide an alternative to foreclosure for mortgagees with 
     mortgages on 1- to 4-family residences insured by the 
     Secretary under the National Housing Act, or to accept 
     assignments of such mortgages.

     SEC. 2103. REFORM OF HUD-OWNED MULTIFAMILY PROPERTY 
                   DISPOSITION PROGRAM.

       (a) In General.--Effective October 1, 1995, section 203 of 
     the Housing and Community Development Amendments of 1978 (12 
     U.S.C. 1701z-11) is amended to read as follows:

     ``SEC. 203. MANAGEMENT AND DISPOSITION OF HUD-OWNED 
                   MULTIFAMILY HOUSING PROJECTS.

       ``(a) In General.--The Secretary of Housing and Urban 
     Development may manage and dispose of (1) multifamily housing 
     projects that are owned by the Secretary or that are subject 
     to mortgages held by the Secretary, and (2) mortgages on 
     multifamily housing projects that are held by the Secretary, 
     without regard to any other provision of law.
       ``(b) Authority to Delegate.--The Secretary of Housing and 
     Urban Development may delegate to one or more entities the 
     authority to carry out some or all of the functions and 
     responsibilities of the Secretary in connection with the 
     foreclosure of mortgages on multifamily housing projects held 
     by the Secretary.
       ``(c) Definition.--For purposes of this section, the term 
     `multifamily housing project' means any multifamily rental 
     housing project which is, or prior to acquisition by the 
     Secretary was, assisted or insured under the National Housing 
     Act, or was subject to a loan under section 202 of the 
     Housing Act of 1959.''.
       (b) Conforming Amendments.--
       (1) Nondiscrimination against certificate and voucher 
     holders.--Section 183(c) of the Housing and Community 
     Development Act of 1987 (42 U.S.C. 1437f note) is amended by 
     striking ``section 203(i)(2) of the Housing and Community 
     Development Amendments of 1978, as amended by section 181(h) 
     of this Act'' and inserting ``section 203(b) of the Housing 
     and Community Development Amendments of 1978 (as in effect 
     before October 1, 1995)''.
       (2) LIHPRH act of 1990.--Section 212(c) of the Low-Income 
     Housing Preservation and

[[Page 1613]]

     Resident Homeownership Act of 1990 (12 U.S.C. 4102(c)) is 
     amended by striking the last sentence.
       (3) Hope homeownership program.--Section 427 of the 
     Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
     12877) is amended by striking ``subject to--'' and all that 
     follows and inserting ``subject to the Low-Income Housing 
     Preservation and Resident Homeownership Act of 1990.''.
       (4) FHA multifamily housing mortgage insurance.--Section 
     207(k) of the National Housing Act (12 U.S.C. 1713(k)) is 
     amended by striking the third sentence.
       (5) Multifamily mortgage foreclosure act of 1981.--Section 
     367(b)(2) of the Multifamily Mortgage Foreclosure Act of 1981 
     (12 U.S.C.3706(b)(2)) is amended--
       (A) by striking subparagraph (B); and
       (B) by striking ``(A)''.
       (6) Preventing mortgage defaults on insured multifamily 
     projects.--Section 103(h)(2)(B) of the Multifamily Housing 
     Property Disposition Reform Act of 1994 (12 U.S.C. 1715z-1a 
     note) is amended by inserting ``(as in effect before October 
     1, 1995)'' after ``1978''.

     SEC. 2104. RECAPTURE OF RURAL HOUSING LOAN SUBSIDIES BY RURAL 
                   HOUSING AND COMMUNITY DEVELOPMENT SERVICE.

       The first sentence of section 521(a)(1)(D)(i) of the 
     Housing Act of 1949 (42 U.S.C. 1490a(a)(1)(D)(i)) is amended 
     by inserting ``upon the repayment of any loan made under this 
     title or'' after ``assistance rendered''.

     SEC. 2105. REDUCTION OF SECTION 8 ANNUAL ADJUSTMENT FACTORS 
                   FOR UNITS WITHOUT TENANT TURNOVER.

       Paragraph (2)(A) of section 8(c) of the United States 
     Housing Act of 1937 (42 U.S.C. 1437f(c)(2)(A)) is amended by 
     striking the last sentence.
                 Subtitle B--Thrift Charter Conversion

     SEC. 2200. SHORT TITLE.

       This subtitle may be cited as the ``Thrift Charter 
     Conversion Act of 1995''.

 CHAPTER 1--BANK INSURANCE FUND AND SAVINGS ASSOCIATION INSURANCE FUND

     SEC. 2201. SPECIAL ASSESSMENT.

       Section 7(b)(6) of the Federal Deposit Insurance Act (12 
     U.S.C. 1817(b)(6)) is amended--
       (1) by redesignating clauses (i), (ii), and (iii) of 
     subparagraph (A) as subclauses (I), (II), and (III), 
     respectively;
       (2) by redesignating subparagraphs (A) and (B) as clauses 
     (i) and (ii), respectively;
       (3) by moving the left margin of such clauses and 
     subclauses (as so redesignated) 2 ems to the right;
       (4) by striking ``special assessments.--In addition to'' 
     and inserting ``special assessments.--
       ``(A) In general.--In addition to''; and
       (5) by adding at the end the following new subparagraphs:
       ``(B) Single additional special assessment with respect to 
     certain accounts.--
       ``(i) In general.--The Corporation shall impose, on the 
     basis of such factors as the Board of Directors considers to 
     be appropriate, a single special assessment on the 
     institutions described in the following subclauses (other 
     than institutions exempt under subparagraph (C)):

       ``(I) Each Savings Association Insurance Fund member 
     (including any Savings Association Insurance Fund member 
     referred to in section 5(d)(2)(G)).
       ``(II) Each Bank Insurance Fund member which has deposits 
     which are treated, under section 5(d)(3), as deposits which 
     are insured by the Savings Association Insurance Fund.

       ``(ii) Amount of assessment.--The assessment imposed under 
     clause (i) shall be in an amount equal to such percentage of 
     the Savings Association Insurance Fund assessment base (of 
     the institutions subject to such assessment) as of March 31, 
     1995, as the Board of Directors determines, in the Board of 
     Directors' discretion, to be necessary in order for the 
     reserve ratio of the Savings Association Insurance Fund to 
     meet the designated reserve ratio on the 1st business day of 
     January, 1996.
       ``(iii) Deposit of assessment.--Notwithstanding any other 
     provision of law, the proceeds of any assessment imposed 
     under clause (i) shall be deposited in the Savings 
     Association Insurance Fund.
       ``(iv) Date payment due.--The special assessment imposed 
     under this subparagraph shall be--

       ``(I) due on the 1st business day of January, 1996; and
       ``(II) paid to the Corporation on the later of the due date 
     or such other date as the Corporation may prescribe which may 
     not be later than the end of the 60-day period beginning on 
     the date of the Thrift Charter Conversion Act of 1995.

       ``(v) Savings association insurance fund assessment base 
     defined.--For purposes of this subparagraph, the term Savings 
     Association Insurance Fund assessment base means--

       ``(I) the assessment base of Savings Association Insurance 
     Fund members on which assessments are imposed under the risk-
     based assessment system established pursuant to paragraph 
     (1); and
       ``(II) in the case of an institution described in clause 
     (i)(II), the adjusted attributable deposit amount determined 
     under subparagraph (C) of section 5(d)(3) for purposes of 
     subparagraph (B)(i) of such section.

       ``(C) Special rules for certain exempt institutions.--
       ``(i) In general.--The Board of Directors may exempt any 
     weak insured depository institution from the payment of the 
     assessment imposed under subparagraph (B)(i) if the exemption 
     would reduce risk to the Savings Association Insurance Fund.
       ``(ii) Continuation of assessment rates applicable as of 
     june 30, 1995.--Notwithstanding any other provision of this 
     subsection or any determination by the Corporation pursuant 
     to paragraph (2), the semiannual assessment rate applicable 
     under paragraph (2) during the period beginning on January 1, 
     1996, and ending on December 31, 1999, with respect to any 
     insured depository institution which receives an exemption 
     under clause (i) shall be the semiannual assessment rate 
     which would be applicable to such institution under paragraph 
     (2) if such assessment rate were calculated in the manner in 
     which semiannual assessment rates for Savings Association 
     Insurance Fund members were determined by the Corporation 
     under such paragraph as of June 30, 1995.
       ``(iii) Special rule for oakar banks.--If an insured 
     depository institution to which clause (ii) applies is an 
     institution described in subparagraph (B)(i)(II), section 
     5(d)(3) (as in effect on September 13, 1995) shall continue 
     to apply with respect to such institution for purposes of 
     clause (ii) without regard to the repeal of such section by 
     section 2202(c) of the Thrift Charter Conversion Act of 1995.
       ``(iv) Deposit of assessment.--Assessments imposed under 
     paragraph (2) in accordance with clause (i) on depository 
     institutions to which such clause applies shall be 
     deposited--

       ``(I) in the Savings Association Insurance Fund until such 
     fund is merged into the deposit insurance fund pursuant to 
     section 2203(a)(2) of the Thrift Charter Conversion Act of 
     1995; and
       ``(II) after such merger, in the deposit insurance fund.

       ``(v) Guidelines.--

       ``(I) Guidelines required.--Not later than 30 days after 
     the date of the enactment of the Thrift Charter Conversion 
     Act of 1995, the Board of Directors shall prescribe 
     guidelines containing the criteria to be used by the Board of 
     Directors in making any determination under clause (i).
       ``(II) Publication.--The guidelines prescribed under 
     subclause (I) shall be published in the Federal Register.

       ``(D) Pro rata payment of special assessment by exempt 
     institutions authorized.--In the case of any depository 
     institution which receives an exemption under subparagraph 
     (C)(i) from the special assessment imposed under subparagraph 
     (B) and any successor to such institution, subparagraph 
     (C)(ii) shall cease to apply with respect to such institution 
     as of the date on which the institution makes a payment to 
     the Corporation, on such terms as the Board of Directors may 
     prescribe, in an amount equal to the product of--
       ``(i) 12.5 percent of the product of--

       ``(I) the Savings Association Insurance Fund assessment 
     base of the institution which would have been used in the 
     calculation of the amount of such special assessment if the 
     institution had not received the exemption from such 
     assessment; and
       ``(II) the percentage rate calculated by the Board of 
     Directors under subparagraph (B)(ii) for use in determining 
     the amount of the special assessment for depository 
     institutions which did not receive an exemption under 
     subparagraph (C); and

       ``(ii) the whole number of full semiannual periods which 
     begin after the date of such payment and end before January 
     1, 2000.
       ``(E) Assessment for certain deposits.--
       ``(i) In general.--Notwithstanding any other provision of 
     law, in carrying out the special assessment under 
     subparagraph (B), the Corporation may set assessment rates on 
     the basis of the factors described in clause (iii) for 
     deposits treated under section 5(d)(3) as deposits insured by 
     the Savings Association Insurance Fund.
       ``(ii) Minimum rate.--Notwithstanding clause (i), any rate 
     assessed under such clause may not be less than \2/3\ of the 
     assessment rate imposed under subparagraph (B).
       ``(iii) Factors.--In setting any assessment rate under 
     clause (i), the Corporation shall consider the following 
     factors:

       ``(I) The extent to which deposits treated under section 
     5(d)(3) as deposits insured by the Savings Association 
     Insurance Fund do not reflect the actual amount of deposits 
     insured by such fund because of the growth attribution rule 
     contained in clause (iii) of such section.
       ``(II) The ability of an insured depository institution to 
     demonstrate with deposit data the amount of actual deposits 
     which should be treated as deposits insured by the Savings 
     Association Insurance Fund notwithstanding the growth 
     attribution rule referred to in subclause (I).

       ``(iv) No net budget effect.--Notwithstanding any other 
     provision of this subparagraph, the Corporation shall not set 
     any assessment rate under clause (i) that would result in an 
     increased budget outlay or a decrease in offsetting receipts 
     under this paragraph.''.

     SEC. 2202. ASSESSMENTS ON INSURED DEPOSITORY INSTITUTIONS.

       (a) Financing Corporation Assessments on all FDIC-Insured 
     Depository Institutions.--Section 21(f) of the Federal Home 
     Loan Bank Act (12 U.S.C. 1441(f)) is amended--
       (1) in the portion of paragraph (2) which precedes 
     subparagraph (A)--
       (A) by striking ``each Savings Association Insurance Fund 
     member'' and inserting

[[Page 1614]]

     ``each insured depository institution (as defined in section 
     3(c)(2) of the Federal Deposit Insurance Act)''; and
       (B) by striking ``such members'' and inserting ``such 
     institutions''; and
       (2) by striking ``, except that--'' and all that follows 
     through the end of the paragraph and inserting ``, except 
     that the Financing Corporation shall have first priority to 
     make the assessment.''.
       (b) Assessment Rates for SAIF Members May Not Be Less Than 
     Assessment Rates for BIF Members.--Section 7(b)(2)(F) of the 
     Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)(F)) is 
     amended--
       (1) by striking ``and'' at the end of clause (i);
       (2) by striking the period at the end of clause (ii) and 
     inserting ``; and''; and
       (3) by adding at the end the following new clause:
       ``(iii) notwithstanding any other provision of this 
     subsection, assessment rates for Savings Association 
     Insurance Fund members may not be less than assessment rates 
     for Bank Insurance Fund members.''.
       (c) Repeal of Exit Moratorium and Oakar Bank Provisions.--
     Effective January 1, 1998, section 5(d) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1815(d)) is amended by 
     striking paragraphs (2) and (3).
       (d) Technical and Conforming Amendments.--
       (1) Section 7(b)(2)(D) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1817(b)(2)(D)) is amended by striking ``Savings 
     Association Insurance Fund members'' and inserting ``members 
     of a deposit insurance fund''.
       (2) Section 21(k) of the Federal Home Loan Bank Act (12 
     U.S.C. 1441(k)) is amended--
       (A) by striking paragraph (1); and
       (B) by redesignating paragraphs (2) and (3) as paragraphs 
     (1) and (2), respectively.
       (e) Effective Date.--The amendments made by subsections 
     (a), (b), and (d) shall take effect on January 1, 1996.

     SEC. 2203. MERGER OF BANK INSURANCE FUND AND SAVINGS 
                   ASSOCIATION INSURANCE FUND AFTER 
                   RECAPITALIZATION OF SAIF.

       (a) Establishment of Deposit Insurance Fund.--
       (1) In general.--Effective January 1, 1998, section 
     11(a)(5) of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(a)(5)) is amended to read as follows:
       ``(5) Deposit insurance fund.--
       ``(A) Establishment.--There is established a fund to be 
     known as the deposit insurance fund which shall--
       ``(i) be maintained and administered by the Corporation; 
     and
       ``(ii) initially consist of the assets and liabilities of 
     the Bank Insurance Fund and Savings Association Insurance 
     Fund which have been merged by the Corporation into the 
     deposit insurance fund pursuant to section 2203(a)(2) of the 
     Thrift Charter Conversion Act of 1995, other than any assets 
     of the Savings Association Insurance Fund which have been 
     deposited in the special reserve of the deposit insurance 
     fund pursuant to section 2203(b)(2) of such Act.
       ``(B) Uses.--The deposit insurance fund shall be available 
     to the Corporation for use in carrying out the insurance 
     purposes of the Corporation in accordance with this Act with 
     respect to insured depository institutions.
       ``(C) Deposits.--All amounts assessed against insured 
     depository institutions by the Corporation shall be deposited 
     into the deposit insurance fund.''.
       (2) Merger by corporation.--Except with respect to any 
     assets of the Savings Association Insurance Fund which are 
     required to be deposited in the special reserve of the 
     deposit insurance fund pursuant to subsection (b)(2), the 
     Corporation shall merge the Bank Insurance Fund and the 
     Savings Association Insurance Fund on January 1, 1998, into 
     the deposit insurance fund established by the amendment made 
     by paragraph (1).
       (b) Establishment of Special Reserve of the Deposit 
     Insurance Fund.--
       (1) In general.--Effective January 1, 1998, section 
     11(a)(6) of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(a)(6)) is amended to read as follows:
       ``(6) Special reserve of the deposit insurance fund.--
       ``(A) In general.--There is established a fund to be known 
     as the special reserve of the deposit insurance fund which 
     shall--
       ``(i) be maintained and administered by the Corporation; 
     and
       ``(ii) initially consist of amounts deposited in the 
     special reserve pursuant to section 2203(b)(2) of the Thrift 
     Charter Conversion Act of 1995.
       ``(B) Emergency use of special reserve.--
       ``(i) Use authorized.--Subject to clause (ii) and 
     notwithstanding subparagraph (C), the Corporation may, in the 
     sole discretion of the Board of Directors, transfer amounts 
     from the special reserve for deposit in the deposit insurance 
     fund for use in accordance with paragraph (5)(B).
       ``(ii) Conditions on transfer.--The Board of Directors may 
     authorize a transfer under clause (i) only if--

       ``(I) the Board of Directors determines that the reserve 
     ratio of the deposit insurance fund is less than 50 percent 
     of the designated reserve ratio; and
       ``(II) the Board of Directors finds that the reserve ratio 
     of the deposit insurance will likely be less than the 
     designated reserve ratio of the fund for each of the 4 
     calendar quarters beginning after the date of such 
     determination.

       ``(C) No refunds or other uses authorized.--Except as 
     provided in subparagraph (B), the Corporation may not make 
     any payment from the special reserve, make any refund or 
     provide any credit to any insured depository institution with 
     respect to any amount in the special reserve, or use any 
     amount in the special reserve for any other purpose 
     (including the use of any such amount as security for the 
     repayment of any obligation of the Corporation).
       ``(D) Exclusion of special reserve in calculating the 
     reserve ratio.--No amount in the special reserve may be taken 
     into account in calculating the reserve ratio of the deposit 
     insurance fund under section 7.''.
       (2) Transfer and deposit by corporation.--If, at the time 
     of the merger of the Bank Insurance Fund and the Savings 
     Association Insurance Fund pursuant to subsection (a)(2), the 
     reserve ratio of the Savings Association Insurance Fund 
     exceeds the designated reserve ratio, the Corporation shall 
     transfer from such fund to the special reserve of the deposit 
     insurance fund established by the amendment made by paragraph 
     (1) an amount equal to the amount which causes the reserve 
     ratio of the Savings Association Insurance Fund to exceed the 
     designated reserve ratio.
       (c) Technical and Conforming Amendments.--
       (1) Section 3(y) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(y)) is amended by striking ``the Bank Insurance 
     Fund or the Savings Association Insurance Fund, as 
     appropriate'' and inserting ``the deposit insurance fund 
     established under section 11(a)(5)''.
       (2) Section 11(a) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(a)) is amended by striking paragraphs (4)(A) and 
     (7).
       (3) Section 5(d)(1) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1815(d)(1)) is amended--
       (A) in subparagraph (A), by striking ``reserve ratios'' and 
     all that follows through the period and inserting ``the 
     reserve ratio of the deposit insurance fund.'';
       (B) by striking subparagraph (B); and
       (C) by redesignating subparagraph (C) as subparagraph (B).
       (4) Section 7 of the Federal Deposit Insurance Act (12 
     U.S.C. 1817) is amended by striking subsection (l).
       (5) Section 7(b)(2) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1817(b)(2)) is amended--
       (A) by striking subparagraphs (B), (F), and (G);
       (B) in clauses (i) and (iv) of subparagraph (A), by 
     striking ``each deposit insurance fund'' and inserting ``the 
     deposit insurance fund'';
       (C) in subparagraph (A)(iii), by striking ``a deposit 
     insurance fund'' and inserting ``the deposit insurance 
     fund''; and
       (D) by inserting after subparagraph (E) the following new 
     subparagraph:
       ``(F) Reserve ratio defined.--For purposes of this 
     subsection, the term `reserve ratio' means the ratio of the 
     net worth of the deposit insurance fund to the aggregate 
     estimated insured deposits held in all insured depository 
     institutions.''.
       (6) Section 7(b)(3) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1817(b)(3)) is amended--
       (A) in subparagraph (A) by striking ``any deposit insurance 
     fund'' and inserting ``the deposit insurance fund''; and
       (B) by striking subparagraphs (C) and (D).
       (7) Subparagraph (A) of section 7(b)(6) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1817(b)(6)) (as so 
     redesignated by section 2201 of this subtitle) is amended--
       (A) in clause (i)--
       (i) by inserting ``or'' after the semicolon at the end of 
     subclause (I);
       (ii) by striking subclause (II); and
       (iii) by striking ``; and'' at the end of subclause (III) 
     and inserting a period; and
       (B) by striking clause (ii).
       (8) Section 11(a)(4)(B) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1821(a)(4)(B)) is amended by striking ``Bank 
     Insurance Fund and the Savings Association Insurance Fund'' 
     and inserting ``deposit insurance fund''.
       (9) Paragraph (1) of section 11(f) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(f)) is amended by striking 
     ``depositor, except that--'' and all that follows through the 
     period at the end of the paragraph and inserting 
     ``depositor.''.
       (10) Section 11(i)(3) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1821(i)(3)) is amended--
       (A) by striking subparagraph (B); and
       (B) in subparagraph (C), by striking ``subparagraphs (A) 
     and (B)'' and inserting ``subparagraph (A)''.
       (11) Section 11A(a)(3) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1821a(a)(3)) is amended by striking ``Bank 
     Insurance Fund, the Savings Association Insurance Fund,'' and 
     inserting ``deposit insurance fund''.
       (12) Section 11A(f) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1821a(f)) is amended by striking ``Savings 
     Association Insurance Fund'' and inserting ``deposit 
     insurance fund''.
       (13) Section 13(a)(1) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1823(a)(1)) is amended by striking ``Bank 
     Insurance Fund, the Savings Association Insurance Fund,'' and 
     inserting ``deposit insurance fund, the special reserve of 
     the deposit insurance fund,''.
       (14) Section 13(c)(4)(G)(ii) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1823(c)(4)(G)(ii)) is amended--
       (A) by striking ``appropriate insurance fund'' and 
     inserting ``deposit insurance fund'';
       (B) by striking ``the members of the insurance fund (of 
     which such institution is a

[[Page 1615]]

     member)'' and inserting ``insured depository institutions'';
       (C) by striking ``each member's'' and inserting ``each 
     insured depository institution's''; and
       (D) by striking ``the member's'' each place such term 
     appears and inserting ``the institution's''.
       (15) Section 13(c) of the Federal Deposit Insurance Act (12 
     U.S.C. 1823(c)) is amended by striking paragraph (11).
       (16) Section 13(h) of the Federal Deposit Insurance Act (12 
     U.S.C. 1823(h)) is amended by striking ``Bank Insurance 
     Fund'' and inserting ``deposit insurance fund''.
       (17) Section 14(a) of the Federal Deposit Insurance Act (12 
     U.S.C. 1824(a)) is amended--
       (A) by striking ``Bank Insurance Fund or the Savings 
     Association Insurance Fund'' and inserting ``deposit 
     insurance fund''; and
       (B) by striking ``each such fund'' and inserting ``the 
     fund''.
       (18) Section 14(b) of the Federal Deposit Insurance Act (12 
     U.S.C. 1824(b)) is amended by striking ``Bank Insurance Fund 
     or Savings Association Insurance Fund'' and inserting 
     ``deposit insurance fund''.
       (19) Section 14(c) of the Federal Deposit Insurance Act (12 
     U.S.C. 1824(c)) is amended by striking paragraph (3).
       (20) Section 14 of the Federal Deposit Insurance Act (12 
     U.S.C. 1824) is amended by striking subsection (d).
       (21) Section 15(c)(5) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1825(c)(5)) is amended--
       (A) by striking ``Bank Insurance Fund or Savings 
     Association Insurance Fund, respectively,'' and inserting 
     ``deposit insurance fund'';
       (B) by striking ``Bank Insurance Fund or Savings 
     Association Insurance Fund, respectively;'' and inserting 
     ``deposit insurance fund;''; and
       (C) by striking ``Bank Insurance Fund or the Savings 
     Association Insurance Fund, respectively,'' and inserting 
     ``deposit insurance fund,''.
       (22) Section 17(a)(1) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1827(a)(1)) is amended by striking ``Bank 
     Insurance Fund, the Savings Association Insurance Fund,'' 
     each place such term appears and inserting ``deposit 
     insurance fund''.
       (23) Section 17(d) of the Federal Deposit Insurance Act (12 
     U.S.C. 1827(d)) is amended by striking ``Bank Insurance Fund, 
     the Savings Association Insurance Fund,'' each place such 
     term appears and inserting ``deposit insurance fund''.
       (24) The heading for section 17(a) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1827(a)) is amended by striking 
     ``BIF, SAIF,'' and inserting ``the Deposit Insurance Fund''.
       (25) Subsections (a)(1) and (d)(1)(A) of section 24 of the 
     Federal Deposit Insurance Act (12 U.S.C. 1831a) are each 
     amended by striking ``appropriate''.
       (26) Section 24(e)(2) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1831a(e)(2)) is amended--
       (A) in subparagraph (A), by striking ``of which such banks 
     are members''; and
       (B) in subparagraph (B)(ii), by striking ``of which such 
     bank is a member''.
       (27) Section 24(f)(6)(B) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1831a(f)(6)(B)) is amended by striking ``of 
     which such bank is a member''.
       (28) Section 31 of the Federal Deposit Insurance Act (12 
     U.S.C. 1831h) is hereby repealed.
       (29) Section 36(i)(3) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1831m(i)(3)) is amended by striking ``affected''.
       (30) Section 38 of the Federal Deposit Insurance Act (12 
     U.S.C. 1831o) is amended by striking subsection (o).
       (31) Section 21B(f)(2)(C)(ii) of the Federal Home Loan Bank 
     Act (12 U.S.C. 1441b(f)(2)(C)(ii)) is amended to read as 
     follows:
       ``(C) Payments by federal home loan banks.--To the extent 
     the amounts available pursuant to subparagraphs (A) and (B) 
     are insufficient to cover the amount of interest payments, 
     each Federal home loan bank shall pay to the Funding 
     Corporation each calendar year an amount equal to 23.7 
     percent of the bank's net earnings for the year for which 
     such amount is required to be paid.''.
       (d) Effective Date of Amendments.--The amendments made by 
     subsection (c) shall take effect on January 1, 1998.

     SEC. 2204. REFUND OF AMOUNTS IN DEPOSIT INSURANCE FUND IN 
                   EXCESS OF DESIGNATED RESERVE AMOUNT.

       Subsection (e) of section 7 of the Federal Deposit 
     Insurance Act (12 U.S.C. 1817(e)) is amended to read as 
     follows:
       ``(e) Refunds.--
       ``(1) Overpayments.--In the case of any payment of an 
     assessment by an insured depository institution in excess of 
     the amount due to the Corporation, the Corporation may--
       ``(A) refund the amount of the excess payment to the 
     insured depository institution; or
       ``(B) credit such excess amount toward the payment of 
     subsequent semiannual assessments until such credit is 
     exhausted.
       ``(2) Balance in insurance fund in excess of designated 
     reserve.--
       ``(A) In general.--Subject to subparagraph (B), if as of 
     the end of any semiannual period the amount of the actual 
     reserves in--
       ``(i) the Bank Insurance Fund (until the merger of such 
     fund into the deposit insurance fund pursuant to section 
     2203(a)(2) of the Thrift Charter Conversion Act of 1995); or
       ``(ii) the deposit insurance fund (after the establishment 
     of such fund under section 2203(a)(1) of such Act),
     exceeds the balance required to meet the designated reserve 
     ratio applicable with respect to such fund, such excess 
     amount shall be refunded to members of the fund by the 
     Corporation on such basis as the Board of Directors 
     determines to be appropriate, taking into account the factors 
     considered under the risk-based assessment system.
       ``(B) Refund not to exceed previous semiannual 
     assessment.--The amount of any refund under this paragraph to 
     any member of a deposit insurance fund for any semiannual 
     period may not exceed the total amount of assessments paid by 
     such member to the insurance fund with respect to such 
     period.''.

     SEC. 2205. ASSESSMENTS AUTHORIZED ONLY IF NEEDED TO MAINTAIN 
                   THE RESERVE RATIO OF A DEPOSIT INSURANCE FUND.

       (a) In General.--Section 7(b)(2)(A)(i) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)(i)) is amended 
     in the portion of such section preceding subclause (I) by 
     inserting ``when necessary, and only to the extent 
     necessary'' after ``insured depository institutions''.
       (b) Limitation on Assessment.--Section 7(b)(2)(A)(iii) of 
     the Federal Deposit Insurance Act (12 U.S.C. 
     1817(b)(2)(A)(iii)) is amended to read as follows:
       ``(iii) Limitation on assessment.--The Board of Directors 
     shall not set semiannual assessments with respect to a 
     deposit insurance fund in excess of the amount needed--

       ``(I) to maintain the reserve ratio of the fund at the 
     designated reserve ratio; or
       ``(II) if the reserve ratio is less than the designated 
     reserve ratio, to increase the reserve ratio to the 
     designated reserve ratio.''.

          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.

       (a) Termination of Federal Savings Association Charters.--
       (1) In general.--Each Federal savings association shall--
       (A) convert to a national bank charter;
       (B) convert to a State depository institution charter; or
       (C) surrender the charter of such savings association and 
     liquidate the institution.
       (2) Conversion to national bank by operation of law.--If 
     any Federal savings association has not taken any action 
     required under paragraph (1) as of January 1, 1998, the 
     savings association shall--
       (A) become a national bank on such date by operation of 
     law;
       (B) immediately file articles of association and an 
     organizational certificate with the Comptroller of the 
     Currency in accordance with sections 5133, 5134, and 5135 of 
     the Revised Statutes of the United States; and
       (C) cease to exist as a Federal savings association as of 
     such date.
       (3) Prohibition on new charters of federal savings 
     associations.--The Director of the Office of Thrift 
     Supervision may not grant any charter for a Federal savings 
     association for which an application was received after the 
     date of the enactment of this Act.
       (b) Treatment of State Savings Associations as Banks For 
     Purposes of Federal Banking Law.--
       (1) Amendments to federal deposit insurance act.--Section 3 
     of the Federal Deposit Insurance Act (12 U.S.C. 1813) is 
     amended--
       (A) by striking paragraph (2) of subsection (a) and 
     inserting the following new paragraph:
       ``(2) State bank.--
       ``(A) In general.--The term `State bank' means any bank, 
     banking association, trust company, savings bank, industrial 
     bank (or similar depository institution which the Board of 
     Directors finds to be operating substantially in the same 
     manner as an industrial bank), building and loan association, 
     savings and loan association, homestead association, 
     cooperative bank, or other banking institution--
       ``(i) which is engaged in the business of receiving 
     deposits, other than trust funds (as defined in this 
     section); and
       ``(ii) which--

       ``(I) is incorporated under the laws of any State;
       ``(II) is organized and operating according to the laws of 
     the State in which such institution is chartered or 
     organized; or
       ``(III) is operating under the Code of Law for the District 
     of Columbia (except a national bank).

       ``(B) Certain insured banks included.--The term `State 
     bank' includes any cooperative bank or other unincorporated 
     bank the deposits of which were insured by the Corporation on 
     the day before the date of the enactment of the Financial 
     Institutions Reform, Recovery, and Enforcement Act of 1989.
       ``(C) Certain uninsured banks excluded.--The term `State 
     bank' does not include any cooperative bank or other 
     unincorporated bank the deposits of which were not insured by 
     the Corporation on the day before the date of the enactment 
     of the Financial Institutions Reform, Recovery, and 
     Enforcement Act of 1989.''; and
       (B) in subsection (q)--
       (i) by inserting ``and'' after the semicolon at the end of 
     paragraph (2);

[[Page 1616]]

       (ii) by striking ``; and'' at the end of paragraph (3) and 
     inserting a period; and
       (iii) by striking paragraph (4).
       (2) Amendments to the bank holding company act of 1956.--
     Section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 
     1841) is amended--
       (A) by striking subparagraph (E) of subsection (a)(5); and
       (B) by striking subparagraphs (B) and (J) of subsection 
     (c)(2).
       (3) Amendments to the federal reserve act.--The 2d and 3d 
     paragraphs of the 1st section of the Federal Reserve Act (12 
     U.S.C. 221) are each amended by inserting ``(as defined in 
     section 3(a)(2) of the Federal Deposit Insurance Act)'' after 
     ``State bank''.

     SEC. 2222. TREATMENT OF CERTAIN ACTIVITIES AND AFFILIATIONS 
                   OF BANK HOLDING COMPANIES RESULTING FROM THIS 
                   ACT.

       Section 4 of the Bank Holding Company Act of 1956 (12 
     U.S.C. 1843) is amended by adding at the end the following 
     new subsection:
       ``(k) Treatment of Companies Resulting From Savings and 
     Loan Holding Companies.--
       ``(1) In general.--Notwithstanding any other provision of 
     this section (other than paragraph (5)) or any other 
     provision of Federal law including sections 20 and 32 of the 
     Banking Act of 1933, a qualified bank holding company may, 
     after such company becomes a bank holding company--
       ``(A) maintain or enter into any nonbanking affiliation 
     which such company was authorized to maintain or enter into 
     as of September 22, 1995, or was authorized to maintain 
     following a merger of insured depository institution 
     subsidiaries pursuant to an application filed no later than 
     such date; and
       ``(B) engage, directly or through any affiliate described 
     in subparagraph (A) which is not a bank, in any activity in 
     which such company or any affiliate described in subparagraph 
     (A) was authorized to engage as of September 22, 1995, or in 
     which such company was authorized to engage following a 
     merger of insured depository institution subsidiaries 
     pursuant to an application filed no later than such date,
     if the requirements of paragraph (4) are met.
       ``(2) Qualified bank holding company defined.--For purposes 
     of this subsection, the term `qualified bank holding company' 
     means--
       ``(A) any company which--
       ``(i) as of September 13, 1995, is a savings and loan 
     holding company and is not a bank holding company; and
       ``(ii) becomes a bank holding company after such date; and
       ``(B) any bank holding company which as of September 13, 
     1995--
       ``(i) is a savings and loan holding company; and
       ``(ii) is exempt from this section pursuant to an order 
     issued by the Board under subsection (d).
       ``(3) No loss of subsection (d) exemption.--No qualified 
     bank holding company described in paragraph (2)(B) shall lose 
     the grounds for the exemption under subsection (d) because a 
     savings association which such company controlled, directly 
     or indirectly, as of September 13, 1995, becomes a bank after 
     such date so long as such bank continues to meet the 
     requirements of subparagraphs (A) and (B) of paragraph (4).
       ``(4) Prerequisites for continuation of grandfathered 
     activities and affiliations.--This subsection shall cease to 
     apply with respect to a qualified bank holding company if, at 
     any time after such company first meets the definition of a 
     qualified bank holding company--
       ``(A) any insured depository institution controlled by such 
     company which, as of the day before the company first meets 
     the definition of a qualified bank holding company, was 
     subject to the requirements contained in section 10(m) of the 
     Home Owners' Loan Act, as in effect on such date, (and 
     regulations in effect on such date under such section) for 
     treatment as a qualified thrift lender under such section 
     fails to meet such requirements;
       ``(B) any insured depository institution controlled by such 
     company fails to comply with any limitation or restriction on 
     the type or amounts of loans or investments of the 
     institution to which such institution was subject as of the 
     date of the enactment of the Thrift Charter Conversion Act of 
     1995; or
       ``(C) the company or any subsidiary of the company acquires 
     more than 5 percent of the shares or assets of any bank or 
     insured institution after September 13, 1995.
       ``(5) Nontransferable.--This subsection shall not apply 
     with respect to any qualified bank holding company if, after 
     September 13, 1995, any person acquires, directly or 
     indirectly, control of the company or the company is the 
     subject of any merger, consolidation, or other similar 
     transaction.
       ``(6) Prohibition on certain insured depository 
     institutions identifying themselves as national banks.--
       ``(A) In general.--Notwithstanding the requirement of 
     section 5134 of the Revised Statutes of the United States--
       ``(i) the name of an insured depository institution 
     subsidiary of a qualified bank holding company which--

       ``(I) as of the date of the enactment of the Thrift Charter 
     Conversion Act of 1995, is a savings and loan holding company 
     described in section 10(c)(3) of the Home Owners' Loan Act 
     (as in effect on such date); and
       ``(II) is subject to the restrictions contained in 
     paragraph (3),

     may not include the term `national'; and
       ``(ii) such insured depository institution may not be 
     identified as a national bank on any sign displayed by the 
     institution or in any advertisement or other publication of 
     the institution.
       ``(B) Depository institution not liable for fraudulent 
     misrepresentation for not representing itself as a national 
     bank.--An insured depository institution which is subject to 
     subparagraph (A) shall not be liable for any civil or 
     criminal penalty under any Federal or State consumer 
     protection law, or in any criminal or civil action, for 
     fraudulently misrepresenting the nature of the charter of the 
     institution, for falsely advertising the status of the 
     institution, for making a false statement with respect to the 
     status of the institution, or for any similar offense by 
     reason of the institution's compliance with such 
     subparagraph.
       ``(7) Enforcement.--In addition to any other power of the 
     Board, the Board may enforce compliance with the provisions 
     of this subsection with respect to any qualified bank holding 
     company and any bank controlled by such company under section 
     8 of the Federal Deposit Insurance Act.''.

     SEC. 2223. TRANSITION PROVISIONS FOR ACTIVITIES OF SAVINGS 
                   ASSOCIATIONS WHICH CONVERT INTO OR BECOME 
                   TREATED AS BANKS.

       Notwithstanding any other provision of Federal law, any 
     insured depository institution which, as of September 13, 
     1995, is a savings association (as defined in section 3(b) of 
     the Federal Deposit Insurance Act (as in effect on such 
     date)) and after such date converts to a national or State 
     bank charter or becomes treated as a State bank pursuant to 
     the amendment made by section 2221(b) may continue to engage, 
     directly or indirectly, in any activity in which such 
     institution was lawfully engaged as of such date during the 
     5-year period beginning on the effective date of such 
     conversion or the effective date of such amendments, as the 
     case may be.

     SEC. 2224. REGISTRATION OF BANK HOLDING COMPANIES RESULTING 
                   FROM CONVERSIONS OF SAVINGS ASSOCIATIONS TO 
                   BANKS OR TREATMENT OF SAVINGS ASSOCIATIONS AS 
                   BANKS.

       Section 3 of the Bank Holding Company Act of 1956 (12 
     U.S.C. 1842) is amended by adding at the end the following 
     new subsections:
       ``(h) Registration of Certain Bank Holding Companies.--A 
     company which, as of September 13, 1995, is a savings and 
     loan holding company (as defined in section 10(a)(1)(D) of 
     Home Owners' Loan Act (as in effect on such date)) and is not 
     a bank holding company shall not be required to obtain the 
     approval of the Board under subsection (a) to become a bank 
     holding company after September 13, 1995, as a result of the 
     conversion of any insured depository institution subsidiary 
     of such company into a bank or by virtue of the treatment of 
     any insured depository institution subsidiary of such company 
     as a bank pursuant to the amendments made by the Thrift 
     Charter Conversion Act of 1995, if such company--
       ``(1) registers as a bank holding company with the Board in 
     accordance with section 5(a); and
       ``(2) does not acquire, directly or indirectly, ownership 
     or control of any additional insured depository institution 
     or other company in connection with such conversion or 
     treatment.
       ``(i) Regulation of Qualified Bank Holding Companies.--The 
     Board shall regulate qualified bank holding companies (as 
     defined in section 4(k)(2)) in a manner consistent with--
       ``(1) the regulation of such companies by the Director of 
     the Office of Thrift Supervision before the date of the 
     enactment of the Thrift Charter Conversion Act of 1995; and
       ``(2) the safety and soundness of insured depository 
     institution subsidiaries of such companies.''.

     SEC. 2225. ADDITIONAL TRANSITION PROVISIONS AND SPECIAL 
                   RULES.

       (a) Mutual National Banks Authorized; Conversion of Mutual 
     Savings Associations Into National Banks.--
       (1) In general.--Chapter one of title LXII of the Revised 
     Statutes of the United States (12 U.S.C. 21 et seq.) is 
     amended by inserting after section 5133 the following new 
     section:

     ``SEC. 5133A. MUTUAL NATIONAL BANKS.

       ``(a) In General.--Notwithstanding the paragraph designated 
     the ``Third'' of section 5134, the Comptroller of the 
     Currency may charter national banks organized in the mutual 
     form either de novo or through a conversion of any stock 
     national or State bank (as defined in section 3 of the 
     Federal Deposit Insurance Act) or any State mutual bank or 
     credit union, subject to regulations prescribed by the 
     Comptroller of the Currency in accordance with this section.
       ``(b) Regulations.--
       ``(1) Transition rules.--National banks organized in the 
     mutual form shall be subject to the regulations of the 
     Director of the Office of Thrift Supervision governing 
     corporate organization, governance, and conversion of mutual 
     institutions, as in effect on September 13, 1995, including 
     parts 543, 544, 546, 563b, and 563c of chapter V of title 12 
     of the Code of Federal Regulations (as in effect on such 
     date), during the 3-year period beginning on the date of the 
     enactment of the Thrift Charter Conversion Act of 1995.
       ``(2) Regulations of the comptroller.--The Comptroller of 
     the Currency shall prescribe appropriate regulations for 
     national banks organized in the mutual form, effective as of 
     the end of the 3-year period referred to in paragraph (1).
       ``(3) Applicability of capital stock requirements.--The 
     Comptroller of the Currency shall prescribe regulations 
     regarding

[[Page 1617]]

      the manner in which requirements of title LXII of the 
     Revised Statutes of the United States with respect to capital 
     stock, and limitations imposed on national banks under such 
     title based on capital stock, shall apply to national banks 
     organized in mutual form pursuant to subsection (a).
       ``(c) Conversions.--
       ``(1) Conversion to stock national bank.--Subject to 
     subsection (b)(1) and, after the end of the 3-year period 
     referred to in such subsection, such regulations as the 
     Comptroller of the Currency may prescribe for the protection 
     of depositors' rights and for any other purpose the 
     Comptroller of the Currency may consider appropriate, any 
     national bank which is organized in mutual form pursuant to 
     paragraph (1) may reorganize as a stock national bank.
       ``(2) Conversions to state banks.--Any national mutual bank 
     may convert to a State bank charter in accordance with 
     regulations prescribed by the Comptroller of the Currency and 
     applicable State law.''.
       (2) Mutual bank holding companies.--Subsection (g) of 
     section 3 of the Bank Holding Company Act of 1956 (12 U.S.C. 
     1842(g)) is amended to read as follows:
       ``(g) Mutual Bank Holding Companies.--
       ``(1) In general.--A national mutual bank may reorganize so 
     as to become a holding company by--
       ``(A) chartering an interim national bank, the stock of 
     which is to be wholly owned, except as otherwise provided in 
     this section, by the national mutual bank; and
       ``(B) transferring the substantial part of the national 
     mutual bank's assets and liabilities, including all of the 
     bank's insured liabilities, to the interim national bank.
       ``(2) Directors and certain account holders' approval of 
     plan required.--A reorganization is not authorized under this 
     subsection unless--
       ``(A) a plan providing for such reorganization has been 
     approved by a majority of the board of directors of the 
     national mutual bank; and
       ``(B) in the case of a national mutual bank in which 
     holders of accounts and obligors exercise voting rights, such 
     plan has been submitted to and approved by a majority of such 
     individuals at a meeting held at the call of the directors in 
     accordance with the procedures prescribed by the bank's 
     charter and bylaws.
       ``(3) Notice to the board; disapproval period.--
       ``(A) Notice required.--
       ``(i) In general.--At least 60 days before taking any 
     action described in paragraph (1), a national mutual bank 
     seeking to establish a mutual holding company shall provide 
     written notice to the Board.
       ``(ii) Contents of notice.--The notice shall contain such 
     relevant information as the Board shall require by regulation 
     or by specific request in connection with any particular 
     notice.
       ``(B) Transaction allowed if not disapproved.--Unless the 
     Board within such 60-day notice period disapproves the 
     proposed holding company formation, or extends for another 30 
     days the period during which such disapproval may be issued, 
     the national mutual bank providing such notice may proceed 
     with the transaction, if the requirements of paragraph (2) 
     have been met.
       ``(C) Grounds for disapproval.--The Board may disapprove 
     any proposed holding company formation only if--
       ``(i) such disapproval is necessary to prevent unsafe or 
     unsound practices;
       ``(ii) the financial or management resources of the 
     national mutual bank involved warrant disapproval;
       ``(iii) the national mutual bank fails to furnish the 
     information required under subparagraph (A); or
       ``(iv) the national mutual bank fails to comply with the 
     requirement of paragraph (2).
       ``(D) Retention of capital assets.--In connection with the 
     transaction described in paragraph (1), a national mutual 
     bank may, subject to the approval of the Board, retain 
     capital assets at the holding company level to the extent 
     that the capital retained at the holding company is in excess 
     of the amount of capital required in order for the interim 
     national bank to meet all relevant capital standards 
     established by the Comptroller of the Currency for national 
     banks.
       ``(4) Ownership.--
       ``(A) In general.--Persons having ownership rights in the 
     national mutual bank under section 5133A of the Revised 
     Statutes of the United States (including paragraph 575.5 of 
     chapter V of title 12 of the Code of Federal Regulations, as 
     in effect on September 13, 1995, and applicable to national 
     mutual banks pursuant to such section) or State law shall 
     have the same ownership rights with respect to the mutual 
     holding company.
       ``(B) Holders of certain accounts.--Holders of savings, 
     demand, or other accounts of--
       ``(i) a national bank chartered as part of a transaction 
     described in paragraph (1); or
       ``(ii) a mutual bank acquired pursuant to paragraph (5)(B),
     shall have the same ownership rights with respect to the 
     mutual holding company as persons described in subparagraph 
     (A) of this paragraph.
       ``(5) Permitted activities.--A mutual holding company may 
     engage only in the following activities:
       ``(A) Investing in the stock of a national or State bank.
       ``(B) Acquiring a mutual bank through the merger of such 
     bank into a national bank subsidiary of such holding company 
     or an interim national bank subsidiary of such holding 
     company.
       ``(C) Subject to paragraph (6), merging with or acquiring 
     another holding company, one of whose subsidiaries is a 
     national mutual bank.
       ``(D) Investing in a corporation the capital stock of which 
     is available for purchase by a national mutual bank under 
     Federal law or under the law of any State where the home 
     office of any subsidiary bank is located.
       ``(E) Engaging in the activities permitted under section 
     4(c).
       ``(6) Limitations on certain activities of acquired holding 
     companies.--
       ``(A) New activities.--If a mutual holding company acquires 
     or merges with another holding company under paragraph 
     (5)(C), the holding company acquired or the holding company 
     resulting from such merger or acquisition may only invest in 
     assets and engage in activities which are authorized under 
     paragraph (5).
       ``(B) Grace period for divesting prohibited assets or 
     discontinuing prohibited activities.--Not later than 2 years 
     following a merger or acquisition described in paragraph 
     (5)(C), the acquired holding company or the holding company 
     resulting from such merger or acquisition shall--
       ``(i) dispose of any asset which is an asset in which a 
     mutual holding company may not invest under paragraph (5); 
     and
       ``(ii) cease any activity which is an activity in which a 
     mutual holding company may not engage under paragraph (5).
       ``(7) Chartering and other requirements.--
       ``(A) In general.--A mutual holding company shall be 
     chartered by the Board and shall be subject to such 
     regulations as the Board may prescribe.
       ``(B) Other requirements.--Unless the context otherwise 
     requires, a mutual holding company shall be subject to the 
     other requirements of this Act regarding regulation of 
     holding companies.
       ``(8) Capital improvement.--
       ``(A) Pledge of stock of savings association subsidiary.--
     This section shall not prohibit a mutual holding company from 
     pledging all or a portion of the stock of a national bank 
     chartered as part of a transaction described in paragraph (1) 
     to raise capital for such bank.
       ``(B) Issuance of nonvoting shares.--No provision of this 
     Act shall be construed as prohibiting a national bank 
     chartered as part of a transaction described in paragraph (1) 
     from issuing any nonvoting shares or less than 50 percent of 
     the voting shares of such bank to any person other than the 
     mutual holding company.
       ``(9) Insolvency and liquidation.--
       ``(A) In general.--Notwithstanding any provision of law, 
     upon--
       ``(i) the default of any national bank--

       ``(I) the stock of which is owned by any mutual holding 
     company; and
       ``(II) which was chartered in a transaction described in 
     paragraph (1);

       ``(ii) the default of a mutual holding company; or
       ``(iii) a foreclosure on a pledge by a mutual holding 
     company described in paragraph (8)(A),
     a trustee shall be appointed receiver of such mutual holding 
     company and such trustee shall have the authority to 
     liquidate the assets of, and satisfy the liabilities of, such 
     mutual holding company pursuant to title 11, United States 
     Code.
       ``(B) Distribution of net proceeds.--Except as provided in 
     subparagraph (C), the net proceeds of any liquidation of any 
     mutual holding company pursuant to subparagraph (A) shall be 
     transferred to persons who hold ownership interests in such 
     mutual holding company.
       ``(C) Recovery by corporation.--If the Corporation incurs a 
     loss as a result of the default of any savings association 
     subsidiary of a mutual holding company which is liquidated 
     pursuant to subparagraph (A), the Corporation shall succeed 
     to the ownership interests of the depositors of such savings 
     association in the mutual holding company, to the extent of 
     the Corporation's loss.
       ``(10) State mutual bank holding company.--
       ``(A) In general.--Notwithstanding any provision of Federal 
     law, a State bank operating in mutual form may reorganize so 
     as to form a holding company under State law.
       ``(B) Regulation of state mutual holding company.--A 
     corporation organized as a holding company in accordance with 
     subparagraph (A) shall be regulated on the same terms and be 
     subject to the same limitations as any other holding company 
     which controls a bank.
       ``(11) Regulations.--
       ``(A) Transition rules.--Mutual bank holding companies 
     organized under this subsection shall be subject to the 
     regulations of the Director of the Office of Thrift 
     Supervision governing corporate organization, governance, and 
     conversion of mutual institutions, as in effect on September 
     13, 1995, including part 575 of chapter V of title 12 of the 
     Code of Federal Regulations (as in effect on such date), 
     during the 3-year period beginning on the date of the 
     enactment of the Thrift Charter Conversion Act of 1995.
       ``(B) Regulations of the board.--The Board shall prescribe 
     appropriate regulations for mutual holding companies, 
     effective at the end of the 3-year period referred to in 
     subparagraph (A).
       ``(12) Definitions.--For purposes of this subsection--
       ``(A) Mutual holding company.--The term `mutual holding 
     company' means a corpora

[[Page 1618]]

     tion organized as a holding company under this subsection.
       ``(B) Default.--The term `default' means an adjudication or 
     other official determination of a court of competent 
     jurisdiction or other public authority pursuant to which a 
     conservator, receiver, or other legal custodian is appointed.
       ``(C) National mutual bank.--The term `national mutual 
     bank' means a national bank organized in mutual form under 
     section 5133A of the Revised Statutes of the United 
     States.''.
       (3) Limitation on federal regulation of state banks.--
     Except as otherwise provided in Federal law, the Comptroller 
     of the Currency, Board of Governors of the Federal Reserve 
     System, and Federal Deposit Insurance Corporation may not 
     adopt or enforce any regulation which contravenes the 
     corporate governance rules prescribed by State law or 
     regulation for State banks unless the Comptroller, Board, or 
     Corporation finds that such Federal regulation is necessary 
     to assure the safety and soundness of such State banks.
       (4) Conversions of mutual savings associations to mutual 
     national banks by operation of law.--Notwithstanding any 
     other provision of Federal or State law, any savings 
     association (as defined in section 3 of the Federal Deposit 
     Insurance Act (as in effect on September 13, 1995)) which is 
     organized in mutual form as of the date of the enactment of 
     this Act may become a national mutual bank by operation of 
     law if the association--
       (A) files the articles of association and organization 
     certificate with the Comptroller of the Currency before 
     January 1, 1998, in accordance with chapter one of title LXII 
     of the Revised Statutes of the United States; and
       (B) provides such other document or information as the 
     Comptroller of the Currency may prescribe in regulations 
     consistent with this section and section 5133A of the Revised 
     Statutes of the United States (as added by paragraph (1) of 
     this subsection).
       (5) Clerical amendment.--The table of sections for chapter 
     one of title LXII of the Revised Statutes of the United 
     States (12 U.S.C. 21 et seq.) is amended by inserting after 
     the item relating to section 5133 the following new item:

``5133A.  Mutual national banks.''.
       (b) Membership in Federal Home Loan Banks.--Any insured 
     depository institution which--
       (1) as of the date of the enactment of this Act, is a 
     Federal savings association which, pursuant to section 6(e) 
     of the Federal Home Loan Bank Act, may not voluntarily 
     withdraw from membership in a Federal home loan bank; and
       (2) after such date converts from a Federal savings 
     association to a national bank,
     shall continue to be subject to the prohibition under such 
     section on voluntary withdrawal from such membership as 
     though such bank were still a Federal savings association 
     until the bank ceases to be a national bank.
       (c) Branches.--
       (1) In general.--Notwithstanding any provision of the 
     Federal Deposit Insurance Act, the Bank Holding Company Act 
     of 1956, or any other Federal or State law, any depository 
     institution which--
       (A) as of the date of the enactment of this Act, is a 
     savings association; and
       (B) becomes a bank before January 1, 1998, or, pursuant to 
     the amendments made by this subsection, is treated as a bank 
     as of such date under the Federal Deposit Insurance Act,
     and any depository institution or bank holding company which 
     acquires such depository institution, may continue, after the 
     depository institution becomes or commences to be treated as 
     a bank, to operate any branch which the savings association 
     operated as a branch on September 13, 1995.
       (2) No additional branches.--Paragraph (1) shall not be 
     construed as authorizing the establishment, acquisition, or 
     operation of any additional branch of a depository 
     institution in any State by virtue of the operation by such 
     institution of a branch in such State pursuant to such 
     paragraph except to the extent such establishment, 
     acquisition, or operation is permitted under the Federal 
     Deposit Insurance Act, Bank Holding Company Act of 1956, and 
     any other applicable Federal or State law without regard to 
     such branch.
       (d) Transition Provision Relating to Limitations on Loans 
     to 1 Borrower.--Section 5200 of the Revised Statutes of the 
     United States (12 U.S.C. 84) is amended by adding at the end 
     the following new subsection:
       ``(e) Transition Provision for Savings Associations 
     Converting to National Banks.--In the case of any depository 
     institution which, as of September 13, 1995, is a savings 
     association (as defined in section 3(b) of the Federal 
     Deposit Insurance Act (as in effect on such date)) and 
     becomes a national bank on or before January 1, 1998, any 
     loan, or legally binding commitment to make a loan, made or 
     entered into by such institution which is outstanding on the 
     date the institution becomes a national bank may continue to 
     be held without regard to any limitation contained in this 
     section during the 3-year period beginning on such date.''.

     SEC. 2226. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Amendments to the Federal Deposit Insurance Act.--
       (1) Section 3(z) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(z)) is amended by striking ``the Director of the 
     Office of Thrift Supervision,''.
       (2) Section 8(b) of the Federal Deposit Insurance Act (12 
     U.S.C. 1818(b)) is amended by striking paragraph (9).
       (3) Section 13 of the Federal Deposit Insurance Act (12 
     U.S.C. 1823) is amended by striking subsection (k).
       (4) Subsections (c)(2) and (i)(2) of section 18 of the 
     Federal Deposit Insurance Act (12 U.S.C. 1828) are each 
     amended--
       (A) in subparagraph (B), by inserting ``and'' after the 
     semicolon;
       (B) in subparagraph (C), by striking ``; and'' and 
     inserting a period; and
       (C) by striking subparagraph (D).
       (5) Section 18 of the Federal Deposit Insurance Act (12 
     U.S.C. 1828) is amended by striking subsection (m).
       (6) The Federal Deposit Insurance Act (12 U.S.C. 1811 et 
     seq.) is amended by striking section 28.
       (b) Amendments to the Bank Holding Company Act of 1956.--
       (1) Section 2 of the Bank Holding Company Act of 1956 (12 
     U.S.C. 1841) is amended by striking subsections (i) and (j).
       (2) Section 4(c)(8) of the Bank Holding Company Act of 1956 
     (12 U.S.C. 1843(c)(8)) is amended by striking the sentence 
     preceding the penultimate sentence.
       (3) Section 4(f) of the Bank Holding Company Act of 1956 
     (12 U.S.C. 1843(f)) is amended--
       (A) in paragraph (2)(A)(i), by striking ``or an insured 
     institution'' and all that follows through ``of this 
     subsection)'';
       (B) in paragraph (2)(A)(ii)--
       (i) by striking ``or a savings association'' where such 
     term appears in the portion of such paragraph which precedes 
     subclause (I);
       (ii) by inserting ``and'' at the end of subclause (VI);
       (iii) by striking subclauses (VIII), (IX), and (X); and
       (iv) by striking ``(V), and (VIII)'', where such term 
     appears in the portion of such paragraph which appears after 
     the end of subclause (VII), and inserting ``and (V)''; and
       (C) by striking paragraphs (10), (11), (12), and (13).
       (4) Section 4(i) of the Bank Holding Company Act of 1956 
     (12 U.S.C. 1843(i)) is amended--
       (A) by striking paragraphs (1) and (2); and
       (B) in paragraph (3)(A), by striking ``any Federal savings 
     association'' and all that follows through the period at the 
     end of such paragraph and inserting ``such association was 
     authorized to engage under this section as of September 15, 
     1995.''.
       (c) Other Technical and Conforming Amendments.--
       (1) Section 804(a) of the Alternative Mortgage Transaction 
     Parity Act of 1982 (12 U.S.C. 3803) is amended--
       (A) in the portion of such subsection which precedes 
     paragraph (1)--
       (i) by striking ``, and other nonfederally chartered 
     housing creditors,''; and
       (ii) by inserting ``and in order to permit other 
     nonfederally chartered housing creditors to make, purchase, 
     and enforce alternative mortgage transactions,'' after 
     ``enforcing alternative mortgage transactions, ''; and
       (B) in paragraph (1), by inserting ``(as such term is 
     defined in section 3(a) of the Federal Deposit Insurance 
     Act)'' after ``with respect to banks''.
       (2) Section 205 of the Depository Institution Management 
     Interlocks Act (12 U.S.C. 3204) is amended--
       (A) in the portion of paragraph (8)(A) which precedes 
     clause (i), by striking ``A diversified savings'' and all 
     that follows through ``with respect to'' and inserting ``A 
     depository institution holding company which, as of September 
     13, 1995, and at all times thereafter, is a diversified 
     savings and loan holding company (as defined in section 
     10(1)(F) of Home Owners' Loan Act, as such section is in 
     effect on such date) with respect to''; and
       (B) by striking paragraph (9).
       (3) Section 19(b)(1)(A) of the Federal Reserve Act (12 
     U.S.C. 461(b)(1)(A)) is amended--
       (A) by inserting ``and'' after the semicolon at the end of 
     clause (v); and
       (B) by striking clause (vi).
       (4) Subparagraphs (A), (B), (C) of section 10(e)(5) of the 
     Federal Home Loan Bank Act (12 U.S.C. 1430(e)(5)) are each 
     amended by inserting before the period at the end ``(as such 
     section is in effect on September 13, 1995)''.

     SEC. 2227. REFERENCES TO SAVINGS ASSOCIATIONS AND STATE BANKS 
                   IN FEDERAL LAW.

       Effective January 1, 1998, any reference in any Federal 
     banking law to--
       (1) the term ``savings association'' shall be deemed to be 
     a reference to a bank as defined in section 3(a) of the 
     Federal Deposit Insurance Act; and
       (2) the term ``State bank'' shall be deemed to include any 
     depository institution included in the definition of such 
     term in section 3(a)(2) of such Act.

     SEC. 2228. REPEAL OF HOME OWNERS' LOAN ACT.

       Effective January 1, 1998, the Home Owners' Loan Act (12 
     U.S.C. 1461 et seq.) is hereby repealed.

     SEC. 2229. EFFECTIVE DATE; DEFINITIONS.

       (a) Effective Date of Amendments.--The amendments made by 
     this chapter shall take effect on January 1, 1998.
       (b) Definitions.--For purposes of this chapter, the terms 
     ``appropriate Federal banking agency'', ``bank holding 
     company'', ``depository institution'', ``Federal savings

[[Page 1619]]

      association'', ``insured depository institution'', ``savings 
     association'', and ``State bank'' have the same meanings as 
     in section 3 of the Federal Deposit Insurance Act (as in 
     effect on the date of the enactment of this Act).

       CHAPTER 3--TRANSFER OF FUNCTIONS, PERSONNEL, AND PROPERTY

     SEC. 2241. OFFICE OF THRIFT SUPERVISION ABOLISHED.

       Effective January 1, 1998, the Office of Thrift Supervision 
     and the position of Director of the Office of Thrift 
     Supervision are hereby abolished.

     SEC. 2242. DETERMINATION OF TRANSFERRED FUNCTIONS AND 
                   EMPLOYEES.

       (a) All Office of Thrift Supervision Employees Shall Be 
     Transferred.--All employees of the Office of Thrift 
     Supervision shall be identified for transfer under subsection 
     (b) to the Office of the Comptroller of the Currency, the 
     Federal Deposit Insurance Corporation, or the Board of 
     Governors of the Federal Reserve System.
       (b) Functions and Employees Transferred.--
       (1) In general.--The Director of the Office of Thrift 
     Supervision, the Comptroller of the Currency, the Chairperson 
     of the Federal Deposit Insurance Corporation, and the 
     Chairman of the Board of Governors of the Federal Reserve 
     System shall jointly determine the functions or activities of 
     the Office of Thrift Supervision, and the number of employees 
     of such Office necessary to perform or support such functions 
     or activities, which are transferred from the Office to the 
     Office of the Comptroller of the Currency, the Federal 
     Deposit Insurance Corporation, or the Board of Governors of 
     the Federal Reserve System, as the case may be.
       (2) Allocation of employees.--The Comptroller of the 
     Currency, the Chairperson of the Federal Deposit Insurance 
     Corporation, and the Chairman of the Board of Governors of 
     the Federal Reserve System shall allocate the employees of 
     the Office of Thrift Supervision consistent with the number 
     determined pursuant to paragraph (1) in a manner which such 
     Comptroller, Chairperson, and Chairman, in their sole 
     discretion, deem equitable, except that, within work units, 
     the agency preferences of individual employees shall be 
     accommodated as far as possible.
       (c) Disposition of Affairs.--
       (1) In general.--In winding up the affairs of the Office of 
     Thrift Supervision, the Director of the Office of Thrift 
     Supervision shall consult and cooperate with the Comptroller 
     of the Currency, the Federal Deposit Insurance Corporation, 
     and the Board of Governors of the Federal Reserve System, as 
     the case may be, to facilitate the orderly transfer of the 
     functions to such Comptroller, Corporation, or Board.
       (2) Continuing authority of director of the office of 
     thrift supervision.--Except as provided in paragraph (1), no 
     provision of this subtitle shall be construed as affecting 
     the authority vested in the Director of the Office of Thrift 
     Supervision before the date of enactment of this Act which is 
     necessary to carry out the duties of the position until the 
     date upon which the position of Director of the Office of 
     Thrift Supervision is abolished.
       (3) Continuation of agency services.--Any agency, 
     department, or other instrumentality of the United States, or 
     any successor to any such agency, department, or 
     instrumentality, which was providing support services to the 
     Director of the Office of Thrift Supervision on the day 
     before the date such position is abolished shall--
       (A) continue to provide such services on a reimbursable 
     basis, in accordance with the terms of the arrangement 
     pursuant to which such services were provided until the 
     arrangement is modified or terminated in accordance with such 
     terms, except that effective January 1, 1998, the Comptroller 
     of the Currency, the Federal Deposit Insurance Corporation, 
     or the Board of Governors of the Federal Reserve System, as 
     the case may be, shall be substituted for the Director of the 
     Office of Thrift Supervision as a party to the arrangement; 
     and
       (B) consult with the Comptroller, the Corporation, or the 
     Board to coordinate and facilitate a prompt and reasonable 
     transition.
       (d) Transfer of Property.--Effective January 1, 1998, all 
     property of the Office of Thrift Supervision shall be 
     transferred to the Comptroller of the Currency, the Federal 
     Deposit Insurance Corporation, or the Board of Governors of 
     the Federal Reserve System, as determined in accordance with 
     subsections (a) and (b).

     SEC. 2243. SAVINGS PROVISIONS.

       (a) Existing Rights, Duties, and Obligations Not 
     Affected.--No provision of this title shall be construed as 
     affecting the validity of any right, duty, or obligation of 
     the United States, the Director of the Office of Thrift 
     Supervision, or any person, which existed on the day before 
     the date upon which the position of Director of the Office of 
     Thrift Supervision and the Office of Thrift Supervision are 
     abolished.
       (b) Continuation of Suits.--No action or other proceeding 
     commenced by or against the Director of the Office of Thrift 
     Supervision shall abate by reason of enactment of this Act, 
     except that, effective January 1, 1998, the Comptroller of 
     the Currency, the Federal Deposit Insurance Corporation, or 
     the Board of Governors of the Federal Reserve System, as the 
     case may be, shall be substituted as a party to any such 
     action or proceeding.
       (c) Continuation of Administrative Rules.--All orders, 
     resolutions, determinations, regulations, interpretative 
     rules, other interpretations, guidelines, procedures, 
     supervisory and enforcement actions, and other advisory 
     material (other than any regulation implementing or 
     prescribed pursuant to section 3(f) of the Home Owners' Loan 
     Act (as in effect on September 13, 1995)) which--
       (1) have been issued, made, prescribed, or permitted to 
     become effective by the Office of Thrift Supervision, and
       (2) are in effect on December 31, 1996, (or become 
     effective after such date pursuant to the terms of the order, 
     resolution, determination, rule, other interpretation, 
     guideline, procedure, supervisory or enforcement action, and 
     other advisory material, as in effect on such date), shall--
       (A) continue in effect according to the terms of such 
     orders, resolutions, determinations, regulations, 
     interpretative rules, other interpretations, guidelines, 
     procedures, supervisory or enforcement actions, or other 
     advisory material;
       (B) be administered by the Comptroller of the Currency, the 
     Federal Deposit Insurance Corporation, or the Board of 
     Governors of the Federal Reserve System; and
       (C) be enforceable by or against the Comptroller of the 
     Currency, the Federal Deposit Insurance Corporation, or the 
     Board of Governors of the Federal Reserve System until 
     modified, terminated, set aside, or superseded in accordance 
     with applicable law by the Comptroller, Corporation, or 
     Board, by any court of competent jurisdiction, or by 
     operation of law.
       (d) Treatment of References in Adjustable Rate Mortgages 
     Issued Before FIRREA.--For purposes of section 402(e) of 
     Financial Institutions Reform, Recovery, and Enforcement Act 
     of 1989 (12 U.S.C. 1437 note), any reference in such section 
     to--
       (A) the Director of the Office of Thrift Supervision shall 
     be deemed to be a reference to the Secretary of the Treasury; 
     and
       (B) a Savings Association Insurance Fund member shall be 
     deemed to be a reference to an insured depository institution 
     (as defined in section 3 of the Federal Deposit Insurance 
     Act).
       (e) Treatment of References in Adjustable Rate Mortgage 
     Instruments Issued After FIRREA.--
       (1) In general.--For purposes of adjustable rate mortgage 
     instruments that are in effect as of the date of enactment of 
     this Act, any reference in the instrument to the Director of 
     the Office of Thrift Supervision or Savings Association 
     Insurance Fund members shall be treated as a reference to the 
     Secretary of the Treasury or insured depository institutions 
     (as defined in section 3 of the Federal Deposit Insurance 
     Act), as appropriate.
       (2) Substitution for indexes.--If any index used to 
     calculate the applicable interest rate on any adjustable rate 
     mortgage instrument is no longer calculated and made 
     available as a direct or indirect result of the enactment of 
     this Act, any index--
       (A) made available by the Secretary of the Treasury; or
       (B) determined by the Secretary of the Treasury, pursuant 
     to paragraph (4), to be substantially similar to the index 
     which is no longer calculated or made available,
     may be substituted by the holder of any such adjustable rate 
     mortgage instrument upon notice to the borrower.
       (3) Agency action required to provide continued 
     availability of indexes.--Promptly after the enactment of 
     this subsection, the Secretary of the Treasury, the 
     Chairperson of the Federal Deposit Insurance Corporation, and 
     the Comptroller of the Currency shall take such action as may 
     be necessary to assure that the indexes prepared by the 
     Director of the Office of Thrift Supervision immediately 
     prior to the enactment of this subsection and used to 
     calculate the interest rate on adjustable rate mortgage 
     instruments continue to be available.
       (4) Requirements relating to substitute indexes.--If any 
     agency can no longer make available an index pursuant to 
     paragraph (3), an index that is substantially similar to such 
     index may be substituted for such index for purposes of 
     paragraph (2) if the Secretary of the Treasury determines, 
     after notice and opportunity for comment, that--
       (A) the new index is based upon data substantially similar 
     to that of the original index; and
       (B) the substitution of the new index will result in an 
     interest rate substantially similar to the rate in effect at 
     the time the original index became unavailable.

     SEC. 2244. REFERENCES IN FEDERAL LAW TO DIRECTOR OF THE 
                   OFFICE OF THRIFT SUPERVISION.

       Effective January 1, 1998, any reference in any Federal law 
     to the Director of the Office of Thrift Supervision or the 
     Office of Thrift Supervision shall be deemed to be a 
     reference to the appropriate Federal banking agency (as 
     defined in section 3(q) of the Federal Deposit Insurance 
     Act).

     SEC. 2245. RECONFIGURATION OF BOARD OF DIRECTORS OF FDIC AS A 
                   RESULT OF REMOVAL OF DIRECTOR OF THE OFFICE OF 
                   THRIFT SUPERVISION.

       (a) In General.--Section 2(a)(1) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1812(a)(1)) is amended to read as 
     follows:
       ``(1) In general.--The management of the Corporation shall 
     be vested in a Board of Directors consisting of 3 members--
       ``(A) 1 of whom shall be the Comptroller of the Currency; 
     and
       ``(B) 2 of whom shall be appointed by the President, by and 
     with the advice and consent of the Senate, from among 
     individuals who are citizens of the United States.''.
       (b) Technical and Conforming Amendments.--

[[Page 1620]]

       (1) Section 2(a)(2) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1812(a)(2)) is amended--
       (A) by striking ``February 28, 1993'' and inserting 
     ``January 1, 1998''; and
       (B) by striking ``3'' and inserting ``2''.
       (2) Section 2(d)(2) of the Federal Deposit Insurance Act 
     (12 U.S.C. 1812(d)(2)) is amended--
       (A) by striking ``or the office of Director of the Office 
     of Thrift Supervision'';
       (B) by striking ``or such Director'';
       (C) by striking ``or the Acting Director of the Office of 
     Thrift Supervision, as the case may be''; and
       (D) by striking ``or Director''.
       (c) Effective Date.--The amendments made by subsections (a) 
     and (b) shall take effect on January 1, 1998.
       (d) Designation of Abolished Position.--Unless there is a 
     vacancy in the position of an appointed member of the Board 
     of Directors as of January 1, 1998, the President, consistent 
     with the requirements of section 2(a)(2) of the Federal 
     Deposit Insurance Act, shall designate which of the 3 
     positions of appointed member of such Board of Directors 
     shall be abolished pursuant to the amendment made by 
     subsection (a).
           Subtitle C--Community Reinvestment Act Amendments

     SEC. 2301. EXPRESSION OF CONGRESSIONAL INTENT.

       Subsection (b) of section 802 of the Community Reinvestment 
     Act of 1977 (12 U.S.C. 2901) is amended to read as follows:
       ``(b) It is the purpose of this title to require each 
     appropriate Federal financial supervisory agency to use its 
     authority, when examining financial institutions, to 
     encourage such institutions to help meet the credit needs of 
     the local communities in which they are chartered consistent 
     with the safe and sound operation of such institutions. When 
     examining financial institutions, a supervisory agency shall 
     not impose additional burden, recordkeeping, or reporting 
     upon such institutions.''.

     SEC. 2302. COMMUNITY REINVESTMENT ACT EXEMPTION.

       The Community Reinvestment Act of 1977 (12 U.S.C. 2901 et 
     seq.) is amended by adding at the end the following new 
     section:

     ``SEC. 809. TREATMENT OF SMALL FINANCIAL INSTITUTIONS.

       ``(a) In General.--In lieu of being evaluated under section 
     806A and receiving a written evaluation under section 807, an 
     eligible regulated financial institution shall make a notice, 
     signed by the president, available to the public that--
       ``(1) lists the type of credit and services that the 
     institution provides to help meet the credit needs of the 
     local community; and
       ``(2) states that the institution helps meet the credit 
     needs of the local communities in which the institution 
     operates, including low- and moderate-income neighborhoods.
       ``(b) Eligible regulated financial institutions.--
       ``(1) In general.--A regulated financial institution shall 
     be eligible for purposes of subsection (a) if the institution 
     and any bank holding company which controls such institution 
     have aggregate assets of not more than $100,000,000.
       ``(2) Annual adjustment.--The dollar amount in paragraph 
     (1) shall be adjusted annually after December 31, 1994, by 
     the annual percentage increase in the Consumer Price Index 
     for Urban Wage Earners and Clerical Workers published by the 
     Bureau of Labor Statistics.
       ``(c) Exemption From Other Requirements.--A regulated 
     financial institution which has complied with the notice 
     requirements of subsection (a) shall not be subject to 
     section 804 and any regulations prescribed under section 
     806.''.

     SEC. 2303. SELF-CERTIFICATION OF CRA COMPLIANCE.

       Section 804 of the Community Reinvestment Act of 1977 (12 
     U.S.C. 2903) is amended by adding at the end the following 
     new subsection (c):
       ``(c) Self-Certification of CRA Compliance.--
       ``(1) Certification.--In lieu of being evaluated under 
     section 806A and receiving a written evaluation under section 
     807, a qualifying financial institution may elect to self-
     certify to the appropriate Federal financial supervisory 
     agency that such institution is in compliance with the goals 
     of this title.
       ``(2) Qualifying institution.--
       ``(A) In general.--For purposes of paragraph (1), the term 
     `qualifying institution' means a financial institution 
     which--
       ``(i) has not more than $250 million in assets;
       ``(ii) has not been found to have engaged in a pattern or 
     practice of illegal discrimination under the Fair Housing Act 
     or the Equal Credit Opportunity Act for the preceding 5-year 
     calendar period; and
       ``(iii) received rating under section 807(b)(2) of 
     `satisfactory' or `outstanding' in the most recent evaluation 
     of such institution under this title.
       ``(B) Annual adjustment.--The dollar amount in subparagraph 
     (A) shall be adjusted annually after December 31, 1994, by 
     the annual percentage increase in the Consumer Price Index 
     for Urban Wage Earners and Clerical Workers published by the 
     Bureau of Labor Statistics.
       ``(3) Public notice.--
       ``(A) In general.--A qualifying institution shall maintain 
     in every branch a public notice stating that--
       ``(i) the institution has self-certified that the 
     institution is satisfactorily helping to meet the credit 
     needs of its community;
       ``(ii) the institution maintains--

       ``(I) at the main office of such institution, a public file 
     which contains a copy of the self-certification to the 
     appropriate Federal financial supervisory agency; and
       ``(II) a map delineating the community served by the 
     institution;

       ``(iii) a list of the types of credit and services that the 
     institution provides to the community served by the 
     institution;
       ``(iv) such other information that the institution believes 
     demonstrates the institution's record of helping to meet the 
     credit needs of its community; and
       ``(v) every public comment or letter to the institution 
     (and any response by the institution) received within the 
     previous 2-year period about the record of the institution of 
     helping to meet the credit needs of its community.
       ``(B) Public file.--A qualifying institution shall maintain 
     a public file containing the contents described in this 
     paragraph at the institution's main office.
       ``(4) Rating.--
       ``(A) In general.--A qualifying institution shall be deemed 
     to have a rating of a `satisfactory record of meeting 
     community credit needs' for the purposes of this section and 
     section 806A(c).
       ``(B) Publication.--Each Federal financial supervisory 
     agency shall publish in the Federal Register once each month 
     a list of institutions that have self-certified during the 
     previous month.
       ``(C) Publication constitutes disclosure.--Publication of 
     the name of the institution in the Federal Register as having 
     self-certified shall constitute disclosure of the rating of 
     the institution to the public for purposes of sections 806A 
     and 807.
       ``(5) Regulatory review.--
       ``(A) Assessment.--During each examination for safety and 
     soundness, a qualifying institution's supervisory agency 
     shall, as part of the agency's review of the institution's 
     loans, assess whether the institution's basis for its self-
     certification is reasonable based on the public notice and 
     the information contained in the public file pursuant to 
     paragraph (3).
       ``(B) Examination if self-certification is not 
     reasonable.--If the agency determines that the institution's 
     basis for the institution's self-certification is not 
     reasonable, the agency shall schedule an examination of the 
     institution for the purpose of assessing the institution's 
     record of helping to meet the credit needs of its community.
       ``(C) Revocation of self-certification.--If an assessment 
     pursuant to subparagraph (B) results in a less than 
     `satisfactory' rating, the agency shall revoke the 
     institution's self-certification and substitute a written 
     evaluation as provided under section 807.
       ``(D) Period of ineligibility for self-certification.--An 
     institution whose self-certification has been revoked may not 
     self-certify pursuant to this subsection during the 5 years 
     succeeding the year in which the self-certification is 
     revoked.
       ``(E) Subsequent eligibility.--After the end of the period 
     of ineligibility described in subparagraph (D), an 
     institution which meets the requirements for self-
     certification may elect to self-certify.
       ``(6) Prohibition on additional requirements.--No 
     appropriate Federal financial supervisory agency may impose 
     any additional requirements, whether by regulation or 
     otherwise, relating to the self-certification procedure under 
     this subsection.''.

     SEC. 2304. COMMUNITY INPUT AND CONCLUSIVE RATING.

       (a) Conforming Amendment.--Section 804(a) of the Community 
     Reinvestment Act of 1977 (12 U.S.C. 2903) is amended by 
     inserting ``conducted in accordance with section 806A,'' 
     after ``financial institution,''.
       (b) Community Input and Conclusive Rating.--The Community 
     Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) is amended 
     by inserting after section 806 the following new section:

     ``SEC. 806A. COMMUNITY INPUT AND CONCLUSIVE RATING.

       ``(a) Publication of Exam Schedule and Opportunity for 
     Comment.--
       ``(1) Publication of notice.--Each appropriate Federal 
     financial supervisory agency shall--
       ``(A) publish in the Federal Register, 30 days before the 
     beginning of a calendar quarter, a listing of institutions 
     scheduled for evaluation for compliance with this title 
     during such calendar quarter; and
       ``(B) provide opportunity for written comments from the 
     community on the performance, under this title, of each 
     institution scheduled for evaluation.
       ``(2) Comment period.--Written comments may not be 
     submitted to an appropriate Federal financial supervisory 
     agency pursuant to paragraph (1) after the end of the 30-day 
     period beginning on the first day of the calendar quarter.
       ``(3) Copy of comments.--The agency shall provide a copy of 
     such comments to the institution.
       ``(b) Evaluation.--The appropriate Federal financial 
     supervisory agency shall--
       ``(1) evaluate the institution in accordance with the 
     standards contained in section 804; and
       ``(2) prepare and publish a written evaluation of the 
     institution as required under section 807.
       ``(c) Reconsideration of Rating.--
       ``(1) Request for reconsideration.--A reconsideration of an 
     institution's rating referred to in section 807(b)(1)(C), may 
     be requested within 30 days of the rating's disclosure to the 
     public.

[[Page 1621]]

       ``(2) Procedures for request.--Any such request shall be 
     made in writing and filed with the appropriate Federal 
     financial supervisory agency, and may be filed by the 
     institution or a member of the community.
       ``(3) Basis for request.--Any request for reconsideration 
     under this subsection shall be based on significant issues of 
     a substantive nature which are relevant to the delineated 
     community of the institution and, in the case of a request by 
     a member of the community, shall be limited to issues 
     previously raised in comments submitted pursuant to 
     subsection (a).
       ``(4) Completion of review.--The appropriate Federal 
     financial supervisory agency shall complete any requested 
     reconsideration within 30 days of the filing of the request.
       ``(d) Conclusive Rating.--
       ``(1) In general.--An institution's rating shall become 
     conclusive on the later of--
       ``(A) 30 days after the rating is disclosed to the public; 
     or
       ``(B) the completion of any requested reconsideration by 
     the Federal financial supervisory agency.
       ``(2) Rating conclusive of meeting community credit 
     needs.--An institution's rating shall be the conclusive 
     assessment of the institution's record of meeting the credit 
     needs of its community for purposes of section 804 until the 
     institution's next rating, developed pursuant to an 
     examination, becomes conclusive.
       ``(3) Safe harbor.--Institutions which have received a 
     `satisfactory' or `outstanding' rating shall be deemed to 
     have met the purposes of section 804.
       ``(4) Rule of construction.--Notwithstanding any other 
     provision of law, no provision of this section shall be 
     construed as granting a cause of action to any person.''.
       (c) Overall Evaluation of Institution.--Paragraph (2) of 
     section 804(a) of the Community Reinvestment Act of 1977 (12 
     U.S.C. 2903(a)) is amended to read as follows:
       ``(2) take such record into account in the overall 
     evaluation of the condition of the institution by the 
     appropriate Federal financial supervisory agency.''.

     SEC. 2305. SPECIAL PURPOSE FINANCIAL INSTITUTIONS.

       (a) In General.--Section 804 of the Community Reinvestment 
     Act of 1977 (12 U.S.C. 2903) is amended by inserting after 
     subsection (c) (as added by section 2303 of this subtitle) 
     the following new subsection:
       ``(d) Special Purpose Institutions.--
       ``(1) In general.--In conducting assessments pursuant to 
     this section at any special purpose institution, the 
     appropriate Federal financial supervisory agency shall--
       ``(A) consider the nature of business such institution is 
     involved in; and
       ``(B) assess and take into account the record of the 
     institution commensurate with the amount of deposits (as 
     defined in section 3(1) of the Federal Deposit Insurance Act) 
     received by such institution.
       ``(2) Standards.--Each appropriate Federal financial 
     supervisory agency shall develop standards under which 
     special purpose institutions may be deemed to have complied 
     with the requirements of this title which are consistent with 
     the specific nature of such businesses.''.
       (b) Special Purpose Institution Defined.--Section 803 of 
     the Community Reinvestment Act of 1977 (12 U.S.C. 2902) is 
     amended by adding at the end the following new paragraph:
       ``(5) Special purpose institutions.--The term `special 
     purpose institution' means a financial institution that does 
     not generally accept deposits from the public in amounts of 
     less than $100,000, such as wholesale, credit card, and trust 
     institutions.''.

     SEC. 2306. INCREASED INCENTIVES FOR LENDING TO LOW- AND 
                   MODERATE-INCOME COMMUNITIES.

       (a) In General.--Section 804(b) of the Community 
     Reinvestment Act of 1977 (12 U.S.C. 2903(b)) is amended to 
     read as follows:
       ``(b) Positive Consideration of Certain Loans and 
     Investments.--In assessing and taking into account the 
     records of a regulated financial institution under subsection 
     (a), the appropriate Federal financial supervisory agency 
     shall--
       ``(1) consider as a positive factor, consistent with the 
     safe and sound operation of the institution, the 
     institution's investment in or loan to--
       ``(A) any minority depository institution or women's 
     depository institution (as such terms are defined in section 
     808(b)) or any low-income credit union;
       ``(B) any joint venture or other entity or project which 
     promotes the public welfare in any distressed community (as 
     defined by such agency) whether or not the distressed 
     community is located in the local community in which the 
     regulated financial institution is chartered to do business; 
     and
       ``(C) targeted low- and moderate-income communities, 
     including real property loans to such communities; and
       ``(2) consider equally with other factors capital 
     investment, loan participation, and other ventures undertaken 
     by the institution in cooperation with--
       ``(A) minority- and women-owned financial institutions and 
     low-income credit unions to the extent that these activities 
     help meet the credit needs of the local communities in which 
     such institutions are chartered; and
       ``(B) community development corporations in extending 
     credit and other financial services principally to low- and 
     moderate-income persons and small businesses to the extent 
     that such community development corporations help meet the 
     credit needs of the local communities served by the majority-
     owned institution.''.
       (b) Amendment to Definitions.--Section 803 of the Community 
     Reinvestment Act of 1977 (12 U.S.C. 2902) is amended by 
     inserting after paragraph (5) (as added by section 2305(b) of 
     this subtitle) the following new paragraph:
       ``(6) State bank supervisor.--The term `State bank 
     supervisor' has the same meaning as in section 3(r) of the 
     Federal Deposit Insurance Act.''.
       (c) Technical Correction.--The 1st of the 2 paragraphs 
     designated as paragraph (2) of section 803 of the Community 
     Reinvestment Act of 1977 (12 U.S.C. 2902) is amended to read 
     as follows:
       ``(D) the Director of the Office of Thrift Supervision with 
     respect to any savings association (the deposits of which are 
     insured by the Federal Deposit Insurance Corporation) and any 
     savings and loan holding company (other than a company which 
     is a bank holding company);''.

     SEC. 2307. PROHIBITION ON ADDITIONAL REPORTING UNDER CRA.

       Section 806 of the Community Reinvestment Act of 1977 (12 
     U.S.C. 2905) is amended to read as follows:

     ``SEC. 806. REGULATIONS.

       ``(a) In General.--
       ``(1) Publication requirement.--Regulations to carry out 
     the purposes of this title shall be published by each 
     appropriate Federal financial supervisory agency.
       ``(2) Prohibition on additional recordkeeping.--Regulations 
     prescribed and policy statements, commentary, examiner 
     guidance, or other supervisory material issued under this 
     title shall not impose any additional recordkeeping on a 
     financial institution.
       ``(3) Prohibition on loan data collection.--No loan data 
     may be required to be collected and reported by a financial 
     institution and no such data may be made public by any 
     Federal financial supervisory agency under this title.''.

     SEC. 2308. TECHNICAL AMENDMENT.

       Section 807(b)(1)(B) of the Community Reinvestment Act (12 
     U.S.C. 2906) is amended by striking ``The information'' and 
     inserting ``In the case of a regulated financial institution 
     that maintains domestic branches in 2 or more States, the 
     information''.

     SEC. 2309. DUPLICATIVE REPORTING.

       Section 10(g) of the Federal Home Loan Bank Act (12 U.S.C. 
     1430(g)) is amended by adding at the end the following new 
     paragraph (3):
       ``(3) Special rule.--This subsection shall not apply to 
     members receiving a grade of `outstanding' or `satisfactory' 
     under section 807 of the Community Reinvestment Act of 
     1977.''.

     SEC. 2310. CRA CONGRESSIONAL OVERSIGHT.

       (a) Sense of Congress Relating to Aggressive Oversight.--It 
     is the sense of the Congress that the appropriate committees 
     of the House of Representatives and the Senate should 
     exercise aggressive oversight of the adoption and 
     implementation of any regulation by any appropriate Federal 
     financial supervisory agency under the Community Reinvestment 
     Act of 1977 after the date of the enactment of this Act.
       (b) Agency Reports Required.--
       (1) In general.--Each appropriate Federal financial 
     supervisory agency shall submit a report to the Congress by 
     December 31, 1996, and by December 31, 1997, on the 
     implementation of all regulations prescribed by such agency 
     under the Community Reinvestment Act of 1977 after the date 
     of the enactment of this Act.
       (2) Requirements relating to preparation of reports.--In 
     preparing each report required under paragraph (1), each 
     appropriate Federal financial supervisory agency shall--
       (A) solicit and include comments from regulated financial 
     institutions with respect to the regulations which are the 
     subject of the report; and
       (B) include quantifiable measures of the cost savings 
     achieved under the regulations which are the subject of the 
     report and the effectiveness of such regulations in achieving 
     the purposes of the Community Reinvestment Act of 1977.
       (3) Definitions.--For purposes of this section, the terms 
     ``appropriate Federal financial supervisory agency'' and 
     ``regulated financial institution'' have the same meanings as 
     in section 803 of the Community Reinvestment Act of 1977.

     SEC. 2311. CONSULTATION AMONG EXAMINERS.

       Section 10 of the Federal Deposit Insurance Act (12 U.S.C. 
     1820) is amended by adding at the end the following new 
     subsection:
       ``(j) Consultation Among Examiners.--
       ``(1) In general.--Each appropriate Federal banking agency 
     shall take such action as may be necessary to ensure that 
     examiners employed by the agency--
       ``(A) consult on examination activities with respect to any 
     depository institution; and
       ``(B) achieve an agreement and resolve any inconsistencies 
     on the recommendations to be given to such institution as a 
     consequence of any examinations.
       ``(2) Examiner-in-charge.--Each agency shall consider 
     appointing an examiner-in-charge with respect to a depository 
     institution to ensure consultation on examination activities 
     among all of the agency's examiners involved in examinations 
     of such institution.''.

     SEC. 2312. LIMITATION ON REGULATIONS.

       Section 806 of the Community Reinvestment Act of 1977 (12 
     U.S.C. 2905) (as amended

[[Page 1622]]

     by section 2307) is amended by adding at the end the 
     following new subsections:
       ``(b) Limitation on Regulations.--No regulation may be 
     prescribed under this title by any Federal agency which 
     would--
       ``(1) require any regulated financial institution to--
       ``(A) make any loan or enter into any other agreement on 
     the basis of any discriminatory criteria prohibited under any 
     law of the United States; or
       ``(B) make any loan to, or enter into any other agreement 
     with, any uncreditworthy person that would jeopardize the 
     safety and soundness of such institution; or
       ``(2) prevent or hinder in any way a financial 
     institution's full responsibility to provide credit to all 
     segments of the community.
       ``(c) Encourage Loans to Creditworthy Borrowers.--
     Regulations prescribed under this title shall encourage 
     regulated financial institutions to make loans and extend 
     credit to all creditworthy persons, consistent with safety 
     and soundness.''.
               Subtitle D--Phase-Down of Oversight Board

     SEC. 2401. TERMINATION OF AUTHORITY OF OVERSIGHT BOARD TO 
                   EMPLOY STAFF.

       (a) In General.--Section 21A(a) of the Federal Home Loan 
     Bank Act (12 U.S.C. 1441a(a)) is amended by adding at the end 
     the following new paragraph:
       ``(17) Phased-down operation of oversight board following 
     termination of corporation.--
       ``(A) Termination of authority to employ staff.--Except as 
     provided in subparagraph (B), the authority of the Thrift 
     Depositor Protection Oversight Board under paragraph (5) to 
     establish officer and employee positions, to compensate 
     officers and employees of the Board, to provide other 
     benefits for officers and employees of the Board, and to 
     utilize staff of any other department or agency shall 
     terminate as of December 31, 1995.
       ``(B) Limited authority for detailing staff from other 
     agencies.--If the Thrift Depositor Protection Oversight Board 
     determines that any staff is required to carry out the 
     functions of the Board after the authority to employ staff 
     terminates under subparagraph (A), the Board shall--
       ``(i) utilize employees of any other department or agency 
     in accordance with paragraph (5)(F) to carry out the staff 
     functions which have been determined to be necessary; and
       ``(i) submit a report to the Congress containing--

       ``(I) the number of staff positions which the Board has 
     determined are necessary to carry out the Board's functions 
     after the termination of the Corporation;
       ``(II) a justification for such determination; and
       ``(III) an estimate of the length of the period for which 
     such staff positions will be required.''.

       (b) Technical and Conforming Amendments.--
       (1) Subparagraphs (B), (C), (D), and (E) of section 
     21A(a)(5) of the Federal Home Loan Bank Act (12 U.S.C. 
     1441a(a)(5)) are each amended by inserting ``subject to 
     paragraph (17)(A),'' after the closing parenthesis of the 
     subparagraph designation.
       (2) Section 21A(a)(5)(F) of the Federal Home Loan Bank Act 
     (12 U.S.C. 1441a(a)(5)(F)) is amended by inserting ``subject 
     to subparagraphs (A) and (B) of paragraph (17) and'' after 
     ``(F)''.
                    TITLE III--COMMITTEE ON COMMERCE
                       Subtitle A--Communications

                      CHAPTER 1--SPECTRUM AUCTIONS

     SEC. 3001. SPECTRUM AUCTIONS.

       (a) Extension and Expansion of Auction Authority.--
       (1) Amendments.--Section 309(j) of the Communications Act 
     of 1934 (47 U.S.C. 309(j)) is amended--
       (A) by striking paragraphs (1) and (2) and inserting in 
     lieu thereof the following:
       ``(1) General authority.--If, consistent with the 
     obligations described in paragraph (6)(E), mutually exclusive 
     applications are accepted for any initial license or 
     construction permit which will involve an exclusive use of 
     the electromagnetic spectrum, then the Commission shall grant 
     such license or permit to a qualified applicant through a 
     system of competitive bidding that meets the requirements of 
     this subsection.
       ``(2) Exemptions.--The competitive bidding authority 
     granted by this subsection shall not apply to licenses or 
     construction permits issued by the Commission--
       ``(A) that, as the result of the Commission carrying out 
     the obligations described in paragraph (6)(E), are not 
     mutually exclusive;
       ``(B) for public safety radio services, including non-
     Government uses that protect the safety of life, health, and 
     property and that are not made commercially available to the 
     public; or
       ``(C) for initial licenses or construction permits for new 
     terrestrial digital television services assigned by the 
     Commission to existing terrestrial broadcast licensees to 
     replace their current television licenses.''; and
       (B) by striking ``1998'' in paragraph (11) and inserting 
     ``2002''.
       (2) Conforming amendment.--Subsection (i) of section 309 of 
     such Act is repealed.
       (3) Effective date.--The amendment made by paragraph (1)(A) 
     shall not apply with respect to any license or permit for 
     which the Federal Communications Commission has accepted 
     mutually exclusive applications on or before the date of 
     enactment of this Act.
       (b) Commission Obligation To Make Additional Spectrum 
     Available by Auction.--
       (1) In general.--The Federal Communications Commission 
     shall complete all actions necessary to permit the 
     assignment, by September 30, 2002, by competitive bidding 
     pursuant to section 309(j) of the Communications Act of 1934 
     (47 U.S.C. 309(j)) of licenses for the use of bands of 
     frequencies that--
       (A) individually span not less than 25 megahertz, unless a 
     combination of smaller bands can, notwithstanding the 
     provisions of paragraph (7) of such section, reasonably be 
     expected to produce greater receipts;
       (B) in the aggregate span not less than 100 megahertz;
       (C) are located below 3 gigahertz; and
       (D) have not, as of the date of enactment of this Act--
       (i) been designated by Commission regulation for assignment 
     pursuant to such section; or
       (ii) been identified by the Secretary of Commerce pursuant 
     to section 113 of the National Telecommunications and 
     Information Administration Organization Act.
     The Commission shall conduct the competitive bidding for not 
     less than one-half of such aggregate spectrum by September 
     30, 2000.
       (2) Criteria for reassignment.--In making available bands 
     of frequencies for competitive bidding pursuant to paragraph 
     (1), the Commission shall--
       (A) seek to promote the most efficient use of the spectrum;
       (B) take into account the cost to incumbent licensees of 
     relocating existing uses to other bands of frequencies or 
     other means of communication;
       (C) take into account the needs of public safety radio 
     services; and
       (D) comply with the requirements of international 
     agreements concerning spectrum allocations.
       (3) Notification to ntia.--The Commission shall notify the 
     Secretary of Commerce if--
       (A) the Commission is not able to provide for the effective 
     relocation of incumbent licensees to bands of frequencies 
     that are available to the Commission for assignment; and
       (B) the Commission has identified bands of frequencies that 
     are--
       (i) suitable for the relocation of such licensees; and
       (ii) allocated for Federal Government use, but that could 
     be reallocated pursuant to part B of the National 
     Telecommunications and Information Administration 
     Organization Act (as amended by this Act).
       (c) Identification and Reallocation of Frequencies.--The 
     National Telecommunications and Information Administration 
     Organization Act (47 U.S.C. 901 et seq.) is amended--
       (1) in section 113, by adding at the end the following new 
     subsection:
       ``(f) Additional Reallocation Report.--If the Secretary 
     receives a notice from the Commission pursuant to section 
     3001(b)(3) of the Seven-Year Balanced Budget Reconciliation 
     Act of 1995, the Secretary shall prepare and submit to the 
     President and the Congress a report recommending for 
     reallocation for use other than by Federal Government 
     stations under section 305 of the 1934 Act (47 U.S.C. 305), 
     bands of frequencies that are suitable for the uses 
     identified in the Commission's notice.'';
       (2) in section 114(a)(1), by striking ``(a) or (d)(1)'' and 
     inserting ``(a), (d)(1), or (f)''.
       (d) Completion of C-Block PCS Auction.--The Federal 
     Communications Commission shall commence the Broadband 
     Personal Communications Services C-Block auction described in 
     the Commission's Sixth Report and Order in DP Docket 93-253 
     (FCC 93-510, released July 18, 1995) not later than December 
     4, 1995. The Commission's competitive bidding rules governing 
     such auction, as set forth in such Sixth Report and Order, 
     are hereby ratified and adopted as a matter of Federal law.
       (e) Modification of Auction Policy To Preserve Auction 
     Value of Spectrum.--The voluntary negotiation period for 
     relocating fixed microwave licensees to frequency bands other 
     than those allocated for licensed emerging technology 
     services (including licensed personal communications 
     services), established by the Commission's Third Report and 
     Order in ET Docket No. 92-9, shall expire one year after the 
     date of acceptance by the Commission of applications for such 
     licensed emerging technology services. The mandatory 
     negotiation period for relocating fixed microwave licensees 
     to frequency bands other than those allocated for licensed 
     emerging technology services (including licensed personal 
     communications services), established in such Third Report 
     and Order, shall expire two years after the date of 
     acceptance by the Commission of applications for such 
     licensed emerging technology services.
       (f) Identification and Reallocation of Auctionable 
     Frequencies.--The National Telecommunications and Information 
     Administration Organization Act (47 U.S.C. 901 et seq.) is 
     amended--
       (1) in section 113(b)--
       (A) by striking the heading of paragraph (1) and inserting 
     ``Initial reallocation report'';

[[Page 1623]]

       (B) by inserting ``in the first report required by 
     subsection (a)'' after ``recommend for reallocation'' in 
     paragraph (1);
       (C) by inserting ``or (3)'' after ``paragraph (1)'' each 
     place it appears in paragraph (2); and
       (D) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) Second reallocation report.--In accordance with the 
     provisions of this section, the Secretary shall recommend for 
     reallocation in the second report required by subsection (a), 
     for use other than by Federal Government stations under 
     section 305 of the 1934 Act (47 U.S.C. 305), a single 
     frequency band that spans not less than an additional 20 
     megahertz, that is located below 3 gigahertz, and that meets 
     the criteria specified in paragraphs (1) through (5) of 
     subsection (a).''; and
       (2) in section 115--
       (A) in subsection (b), by striking ``the report required by 
     section 113(a)'' and inserting ``the initial reallocation 
     report required by section 113(a)''; and
       (B) by adding at the end the following new subsection:
       ``(c) Allocation and Assignment of Frequencies Identified 
     in the Second Reallocation Report.--With respect to the 
     frequencies made available for reallocation pursuant to 
     section 113(b)(3), the Commission shall, not later than 1 
     year after receipt of the second reallocation report required 
     by such section, prepare, submit to the President and the 
     Congress, and implement, a plan for the allocation and 
     assignment under the 1934 Act of such frequencies. Such plan 
     shall propose the immediate allocation and assignment of all 
     such frequencies in accordance with section 309(j).''.

       CHAPTER 2--FEDERAL COMMUNICATIONS COMMISSION AUTHORIZATION

     SEC. 3011. SHORT TITLE.

       This chapter may be cited as the ``Federal Communications 
     Commission Authorization Act of 1995''.

     SEC. 3012. EXTENSION OF AUTHORITY.

       (a) Authorization of Appropriations.--Section 6 of the 
     Communications Act of 1934 (47 U.S.C. 156) is amended to read 
     as follows:

     ``SEC. 6. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated for the 
     administration of this Act by the Commission $186,000,000 for 
     fiscal year 1996, together with such sums as may be necessary 
     for increases resulting from adjustments in salary, pay, 
     retirement, other employee benefits required by law, and 
     other nondiscretionary costs, for fiscal year 1996. Of the 
     sum appropriated in each fiscal year under this section, a 
     portion, in an amount determined under sections 8(b) and 
     9(b), shall be derived from fees authorized by sections 8 and 
     9.''.
       (b) Travel and Reimbursement Program.--Section 4(g)(2) of 
     the Communications Act of 1934 (47 U.S.C. 154(g)(2)) is 
     amended to read as follows:
       ``(2) The Commission shall submit to the appropriate 
     committees of Congress, and publish in the Federal Register, 
     semiannual reports specifying the reimbursements which the 
     Commission has accepted under section 1353 of title 31, 
     United States Code.''.
       (c) Communications Support From Older Americans.--Section 
     6(a) of the Federal Communications Commission Authorization 
     Act of 1988 (47 U.S.C. 154 note) is amended by striking 
     ``fiscal years 1992 and 1993'' and inserting ``fiscal year 
     1996''.

     SEC. 3013. APPLICATION FEES.

       (a) Adjustment of Application Fee Schedule.--Section 8(b) 
     of the Communications Act of 1934 (47 U.S.C. 158(b)) is 
     amended to read as follows:
       ``(b)(1) For fiscal year 1996 and each fiscal year 
     thereafter, the Commission shall, by regulation, modify the 
     application fees by proportionate increases or decreases so 
     as to result in estimated total collections for the fiscal 
     year equal to--
       ``(A) $40,000,000; plus
       ``(B) an additional amount, specified in an appropriation 
     Act for the Commission for that fiscal year to be collected 
     and credited to such appropriation, not to exceed the amount 
     by which the necessary expenses for the costs described in 
     paragraph (5) exceeds $40,000,000.
       ``(2) In making adjustments pursuant to this paragraph the 
     Commission may round such fees to the nearest $5.00 in the 
     case of fees under $100, or to the nearest $20 in the case of 
     fees of $100 or more. The Commission shall transmit to the 
     Congress notification of any adjustment made pursuant to this 
     paragraph immediately upon the adoption of such adjustment.
       ``(3) The Commission is authorized to continue to collect 
     fees at the prior year's rate until the effective date of fee 
     adjustments or amendments made pursuant to paragraphs (1) and 
     (4).
       ``(4) The Commission shall, by regulation, add, delete, or 
     reclassify services, categories, applications, or other 
     filings subject to application fees to reflect additions, 
     deletions, or changes in the nature of its services or 
     authorization of service processes as a consequence of 
     Commission rulemaking proceedings or changes in law.
       ``(5) Any modified fees established under paragraph (4) 
     shall be derived by determining the full-time equivalent 
     number of employees performing application activities, 
     adjusted to take into account other expenses that are 
     reasonably related to the cost of processing the application 
     or filing, including all executive and legal costs incurred 
     by the Commission in the discharge of these functions, and 
     other factors that the Commission determines are necessary in 
     the public interest. The Commission shall--
       ``(A) transmit to the Congress notification of any proposed 
     modification made pursuant to this paragraph immediately upon 
     adoption of such proposal; and
       ``(B) transmit to the Congress notification of any 
     modification made pursuant to this paragraph immediately upon 
     adoption of such modification.
       ``(6) Increases or decreases in application fees made 
     pursuant to this subsection shall not be subject to judicial 
     review.''.
       (b) Treatment of Additional Collections.--Section 8(e) of 
     such Act is amended to read as follows:
       ``(e) Of the moneys received from fees authorized under 
     this section--
       ``(1) $40,000,000 shall be deposited in the general fund of 
     the Treasury to reimburse the United States for amounts 
     appropriated for use by the Commission in carrying out its 
     functions under this Act; and
       ``(2) the remainder shall be deposited as an offsetting 
     collection in, and credited to, the account providing 
     appropriations to carry out the functions of the 
     Commission.''.
       (c) Schedule of Application Fees for PCS.--The schedule of 
     application fees in section 8(g) of such Act is amended by 
     adding, at the end of the portion under the heading ``common 
     carrier services'', the following 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''.
       (d) Vanity Call Signs.--
       (1) Lifetime license fees.--
       (A) Amendment.--The schedule of application fees in section 
     8(g) of such Act is further amended by adding, at the end of 
     the portion under the heading ``private radio services'', the 
     following new item:

      ``11. Amateur vanity call signs........................150.00''. 
       (B) Treatment of receipts.--Moneys received from fees 
     established under the amendment made by this subsection shall 
     be deposited as an offsetting collection in, and credited to, 
     the account providing appropriations to carry out the 
     functions of the Commission.
       (2) Termination of annual regulatory fees.--The schedule of 
     regulatory fees in section 9(g) of such Act (47 U.S.C. 
     159(g)) is amended by striking the following item from the 
     fees applicable to the Private Radio Bureau:

    ``Amateur vanity call-signs....................................7''.

     SEC. 3014. REGULATORY FEES.

       (a) Executive and Legal Costs.--Section 9(a)(1) of the 
     Communications Act of 1934 (47 U.S.C. 159(a)(1)) is amended 
     by inserting before the period at the end the following: ``, 
     and all executive and legal costs incurred by the Commission 
     in the discharge of these functions''.
       (b) Establishment and Adjustment.--Section 9(b) of such Act 
     is amended--
       (1) in paragraph (4)(B), by striking ``90 days'' and 
     inserting ``45 days''; and
       (2) by adding at the end the following new paragraph:
       ``(5) Effective date of adjustments.--The Commission is 
     authorized to continue to collect fees at the prior year's 
     rate until the effective date of fee adjustments or 
     amendments made pursuant to paragraph (2) or (3).''.
       (c) Regulatory Fees for Satellite TV Operations.--The 
     schedule of regulatory fees in section 9(g) of such Act is 
     amended, in the fees applicable to the Mass Media Bureau, by 
     inserting after each of the items pertaining to construction 
     permits in the fees applicable to VHF commercial and UHF 
     commercial TV the following new item:

``Terrestrial television satellite operations....................500''.
       (d) Governmental Entities Use for Common Carrier 
     Purposes.--Section 9(h) of such Act is amended by adding at 
     the end the following new sentence: ``The exceptions provided 
     by this subsection for governmental entities shall not be 
     applicable to any services that are provided on a commercial 
     basis in competition with another carrier.''.
       (e) Information Required in Connection With Adjustment of 
     Regulatory Fees.--Title I of such Act is amended--
       (1) in section 9, by striking subsection (i); and
       (2) by inserting after section 9 the following new section:

     ``SEC. 10. ACCOUNTING SYSTEM AND ADJUSTMENT INFORMATION.

       ``(a) Accounting System Required.--The Commission shall 
     develop accounting systems for the purposes of making the 
     adjustments authorized by sections 8 and 9. The Commission 
     shall annually prepare and submit to the Congress an analysis 
     of such systems and shall annually afford interested persons 
     the opportunity to submit comments concerning the allocation 
     of the costs of performing the functions described in section

[[Page 1624]]

      8(a)(5) and 9(a)(1) in making such adjustments in the 
     schedules required by sections 8 and 9.
       ``(b) Information Required in Connection with Adjustment of 
     Application and Regulatory Fees.--
       ``(1) Schedule of requested amounts.--No later than May 1 
     of each calendar year, the Commission shall prepare and 
     transmit to the Committees of Congress responsible for the 
     Commission's authorization and appropriations a detailed 
     schedule of the amounts requested by the President's budget 
     to be appropriated for the ensuing fiscal year for the 
     activities described in sections 8(a)(5) and 9(a)(1), 
     allocated by bureaus, divisions, and offices of the 
     Commission.
       ``(2) Explanatory statement.--If the Commission anticipates 
     increases in the application fees or regulatory fees 
     applicable to any applicant, licensee, or unit subject to 
     payment of fees, the Commission shall submit to the Congress 
     by May 1 of such calendar year a statement explaining the 
     relationship between any such increases and either (A) 
     increases in the amounts requested to be appropriated for 
     Commission activities in connection with such applicants, 
     licensees, or units subject to payment of fees, or (B) 
     additional activities to be performed with respect to such 
     applicants, licensees, or units.
       ``(3) Definition.--For purposes of this subsection, the 
     term `amount requested by the President's budget' shall 
     include any adjustments to such requests that are made by May 
     1 of such calendar year. If any such adjustment is made after 
     May 1, the Commission shall provide such Committees with 
     updated schedules and statements containing the information 
     required by this subsection within 10 days after the date of 
     any such adjustment.''.

     SEC. 3015. INSPECTION OF SHIP RADIO STATIONS.

       (a) Authority To Designate Entities To Inspect.--Section 
     4(f)(3) of the Communications Act of 1934 (47 U.S.C. 
     154(f)(3)) is amended by inserting before the period at the 
     end the following: ``: And provided further, That, in the 
     alternative, an entity designated by the Commission may make 
     the inspections referred to in this paragraph''.
       (b) Conduct of Inspections.--Section 362(b) of such Act (47 
     U.S.C. 362(b)) is amended to read as follows:
       ``(b) Every ship of the United States that is subject to 
     this part shall have the equipment and apparatus prescribed 
     therein inspected at least once each year by the Commission 
     or an entity designated by the Commission. If, after such 
     inspection, the Commission is satisfied that all relevant 
     provisions of this Act and the station license have been 
     complied with, the fact shall be certified to on the station 
     license by the Commission. The Commission shall make such 
     additional inspections at frequent intervals as the 
     Commission determines may be necessary to ensure compliance 
     with the requirements of this Act. The Commission may, upon a 
     finding that the public interest could be served thereby--
       ``(1) waive the annual inspection required under this 
     section for a period of up to 90 days for the sole purpose of 
     enabling a vessel to complete its voyage and proceed to a 
     port in the United States where an inspection can be held; or
       ``(2) waive the annual inspection required under this 
     section for a vessel that is in compliance with the radio 
     provisions of the Safety Convention and that is operating 
     solely in waters beyond the jurisdiction of the United 
     States, provided that such inspection shall be performed 
     within 30 days of such vessel's return to the United 
     States.''.
       (c) Inspection by Other Entities.--Section 385 of such Act 
     (47 U.S.C. 385) is amended by inserting ``or an entity 
     designated by the Commission'' after ``The Commission''.

     SEC. 3016. EXPEDITED ITFS PROCESSING.

       Section 5(c)(1) of the Communications Act of 1934 (47 
     U.S.C. 155(c)(1)) is amended by striking the last sentence 
     and inserting the following: ``Except for cases involving the 
     authorization of service in the Instructional Television 
     Fixed Service, or as otherwise provided in this Act, nothing 
     in this paragraph shall authorize the Commission to provide 
     for the conduct, by any person or persons other than persons 
     referred to in paragraph (2) or (3) of section 556(b) of 
     title 5, United States Code, of any hearing to which such 
     section applies.''.

     SEC. 3017. TARIFF REJECTION AUTHORITY.

       Section 203(d) of the Communications Act of 1934 (47 U.S.C. 
     203(d)) is amended by inserting after the first sentence the 
     following new sentences: ``The Commission may, after 
     affording interested parties an opportunity to comment, 
     reject a proposed tariff filing in whole or in part, if the 
     filing or any part thereof is patently unlawful. In 
     evaluating whether a proposed tariff filing is patently 
     unlawful, the Commission may consider additional information 
     filed by the carrier or any interested party and shall 
     presume the facts alleged by the carrier to be true.''.

     SEC. 3018. REFUND AUTHORITY.

       Title II of the Communications Act of 1934 (47 U.S.C. 201 
     et seq.) is amended by adding at the end thereof the 
     following new section:

     ``SEC. 230. REFUND AUTHORITY.

       ``In addition to any other provision of this Act under 
     which the Commission may order refunds, the Commission may 
     require by order the refund of such portion of any charge by 
     any carrier or carriers as results from a violation of 
     section 220 (a), (b), or (d) or 221 (c) or (d) or of any of 
     the rules promulgated pursuant to such sections or pursuant 
     to section 215, 218, or 219. Such refunds shall be ordered 
     only to the extent that the Commission or a court finds that 
     such violation resulted in unlawful charges and shall be made 
     to such persons or classes of persons as the Commission 
     determines reasonably represent the persons from whom amounts 
     were improperly received by reason of such violation. No 
     refunds shall be required under this section unless--
       ``(1) the Commission issues an order advising the carrier 
     of its potential refund liability and provides the carrier 
     with an opportunity to file written comments as to why 
     refunds should not be required; and
       ``(2) such order is issued not later than 5 years after the 
     date the charge was paid.
     In the case of a continuing violation, a violation shall be 
     considered to occur on each date that the violation is 
     repeated.''.

     SEC. 3019. LICENSING OF AVIATION AND MARITIME SERVICES BY 
                   RULE.

       Section 307(e) of the Communications Act of 1934 (47 U.S.C. 
     307(e)) is amended to read as follows:
       ``(e)(1) Notwithstanding any license requirement 
     established in this Act, if the Commission determines that 
     such authorization serves the public interest, convenience, 
     and necessity, the Commission may by rule authorize the 
     operation of radio stations without individual licenses in 
     the following radio services: (A) the aviation radio service 
     for aircraft stations operated on domestic flights when such 
     aircraft are not otherwise required to carry a radio station; 
     and (B) the maritime radio service for ship stations 
     navigated on domestic voyages when such ships are not 
     otherwise required to carry a radio station.
       ``(2) Any radio station operator who is authorized by the 
     Commission to operate without an individual license shall 
     comply with all other provisions of this Act and with rules 
     prescribed by the Commission under this Act.
       ``(3) For purposes of this subsection, the terms `aircraft 
     station' and `ship station' shall have the meanings given 
     them by the Commission by rule.''.

     SEC. 3020. AUCTION TECHNICAL AMENDMENTS.

       (a) Funding Availability.--Section 309(j)(8)(B) of the 
     Communications Act of 1934 (47 U.S.C. 309(j)(8)(B)) is 
     amended by adding at the end the following new sentence: 
     ``Such offsetting collections are authorized to remain 
     available until expended.''.
       (b) Escrow of Deposits.--Section 309(j)(8) of such Act is 
     further amended by adding at the end the following new 
     subparagraph:
       ``(C) Escrow of deposit.--The Commission is authorized, 
     based on the competitive bidding methodology selected, to 
     provide for the deposit of moneys for bids in an interest-
     bearing account until such time as the Commission accepts a 
     deposit from the high bidder. All interest earned on bid 
     moneys received from the winning bidder shall be deposited 
     into the general fund of the Treasury. All interest earned on 
     bid moneys deposited from unsuccessful bidders, less any 
     applicable fees and penalties, shall be paid to those 
     bidders.''.

     SEC. 3021. FORFEITURES FOR VIOLATIONS IMPERILING SAFETY OF 
                   LIFE.

       (a) Administrative Sanctions.--Section 312(a) of the 
     Communications Act of 1934 (47 U.S.C. 312(a)) is amended--
       (1) by striking ``or'' at the end of paragraph (6);
       (2) by striking the period at the end of paragraph (7) and 
     inserting ``; or''; and
       (3) by adding at the end the following new paragraph:
       ``(8) for failure to comply with any requirement of this 
     Act or the Commission's rules that imperils the safety of 
     life.''.
       (b) Forfeitures.--Section 503(b)(1) of such Act (47 U.S.C. 
     503(b)(1)) is amended--
       (1) by striking ``or'' at the end of subparagraph (C);
       (2) by striking the semicolon at the end of subparagraph 
     (D) and inserting ``; or''; and
       (3) by adding after subparagraph (D) the following new 
     subparagraph:
       ``(E) failed to comply with any requirement of this Act or 
     the Commission's rules that imperils the safety of life;''.

     SEC. 3022. USE OF EXPERTS AND CONSULTANTS.

       Section 4(f)(1) of the Communications Act of 1934 (47 
     U.S.C. 154) is amended by adding at the end thereof the 
     following: ``The Commission may also procure the services of 
     experts and consultants in accordance with section 3109 of 
     title 5, United States Code, relating to appointments in the 
     Federal Service, at rates of compensation for individuals not 
     to exceed the daily rate equivalent to the maximum rate 
     payable for senior-level positions under section 5276 of 
     title 5, United States Code.''.

     SEC. 3023. STATUTE OF LIMITATIONS FOR FORFEITURE PROCEEDINGS 
                   AGAINST COMMON CARRIERS.

       Section 503(b)(6) of the Communications Act of 1934 (47 
     U.S.C. 503(b)(6)) is amended--
       (1) by striking ``or'' at the end of subparagraph (A);
       (2) by inserting ``and is not a common carrier'' after 
     ``title III of this Act'' in subparagraph (B);
       (3) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (4) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) such person is a common carrier and the required 
     notice of apparent liability is issued more than 5 years 
     after the date the violation charged occurred; or''.

[[Page 1625]]

     SEC. 3024. UTILIZATION OF FM BAND FOR ASSISTIVE DEVICES FOR 
                   HEARING IMPAIRED INDIVIDUALS.

       Within 6 months after the date of enactment of this Act, 
     the Federal Communications Commission shall report to the 
     Congress on the existing and future use of the FM band to 
     facilitate the use of auditory assistive devices for 
     individuals with hearing impairments. In preparing such 
     report, the Commission shall consider--
       (1) the potential for utilizing FM band auditory assistive 
     devices to comply with the American with Disabilities Act;
       (2) the impact on such compliance of the vulnerability of 
     such devices to harmful interference from radio licensees; 
     and
       (3) alternative frequency allocations that could facilitate 
     such compliance.

     SEC. 3025. TECHNICAL AMENDMENT.

       Section 302(d)(1) of the Communications Act of 1934 (47 
     U.S.C. 309(d)(1)) is amended--
       (1) in subparagraph (A), by striking ``allocated to the 
     domestic cellular radio telecommunications service'' and 
     inserting ``utilized to provide commercial mobile service (as 
     defined in section 332(d))''; and
       (2) in subparagraph (C), by striking ``cellular'' and 
     inserting ``commercial mobile service''.
        Subtitle B--Nuclear Regulatory Commission Annual Charge

     SEC. 3031. NUCLEAR REGULATORY COMMISSION ANNUAL CHARGES.

       Section 6101(a)(3) of the Omnibus Budget Reconciliation Act 
     of 1990 (42 U.S.C. 2214(a)(3)) is amended by striking 
     ``September 30, 1998'' and inserting ``September 30, 2002''.
            Subtitle C--United States Enrichment Corporation

     SEC. 3035. SHORT TITLE AND REFERENCE.

       (a) Short Title.--This subtitle may be cited as the ``USEC 
     Privatization Act''.
       (b) Reference.--Except as otherwise expressly provided, 
     whenever in this subtitle an amendment or repeal is expressed 
     in terms of an amendment to, or repeal of, a section or other 
     provision, the reference shall be considered to be made to a 
     section or other provision of the Atomic Energy Act of 1954 
     (42 U.S.C. 2011 et seq.).

     SEC. 3036. PRODUCTION FACILITY.

       Paragraph v. of section 11 (42 U.S.C. 2014 v.) is amended 
     by striking ``or the construction and operation of a uranium 
     enrichment production facility using Atomic Vapor Laser 
     Isotope Separation technology''.

     SEC. 3037. DEFINITIONS.

       Section 1201 (42 U.S.C. 2297) is amended--
       (1) in paragraph (4), by inserting before the period the 
     following: ``and any successor corporation established 
     through privatization of the Corporation'';
       (2) by redesignating paragraphs (10) through (13) as 
     paragraphs (14) through (17), respectively, and by inserting 
     after paragraph (9) the following new paragraphs:
       ``(10) The term `low-level radioactive waste' has the 
     meaning given such term in section 102(9) of the Low-Level 
     Radioactive Waste Policy Amendments Act of 1985 (42 U.S.C. 
     2021b(9)).
       ``(11) The term `mixed waste' has the meaning given such 
     term in section 1004(41) of the Solid Waste Disposal Act (42 
     U.S.C. 6903(41)).
       ``(12) The term `privatization' means the transfer of 
     ownership of the Corporation to private investors pursuant to 
     chapter 25.
       ``(13) The term `privatization date' means the date on 
     which 100 percent of ownership of the Corporation has been 
     transferred to private investors.'';
       (3) by inserting after paragraph (17) (as redesignated) the 
     following new paragraph:
       ``(18) The term `transition date' means July 1, 1993.'';
       (4) by redesignating the unredesignated paragraph (14) as 
     paragraph (19); and
       (5) by adding the following new paragraphs after paragraph 
     (19):
       ``(20) The term `gaseous diffusion plants' means the 
     Paducah Gaseous Diffusion Plant at Paducah, Kentucky and the 
     Portsmouth Gaseous Diffusion Plant at Piketon, Ohio.
       ``(21) The term `private corporation' means the corporation 
     established under section 1503.
       ``(22) The term `Russian HEU agreement' means the Agreement 
     Between the Government of the United States of America and 
     the Government of the Russian Federation Concerning the 
     Disposition of Highly Enriched Uranium Extracted from Nuclear 
     Weapons, dated February 18, 1993.
       ``(23) The term `Suspension Agreement' means the Agreement 
     to Suspend the Antidumping Investigation on Uranium from the 
     Russian Federation, as amended.''.

     SEC. 3038. EMPLOYEES OF THE CORPORATION.

       (a) Paragraphs (1) and (2).--Section 1305(e) (42 U.S.C. 
     2297b-4(e)) is amended by striking paragraphs (1) and (2) and 
     inserting in thereof the following:
       ``(1) In general.--
       ``(A) Privatization shall not diminish the accrued, vested 
     pension benefits of employees of the Corporation's operating 
     contractor at the two gaseous diffusion plants.
       ``(B) In the event that the private corporation terminates 
     or changes the contractor at either or both of the gaseous 
     diffusion plants, the plan sponsor or other appropriate 
     fiduciary of the pension plan covering employees of the prior 
     operating contractor shall arrange for the transfer of all 
     plan assets and liabilities relating to accrued pension 
     benefits of such plan's participants and beneficiaries from 
     such plan to a pension plan sponsored by the new contractor 
     or the private corporation, as the case may be.
       ``(C) Any employer (including the private corporation or 
     any contractor of the private corporation) at a gaseous 
     diffusion plant shall abide by the terms of any unexpired 
     collective bargaining agreement covering employees in 
     bargaining units at the plant and in effect on the 
     privatization date until the expiration of the agreement.
       ``(D) In the event of a plant closing or mass layoff (as 
     such terms are defined in section 2101(a) (2) and (3) of 
     title 29, United States Code) at either of the gaseous 
     diffusion plants, the Secretary of Energy shall treat such 
     plant as a Department of Energy defense nuclear facility and 
     any person employed by an operating contractor on the 
     privatization date at either plant as a Department of Energy 
     employee for purposes of sections 3161 through 3163 of the 
     National Defense Authorization Act for Fiscal Year 1993 (42 
     U.S.C. 7274h-7274j).
       ``(E) The Department of Energy and the private corporation 
     shall continue to fund postretirement health benefits for 
     persons employed by an operating contractor at either of the 
     gaseous diffusion plants at substantially the same level of 
     coverage as eligible retirees are entitled to receive on the 
     privatization date, consistent with clauses (i) through 
     (iii), except that the Department of Energy, the private 
     corporations and the operating contractor shall have the 
     right to implement cost-saving measures, including (but not 
     limited to) preferred provider organizations, managed care 
     programs, mandatory second opinions before surgery or other 
     medical procedures, and mandatory use of generic drugs, that 
     do not materially diminish the overall quality of the medical 
     care provided--
       ``(i) persons eligible for this coverage shall be limited 
     to persons who retired from active employment at one of the 
     gaseous diffusion plants as of the privatization date, as 
     vested participants in a pension plan maintained either by 
     the Corporation's operating contractor or by a contractor 
     employed prior to July 1, 1993, by the Department of Energy 
     to operate either of the gaseous diffusion plants and persons 
     who, as of the privatization date, are employed by the 
     Corporation's operating contractor and are vested 
     participants in a pension plan maintained either by the 
     Corporation's operating contractor or by a contractor 
     employed prior to July 1, 1993, by the Department of Energy 
     to operate either of the gaseous diffusion plants;
       ``(ii) for persons who retired from employment with an 
     operating contractor prior to July 1, 1993, the Department of 
     Energy shall fund the entire cost of postretirement health 
     benefits; and
       ``(iii) for persons who retire from employment with an 
     operating contractor after July 1, 1993, the Department of 
     Energy and the private corporation shall fund the cost of 
     postretirement health benefits in proportion to the retired 
     persons' years and months of service at a gaseous diffusion 
     plant under their respective management.''.
       (b) Paragraph (4).--Paragraph (4) of section 1305(e) (42 
     U.S.C. 2297b-4(e)(4)) is amended--
       (1) by striking ``and detailees'' in the heading;
       (2) by striking the first sentence;
       (3) in the second sentence, by inserting ``from other 
     Federal employment'' after ``transfer to the Corporation''; 
     and
       (4) by striking the last sentence.

     SEC. 3039. MARKETING AND CONTRACTING AUTHORITY.

       (a) Marketing Authority.--Section 1401(a) (42 U.S.C. 
     2297c(a)) is amended effective on the privatization date (as 
     defined in section 1201(13) of the Atomic Energy Act of 
     1954)--
       (1) by amending the subsection heading to read ``Marketing 
     Authority.--''; and
       (2) by striking the first sentence.
       (b) Transfer of Contracts.--Section 1401(b) (42 U.S.C. 
     2297c(b)) is amended--
       (1) in paragraph (2)(B), by adding at the end the 
     following: ``The privatization of the Corporation shall not 
     affect the terms of, or the rights or obligations of the 
     parties to, any such power purchase contract.''; and
       (2) by adding at the end the following:
       ``(3) Effect of transfer.--
       ``(A) As a result of the transfer pursuant to paragraph 
     (1), all rights, privileges, and benefits under such 
     contracts, agreements, and leases, including the right to 
     amend, modify, extend, revise, or terminate any of such 
     contracts, agreements, or leases were irrevocably assigned to 
     the Corporation for its exclusive benefit.
       ``(B) Notwithstanding the transfer pursuant to paragraph 
     (1), the United States shall remain obligated to the parties 
     to the contracts, agreements, and leases transferred pursuant 
     to paragraph (1) for the performance of the obligations of 
     the United States thereunder during the term thereof. The 
     Corporation shall reimburse the United States for any amount 
     paid by the
     United States in respect of such obligations arising after 
     the privatization date to the extent such amount is a legal 
     and valid obligation of the Corporation then due.
       ``(C) After the privatization date, upon any material 
     amendment, modification, extension, revision, replacement, or 
     termination of any contract, agreement, or lease transferred 
     under paragraph (1), the United States shall be released from 
     further obligation under such contract, agreement, or lease, 
     except that such action shall not release the United States 
     from obligations arising under such contract, agreement, or 
     lease prior to such time.''.
       (c) Pricing.--Section 1402 (42 U.S.C. 2297c-1) is amended 
     to read as follows:

[[Page 1626]]

     ``SEC. 1402. PRICING.

       ``The Corporation shall establish prices for its products, 
     materials, and services provided to customers on a basis that 
     will allow it to attain the normal business objectives of a 
     profitmaking corporation.''.
       (d) Leasing of Gaseous Diffusion Facilities of 
     Department.--Effective on the privatization date (as defined 
     in section 1201(13) of the Atomic Energy Act of 1954), 
     section 1403 (42 U.S.C. 2297c-2) is amended by adding at the 
     end the following:
       ``(h) Low-Level Radioactive Waste and Mixed Waste.--
       ``(1) Responsibility of the department; costs.--
       ``(A) With respect to low-level radioactive waste and mixed 
     waste generated by the Corporation as a result of the 
     operation of the facilities and related property leased by 
     the Corporation pursuant to subsection (a) or as a result of 
     treatment of such wastes at a location other than the 
     facilities and related property leased by the Corporation 
     pursuant to subsection (a) the Department, at the request of 
     the Corporation, shall--
       ``(i) accept for treatment or disposal of all such wastes 
     for which treatment or disposal technologies and capacities 
     exist, whether within the Department or elsewhere; and
       ``(ii) accept for storage (or ultimately treatment or 
     disposal) all such wastes for which treatment and disposal 
     technologies or capacities do not exist, pending development 
     of such technologies or availability of such capacities for 
     such wastes.
       ``(B) All low-level wastes and mixed wastes that the 
     Department accepts for treatment, storage, or disposal 
     pursuant to subparagraph (A) shall, for the purpose of any 
     permits, licenses, authorizations, agreements, or orders 
     involving the Department and other Federal agencies or State 
     or local governments, be deemed to be generated by the 
     Department and the Department shall handle such wastes in 
     accordance with any such permits, licenses, authorizations, 
     agreements, or orders. The Department shall obtain any 
     additional permits, licenses, or authorizations necessary to 
     handle such wastes, shall amend any such agreements or orders 
     as necessary to handle such wastes, and shall handle such 
     wastes in accordance therewith.
       ``(C) The Corporation shall reimburse the Department for 
     the treatment, storage, or disposal of low-level radioactive 
     waste or mixed waste pursuant to subparagraph (A) in an 
     amount equal to the Department's costs but in no event 
     greater than an amount equal to that which would be charged 
     by commercial, State, regional, or interstate compact 
     entities for treatment, storage, or disposal of such waste.
       ``(2) Agreements with other persons.--The Corporation may 
     also enter into agreements for the treatment, storage, or 
     disposal of low-level radioactive waste and mixed waste 
     generated by the Corporation as a result of the operation of 
     the facilities and related property leased by the Corporation 
     pursuant to subsection (a) with any person other than the 
     Department that is authorized by applicable laws and 
     regulations to treat, store, or dispose of such wastes.''.
       (e) Liabilities.--
       (1) Subsection (a) of section 1406 (42 U.S.C. 2297c-5(a)) 
     is amended--
       (A) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (B) by adding at the end the following: ``As of the 
     privatization date, all liabilities attributable to the 
     operation of the Corporation from the transition date to the 
     privatization date shall be direct liabilities of the United 
     States.''.
       (2) Subsection (b) of section 1406 (42 U.S.C. 2297c-5(b)) 
     is amended--
       (A) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (B) by adding at the end the following: ``As of the 
     privatization date, any judgment entered against the 
     Corporation imposing liability arising out of the operation 
     of the Corporation from the transition date to the 
     privatization date shall be considered a judgment against the 
     United States.''.
       (3) Subsection (d) of section 1406 (42 U.S.C. 2297c-5(d)) 
     is amended--
       (A) by inserting ``and Privatization'' after ``Transition'' 
     in the heading; and
       (B) by striking ``the transition date'' and inserting ``the 
     privatization date (or, in the event the privatization date 
     does not occur, the transition date)''.
       (f) Transfer of Uranium.--
       (1) Amendment.--Title II (42 U.S.C. 2297 et seq.) is 
     amended by redesignating section 1408 as section 1409 and by 
     inserting after section 1407 the following:

     ``SEC. 1408. URANIUM TRANSFERS AND SALES.

       ``(a) Transfers and Sales by the Secretary.--The Secretary 
     shall not provide enrichment services or transfer or sell any 
     uranium (including natural or enriched uranium in any form) 
     to any person except as provided in this section.
       ``(b) Russian Heu.--
       ``(1) Tranfers.--Prior to December 31, 1996, the United 
     States Executive Agent under the Russian HEU Agreement shall 
     transfer to the Secretary without charge an amount of uranium 
     hexafluoride equivalent to the natural uranium component of 
     low-enriched uranium derived from at least 18 metric tons of 
     highly enriched uranium purchased from the Russian Executive 
     Agent under the Russian HEU Agreement. The quantity of such 
     uranium hexafluoride delivered to the Secretary shall be 
     based on a tails assay of 0.30 U235. Title to uranium 
     hexafluoride delivered to the Secretary pursuant to this 
     paragraph shall transfer to the Secretary upon delivery of 
     such material to the Secretary. Uranium hexafluoride 
     delivered to the Secretary pursuant to this paragraph shall 
     be deemed to be of Russian origin.
       ``(2) Contracts.--Within 7 years of the date of enactment 
     of the USEC Privatization Act, the Secretary shall enter into 
     contracts to sell the uranium hexafluoride transferred to the 
     Secretary pursuant to paragraph (1). Such uranium 
     hexafluoride shall be sold--
       ``(A) at any time for use in the United States for the 
     purpose of overfeeding;
       ``(B) at any time for use outside the United States; and
       ``(C) for consumption by end users in the United States not 
     prior to January 1, 2002, in volumes not to exceed 3 million 
     pounds U3O8 equivalent per year.
       ``(3) Uranium hexafluoride.--With respect to all low-
     enriched uranium that is delivered to the United States 
     Executive Agent under the Russian HEU Agreement after January 
     1, 1997, the United States Executive Agent shall, upon 
     request of the Russian Executive Agent, deliver to the 
     Russian Executive Agent an amount of uranium hexafluoride 
     equivalent to the natural uranium component of such low-
     enriched uranium simultaneously with the delivery of such 
     low-enriched uranium. The quantity of such uranium 
     hexafluoride delivered to the Russian Executive Agent shall 
     be based on a tails assay of 0.30 U235. Title to uranium 
     hexafluoride delivered to the Russian Executive Agent 
     pursuant to this paragraph shall transfer to the Russian 
     Executive Agent upon delivery of such material to the Russian 
     Executive Agent at a North American facility designated by 
     the Russian Executive Agent. Uranium hexafluoride delivered 
     to the Russian Executive Agent pursuant to this paragraph 
     shall be deemed to be of Russian origin. Such uranium 
     hexafluoride may be sold to any person or entity consistent 
     with the limitations on delivery to end users set forth in 
     this subsection. Nothing in this subsection shall restrict 
     the sale of the conversion component of such uranium 
     hexafluoride.
       ``(4) Independent party.--In the event that the Russian 
     Executive Agent does not request delivery of the natural 
     uranium component of any low-enriched uranium, as 
     contemplated in paragraph (3), within 90 days of the date 
     such low-enriched uranium is delivered to the United States 
     Executive Agent, then the United States Executive Agent shall 
     engage an independent party through a competitive selection 
     process to auction an amount of uranium hexafluoride 
     equivalent to the natural uranium component of such low-
     enriched uranium. Such independent party shall sell such 
     uranium hexafluoride to any person or entity consistent with 
     the limitations set forth in this subsection. The independent 
     entity shall pay to the Russian Executive Agent the proceeds 
     of any such auction less all transaction and other 
     administrative costs. The quantity of such uranium 
     hexafluoride auctioned shall be based on a tails assay of 
     0.30 U235. Title to uranium hexafluoride auctioned pursuant 
     to this paragraph shall transfer to the buyer of such 
     material upon delivery of such material to the buyer. Uranium 
     hexafluoride auctioned pursuant to this paragraph shall be 
     deemed to be of Russian origin.
       ``(5) Consumption.--Except as provided in paragraphs (6) 
     and (7), uranium hexafluoride delivered to the Secretary 
     under paragraph (1) or the Russian Executive Agent under 
     paragraph (3) or auctioned pursuant to paragraph (4), may not 
     be delivered for consumption by end users in the United 
     States prior to January 1, 1998 and thereafter only in 
     accordance with the following schedule:

Annual Maximum Deliveries to End Users
(millions lbs. U3O8 equivalent)
2 million lbs. U3O8 equivalent...................
4 million lbs. U3O8 equivalent...................
6 million lbs. U3O8 equivalent...................
8 million lbs. U3O8 equivalent...................
10 million lbs. U3O8 equivalent..................
12 million lbs. U3O8 equivalent..................
14 million lbs. U3O8 equivalent..................
16 million lbs. U3O8 equivalent..................
       ``(6) Matched sales.--Uranium hexafluoride delivered to the 
     Secretary under paragraph (1) or the Russian Executive Agent 
     under paragraph (3) or auctioned pursuant to paragraph (4) 
     may be sold at any time as Russian-origin natural uranium in 
     a sale with an equal portion of U.S.-origin natural uranium 
     pursuant to the Suspension Agreement and in such case shall 
     not be counted against the annual maximum deliveries set 
     forth in paragraph (5).
       ``(7) Overfeeding.--Uranium hexafluoride delivered to the 
     Secretary under paragraph (1) or the Russian Executive Agent 
     under paragraph (3) or auctioned pursuant to paragraph (4) 
     may be sold at any time for use in the United States for the 
     purpose of overfeeding in the operations of enrichment 
     facilities.
       ``(c) Transfers to the Corporation.--(1) Before the 
     privatization date, the Secretary may transfer to the 
     Corporation without charge the low enriched uranium from up 
     to 50 metric tons of highly enriched uranium and up to 7,000 
     metric tons of natural uranium, subject to the restrictions 
     in subsection (b)(2).

[[Page 1627]]

       ``(2) The Corporation (or its successor) may not deliver 
     for commercial end use--
       ``(A) any of the natural uranium transferred under this 
     subsection before January 1, 1998;
       ``(B) more than 10 percent of the natural uranium (by 
     uranium hexafluoride equivalent content) transferred under 
     this subsection or more than 4 million pounds, whichever is 
     less, in any calendar year after 1997; or
       ``(C) more than 800,000 separative work units of low-
     enriched uranium transferred under this subsection in any 
     calendar year.
       ``(d) Inventory Sales.--(1) In addition to the transfers 
     authorized under subsection (b), the Secretary may, from time 
     to time, sell natural and low-enriched uranium (including 
     low-enriched uranium derived from highly enriched uranium) 
     from the Department of Energy s stockpile.
       ``(2) Except as provided in subsections (b) and (d), no 
     sale or transfer of natural or low-enriched uranium shall be 
     made unless--
       ``(A) the President determines that the material is not 
     necessary to national security needs,
       ``(B) the Secretary determines that the sale of the 
     material will not have an adverse impact on the domestic 
     uranium mining and enrichment industries, taking into account 
     the sales of uranium under the Russian HEU Agreement and the 
     Suspension Agreement, and
       ``(C) the price paid to the Secretary will not be less than 
     the fair market value of the material.
       ``(e) Government Transfers.--Notwithstanding subsection 
     (c), the Secretary may transfer or sell low-enriched 
     uranium--
       ``(1) to a federal agency if the material is transferred 
     for the use of the receiving agency without any resale or 
     transfer to another entity and the material does not meet 
     commercial specifications;
       ``(2) to any person for national security purposes, as 
     determined by the Secretary; or
       ``(3) to any state or local agency or nonprofit, 
     charitable, or educational institution for use other than the 
     generation of electricity for commercial use.''.
       (2) Conforming amendment.--The table of contents for 
     chapter 24 is amended by redesignating the item relating to 
     section 1408 as the item relating to section 1409 and by 
     inserting after the item for section 1407 the following:

``Sec. 1408. Uranium transfers and sales.''.

     SEC. 3040. PRIVATIZATION OF THE CORPORATION.

       (a) Establishment of Private Corporation.--Chapter 25 (42 
     U.S.C. 2297d et seq.) is amended by adding at the end the 
     following new section:

     ``SEC. 1503. ESTABLISHMENT OF PRIVATE CORPORATION.

       ``(a) Establishment.--
       ``(1) In general.--In order to facilitate privatization, 
     the Corporation may provide for the establishment of a 
     private corporation organized under the laws of any of the 
     several States. Such corporation shall have among its 
     purposes the following:
       ``(A) To help maintain a reliable and economical domestic 
     source of uranium enrichment services.
       ``(B) To undertake any and all activities as provided in 
     its corporate charter.
       ``(2) Authorities.--The corporation established pursuant to 
     paragraph (1) shall be authorized to--
       ``(A) enrich uranium, provide for uranium to be enriched by 
     others, or acquire enriched uranium (including low-enriched 
     uranium derived from highly enriched uranium);
       ``(B) conduct, or provide for conducting, those research 
     and development activities related to uranium enrichment and 
     related processes and activities the corporation considers 
     necessary or advisable to maintain itself as a commercial 
     enterprise operating on a profitable and efficient basis;
       ``(C) enter into transactions regarding uranium, enriched 
     uranium, or depleted uranium with--
       ``(i) persons licensed under section 53, 63, 103, or 104 in 
     accordance with the licenses held by those persons;
       ``(ii) persons in accordance with, and within the period 
     of, an agreement for cooperation arranged under section 123; 
     or
       ``(iii) persons otherwise authorized by law to enter into 
     such transactions;
       ``(D) enter into contracts with persons licensed under 
     section 53, 63, 103, or 104, for as long as the corporation 
     considers necessary or desirable, to provide uranium or 
     uranium enrichment and related services;
       ``(E) enter into contracts to provide uranium or uranium 
     enrichment and related services in accordance with, and 
     within the period of, an agreement for cooperation arranged 
     under section 123 or as otherwise authorized by law; and
       ``(F) take any and all such other actions as are permitted 
     by the law of the jurisdiction of incorporation of the 
     corporation.
       ``(3) Transfer of assets.--For purposes of implementing the 
     privatization, the Corporation may transfer some or all of 
     its assets and obligations to the corporation established 
     pursuant to this section, including--
       ``(A) all of the Corporation's assets and obligations, 
     including all of the Corporation's rights, duties, and 
     obligations accruing subsequent to the privatization date 
     under contracts, agreements, and leases entered into by the 
     Corporation before the privatization date, including all 
     uranium enrichment contracts and power purchase contracts;
       ``(B) all funds in accounts of the Corporation held by the 
     Treasury or on deposit with any bank or other financial 
     institution;
       ``(C) all of the Corporation's rights, duties, and 
     obligations, accruing subsequent to the privatization date, 
     under the power purchase contracts covered by section 
     1401(b)(2)(B);
       ``(D) all of the Corporation's rights, duties, and 
     obligations, accruing subsequent to the privatization date, 
     under the lease agreement between the Department and the 
     Corporation executed by the Department and the Corporation 
     pursuant to section 1403; and
       ``(E) all of the Corporation's records, including all of 
     the papers and other documentary materials, regardless of 
     physical form or characteristics, made or received by the 
     Corporation.
       ``(4) Merger or consolidation.--For purposes of 
     implementing the privatization, the Corporation may merge or 
     consolidate with the corporation established pursuant to 
     subsection (a)(1) if such action is contemplated by the plan 
     for privatization approved by the President under section 
     1502(b). The Board shall have exclusive authority to approve 
     such merger or consolidation and to take all further actions 
     necessary to consummate such merger or consolidation, and no 
     action by or in respect of shareholders shall be required. 
     The merger or consolidation shall be effected in accordance 
     with, and have the effects of a merger or consolidation 
     under, the laws of the jurisdiction of incorporation of the 
     surviving corporation, and all rights and benefits provided 
     under this title to the Corporation shall apply to the 
     surviving corporation as if it were the Corporation.
       ``(b) OSHA Requirements.--For purposes of the regulation of 
     radiological and nonradiological hazards under the 
     Occupational Safety and Health Act of 1970, the corporation 
     established pursuant to subsection (a)(1) shall be treated in 
     the same manner as other employers licensed by the Nuclear 
     Regulatory Commission. Any interagency agreement entered into 
     between the Nuclear Regulatory Commission and the 
     Occupational Safety and Health Administration governing the 
     scope of their respective regulatory authorities shall apply 
     to the corporation as if the corporation were a Nuclear 
     Regulatory Commission licensee.
       ``(c) Legal Status of Private Corporation.--
       ``(1) Not federal agency.--The Corporation established 
     pursuant to subsection (a)(1) shall not be an agency, 
     instrumentality, or establishment of the United States 
     Government and shall not be a Government corporation or 
     Government-controlled corporation.
       ``(2) No recourse against united states.--Obligations of 
     the Corporation established pursuant to subsection (a)(1) 
     shall not be obligations of, or guaranteed as to principal or 
     interest by, the Corporation or the United States, and the 
     obligations shall so plainly state.
       ``(3) No claims court jurisdiction.--No action under 
     section 1491 of title 28, United States Code, shall be 
     allowable against the United States based on the actions of 
     the Corporation established pursuant to subsection (a)(1).
       ``(d) Board of Director's Election After Public Offering.--
     In the event that the privatization is implemented by means 
     of a public offering, an election of the members of the board 
     of directors of the Corporation by the shareholders shall be 
     conducted before the end of the 1-year period beginning the 
     date shares are first offered to the public pursuant to such 
     public offering.
       ``(e) Adequate Proceeds.--The Secretary of Energy shall not 
     allow the privatization of the Corporation unless before the 
     sale date the Secretary determines that the estimated sum of 
     the gross proceeds from the sale of the Corporation will be 
     an adequate amount.''.
       (b) Ownership Limitations.--Chapter 25 (as amended by 
     subsection (a)) is amended by adding at the end the following 
     new section:

     ``SEC. 1504. OWNERSHIP LIMITATIONS.

       ``(a) Securities Limitation.--In the event that the 
     privatization is implemented by means of a public offering, 
     during a period of 3 years beginning on the privatization 
     date, no person, directly or indirectly, may acquire or hold 
     securities representing more than 10 percent of the total 
     votes of all outstanding voting securities of the 
     Corporation.
       ``(b) Application.--Subsection (a) shall not apply--
       ``(1) to any employee stock ownership plan of the 
     Corporation,
       ``(2) to underwriting syndicates holding shares for resale, 
     or
       ``(3) in the case of shares beneficially held for others, 
     to commercial banks, broker-dealers, clearing corporations, 
     or other nominees.
       ``(c) Acquisitions.--No director, officer, or employee of 
     the Corporation may acquire any securities, or any right to 
     acquire securities, of the Corporation--
       ``(1) in the public offering of securities of the 
     Corporation in the implementation of the privatization,
       ``(2) pursuant to any agreement, arrangement, or 
     understanding entered into before the privatization date, or
       ``(3) before the election of directors of the Corporation 
     under section 1503(d) on any terms more favorable than those 
     offered to the general public.''.
       (c) Exemption From Liability.--Chapter 25 (as amended by 
     subsection (b)) is amended by adding at the end the following 
     new section:

     ``SEC. 1505. EXEMPTION FROM LIABILITY.

       ``(a) In General.--No director, officer, employee, or agent 
     of the Corporation shall be

[[Page 1628]]

     liable, for money damages or otherwise, to any party if, with 
     respect to the subject matter of the action, suit, or 
     proceeding, such person was fulfilling a duty, in connection 
     with any action taken in connection with the privatization, 
     which such person in good faith reasonably believed to be 
     required by law or vested in such person.
       ``(b) Exception.--The privatization shall be subject to the 
     Securities Act of 1933 and the Securities Exchange Act of 
     1934. The exemption set forth in subsection (a) shall not 
     apply to claims arising under such Acts or under the 
     Constitution or laws of any State, territory, or possession 
     of the United States relating to transactions in securities, 
     which claims are in connection with a public offering 
     implementing the privatization.
       ``(c) Securities Laws Applicable.--Any offering or sale of 
     securities by the Corporation established pursuant to section 
     1503(a)(1) shall be subject to the Securities Act of 1933, 
     the Securities Exchange Act of 1934 and the provisions of the 
     Constitution and laws of any State, territory, or possession 
     of the United States relating to transactions in 
     securities.''.
       (d) Resolution of Certain Issues.--Chapter 25 (as amended 
     by subsection (c)) is amended by adding at the end the 
     following new section:

     ``SEC. 1506. RESOLUTION OF CERTAIN ISSUES.

       ``(a) Corporation Actions.--Notwithstanding any provision 
     of any agreement to which the Corporation is a party, the 
     Corporation shall not be considered to be in breach, default, 
     or violation of any such agreement because of any provision 
     of this chapter or any action the Corporation is required to 
     take under this chapter.
       ``(b) Right To Sue Withdrawn.--The United States hereby 
     withdraws any stated or implied consent for the United 
     States, or any agent or officer of the United States, to be 
     sued by any person for any legal, equitable, or other relief 
     with respect to any claim arising out of, or resulting from, 
     acts or omissions under this chapter.''.
       (e) Conforming Amendment.--The table of contents for 
     chapter 25 is amended by inserting after the item 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.''.
       (f) Section 193 (42 U.S.C. 2243) is amended by adding at 
     the end the following:
       ``(f) Limitation.--If the privatization of the United 
     States Enrichment Corporation results in the Corporation 
     being--
       ``(1) owned, controlled, or dominated by a foreign 
     corporation or a foreign government, or
       ``(2) otherwise inimical to the common defense or security 
     of the United States,
     any license held by the Corporation under sections 53 and 63 
     shall be terminated.''.
       (g) Period for Congressional Review.--Section 1502(d) (42 
     U.S.C. 2297d-1(d)) is amended by striking ``less than 60 days 
     after notification of the Congress'' and inserting ``less 
     than 60 days after the date of the report to Congress by the 
     Comptroller General under subsection (c)''.

     SEC. 3041. PERIODIC CERTIFICATION OF COMPLIANCE.

       Section 1701(c)(2) (42 U.S.C. 2297f(c)(2)) is amended by 
     striking ``Annual application for certificate of 
     compliance.--The Corporation shall apply at least annually to 
     the Nuclear Regulatory Commission for a certificate of 
     compliance under paragraph (1).'' and inserting ``Periodic 
     application for certificate of compliance.--The Corporation 
     shall apply to the Nuclear Regulatory Commission for a 
     certificate of compliance under paragraph (1) periodically, 
     as determined by the Nuclear Regulatory Commission, but not 
     less than every 5 years.''.

     SEC. 3042. LICENSING OF OTHER TECHNOLOGIES.

       Subsection (a) of section 1702 (42 U.S.C. 2297f-1(a)) is 
     amended by striking ``other than'' and inserting 
     ``including''.

     SEC. 3043. CONFORMING AMENDMENTS.

       (a) Repeals in Atomic Energy Act of 1954 as of the 
     Privatization Date.--
       (1) Repeals.--As of the privatization date (as defined in 
     section 1201(13) of the Atomic Energy Act of 1954), the 
     following sections (as in effect on such privatization date) 
     of the Atomic Energy Act of 1954 are repealed:
       (A) Section 1202.
       (B) Sections 1301 through 1304.
       (C) Sections 1306 through 1316.
       (D) Sections 1404 and 1405.
       (E) Section 1601.
       (F) Sections 1603 through 1607.
       (2) Conforming amendment.--The table of contents of such 
     Act is amended by repealing the items referring to sections 
     repealed by paragraph (1).
       (b) Statutory Modifications.--As of such privatization 
     date, the following shall take effect:
       (1) For purposes of title I of the Atomic Energy Act of 
     1954, all references in such Act to the ``United States 
     Enrichment Corporation'' shall be deemed to be references to 
     the corporation established pursuant to section 1503 of the 
     Atomic Energy Act of 1954 (as added by section 3036(a)).
       (2) Section 1018(1) of the Energy Policy Act of 1992 (42 
     U.S.C. 2296b-7(1)) is amended by striking ``the United 
     States'' and all that follows through the period and 
     inserting ``the corporation referred to in section 1201(4) of 
     the Atomic Energy Act of 1954.''.
       (3) Section 9101(3) of title 31, United States Code, is 
     amended by striking subparagraph (N), as added by section 
     902(b) of Public Law 102-486.
       (c) Revision of Section 1305.--As of such privatization 
     date, section 1305 of the Atomic Energy Act of 1954 (42 U.S.C 
     2297b-4) is amended--
       (1) by repealing subsections (a), (b), (c), and (d), and
       (2) in subsection (e)--
       (A) by striking the subsection designation and heading,
       (B) by redesignating paragraph (1) (as added by section 
     3038(a)) as subsection (a), striking ``In general.--'' and 
     inserting ``In General.--'', redesignating subparagraphs (A) 
     through (E) as paragraphs (1) through (5) (redesignating in 
     such paragraph, clauses (i) through (iii) as subparagraphs 
     (A) through (C)), striking ``clauses (i) through (iii)'' in 
     paragraph (5) and inserting ``subparagraphs (A) through 
     (C)'', and by moving the margins 2-ems to the left,
       (C) by striking paragraph (3), and
       (D) by redesignating paragraph (4) (as amended by section 
     3038(b)) as subsection (b), and by moving the margins 2-ems 
     to the left.
               Subtitle D--Waste Isolation Pilot Project

     SEC. 3045. SHORT TITLE AND REFERENCE.

       (a) Short Title.--This subtitle may be cited as the ``Waste 
     Isolation Pilot Plant Land Withdrawal Amendment Act''.
       (b) Reference.--Except as otherwise expressly provided, 
     whenever in this subtitle an amendment or repeal is expressed 
     in terms of an amendment to, or repeal of, a section or other 
     provision, the reference shall be considered to be made to a 
     section or other provision of the Waste Isolation Pilot Plant 
     Land Withdrawal Act (Public Law 102-579).

     SEC. 3046. DEFINITIONS.

       Paragraphs (18) and (19) of section 2 are repealed.

     SEC. 3047. TEST PHASE AND RETRIEVAL PLANS.

       Section 5 is repealed.

     SEC. 3048. TEST PHASE ACTIVITIES.

       Section 6 is amended--
       (1) by repealing subsections (a) and (b),
       (2) by repealing paragraph (1) of subsection (c),
       (3) by repealing subparagraph (A) of paragraph (2) of 
     subsection (c),
       (4) by redesignating subsection (c) as subsection (a), by 
     striking the subsection heading and the matter before 
     paragraph (1) and inserting ``Study.--The following study 
     shall be conducted:'', by striking ``(2) Remote-handled 
     waste.--'', by striking ``(B) Study.--'', and by 
     redesignating clauses (i), (ii), and (iii) as paragraphs (1), 
     (2), and (3), respectively, and moving them 4-ems to the 
     left, and
       (5) by redesignating subsection (d) as subsection (b).

     SEC. 3049. DISPOSAL OPERATIONS.

       Section 7(b) is repealed.

     SEC. 3050. ENVIRONMENTAL PROTECTION AGENCY DISPOSAL 
                   REGULATIONS.

       (a) Section 8(d)(1).--Section 8(d)(1) is amended by 
     striking subparagraphs (B), (C), and (D) and by adding after 
     subparagraph (A) the following:
       ``(B) Comments of administrator.--Within 2 months of 
     receipt of the application under subparagraph (A), the 
     Administrator shall provide the Secretary with any comments 
     on the Secretary's application. Within one month of the 
     receipt of such comments, the Secretary shall, to the extent 
     practicable, incorporate the Administrator's comments in the 
     Secretary's application. The comments of the Administrator 
     provided to the Secretary should also be transmitted to the 
     appropriate committees of jurisdiction in the House of 
     Representatives and the Senate.''.
       (b) Section 8(d) (2), (3).--Section 8(d) is amended by 
     striking paragraphs (2) and (3), by striking ``(1) Compliance 
     with disposal regulations.--'', and by redesignating 
     subparagraphs (A) and (B) of paragraph (1), as amended by 
     subsection (a), as paragraphs (1) and (2), respectively, and 
     moving them 2-ems to the left.
       (c) Section 8(f).--Subsection (f) of section 8 is amended--
       (1) by amending the subsection heading to read ``Periodic 
     Review'', and
       (2) by amending paragraph (2) to read as follows:
       ``(2) Review by the administrator.--The Administrator 
     shall, not later than 6 months after receiving a submission 
     under paragraph (1), comment on whether or not the WIPP 
     facility continues to be in compliance with the final 
     disposition regulations.''.
       (d) Section 8(g).--Section 8(g) is amended to read as 
     follows:
       ``(g) Engineered and Natural Barriers, Etc.--The Secretary 
     should determine whether or not engineered barriers or 
     natural barriers, or both, will be required at WIPP 
     consistent with regulations published as part 191 of 40 
     C.F.R.''.

     SEC. 3051. COMPLIANCE WITH ENVIRONMENTAL LAWS AND 
                   REGULATIONS.

       (a) Section 9(a)(1).--Section 9(a)(1) is amended by adding 
     after and below subparagraph (H) the following:
     ``With respect to transuranic mixed waste designated by the 
     Secretary for disposal at WIPP, such waste is exempt from the 
     land disposal restrictions published at part 268 of 40 C.F.R. 
     because compliance with the environmental radiation 
     protection standards published at part 191 of 40 C.F.R. 
     renders compliance with the land disposal restrictions 
     unnecessary to achieve desired environmental protection and a 
     no migration variance is not required for disposal of 
     transuranic mixed waste at WIPP.''.
       (b) Section 9(b).--Subsection (b) of section 9 is repealed.

[[Page 1629]]

       (c) Sections 9(c), (d).--Subsections (c) and (d) of section 
     9 are repealed.

     SEC. 3052. RETRIEVABILITY.

       Section 10 is amended to read as follows:

     ``SEC. 10. TRANSURANIC WASTE.

       ``It is the intent of Congress that a decision will be made 
     by the Secretary with respect to the disposal of transuranic 
     waste no later than March 31, 1997.''.

     SEC. 3053. DECOMMISSIONING OF WIPP.

       Section 13 is amended--
       (1) by repealing subsection (a), and
       (2) in subsection (b), by striking ``(b) Management Plan 
     for the Withdrawal After Decommissioning.--Within 5 years 
     after the date of the enactment of this Act, the'' and 
     inserting ``The''.

     SEC. 3054. ECONOMIC ASSISTANCE AND MISCELLANEOUS PAYMENTS.

       Section 15(a) is amended--
       (1) by striking ``to the Secretary for payments to the 
     State $20,000,000 for each of the 15 fiscal years beginning 
     with the fiscal year in which the transport of transuranic 
     waste to WIPP is initiated'' and inserting ``to the State 
     $20,000,000 for each of the 15 fiscal years beginning with 
     the date of the enactment of the Waste Isolation Pilot Plant 
     Land Withdrawal Amendment Act'', and
       (2) by adding at the end the following: ``An appropriation 
     to the State shall be in addition to any appropriation for 
     WIPP.''.

     SEC. 3055. NON-DEFENSE WASTE.

       Section 7(a) is amended by redesignating paragraph (3) as 
     paragraph (4) and by inserting after paragraph (2) the 
     following:
       ``(3) Nondefense waste.--Within the capacity prescribed by 
     paragraph (4), WIPP may receive transuranic waste from the 
     Secretary which did not result from a defense activity.''.
                Subtitle E--Strategic Petroleum Reserve

     SEC. 3071. LEASE OF EXCESS STRATEGIC PETROLEUM RESERVE 
                   CAPACITY.

       (a) Amendment.--Part B of title I of the Energy Policy and 
     Conservation Act (42 U.S.C. 151 et seq.) is amended by adding 
     at the end the following new section:

                   ``use of underutilized facilities

       ``Sec. 168. (a) Authority.--Notwithstanding any other 
     provision of this title, the Secretary, by lease or 
     otherwise, for any term and under such other conditions as 
     the Secretary considers necessary or appropriate, may store 
     in underutilized Strategic Petroleum Reserve facilities 
     petroleum product owned by a foreign government or its 
     representative.
       ``(b) Conditions of Withdrawal.--The lessee or occupier of 
     facilities under subsection (a) may not withdraw petroleum 
     product from those facilities more frequently than once every 
     5 years, unless an earlier drawdown is required to comply 
     with the terms of the International Energy Agreement or to 
     respond to a national energy emergency involving the 
     disruption of more than 5 percent of the lessee's or 
     occupier's imports.
       ``(c) Priority Access.--When a drawdown of the reserve is 
     ordered pursuant to section 161, the United States shall have 
     priority access, over a lessee or occupier of facilities 
     under subsection (a), to distribution facilities, including 
     pipelines and terminals.
       ``(d) Status of Stored Petroleum Product.--Petroleum 
     product stored under this section is not part of the Reserve, 
     and may be exported from the United States.''.
       (b) Table of Contents Amendment.--The table of contents of 
     part B of title I of the Energy Policy and Conservation Act 
     is amended by adding at the end the following new item:

``Sec. 168. Use of underutilized facilities.''.
           Subtitle F--FDA Export Reform and Enhancement Act

     SEC. 3081. SHORT TITLE.

       This Act may be cited as the ``FDA Export Reform and 
     Enhancement Act of 1995''.

     SEC. 3082. EXPORT OF NEW DRUGS.

       Section 801(e) of the Federal Food, Drug, and Cosmetic Act 
     (21 U.S.C. 381(e)) is amended--
       (1) in paragraph (1), by inserting after ``under this Act'' 
     the following: ``or in violation of section 505 or section 
     351 of the Public Health Service Act'',
       (2) in paragraph (1), by striking the last sentence, and
       (3) by amending paragraph (2) to read as follows:
       ``(2) Paragraph (1) does not apply to the export of--
       ``(A) any device--
       ``(i) which does not comply with an applicable requirement 
     under section 514 or 515,
       ``(ii) which under section 520(g) is exempt from either 
     such section, or
       ``(iii) which is a banned device under section 516, or
       ``(B) any drug (including a biological product) which does 
     not comply with an applicable requirement under section 505 
     or 512 or section 351 of the Public Health Service Act,
     unless the device or drug is in compliance with the 
     requirements of paragraph (1) and if the device or drug is to 
     be exported to a country which is not a member of the World 
     Trade Organization, the person exporting it has notified the 
     Secretary of the export at least 30 days before the export 
     and has included in such notice the name of the product, the 
     country to which the product is being exported, and a brief 
     description of the medical need for such device or drug in 
     such country. In the case of a device or drug for which an 
     export notice is required under this paragraph, the Secretary 
     may prohibit the export of such device or drug if the 
     Secretary determines that the possibility of the 
     reimportation of the device or drug into the United States 
     presents an imminent hazard to the public health and safety 
     of the United States and the only means of limiting the 
     hazard is to prohibit the export of the device or drug.''.

     SEC. 3083. EXPORT OF CERTAIN UNAPPROVED PRODUCTS.

       Section 802 (21 U.S.C. 382) is repealed.

     SEC. 3084. PARTIALLY PROCESSED BIOLOGICAL PRODUCTS.

       Subsection (h) of section 351 of the Public Health Service 
     Act (42 U.S.C. 262) is amended to read as follows:
       ``(h) A partially-processed biological product which--
       ``(1) is not in a form applicable to the prevention, 
     treatment, or cure of diseases or injuries of man,
       ``(2) is not intended for sale in the United States, and
       ``(3) is intended for further manufacture into final dosage 
     form outside the United States,
     shall be subject to no restriction on its export under this 
     Act or the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
     321 et seq.).''.
     TITLE IV--COMMITTEE ON ECONOMIC AND EDUCATIONAL OPPORTUNITIES

     SEC. 4000. TABLE OF CONTENTS.

       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

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.
                      Subtitle A--Higher Education

     SEC. 4001. SHORT TITLE; EFFECTIVE DATE.

       (a) Short Title.--This subtitle may be cited as the 
     ``Higher Education Program Efficiency Act of 1995''.
       (b) Effective Date.--Except as otherwise provided therein, 
     the amendments made by this subtitle shall take effect on 
     January 1, 1996.

     SEC. 4002. TERMINATION OF DIRECT LENDING.

       (a) Termination of Authority.--
       (1) Program authority.--Section 451(a) of the Higher 
     Education Act of 1965 (20 U.S.C. 1087a(a)) is amended by 
     inserting ``and ending June 30, 1996'' after ``period 
     beginning July 1, 1994''.
       (2) Termination of funding.--Section 452 of such Act (20 
     U.S.C. 1087b) is amended by adding at the end the following 
     new subsection:
       ``(e) Termination of Funding.--The Secretary shall not 
     provide funds under this section for loans for any academic 
     year beginning on or after July 1, 1996. The Secretary shall 
     not pay any fees pursuant to subsection (b) of this section 
     on or after January 1, 1996.''.
       (3) Termination of authority to enter new agreements.--
     Section 453(a) of such Act (20 U.S.C. 1087c(a)) is amended--
       (A) in paragraph (1), by inserting ``and ending before July 
     1, 1996'' after ``academic years beginning on or after July 
     1, 1994'';
       (B) in paragraph (2)--
       (i) by inserting ``and'' after the semicolon at the end of 
     subparagraph (A);
       (ii) by striking the semicolon at the end of subparagraph 
     (B) and inserting a period; and
       (iii) by striking subparagraphs (C) and (D); and
       (C) by striking paragraph (3) and redesignating paragraph 
     (4) as paragraph (3).
       (b) Administrative Cost Amendments.--Section 458 of such 
     Act (20 U.S.C. 1087h) of such Act is amended--
       (1) by striking subsection (d);
       (2) by redesignating subsections (b) and (c) as subsections 
     (f) and (g), respectively; and
       (3) by striking subsection (a) and inserting the following:
       ``(a) In General.--
       ``(1) Direct administrative costs.--Each fiscal year there 
     shall be available to the Secretary of Education, from funds 
     not otherwise appropriated, funds to be obligated for the 
     subsidy costs of direct administrative costs under this part, 
     subject to subsection (b) of this section.
       ``(2) Indirect administrative costs.--There shall also be 
     available from funds available from funds not otherwise 
     appropriated, funds to be obligated for indirect 
     administrative costs under this part and part B, subject to 
     subsection (c) of this section,

[[Page 1630]]

      not to exceed (from such funds not otherwise appropriated) 
     $260,000,000 in fiscal year 1994, $345,000,000 in fiscal year 
     1995, $110,000,000 in fiscal year 1996 (of which $40,000,000 
     shall be available for administrative cost allowances for 
     guaranty agencies for October through December of 1995), and 
     $70,000,000 in each of the fiscal years 1997 through 2002.
       ``(3) Reduction.--The amount authorized to be made 
     available for fiscal year 1997 under paragraph (2) shall be 
     reduced by the amount of any unobligated unexpended funds 
     available to carry out this subsection for any fiscal year 
     prior to fiscal year 1996.
       ``(b) Subsidy Costs.--For purposes of this section, 
     `subsidy cost' means the estimated long-term cost to the 
     Federal Government of direct administrative expenses 
     calculated on a net present value basis.
       ``(c) Direct Administrative Expenses.--For purposes of this 
     section, `direct administrative expenses' shall consist of 
     the cost of--
       ``(1) activities related to credit extension, loan 
     origination, loan servicing, management of contractors, and 
     payments to contractors, other government entities, and 
     program participants;
       ``(2) collection of delinquent loans; and
       ``(3) write-off and closeout of loans.
       ``(d) Indirect Administrative Expenses.--For purposes of 
     this section, `indirect administrative expenses' shall 
     consist of the cost of--
       ``(1) personnel engaged in developing program regulations, 
     policy, and administrative guidelines;
       ``(2) audits of institutions and contractors;
       ``(3) program reviews; and
       ``(4) other oversight of the program.
       ``(e) Limitation on Part D Expenditures.--For any fiscal 
     year, expenditures for indirect administrative expenses and 
     for loan servicing for loans made pursuant to this part shall 
     not exceed 30 percent of funds available pursuant to 
     paragraph (2) for such fiscal year.''.
       (c) Elimination of Transition to Direct Loans.--Such Act is 
     further amended--
       (1) in section 422(c)(7) (20 U.S.C. 1072(c)(7))--
       (A) by striking ``during the transition'' and all that 
     follows through ``part D of this title'' in subparagraph (A); 
     and
       (B) by striking ``section 428(c)(10)(F)(v)'' in 
     subparagraph (B) and inserting ``section 428(c)(9)(F)(v)'';
       (2) in section 428(c)(8) (20 U.S.C. 1078(c)(8)), by 
     striking subparagraph (B) and inserting the following:
       ``(B) Prior to making such determination for any guaranty 
     agency, the Secretary shall, in consultation with the 
     guaranty agency, develop criteria to determine whether such 
     guaranty agency has made adequate collection efforts. In 
     determining whether a guaranty agency's collection efforts 
     have met such criteria, the Secretary shall consider the 
     agency's record of success in collecting on defaulted loans, 
     the age of the loans, and the amount of recent payments 
     received on the loans.'';
       (3) in section 428(c)(9)(E)--
       (A) by inserting ``or'' after the semicolon at the end of 
     clause (iv);
       (B) by striking ``; or'' at the end of clause (v) and 
     inserting a period; and
       (C) by striking clause (vi);
       (4) in clause (vii) of section 428(c)(9)(F)--
       (A) by inserting ``and'' before ``to avoid disruption''; 
     and
       (B) by striking ``, and to ensure an orderly transition'' 
     and all that follows through the end of such clause and 
     inserting a period;
       (5) in section 428(c)(9)(K), by striking ``the progress of 
     the transition from the loan programs under this part to'' 
     and inserting ``the integrity and administration of'';
       (6) in section 428(e)(1)(B)(ii), by striking ``during the 
     transition'' and all that follows through ``part D of this 
     title'';
       (7) in section 428(e)(3), by striking ``of transition'';
       (8) in section 428(j)(3)--
       (A) by striking ``during transition to direct lending''; 
     and
       (B) by striking ``during the transition'' and all that 
     follows through ``part D of this title,'' in subparagraph (A) 
     and inserting a comma;
       (9) in section 453(c)(2) (20 U.S.C. 1087c(c)(2)), by 
     striking ``Transition'' and inserting ``Institutional'';
       (10) in section 453(c), by striking paragraph (3); and
       (11) in section 456(b) (20 U.S.C. 1087f(b))--
       (A) by inserting ``and'' after the semicolon at the end of 
     paragraph (3);
       (B) by striking paragraph (4);
       (C) by redesignating paragraph (5) as paragraph (4); and
       (D) in such paragraph (4) (as redesignated), by striking 
     ``successful operation'' and inserting ``integrity and 
     efficiency''.
       (d) Additional Conforming Amendments.--
       (1) Ability of part d borrowers to obtain federal stafford 
     consolidation loans.--Section 428C(a)(4) of such Act (20 
     U.S.C. 1078-3(a)(4)) is amended--
       (A) by redesignating subparagraphs (C) and (D) as 
     subparagraphs (D) and (E); and
       (B) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) made under part D of this title;''.
       (2) Conforming amendments.--Section 428C(b) of such Act (20 
     U.S.C. 1078-3(b)) is amended by striking paragraph (5).

     SEC. 4003. ELIMINATION OF GRACE PERIOD INTEREST SUBSIDIES.

       Section 428(a)(3) of the Higher Education Act of 1965 (20 
     U.S.C. 1078(a)(3)) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Notwithstanding subparagraph (A), no portion of the 
     interest which accrues after the student ceases to carry at 
     an eligible institution at least one-half the normal full-
     time academic workload (as determined by the institution) and 
     prior to the beginning of the repayment period of the loan 
     shall be paid by the Secretary under this subsection on any 
     loan made on or after January 1, 1996. Interest on the unpaid 
     principal amount of any such loan during the interval 
     described in the preceding sentence shall, at the option of 
     the borrower--
       ``(i) be paid monthly or quarterly, or
       ``(ii) be added by the lender to the principal amount of 
     the loan at the commencement of the repayment period.''.

     SEC. 4004. PLUS PROGRAM REDUCTIONS.

       (a) Loan Limits.--Section 428B(b) of the Higher Education 
     Act of 1965 (20 U.S.C. 1078-2(b)) is amended--
       (1) by striking ``(b) Limitation Based on Need.--'' and 
     inserting the following:
       ``(b) Annual Limits.--
       ``(1) Limitation based on need.--'';
       (2) by inserting before the last sentence thereof the 
     following:
       ``(3) Limitation computed on basis of actual payments.--''; 
     and
       (3) by inserting before paragraph (3) (as designated by the 
     amendment made by paragraph (2) of this subsection) the 
     following new paragraph:
       ``(2) Dollar limitation.--Subject to paragraph (1), the 
     maximum amount parents may borrow for one student in any 
     academic year or its equivalent (as defined by regulations of 
     the Secretary) is $15,000.''.
       (b) Interest Rebate.--Section 428B of such Act is further 
     amended by adding at the end the following new subsection:
       ``(f) Interest Rebate.--
       ``(1) Rebate required.--Each holder of a loan under this 
     section made on or after the date of enactment of this 
     subsection, shall pay, on June 30 and December 31 of each 
     year, to the Secretary a rebate of subsidies in an amount 
     equal to 0.8 percent of the outstanding principal balance of 
     loans held on such date. Payment of such rebate shall be made 
     not later than 60 days after each such date.
       ``(2) Deposit of rebates.--The Secretary shall deposit all 
     fees collected pursuant to paragraph (1) into the insurance 
     fund established in section 431.''.
       (c) Plus Loans Interest Rates.--Section 427A(c)(4) of such 
     Act (20 U.S.C. 1077a(c)(4)) is amended by adding at the end 
     the following new subparagraph:
       ``(F) Notwithstanding subparagraphs (A), (D), and (E), for 
     any loan made pursuant to section 428B for which the first 
     disbursement is made on or after January 1, 1996--
       ``(i) subparagraph (B) shall be applied by substituting 
     `4.0' for `3.25'; and
       ``(ii) the interest rate shall not exceed 11 percent.''.
       (d) Conforming Amendment.--Section 427A(h) of such Act (20 
     U.S.C. 1077a(h)) is amended--
       (1) by striking paragraph (2); and
       (2) by redesignating paragraph (3) as paragraph (2).

     SEC. 4005. LOAN TRANSFER FEE.

       Section 428(b)(2) of the Higher Education Act of 1965 (20 
     U.S.C. 1078(b)(2)) is amended--
       (1) by striking ``and'' at the end of subparagraph (E);
       (2) by striking the period at the end of subparagraph (F) 
     and inserting ``; and''; and
       (3) by adding at the end thereof the following new 
     subparagraph:
       ``(G) provide that, if a lender or holder, on or after 
     January 1, 1996, sells, transfers, or assigns a loan under 
     this part, then the transferee shall pay to the Secretary a 
     transfer fee in an amount equal to 0.20 percent of the 
     principal of the loan, which transfer fee shall be deposited 
     into the insurance fund established in section 431, except 
     that the provisions of this subparagraph shall not apply to 
     any such sale, transfer, or assignment by a lender or holder 
     to such lender's or holder's affiliate or pursuant to a 
     merger or other consolidation transaction.''.

     SEC. 4006. LENDER FEES TO GUARANTY AGENCIES.

       Subsection (f) of section 428 of the Higher Education Act 
     of 1965 (20 U.S.C. 1078(f)) is amended to read as follows:
       ``(f) Payments of Certain Costs.--
       ``(1) Payments from lenders.--With respect to any loan 
     under this part for which the first disbursement is made on 
     or after January 1, 1996, the originating lender shall remit 
     to the guaranty agency which guarantees the loan, a fee equal 
     to 0.70 percent of the principal amount of the loan.
       ``(2) Use of payments.--Payments made pursuant to paragraph 
     (1) shall be used for the purposes of--
       ``(A) the administrative costs of collections of loans;
       ``(B) the administrative costs of preclaim assistance and 
     other predefault activities;
       ``(C) the administrative costs of monitoring the enrollment 
     and repayment status of students; and
       ``(D) other such costs related to the student loan 
     insurance program.
       ``(3) Timing of payments.--Payments made pursuant to 
     paragraph (1) shall be made at the time insurance premiums on 
     such loans are paid to the guaranty agency.
       ``(4) Prohibition on pass-through.--No part of any payments 
     required by this section shall be assessed or collected, 
     directly or indirectly, from any borrower under this part.''.

[[Page 1631]]

     SEC. 4007. ADDITIONAL LOAN PROGRAM CHANGES.

       (a) Reserve Funds.--
       (1) Amendments to section 422.--Section 422 of the Higher 
     Education Act of 1965 (20 U.S.C. 1072) is amended--
       (A) in the last sentence of subsection (a)(2), by striking 
     ``Except as provided in section 428(c)(10)(E) or (F), such 
     unencumbered'' and inserting ``Such'';
       (B) in subsection (g)(1), by striking ``or the program 
     authorized by part D of this title'' each place it appears;
       (C) in subsection (g)(1)(D), by striking ``(A) or (B)'' and 
     inserting ``(A), (B), or (C)''; and
       (D) in subsection (g), by striking paragraph (4) and 
     inserting the following:
       ``(4) Disposition of funds returned to or recovered by the 
     secretary.--Any funds that are returned to or otherwise 
     recovered by the Secretary pursuant to this subsection shall 
     be returned to the Treasury of the United States for purposes 
     of reducing the Federal debt and shall be deposited into the 
     special account under section 3113(d) of title 31, United 
     States Code.''.
       (2) Amendments to section 428.--Section 428(c)(9)(A) of 
     such Act (20 U.S.C. 1078(c)(9)(A)) is amended--
       (A) by inserting ``and'' after the semicolon at the end of 
     clause (i);
       (B) by striking ``; and'' at the end of clause (ii) and 
     inserting a period; and
       (C) by striking clause (iii).
       (b) Application for Part B Loans Using Free Federal 
     Application.--
       (1) Single form required.--Section 483(a) of such Act (20 
     U.S.C. 1090(a)) is amended--
       (A) in paragraph (1)--
       (i) by inserting ``B,'' after ``assistance under parts 
     A,'';
       (ii) by striking ``and to determine the need of a student 
     for the purpose of part B of this title''; and
       (iii) by striking the last sentence and inserting the 
     following: ``Such form may be in an electronic or any other 
     format (subject to section 485B) in order to facilitate use 
     by borrowers and institutions.''; and
       (B) in paragraph (3), by striking ``and States shall 
     receive,'' and inserting ``, any guaranty agency authorized 
     by any such institution, and States shall receive, at their 
     request and''.
       (2) Use of electronic forms.--Section 483(a) of such Act is 
     further amended by adding the following new paragraph after 
     paragraph (4):
       ``(5) Electronic forms.--(A) The Secretary, in cooperation 
     with representatives of institutions of higher education, 
     eligible lenders, and guaranty agencies, shall prescribe an 
     electronic version of the form described in subsection 
     (a)(1). Such electronic form shall not require signatures to 
     be collected at the time such form is submitted if the data 
     contained in the electronic form is certified in one or more 
     separate writings. The Secretary shall prescribe the initial 
     electronic form not later than 90 days after the date of 
     enactment of this paragraph.
       ``(B) Nothing in this Act shall preclude the use of the 
     electronic form prescribed under subparagraph (A) through 
     software developed, produced, distributed (including by 
     diskette, modem or network communication, or otherwise) or 
     collected by eligible lenders, guaranty agencies, eligible 
     institutions, or consortia thereof. Such organization or 
     consortium shall submit such electronic form to the Secretary 
     for review prior to its use. If such electronic form is 
     inconsistent with the provisions of this part, the Secretary 
     shall notify the submitting organization or consortium of his 
     objection within 30 days of such submission, and shall 
     specifically identify the necessary changes. In the absence 
     of such an objection the organization or consortium may use 
     the electronic form as submitted. No fee may be charged in 
     connection with use of the electronic form, or of any other 
     electronic forms used in conjunction with such form in 
     applying for Federal or State student financial 
     assistance.''.
       (c) Amendments to Eligible Lender Definition.--Section 
     435(d)(1) of such Act (20 U.S.C. 1085) is amended--
       (1) by inserting before the semicolon at the end of 
     subparagraph (A) the following: ``; and in determining 
     whether the making or holding of loans to students and 
     parents under this part is the primary consumer credit 
     function of the eligible lender, loans made or held as 
     trustee or in a trust capacity for the benefit of a third 
     party shall not be considered'';
       (2) by striking ``and'' at the end of subparagraph (I);
       (3) in subparagraph (J), by striking the period and 
     inserting ``; and''; and
       (4) by adding at the end the following new subparagraph:
       ``(K) a wholly owned subsidiary of a publicly-held holding 
     company which, as of the date of enactment of this 
     subparagraph, through one or more subsidiaries (i) acts as a 
     finance company, and (ii) participates in the program 
     authorized by this part pursuant to subparagraph (C).''.
       (d) Additional Amendments to Section 428.--
       (1) Amendments.--Section 428 of such Act is further 
     amended--
       (A) in subsection (b)(1)(G), by striking ``98 percent'' and 
     inserting ``95 percent'';
       (B) in subsection (b)(1)(X), by striking ``section 
     428(c)(10)'' and inserting ``section 428(c)(9)'';
       (C) in subsection (c)(1)(A), by striking ``98 percent'' and 
     inserting ``96 percent'';
       (D) in subsection (c)(1)(B)(i), by striking ``88 percent'' 
     and inserting ``86 percent'';
       (E) in subsection (c)(1)(B)(ii), by striking ``78 percent'' 
     and inserting ``76 percent'';
       (F) in subsection (c)(9)(C)(ii), by striking ``80 percent'' 
     and inserting ``76 percent'';
       (G) in subsection (c)(9)(I) by inserting ``on the record'' 
     after ``for a hearing'';
       (H) in subsection (j)(2)(A), by striking ``60'' and 
     inserting ``15'';
       (I) in subsection (j)(2)(B), by striking ``two rejections'' 
     and inserting ``one rejection''; and
       (J) in subsection (l)--
       (i) by striking paragraph (2); and
       (ii) by striking ``(1) Assistance required.--''.
       (2) Effective date.--The amendments made by subparagraphs 
     (A) and (C) through (F) of paragraph (1) of this subsection 
     shall apply to loans on which the first disbursement of 
     principal is made on or after January 1, 1996.
       (e) Reinsurance Percentage Under Section 428I.--Section 
     428I of such Act (20 U.S.C. 1078-9) is amended in subsection 
     (b)(1)--
       (1) by striking ``100 percent'' in the heading and 
     inserting ``95 percent''; and
       (2) by striking ``100 percent'' and inserting ``95 
     percent''.
       (f) Loan Fees From Lenders.--Section 438(d)(2) of such Act 
     (20 U.S.C. 1087-1(d)(2)) is amended to read as follows:
       ``(2) Amount of loan fees.--The amount of the loan fee 
     which shall be deducted under paragraph (1) shall be--
       ``(A) 0.50 percent of the principal amount of the loan, for 
     any loan under this part for which the first disbursement was 
     made on or after October 1, 1993, and before January 1, 1996; 
     or
       ``(B) 0.30 percent of the principal amount of the loan, for 
     any loan under this part for which the first disbursement was 
     made on or after January 1, 1996.''.
       (g) Small Lender Audit Exemption.--Section 
     428(b)(1)(U)(iii) of such Act (20 U.S.C. 1078(b)(1)(U)(iii)) 
     is amended--
       (1) by inserting ``in the case of any lender that 
     originates or holds more than $5,000,000 in principal on 
     loans made under this title in any fiscal year,'' before 
     ``for (I)'';
       (2) by inserting ``such'' before ``lender at least once'';
       (3) by inserting ``such'' before ``a lender that is 
     audited''; and
       (4) by striking ``if the lender'' and inserting ``if such 
     lender''.

     SEC. 4008. USE OF RESERVE FUNDS TO PURCHASE DEFAULTED LOANS.

       Section 422 of the Higher Education Act of 1965 (20 U.S.C. 
     1072) is amended by adding at the end the following new 
     subsection:
       ``(h) Use of Reserve Funds to Purchase Defaulted Loans.--
       ``(1) In general.--Except as provided in paragraph (2), a 
     guaranty agency shall use not less than 50 percent of such 
     agency's reserve funds to purchase and hold defaulted loans 
     that are guaranteed by such agency and for which a claim for 
     insurance is filed with such agency by an eligible lender 
     after the date of enactment of this subsection. The amount of 
     such purchases shall be considered as reserve funds under 
     this section and used in the calculation of the minimum 
     reserve level under section 428(c)(9).
       ``(2) Special rule.--A guaranty agency shall not be 
     required to use its reserve funds to purchase and hold 
     defaulted loans in accordance with paragraph (1) to the 
     extent that--
       ``(A) the dollar volume of insurance claims filed with such 
     agency does not amount to 50 percent of such agency's 
     available reserve funds; or
       ``(B) such use is prohibited by State law; or
       ``(C) such use will compromise the ability of the guaranty 
     agency to pay program expenses.''.

     SEC. 4009. EXTENSION OF PERIOD A GUARANTY AGENCY MUST HOLD A 
                   DEFAULTED LOAN.

       (a) Exemption for Extended Holding Period.--The last 
     sentence of section 428(c)(1)(A) of the Higher Education Act 
     of 1965 (20 U.S.C. 1078(c)(1)(A)) is amended by striking out 
     ``A guaranty agency'' and inserting ``Except as provided in 
     section 428K, a guaranty agency''.
       (b) New Extended Holding Period Program.--Part B of title 
     IV of such Act (20 U.S.C. 1071 et seq.) is amended by 
     inserting after section 428J the following new section:

     ``SEC. 428K. GUARANTOR PURCHASE OF CLAIMS WITH RESERVE FUNDS.

       ``(a) Loans Subject to Extended Holding Period.--Except as 
     provided in subsection (b), a guaranty agency shall file a 
     claim for reimbursement with respect to losses (resulting 
     from the default of a student borrower) subject to 
     reimbursement by the Secretary pursuant to section 428(c)(1) 
     not less than 180 days nor more than 225 days after the 
     guaranty agency discharges such agency's insurance obligation 
     on a loan insured under this part. Such claim shall include 
     losses on the unpaid principal and accrued interest of any 
     such loan, including interest accrued from the date of such 
     discharge to the date such agency files the claim for 
     reimbursement from the Secretary.
       ``(b) Loans Excluded From Extended Holding.--A guaranty 
     agency may file a claim with respect to losses subject to 
     reimbursement by the Secretary pursuant to section 428(c)(1) 
     prior to 180 days after the date the guaranty agency 
     discharges such agency's insurance obligation on a loan 
     insured under this part, if--
       ``(1) such agency used 50 percent or more of such agency's 
     reserve funds to purchase or hold loans in accordance with 
     section 422(h);
       ``(2) such claim is based on an inability to locate the 
     borrower and the guaranty agency certifies to the Secretary 
     that--

[[Page 1632]]

       ``(A) diligent attempts were made to locate the borrower 
     through the use of reasonable skip-tracing techniques in 
     accordance with section 428(c)(2)(G); and
       ``(B) such skip-tracing attempts to locate the borrower 
     were unsuccessful; or
       ``(3) the guaranty agency determines that the borrower is 
     unlikely to possess the financial resources to begin repaying 
     the loan prior to 180 days after default by the borrower.
       ``(c) Guaranty Agency Efforts During Extended Holding 
     Period.--A guaranty agency shall attempt to bring a loan 
     described in subsection (a) into repayment status prior to 
     180 days after the date the guaranty agency discharges its 
     insurance obligation on the loan, so that no claim for 
     reimbursement by the Secretary is necessary. Upon securing 
     payment satisfactory to the guaranty agency during the 180-
     day period, such agency shall, if practicable, sell such loan 
     to an eligible lender. Such loan shall not be sold to an 
     eligible lender that the guaranty agency determines has 
     substantially failed to exercise the due diligence required 
     of lenders under this part.
       ``(d) Regulation Prohibited.--The Secretary shall not 
     regulate the collection activities of a guaranty agency with 
     respect to a loan described in subsection (a) for which 
     reinsurance has not been paid under section 428(c)(1).''.

     SEC. 4010. PRIVATIZATION OF COLLEGE CONSTRUCTION LOAN 
                   INSURANCE ASSOCIATION.

       (a) Repeal of Statutory Restrictions.--Part D of title VII 
     of the Higher Education Act of 1965 (20 U.S.C. 1132f et seq.) 
     is repealed.
       (b) Status of the Corporation.--
       (1) Status of the corporation.--The Corporation shall not 
     be an agency, instrumentality, or establishment of the United 
     States Government and shall not be a ``Government 
     corporation'' nor a ``Government controlled corporation'' as 
     defined in section 103 of title 5, United States Code. No 
     action under section 1491 of title 28, United States Code 
     (commonly known as the Tucker Act), shall be allowable 
     against the United States based on the actions of the 
     Corporation.
       (2) Corporate powers.--The Corporation shall have the power 
     to engage in any business or other activities for which 
     corporations may be organized under the laws of any State of 
     the United States or the District of Columbia. The 
     Corporation shall have the power to enter into contracts, to 
     execute instruments, to incur liabilities, to provide 
     products and services, and to do all things as are necessary 
     or incidental to the proper management of its affairs and the 
     efficient operation of a private, for-profit business.
       (3) Limitation on ownership of stock.--Except as provided 
     in subsection (d)(2) of this section, no stock of the 
     Corporation may be sold or issued to an agency, 
     instrumentality, or establishment of the United States 
     Government, to a Government corporation or a Government 
     controlled corporation (as such terms are defined in section 
     103 of title 5, United States Code), or to a Government 
     sponsored enterprise (as such term is defined in section 622 
     of title 2, United States Code). The Student Loan Marketing 
     Association shall not own any stock of the Corporation, 
     except that it may retain the stock it owns on the date of 
     enactment. The Student Loan Marketing Association shall not 
     control the operation of the Corporation, except that the 
     Student Loan Marketing Association may participate in the 
     election of directors as a shareholder, and may continue to 
     exercise its right to appoint directors under section 754 of 
     the Higher Education Act of 1965 as long as that section is 
     in effect. The Student Loan Marketing Association shall not 
     provide financial support or guarantees to the Corporation. 
     Notwithstanding the prohibitions in this subsection, the 
     United States may pursue any remedy against a holder of the 
     Corporation's stock to which it would otherwise be entitled.
       (c) Related Privatization Requirements.--
       (1) Notice requirements.--During the 5-year period 
     following the date of the enactment of this Act, the 
     Corporation shall include in any document offering the 
     Corporation's securities, in any contracts for insurance, 
     guarantee, or reinsurance of obligations, and in any 
     advertisement or promotional material, a statement that--
       (A) the Corporation is not a Government-sponsored 
     enterprise or instrumentality of the United States; and
       (B) the Corporation's obligations are not guaranteed by the 
     full faith and credit of the United States.
       (2) Corporate charter.--The Corporation's charter shall be 
     amended as necessary and without delay to conform the 
     requirements of this Act.
       (3) Corporate name.--The name of the Corporation, or of any 
     direct or indirect subsidiary thereof, may not contain the 
     term ``College Construction Loan Insurance Association''.
       (4) Articles of incorporation.--The Corporation shall amend 
     its articles of incorporation without delay to reflect that 
     one of the purposes of the Corporation shall be to guarantee, 
     insure and reinsure bonds, leases, and other evidences of 
     debt of educational institutions, including Historically 
     Black Colleges and Universities and other academic 
     institutions which are ranked in the lower investment grade 
     category using a nationally recognized credit rating system.
       (5) Transition requirements.--
       (A) Requirements until stock sale.--Notwithstanding 
     subsection (a), the requirements of section 754 of the Higher 
     Education Act of 1965 (20 U.S.C. 1132f-3), as in existence as 
     of the day before enactment of this Act, shall continue to be 
     effective until the day immediately following the date of 
     closing of the purchase of the Secretary's stock (or the date 
     of closing of the final purchase, in the case of multiple 
     transactions) pursuant to subsection (d) of this section.
       (B) Reports after stock sale.--The Corporation shall, not 
     later than March 30 of the first full calendar year 
     immediately following the sale pursuant to subsection (d), 
     and each of the 2 succeeding years, submit to the Secretary 
     of Education a report describing the Corporation's efforts to 
     assist in the financing of education facilities projects, 
     including projects for elementary, secondary, and 
     postsecondary educational institution infrastructure, and 
     detailing, on a project-by-project basis, the Corporation's 
     business dealings with educational institutions that are 
     rated by a nationally recognized statistical rating 
     organization at or below the organization's third highest 
     ratings.
       (d) Sale of Federally Owned Stock.--
       (1) Sale of stock required.--The Secretary of the Treasury 
     shall make every effort to sell, pursuant to section 324 of 
     title 31, United States Code, the stock of the Corporation 
     owned by the Secretary of Education not later than 6 months 
     after the date of the enactment of this Act.
       (2) Purchase by the corporation.--In the event that the 
     Secretary of the Treasury is unable to sell the stock, or any 
     portion thereof, at a price acceptable to the Secretary of 
     Education and the Secretary of the Treasury, the Corporation 
     shall purchase, within the period specified in paragraph (1), 
     such stock at a price determined by the Secretary of the 
     Treasury and acceptable to the Corporation based on 
     independent appraisal by one or more nationally recognized 
     financial firms, except that such price shall not exceed the 
     value of the Secretary's stock as determined by the 
     Congressional Budget Office in House Report 104-153, dated 
     June 22, 1995. Such firms shall be selected by the Secretary 
     of the Treasury in consultation with the Secretary of 
     Education and the Corporation.
       (e) Assistance by the Corporation.--The Corporation shall 
     provide such assistance as the Secretary of the Treasury and 
     the Secretary of Education may require to facilitate the sale 
     of the stock under this section.
       (f) Definition.--As used in this section, the term 
     ``Corporation'' means the Corporation established pursuant to 
     the provision of law repealed by subsection (a).

     SEC. 4011. ELIGIBLE INSTITUTION.

       (a) Amendments.--Section 481(b) of the Higher Education Act 
     of 1965 (20 U.S.C. 1088(b)) is amended--
       (1) by inserting before the period at the end of the first 
     sentence the following: ``on the basis of a review by the 
     institution's independent auditor using generally accepted 
     accounting principles''; and
       (2) by inserting after the end of such first sentence the 
     following new sentences: ``For the purposes of clause (6), 
     revenues from sources that are not derived from funds 
     provided under this title include revenues from programs of 
     education or training that do not meet the definition of an 
     eligible program in subsection (e), but are provided on a 
     contractual basis under Federal, State, or local training 
     programs, or to business and industry. For the purposes of 
     determining whether an institution meets the requirements of 
     clause (6), the Secretary shall not consider the financial 
     information of any institution for a fiscal year began on or 
     before April 30, 1994.''.
       (b) Effective Date.--Notwithstanding section 713 of this 
     Act, the amendments made by subsection (a) shall apply to any 
     determination made on or after July 1, 1994, by the Secretary 
     of Education pursuant to section 481(b)(6) of the Higher 
     Education Act of 1965.

     SEC. 4012. EXTENSION OF PROGRAM DURATION.

       Part B of title IV of the Higher Education Act of 1965 is 
     amended--
       (1) in section 424(a) (20 U.S.C. 1074(a)), by striking 
     ``1998'' and inserting ``2002'';
       (2) in section 428(a)(5) (20 U.S.C. 1078(a)(5))--
       (A) by striking ``2002'' and inserting ``2006''; and
       (B) by striking ``1998'' and inserting ``2002''; and
       (3) in section 428C(e) (20 U.S.C. 1078-3(e)), by striking 
     the first sentence and inserting ``The authority to make 
     loans under this section expires at the close of September 
     30, 2002.''.
                  Subtitle B--Service Contract Repeal

     SEC. 4101. SERVICE CONTRACT ACT OF 1965.

       (a) Repeal.--The Service Contract Act of 1965 (41 U.S.C. 
     351 et seq.) is repealed.
       (b) Application.--The amendment made by subsection (a) 
     shall not apply to a contract which was entered into before 
     the 45th day after the date of the enactment of this Act and 
     to which the Service Contract Act of 1965 applied.
   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.

       (a) General Rule.--For purposes of section 205(c)(3)(A) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1055(c)(3)(A)), the minimum period prescribed by the 
     Secretary of the Treasury between the date that the 
     explanation referred to in

[[Page 1633]]

     such section is provided and the annuity starting date shall 
     not apply if waived by the participant and, if applicable, 
     the participant's spouse.
       (b) Effective Date.--Subsection (a) shall apply to plan 
     years beginning after December 31, 1995.
         TITLE V--COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
 Subtitle A--Federal Employee and Congressional Benefits; Availability 
              of Surplus Property for Homeless Assistance

     SEC. 5001. EXTENSION OF DELAY IN COST-OF-LIVING ADJUSTMENTS 
                   IN FEDERAL EMPLOYEE RETIREMENT BENEFITS THROUGH 
                   FISCAL YEAR 2002.

       Section 11001(a) of the Omnibus Budget Reconciliation Act 
     of 1993 (Public Law 103-66; 107 Stat. 408) is amended in the 
     matter preceding paragraph (1) by striking out ``or 1996,'' 
     and inserting in lieu thereof ``1996, 1997, 1998, 1999, 2000, 
     2001, or 2002,''.

     SEC. 5002. INCREASED CONTRIBUTIONS TO FEDERAL CIVILIAN 
                   RETIREMENT SYSTEMS.

       (a) Civil Service Retirement System.--
       (1) Deductions.--The first sentence of section 8334(a)(1) 
     of title 5, United States Code, is amended to read as 
     follows: ``The employing agency shall deduct and withhold 
     from the basic pay of an employee, Member, Congressional 
     employee, law enforcement officer, firefighter, bankruptcy 
     judge, judge of the United States Court of Appeals for the 
     Armed Forces, United States magistrate, Claims Court judge, 
     or member of the Capitol Police, as the case may be, the 
     percentage of basic pay applicable under subsection (c).''.
       (2) Agency contributions.--
       (A) Increase in agency contributions during calendar years 
     1996 through 2002.--Section 8334(a)(1) of title 5, United 
     States Code (as amended by this section) is further amended--
       (i) by inserting ``(A)'' after ``(1)''; and
       (ii) by adding at the end thereof the following new 
     subparagraph:
       ``(B)(i) Notwithstanding subparagraph (A), the agency 
     contribution under the second sentence of such subparagraph, 
     during the period beginning on January 1, 1996, through 
     December 31, 2002--
       ``(I) for each employing agency (other than the United 
     States Postal Service) shall be 8.5 percent of the basic pay 
     of an employee, Congressional employee, and a Member of 
     Congress, 9 percent of the basic pay of a law enforcement 
     officer, a member of the Capitol Police, and a firefighter, 
     and 9.5 percent of the basic pay of a Claims Court judge, a 
     United States magistrate, a judge of the United States Court 
     of Appeals for the Armed Services, and a bankruptcy judge, as 
     the case may be; and
       ``(II) for the United States Postal Service shall be 7 
     percent of the basic pay of an employee and 9 percent of the 
     basic pay of a law enforcement officer.''.
       (B) No reduction in agency contributions by the postal 
     service.--Agency contributions by the United States Postal 
     Service under section 8348(h) of title 5, United States 
     Code--
       (i) shall not be reduced as a result of the amendments made 
     under paragraph (3) of this subsection; and
       (ii) shall be computed as though such amendments had not 
     been enacted.
       (3) Individual deductions, withholdings, and deposits.--The 
     table under section 8334(c) of title 5, United States Code, 
     is amended--
       (A) in the matter relating to an employee by striking out

                                          ``7....................  After December 31, 1969.''

     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.'';

       (B) in the matter relating to a Member or employee for 
     Congressional employee service by striking out

                                          ``7\1/2\...............  After December 31, 1969.''

     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.'';

       (C) in the matter relating to a Member for Member service 
     by striking out

                                          ``8....................  After December 31, 1969.''

     and inserting in lieu thereof the following:

                                          ``8....................  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.'';

       (D) in the matter relating to a law enforcement officer for 
     law enforcement service and firefighter for firefighter 
     service by striking out

                                          ``7\1/2\...............  After December 31, 1974.''

     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.'';

       (E) in the matter relating to a bankruptcy judge by 
     striking out

                                          ``8....................  After December 31, 1983.''

     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.'';

       (F) in the matter relating to a judge of the United States 
     Court of Appeals for the Armed Forces for service as a judge 
     of that court by striking out

                                          ``8....................  On and after the date of the enactment of the
                                                                    Department of Defense Authorization Act,
                                                                    1984.''

     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.'';

       (G) in the matter relating to a United States magistrate by 
     striking out

                                          ``8....................  After September 30, 1987.''

     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.

                                           8.....................  After December 31, 2002.'';

       (H) in the matter relating to a Claims Court judge by 
     striking out

                                          ``8....................  After September 30, 1988.''

     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.'';

     and
       (I) by inserting after the matter relating to 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.''.

       (4) Other service.--
       (A) Military service.--Section 8334(j) of title 5, United 
     States Code, is amended--
       (i) in paragraph (1)(A) by inserting ``and subject to 
     paragraph (5),'' after ``Except as provided in subparagraph 
     (B),''; and
       (ii) by adding at the end thereof the following new 
     paragraph:
       ``(5) Effective with respect to any period of military 
     service after December 31, 1995, the percentage of basic pay 
     under section 204 of title 37 payable under paragraph (1) 
     shall be equal to the same percentage as would be applicable 
     under section 8334(c) for that same period for service as an 
     employee, subject to paragraph (1)(B).''.
       (B) Volunteer service.--Section 8334(l) of title 5, United 
     States Code, is amended--
       (i) in paragraph (1) by adding at the end thereof the 
     following: ``This paragraph shall be subject to paragraph 
     (4).''; and
       (ii) by adding at the end thereof the following new 
     paragraph:
       ``(4) Effective with respect to any period of service after 
     December 31, 1995, the percentage of the readjustment 
     allowance or stipend (as the case may be) payable under 
     paragraph (1) shall be equal to the same percentage as would 
     be applicable under section 8334(c) for that same period for 
     service as an employee.''.
       (b) Federal Employees Retirement System.--
       (1) Individual deductions and withholdings.--
       (A) In general.--Section 8422(a) of title 5, United States 
     Code, is amended by striking out paragraph (2) and inserting 
     in lieu thereof the following:
       ``(2) The percentage to be deducted and withheld from basic 
     pay for any pay period shall be equal to--
       ``(A) the applicable percentage under paragraph (3), minus
       ``(B) the percentage then in effect under section 3101(a) 
     of the Internal Revenue Code of 1986 (relating to rate of tax 
     for old-age, survivors, and disability insurance).
       ``(3) The applicable percentage under this paragraph, 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.
                               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,      7.5..........  Before January 1, 1996.
 firefighter, member of the
 Capitol Police, or air
 traffic controller.
                               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.''
------------------------------------------------------------------------

       (B) Military service.--Section 8422(e) of title 5, United 
     States Code, is amended--
       (i) in paragraph (1)(A) by inserting ``and subject to 
     paragraph (6),'' after ``Except as provided in subparagraph 
     (B),''; and
       (ii) by adding at the end thereof the following:

[[Page 1634]]

       ``(6) The percentage of basic pay under section 204 of 
     title 37 payable under paragraph (1), with respect to any 
     period of military service performed during--
       ``(A) January 1, 1996, through December 31, 1996, shall be 
     3.25 percent;
       ``(B) January 1, 1997, through December 31, 1997, shall be 
     3.4 percent; and
       ``(C) January 1, 1998, through December 31, 2002, shall be 
     3.5 percent.''.
       (C) Volunteer service.--Section 8422(f) of title 5, United 
     States Code, is amended--
       (i) in paragraph (1) by adding at the end thereof the 
     following: ``This paragraph shall be subject to paragraph 
     (4).''; and
       (ii) by adding at the end the following:
       ``(4) The percentage of the readjustment allowance or 
     stipend (as the case may be) payable under paragraph (1), 
     with respect to any period of volunteer service performed 
     during--
       ``(A) January 1, 1996, through December 31, 1996, shall be 
     3.25 percent;
       ``(B) January 1, 1997, through December 31, 1997, shall be 
     3.4 percent; and
       ``(C) January 1, 1998, through December 31, 2002, shall be 
     3.5 percent.''.
       (2) No reduction in agency contributions.--Agency 
     contributions under section 8423 (a) and (b) of title 5, 
     United States Code, shall not be reduced as a result of the 
     amendments made under paragraph (1) of this subsection.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the first day of the first applicable 
     pay period beginning on or after January 1, 1996.

     SEC. 5003. FEDERAL RETIREMENT PROVISIONS RELATING TO MEMBERS 
                   OF CONGRESS AND CONGRESSIONAL EMPLOYEES.

       (a) Relating to the Years of Service as a Member of 
     Congress and Congressional Employees for Purposes of 
     Computing an Annuity.--
       (1) CSRS.--Section 8339 of title 5, United States Code, is 
     amended--
       (A) in subsection (a) by inserting ``or Member'' after 
     ``employee''; and
       (B) by striking out subsections (b) and (c).
       (2) FERS.--Section 8415 of title 5, United States Code, is 
     amended--
       (A) by striking out subsections (b) and (c);
       (B) in subsections (a) and (g) by inserting ``or Member'' 
     after ``employee'' each place it appears; and
       (C) in subsection (g)(2) by striking out ``Congressional 
     employee''.
       (3) Capitol police.--Section 8339(q) of title 5, United 
     States Code, is amended--
       (A) by striking ``subsection (b),'' and inserting 
     ``subsection (b) (as last in effect),''; and
       (B) by striking ``subsection (b)(2),'' and inserting 
     ``subsection (b)(2) (as last in effect),''.
       (b) Administrative Regulations.--The Secretary of the 
     Senate and the Clerk of the House of Representatives, in 
     consultation with the Office of Personnel Management, may 
     prescribe regulations to carry out the provisions of this 
     section and the amendments made by this section for 
     applicable employees and Members of Congress.
       (c) Effective Dates.--
       (1) Years of service; annuity computation.--(A) The 
     amendments made by subsection (a) shall take effect on the 
     date of the enactment of this Act and shall apply only with 
     respect to the computation of an annuity relating to--
       (i) the service of a Member of Congress as a Member or as a 
     Congressional employee performed on or after January 1, 1996; 
     and
       (ii) the service of a Congressional employee as a 
     Congressional employee performed on or after January 1, 1996.
       (B) An annuity shall be computed as though the amendments 
     made under subsection (a) had not been enacted with respect 
     to--
       (i) the service of a Member of Congress as a Member or a 
     Congressional employee or military service performed before 
     January 1, 1996; and
       (ii) the service of a Congressional employee as a 
     Congressional employee or military service performed before 
     January 1, 1996.
       (2) Regulations.--The provisions of subsection (b) shall 
     take effect on the date of the enactment of this Act.

     SEC. 5004. FEDERAL EMPLOYEES RETIREMENT SECURITY COMMISSION.

       (a) Establishment.--There shall be established in the 
     legislative branch a commission to be known as the ``Federal 
     Employees Retirement Security Commission'' (hereinafter in 
     this section referred to as the ``Commission'').
       (b) Members.--
       (1) Appointment.--The Commission shall be composed of 7 
     members, to be appointed within 30 days after the date of the 
     enactment of this Act, as follows:
       (A) 2 members appointed by the Speaker of the House of 
     Representatives.
       (B) 2 members appointed by the majority leader of the 
     Senate.
       (C) 1 member appointed by the minority leader of the House 
     of Representatives.
       (D) 1 member appointed by the minority leader of the 
     Senate.
       (E) 1 member appointed by the President.
       (2) Chairman; vice chairman.--The members of the Commission 
     shall select 1 of the members to be the Chairman and another 
     to be the Vice Chairman of the Commission.
       (3) Terms.--Each member shall be appointed for the life of 
     the Commission.
       (4) Pay and travel expenses.--
       (A) Pay generally.--Each member, other than the Chairman, 
     shall be paid at a rate not to exceed the daily equivalent of 
     the annual rate of basic pay payable for level IV of the 
     Executive Schedule under section 5315 of title 5, United 
     States Code, for each day (including travel time) during 
     which such member is engaged in the actual performance of 
     duties vested in the Commission.
       (B) Pay for the chairman.--The Chairman shall be paid, for 
     each day referred to in subparagraph (A), at a rate not to 
     exceed the daily equivalent of the annual rate of basic pay 
     payable for level III of the Executive Schedule under section 
     5314 of title 5, United States Code.
       (C) Travel expenses.--Each member of the Commission shall, 
     subject to the availability of appropriations and in such 
     amounts as may be provided by such Act, be allowed travel 
     expenses in the same manner as any individual employed 
     intermittently by the Government is allowed travel expenses 
     under section 5703 of title 5, United States Code.
       (D) Government employees and members of congress.--
     Notwithstanding any other provision of this paragraph, 
     members of the Commission who are full-time officers or 
     employees of the United States or Members of Congress may not 
     receive additional pay, allowances, or benefits by reason of 
     their service on the Commission, except for travel expenses 
     under subparagraph (C).
       (5) Vacancies.--A vacancy in the Commission shall be filled 
     in the manner in which the original appointment was made.
       (c) Meetings.--
       (1) Open meetings.--Each meeting of the Commission, other 
     than meetings in which classified information is to be 
     discussed, shall be open to the public.
       (2) Access by request.--
       (A) In general.--All the proceedings, information, and 
     deliberations of the Commission shall be open, upon request, 
     to the Chairman and the ranking minority party member of the 
     respective committees under subparagraph (B) or such chairmen 
     or ranking minority party members of subcommittees of any 
     such committee as may be designated by the Chairman or 
     ranking minority party member, respectively, of such 
     committee.
       (B) Identification of committees.--The committees under 
     this subparagraph are as follows:
       (i) The Committee on Government Reform and Oversight of the 
     House of Representatives.
       (ii) The Committee on National Security of the House of 
     Representatives.
       (iii) The Committee on Governmental Affairs of the Senate.
       (iv) The Committee on Armed Services of the Senate.
       (3) First meeting.--The Commission shall hold its first 
     meeting within 60 days after the date of the enactment of 
     this Act.
       (d) Director; Staff.--
       (1) Director.--The Commission shall have a Director, who--
       (A) shall be appointed by the Commission; and
       (B) shall be paid at a rate not to exceed the rate of basic 
     pay payable for level IV of the Executive Schedule under 
     section 5315 of title 5, United States Code.
       (2) Staff.--
       (A) Appointments; pay.--The Director, with the approval of 
     the Commission, may appoint and fix the pay of additional 
     personnel, except that no individual so appointed may receive 
     pay at a rate in excess of the maximum rate of basic pay 
     payable under section 5376 of title 5, United States Code, 
     for positions classified above GS-15 of the General Schedule.
       (B) Details from congressional committees and offices.--
     Upon the request of the Director, the chairman of any 
     standing committee or other committee of either House or both 
     Houses of the Congress, or the head of any other 
     congressional office, may detail any of the personnel of that 
     committee or office to the Commission to assist the 
     Commission in carrying out its duties under this Act.
       (C) Assistance from gao.--The Comptroller General of the 
     United States shall provide assistance, including the 
     detailing of employees, to the Commission in accordance with 
     an agreement entered into with the Commission.
       (e) Duties.--
       (1) In general.--The Commission shall study and, within 7 
     months after the date of the enactment of this Act, submit to 
     the Congress a written report on--
       (A) the financial soundness of the retirement systems for 
     Government employees (including employees of nonappropriated 
     fund instrumentalities) and members of the uniformed 
     services;
       (B) the cost and level of benefits provided by the Civil 
     Service Retirement System, the Federal Employees' Retirement 
     System, and the other retirement systems under subparagraph 
     (A), as compared with the cost and level of benefits of 
     retirement systems prevalent in the private sector;
       (C) the appropriate level and design of benefits of an 
     alternative retirement system and modifications of existing 
     systems to achieve the objectives described in paragraph (2); 
     and
       (D) the cost and suitability of benefits provided by the 
     military retirement system, and their appropriateness in 
     light of current and projected military readiness 
     requirements.
       (2) Considerations.--The considerations described in this 
     paragraph are as follows:
       (A) Portability of benefits, consistent with the greater 
     mobility anticipated with respect to the workforce of the 
     21st century.
       (B) Financial soundness, consistent with the requirements 
     of the Employee Retire

[[Page 1635]]

     ment Income Security Act of 1974 and the requirements that 
     must be met in order to qualify to be insured by the Pension 
     Benefit Guarantee Corporation.
       (C) The Government's presence in a wide range of 
     occupations and local labor markets, and the need for 
     retirement benefits to be representative of the level of 
     benefits received by most Americans in the private sector in 
     order to allow the Government to recruit and retain a 
     qualified workforce.
       (D) Total compensation trends in the private sector, 
     including the use of cafeteria plans.
       (3) Contents.--The Commission's report shall contain a 
     detailed statement of the findings and conclusions of the 
     Commission, together with its recommendations for any 
     legislation that the Commission considers appropriate.
       (f) Other Authority.--
       (1) Experts and consultants.--The Commission may procure by 
     contract, to the extent funds are available, the temporary or 
     intermittent services of experts or consultants subject to 
     the same terms and conditions as would apply under section 
     3109 of title 5, United States Code, in the case of an 
     Executive agency.
       (2) Leases.--The Commission may lease space and acquire 
     personal property to the extent funds are available.
       (g) Funding.--There are authorized to be appropriated to 
     the Commission such funds as are necessary to carry out its 
     duties under this Act. Such funds shall remain available 
     until expended.
       (h) Termination.--The Commission shall cease to exist 30 
     days after submitting its report to the Congress under 
     subsection (e).

     SEC. 5005. REPEAL OF AUTHORIZATION OF TRANSITIONAL 
                   APPROPRIATIONS FOR THE UNITED STATES POSTAL 
                   SERVICE.

       (a) Repeal.--
       (1) In general.--Section 2004 of title 39, United States 
     Code, is repealed.
       (2) Technical and conforming amendments.--
       (A) The table of sections for chapter 20 of such title is 
     amended by repealing the item relating to section 2004.
       (B) Section 2003(e)(2) of such title is amended by striking 
     ``sections 2401 and 2004'' each place it appears and 
     inserting ``section 2401''.
       (b) Clarification That Liabilities Formerly Paid Pursuant 
     to Section 2004 Remain Liabilities Payable by the Postal 
     Service.--Section 2003 of title 39, United States Code, is 
     amended by adding at the end the following:
       ``(h) Liabilities of the former Post Office Department to 
     the Employees' Compensation Fund (appropriations for which 
     were authorized by former section 2004, as in effect before 
     the effective date of this subsection) shall be liabilities 
     of the Postal Service payable out of the Fund.''.
       (c) Effective Date.--
       (1) In general.--This section and the amendments made by 
     this section shall be effective as of October 1, 1995.
       (2) Provisions relating to payments for fiscal year 1996.--
       (A) Amounts not yet paid.--No payment may be made to the 
     Postal Service Fund, on or after the date of the enactment of 
     this Act, pursuant to any appropriation for fiscal year 1996 
     authorized by section 2004 of title 39, United States Code 
     (as in effect before the effective date of this section).
       (B) Amounts paid.--If any payment to the Postal Service 
     Fund is or has been made pursuant to an appropriation for 
     fiscal year 1996 authorized by such section 2004, then an 
     amount equal to the amount of such payment shall be paid from 
     such Fund into the Treasury as miscellaneous receipts.

     SEC. 5006. AVAILABILITY OF SURPLUS PROPERTY FOR HOMELESS 
                   ASSISTANCE.

       (a) Repeal.--(1) Title V of the Stewart B. McKinney 
     Homeless Assistance Act (42 U.S.C. 11411 et seq.) is 
     repealed.
       (2) The table of contents in section 101(b) of that Act is 
     amended by striking the items relating to title V.
       (3) This subsection shall be effective October 1, 1995.
       (b) Authority To Transfer Surplus Real Property for Housing 
     Use.--Section 203 of the Federal Property and Administrative 
     Services Act of 1949 (40 U.S.C. 484) is amended by adding at 
     the end the following:
       ``(r) Under such regulations as the Administrator may 
     prescribe, and in consultation with appropriate local 
     governmental authorities, the Administrator may transfer to 
     any nonprofit organization which exists for the primary 
     purpose of providing housing or housing assistance for 
     homeless individuals or families, such surplus real property, 
     including buildings, fixtures, and equipment situated 
     thereon, as is needed for housing use.
       ``(s)(1) Under such regulations as the Administrator may 
     prescribe, and in consultation with appropriate local 
     governmental authorities, the Administrator may transfer to 
     any non-profit organization which exists for the primary 
     purpose of providing housing or housing assistance for low-
     income individuals or families such surplus real property, 
     including buildings, fixtures, and equipment situated 
     thereon, as is needed for housing use.
       ``(2) In making transfers under this subsection, the 
     Administrator shall take such actions, which may include 
     grant agreements with an organization receiving a grant, as 
     may be necessary to ensure that--
       ``(A) assistance provided under this subsection is used to 
     facilitate and encourage homeownership opportunities through 
     the construction of self-help housing, under terms which 
     require that the person receiving the assistance contribute a 
     significant amount of labor toward the construction; and
       ``(B) the dwellings constructed with property transferred 
     under this subsection shall be quality dwellings that comply 
     with local building and safety codes and standards and shall 
     be available at prices below the prevailing market prices.''.
          Subtitle B--Debt Collection Improvement Act of 1995

     SEC 5201. SHORT TITLE.

       This subtitle may be cited as the ``Debt Collection 
     Improvement Act of 1995''.

     SEC. 5202. TABLE OF CONTENTS.

       The table of contents for this subtitle is as follows:

Sec. 5201. Short title.
Sec. 5202. Table of contents.
Sec. 5203. Effective date.
Sec. 5204. Purposes.

              Part I--General Debt Collection Initiatives

                  subpart a--general offset authority

Sec. 5211. Expansion of administrative offset authority.
Sec. 5212. Enhancement of administrative offset authority.
Sec. 5213. Exemption from computer matching requirements under the 
              Privacy Act of 1974.
Sec. 5214. Use of administrative offset authority for debts to States.
Sec. 5215. Technical and conforming amendments.

                   subpart b--salary offset authority

Sec. 5221. Enhancement of salary offset authority.

                subpart c--taxpayer identifying numbers

Sec. 5231. Access to debtor information.
Sec. 5232. Barring delinquent Federal debtors from obtaining Federal 
              loans or loan guarantees.

     subpart d--expansion and enhancement of collection authorities

Sec. 5241. Disclosure to consumer reporting agencies and commercial 
              reporting agencies.
Sec. 5242. Contracts for collection services.
Sec. 5243. Cross-servicing partnerships and centralization of debt 
              collection activities in the Department of the Treasury.
Sec. 5244. Compromise of claims.
Sec. 5245. Wage garnishment requirement.
Sec. 5246. Debt sales by agencies.
Sec. 5247. Adjustments of administrative debt.
Sec. 5248. Dissemination of information regarding identity of 
              delinquent debtors.

              subpart e--federal civil monetary penalties

Sec. 5251. Adjusting Federal civil monetary penalties for inflation.

                        subpart f--gain sharing

Sec. 5261. Debt collection improvement account.

                 subpart g--tax refund offset authority

Sec. 5271. Expanding tax refund offset authority.
Sec. 5272. Expanding authority to collect past-due support.

                        subpart h--disbursements

Sec. 5281. Electronic funds transfer.
Sec. 5282. Requirement to include taxpayer identifying number with 
              payment voucher.

                        subpart i--miscellaneous

Sec. 5291. Miscellaneous amendments to definitions.
Sec. 5292. Monitoring and reporting.
Sec. 5293. Review of standards and policies for compromise or write-
              down of delinquent debts.

                    Part II--Justice Debt Management

Sec. 5301. Expanded use of private attorneys.
Sec. 5302. Nonjudicial foreclosure of mortgages.

     SEC. 5203. EFFECTIVE DATE.

       Except as otherwise provided in this subtitle, the 
     provisions of this subtitle and the amendments made by this 
     subtitle shall become effective October 1, 1995.

     SEC. 5204. PURPOSES.

       The purposes of this subtitle are the following:
       (1) To maximize collections of delinquent debts owed to the 
     Government by ensuring quick action to enforce recovery of 
     debts and the use of all appropriate collection tools.
       (2) To minimize the costs of debt collection by 
     consolidating related functions and activities and utilizing 
     interagency teams.
       (3) To reduce losses arising from debt management 
     activities by requiring proper screening of potential 
     borrowers, aggressive monitoring of all accounts, and sharing 
     of information within and among Federal agencies.
       (4) To ensure that the public is fully informed of the 
     Federal Government's debt collection policies and that 
     debtors are cognizant of their financial obligations to repay 
     amounts owed to the Federal Government.
       (5) To ensure that debtors have all appropriate due process 
     rights, including the ability to verify, challenge, and 
     compromise claims, and access to administrative appeals 
     procedures which are both reasonable and protect the 
     interests of the United States.
       (6) To encourage agencies, when appropriate, to sell 
     delinquent debt, particularly debts with underlying 
     collateral.
       (7) To rely on the experience and expertise of private 
     sector professionals to provide debt collection services to 
     Federal agencies.

[[Page 1636]]

              PART I--GENERAL DEBT COLLECTION INITIATIVES

                  Subpart A--General Offset Authority

     SEC. 5211. EXPANSION OF ADMINISTRATIVE OFFSET AUTHORITY.

       Chapter 37 of title 31, United States Code, is amended--
       (1) in each of sections 3711, 3716, 3717, and 3718, by 
     striking ``the head of an executive or legislative agency'' 
     each place it appears and inserting ``the head of an 
     executive, judicial, or legislative agency''; and
       (2) by amending section 3701(a)(4) to read as follows:
       ``(4) `executive, judicial, or legislative agency' means a 
     department, agency, court, court administrative office, or 
     instrumentality in the executive, judicial, or legislative 
     branch of government, including government corporations.''.

     SEC. 5212. ENHANCEMENT OF ADMINISTRATIVE OFFSET AUTHORITY.

       (a) Persons Subject to Administrative Offset.--Section 
     3701(c) of title 31, United States Code, is amended to read 
     as follows:
       ``(c) In sections 3716 and 3717 of this title, the term 
     `person' does not include an agency of the United States 
     Government.''.
       (b) Requirements and Procedures.--Section 3716 of title 31, 
     United States Code, is amended--
       (1) by amending subsection (b) to read as follows:
       ``(b) Before collecting a claim by administrative offset, 
     the head of an executive, judicial, or legislative agency 
     must either--
       ``(1) adopt, without change, regulations on collecting by 
     administrative offset promulgated by the Department of 
     Justice, the General Accounting Office, or the Department of 
     the Treasury; or
       ``(2) prescribe regulations on collecting by administrative 
     offset consistent with the regulations referred to in 
     paragraph (1).'';
       (2) by amending subsection (c)(2) to read as follows:
       ``(2) when a statute explicitly prohibits using 
     administrative offset or setoff to collect the claim or type 
     of claim involved.'';
       (3) by redesignating subsection (c) as subsection (e); and
       (4) by inserting after subsection (b) the following new 
     subsections:
       ``(c)(1)(A) Except as otherwise provided in this 
     subsection, a disbursing official of the Department of the 
     Treasury, the Department of Defense, the United States Postal 
     Service, or any other government corporation, or any 
     disbursing official of the United States designated by the 
     Secretary of the Treasury, shall offset at least annually the 
     amount of a payment which a payment certifying agency has 
     certified to the disbursing official for disbursement, by an 
     amount equal to the amount of a claim which a creditor agency 
     has certified to the Secretary of the Treasury pursuant to 
     this subsection.
       ``(B) An agency that designates disbursing officials 
     pursuant to section 3321(c) of this title is not required to 
     certify claims arising out of its operations to the Secretary 
     of the Treasury before such agency's disbursing officials 
     offset such claims.
       ``(C) Payments certified by the Department of Education 
     under a program administered by the Secretary of Education 
     under title IV of the Higher Education Act of 1965 shall not 
     be subject to administrative offset under this subsection.
       ``(2) Neither the disbursing official nor the payment 
     certifying agency shall be liable--
       ``(A) for the amount of the administrative offset on the 
     basis that the underlying obligation, represented by the 
     payment before the administrative offset was taken, was not 
     satisfied; or
       ``(B) for failure to provide timely notice under paragraph 
     (8).
       ``(3) The Secretary of the Treasury shall exempt from 
     administrative offset under this subsection payments under 
     means-tested programs when requested by the head of the 
     respective agency. The Secretary may exempt other payments 
     from administrative offset under this subsection upon the 
     written request of the head of a payment certifying agency. A 
     written request for exemption of other payments must provide 
     justification for the exemption under standards prescribed by 
     the Secretary. Such standards shall give due consideration to 
     whether administrative offset would tend to interfere 
     substantially with or defeat the purposes of the payment 
     certifying agency's program. The Secretary shall report to 
     the Congress annually on exemptions granted under this 
     section.
       ``(4) The Secretary of the Treasury may charge a fee 
     sufficient to cover the full cost of implementing this 
     subsection. The fee may be collected either by the retention 
     of a portion of amounts collected pursuant to this 
     subsection, or by billing the agency referring or 
     transferring a claim for those amounts. Fees charged to the 
     agencies shall be based on actual administrative offsets 
     completed. Amounts received by the United States as fees 
     under this subsection shall be deposited into the account of 
     the Department of the Treasury under section 3711(g)(4) of 
     this title, and shall be collected and accounted for in 
     accordance with the provisions of that section.
       ``(5) The Secretary of the Treasury may disclose to a 
     creditor agency the current address of any payee and any data 
     related to certifying and authorizing payments to a payee in 
     accordance with section 552a of title 5, United States Code, 
     even if the payment has been exempt from administrative 
     offset. If a payment is made electronically, the Secretary 
     may obtain the current address of the payee from the 
     institution receiving the payment. Upon request by the 
     Secretary, the institution receiving the payment shall report 
     the current address of the payee to the Secretary.
       ``(6) The Secretary of the Treasury may prescribe such 
     rules, regulations, and procedures as the Secretary of the 
     Treasury considers necessary to carry out this subsection. 
     The Secretary shall consult with the heads of affected 
     agencies in the development of such rules, regulations, and 
     procedures.
       ``(7) Any Federal agency that is owed by a person a past 
     due, legally enforceable nontax debt that is over 180 days 
     delinquent, including nontax debt administered by a third 
     party acting as an agent for the Federal Government, shall 
     notify the Secretary of the Treasury of all such nontax debts 
     for purposes of administrative offset under this subsection.
       ``(8)(A) The disbursing official conducting an 
     administrative offset with respect to a payment to a payee 
     shall notify the payee in writing of--
       ``(i) the occurrence of the administrative offset to 
     satisfy a past due legally enforceable debt, including a 
     description of the type and amount of the payment otherwise 
     payable to the payee against which the offset was executed;
       ``(ii) the identity of the creditor agency requesting the 
     offset; and
       ``(iii) a contact point within the creditor agency that 
     will handle concerns regarding the offset.
       ``(B) If the payment to be offset is a periodic benefit 
     payment, the disbursing official shall take reasonable steps, 
     as determined by the Secretary of the Treasury, to provide 
     the notice to the payee not later than the date on which the 
     payee is otherwise scheduled to receive the payment, or as 
     soon as practical thereafter, but no later than the date of 
     the administrative offset. Notwithstanding the preceding 
     sentence, the failure of the debtor to receive such notice 
     shall not impair the legality of such administrative offset.
       ``(9) A levy pursuant to the Internal Revenue Code of 1986 
     shall take precedence over requests for administrative offset 
     pursuant to other laws.
       ``(d) Nothing in this section is intended to prohibit the 
     use of any other administrative offset authority existing 
     under statute or common law.''.
       (c) Nontax Debt or Claim Defined.--Section 3701 of title 
     31, United States Code, is amended--
       (1) in subsection (b) by inserting ``and subsection (a)(8) 
     of this section'' after ``of this chapter''; and
       (2) in subsection (a) by adding at the end the following 
     new paragraph:
       ``(8) `nontax' means, with respect to any debt or claim, 
     any debt or claim other than a debt or claim under the 
     Internal Revenue Code of 1986.''.

     SEC. 5213. EXEMPTION FROM COMPUTER MATCHING REQUIREMENTS 
                   UNDER THE PRIVACY ACT OF 1974.

       Section 3716 of title 31, United States Code, as amended by 
     section 5212(b) of this subtitle, is further amended by 
     adding at the end the following new subsections:
       ``(f) The Secretary may waive the requirements of sections 
     552a(o) and (p) of title 5 for administrative offset or 
     claims collection upon written certification by the head of 
     the executive, judicial, or legislative agency seeking to 
     collect the claim that the requirements of subsection (a) of 
     this section have been met.
       ``(g) The Data Integrity Board of the Department of the 
     Treasury established under 552a(u) of title 5 shall review 
     and include in reports under paragraph (3)(D) of that section 
     a description of any matching activities conducted under this 
     section. If the Secretary has granted a waiver under 
     subsection (f) of this section, no other Data Integrity Board 
     is required to take any action under section 552a(u) of title 
     5.''.

     SEC. 5214. USE OF ADMINISTRATIVE OFFSET AUTHORITY FOR DEBTS 
                   TO STATES.

       Section 3716 of title 31, United States Code, as amended by 
     sections 5212 and 5213 of this subtitle, is further amended 
     by adding at the end the following new subsection:
       ``(h)(1) The Secretary may, in the discretion of the 
     Secretary, apply subsection (a) with respect to any past-due, 
     legally-enforceable debt owed to a State if--
       ``(A) the appropriate State disbursing official requests 
     that an offset be performed; and
       ``(B) a reciprocal agreement with the State is in effect 
     which contains, at a minimum--
       ``(i) requirements substantially equivalent to subsection 
     (b) of this section; and
       ``(ii) any other requirements which the Secretary considers 
     appropriate to facilitate the offset and prevent duplicative 
     efforts.
       ``(2) This subsection does not apply to--
       ``(A) the collection of a debt or claim on which the 
     administrative costs associated with the collection of the 
     debt or claim exceed the amount of the debt or claim;
       ``(B) any collection of any other type, class, or amount of 
     claim, as the Secretary considers necessary to protect the 
     interest of the United States; or
       ``(C) the disbursement of any class or type of payment 
     exempted by the Secretary of the Treasury at the request of a 
     Federal agency.''.

     SEC. 5215. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Title 31.--Title 31, United States Code, is amended--
       (1) in section 3322(a), by inserting ``section 3716 and 
     section 3720A of this title and'' after ``Except as provided 
     in'';
       (2) in section 3325(a)(3), by inserting ``or pursuant to 
     payment intercepts or offsets

[[Page 1637]]

     pursuant to section 3716 or 3720A of this title,'' after 
     ``voucher''; and
       (3) in each of sections 3711(e)(2) and 3717(h) by inserting 
     ``, the Secretary of the Treasury,'' after ``Attorney 
     General''.
       (b) Internal Revenue Code of 1986.--Subsection 
     6103(l)(10)(A) of the Internal Revenue Code of 1986 (26 
     U.S.C. 6103(l)(10)(A)) is amended--
       (1) in subparagraph (A), by inserting ``and to officers and 
     employees of the Department of the Treasury in connection 
     with such reduction'' after ``6402''; and
       (2) in subparagraph (B), by inserting ``and officers and 
     employees of the Department of the Treasury'' after 
     ``agency'' the first place it appears.

                   Subpart B--Salary Offset Authority

     SEC. 5221. ENHANCEMENT OF SALARY OFFSET AUTHORITY.

       Section 5514 of title 5, United States Code, is amended--
       (1) in subsection (a)--
       (A) by adding at the end of paragraph (1) the following: 
     ``All Federal agencies to which debts are owed and which have 
     outstanding delinquent debts shall participate in a computer 
     match at least annually of their delinquent debt records with 
     records of Federal employees to identify those employees who 
     are delinquent in repayment of those debts. The preceding 
     sentence shall not apply to any debt under the Internal 
     Revenue Code of 1986. Matched Federal employee records shall 
     include, but shall not be limited to, records of active Civil 
     Service employees government-wide, military active duty 
     personnel, military reservists, United States Postal Service 
     employees, employees of other government corporations, and 
     seasonal and temporary employees. The Secretary of the 
     Treasury shall establish and maintain an interagency 
     consortium to implement centralized salary offset computer 
     matching, and promulgate regulations for this program. 
     Agencies that perform centralized salary offset computer 
     matching services under this subsection are authorized to 
     charge a fee sufficient to cover the full cost for such 
     services.'';
       (B) by redesignating paragraphs (3) and (4) as paragraphs 
     (4) and (5), respectively;
       (C) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) Paragraph (2) shall not apply to routine intra-agency 
     adjustments of pay that are attributable to clerical or 
     administrative errors or delays in processing pay documents 
     that have occurred within the four pay periods preceding the 
     adjustment and to any adjustment that amounts to $50 or less, 
     if at the time of such adjustment, or as soon thereafter as 
     practical, the individual is provided written notice of the 
     nature and the amount of the adjustment and a point of 
     contact for contesting such adjustment.''; and
       (D) by amending paragraph (5)(B) (as redesignated by 
     subparagraph (B) of this paragraph) to read as follows:
       ``(B) `agency' includes executive departments and agencies, 
     the United States Postal Service, the Postal Rate Commission, 
     the Senate, the House of Representatives, and any court, 
     court administrative office, or instrumentality in the 
     judicial or legislative branches of the Government, and 
     government corporations.'';
       (2) by adding after subsection (c) the following new 
     subsection:
       ``(d) A levy pursuant to the Internal Revenue Code of 1986 
     shall take precedence over deductions under this section.''.

                Subpart C--Taxpayer Identifying Numbers

     SEC. 5231. ACCESS TO DEBTOR INFORMATION.

       Section 4 of the Debt Collection Act of 1982 (Public Law 
     97-365, 96 Stat. 1749, 26 U.S.C. 6103 note) is amended--
       (1) in subsection (b), by striking ``For purposes of this 
     section'' and inserting ``For purposes of subsection (a)''; 
     and
       (2) by adding at the end the following new subsections:
       ``(c) Federal Agencies.--
       ``(1) In general.--Each Federal agency shall require each 
     person doing business with that agency to furnish to that 
     agency such person's taxpayer identifying number.
       ``(2) Doing business.--For purposes of this subsection, a 
     person shall be considered to be doing business with a 
     Federal agency if the person is--
       ``(A) a lender or servicer in a Federal guaranteed or 
     insured loan program administered by the agency;
       ``(B) an applicant for, or recipient of--
       ``(i) a Federal guaranteed, insured, or direct loan 
     administered by the agency; or
       ``(ii) a Federal license, permit, right-of-way, grant, or 
     benefit payment administered by the agency or insurance 
     administered by the agency;
       ``(C) a contractor of the agency;
       ``(D) assessed a fine, fee, royalty or penalty by the 
     agency; and
       ``(E) in a relationship with the agency that may give rise 
     to a receivable due to that agency, such as a partner of a 
     borrower in or a guarantor of a Federal direct or insured 
     loan administered by the agency.
       ``(3) Disclosure.--Each agency shall disclose to a person 
     required to furnish a taxpayer identifying number under this 
     subsection its intent to use such number for purposes of 
     collecting and reporting on any delinquent amounts arising 
     out of such person's relationship with the Government.
       ``(4) Definitions.--For purposes of this subsection--
       ``(A) the term `taxpayer identifying number' has the 
     meaning given such term in section 6109 of the Internal 
     Revenue Code of 1986 (26 U.S.C. 6109); and
       ``(B) the term `person'--
       ``(i) subject to clause (ii), means an individual, sole 
     proprietorship, partnership, corporation, or nonprofit 
     organization, or any other form of business association; and
       ``(ii) does not include debtors under third party claims of 
     the United States, other than debtors owing claims resulting 
     from petroleum pricing violations.
       ``(d) Access to Debtor Information.--Notwithstanding 
     section 552a(b) of title 5, United States Code, creditor 
     agencies to which a delinquent claim is owed, and their 
     agents, may match their debtor records with Department of 
     Health and Human Services and Department of Labor records to 
     obtain names (including names of employees), name controls, 
     names of employers, social security account numbers, 
     addresses (including addresses of employers), and dates of 
     birth. The Department of Health and Human Services and the 
     Department of Labor shall release that information to 
     creditor agencies and may charge reasonable fees sufficient 
     to pay the costs associated with that release.
       ``(e) Electronic Payments.--If a payment is made 
     electronically by any executive, judicial, or legislative 
     agency, the Secretary of the Treasury may obtain from the 
     institution receiving the payment the taxpayer identification 
     number of any joint holder of the account to which the 
     payment is made. Upon request of the Secretary, the 
     institution receiving the payment shall report the taxpayer 
     identification number of the joint holder to the 
     Secretary.''.

     SEC. 5232. BARRING DELINQUENT FEDERAL DEBTORS FROM OBTAINING 
                   FEDERAL LOANS OR LOAN GUARANTEES.

       (a) In General.--Title 31, United States Code, is amended 
     by inserting after section 3720A the following new section:

     ``Sec. 3720B. Barring delinquent Federal debtors from 
       obtaining Federal loans or loan guarantees

       ``(a) Unless this subsection is waived by the head of a 
     Federal agency, a person may not obtain any Federal financial 
     assistance in the form of a loan (other than a disaster loan) 
     or loan guarantee administered by the agency if the person 
     has an outstanding debt (other than a debt under the Internal 
     Revenue Code of 1986) with any Federal agency which is in a 
     delinquent status, as determined under standards prescribed 
     by the Secretary of the Treasury. Such a person may obtain 
     additional loans or loan guarantees only after such 
     delinquency is resolved in accordance with those standards. 
     The Secretary of the Treasury may exempt, at the request of 
     an agency, any class of claims.
       ``(b) The head of a Federal agency may delegate the waiver 
     authority under subsection (a) to the Chief Financial Officer 
     of the agency. The waiver authority may be redelegated only 
     to the Deputy Chief Financial Officer of the agency.
       ``(c) For purposes of this section, the term `person' 
     means--
       ``(1) an individual; or
       ``(2) any sole proprietorship, partnership, corporation, 
     nonprofit organization, or other form of business 
     association.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter II of chapter 37 of title 31, United States Code, 
     is amended by inserting after the item relating to section 
     3720A the following new item:

``3720B. Barring delinquent Federal debtors from obtaining Federal 
              loans or loan guarantees.''.

     Subpart D--Expansion and Enhancement of Collection Authorities

     SEC. 5241. DISCLOSURE TO CONSUMER REPORTING AGENCIES AND 
                   COMMERCIAL REPORTING AGENCIES.

       Section 3711(f) of title 31, United States Code, is 
     amended--
       (1) by striking ``may'' the first place it appears and 
     inserting ``shall'';
       (2) by striking ``an individual'' each place it appears and 
     inserting ``a covered person'';
       (3) by striking ``the individual'' each place it appears 
     and inserting ``the covered person''; and
       (4) by adding at the end the following new paragraphs:
       ``(4) The head of each executive agency shall require, as a 
     condition for guaranteeing any loan, financing, or other 
     extension of credit under any law to a covered person, that 
     the lender provide information relating to the extension of 
     credit to consumer reporting agencies or commercial reporting 
     agencies, as appropriate.
       ``(5) The head of each executive agency may provide to a 
     consumer reporting agency or commercial reporting agency 
     information from a system of records that a covered person is 
     responsible for a claim which is current, if notice required 
     by section 552a(e)(4) of title 5 indicates that information 
     in the system may be disclosed to a consumer reporting agency 
     or commercial reporting agency, respectively.
       ``(6) In this subsection, the term `covered person' means 
     an individual, a sole proprietorship, a corporation 
     (including a nonprofit corporation), or any other form of 
     business association.''.

     SEC. 5242. CONTRACTS FOR COLLECTION SERVICES.

       Section 3718 of title 31, United States Code, is amended--
       (1) in subsection (a), by striking the first sentence and 
     inserting the following: ``Under conditions the head of an 
     executive, judicial, or legislative agency considers 
     appropriate, the head of the agency may enter into a con

[[Page 1638]]

     tract with a person for collection service to recover 
     indebtedness owed, or to locate or recover assets of, the 
     United States Government. The head of an agency may not enter 
     into a contract under the preceding sentence to locate or 
     recover assets of the United States held by a State 
     government or financial institution unless that agency has 
     established procedures approved by the Secretary of the 
     Treasury to identify and recover such assets.''; and
       (2) in subsection (d), by inserting ``, or to locate or 
     recover assets of,'' after ``owed''.

     SEC. 5243. CROSS-SERVICING PARTNERSHIPS AND CENTRALIZATION OF 
                   DEBT COLLECTION ACTIVITIES IN THE DEPARTMENT OF 
                   THE TREASURY.

       Section 3711 of title 31, United States Code, is amended by 
     adding at the end the following new subsections:
       ``(g)(1) If a nontax debt or claim owed to the United 
     States has been delinquent for a period of 180 days--
       ``(A) the head of the executive, judicial, or legislative 
     agency that administers the program that gave rise to the 
     debt or claim shall transfer the debt or claim to the 
     Secretary of the Treasury; and
       ``(B) upon such transfer the Secretary of the Treasury 
     shall take appropriate action to collect or terminate 
     collection actions on the debt or claim.
       ``(2) Paragraph (1) shall not apply--
       ``(A) to any debt or claim that--
       ``(i) is in litigation or foreclosure;
       ``(ii) will be disposed of under an asset sales program 
     within 1 year after the date the debt or claim is first 
     delinquent, or a greater period of time if a delay would be 
     in the best interests of the United States, as determined by 
     the Secretary of the Treasury;
       ``(iii) has been referred to a private collection 
     contractor for collection for a period of time determined by 
     the Secretary of the Treasury;
       ``(iv) has been referred by, or with the consent of, the 
     Secretary of the Treasury to a debt collection center for a 
     period of time determined by the Secretary of the Treasury; 
     or
       ``(v) will be collected under internal offset, if such 
     offset is sufficient to collect the claim within 3 years 
     after the date the debt or claim is first delinquent; and
       ``(B) to any other specific class of debt or claim, as 
     determined by the Secretary of the Treasury at the request of 
     the head of an executive, judicial, or legislative agency or 
     otherwise.
       ``(3) For purposes of this section, the Secretary of the 
     Treasury may designate, and withdraw such designation of debt 
     collection centers operated by other Federal agencies. The 
     Secretary of the Treasury shall designate such centers on the 
     basis of their performance in collecting delinquent claims 
     owed to the Government.
       ``(4) At the discretion of the Secretary of the Treasury, 
     referral of a nontax claim may be made to--
       ``(A) any executive department or agency operating a debt 
     collection center for servicing, collection, compromise, or 
     suspension or termination of collection action;
       ``(B) a contractor operating under a contract for servicing 
     or collection action; or
       ``(C) the Department of Justice for litigation.
       ``(5) nontax claims referred or transferred under this 
     section shall be serviced, collected, or compromised, or 
     collection action thereon suspended or terminated, in 
     accordance with otherwise applicable statutory requirements 
     and authorities. Executive departments and agencies operating 
     debt collection centers may enter into agreements with the 
     Secretary of the Treasury to carry out the purposes of this 
     subsection. The Secretary of the Treasury shall--
       ``(A) maintain competition in carrying out this subsection;
       ``(B) maximize collections of delinquent debts by placing 
     delinquent debts quickly;
       ``(C) maintain a schedule of contractors and debt 
     collection centers eligible for referral of claims; and
       ``(D) refer delinquent debts to the person most appropriate 
     to collect the type or amount of claim involved.
       ``(6) Any agency operating a debt collection center to 
     which nontax claims are referred or transferred under this 
     subsection may charge a fee sufficient to cover the full cost 
     of implementing this subsection. The agency transferring or 
     referring the nontax claim shall be charged the fee, and the 
     agency charging the fee shall collect such fee by retaining 
     the amount of the fee from amounts collected pursuant to this 
     subsection. Agencies may agree to pay through a different 
     method, or to fund an activity from another account or from 
     revenue received from the procedure described under section 
     3720C of this title. Amounts charged under this subsection 
     concerning delinquent claims may be considered as costs 
     pursuant to section 3717(e) of this title.
       ``(7) Notwithstanding any other law concerning the 
     depositing and collection of Federal payments, including 
     section 3302(b) of this title, agencies collecting fees may 
     retain the fees from amounts collected. Any fee charged 
     pursuant to this subsection shall be deposited into an 
     account to be determined by the executive department or 
     agency operating the debt collection center charging the fee 
     (in this subsection referred to in this section as the 
     `Account'). Amounts deposited in the Account shall be 
     available until expended to cover costs associated with the 
     implementation and operation of Governmentwide debt 
     collection activities. Costs properly chargeable to the 
     Account include--
       ``(A) the costs of computer hardware and software, word 
     processing and telecommunications equipment, and other 
     equipment, supplies, and furniture;
       ``(B) personnel training and travel costs;
       ``(C) other personnel and administrative costs;
       ``(D) the costs of any contract for identification, 
     billing, or collection services; and
       ``(E) reasonable costs incurred by the Secretary of the 
     Treasury, including services and utilities provided by the 
     Secretary, and administration of the Account.
       ``(8) Not later than January 1 of each year, there shall be 
     deposited into the Treasury as miscellaneous receipts an 
     amount equal to the amount of unobligated balances remaining 
     in the Account at the close of business on September 30 of 
     the preceding year, minus any part of such balance that the 
     executive department or agency operating the debt collection 
     center determines is necessary to cover or defray the costs 
     under this subsection for the fiscal year in which the 
     deposit is made.
       ``(9) To carry out the purposes of this subsection, the 
     Secretary of the Treasury may prescribe such rules, 
     regulations, and procedures as the Secretary considers 
     necessary.
       ``(h)(1) The head of an executive, judicial, or legislative 
     agency acting under subsection (a)(1), (2), or (3) of this 
     section to collect a claim, compromise a claim, or terminate 
     collection action on a claim may obtain a consumer report (as 
     that term is defined in section 603 of the Fair Credit 
     Reporting Act (15 U.S.C. 1681a)) or comparable credit 
     information on any person who is liable for the claim.
       ``(2) The obtaining of a consumer report under this 
     subsection is deemed to be a circumstance or purpose 
     authorized or listed under section 604 of the Fair Credit 
     Reporting Act (15 U.S.C. 1681b).''.

     SEC. 5244. COMPROMISE OF CLAIMS.

       Section 11 of the Administrative Dispute Resolution Act 
     (Public Law 101-552, 104 Stat. 2736, 5 U.S.C. 571 note) is 
     amended by adding at the end the following sentence: ``This 
     section shall not apply to section 8(b) of this Act.''.

     SEC. 5245. WAGE GARNISHMENT REQUIREMENT.

       (a) In General.--Chapter 37 of title 31, United States 
     Code, is amended in subchapter II by adding after section 
     3720C, as added by section 5261 of this subtitle, the 
     following new section:

     ``Sec. 3720D. Garnishment

       ``(a) Notwithstanding any provision of State law, the head 
     of an executive, judicial, or legislative agency that 
     administers a program that gives rise to a delinquent nontax 
     debt owed to the United States by an individual may in 
     accordance with this section garnish the disposable pay of 
     the individual to collect the amount owed, if the individual 
     is not currently making required repayment in accordance with 
     any agreement between the agency head and the individual.
       ``(b) In carrying out any garnishment of disposable pay of 
     an individual under subsection (a), the head of an executive, 
     judicial, or legislative agency shall comply with the 
     following requirements:
       ``(1) The amount deducted under this section for any pay 
     period may not exceed 15 percent of disposable pay, except 
     that a greater percentage may be deducted with the written 
     consent of the individual.
       ``(2) The individual shall be provided written notice, sent 
     by mail to the individual's last known address, a minimum of 
     30 days prior to the initiation of proceedings, from the head 
     of the executive, judicial, or legislative agency, informing 
     the individual of--
       ``(A) the nature and amount of the debt to be collected;
       ``(B) the intention of the agency to initiate proceedings 
     to collect the debt through deductions from pay; and
       ``(C) an explanation of the rights of the individual under 
     this section.
       ``(3) The individual shall be provided an opportunity to 
     inspect and copy records relating to the debt.
       ``(4) The individual shall be provided an opportunity to 
     enter into a written agreement with the executive, judicial, 
     or legislative agency, under terms agreeable to the head of 
     the agency, to establish a schedule for repayment of the 
     debt.
       ``(5) The individual shall be provided an opportunity for a 
     hearing in accordance with subsection (c) on the 
     determination of the head of the executive, judicial, or 
     legislative agency concerning--
       ``(A) the existence or the amount of the debt, and
       ``(B) in the case of an individual whose repayment schedule 
     is established other than by a written agreement pursuant to 
     paragraph (4), the terms of the repayment schedule.
       ``(6) If the individual has been reemployed within 12 
     months after having been involuntarily separated from 
     employment, no amount may be deducted from the disposable pay 
     of the individual until the individual has been reemployed 
     continuously for at least 12 months.
       ``(c)(1) A hearing under subsection (b)(5) shall be 
     provided prior to issuance of a garnishment order if the 
     individual, on or before the 15th day following the mailing 
     of the notice described in subsection (b)(2), and in 
     accordance with such procedures as the head of the executive, 
     judicial, or legislative agency may prescribe, files a 
     petition requesting such a hearing.
       ``(2) If the individual does not file a petition requesting 
     a hearing prior to such date, the head of the agency shall 
     provide the indi

[[Page 1639]]

     vidual a hearing under subsection (a)(5) upon request, but 
     such hearing need not be provided prior to issuance of a 
     garnishment order.
       ``(3) The hearing official shall issue a final decision at 
     the earliest practicable date, but not later than 60 days 
     after the filing of the petition requesting the hearing.
       ``(d) The notice to the employer of the withholding order 
     shall contain only such information as may be necessary for 
     the employer to comply with the withholding order.
       ``(e)(1) An employer may not discharge from employment, 
     refuse to employ, or take disciplinary action against an 
     individual subject to wage withholding in accordance with 
     this section by reason of the fact that the individual's 
     wages have been subject to garnishment under this section, 
     and such individual may sue in a State or Federal court of 
     competent jurisdiction any employer who takes such action.
       ``(2) The court shall award attorneys' fees to a prevailing 
     employee and, in its discretion, may order reinstatement of 
     the individual, award punitive damages and back pay to the 
     employee, or order such other remedy as may be reasonably 
     necessary.
       ``(f)(1) The employer of an individual--
       ``(A) shall pay to the head of an executive, judicial, or 
     legislative agency as directed in a withholding order issued 
     in an action under this section with respect to the 
     individual, and
       ``(B) shall be liable for any amount that the employer 
     fails to withhold from wages due an employee following 
     receipt by such employer of notice of the withholding order, 
     plus attorneys' fees, costs, and, in the court's discretion, 
     punitive damages.
       ``(2)(A) The head of an executive, judicial, or legislative 
     agency may sue an employer in a State or Federal court of 
     competent jurisdiction to recover amounts for which the 
     employer is liable under paragraph (1)(B).
       ``(B) A suit under this paragraph may not be filed before 
     the termination of the collection action, unless earlier 
     filing is necessary to avoid expiration of any applicable 
     statute of limitations period.
       ``(3) Notwithstanding paragraphs (1) and (2), an employer 
     shall not be required to vary its normal pay and disbursement 
     cycles in order to comply with this subsection.
       ``(g) For the purpose of this section, the term `disposable 
     pay' means that part of the compensation of any individual 
     from an employer remaining after the deduction of any amounts 
     required by any other law to be withheld.
       ``(h) The Secretary of the Treasury shall issue regulations 
     to implement this section.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter II of chapter 37 of title 31, United States Code, 
     is amended by inserting after the item relating to section 
     3720C (as added by section 5261 of this subtitle) the 
     following new item:

``3720D. Garnishment.''.

     SEC. 5246. DEBT SALES BY AGENCIES.

       Section 3711 of title 31, United States Code, is further 
     amended by adding at the end the following new subsection:
       ``(h)(1) The head of an executive, judicial, or legislative 
     agency may sell, subject to section 504(b) of the Federal 
     Credit Reform Act of 1990 and using competitive procedures, 
     any nontax debt owed to the United States that is delinquent 
     for more than 90 days. Appropriate fees charged by a 
     contractor to assist in the conduct of a sale under this 
     subsection may be payable from the proceeds of the sale.
       ``(2) After terminating collection action, the head of an 
     executive, judicial, or legislative agency shall sell, using 
     competitive procedures, any nontax debt or class of nontax 
     debts owed to the United States, if the Secretary of the 
     Treasury determines the sale is in the best interests of the 
     United States.
       ``(3) Sales of nontax debt under this subsection--
       ``(A) shall be for--
       ``(i) cash, or
       ``(ii) cash and a residuary equity or profit participation, 
     if the head of the agency reasonably determines that the 
     proceeds will be greater than sale solely for cash,
       ``(B) shall be without recourse, but may include the use of 
     guarantees if otherwise authorized, and
       ``(C) shall transfer to the purchaser all rights of the 
     Government to demand payment of the nontax debt, other than 
     with respect to a residuary equity or profit participation 
     under subparagraph (A)(ii).
       ``(4)(A) Within one year after the date of enactment of the 
     Debt Collection Improvement Act of 1995, and every year 
     thereafter, each executive agency with current and delinquent 
     collateralized nontax debts shall report to the Congress on 
     the valuation of its existing portfolio of loans, notes and 
     guarantees, and other collateralized debts based on standards 
     developed by the Director of the Office of Management and 
     Budget, in consultation with the Secretary of the Treasury.
       ``(B) The Director of the Office of Management and Budget 
     shall determine what information is required to be reported 
     to comply with subparagraph (A). At a minimum, for each 
     financing account and for each liquidating account (as those 
     terms are defined in sections 502(7) and 502(8), 
     respectively, of the Federal Credit Reform Act of 1990) the 
     following information shall be reported:
       ``(i) The cumulative balance of current debts outstanding, 
     the estimated net present value of such debts, the annual 
     administrative expenses of those debts (including the portion 
     of salaries and expenses that are directly related thereto), 
     and the estimated net proceeds that would be received by the 
     Government if such debts were sold.
       ``(ii) The cumulative balance of delinquent debts, debts 
     outstanding, the estimated net present value of such debts, 
     the annual administrative expenses of those debts (including 
     the portion of salaries and expenses that are directly 
     related thereto), and the estimated net proceeds that would 
     be received by the Government if such debts were sold.
       ``(iii) The cumulative balance of guaranteed loans 
     outstanding, the estimated net present value of such 
     guarantees, the annual administrative expenses of such 
     guarantees (including the portion of salaries and expenses 
     that are directly related to such guaranteed loans), and the 
     estimated net proceeds that would be received by the 
     Government if such loan guarantees were sold.
       ``(iv) The cumulative balance of defaulted loans that were 
     previously guaranteed and have resulted in loans receivables, 
     the estimated net present value of such loan assets, the 
     annual administrative expenses of such loan assets (including 
     the portion of salaries and expenses that are directly 
     related to such loan assets), and the estimated net proceeds 
     that would be received by the Government if such loan assets 
     were sold.
       ``(v) The marketability of all debts.
       ``(5) This subsection is not intended to limit existing 
     statutory authority of agencies to sell loans, debts, or 
     other assets.''.

     SEC. 5247. ADJUSTMENTS OF ADMINISTRATIVE DEBT.

       Section 3717 of title 31, United States Code, is amended by 
     adding at the end of subsection (h) the following new 
     subsection:
       ``(i)(1) The head of an executive, judicial, or legislative 
     agency may increase an administrative claim by the cost of 
     living adjustment in lieu of charging interest and penalties 
     under this section. Adjustments under this subsection will be 
     computed annually.
       ``(2) For the purpose of this subsection--
       ``(A) the term `cost of living adjustment' means the 
     percentage by which the Consumer Price Index for the month of 
     June of the calendar year preceding the adjustment exceeds 
     the Consumer Price Index for the month of June of the 
     calendar year in which the claim was determined or last 
     adjusted; and
       ``(B) the term `administrative claim' includes all debt 
     that is not based on an extension of Government credit 
     through direct loans, loan guarantees, or insurance, 
     including fines, penalties, and overpayments.''.

     SEC. 5248. DISSEMINATION OF INFORMATION REGARDING IDENTITY OF 
                   DELINQUENT DEBTORS.

       (a) In General.--Chapter 37 of title 31, United States 
     Code, is amended in subchapter II by adding after section 
     3720D, as added by section 5245 of this subtitle, the 
     following new section:

     ``Sec. 3720E. Dissemination of information regarding identity 
       of delinquent debtors

       ``(a) The head of any agency may, with the review of the 
     Secretary of the Treasury, for the purpose of collecting any 
     delinquent nontax debt owed by any person, publish or 
     otherwise publicly disseminate information regarding the 
     identity of the person and the existence of the nontax debt.
       ``(b)(1) The Secretary of the Treasury, in consultation 
     with the Director of the Office of Management and Budget and 
     the heads of other appropriate Federal agencies, shall issue 
     regulations establishing procedures and requirements the 
     Secretary considers appropriate to carry out this section.
       ``(2) Regulations under this subsection shall include--
       ``(A) standards for disseminating information that maximize 
     collections of delinquent nontax debts, by directing actions 
     under this section toward delinquent debtors that have assets 
     or income sufficient to pay their delinquent nontax debt;
       ``(B) procedures and requirements that prevent 
     dissemination of information under this section regarding 
     persons who have not had an opportunity to verify, contest, 
     and compromise their nontax debt in accordance with this 
     subchapter; and
       ``(C) procedures to ensure that persons are not incorrectly 
     identified pursuant to this section.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter II of chapter 37 of title 31, United States Code, 
     is amended by adding after the item relating to section 3720D 
     (as added by section 5245 of this subtitle) the following new 
     item:

``3720E. Dissemination of information regarding identity of delinquent 
              debtors.''.

              Subpart E--Federal Civil Monetary Penalties

     SEC. 5251. ADJUSTING FEDERAL CIVIL MONETARY PENALTIES FOR 
                   INFLATION.

       (a) In General.--The Federal Civil Penalties Inflation 
     Adjustment Act of 1990 (Public Law 101-410, 104 Stat. 890; 28 
     U.S.C. 2461 note) is amended--
       (1) by amending section 4 to read as follows:
       ``Sec. 4. The head of each agency shall, not later than 180 
     days after the date of enactment of the Debt Collection 
     Improvement Act of 1995, and at least once every 4 years 
     thereafter--
       ``(1) by regulation adjust each civil monetary penalty 
     provided by law within the jurisdiction of the Federal 
     agency, except for any penalty (including any addition to tax 
     and additional amount) under the Internal

[[Page 1640]]

     Revenue Code of 1986, the Tarriff Act of 1930, or the Social 
     Security Act, by the inflation adjustment described under 
     section 5 of this Act; and
       ``(2) publish each such regulation in the Federal 
     Register.'';
       (2) in section 5(a), by striking ``The adjustment described 
     under paragraphs (4) and (5)(A) of section 4'' and inserting 
     ``The inflation adjustment under section 4''; and
       (3) by adding at the end the following new section:
       ``Sec. 7. Any increase under this Act in a civil monetary 
     penalty shall apply only to violations which occur after the 
     date the increase takes effect.''.
       (b) Limitation on Initial Adjustment.--The first adjustment 
     of a civil monetary penalty made pursuant to the amendment 
     made by to subsection (a) may not exceed 10 percent of such 
     penalty.

                        Subpart F--Gain Sharing

     SEC. 5261. DEBT COLLECTION IMPROVEMENT ACCOUNT.

       (a) In General.--Title 31, United States Code, is amended 
     by inserting after section 3720B (as added by section 5232 of 
     this subtitle) the following new section:

     ``Sec. 3720C. Debt Collection Improvement Account

       ``(a)(1) There is hereby established in the Treasury a 
     special fund to be known as the `Debt Collection Improvement 
     Account' (hereinafter in this section referred to as the 
     `Account').
       ``(2) The Account shall be maintained and managed by the 
     Secretary of the Treasury, who shall ensure that agency 
     programs are credited with amounts transferred under 
     subsection (b)(1).
       ``(b)(1) Not later than 30 days after the end of a fiscal 
     year, an agency may transfer to the Account the amount 
     described in paragraph (3), as adjusted under paragraph (4).
       ``(2) Agency transfers to the Account may include 
     collections from--
       ``(A) salary, administrative, and tax refund offsets;
       ``(B) automated levy authority;
       ``(C) the Department of Justice;
       ``(D) private collection agencies;
       ``(E) sales of delinquent loans; and
       ``(F) contracts to locate or recover assets.
       ``(3) The amount referred to in paragraph (1) shall be 5 
     percent of the amount of delinquent debt collected by an 
     agency in a fiscal year, minus the greater of--
       ``(A) 5 percent of the amount of delinquent nontax debt 
     collected by the agency in the previous fiscal year, or
       ``(B) 5 percent of the amount of delinquent nontax debt 
     collected by the agency in the previous 4 fiscal years.
       ``(4) In consultation with the Secretary of the Treasury, 
     the Office of Management and Budget may adjust the amount 
     described in paragraph (3) for an agency to reflect the level 
     of effort in credit management programs by the agency. As an 
     indicator of the level of effort in credit management, the 
     Office of Management and Budget shall consider the following:
       ``(A) The number of days between the date a claim or debt 
     became delinquent and the date which an agency referred the 
     debt or claim to the Secretary of the Treasury or obtained an 
     exemption from this referral under section 3711(g)(2) of this 
     title.
       ``(B) The ratio of delinquent debts or claims to total 
     receivables for a given program, and the change in this ratio 
     over a period of time.
       ``(c)(1) The Secretary of the Treasury may make payments 
     from the Account solely to reimburse agencies for qualified 
     expenses. For agencies with franchise funds, such payments 
     may be credited to subaccounts designated for debt 
     collection.
       ``(2) For purposes of this section, the term `qualified 
     expenses' means expenditures for the improvement of credit 
     management, debt collection, and debt recovery activities, 
     including--
       ``(A) account servicing (including cross-servicing under 
     section 3711(g) of this title),
       ``(B) automatic data processing equipment acquisitions,
       ``(C) delinquent debt collection,
       ``(D) measures to minimize delinquent debt,
       ``(E) sales of delinquent debt,
       ``(F) asset disposition, and
       ``(G) training of personnel involved in credit and debt 
     management.
       ``(3)(A) Amounts in the Account shall be available to the 
     Secretary of the Treasury for purposes of this section to the 
     extent and in amounts provided in advance in appropriation 
     Acts.
       ``(B) As soon as practicable after the end of the third 
     fiscal year after which appropriations are made pursuant to 
     this section, and every 3 years thereafter, any 
     unappropriated balance in the Account shall be transferred to 
     the general fund of the Treasury as miscellaneous receipts.
       ``(d) For direct loans and loan guarantee programs subject 
     to title V of the Congressional Budget Act of 1974, amounts 
     credited in accordance with subsection (c) shall be 
     considered administrative costs.
       ``(e) The Secretary of the Treasury shall prescribe such 
     rules, regulations, and procedures as the Secretary considers 
     necessary or appropriate to carry out the purposes of this 
     section.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     37 of title 31, United States Code, is amended by inserting 
     after the item relating to section 3720B (as added by section 
     5232 of this subtitle) the following new item:

``3720C. Debt Collection Improvement Account.''.

                 Subpart G--Tax Refund Offset Authority

     SEC. 5271. EXPANDING TAX REFUND OFFSET AUTHORITY.

       (a) Discretionary Authority.--Section 3720A of title 31, 
     United States Code, is amended by adding after subsection (h) 
     the following new subsection:
       ``(i) An agency subject to section 9 of the Act of May 18, 
     1933 (16 U.S.C. 831h), may implement this section at its 
     discretion.''.
       (b) Federal Agency Defined.--Section 6402(f) of the 
     Internal Revenue Code of 1986 (26 U.S.C. 6402(f)), is amended 
     to read as follows:
       ``(f) Federal Agency.--For purposes of this section, the 
     term `Federal agency' means a department, agency, or 
     instrumentality of the United States, and includes a 
     Government corporation (as such term is defined in section 
     103 of title 5, United States Code).''.

     SEC. 5272. EXPANDING AUTHORITY TO COLLECT PAST-DUE SUPPORT.

       (a) Notification of Secretary of the Treasury.--Section 
     3720A(a) of title 31, United States Code, is amended to read 
     as follows:
       ``(a) Any Federal agency that is owed by a person a past-
     due, legally enforceable debt (including debt administered by 
     a third party acting as an agent for the Federal Government) 
     shall, and any agency subject to section 9 of the Act of May 
     18, 1933 (16 U.S.C. 831h), owed such a debt may, in 
     accordance with regulations issued pursuant to subsections 
     (b) and (d), notify the Secretary of the Treasury at least 
     once each year of the amount of such debt.''.
       (b) Implementation of Support Collection by Secretary of 
     the Treasury.--Section 464(a) of the Act of August 14, 1935 
     (42 U.S.C. 664(a)) is amended--
       (1) in paragraph (1), by adding at the end the following: 
     ``This subsection may be executed by the disbursing official 
     of the Department of the Treasury.''; and
       (2) in paragraph (2)(A), by adding at the end the 
     following: ``This subsection may be executed by the 
     disbursing official of the Department of the Treasury.''.

                        Subpart H--Disbursements

     SEC. 5281. ELECTRONIC FUNDS TRANSFER.

       Section 3332 of title 31, United States Code, popularly 
     known as the Federal Financial Management Act of 1994, is 
     amended--
       (1) by redesignating subsection (e) as subsection (h), and 
     inserting after subsection (d) the following new subsections:
       ``(e)(1) Notwithstanding subsections (a) through (d) of 
     this section, sections 5120 (a) and (d) of title 38, and any 
     other provision of law, all Federal payments to a recipient 
     who becomes eligible for that type of payments after 90 days 
     after the date of the enactment of the Debt Collection 
     Improvement Act of 1995 shall be made by electronic funds 
     transfer.
       ``(2) The head of a Federal agency shall, with respect to 
     Federal payments made or authorized by the agency, waive the 
     application of paragraph (1) to a recipient of those payments 
     upon receipt of written certification from the recipient that 
     the recipient does not have an account with a financial 
     institution or an authorized payment agent.
       ``(f)(1) Notwithstanding any other provision of law 
     (including subsections (a) through (e) of this section and 
     sections 5120 (a) and (d) of title 38), except as provided in 
     paragraph (2) all Federal payments made after January 1, 
     1999, shall be made by electronic funds transfer.
       ``(2)(A) The Secretary of the Treasury may waive 
     application of this subsection to payments--
       ``(i) for individuals or classes of individuals for whom 
     compliance imposes a hardship;
       ``(ii) for classifications or types of checks; or
       ``(iii) in other circumstances as may be necessary.
       ``(B) The Secretary of the Treasury shall make 
     determinations under subparagraph (A) based on standards 
     developed by the Secretary.
       ``(g) Each recipient of Federal payments required to be 
     made by electronic funds transfer shall--
       ``(1) designate 1 or more financial institutions or other 
     authorized agents to which such payments shall be made; and
       ``(2) provide to the Federal agency that makes or 
     authorizes the payments information necessary for the 
     recipient to receive electronic funds transfer payments 
     through each institution or agent designated under paragraph 
     (1).''; and
       (2) by adding after subsection (h) (as so redesignated) the 
     following new subsections:
       ``(i)(1) The Secretary of the Treasury may prescribe 
     regulations that the Secretary considers necessary to carry 
     out this section.
       ``(2) Regulations under this subsection shall ensure that 
     individuals required under subsection (g) to have an account 
     at a financial institution because of the application of 
     subsection (f)(1)--
       ``(A) will have access to such an account at a reasonable 
     cost; and
       ``(B) are given the same consumer protections with respect 
     to the account as other account holders at the same financial 
     institution.
       ``(j) For purposes of this section--
       ``(1) The term `electronic funds transfer' means any 
     transfer of funds, other than a transaction originated by 
     cash, check, or similar paper instrument, that is initiated 
     through an electronic terminal, telephone, computer, or 
     magnetic tape, for the purpose

[[Page 1641]]

      of ordering, instructing, or authorizing a financial 
     institution to debit or credit an account. The term includes 
     Automated Clearing House transfers, Fed Wire transfers, 
     transfers made at automatic teller machines, and point-of-
     sale terminals.
       ``(2) The term `Federal agency' means--
       ``(A) an agency (as defined in section 101 of this title); 
     and
       ``(B) a Government corporation (as defined in section 103 
     of title 5).
       ``(3) The term `Federal payments' includes--
       ``(A) Federal wage, salary, and retirement payments;
       ``(B) vendor and expense reimbursement payments; and
       ``(C) benefit payments.
     Such term shall not include any payment under the Internal 
     Revenue Code of 1986.''

     SEC. 5282. REQUIREMENT TO INCLUDE TAXPAYER IDENTIFYING NUMBER 
                   WITH PAYMENT VOUCHER.

       Section 3325 of title 31, United States Code, is amended by 
     adding at the end the following new subsection:
       ``(d) The head of an executive agency or an officer or 
     employee of an executive agency referred to in subsection 
     (a)(1)(B), as applicable, shall include with each certified 
     voucher submitted to a disbursing official pursuant to this 
     section the taxpayer identifying number of each person to 
     whom payment may be made under the voucher.''.

                        Subpart I--Miscellaneous

     SEC. 5291. MISCELLANEOUS AMENDMENTS TO DEFINITIONS.

       Section 3701 of title 31, United States Code, is amended--
       (1) by amending subsection (a)(1) to read as follows:
       ``(1) `administrative offset' means withholding funds 
     payable by the United States (including funds payable by the 
     United States on behalf of a State government) to, or held by 
     the United States for, a person to satisfy a claim.'';
       (2) by amending subsection (b) to read as follows:
       ``(b)(1) In subchapter II of this chapter, The term `claim' 
     or `debt' means any amount of funds or property that has been 
     determined by an appropriate official of the Federal 
     Government to be owed to the United States by a person, 
     organization, or entity other than another Federal agency. A 
     claim includes, without limitation--
       ``(A) funds owed on account of loans made, insured, or 
     guaranteed by the Government, including any deficiency or any 
     difference between the price obtained by the Government in 
     the sale of a property and the amount owed to the Government 
     on a mortgage on the property,
       ``(B) expenditures of nonappropriated funds,
       ``(C) over-payments, including payments disallowed by 
     audits performed by the Inspector General of the agency 
     administering the program,
       ``(D) any amount the United States is authorized by statute 
     to collect for the benefit of any person,
       ``(E) the unpaid share of any non-Federal partner in a 
     program involving a Federal payment and a matching, or cost-
     sharing, payment by the non-Federal partner,
       ``(F) any fines or penalties assessed by an agency; and
       ``(G) other amounts of money or property owed to the 
     Government.
       ``(2) For purposes of sections 3716 of this title, each of 
     the terms `claim' and `debt' includes an amount of funds or 
     property owed by a person to a State (including any past-due 
     support being enforced by the State), the District of 
     Columbia, American Samoa, Guam, the United States Virgin 
     Islands, the Commonwealth of the Northern Mariana Islands, or 
     the Commonwealth of Puerto Rico.''; and
       (3) by adding after subsection (f) (as added by section 
     5241 of this subtitle) the following new subsection:
       ``(g) In section 3716 of this title--
       ``(1) `creditor agency' means any agency owed a claim that 
     seeks to collect that claim through administrative offset; 
     and
       ``(2) `payment certifying agency' means any agency that has 
     transmitted a voucher to a disbursing official for 
     disbursement.''.

     SEC. 5292. MONITORING AND REPORTING.

       (a) Guidelines.--The Secretary of the Treasury, in 
     consultation with concerned Federal agencies, may establish 
     guidelines, including information on outstanding debt, to 
     assist agencies in the performance and monitoring of debt 
     collection activities.
       (b) Report.--Not later than 3 years after the date of 
     enactment of this subtitle, the Secretary of the Treasury 
     shall report to the Congress on collection services provided 
     by Federal agencies or entities collecting debt on behalf of 
     other Federal agencies under the authorities contained in 
     section 3711(g) of title 31, United States Code, as added by 
     section 5243 of this subtitle.
       (c) Agency Reports.--Section 3719 of title 31, United 
     States Code, is amended--
       (1) in subsection (a)--
       (A) by amending the first sentence to read as follows: ``In 
     consultation with the Comptroller General of the United 
     States, the Secretary of the Treasury shall prescribe 
     regulations requiring the head of each agency with 
     outstanding nontax claims to prepare and submit to the 
     Secretary at least once each year a report summarizing the 
     status of loans and accounts receivable that are managed by 
     the head of the agency.''; and
       (B) in paragraph (3), by striking ``Director'' and 
     inserting ``Secretary''; and
       (2) in subsection (b), by striking ``Director'' and 
     inserting ``Secretary''.
       (d) Consolidation of Reports.--Notwithstanding any other 
     provision of law, the Secretary of the Treasury may 
     consolidate reports concerning debt collection otherwise 
     required to be submitted by the Secretary into one annual 
     report.

     SEC. 5293. REVIEW OF STANDARDS AND POLICIES FOR COMPROMISE OR 
                   WRITE-DOWN OF DELINQUENT DEBTS.

       The Director of the Office of Management and Budget shall--
       (1) review the standards and policies of each Federal 
     agency for compromising, writing-down, forgiving, or 
     discharging indebtedness arising from programs of the agency;
       (2) determine whether those standards and policies are 
     consistent and protect the interests of the United States;
       (3) in the case of any Federal agency standard or policy 
     that the Secretary determines is not consistent or does not 
     protect the interests of the United States, direct the head 
     of the agency to make appropriate modifications to the 
     standard or policy; and
       (4) report annually to the Congress on--
       (A) deficiencies in the standards and policies of Federal 
     agencies for compromising, writing-down, forgiving, or 
     discharging indebtedness; and
       (B) progress made in improving those standards and 
     policies.

                    PART II--JUSTICE DEBT MANAGEMENT

     SEC. 5301. EXPANDED USE OF PRIVATE ATTORNEYS.

       (a) Elimination of Limitation on Fees.--Section 
     3718(b)(1)(A) of title 31, United States Code, is amended by 
     striking the fourth sentence.
       (b) Repeal.--Sections 3 and 5 of the Act of October 28, 
     1986 (popularly known as the Federal Debt Recovery Act; 
     Public Law 99-578, 100 Stat. 3305) are hereby repealed.

     SEC. 5302. NONJUDICIAL FORECLOSURE OF MORTGAGES.

       Chapter 176 of title 28, United States Code, is amended--
       (1) in the table of subchapters at the beginning of the 
     chapter by adding at the end the following new item:

``E. Nonjudicial foreclosure................................3401'';....

     and
       (2) by adding at the end of the chapter the following new 
     subchapter:

                ``SUBCHAPTER E--NONJUDICIAL FORECLOSURE

``Sec.
``3401. Definitions.
``3402. Rules of construction.
``3403. Election of procedure.
``3404. Designation of foreclosure trustee.
``3405. Notice of foreclosure sale; statute of limitations.
``3406. Service of notice of foreclosure sale.
``3407. Cancellation of foreclosure sale.
``3408. Stay.
``3409. Conduct of sale; postponement.
``3410. Transfer of title and possession.
``3411. Record of foreclosure and sale.
``3412. Effect of sale.
``3413. Disposition of sale proceeds.
``3414. Deficiency judgment.

     ``Sec. 3401. Definitions

       ``As used in this subchapter--
       ``(1) `agency' means--
       ``(A) an Executive department, as set forth in section 101 
     of title 5, United States Code;
       ``(B) an independent establishment, as defined in section 
     104 of title 5, United States Code (except that it shall not 
     include the General Accounting Office);
       ``(C) a military department, as set forth in section 102 of 
     title 5, United States Code; and
       ``(D) a wholly owned government corporation, as defined in 
     section 9101(3) of title 31, United States Code;
       ``(2) `agency head' means the head and any assistant head 
     of an agency, and may upon the designation by the head of an 
     agency include the chief official of any principal division 
     of an agency or any other employee of an agency;
       ``(3) `bona fide purchaser' means a purchaser for value in 
     good faith and without notice of any adverse claim who 
     acquires the seller's interest free of any adverse claim;
       ``(4) `debt instrument' means a note, mortgage bond, 
     guaranty, or other instrument creating a debt or other 
     obligation, including any instrument incorporated by 
     reference therein and any instrument or agreement amending or 
     modifying a debt instrument;
       ``(5) `file' or `filing' means docketing, indexing, 
     recording, or registering, or any other requirement for 
     perfecting a mortgage or a judgment;
       ``(6) `foreclosure trustee' means an individual, 
     partnership, association, or corporation, or any employee 
     thereof, including a successor, appointed by the agency head 
     to conduct a foreclosure sale pursuant to this subchapter;
       ``(7) `mortgage' means a deed of trust, deed to secure 
     debt, security agreement, or any other form of instrument 
     under which any interest in real property, including 
     leaseholds, life estates, reversionary interests, and any 
     other estates under applicable law is conveyed in trust, 
     mortgaged, encumbered, pledged, or otherwise rendered subject 
     to a lien, for the purpose of securing the payment of money 
     or the performance of any other obligation;
       ``(8) `of record' means an interest recorded pursuant to 
     Federal or State statutes that provide for official recording 
     of deeds, mortgages, and judgments, and that establish the 
     effect of such records as notice to creditors, purchasers, 
     and other interested persons;

[[Page 1642]]

       ``(9) `owner' means any person who has an ownership 
     interest in property and includes heirs, devisees, executors, 
     administrators, and other personal representatives, and 
     trustees of testamentary trusts if the owner of record is 
     deceased;
       ``(10) `sale' means a sale conducted pursuant to this 
     subchapter, unless the context requires otherwise; and
       ``(11) `security property' means real property, or any 
     interest in real property including leaseholds, life estates, 
     reversionary interests, and any other estates under 
     applicable State law that secure a mortgage.

     ``Sec. 3402. Rules of construction

       ``(a) In General.--If an agency head elects to proceed 
     under this subchapter, this subchapter shall apply and the 
     provisions of this subchapter shall govern in the event of a 
     conflict with any other provision of Federal law or State 
     law.
       ``(b) Limitation.--This subchapter shall not be construed 
     to supersede or modify the operation of--
       ``(1) the lease-back/buy-back provisions under section 335 
     of the Consolidated Farm and Rural Development Act, or 
     regulations promulgated thereunder; or
       ``(2) The Multifamily Mortgage Foreclosure Act of 1981.
       ``(c) Effect on Other Laws.--This subchapter shall not be 
     construed to curtail or limit the rights of the United States 
     or any of its agencies--
       ``(1) to foreclose a mortgage under any other provision of 
     Federal law or State law; or
       ``(2) to enforce any right under Federal law or State law 
     in lieu of or in addition to foreclosure, including any right 
     to obtain a monetary judgment.
       ``(d) Application to Mortgages.--The provisions of this 
     subchapter may be used to foreclose any mortgage, whether 
     executed prior or subsequent to the effective date of this 
     subchapter.

     ``Sec. 3403. Election of procedure

       ``(a) Security Property Subject to Foreclosure.--An agency 
     head may foreclose a mortgage upon the breach of a covenant 
     or condition in a debt instrument or mortgage for which 
     acceleration or foreclosure is authorized. An agency head may 
     not institute foreclosure proceedings on the mortgage under 
     any other provision of law, or refer such mortgage for 
     litigation, during the pendency of foreclosure proceedings 
     pursuant to this subchapter.
       ``(b) Effect of Cancellation of Sale.--If a foreclosure 
     sale is canceled pursuant to section 3407, the agency head 
     may thereafter foreclose on the security property in any 
     manner authorized by law.

     ``Sec. 3404. Designation of foreclosure trustee

       ``(a) In General.--An agency head shall designate a 
     foreclosure trustee who shall supersede any trustee 
     designated in the mortgage. A foreclosure trustee designated 
     under this section shall have a nonjudicial power of sale 
     pursuant to this subchapter.
       ``(b) Designation of Foreclosure Trustee.--
       ``(1) An agency head may designate as foreclosure trustee--
       ``(A) an officer or employee of the agency;
       ``(B) an individual who is a resident of the State in which 
     the security property is located; or
       ``(C) a partnership, association, or corporation, if such 
     entity is authorized to transact business under the laws of 
     the State in which the security property is located.
       ``(2) The agency head is authorized to enter into personal 
     services and other contracts not inconsistent with this 
     subchapter.
       ``(c) Method of Designation.--An agency head shall 
     designate the foreclosure trustee in writing. The foreclosure 
     trustee may be designated by name, title, or position. An 
     agency head may designate one or more foreclosure trustees 
     for the purpose of proceedings with multiple foreclosures or 
     a class of foreclosures.
       ``(d) Availability of Designation.--An agency head may 
     designate such foreclosure trustees as the agency head deems 
     necessary to carry out the purposes of this subchapter.
       ``(e) Multiple Foreclosure Trustees Authorized.--An agency 
     head may designate multiple foreclosure trustees for 
     different tracts of a secured property.
       ``(f) Removal of Foreclosure Trustees; Successor 
     Foreclosure Trustees.--An agency head may, with or without 
     cause or notice, remove a foreclosure trustee and designate a 
     successor trustee as provided in this section. The 
     foreclosure sale shall continue without prejudice 
     notwithstanding the removal of the foreclosure trustee and 
     designation of a successor foreclosure trustee. Nothing in 
     this section shall be construed to prohibit a successor 
     foreclosure trustee from postponing the foreclosure sale in 
     accordance with this subchapter.

     ``Sec. 3405. Notice of foreclosure sale; statute of 
       limitations

       ``(a) In General.--
       ``(1) Not earlier than 21 days nor later than ten years 
     after acceleration of a debt instrument or demand on a 
     guaranty, the foreclosure trustee shall serve a notice of 
     foreclosure sale in accordance with this subchapter.
       ``(2) For purposes of computing the time period under 
     paragraph (1), there shall be excluded all periods during 
     which there is in effect--
       ``(A) a judicially imposed stay of foreclosure; or
       ``(B) a stay imposed by section 362 of title 11, United 
     States Code.
       ``(3) In the event of partial payment or written 
     acknowledgement of the debt after acceleration of the debt 
     instrument, the right to foreclose shall be deemed to accrue 
     again at the time of each such payment or acknowledgement.
       ``(b) Notice of Foreclosure Sale.--The notice of 
     foreclosure sale shall include--
       ``(1) the name, title, and business address of the 
     foreclosure trustee as of the date of the notice;
       ``(2) the names of the original parties to the debt 
     instrument and the mortgage, and any assignees of the 
     mortgagor of record;
       ``(3) the street address or location of the security 
     property, and a generally accepted designation used to 
     describe the security property, or so much thereof as is to 
     be offered for sale, sufficient to identify the property to 
     be sold;
       ``(4) the date of the mortgage, the office in which the 
     mortgage is filed, and the location of the filing of the 
     mortgage;
       ``(5) the default or defaults upon which foreclosure is 
     based, and the date of the acceleration of the debt 
     instrument;
       ``(6) the date, time, and place of the foreclosure sale;
       ``(7) a statement that the foreclosure is being conducted 
     in accordance with this subchapter;
       ``(8) the types of costs, if any, to be paid by the 
     purchaser upon transfer of title; and
       ``(9) the terms and conditions of sale, including the 
     method and time of payment of the foreclosure purchase price.

     ``Sec. 3406. Service of notice of foreclosure sale

       ``(a) Record Notice.--At least 21 days prior to the date of 
     the foreclosure sale, the notice of foreclosure sale required 
     by section 3405 shall be filed in the manner authorized for 
     filing a notice of an action concerning real property 
     according to the law of the State where the security property 
     is located or, if none, in the manner authorized by section 
     3201 of this chapter.
       ``(b) Notice by Mail.--
       ``(1) At least 21 days prior to the date of the foreclosure 
     sale, the notice set forth in section 3405 shall be sent by 
     registered or certified mail, return receipt requested--
       ``(A) to the current owner of record of the security 
     property as the record appears on the date that the notice of 
     foreclosure sale is recorded pursuant to subsection (a);
       ``(B) to all debtors, including the mortgagor, assignees of 
     the mortgagor and guarantors of the debt instrument;
       ``(C) to all persons having liens, interests or 
     encumbrances of record upon the security property, as the 
     record appears on the date that the notice of foreclosure 
     sale is recorded pursuant to subsection (a); and
       ``(D) to any occupants of the security property.
     If the names of the occupants of the security property are 
     not known to the agency, or the security property has more 
     than one dwelling unit, the notice shall be posted at the 
     security property.
       ``(2) The notice shall be sent to the debtor at the 
     address, if any, set forth in the debt instrument or mortgage 
     as the place to which notice is to be sent, and if different, 
     to the debtor's last known address as shown in the mortgage 
     record of the agency. The notice shall be sent to any person 
     other than the debtor to that person's address of record or, 
     if there is no address of record, to any address at which the 
     agency in good faith believes the notice is likely to come to 
     that person's attention.
       ``(3) Notice by mail pursuant to this subsection shall be 
     effective upon mailing.
       ``(c) Notice By Publication.--The notice of the foreclosure 
     sale shall be published at least once a week for each of 
     three successive weeks prior to the sale in at least one 
     newspaper of general circulation in any county or counties in 
     which the security property is located. If there is no 
     newspaper published at least weekly that has a general 
     circulation in at least one county in which the security 
     property is located, copies of the notice of foreclosure sale 
     shall instead be posted at least 21 days prior to the sale at 
     the courthouse of any county or counties in which the 
     property is located and the place where the sale is to be 
     held.

     ``Sec. 3407. Cancellation of foreclosure sale

       ``(a) In General.--At any time prior to the foreclosure 
     sale, the foreclosure trustee shall cancel the sale--
       ``(1) if the debtor or the holder of any subordinate 
     interest in the security property tenders the performance due 
     under the debt instrument and mortgage, including any amounts 
     due because of the exercise of the right to accelerate, and 
     the expenses of proceeding to foreclosure incurred to the 
     time of tender; or
       ``(2) if the security property is a dwelling of four units 
     or fewer, and the debtor--
       ``(A) pays or tenders all sums which would have been due at 
     the time of tender in the absence of any acceleration;
       ``(B) performs any other obligation which would have been 
     required in the absence of any acceleration; and
       ``(C) pays or tenders all costs of foreclosure incurred for 
     which payment from the proceeds of the sale would be allowed; 
     or
       ``(3) for any reason approved by the agency head.
       ``(b) Limitation.--The debtor may not, without the approval 
     of the agency head, cure the default under subsection (a)(2) 
     if, within the preceding 12 months, the debtor has cured a 
     default after being served with a notice of foreclosure sale 
     pursuant to this subchapter.
       ``(c) Notice of Cancellation.--The foreclosure trustee 
     shall file a notice of the can

[[Page 1643]]

     cellation in the same place and manner provided for the 
     filing of the notice of foreclosure sale under section 
     3406(a).

     ``Sec. 3408. Stay

       ``If, prior to the time of sale, foreclosure proceedings 
     under this subchapter are stayed in any manner, including the 
     filing of bankruptcy, no person may thereafter cure the 
     default under the provisions of section 3407(a)(2). If the 
     default is not cured at the time a stay is terminated, the 
     foreclosure trustee shall proceed to sell the security 
     property as provided in this subchapter.

     ``Sec. 3409. Conduct of sale; postponement

       ``(a) Sale Procedures.--Foreclosure sale pursuant to this 
     subchapter shall be at public auction and shall be scheduled 
     to begin at a time between the hours of 9:00 a.m. and 4:00 
     p.m. local time. The foreclosure sale shall be held at the 
     location specified in the notice of foreclosure sale, which 
     shall be a location where real estate foreclosure auctions 
     are customarily held in the county or one of the counties in 
     which the property to be sold is located or at a courthouse 
     therein, or upon the property to be sold. Sale of security 
     property situated in two or more counties may be held in any 
     one of the counties in which any part of the security 
     property is situated. The foreclosure trustee may designate 
     the order in which multiple tracts of security property are 
     sold.
       ``(b) Bidding Requirements.--Written one-price sealed bids 
     shall be accepted by the foreclosure trustee, if submitted by 
     the agency head or other persons for entry by announcement by 
     the foreclosure trustee at the sale. The sealed bids shall be 
     submitted in accordance with the terms set forth in the 
     notice of foreclosure sale. The agency head or any other 
     person may bid at the foreclosure sale, even if the agency 
     head or other person previously submitted a written one-price 
     bid. The agency head may bid a credit against the debt due 
     without the tender or payment of cash. The foreclosure 
     trustee may serve as auctioneer, or may employ an auctioneer 
     who may be paid from the sale proceeds. If an auctioneer is 
     employed, the foreclosure trustee is not required to attend 
     the sale. The foreclosure trustee or an auctioneer may bid as 
     directed by the agency head.
       ``(c) Postponement of Sale.--The foreclosure trustee shall 
     have discretion, prior to or at the time of sale, to postpone 
     the foreclosure sale. The foreclosure trustee may postpone a 
     sale to a later hour the same day by announcing or posting 
     the new time and place of the foreclosure sale at the time 
     and place originally scheduled for the foreclosure sale. The 
     foreclosure trustee may instead postpone the foreclosure sale 
     for not fewer than 9 nor more than 31 days, by serving notice 
     that the foreclosure sale has been postponed to a specified 
     date, and the notice may include any revisions the 
     foreclosure trustee deems appropriate. The notice shall be 
     served by publication, mailing, and posting in accordance 
     with section 3406(b) and (c), except that publication may be 
     made on any of three separate days prior to the new date of 
     the foreclosure sale, and mailing may be made at any time at 
     least 7 days prior to the new date of the foreclosure sale.
       ``(d) Liability of Successful Bidder Who Fails To Comply.--
     The foreclosure trustee may require a bidder to make a cash 
     deposit before the bid is accepted. The amount or percentage 
     of the cash deposit shall be stated by the foreclosure 
     trustee in the notice of foreclosure sale. A successful 
     bidder at the foreclosure sale who fails to comply with the 
     terms of the sale shall forfeit the cash deposit or, at the 
     election of the foreclosure trustee, shall be liable to the 
     agency on a subsequent sale of the property for all net 
     losses incurred by the agency as a result of such failure.
       ``(e) Effect of Sale.--Any foreclosure sale held in 
     accordance with this subchapter shall be conclusively 
     presumed to have been conducted in a legal, fair, and 
     commercially reasonable manner. The sale price shall be 
     conclusively presumed to constitute the reasonably equivalent 
     value of the security property.

     ``Sec. 3410. Transfer of title and possession

       ``(a) Deed.--After receipt of the purchase price in 
     accordance with the terms of the sale as provided in the 
     notice of foreclosure sale, the foreclosure trustee shall 
     execute and deliver to the purchaser a deed conveying the 
     security property to the purchaser that grants and conveys 
     title to the security property without warranty or covenants 
     to the purchaser. The execution of the foreclosure trustee's 
     deed shall have the effect of conveying all of the right, 
     title, and interest in the security property covered by the 
     mortgage. Notwithstanding any other law to the contrary, the 
     foreclosure trustee's deed shall be a conveyance of the 
     security property and not a quitclaim. No judicial proceeding 
     shall be required ancillary or supplementary to the 
     procedures provided in this subchapter to establish the 
     validity of the conveyance.
       ``(b) Death of Purchaser Prior to Consummation of Sale.--If 
     a purchaser dies before execution and delivery of the deed 
     conveying the security property to the purchaser, the 
     foreclosure trustee shall execute and deliver the deed to the 
     representative of the purchaser's estate upon payment of the 
     purchase price in accordance with the terms of sale. Such 
     delivery to the representative of the purchaser's estate 
     shall have the same effect as if accomplished during the 
     lifetime of the purchaser.
       ``(c) Purchaser Considered Bona Fide Purchaser Without 
     Notice.--The purchaser of property under this subchapter 
     shall be presumed to be a bona fide purchaser without notice 
     of defects, if any, in the title conveyed to the purchaser.
       ``(d) Possession by Purchaser; Continuing Interests.--A 
     purchaser at a foreclosure sale conducted pursuant to this 
     subchapter shall be entitled to possession upon passage of 
     title to the security property, subject to any interest or 
     interests senior to that of the mortgage. The right to 
     possession of any person without an interest senior to the 
     mortgage who is in possession of the property shall terminate 
     immediately upon the passage of title to the security 
     property, and the person shall vacate the security property 
     immediately. The purchaser shall be entitled to take any 
     steps available under Federal law or State law to obtain 
     possession.

     ``Sec. 3411. Record of foreclosure and sale

       ``(a) Recital Requirements.--The foreclosure trustee shall 
     recite in the deed to the purchaser, or in an addendum to the 
     foreclosure trustee's deed, or shall prepare an affidavit 
     stating--
       ``(1) the date, time, and place of sale;
       ``(2) the date of the mortgage, the office in which the 
     mortgage is filed, and the location of the filing of the 
     mortgage;
       ``(3) the persons served with the notice of foreclosure 
     sale;
       ``(4) the date and place of filing of the notice of 
     foreclosure sale under section 3406(a);
       ``(5) that the foreclosure was conducted in accordance with 
     the provisions of this subchapter; and
       ``(6) the sale amount.
       ``(b) Effect of Recitals.--The recitals set forth in 
     subsection (a) shall be prima facie evidence of the truth of 
     such recitals. Compliance with the requirements of subsection 
     (a) shall create a conclusive presumption of the validity of 
     the sale in favor of bona fide purchasers and encumbrancers 
     for value without notice.
       ``(c) Deed To Be Accepted for Filing.--The register of 
     deeds or other appropriate official of the county or counties 
     where real estate deeds are regularly filed shall accept for 
     filing and shall file the foreclosure trustee's deed and 
     affidavit, if any, and any other instruments submitted for 
     filing in relation to the foreclosure of the security 
     property under this subchapter.

     ``Sec. 3412. Effect of sale

       ``A sale conducted under this subchapter to a bona fide 
     purchaser shall bar all claims upon the security property 
     by--
       ``(1) any person to whom the notice of foreclosure sale was 
     mailed as provided in this subchapter who claims an interest 
     in the property subordinate to that of the mortgage, and the 
     heir, devisee, executor, administrator, successor, or 
     assignee claiming under any such person;
       ``(2) any person claiming any interest in the property 
     subordinate to that of the mortgage, if such person had 
     actual knowledge of the sale;
       ``(3) any person so claiming, whose assignment, mortgage, 
     or other conveyance was not filed in the proper place for 
     filing, or whose judgment or decree was not filed in the 
     proper place for filing, prior to the date of filing of the 
     notice of foreclosure sale as required by section 3406(a), 
     and the heir, devisee, executor, administrator, successor, or 
     assignee of such a person; or
       ``(4) any other person claiming under a statutory lien or 
     encumbrance not required to be filed and attaching to the 
     title or interest of any person designated in any of the 
     foregoing subsections of this section.

     ``Sec. 3413. Disposition of sale proceeds

       ``(a) Distribution of Sale Proceeds.--The foreclosure 
     trustee shall distribute the proceeds of the foreclosure sale 
     in the following order:
       ``(1)(A) First, to pay the commission of the foreclosure 
     trustee, other than an agency employee, the greater of--
       ``(i) the sum of--
       ``(I) 3 percent of the first $1,000 collected, plus
       ``(II) 1.5 percent on the excess of any sum collected over 
     $1,000; or
       ``(ii) $250.
       ``(B) The amounts described in subparagraph (A)(i) shall be 
     computed on the gross proceeds of all security property sold 
     at a single sale.
       ``(2) Thereafter, to pay the expense of any auctioneer 
     employed by the foreclosure trustee, if any, except that the 
     commission payable to the foreclosure trustee pursuant to 
     paragraph (1) shall be reduced by the amount paid to an 
     auctioneer, unless the agency head determines that such 
     reduction would adversely affect the ability of the agency 
     head to retain qualified foreclosure trustees or auctioneers.
       ``(3) Thereafter, to pay for the costs of foreclosure, 
     including--
       ``(A) reasonable and necessary advertising costs and 
     postage incurred in giving notice pursuant to section 3406;
       ``(B) mileage for posting notices and for the foreclosure 
     trustee's or auctioneer's attendance at the sale at the rate 
     provided in section 1921 of title 28, United States Code, for 
     mileage by the most reasonable road distance;
       ``(C) reasonable and necessary costs actually incurred in 
     connection with any search of title and lien records; and
       ``(D) necessary costs incurred by the foreclosure trustee 
     to file documents.
       ``(4) Thereafter, to pay valid real property tax liens or 
     assessments, if required by the notice of foreclosure sale.

[[Page 1644]]

       ``(5) Thereafter, to pay any liens senior to the mortgage, 
     if required by the notice of foreclosure sale.
       ``(6) Thereafter, to pay service charges and advancements 
     for taxes, assessments, and property insurance premiums.
       ``(7) Thereafter, to pay late charges and other 
     administrative costs and the principal and interest balances 
     secured by the mortgage, including expenditures for the 
     necessary protection, preservation, and repair of the 
     security property as authorized under the debt instrument or 
     mortgage and interest thereon if provided for in the debt 
     instrument or mortgage, pursuant to the agency's procedure.
       ``(b) Insufficient Proceeds.--In the event there are no 
     proceeds of sale or the proceeds are insufficient to pay the 
     costs and expenses set forth in subsection (a), the agency 
     head shall pay such costs and expenses as authorized by 
     applicable law.
       ``(c) Surplus Monies.--
       ``(1) After making the payments required by subsection (a), 
     the foreclosure trustee shall--
       ``(A) distribute any surplus to pay liens in the order of 
     priority under Federal law or the law of the State where the 
     security property is located; and
       ``(B) pay to the person who was the owner of record on the 
     date the notice of foreclosure sale was filed the balance, if 
     any, after any payments made pursuant to paragraph (1).
       ``(2) If the person to whom such surplus is to be paid 
     cannot be located, or if the surplus available is 
     insufficient to pay all claimants and the claimants cannot 
     agree on the distribution of the surplus, that portion of the 
     sale proceeds may be deposited by the foreclosure trustee 
     with an appropriate official authorized under law to receive 
     funds under such circumstances. If such a procedure for the 
     deposit of disputed funds is not available, and the 
     foreclosure trustee files a bill of interpleader or is sued 
     as a stakeholder to determine entitlement to such funds, the 
     foreclosure trustee's necessary costs in taking or defending 
     such action shall be deducted first from the disputed funds.

     ``Sec. 3414. Deficiency judgment

       ``(a) In General.--If after deducting the disbursements 
     described in section 3413, the price at which the security 
     property is sold at a foreclosure sale is insufficient to pay 
     the unpaid balance of the debt secured by the security 
     property, counsel for the United States may commence an 
     action or actions against any or all debtors to recover the 
     deficiency, unless specifically prohibited by the mortgage. 
     The United States is also entitled to recover any amount 
     authorized by section 3011 and costs of the action.
       ``(b) Limitation.--Any action commenced to recover the 
     deficiency shall be brought within 6 years of the last sale 
     of security property.
       ``(c) Credits.--The amount payable by a private mortgage 
     guaranty insurer shall be credited to the account of the 
     debtor prior to the commencement of an action for any 
     deficiency owed by the debtor. Nothing in this subsection 
     shall curtail or limit the subrogation rights of a private 
     mortgage guaranty insurer.''.
             TITLE VI--COMMITTEE ON INTERNATIONAL RELATIONS
     Subtitle A--Recovery Of Costs Of Certain Health Care Services

     SEC. 6001. RECOVERY OF COSTS OF HEALTH CARE SERVICES FOR 
                   PERSONNEL OF THE FOREIGN SERVICE OF THE UNITED 
                   STATES AND OTHER ELIGIBLE INDIVIDUALS.

       (a) Authorities.--Section 904 of the Foreign Service Act of 
     1980 (22 U.S.C. 4084) is amended--
       (1) in subsection (a) by--
       (A) striking ``and'' before ``members of the families of 
     such members and employees''; and
       (B) by inserting immediately before the period ``, and for 
     care provided abroad) such other persons as are designated by 
     the Secretary of State, except that such persons shall be 
     considered persons other than covered beneficiaries for 
     purposes of subsections (g) and (h)'';
       (2) in subsection (d) by inserting ``, subject to the 
     provisions of subsections (g) and (h)'' after ``treatment''; 
     and
       (3) by adding the following new subsections:
       ``(g)(1) In the case of a person who is a covered 
     beneficiary, the Secretary of State is authorized to collect 
     from a third-party payer the reasonable costs incurred by the 
     Department of State on behalf of such person for health care 
     services to the same extent that the covered beneficiary 
     would be eligible to receive reimbursement or indemnification 
     from the third-party payer for such costs.
       ``(2) If the insurance policy, plan, contract, or similar 
     agreement of that third-party payer includes a requirement 
     for a deductible or copayment by the beneficiary of the plan, 
     then the Secretary of State may collect from the third-party 
     payer only the reasonable costs of the care provided less the 
     deductible or copayment amount.
       ``(3) A covered beneficiary shall not be required to pay 
     any deductible or copayment for health care services under 
     this subsection.
       ``(4) No provision of any insurance, medical service, or 
     health plan contract or agreement having the effect of 
     excluding from coverage or limiting payment of charges for 
     care in the following circumstances shall operate to prevent 
     collection by the Secretary of State under paragraph (1)--
       ``(A) care provided directly or indirectly by a 
     governmental entity;
       ``(B) care provided to an individual who has not paid a 
     required deductible or copayment; or
       ``(C) care provided by a provider with which the third-
     party payer has no participation agreement.
       ``(5) No law of any State, or of any political subdivision 
     of a State, and no provision of any contract or agreement 
     shall operate to prevent or hinder recovery or collection by 
     the United States under this section.
       ``(6) As to the authority provided in paragraph (1) of this 
     subsection--
       ``(A) the United States shall be subrogated to any right or 
     claim that the covered beneficiary may have against a third-
     party payer;
       ``(B) the United States may institute and prosecute legal 
     proceedings against a third-party payer to enforce a right of 
     the United States under this subsection; and
       ``(C) the Secretary may compromise, settle, or waive a 
     claim of the United States under this subsection.
       ``(7) The Secretary shall prescribe regulations for the 
     administration of this subsection and subsection (h). Such 
     regulations shall provide for computation of the reasonable 
     cost of health care services.
       ``(8) Regulations prescribed under this subsection shall 
     provide that medical records of a covered beneficiary 
     receiving health care under this subsection shall be made 
     available for inspection and review by representatives of the 
     payer from which collection by the United States is sought 
     for the sole purpose of permitting the third party to 
     verify--
       ``(A) that the care or services for which recovery or 
     collection is sought were furnished to the covered 
     beneficiary; and
       ``(B) that the provisions of such care or services to the 
     covered beneficiary meets criteria generally applicable under 
     the health plan contract involved, except that this paragraph 
     shall be subject to the provisions of paragraphs (2) and (4).
       ``(9) Amounts collected under this subsection or under 
     subsection (h) from a third party payer or from any other 
     payer shall be deposited in the Treasury as a miscellaneous 
     offsetting receipt.
       ``(10) For purposes of this section--
       ``(A) the term `covered beneficiary' means an individual 
     eligible to receive health care under this section whose 
     health care costs are to be paid by a third-party payer under 
     a contractual agreement with such payer;
       ``(B) the term `services', as used in `health care 
     services' includes products; and
       ``(C) the term `third-party payer' means an entity that 
     provides a fee-for-service insurance policy, contract, or 
     similar agreement through the Federal Employees Health 
     Benefit program, under which the expenses of health care 
     services for individuals are paid.
       ``(h) In the case of a person, other than a covered 
     beneficiary, who receives health care services pursuant to 
     this section, the Secretary of State is authorized to collect 
     from such person the reasonable costs of health care services 
     incurred by the Department of State on behalf of such person. 
     The United States shall have the same rights against persons 
     subject to the provisions of this subsection as against 
     third-party payers covered by subsection (g).''.
       (b) Effective Date.--The authorities of this section shall 
     be effective beginning on the date of the enactment of this 
     Act.
       Subtitle B--Enactment Into Law of Division A of H.R. 1561

     SEC. 6101. ENACTMENT INTO LAW OF DIVISION A OF H.R. 1561.

       Division A of H.R. 1561, as passed the House of 
     Representatives on June 8, 1995 (relating to consolidation of 
     foreign affairs agencies), is hereby enacted into law.
Subtitle C--Cuban Liberty and Democratic Solidarity (LIBER- TAD) Act of 
                                  1995

     SEC. 6201. SHORT TITLE.

       This subtitle may be cited as the ``Cuban Liberty and 
     Democratic Solidarity (LIBERTAD) Act of 1995''.

     SEC. 6202. FINDINGS.

       The Congress makes the following findings:
       (1) The economy of Cuba has experienced a decline of at 
     least 60 percent in the last 5 years as a result of--
       (A) the end of its subsidization by the former Soviet Union 
     of between 5 billion and 6 billion dollars annually;
       (B) 36 years of Communist tyranny and economic 
     mismanagement by the Castro government;
       (C) the extreme decline in trade between Cuba and the 
     countries of the former Soviet bloc; and
       (D) the stated policy of the Russian Government and the 
     countries of the former Soviet bloc to conduct economic 
     relations with Cuba on strictly commercial terms.
       (2) At the same time, the welfare and health of the Cuban 
     people have substantially deteriorated as a result of this 
     economic decline and the refusal of the Castro regime to 
     permit free and fair democratic elections in Cuba.
       (3) The Castro regime has made it abundantly clear that it 
     will not engage in any substantive political reforms that 
     would lead to democracy, a market economy, or an economic 
     recovery.
       (4) The repression of the Cuban people, including a ban on 
     free and fair democratic elections, and continuing violations 
     of fundamental human rights have isolated the Cuban regime as 
     the only completely nondemocratic government in the Western 
     Hemisphere.

[[Page 1645]]

       (5) As long as free elections are not held in Cuba, the 
     economic condition of the country and the welfare of the 
     Cuban people will not improve in any significant way.
       (6) The totalitarian nature of the Castro regime has 
     deprived the Cuban people of any peaceful means to improve 
     their condition and has led thousands of Cuban citizens to 
     risk or lose their lives in dangerous attempts to escape from 
     Cuba to freedom.
       (7) Radio Marti and Television Marti have both been 
     effective vehicles for providing the people of Cuba with news 
     and information and have helped to bolster the morale of the 
     people of Cuba living under tyranny.
       (8) The consistent policy of the United States towards Cuba 
     since the beginning of the Castro regime, carried out by both 
     Democratic and Republican administrations, has sought to keep 
     faith with the people of Cuba, and has been effective in 
     sanctioning the totalitarian Castro regime.
       (9) The United States has shown a deep commitment, and 
     considers it a moral obligation, to promote and protect human 
     rights and fundamental freedoms as expressed in the Charter 
     of the United Nations and in the Universal Declaration of 
     Human Rights.
       (10) The Congress has historically and consistently 
     manifested its solidarity and the solidarity of the American 
     people with the democratic aspirations of the Cuban people.
       (11) The Cuban Democracy Act of 1992 calls upon the 
     President to encourage the governments of countries that 
     conduct trade with Cuba to restrict their trade and credit 
     relations with Cuba in a manner consistent with the purposes 
     of that Act.
       (12) The 1992 FREEDOM Support Act requires that the 
     President, in providing economic assistance to Russia and the 
     emerging Eurasian democracies, take into account the extent 
     to which they are acting to ``terminate support for the 
     communist regime in Cuba, including removal of troops, 
     closing military facilities, and ceasing trade subsidies and 
     economic, nuclear, and other assistance''.
       (13) The Cuban Government engages in the illegal 
     international narcotics trade and harbors fugitives from 
     justice in the United States.
       (14) The Castro government threatens international peace 
     and security by engaging in acts of armed subversion and 
     terrorism such as the training and supplying of groups 
     dedicated to international violence.
       (15) The Castro government has utilized from its inception 
     and continues to utilize torture in various forms (including 
     by psychiatry), as well as execution, exile, confiscation, 
     political imprisonment, and other forms of terror and 
     repression, as means of retaining power.
       (16) Fidel Castro has defined democratic pluralism as 
     ``pluralistic garbage'' and continues to make clear that he 
     has no intention of tolerating the democratization of Cuban 
     society.
       (17) The Castro government holds innocent Cubans hostage in 
     Cuba by no fault of the hostages themselves solely because 
     relatives have escaped the country.
       (18) Although a signatory state to the 1928 Inter-American 
     Convention on Asylum and the International Covenant on Civil 
     and Political Rights (which protects the right to leave one's 
     own country), Cuba nevertheless surrounds embassies in its 
     capital by armed forces to thwart the right of its citizens 
     to seek asylum and systematically denies that right to the 
     Cuban people, punishing them by imprisonment for seeking to 
     leave the country and killing them for attempting to do so 
     (as demonstrated in the case of the confirmed murder of over 
     40 men, women, and children who were seeking to leave Cuba on 
     July 13, 1994).
       (19) The Castro government continues to utilize blackmail, 
     such as the immigration crisis with which it threatened the 
     United States in the summer of 1994, and other unacceptable 
     and illegal forms of conduct to influence the actions of 
     sovereign states in the Western Hemisphere in violation of 
     the Charter of the Organization of American States and other 
     international agreements and international law.
       (20) The United Nations Commission on Human Rights has 
     repeatedly reported on the unacceptable human rights 
     situation in Cuba and has taken the extraordinary step of 
     appointing a Special Rapporteur.
       (21) The Cuban Government has consistently refused access 
     to the Special Rapporteur and formally expressed its decision 
     not to ``implement so much as one comma'' of the United 
     Nations Resolutions appointing the Rapporteur.
       (22) The United Nations General Assembly passed Resolution 
     1992/70 on December 4, 1992, Resolution 1993/48/142 on 
     December 20, 1993, and Resolution 1994/49/544 on October 19, 
     1994, referencing the Special Rapporteur's reports to the 
     United Nations and condemning ``violations of human rights 
     and fundamental freedoms'' in Cuba.
       (23) Article 39 of Chapter VII of the United Nations 
     Charter provides that the United Nations Security Council 
     ``shall determine the existence of any threat to the peace, 
     breach of the peace, or act of aggression and shall make 
     recommendations, or decide what measures shall be taken . . 
     ., to maintain or restore international peace and 
     security.''.
       (24) The United Nations has determined that massive and 
     systematic violations of human rights may constitute a 
     ``threat to peace'' under Article 39 and has imposed 
     sanctions due to such violations of human rights in the cases 
     of Rhodesia, South Africa, Iraq, and the former Yugoslavia.
       (25) In the case of Haiti, a neighbor of Cuba not as close 
     to the United States as Cuba, the United States led an effort 
     to obtain and did obtain a United Nations Security Council 
     embargo and blockade against that country due to the 
     existence of a military dictatorship in power less than 3 
     years.
       (26) United Nations Security Council Resolution 940 of July 
     31, 1994, subsequently authorized the use of ``all necessary 
     means'' to restore the ``democratically elected government of 
     Haiti'', and the democratically elected government of Haiti 
     was restored to power on October 15, 1994.
       (27) The Cuban people deserve to be assisted in a decisive 
     manner to end the tyranny that has oppressed them for 36 
     years and the continued failure to do so constitutes 
     ethically improper conduct by the international community.
       (28) For the past 36 years, the Cuban Government has posed 
     and continues to pose a national security threat to the 
     United States.

     SEC. 6203. PURPOSES.

       The purposes of this subtitle are as follows:
       (1) To assist the Cuban people in regaining their freedom 
     and prosperity, as well as in joining the community of 
     democracies that are flourishing in the Western Hemisphere.
       (2) To seek international sanctions against the Castro 
     government in Cuba.
       (3) To encourage the holding of free and fair democratic 
     elections in Cuba, conducted under the supervision of 
     internationally recognized observers.
       (4) To develop a plan for furnishing assistance to a 
     transition government and, subsequently, to a democratically 
     elected government when such governments meet the eligibility 
     requirements of this subtitle.
       (5) To protect property rights abroad of United States 
     nationals.
       (6) To provide for the continued national security of the 
     United States in the face of continuing threats from the 
     Castro government of terrorism, theft of property from United 
     States nationals, and domestic repression from which refugees 
     flee to United States shores.

     SEC. 6204. DEFINITIONS.

       As used in this subtitle, the following terms have the 
     following meanings:
       (1) Appropriate congressional committees.--The term 
     ``appropriate congressional committees'' means the Committee 
     on International Relations, the Committee on Ways and Means, 
     and the Committee on Appropriations of the House of 
     Representatives and the Committee on Foreign Relations, the 
     Committee on Finance, and the Committee on Appropriations of 
     the Senate.
       (2) Commercial activity.--The term ``commercial activity'' 
     has the meaning given that term in section 1603(d) of title 
     28, United States Code.
       (3) Confiscated.--As used in parts 1 and 3, the term 
     ``confiscated'' refers to--
       (A) the nationalization, expropriation, or other seizure by 
     the Cuban Government of ownership or control of property, on 
     or after January 1, 1959--
       (i) without the property having been returned or adequate 
     and effective compensation provided; or
       (ii) without the claim to the property having been settled 
     pursuant to an international claims settlement agreement or 
     other mutually accepted settlement procedure; and
       (B) the repudiation by the Cuban Government of, the default 
     by the Cuban Government on, or the failure by the Cuban 
     Government to pay, on or after January 1, 1959--
       (i) a debt of any enterprise which has been nationalized, 
     expropriated, or otherwise taken by the Cuban Government;
       (ii) a debt which is a charge on property nationalized, 
     expropriated, or otherwise taken by the Cuban Government; or
       (iii) a debt which was incurred by the Cuban Government in 
     satisfaction or settlement of a confiscated property claim.
       (4) Cuban government.--(A) The term ``Cuban Government'' 
     includes the government of any political subdivision of Cuba, 
     and any agency or instrumentality of the Government of Cuba.
       (B) For purposes of subparagraph (A), the term ``agency or 
     instrumentality of the Government of Cuba'' means an agency 
     or instrumentality of a foreign state as defined in section 
     1603(b) of title 28, United States Code, with ``Cuba'' 
     substituted for ``a foreign state'' each place it appears in 
     such section.
       (5) Democratically elected government in cuba.--The term 
     ``democratically elected government in Cuba'' means a 
     government determined by the President to have met the 
     requirements of section 206.
       (6) Economic embargo of cuba.--The term ``economic embargo 
     of Cuba'' refers to the economic embargo imposed against Cuba 
     pursuant to section 620(a) of the Foreign Assistance Act of 
     1961 (22 U.S.C. 2370(a)), section 5(b) of the Trading With 
     the Enemy Act (50 U.S.C. App. 5(b)), the International 
     Emergency Economic Powers Act (50 U.S.C. 1701 and following), 
     and the Export Administration Act of 1979 (50 U.S.C. App. 
     2401 and following), as modified by the Cuban Democracy Act 
     of 1992 (22 U.S.C. 6001 and following).
       (7) Foreign national.--The term ``foreign national'' 
     means--
       (A) an alien; or
       (B) any corporation, trust, partnership, or other juridical 
     entity not organized under the laws of the United States, or 
     of any State, the District of Columbia, the Commonwealth of 
     Puerto Rico, or any other territory or possession of the 
     United States.
       (8) Knowingly.--The term ``knowingly'' means with knowledge 
     or having reason to know.

[[Page 1646]]

       (9) Property.--(A) The term ``property'' means any property 
     (including patents, copyrights, trademarks, and any other 
     form of intellectual property), whether real, personal, or 
     mixed, and any present, future, or contingent right, 
     security, or other interest therein, including any leasehold 
     interest.
       (B) For purposes of part 3 of this subtitle, the term 
     ``property'' shall not include real property used for 
     residential purposes unless, as of the date of the enactment 
     of this Act--
       (i) the claim to the property is owned by a United States 
     national and the claim has been certified under title V of 
     the International Claims Settlement Act of 1949; or
       (ii) the property is occupied by a member or official of 
     the Cuban Government or the ruling political party in Cuba.
       (10) Traffics.--(A) As used in part 3, a person or entity 
     ``traffics'' in property if that person or entity knowingly 
     and intentionally--
       (i) sells, transfers, distributes, dispenses, brokers, 
     manages, or otherwise disposes of confiscated property, or 
     purchases, leases, receives, possesses, obtains control of, 
     manages, uses, or otherwise acquires or holds an interest in 
     confiscated property,
       (ii) engages in a commercial activity using or otherwise 
     benefiting from confiscated property, or
       (iii) causes, directs, participates in, or profits from, 
     trafficking (as described in clauses (i) and (ii)) by another 
     person, or otherwise engages in trafficking (as described in 
     clauses (i) and (ii)) through another person,
     without the authorization of the United States national who 
     holds a claim to the property.
       (B) The term ``traffics'' does not include--
       (i) the delivery of international telecommunication signals 
     to Cuba that are authorized by section 1705(e) of the Cuban 
     Democracy Act of 1992 (22 U.S.C. 6004(e)); or
       (ii) the trading or holding of securities publicly traded 
     or held, unless the trading is with or by a person determined 
     by the Secretary of the Treasury to be a specially designated 
     national.
       (11) Transition government in cuba.--The term ``transition 
     government in Cuba'' means a government determined by the 
     President to have met the requirements of section 6235.
       (12) United states national.--The term ``United States 
     national'' means--
       (A) any United States citizen; or
       (B) any other legal entity which is organized under the 
     laws of the United States, or of any State, the District of 
     Columbia, the Commonwealth of Puerto Rico, or any other 
     territory or possession of the United States, and which has 
     its principal place of business in the United States.

        PART 1--SEEKING SANCTIONS AGAINST THE CASTRO GOVERNMENT

     SEC. 6211. STATEMENT OF POLICY.

       It is the sense of the Congress that--
       (1) the acts of the Castro government, including its 
     massive, systematic, and extraordinary violations of human 
     rights, are a threat to international peace;
       (2) the President should advocate, and should instruct the 
     United States Permanent Representative to the United Nations 
     to propose and seek, within the Security Council, a mandatory 
     international embargo against the totalitarian Cuban 
     Government pursuant to chapter VII of the Charter of the 
     United Nations, which is similar to measures taken by United 
     States representatives with respect to Haiti; and
       (3) any resumption or commencement of efforts by any state 
     to make operational the nuclear facility at Cienfuegos, Cuba, 
     will have a detrimental impact on United States assistance to 
     and relations with that state.

     SEC. 6212. ENFORCEMENT OF THE ECONOMIC EMBARGO OF CUBA.

       (a) Policy.--(1) The Congress hereby reaffirms section 
     1704(a) of the Cuban Democracy Act of 1992 that states the 
     President should encourage foreign countries to restrict 
     trade and credit relations with Cuba.
       (2) The Congress further urges the President to take 
     immediate steps to apply the sanctions described in section 
     1704(b) of that Act against countries assisting Cuba.
       (b) Diplomatic Efforts.--The Secretary of State shall 
     ensure that United States diplomatic personnel abroad 
     understand and, in their contacts with foreign officials, are 
     communicating the reasons for the United States economic 
     embargo of Cuba, and are urging foreign governments to 
     cooperate more effectively with the embargo.
       (c) Existing Regulations.--The President should instruct 
     the Secretary of the Treasury and the Attorney General to 
     enforce fully the Cuban Assets Control Regulations set forth 
     in part 515 of title 31, Code of Federal Regulations.
       (d) Trading With the Enemy Act.--
       (1) Civil penalties.--Subsection (b) of section 16 of the 
     Trading With the Enemy Act (50 U.S.C. App. 16(b)) is amended 
     to read as follows:
       ``(b)(1) A civil penalty of not to exceed $50,000 may be 
     imposed by the Secretary of the Treasury on any person who 
     violates any license, order, rule, or regulation issued in 
     compliance with the provisions of this Act.
       ``(2) Any property, funds, securities, papers, or other 
     articles or documents, or any vessel, together with its 
     tackle, apparel, furniture, and equipment, that is the 
     subject of a violation under paragraph (1) shall, at the 
     discretion of the Secretary of the Treasury, be forfeited to 
     the United States Government.
       ``(3) The penalties provided under this subsection may not 
     be imposed for--
       ``(A) news gathering, research, or the export or import of, 
     or transmission of, information or informational materials; 
     or
       ``(B) clearly defined educational or religious activities, 
     or activities of recognized human rights organizations, that 
     are reasonably limited in frequency, duration, and number of 
     participants.
       ``(4) The penalties provided under this subsection may be 
     imposed only on the record after opportunity for an agency 
     hearing in accordance with sections 554 through 557 of title 
     5, United States Code, with the right to prehearing 
     discovery.
       ``(5) Judicial review of any penalty imposed under this 
     subsection may be had to the extent provided in section 702 
     of title 5, United States Code.''.
       (2) Forfeiture of property used in violation.--Section 16 
     of the Trading With the Enemy Act is further amended by 
     striking subsection (c).
       (3) Clerical amendment.--Section 16 of the Trading With the 
     Enemy Act is further amended by inserting ``Sec. 16.'' before 
     ``(a)''.
       (e) Coverage of Debt-for-Equity Swaps by Economic Embargo 
     of Cuba.--Section 1704(b)(2) of the Cuban Democracy Act of 
     1992 (22 U.S.C. 6003(b)(2)) is amended--
       (1) by striking ``and'' at the end of subparagraph (A);
       (2) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (3) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) includes an exchange, reduction, or forgiveness of 
     Cuban debt owed to a foreign country in return for a grant of 
     an equity interest in a property, investment, or operation of 
     the Government of Cuba (including the government of any 
     political subdivision of Cuba, and any agency or 
     instrumentality of the Government of Cuba) or of a Cuban 
     national; and''; and
       (4) by adding at the end the following flush sentence:
     ``As used in this paragraph, the term `agency or 
     instrumentality of the Government of Cuba' means an agency or 
     instrumentality of a foreign state as defined in section 
     1603(b) of title 28, United States Code, with `Cuba' 
     substituted for `a foreign state' each place it appears in 
     such section.''.

     SEC. 6213. PROHIBITION AGAINST INDIRECT FINANCING OF THE 
                   CASTRO DICTATORSHIP.

       (a) Prohibition.--Notwithstanding any other provision of 
     law, no loan, credit, or other financing may be extended 
     knowingly by a United States national, permanent resident 
     alien, or United States agency, to a foreign national, United 
     States national, or permanent resident alien, in order to 
     finance transactions involving any confiscated property the 
     claim to which is owned by a United States national as of the 
     date of the enactment of this Act.
       (b) Termination of Prohibition.--The prohibition of 
     subsection (a) shall cease to apply on the date on which the 
     economic embargo of Cuba terminates under section 6235.
       (c) Penalties.--Violations of subsection (a) shall be 
     punishable by the same penalties as are applicable to 
     violations of the Cuban Assets Control Regulations set forth 
     in part 515 of title 31, Code of Federal Regulations.
       (d) Definitions.--As used in this section--
       (1) the term ``permanent resident alien'' means an alien 
     admitted for permanent residence into the United States; and
       (2) the term ``United States agency'' has the meaning given 
     the term ``agency'' in section 551(1) of title 5, United 
     States Code.

     SEC. 6214. UNITED STATES OPPOSITION TO CUBAN MEMBERSHIP IN 
                   INTERNATIONAL FINANCIAL INSTITUTIONS.

       (a) Opposition to Cuban Membership in International 
     Financial Institutions.--(1) Until such time as the President 
     determines that a transition government in Cuba is in power, 
     the Secretary of the Treasury should instruct the United 
     States executive director to each international financial 
     institution to use the voice and vote of the United States to 
     oppose the admission of Cuba as a member of such institution.
       (2) Once a transition government in Cuba is in power, the 
     President is encouraged to take steps to support the 
     processing of Cuba's application for membership in any 
     financial institution subject to the membership taking effect 
     at such time as the President deems most likely to facilitate 
     the transition to a democratically elected government in 
     Cuba.
       (b) Reduction in United States Payments to International 
     Financial Institutions.--If any international financial 
     institution approves a loan or other assistance to the Cuban 
     Government over the opposition of the United States, then the 
     Secretary of the Treasury shall withhold from payment to that 
     institution an amount equal to the amount of the loan or 
     other assistance to the Cuban Government, with respect to 
     each of the following types of payment:
       (1) The paid-in portion of the increase in capital stock of 
     the institution.
       (2) The callable portion of the increase in capital stock 
     of the institution.
       (c) Definition.--For purposes of this section, the term 
     ``international financial institution'' means the 
     International Monetary Fund, the International Bank for 
     Reconstruction and Development, the International Development 
     Association, the International Finance Corporation, the 
     Multilateral Investment Guaranty Agency, and the Inter-
     American Development Bank.

[[Page 1647]]

     SEC. 6215. UNITED STATES OPPOSITION TO ENDING THE SUSPENSION 
                   OF THE GOVERNMENT OF CUBA FROM THE ORGANIZATION 
                   OF AMERICAN STATES.

       The President should instruct the United States Permanent 
     Representative to the Organization of American States to use 
     the voice and vote of the United States to oppose ending the 
     suspension of the Government of Cuba from the Organization 
     until the President determines under section 6233(c)(3) that 
     a democratically elected government in Cuba is in power.

     SEC. 6216. ASSISTANCE BY THE INDEPENDENT STATES OF THE FORMER 
                   SOVIET UNION FOR THE CUBAN GOVERNMENT.

       (a) Reporting Requirement.--Not later than 90 days after 
     the date of the enactment of this Act, the President shall 
     submit to the appropriate congressional committees a report 
     detailing progress towards the withdrawal of personnel of any 
     independent state of the former Soviet Union (within the 
     meaning of section 3 of the FREEDOM Support Act (22 U.S.C. 
     5801)), including advisers, technicians, and military 
     personnel, from the Cienfuegos nuclear facility in Cuba.
       (b) Criteria for Assistance.--Section 498A(a)(11) of the 
     Foreign Assistance Act of 1961 (22 U.S.C. 2295a(a)(11)) is 
     amended by striking ``of military facilities'' and inserting 
     ``military and intelligence facilities, including the 
     military and intelligence facilities at Lourdes and 
     Cienfuegos''.
       (c) Ineligibility for Assistance.--(1) Section 498A(b) of 
     that Act (22 U.S.C. 2295a(b)) is amended--
       (A) by striking ``or'' at the end of paragraph (4);
       (B) by redesignating paragraph (5) as paragraph (6); and
       (C) by inserting after paragraph (4) the following:
       ``(5) for the government of any independent state effective 
     30 days after the President has determined and certified to 
     the appropriate congressional committees (and Congress has 
     not enacted legislation disapproving the determination within 
     that 30-day period) that such government is providing 
     assistance for, or engaging in nonmarket based trade (as 
     defined in section 498B(k)(3)) with, the Cuban Government; 
     or''.
       (2) Subsection (k) of section 498B of that Act (22 U.S.C. 
     2295b(k)), is amended by adding at the end the following:
       ``(3) Nonmarket based trade.--As used in section 
     498A(b)(5), the term `nonmarket based trade' includes 
     exports, imports, exchanges, or other arrangements that are 
     provided for goods and services (including oil and other 
     petroleum products) on terms more favorable than those 
     generally available in applicable markets or for comparable 
     commodities, including--
       ``(A) exports to the Cuban Government on terms that involve 
     a grant, concessional price, guaranty, insurance, or subsidy;
       ``(B) imports from the Cuban Government at preferential 
     tariff rates;
       ``(C) exchange arrangements that include advance delivery 
     of commodities, arrangements in which the Cuban Government is 
     not held accountable for unfulfilled exchange contracts, and 
     arrangements under which Cuba does not pay appropriate 
     transportation, insurance, or finance costs; and
       ``(D) the exchange, reduction, or forgiveness of Cuban debt 
     in return for a grant by the Cuban Government of an equity 
     interest in a property, investment, or operation of the Cuban 
     Government or of a Cuban national.
       ``(4) Cuban government.--(A) The term `Cuban Government' 
     includes the government of any political subdivision of Cuba, 
     and any agency or instrumentality of the Government of Cuba.
       ``(B) For purposes of subparagraph (A), the term `agency or 
     instrumentality of the Government of Cuba' means an agency or 
     instrumentality of a foreign state as defined in section 
     1603(b) of title 28, United States Code, with `Cuba' 
     substituted for `a foreign state' each place it appears in 
     such section.''.
       (d) Facilities at Lourdes, Cuba.--(1) The Congress 
     expresses its strong disapproval of the extension by Russia 
     of credits equivalent to approximately $200,000,000 in 
     support of the intelligence facility at Lourdes, Cuba, in 
     November 1994.
       (2) Section 498A of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2295a) is amended by adding at the end the following 
     new subsection:
       ``(d) Reduction in Assistance for Support of Intelligence 
     Facilities in Cuba.--(1) Notwithstanding any other provision 
     of law, the President shall withhold from assistance 
     provided, on or after the date of the enactment of this 
     subsection, for an independent state of the former Soviet 
     Union under this chapter an amount equal to the sum of 
     assistance and credits, if any, provided on or after such 
     date by such state in support of intelligence facilities in 
     Cuba, including the intelligence facility at Lourdes, Cuba.
       ``(2)(A) The President may waive the requirement of 
     paragraph (1) to withhold assistance if the President 
     certifies to the appropriate congressional committees that 
     the provision of such assistance is important to the national 
     security of the United States, and, in the case of such a 
     certification made with respect to Russia, if the President 
     certifies that the Russian Government has assured the United 
     States Government that the Russian Government is not sharing 
     intelligence data collected at the Lourdes facility with 
     officials or agents of the Cuban Government.
       ``(B) At the time of a certification made with respect to 
     Russia pursuant to subparagraph (A), the President shall also 
     submit to the appropriate congressional committees a report 
     describing the intelligence activities of Russia in Cuba, 
     including the purposes for which the Lourdes facility is used 
     by the Russian Government and the extent to which the Russian 
     Government provides payment or government credits to the 
     Cuban Government for the continued use of the Lourdes 
     facility.
       ``(C) The report required by subparagraph (B) may be 
     submitted in classified form.
       ``(D) For purposes of this paragraph, the term `appropriate 
     congressional committees' includes the Permanent Select 
     Committee on Intelligence of the House of Representatives and 
     the Select Committee on Intelligence of the Senate.
       ``(3) The requirement of paragraph (1) to withhold 
     assistance shall not apply with respect to--
       ``(A) assistance to meet urgent humanitarian needs, 
     including disaster and refugee relief;
       ``(B) democratic political reform and rule of law 
     activities;
       ``(C) technical assistance for safety upgrades of civilian 
     nuclear power plants;
       ``(D) the creation of private sector and nongovernmental 
     organizations that are independent of government control;
       ``(E) the development of a free market economic system; and
       ``(F) assistance for the purposes described in the 
     Cooperative Threat Reduction Act of 1993 (title XII of Public 
     Law 103-160).''.

     SEC. 6217. TELEVISION BROADCASTING TO CUBA.

       (a) Conversion to UHF.--The Director of the United States 
     Information Agency shall implement a conversion of television 
     broadcasting to Cuba under the Television Marti Service to 
     ultra high frequency (UHF) broadcasting.
       (b) Periodic Reports.--Not later than 45 days after the 
     date of the enactment of this Act, and every three months 
     thereafter until the conversion described in subsection (a) 
     is fully implemented, the Director of the United States 
     Information Agency shall submit a report to the appropriate 
     congressional committees on the progress made in carrying out 
     subsection (a).
       (c) Termination of Broadcasting Authorities.--Upon 
     transmittal of a determination under section 6233(c)(3), the 
     Television Broadcasting to Cuba Act (22 U.S.C. 1465aa and 
     following) and the Radio Broadcasting to Cuba Act (22 U.S.C. 
     1465 and following) are repealed.

     SEC. 6218. REPORTS ON ASSISTANCE AND COMMERCE RECEIVED BY 
                   CUBA FROM OTHER FOREIGN COUNTRIES.

       (a) Reports Required.--Not later than 90 days after the 
     date of the enactment of this Act, and every year thereafter, 
     the President shall submit a report to the appropriate 
     congressional committees on assistance and commerce received 
     by Cuba from other foreign countries during the preceding 12-
     month period.
       (b) Contents of Reports.--Each report required by 
     subsection (a) shall, for the period covered by the report, 
     contain the following, to the extent such information is 
     known:
       (1) A description of all bilateral assistance provided to 
     Cuba by other foreign countries, including humanitarian 
     assistance.
       (2) A description of Cuba's commerce with foreign 
     countries, including an identification of Cuba's trading 
     partners and the extent of such trade.
       (3) A description of the joint ventures completed, or under 
     consideration, by foreign nationals involving facilities in 
     Cuba, including an identification of the location of the 
     facilities involved and a description of the terms of 
     agreement of the joint ventures and the names of the parties 
     that are involved.
       (4) A determination whether or not any of the facilities 
     described in paragraph (3) is the subject of a claim by a 
     United States national.
       (5) A determination of the amount of Cuban debt owed to 
     each foreign country, including--
       (A) the amount of debt exchanged, forgiven, or reduced 
     under the terms of each investment or operation in Cuba 
     involving foreign nationals; and
       (B) the amount of debt owed to the foreign country that has 
     been exchanged, reduced, or forgiven in return for a grant by 
     the Cuban Government of an equity interest in a property, 
     investment, or operation of the Cuban Government or of a 
     Cuban national.
       (6) A description of the steps taken to ensure that raw 
     materials and semifinished or finished goods produced by 
     facilities in Cuba involving foreign nationals do not enter 
     the United States market, either directly or through third 
     countries or parties.
       (7) An identification of countries that purchase, or have 
     purchased, arms or military supplies from the Cuban 
     Government or that otherwise have entered into agreements 
     with the Cuban Government that have a military application, 
     including--
       (A) a description of the military supplies, equipment, or 
     other materiel sold, bartered, or exchanged between the Cuban 
     Government and such countries;
       (B) a listing of the goods, services, credits, or other 
     consideration received by the Cuban Government in exchange 
     for military supplies, equipment, or materiel; and
       (C) the terms or conditions of any such agreement.

[[Page 1648]]

     SEC. 6219. AUTHORIZATION OF SUPPORT FOR DEMOCRATIC AND HUMAN 
                   RIGHTS GROUPS AND INTERNATIONAL OBSERVERS.

       (a) Authorization.--Notwithstanding any other provision of 
     law, except for section 634A of the Foreign Assistance Act of 
     1961 (22 U.S.C. 2394-1) and comparable notification 
     requirements contained in any Act making appropriations for 
     foreign operations, export financing, and related programs, 
     the President is authorized to furnish assistance and provide 
     other support for individuals and independent nongovernmental 
     organizations to support democracy-building efforts for Cuba, 
     including the following:
       (1) Published and informational matter, such as books, 
     videos, and cassettes, on transitions to democracy, human 
     rights, and market economies, to be made available to 
     independent democratic groups in Cuba.
       (2) Humanitarian assistance to victims of political 
     repression, and their families.
       (3) Support for democratic and human rights groups in Cuba.
       (4) Support for visits and permanent deployment of 
     independent international human rights monitors in Cuba.
       (b) OAS Emergency Fund.--(1) The President shall take the 
     necessary steps to encourage the Organization of American 
     States to create a special emergency fund for the explicit 
     purpose of deploying human rights observers, election 
     support, and election observation in Cuba.
       (2) The President should instruct the United States 
     Permanent Representative to the Organization of American 
     States to encourage other member states of the Organization 
     to join in calling for the Cuban Government to allow the 
     immediate deployment of independent human rights monitors of 
     the Organization throughout Cuba and on-site visits to Cuba 
     by the Inter-American Commission on Human Rights.
       (3) Notwithstanding section 307 of the Foreign Assistance 
     Act of 1961 (22 U.S.C. 2227) or any other provision of law 
     limiting the United States proportionate share of assistance 
     to Cuba by any international organization, the President 
     should provide not less than $5,000,000 of the voluntary 
     contributions of the United States to the Organization of 
     American States as of the date of the enactment of this Act 
     solely for the purposes of the special fund referred to in 
     paragraph (1).

     SEC. 6220. WITHHOLDING OF FOREIGN ASSISTANCE FROM COUNTRIES 
                   SUPPORTING NUCLEAR PLANT IN CUBA.

       (a) Findings.--The Congress makes the following findings:
       (1) President Clinton stated in April 1993 that ``the 
     United States opposes the construction of the Juragua nuclear 
     power plant because of our concerns about Cuba's ability to 
     ensure the safe operation of the facility and because of 
     Cuba's refusal to sign the Nuclear Non-Proliferation Treaty 
     or ratify the Treaty of Tlatelolco.''.
       (2) Cuba has not signed the Treaty on the Non-Proliferation 
     of Nuclear Weapons or ratified the Treaty of Tlatelolco, the 
     latter of which establishes Latin America and the Caribbean 
     as a nuclear weapons-free zone.
       (3) The State Department, the Nuclear Regulatory 
     Commission, and the Department of Energy have expressed 
     concerns about the construction and operation of Cuba's 
     nuclear reactors.
       (4) In a September 1992 report to Congress, the General 
     Accounting Office outlined concerns among nuclear energy 
     experts about deficiencies in the nuclear plant project in 
     Juragua, near Cienfuegos, Cuba, including--
       (A) a lack in Cuba of a nuclear regulatory structure;
       (B) the absence in Cuba of an adequate infrastructure to 
     ensure the plant's safe operation and requisite maintenance;
       (C) the inadequacy of training of plant operators;
       (D) reports by a former technician from Cuba who, by 
     examining with x-rays weld sites believed to be part of the 
     auxiliary plumbing system for the plant, found that 10 to 15 
     percent of those sites were defective;
       (E) since September 5, 1992, when construction on the plant 
     was halted, the prolonged exposure to the elements, including 
     corrosive salt water vapor, of the primary reactor 
     components; and
       (F) the possible inadequacy of the upper portion of the 
     reactors' dome retention capability to withstand only 7 
     pounds of pressure per square inch, given that normal 
     atmospheric pressure is 32 pounds per square inch and United 
     States reactors are designed to accommodate pressures of 50 
     pounds per square inch.
       (5) The United States Geological Survey claims that it had 
     difficulty determining answers to specific questions 
     regarding earthquake activity in the area near Cienfuegos 
     because the Cuban Government was not forthcoming with 
     information.
       (6) The Geological Survey has indicated that the Caribbean 
     plate, a geological formation near the south coast of Cuba, 
     may pose seismic risks to Cuba and the site of the power 
     plant, and may produce large to moderate earthquakes.
       (7) On May 25, 1992, the Caribbean plate produced an 
     earthquake numbering 7.0 on the Richter scale.
       (8) According to a study by the National Oceanic and 
     Atmospheric Administration, summer winds could carry 
     radioactive pollutants from a nuclear accident at the power 
     plant throughout all of Florida and parts of the States on 
     the gulf coast as far as Texas, and northern winds could 
     carry the pollutants as far northeast as Virginia and 
     Washington, D.C.
       (9) The Cuban Government, under dictator Fidel Castro, in 
     1962 advocated the Soviets' launching of nuclear missiles to 
     the United States, which represented a direct and dangerous 
     provocation of the United States and brought the world to the 
     brink of a nuclear conflict.
       (10) Fidel Castro over the years has consistently issued 
     threats against the United States Government, most recently 
     that he would unleash another perilous mass migration from 
     Cuba upon the enactment of this Act.
       (11) Despite the various concerns about the plant's safety 
     and operational problems, a feasibility study is being 
     conducted that would establish a support group to include 
     Russia, Cuba, and third countries with the objective of 
     completing and operating the plant.
       (b) Withholding of Foreign Assistance.--
       (1) In general.--Notwithstanding any other provision of 
     law, the President shall withhold from assistance allocated, 
     on or after the date of the enactment of this Act, for any 
     country an amount equal to the sum of assistance and credits, 
     if any, provided on or after such date of enactment by that 
     country or any entity in that country in support of the 
     completion of the Cuban nuclear facility at Juragua, near 
     Cienfuegos, Cuba.
       (2) Exceptions.--The requirement of paragraph (1) to 
     withhold assistance shall not apply with respect to--
       (A) assistance to meet urgent humanitarian needs, including 
     disaster and refugee relief;
       (B) democratic political reform and rule of law activities;
       (C) the creation of private sector and nongovernmental 
     organizations that are independent of government control;
       (D) the development of a free market economic system; and
       (E) assistance for the purposes described in the 
     Cooperative Threat Reduction Act of 1993 (title XII of Public 
     Law 103-160).
       (3) Definition.--As used in paragraph (1), the term 
     ``assistance'' means assistance under the Foreign Assistance 
     Act of 1961, credits, sales, and guarantees of extensions of 
     credit under the Arms Export Control Act, assistance under 
     titles I and III of the Agricultural Trade Development and 
     Assistance Act of 1954, assistance under the FREEDOM Support 
     Act of 1992, and any other program of assistance or credits 
     provided by the United States to other countries under other 
     provisions of law, except that the term ``assistance'' does 
     not include humanitarian assistance, including disaster 
     relief assistance.

     SEC. 6221. EXPULSION OF CRIMINALS FROM CUBA.

       The President shall instruct all United States Government 
     officials who engage in official conduct with the Cuban 
     Government to raise on a regular basis the extradition of or 
     rendering to the United States all persons residing in Cuba 
     who are sought by the United States Department of Justice for 
     crimes committed in the United States.

           PART 2--ASSISTANCE TO A FREE AND INDEPENDENT CUBA

     SEC. 6231. POLICY TOWARD A TRANSITION GOVERNMENT AND A 
                   DEMOCRATICALLY ELECTED GOVERNMENT IN CUBA.

       The policy of the United States is as follows:
       (1) To support the self-determination of the Cuban people.
       (2) To recognize that the self-determination of the Cuban 
     people is a sovereign and national right of the citizens of 
     Cuba which must be exercised free of interference by the 
     government of any other country.
       (3) To encourage the Cuban people to empower themselves 
     with a government which reflects the self-determination of 
     the Cuban people.
       (4) To recognize the potential for a difficult transition 
     from the current regime in Cuba that may result from the 
     initiatives taken by the Cuban people for self-determination 
     in response to the intransigence of the Castro regime in not 
     allowing any substantive political or economic reforms, and 
     to be prepared to provide the Cuban people with humanitarian, 
     developmental, and other economic assistance.
       (5) In solidarity with the Cuban people, to provide 
     appropriate forms of assistance--
       (A) to a transition government in Cuba;
       (B) to facilitate the rapid movement from such a transition 
     government to a democratically elected government in Cuba 
     that results from an expression of the self-determination of 
     the Cuban people; and
       (C) to support such a democratically elected government.
       (6) Through such assistance, to facilitate a peaceful 
     transition to representative democracy and a market economy 
     in Cuba and to consolidate democracy in Cuba.
       (7) To deliver such assistance to the Cuban people only 
     through a transition government in Cuba, through a 
     democratically elected government in Cuba, through United 
     States Government organizations, or through United States, 
     international, or indigenous nongovernmental organizations.
       (8) To encourage other countries and multilateral 
     organizations to provide similar assistance, and to work 
     cooperatively with such countries and organizations to 
     coordinate such assistance.
       (9) To ensure that appropriate assistance is rapidly 
     provided and distributed to the people of Cuba upon the 
     institution of a transition government in Cuba.
       (10) Not to provide favorable treatment or influence on 
     behalf of any individual or entity in the selection by the 
     Cuban people of their future government.

[[Page 1649]]

       (11) To assist a transition government in Cuba and a 
     democratically elected government in Cuba to prepare the 
     Cuban military forces for an appropriate role in a democracy.
       (12) To be prepared to enter into negotiations with a 
     democratically elected government in Cuba either to return 
     the United States Naval Base at Guantanamo to Cuba or to 
     renegotiate the present agreement under mutually agreeable 
     terms.
       (13) To consider the restoration of diplomatic recognition 
     and support the reintegration of the Cuban Government into 
     Inter-American organizations when the President determines 
     that there exists a democratically elected government in 
     Cuba.
       (14) To take steps to remove the economic embargo of Cuba 
     when the President determines that a transition to a 
     democratically elected government in Cuba has begun.
       (15) To assist a democratically elected government in Cuba 
     to strengthen and stabilize its national currency.
       (16) To pursue trade relations with a free, democratic, and 
     independent Cuba.

     SEC. 6232. ASSISTANCE FOR THE CUBAN PEOPLE.

       (a) Authorization.--
       (1) In general.--The President shall develop a plan for 
     providing economic assistance to Cuba at such time as the 
     President determines that a transition government or a 
     democratically elected government in Cuba (as determined 
     under section 6233(c)) is in power.
       (2) Effect on other laws.--Assistance may be provided under 
     this section subject to an authorization of appropriations 
     and subject to the availability of appropriations.
       (b) Plan for Assistance.--
       (1) Development of plan.--The President shall develop a 
     plan for providing assistance under this section--
       (A) to Cuba when a transition government in Cuba is in 
     power; and
       (B) to Cuba when a democratically elected government in 
     Cuba is in power.
       (2) Types of assistance.--Assistance under the plan 
     developed under paragraph (1) may, subject to an 
     authorization of appropriations and subject to the 
     availability of appropriations, include the following:
       (A) Transition government.--(i) Except as provided in 
     clause (ii), assistance to Cuba under a transition government 
     shall, subject to an authorization of appropriations and 
     subject to the availability of appropriations, be limited 
     to--
       (I) such food, medicine, medical supplies and equipment, 
     and assistance to meet emergency energy needs, as is 
     necessary to meet the basic human needs of the Cuban people; 
     and
       (II) assistance described in subparagraph (C).
       (ii) Assistance provided only after the President certifies 
     to the appropriate congressional committees, in accordance 
     with procedures applicable to reprogramming notifications 
     under section 634A of the Foreign Assistance Act of 1961, 
     that such assistance is essential to the successful 
     completion of the transition to democracy.
       (iii) Only after a transition government in Cuba is in 
     power, remittances by individuals to their relatives of cash 
     or goods, as well as freedom to travel to visit them without 
     any restrictions, shall be permitted.
       (B) Democratically elected government.--Assistance to a 
     democratically elected government in Cuba may, subject to an 
     authorization of appropriations and subject to the 
     availability of appropriations, consist of additional 
     economic assistance, together with assistance described in 
     subparagraph (C). Such economic assistance may include--
       (i) assistance under chapter 1 of part I (relating to 
     development assistance), and chapter 4 of part II (relating 
     to the economic support fund), of the Foreign Assistance Act 
     of 1961;
       (ii) assistance under the Agricultural Trade Development 
     and Assistance Act of 1954;
       (iii) financing, guarantees, and other forms of assistance 
     provided by the Export-Import Bank of the United States;
       (iv) financial support provided by the Overseas Private 
     Investment Corporation for investment projects in Cuba;
       (v) assistance provided by the Trade and Development 
     Agency;
       (vi) Peace Corps programs; and
       (vii) other appropriate assistance to carry out the policy 
     of section 6231.
       (C) Military adjustment assistance.--Assistance to a 
     transition government in Cuba and to a democratically elected 
     government in Cuba shall also include assistance in preparing 
     the Cuban military forces to adjust to an appropriate role in 
     a democracy.
       (c) Strategy for Distribution.--The plan developed under 
     subsection (b) shall include a strategy for distributing 
     assistance under the plan.
       (d) Distribution.--Assistance under the plan developed 
     under subsection (b) shall be provided through United States 
     Government organizations and nongovernmental organizations 
     and private and voluntary organizations, whether within or 
     outside the United States, including humanitarian, 
     educational, labor, and private sector organizations.
       (e) International Efforts.--The President shall take the 
     necessary steps--
       (1) to seek to obtain the agreement of other countries and 
     of international financial institutions and multilateral 
     organizations to provide to a transition government in Cuba, 
     and to a democratically elected government in Cuba, 
     assistance comparable to that provided by the United States 
     under this subtitle; and
       (2) to work with such countries, institutions, and 
     organizations to coordinate all such assistance programs.
       (f) Communication With the Cuban People.--The President 
     shall take the necessary steps to communicate to the Cuban 
     people the plan for assistance developed under this section.
       (g) Report to Congress.--Not later than 180 days after the 
     date of the enactment of this Act, the President shall 
     transmit to the appropriate congressional committees a report 
     describing in detail the plan developed under this section.
       (h) Trade and Investment Relations.--
       (1) Report to congress.--The President, following the 
     transmittal to the Congress of a determination under section 
     6233(c)(3) that a democratically elected government in Cuba 
     is in power, shall submit to the appropriate congressional 
     committees a report that describes--
       (A) acts, policies, and practices that constitute 
     significant barriers to, or distortions of, United States 
     trade in goods or services or foreign direct investment with 
     respect to Cuba;
       (B) policy objectives of the United States regarding trade 
     relations with a democratically elected government in Cuba, 
     and the reasons therefor, including possible--
       (i) reciprocal extension of nondiscriminatory trade 
     treatment (most-favored- nation treatment);
       (ii) designation of Cuba as a beneficiary developing 
     country under title V of the Trade Act of 1974 (relating to 
     the Generalized System of Preferences) or as a beneficiary 
     country under the Caribbean Basin Economic Recovery Act, and 
     the implications of such designation with respect to trade 
     with any other country that is such a beneficiary developing 
     country or beneficiary country or is a party to the North 
     American Free Trade Agreement; and
       (iii) negotiations regarding free trade, including the 
     accession of Cuba to the North American Free Trade Agreement;
       (C) specific trade negotiating objectives of the United 
     States with respect to Cuba, including the objectives 
     described in section 108(b)(5) of the North American Free 
     Trade Agreement Implementation Act (19 U.S.C. 3317(b)(5)); 
     and
       (D) actions proposed or anticipated to be undertaken, and 
     any proposed legislation necessary or appropriate, to achieve 
     any of such policy and negotiating objectives.
       (2) Consultations.--The President shall consult with the 
     appropriate congressional committees and shall seek advice 
     from the appropriate advisory committees established under 
     section 135 of the Trade Act of 1974 regarding the policy and 
     negotiating objectives and the legislative proposals 
     described in paragraph (1).

     SEC. 6233. COORDINATION OF ASSISTANCE PROGRAM; IMPLEMENTATION 
                   AND REPORTS TO CONGRESS; REPROGRAMMING.

       (a) Coordinating Official.--The President shall designate a 
     coordinating official who shall be responsible for--
       (1) implementing the strategy for distributing assistance 
     described in section 6232(b);
       (2) ensuring the speedy and efficient distribution of such 
     assistance; and
       (3) ensuring coordination among, and appropriate oversight 
     by, the agencies of the United States that provide assistance 
     described in section 6232(b), including resolving any 
     disputes among such agencies.
       (b) United States-Cuba Council.--Upon making a 
     determination under subsection (c)(3) that a democratically 
     elected government in Cuba is in power, the President, after 
     consultation with the coordinating official, is authorized to 
     designate a United States-Cuba council--
       (1) to ensure coordination between the United States 
     Government and the private sector in responding to change in 
     Cuba, and in promoting market-based development in Cuba; and
       (2) to establish periodic meetings between representatives 
     of the United States and Cuban private sectors for the 
     purpose of facilitating bilateral trade.
       (c) Implementation of Plan; Reports to Congress.--
       (1) Implementation with respect to transition government.--
     Upon making a determination that a transition government in 
     Cuba is in power, the President shall transmit that 
     determination to the appropriate congressional committees and 
     shall, subject to an authorization of appropriations and 
     subject to the availability of appropriations, commence the 
     delivery and distribution of assistance to such transition 
     government under the plan developed under section 6232(b).
       (2) Reports to congress.--(A) The President shall transmit 
     to the appropriate congressional committees a report setting 
     forth the strategy for providing assistance described in 
     section 6232(b)(2) (A) and (C) to the transition government 
     in Cuba under the plan of assistance developed under section 
     6232(b), the types of such assistance, and the extent to 
     which such assistance has been distributed in accordance with 
     the plan.
       (B) The President shall transmit the report not later than 
     90 days after making the determination referred to in 
     paragraph (1), except that the President shall transmit the 
     report in preliminary form not later than 15 days after 
     making that determination.
       (3) Implementation with respect to democratically elected 
     government.--The President shall, upon determining that a 
     democratically elected government in Cuba

[[Page 1650]]

      is in power, submit that determination to the appropriate 
     congressional committees and shall, subject to an 
     authorization of appropriations and subject to the 
     availability of appropriations, commence the delivery and 
     distribution of assistance to such democratically elected 
     government under the plan developed under section 6232(b).
       (4) Annual reports to congress.--Not later than 60 days 
     after the end of each fiscal year, the President shall 
     transmit to the appropriate congressional committees a report 
     on the assistance provided under the plan developed under 
     section 6232(b), including a description of each type of 
     assistance, the amounts expended for such assistance, and a 
     description of the assistance to be provided under the plan 
     in the current fiscal year.
       (d) Reprogramming.--Any changes in the assistance to be 
     provided under the plan developed under section 6232(b) may 
     not be made unless the President notifies the appropriate 
     congressional committees at least 15 days in advance in 
     accordance with the procedures applicable to reprogramming 
     notifications under section 634A of the Foreign Assistance 
     Act of 1961 (22 U.S.C. 2394-1).

     SEC. 6234. TERMINATION OF THE ECONOMIC EMBARGO OF CUBA.

       (a) Presidential Actions.--Upon submitting a determination 
     to the appropriate congressional committees under section 
     6233(c)(1) that a transition government in Cuba is in power, 
     the President, after consulting with the Congress, is 
     authorized to take steps to suspend the economic embargo of 
     Cuba to the extent that such action contributes to a stable 
     foundation for a democratically elected government in Cuba.
       (b) Suspension of Certain Provisions of Law.--In carrying 
     out subsection (a), the President may suspend the enforcement 
     of--
       (1) section 620(a) of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2370(a));
       (2) section 620(f) of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2370(f)) with regard to the ``Republic of Cuba'';
       (3) sections 1704, 1705(d), and 1706 of the Cuban Democracy 
     Act (22 U.S.C. 6003, 6004(d), 6005);
       (4) section 902(c) of the Food Security Act of 1985; and
       (5) the prohibitions on transactions described in part 515 
     of title 31, Code of Federal Regulations.
       (c) Additional Presidential Actions.--Upon submitting a 
     determination to the appropriate congressional committees 
     under section 6233(c)(3) that a democratically elected 
     government in Cuba is in power, the President shall take 
     steps to terminate the economic embargo of Cuba.
       (d) Conforming Amendments.--On the date on which the 
     President submits a determination under section 6233(c)(3)--
       (1) section 620(a) of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2370(a)) is repealed;
       (2) section 620(f) of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2370(f)) is amended by striking ``Republic of 
     Cuba'';
       (3) sections 1704, 1705(d), and 1706 of the Cuban Democracy 
     Act of 1992 (22 U.S.C. 6003, 6004(d), and 6005) are repealed; 
     and
       (4) section 902(c) of the Food Security Act of 1985 is 
     repealed.
       (e) Review of Suspension of Economic Embargo.--
       (1) Review.--If the President takes action under subsection 
     (a) to suspend the economic embargo of Cuba, the President 
     shall immediately so notify the Congress. The President shall 
     report to the Congress no less frequently than every 6 months 
     thereafter, until he submits a determination under section 
     6233(c)(3) that a democratically elected government in Cuba 
     is in power, on the progress being made by Cuba toward the 
     establishment of such a democratically elected government. 
     The action of the President under subsection (a) shall cease 
     to be effective upon the enactment of a joint resolution 
     described in paragraph (2).
       (2) Joint resolutions.--For purposes of this subsection, 
     the term ``joint resolution'' means only a joint resolution 
     of the 2 Houses of Congress, the matter after the resolving 
     clause of which is as follows: ``That the Congress 
     disapproves the action of the President under section 6234(a) 
     of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act 
     of 1995 to suspend the economic embargo of Cuba, notice of 
     which was submitted to the Congress on ____.'', with the 
     blank space being filled with the appropriate date.
       (3) Referral to committees.--Joint resolutions introduced 
     in the House of Representatives shall be referred to the 
     Committee on International Relations and joint resolutions 
     introduced in the Senate shall be referred to the Committee 
     on Foreign Relations.
       (4) Procedures.--(A) Any joint resolution shall be 
     considered in the Senate in accordance with the provisions of 
     section 601(b) of the International Security Assistance and 
     Arms Export Control Act of 1976.
       (B) For the purpose of expediting the consideration and 
     enactment of joint resolutions, a motion to proceed to the 
     consideration of any joint resolution after it has been 
     reported by the appropriate committee shall be treated as 
     highly privileged in the House of Representatives.
       (C) Not more than 1 joint resolution may be considered in 
     the House of Representatives and the Senate in the 6-month 
     period beginning on the date on which the President notifies 
     the Congress under paragraph (1) of the action taken under 
     subsection (a), and in each 6-month period thereafter.

     SEC. 6235. REQUIREMENTS FOR A TRANSITION GOVERNMENT.

       For purposes of this subtitle, a transition government in 
     Cuba is a government in Cuba which--
       (1) is demonstrably in transition from communist 
     totalitarian dictatorship to representative democracy;
       (2) has recognized the right to independent political 
     activity and association;
       (3) has released all political prisoners and allowed for 
     investigations of Cuban prisons by appropriate international 
     human rights organizations;
       (4) has ceased any interference with Radio or Television 
     Marti broadcasts;
       (5) makes public commitments to and is making demonstrable 
     progress in--
       (A) establishing an independent judiciary;
       (B) dissolving the present Department of State Security in 
     the Cuban Ministry of the Interior, including the Committees 
     for the Defense of the Revolution and the Rapid Response 
     Brigades;
       (C) respecting internationally recognized human rights and 
     basic freedoms as set forth in the Universal Declaration of 
     Human Rights, to which Cuba is a signatory nation;
       (D) effectively guaranteeing the rights of free speech and 
     freedom of the press;
       (E) organizing free and fair elections for a new 
     government--
       (i) to be held in a timely manner within a period not to 
     exceed 1 year after the transition government assumes power;
       (ii) with the participation of multiple independent 
     political parties that have full access to the media on an 
     equal basis, including (in the case of radio, television, or 
     other telecommunications media) in terms of allotments of 
     time for such access and the times of day such allotments are 
     given; and
       (iii) to be conducted under the supervision of 
     internationally recognized observers, such as the 
     Organization of American States, the United Nations, and 
     other elections monitors;
       (F) assuring the right to private property;
       (G) taking appropriate steps to return to United States 
     citizens (and entities which are 50 percent or more 
     beneficially owned by United States citizens) property taken 
     by the Cuban Government from such citizens and entities on or 
     after January 1, 1959, or to provide equitable compensation 
     to such citizens and entities for such property;
       (H) granting permits to privately owned telecommunications 
     and media companies to operate in Cuba; and
       (I) allowing the establishment of independent trade unions 
     as set forth in conventions 87 and 98 of the International 
     Labor Organization, and allowing the establishment of 
     independent social, economic, and political associations;
       (6) does not include Fidel Castro or Raul Castro;
       (7) has given adequate assurances that it will allow the 
     speedy and efficient distribution of assistance to the Cuban 
     people;
       (8) permits the deployment throughout Cuba of independent 
     and unfettered international human rights monitors; and
       (9) has extradited or otherwise rendered to the United 
     States all persons sought by the United States Department of 
     Justice for crimes committed in the United States.

     SEC. 6236. REQUIREMENTS FOR A DEMOCRATICALLY ELECTED 
                   GOVERNMENT.

       For purposes of this subtitle, a democratically elected 
     government in Cuba, in addition to continuing to comply with 
     the requirements of section 6235, is a government in Cuba 
     which--
       (1) results from free and fair elections conducted under 
     the supervision of internationally recognized observers;
       (2) has permitted opposition parties ample time to organize 
     and campaign for such elections, and has permitted full 
     access to the media to all candidates in the elections;
       (3) is showing respect for the basic civil liberties and 
     human rights of the citizens of Cuba;
       (4) has made demonstrable progress in establishing an 
     independent judiciary;
       (5) is substantially moving toward a market-oriented 
     economic system;
       (6) is committed to making constitutional changes that 
     would ensure regular free and fair elections that meet the 
     requirements of paragraph (2); and
       (7) has made demonstrable progress in returning to United 
     States citizens (and entities which are 50 percent or more 
     beneficially owned by United States citizens) property taken 
     by the Cuban Government from such citizens and entities on or 
     after January 1, 1959, or providing full compensation for 
     such property in accordance with international law standards 
     and practice.

   PART 3--PROTECTION OF PROPERTY RIGHTS OF UNITED STATES NATIONALS 
           AGAINST CONFISCATORY TAKINGS BY THE CASTRO REGIME

     SEC. 6251. STATEMENT OF POLICY.

       The Congress makes the following findings:
       (1) The right of individuals to hold and enjoy property is 
     a fundamental right recognized by the United States 
     Constitution and international human rights law, including 
     the Universal Declaration of Human Rights.
       (2) The illegal confiscation or taking of property by 
     governments, and the acquiescence of governments in the 
     confiscation of property by their citizens, undermines the 
     comity among nations, the free flow of commerce, and economic 
     development.
       (3) It is in the interest of all nations to respect equally 
     the property rights of their citizens and nationals of other 
     countries.
       (4) Nations that provide an effective mechanism for prompt, 
     adequate, and fair compensation for the confiscation of 
     private

[[Page 1651]]

      property will continue to have the support of the United 
     States.
       (5) The United States Government has an obligation to its 
     citizens to provide protection against illegal confiscation 
     by foreign nations and their citizens, including the 
     provision of private remedies.
       (6) Nations that illegally confiscate private property 
     should not be immune to another nation's laws whose purpose 
     is to protect against the confiscation of lawfully acquired 
     property by its citizens.
       (7) Trafficking in illegally acquired property is a crime 
     under the laws of the United States and other nations, yet 
     this same activity is allowed under international law.
       (8) International law, by not providing effective remedies, 
     condones the illegal confiscation of property and allows for 
     the unjust enrichment from the use of confiscated property by 
     governments and private entities at the expense of those who 
     hold legal claim to the property.
       (9) The development of an international mechanism 
     sanctioning those governments and private entities that 
     confiscate and unjustly use private property so confiscated 
     should be a priority objective of United States foreign 
     policy.

     SEC. 6252. LIABILITY FOR TRAFFICKING IN PROPERTY CONFISCATED 
                   FROM UNITED STATES NATIONALS.

       (a) Civil Remedy.--
       (1) Liability for trafficking.--(A) Except as provided in 
     paragraphs (3) and (4), any person, including any agency or 
     instrumentality of a foreign state in the conduct of a 
     commercial activity, that, after the end of the 6-month 
     period beginning on the date of the enactment of this Act, 
     traffics in confiscated property shall be liable to any 
     United States national who owns the claim to such property 
     for money damages in an amount equal to the sum of--
       (i) the amount which is the greater of--
       (I) the amount, if any, certified to the claimant by the 
     Foreign Claims Settlement Commission under the International 
     Claims Settlement Act of 1949, plus interest;
       (II) the amount determined under section 6253(a)(2), plus 
     interest; or
       (III) the fair market value of that property, calculated as 
     being the then current value of the property, or the value of 
     the property when confiscated plus interest, whichever is 
     greater; and
       (ii) reasonable costs and attorneys' fees.
       (B) Interest under subparagraph (A)(i) shall be at the rate 
     set forth in section 1961 of title 28, United States Code, 
     computed by the court from the date of the confiscation of 
     the property involved to the date on which the action is 
     brought under this subsection.
       (2) Presumption in favor of certified claims.--There shall 
     be a presumption that the amount for which a person, 
     including any agency or instrumentality of a foreign state in 
     the conduct of a commercial activity, is liable under clause 
     (i) of paragraph (1)(A) is the amount that is certified under 
     subclause (I) of that clause. The presumption shall be 
     rebuttable by clear and convincing evidence that the amount 
     described in subclause (II) or (III) of that clause is the 
     appropriate amount of liability under that clause.
       (3) Increased liability for prior notice.--Except as 
     provided in paragraph (4), any person, including any agency 
     or instrumentality of a foreign state in the conduct of a 
     commercial activity, that traffics in confiscated property 
     after having received--
       (A) notice of a claim to ownership of the property by a 
     United States national who owns a claim to the confiscated 
     property, and
       (B) notice of the provisions of this section,
     shall be liable to that United States national for money 
     damages in an amount which is the sum of the amount equal to 
     the amount determined under paragraph (1)(A)(ii) plus triple 
     the amount determined applicable under subclause (I), (II), 
     or (III) of paragraph (1)(A)(i).
       (4) Applicability.--(A) Except as otherwise provided in 
     this paragraph, actions may be brought under paragraph (1) 
     with respect to property confiscated before, on, or after the 
     date of the enactment of this Act.
       (B) In the case of property confiscated before the date of 
     the enactment of this Act, no United States national may 
     bring an action under this section unless such national 
     acquired ownership of the claim to the confiscated property 
     before such date.
       (C) In the case of property confiscated on or after the 
     date of the enactment of this Act, no United States national 
     who acquired ownership of a claim to confiscated property by 
     assignment for value after such date of enactment may bring 
     an action on the claim under this section.
       (5) Treatment of certain actions.--(A) In the case of any 
     action brought under this section by a United States national 
     who was eligible to file the underlying claim in the action 
     with the Foreign Claims Settlement Commission under title V 
     of the International Claims Settlement Act of 1949 but did 
     not so file the claim, the court may hear the case only if 
     the court determines that the United States national had good 
     cause for not filing the claim.
       (B) In the case of any action brought under this section by 
     a United States national whose claim in the action was timely 
     filed with the Foreign Claims Settlement Commission under 
     title V of the International Claims Settlement Act of 1949 
     but was denied by the Commission, the court may assess the 
     basis for the denial and may accept the findings of the 
     Commission on the claim as conclusive in the action under 
     this section unless good cause justifies another result.
       (6) Inapplicability of act of state doctrine.--No court of 
     the United States shall decline, based upon the act of state 
     doctrine, to make a determination on the merits in an action 
     brought under paragraph (1).
       (b) Definition.--As used in this subsection, the term 
     ``agency or instrumentality of a foreign state'' has the 
     meaning given that term in section 1603(b) of title 28, 
     United States Code.
       (c) Jurisdiction.--
       (1) In general.--Chapter 85 of title 28, United States 
     Code, is amended by inserting after section 1331 the 
     following new section:

     ``Sec. 1331a. Civil actions involving confiscated property

       ``The district courts shall have exclusive jurisdiction of 
     any action brought under section 6252 of the Cuban Liberty 
     and Democratic Solidarity (LIBERTAD) Act of 1995, regardless 
     of the amount in controversy.''.
       (2) Conforming amendment.--The table of sections for 
     chapter 85 of title 28, United States Code, is amended by 
     inserting after the item relating to section 1331 the 
     following:

``1331a. Civil actions involving confiscated property.''.
       (d) Certain Property Immune From Execution.--Section 1611 
     of title 28, United States Code, is amended by adding at the 
     end the following:
       ``(c) Notwithstanding the provisions of section 1610 of 
     this chapter, the property of a foreign state shall be immune 
     from attachment and from execution in an action brought under 
     section 6252 of the Cuban Liberty and Democratic Solidarity 
     (LIBERTAD) Act of 1995 to the extent the property is a 
     facility or installation used by an accredited diplomatic 
     mission for official purposes.''.
       (e) Election of Remedies.--
       (1) Election.--Subject to paragraph (2)--
       (A) any United States national that brings an action under 
     this section may not bring any other civil action or 
     proceeding under the common law, Federal law, or the law of 
     any of the several States, the District of Columbia, or any 
     territory or possession of the United States, that seeks 
     monetary or nonmonetary compensation by reason of the same 
     subject matter; and
       (B) any person who brings, under the common law or any 
     provision of law other than this section, a civil action or 
     proceeding for monetary or nonmonetary compensation arising 
     out of a claim for which an action would otherwise be 
     cognizable under this section may not bring an action under 
     this section on that claim.
       (2) Treatment of certified claimants.--In the case of any 
     United States national that brings an action under this 
     section based on a claim certified under title V of the 
     International Claims Settlement Act of 1949--
       (A) if the recovery in the action is equal to or greater 
     than the amount of the certified claim, the United States 
     national may not receive payment on the claim under any 
     agreement entered into between the United States and Cuba 
     settling claims covered by such title, and such national 
     shall be deemed to have discharged the United States from any 
     further responsibility to represent the United States 
     national with respect to that claim;
       (B) if the recovery in the action is less than the amount 
     of the certified claim, the United States national may 
     receive payment under a claims agreement described in 
     subparagraph (A) but only to the extent of the difference 
     between the amount of the recovery and the amount of the 
     certified claim; and
       (C) if there is no recovery in the action, the United 
     States national may receive payment on the certified claim 
     under a claims agreement described in subparagraph (A) to the 
     same extent as any certified claimant who does not bring an 
     action under this section.
       (f) Deposit of Excess Payments by Cuba Under Claims 
     Agreement.--Any amounts paid by Cuba under any agreement 
     entered into between the United States and Cuba settling 
     certified claims under title V of the International Claims 
     Settlement Act of 1949 that are in excess of the payments 
     made on such certified claims after the application of 
     subsection (e) shall be deposited into the United States 
     Treasury.
       (g) Termination of Rights.--
       (1) In general.--All rights created under this section to 
     bring an action for money damages with respect to property 
     confiscated before the date of the enactment of this Act 
     shall cease upon the transmittal to the Congress of a 
     determination of the President under section 6233(c)(3).
       (2) Pending suits.--The termination of rights under 
     paragraph (1) shall not affect suits commenced before the 
     date of such termination, and in all such suits, proceedings 
     shall be had, appeals taken, and judgments rendered in the 
     same manner and with the same effect as if this subsection 
     had not been enacted.

     SEC. 6253. DETERMINATION OF CLAIMS TO CONFISCATED PROPERTY.

       (a) Evidence of Ownership.--
       (1) Conclusiveness of certified claims.--In any action 
     brought under this part, the courts shall accept as 
     conclusive proof of ownership a certification of a claim to 
     ownership that has been made by the Foreign Claims Settlement 
     Commission pursuant to title V of the International Claims 
     Settlement Act of 1949 (22 U.S.C. 1643 and following).
       (2) Claims not certified.--In the case of a claim that has 
     not been certified by the For

[[Page 1652]]

     eign Claims Settlement Commission before the enactment of 
     this Act, a court may appoint a special master, including the 
     Foreign Claims Settlement Commission, to make determinations 
     regarding the amount and validity of claims to ownership of 
     confiscated property. Such determinations are only for 
     evidentiary purposes in civil actions brought under this part 
     and do not constitute certifications pursuant to title V of 
     the International Claims Settlement Act of 1949.
       (3) Effect of determinations of foreign entities.--In 
     determining ownership, courts shall not accept as conclusive 
     evidence of ownership any findings, orders, judgments, or 
     decrees from administrative agencies or courts of foreign 
     countries or international organizations that invalidate the 
     claim held by a United States national, unless the 
     invalidation was found pursuant to binding international 
     arbitration to which United States national submitted the 
     claim.
       (b) Amendment of the International Claims Settlement Act of 
     1949.--Title V of the International Claims Settlement Act of 
     1949 (22 U.S.C. 1643 and following) is amended by adding at 
     the end the following new section:

  ``evaluation of ownership claims referred by district courts of the 
                             united states

       ``Sec. 514. Notwithstanding any other provision of this 
     title and only for purposes of section 6252 the Cuban Liberty 
     and Solidarity (LIBERTAD) Act, a United States district 
     court, for fact-finding purposes, may refer to the 
     Commission, and the Commission may determine, questions of 
     the amount and ownership of a claim by a United States 
     national (as defined in section 6204 of the Cuban Liberty and 
     Solidarity (LIBERTAD) Act) resulting from the confiscation of 
     property by the Government of Cuba described in section 
     503(a), whether or not the United States national qualified 
     as a national of the United States (as defined in section 
     502(1)) at the time of the action by the Government of 
     Cuba.''.
       (c) Rule of Construction.--Nothing in this subtitle or 
     section 514 of the International Claims Settlement Act of 
     1949, as added by subsection (b), shall be construed--
       (1) to require or otherwise authorize the claims of Cuban 
     nationals who became United States citizens after their 
     property was confiscated to be included in the claims 
     certified to the Secretary of State by the Foreign Claims 
     Settlement Commission for purposes of future negotiation and 
     espousal of claims with a friendly government in Cuba when 
     diplomatic relations are restored; or
       (2) as superseding, amending, or otherwise altering 
     certifications that have been made pursuant to title V of the 
     International Claims Settlement Act of 1949 before the 
     enactment of this Act.

     SEC. 6254. EXCLUSIVITY OF FOREIGN CLAIMS SETTLEMENT 
                   COMMISSION CERTIFICATION PROCEDURE.

       Title V of the International Claims Settlement Act of 1949 
     (22 U.S.C. 1643 and following), as amended by section 6253, 
     is further amended by adding at the end the following new 
     section:

  ``exclusivity of foreign claims settlement commission certification 
                               procedure

       ``Sec. 515. (a) Subject to subsection (b), neither any 
     national of the United States who was eligible to file a 
     claim under section 503 but did not timely file such claim 
     under that section, nor any national of the United States (on 
     the date of the enactment of this section) who was not 
     eligible to file a claim under that section, nor any national 
     of Cuba, including any agency, instrumentality, subdivision, 
     or enterprise of the Government of Cuba or any local 
     government of Cuba in place on the date of the enactment of 
     this section, nor any successor thereto, whether or not 
     recognized by the United States, shall have a claim to, 
     participate in, or otherwise have an interest in, the 
     compensation proceeds or other nonmonetary compensation paid 
     or allocated to a national of the United States by virtue of 
     a claim certified by the Commission under section 507, nor 
     shall any court of the United States or any State court have 
     jurisdiction to adjudicate any such claim.
       ``(b) Nothing in subsection (a) shall be construed to 
     detract from or otherwise affect any rights in the shares of 
     the capital stock of nationals of the United States owning 
     claims certified by the Commission under section 507.''.

                  PART 4--EXCLUSION OF CERTAIN ALIENS

     SEC. 6271. EXCLUSION FROM THE UNITED STATES OF ALIENS WHO 
                   HAVE CONFISCATED PROPERTY OF UNITED STATES 
                   NATIONALS OR WHO TRAFFIC IN SUCH PROPERTY.

       (a) Grounds for Exclusion.--The Secretary of State, in 
     consultation with the Attorney General, shall exclude from 
     the United States any alien who the Secretary of State 
     determines is a person who--
       (1) has confiscated, or has directed or overseen the 
     confiscation of, property a claim to which is owned by a 
     United States national, or converts or has converted for 
     personal gain confiscated property, a claim to which is owned 
     by a United States national;
       (2) traffics in confiscated property, a claim to which is 
     owned by a United States national;
       (3) is a corporate officer, principal, or shareholder with 
     a controlling interest of an entity which has been involved 
     in the confiscation of property or trafficking in confiscated 
     property, a claim to which is owned by a United States 
     national; or
       (4) is a spouse, minor child, or agent of a person 
     excludable under paragraph (1), (2), or (3).
       (b) Definitions.--As used in this section, the following 
     terms have the following meanings:
       (1) Confiscated; confiscation.--The terms ``confiscated'' 
     and ``confiscation'' refer to--
       (A) the nationalization, expropriation, or other seizure by 
     foreign governmental authority of ownership or control of 
     property on or after January 1, 1959--
       (i) without the property having been returned or adequate 
     and effective compensation provided; or
       (ii) without the claim to the property having been settled 
     pursuant to an international claims settlement agreement or 
     other mutually accepted settlement procedure; and
       (B) the repudiation by foreign governmental authority of, 
     the default by foreign governmental authority on, or the 
     failure by foreign governmental authority to pay, on or after 
     January 1, 1959--
       (i) a debt of any enterprise which has been nationalized, 
     expropriated, or otherwise taken by foreign governmental 
     authority;
       (ii) a debt which is a charge on property nationalized, 
     expropriated, or otherwise taken by foreign governmental 
     authority; or
       (iii) a debt which was incurred by foreign governmental 
     authority in satisfaction or settlement of a confiscated 
     property claim.
       (2) Property.--The term ``property'' does not include 
     claims arising from a territory in dispute as a result of war 
     between United Nations member states in which the ultimate 
     resolution of the disputed territory has not been resolved.
       (3) Traffics.--(A) A person or entity ``traffics'' in 
     property if that person or entity knowingly and 
     intentionally--
       (i) sells, transfers, distributes, dispenses, brokers, 
     manages, or otherwise disposes of confiscated property, or 
     purchases, leases, receives, possesses, obtains control of, 
     manages, uses, or otherwise acquires or holds an interest in 
     confiscated property,
       (ii) engages in a commercial activity using or otherwise 
     benefiting from confiscated property, or
       (iii) causes, directs, participates in, or profits from, 
     trafficking (as described in clauses (i) and (ii)) by another 
     person, or otherwise engages in trafficking (as described in 
     clauses (i) and (ii)) through another person,
     without the authorization of the United States national who 
     holds a claim to the property.
       (B) The term ``traffics'' does not include--
       (i) the delivery of international telecommunication signals 
     to Cuba that are authorized by section 1705(e) of the Cuban 
     Democracy Act of 1992 (22 U.S.C. 6004(e)); or
       (ii) the trading or holding of securities publicly traded 
     or held, unless the trading is with or by a person determined 
     by the Secretary of the Treasury to be a specially designated 
     national.
       (c) National Interest Exemption.--This section shall not 
     apply where the Secretary of State finds, on a case-by-case 
     basis, that making a determination under subsection (a) would 
     be contrary to the national interest of the United States.
       (d) Effective Date.--
       (1) In general.--This section applies to aliens seeking to 
     enter the United States on or after the date of the enactment 
     of this Act.
       (2) Trafficking.--This section applies only with respect to 
     acts within the meaning of ``traffics'' that occur on or 
     after the date of the enactment of this Act.
                 TITLE VII--COMMITTEE ON THE JUDICIARY

     SEC. 7001. PATENT AND TRADEMARK FEES.

       Section 10101 of the Omnibus Budget Reconciliation Act of 
     1990 (35 U.S.C. 41 note) is amended--
       (1) in subsection (a) by striking ``1998'' and inserting 
     ``2002'';
       (2) in subsection (b)(2) by striking ``1998'' and inserting 
     ``2002''; and
       (3) in subsection (c)--
       (A) by striking ``through 1998'' and inserting ``through 
     2002''; and
       (B) by adding at the end the following:
       ``(9) $119,000,000 in fiscal year 1999.
       ``(10) $119,000,000 in fiscal year 2000.
       ``(11) $119,000,000 in fiscal year 2001.
       ``(12) $119,000,000 in fiscal year 2002.''.
               TITLE VIII--COMMITTEE ON NATIONAL SECURITY

                    Subtitle A--Military Retired Pay

     SEC. 8001. ELIMINATION OF DISPARITY BETWEEN EFFECTIVE DATES 
                   FOR MILITARY AND CIVILIAN RETIREE COST-OF-
                   LIVING ADJUSTMENTS FOR FISCAL YEARS 1996, 1997, 
                   AND 1998.

       (a) Conformance With Schedule for Civil Service COLAs.--
     Subparagraph (B) of section 1401a(b)(2) of title 10, United 
     States Code, is amended--
       (1) by striking out ``through 1998'' the first place it 
     appears and all that follows through ``In the case of'' the 
     second place it appears and inserting in lieu thereof 
     ``through 1996.--In the case of'';
       (2) by striking ``of 1994, 1995, 1996, or 1997'' and 
     inserting in lieu thereof ``of 1993, 1994, or 1995''; and
       (3) by striking out ``September'' and inserting in lieu 
     thereof ``March''.
       (b) Repeal of Prior Conditional Enactment.--Section 
     8114A(b) of Public Law 103-335 (108 Stat. 2648) is repealed.
                  Subtitle B--Naval Petroleum Reserves

     SEC. 8011. SALE OF NAVAL PETROLEUM RESERVES.

       (a) Sale of Reserves Required.--Chapter 641 of title 10, 
     United States Code, is amend

[[Page 1653]]

     ed by inserting after section 7421 the following new section:

     ``Sec. 7421a. Sale of naval petroleum reserves

       ``(a) Sale Required.--(1) Notwithstanding any other 
     provision of this chapter, the Secretary shall sell all 
     right, title, and interest of the United States in and to the 
     lands owned or controlled by the United States inside the 
     naval petroleum and oil shale reserves established by this 
     chapter. In the case of Naval Petroleum Reserve Numbered 1, 
     the lands to be sold shall include sections 16 and 36 of 
     township 30 south, range 23 east, Mount Diablo Principal 
     Meridian, California.
       ``(2) Not later than September 30, 1996, the Secretary 
     shall enter into one or more contracts for the sale of all of 
     the interest of the United States in the naval petroleum 
     reserves.
       ``(b) Timing and Administration of Sale.--(1) Not later 
     than January 1, 1996, the Secretary shall retain the services 
     of five independent experts in the valuation of oil and gas 
     fields to conduct separate assessments, in a manner 
     consistent with commercial practices, of the fair market 
     value of the interest of the United States in each naval 
     petroleum reserve. In making their assessments for each naval 
     petroleum reserve, the independent experts shall consider 
     (among other factors) all equipment and facilities to be 
     included in the sale, the net present value of the reserve, 
     and the net present value of the anticipated revenue stream 
     that the Secretary determines the Treasury would receive from 
     the reserve if it were not sold, adjusted for any anticipated 
     increases in tax revenues that would result if it were sold. 
     The independent experts shall complete their assessments not 
     later than June 1, 1996. In setting the minimum acceptable 
     price for each naval petroleum reserve, the Secretary shall 
     consider the average of the five assessments regarding the 
     reserve or, if more advantageous to the Government, the 
     average of three assessments after excluding the high and low 
     assessments.
       ``(2) Not later than March 1, 1996, the Secretary shall 
     retain the services of an investment banker to independently 
     administer, in a manner consistent with commercial practices 
     and in a manner that maximizes sale proceeds to the 
     Government, the sale of the naval petroleum reserves under 
     this section. The Secretary may enter into the contracts 
     required under this paragraph and paragraph (1) on a 
     noncompetitive basis.
       ``(3) Not later than June 1, 1996, the sales administrator 
     selected under paragraph (2) shall complete a draft contract 
     for the sale of each naval petroleum reserve, which shall 
     accompany the invitation for bids and describe the terms and 
     provisions of the sale of the interest of the United States 
     in the reserve. Each draft contract shall identify all 
     equipment and facilities to be included in the sales. Each 
     draft contract, including the terms and provisions of the 
     sale of the interest of the United States in the naval 
     petroleum reserves, shall be subject to review and approval 
     by the Secretary, the Secretary of the Treasury, and the 
     Director of the Office of Management and Budget.
       ``(4) Not later than July 1, 1996, the Secretary shall 
     publish an invitation for bids for the purchase of the naval 
     petroleum reserves.
       ``(5) Not later than September 1, 1996, the Secretary shall 
     accept the highest responsible offer for purchase of the 
     interest of the United States in the naval petroleum 
     reserves, or a particular reserve, that meets or exceeds the 
     minimum acceptable price determined under paragraph (1). The 
     Secretary may accept an offer for only a portion of a reserve 
     so long as the entire reserve is still sold under this 
     section at a price that meets or exceeds the minimum 
     acceptable price.
       ``(c) Future Liabilities.--To effectuate the sale of the 
     interest of the United States in a naval petroleum reserve, 
     the Secretary may extend such indemnities and warranties as 
     the Secretary considers reasonable and necessary to protect 
     the purchaser from claims arising from the ownership in the 
     reserve by the United States.
       ``(d) Special Rules Preparatory to Sale of Naval Petroleum 
     Reserve Numbered 1.--(1) Not later than June 1, 1996, the 
     Secretary shall finalize equity interests of the known oil 
     and gas zones in Naval Petroleum Reserve Numbered 1 in the 
     manner provided by this subsection.
       ``(2) The Secretary shall retain the services of an 
     independent petroleum engineer, mutually acceptable to the 
     equity owners, who shall prepare a recommendation on final 
     equity figures. The Secretary may accept the recommendation 
     of the independent petroleum engineer for final equity in 
     each known oil and gas zone and establish final equity 
     interest in the Naval Petroleum Reserve Numbered 1 in 
     accordance with such recommendation, or the Secretary may use 
     such other method to establish final equity interest in that 
     reserve as the Secretary considers appropriate. The Secretary 
     may enter into the contract required under this paragraph on 
     a noncompetitive basis.
       ``(3) If, on the effective date of this section, there is 
     an ongoing equity redetermination dispute between the equity 
     owners under section 9(b) of the unit plan contract, such 
     dispute shall be resolved in the manner provided in the unit 
     plan contract not later than June 1, 1996. Such resolution 
     shall be considered final for all purposes under this 
     section.
       ``(4) In this section, the term `unit plan contract' means 
     the unit plan contract between equity owners of the lands 
     within the boundaries of Naval Petroleum Reserve Numbered 1 
     (Elk Hills) entered into on June 19, 1944.
       ``(e) Production Allocation Regarding Naval Petroleum 
     Reserve Numbered 1.--(1) As part of the contract for purchase 
     of Naval Petroleum Reserve Numbered 1, the purchaser of the 
     interest of the United States in that reserve shall agree to 
     make up to 25 percent of the purchaser's share of annual 
     petroleum production from the purchased lands available for 
     sale to small refiners, which do not have their own adequate 
     sources of supply of petroleum, for processing or use only in 
     their own refineries. None of the reserved production sold to 
     small refiners may be resold in kind. The purchaser of that 
     reserve may reduce the quantity of petroleum reserved under 
     this subsection in the event of an insufficient number of 
     qualified bids. The seller of this petroleum production has 
     the right to refuse bids that are less than the prevailing 
     market price of comparable oil.
       ``(2) The purchaser of Naval Petroleum Reserve Numbered 1 
     shall also agree to ensure that the terms of every sale of 
     the purchaser's share of annual petroleum production from the 
     purchased lands shall be so structured as to give full and 
     equal opportunity for the acquisition of petroleum by all 
     interested persons, including major and independent oil 
     producers and refiners alike.
       ``(f) Maintaining Production Pending Sale of Naval 
     Petroleum Reserve Numbered 1.--Until the sale of Naval 
     Petroleum Reserve Numbered 1 is completed under this section, 
     the Secretary shall continue to produce that reserve at the 
     maximum daily oil or gas rate from a reservoir, which will 
     permit maximum economic development of the reservoir 
     consistent with sound oil field engineering practices in 
     accordance with section 3 of the unit plan contract. The 
     definition of maximum efficient rate in section 7420(6) of 
     this title shall not apply to Naval Petroleum Reserve 
     Numbered 1.
       ``(g) Effect on Existing Contracts.--(1) In the case of any 
     contract, in effect on the effective date of this section, 
     for the purchase of production from any part of the United 
     States' share of the naval petroleum reserves, the sale of 
     the interest of the United States in the reserves shall be 
     subject to the contract for a period of three months after 
     the closing date of the sale or until termination of the 
     contract, whichever occurs first. The term of any contract 
     entered into after the effective date of this section for the 
     purchase of such production shall not exceed the anticipated 
     closing date for the sale of the reserve.
       ``(2) In the case of Naval Petroleum Reserve Numbered 1, 
     the Secretary shall exercise the termination procedures 
     provided in the contract between the United States and 
     Bechtel Petroleum Operation, Inc., Contract Number DE-ACO1-
     85FE60520 so that the contract terminates not later than the 
     date of closing of the sale of that reserve.
       ``(3) In the case of Naval Petroleum Reserve Numbered 1, 
     the Secretary shall exercise the termination procedures 
     provided in the unit plan contract so that the unit plan 
     contract terminates not later than the date of closing of the 
     sale of that reserve.
       ``(h) Offer of Settlement of State of California Claims 
     Regarding Naval Petroleum Reserve Numbered 1.--(1) In 
     connection with the sale of Naval Petroleum Reserve Numbered 
     1, the Secretary shall offer to settle all claims against the 
     United States by the State of California and the Teachers' 
     Retirement Fund of the State of California with respect to 
     lands within that reserve, including sections 16 and 36 of 
     township 30 south, range 23 east, Mount Diablo Principal 
     Meridian, California, or production or proceeds of sale from 
     that reserve. Subject to paragraph (2), the Secretary shall 
     offer in settlement of such claims--
       ``(A) a payment from funds provided for this purpose in 
     advance in appropriation Acts;
       ``(B) a grant of land pursuant to sections 2275 and 2276 of 
     the Revised Statutes of the United States (43 U.S.C. 851 and 
     852) so long as such land is not generating revenue for the 
     United States;
       ``(C) any other option that would not be inconsistent with 
     the Congressional Budget Act of 1974 (2 U.S.C. 621 et seq.); 
     or
       ``(D) any combination of subparagraphs (A), (B), and (C).
       ``(2) The value of any payment, grant, or option (or 
     combination thereof) offered as settlement under paragraph 
     (1) may not exceed an amount equal to seven percent of the 
     proceeds from the sale of Naval Petroleum Reserve Numbered 1, 
     after deducting the costs incurred to conduct the sale of 
     that reserve.
       ``(3) Acceptance of the settlement offered under paragraph 
     (1) shall be subject to the condition that all claims against 
     the United States by the State of California or the Teachers' 
     Retirement Fund of the State of California are released with 
     respect to lands within the Naval Petroleum Reserve Numbered 
     1, including sections 16 and 36 of township 30 south, range 
     23 east, Mount Diablo Principal Meridian, California, or 
     production or proceeds of sale from that reserve. The 
     Secretary may specify the manner in which the release of such 
     claims shall be evidenced.
       ``(i) Effect on Antitrust Laws.--Nothing in this section 
     shall be construed to alter the application of the antitrust 
     laws of the United States to the purchaser of a naval 
     petroleum reserve or to the lands in the naval petroleum 
     reserves subject to sale under this section upon the 
     completion of the sale.
       ``(j) Preservation of Private Right, Title, and Interest.--
     Nothing in this sec

[[Page 1654]]

     tion shall be construed to adversely affect the ownership 
     interest of any other entity having any right, title, and 
     interest in and to lands within the boundaries of the naval 
     petroleum reserves.
       ``(k) Congressional Notification.--Section 7431 of this 
     title shall not apply to the sale of the naval petroleum 
     reserves under this section. However, the Secretary may not 
     enter into a contract for the sale of a naval petroleum 
     reserve until the end of the 15-day period beginning on the 
     date on which the Secretary notifies the Committee on Armed 
     Services of the Senate and the Committee on National Security 
     and the Committee on Commerce of the House of Representatives 
     that the Secretary has accepted an offer under subsection 
     (b)(5) for the sale of that reserve.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of such chapter is amended by inserting after the 
     item relating to section 7421 the following new item:

``7421a. Sale of naval petroleum reserves.''.
                 Subtitle C--National Defense Stockpile

     SEC. 8021. DISPOSAL OF CERTAIN MATERIALS IN NATIONAL DEFENSE 
                   STOCKPILE FOR DEFICIT REDUCTION.

       (a) Disposals Required.--(1) During fiscal year 1996, the 
     President shall dispose of all cobalt contained in the 
     National Defense Stockpile that, as of the date of the 
     enactment of this Act, is authorized for disposal under any 
     law (other than this Act).
       (2) In addition to the disposal of cobalt under paragraph 
     (1), the President shall dispose of additional quantities of 
     cobalt and quantities of aluminum, ferro columbium, 
     germanium, palladium, platinum, and rubber contained in the 
     National Defense Stockpile so as to result in receipts to the 
     United States in amounts equal to--
       (A) $21,000,000 during the fiscal year ending September 30, 
     1996;
       (B) $338,000,000 during the five-fiscal year period ending 
     on September 30, 2000; and
       (C) $649,000,000 during the seven-fiscal year period ending 
     on September 30, 2002.
       (3) The President is not required to include the disposal 
     of the materials identified in paragraph (2) in an annual 
     materials plan for the National Defense Stockpile. Disposals 
     made under this section may be made without consideration of 
     the requirements of an annual materials plan.
       (b) Limitation on Disposal Quantity.--The total quantities 
     of materials authorized for disposal by the President under 
     subsection (a)(2) may not exceed the 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
------------------------------------------------------------------------

       (c) Deposit of Receipts.--Notwithstanding section 9 of the 
     Strategic and Critical Materials Stock Piling Act (50 U.S.C. 
     98h), funds received as a result of the disposal of materials 
     under subsection (a)(2) shall be deposited into the general 
     fund of the Treasury for the purpose of deficit reduction.
       (d) Relationship to Other Disposal Authority.--The disposal 
     authority provided in subsection (a)(2) is new disposal 
     authority and is in addition to, and shall not affect, any 
     other disposal authority provided by law regarding the 
     materials specified in such subsection.
       (e) Termination of Disposal Authority.--The President may 
     not use the disposal authority provided in subsection (a)(2) 
     after the date on which the total amount of receipts 
     specified in subparagraph (C) of such subsection is achieved.
       (f) Definition.--The term ``National Defense Stockpile'' 
     means the National Defense Stockpile provided for in section 
     4 of the Strategic and Critical Materials Stock Piling Act 
     (50 U.S.C. 98c).
                    TITLE IX--COMMITTEE ON RESOURCES

     SEC. 9000. TABLE OF CONTENTS.

       The table of contents for this title is as follows:

                    TITLE IX--COMMITTEE ON RESOURCES

Sec. 9000. Table of contents.

              Subtitle A--Alaska and Helium Privatization

                             Part 1--Alaska

Sec. 9001. Exports of Alaskan North Slope oil.
Sec. 9002. Arctic Coastal Plain leasing and revenue.
Sec. 9003. Alaska Power Administration sale.

                      Part 2--Helium Privatization

Sec. 9011. Short title.
Sec. 9012. Amendment of Helium Act.
Sec. 9013. Authority of Secretary.
Sec. 9014. Sale of crude helium.
Sec. 9015. Elimination of stockpile.
Sec. 9016. Repeal of authority to borrow.
Sec. 9017. Reports.
Sec. 9018. Land conveyance in Potter County, Texas.

                      Subtitle B--Water and Power

                Part 1--Power Marketing Administrations

Sec. 9201. Short title.
Sec. 9202. 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.
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.
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.
              Subtitle A--Alaska and Helium Privatization

                             PART 1--ALASKA

     SEC. 9001. EXPORTS OF ALASKAN NORTH SLOPE OIL.

       (a) Amendment of Mineral Leasing Act.--Section 28(s) of the 
     Mineral Leasing Act (30 U.S.C. 185(s)) is amended to read as 
     follows:

                  ``exports of alaskan north slope oil

       ``(s)(1) Subject to paragraphs (2) through (6) of this 
     subsection and notwithstanding

[[Page 1655]]

     any other provision of this Act or any other provision of law 
     (including any regulation) applicable to the export of oil 
     transported by pipeline over right-of-way granted pursuant to 
     section 203 of the Trans-Alaska Pipeline Authorization Act 
     (43 U.S.C. 1652), such oil may be exported unless the 
     President finds that exportation of this oil is not in the 
     national interest. The President shall make his national 
     interest determination within 5 months after the date of 
     enactment of this subsection. In evaluating whether exports 
     of this oil are in the national interest, the President shall 
     at a minimum consider--
       ``(A) whether exports of this oil would diminish the total 
     quantity or quality of petroleum available to the United 
     States;
       ``(B) the results of an appropriate environmental review, 
     including consideration of appropriate measures to mitigate 
     any potential adverse effects of exports of this oil on the 
     environment, which shall be completed within four months of 
     the date of the enactment of this subsection; and
       ``(C) whether exports of this oil are likely to cause 
     sustained material oil supply shortages or sustained oil 
     prices significantly above world market levels that would 
     cause sustained material adverse employment effects in the 
     United States or that would cause substantial harm to 
     consumers, including in noncontiguous States and Pacific 
     territories.
     If the President determines that exports of this oil are in 
     the national interest, he may impose such terms and 
     conditions (other than a volume limitation) as are necessary 
     or appropriate to ensure that such exports are consistent 
     with the national interest.
       ``(2) Except in the case of oil exported to a country with 
     which the United States entered into a bilateral 
     international oil supply agreement before November 26, 1979, 
     or to a country pursuant to the International Emergency Oil 
     Sharing Plan of the International Energy Agency, any oil 
     transported by pipeline over right-of-way granted pursuant to 
     section 203 of the Trans-Alaska Pipeline Authorization Act 
     (43 U.S.C. 1652) shall, when exported, be transported by a 
     vessel documented under the laws of the United States and 
     owned by a citizen of the United States (as determined in 
     accordance with section 2 of the Shipping Act, 1916 (46 
     U.S.C. App. 802)).
       ``(3) Nothing in this subsection shall restrict the 
     authority of the President under the Constitution, the 
     International Emergency Economic Powers Act (50 U.S.C. 1701 
     et seq.), or the National Emergencies Act (50 U.S.C. 1601 et 
     seq.) to prohibit exports of this oil or under Part B of 
     title II of the Energy Policy and Conservation Act (42 U.S.C. 
     6271-76).
       ``(4) The Secretary of Commerce shall issue any rules 
     necessary for implementation of the President's national 
     interest determination, including any licensing requirements 
     and conditions, within 30 days of the date of such 
     determination by the President. The Secretary of Commerce 
     shall consult with the Secretary of Energy in administering 
     the provisions of this subsection.
       ``(5) If the Secretary of Commerce finds that exporting oil 
     under authority of this subsection has caused sustained 
     material oil supply shortages or sustained oil prices 
     significantly above world market levels and further finds 
     that these supply shortages or price increases have caused or 
     are likely to cause sustained material adverse employment 
     effects in the United States, the Secretary of Commerce, in 
     consultation with the Secretary of Energy, shall recommend, 
     and the President may take, appropriate action concerning 
     exports of this oil, which may include modifying or revoking 
     authority to export such oil.
       ``(6) Administrative action under this subsection is not 
     subject to sections 551 and 553 through 559 of title 5, 
     United States Code.''.
       (b) GAO Report.--
       (1) Review.--The Comptroller General of the United States 
     shall conduct a review of energy production in California and 
     Alaska and the effects of Alaskan North Slope oil exports, if 
     any, on consumers, independent refiners, and shipbuilding and 
     ship repair yards on the West Coast and in Hawaii. The 
     Comptroller General shall commence this review 2 years after 
     the date of enactment of this Act and, within 6 months after 
     commencing the review, shall provide a report to the 
     Committee on Resources and the Committee on Commerce of the 
     House of Representatives and the Committee on Energy and 
     Natural Resources of the Senate.
       (2) Contents of report.--The report shall contain a 
     statement of the principal findings of the review and 
     recommendations for Congress and the President to address job 
     loss in the shipbuilding and ship repair industry on the West 
     Coast, as well as adverse impacts on consumers and refiners 
     on the West Coast and in Hawaii, that the Comptroller General 
     attributes to Alaska North Slope oil exports.

     SEC. 9002. ARCTIC COASTAL PLAIN LEASING AND REVENUE.

       (a) Purpose.--It is the purpose of this section to reduce 
     the Federal deficit by an estimated $1,300,000,000 over the 
     next 5 years. This revenue will be derived from competitive 
     bonus bids for oil and gas leases in the Coastal Plain area 
     of Alaska's North Slope.
       (b) Definitions.--For the purposes of this section:
       (1) The term ``Secretary'' means the Secretary of the 
     Interior.
       (2) The term ``Coastal Plain'' means that portion of the 
     Arctic National Wildlife Refuge identified in section 
     1002(b)(1) of the Alaska National Interest Lands Conservation 
     Act of 1980 (Public Law 96-487; 16 U.S.C. 3142(b)(1)) 
     consisting of approximately 1,549,000 acres.
       (c) Compatibility.--Congress hereby determines that the oil 
     and gas leasing program and activities authorized by this 
     section in the Coastal Plain are compatible with the purposes 
     for which the Arctic National Wildlife Refuge was 
     established, and that no further findings or decisions are 
     required to implement this determination.
       (d) Authorization.--(1) Congress hereby authorizes and 
     directs the Secretary to establish and promptly implement a 
     program to assure the expeditious competitive leasing 
     exploration, development, production, and transportation of 
     the oil and gas resources of the Coastal Plain. Regulations 
     to implement this program and to govern oil and gas leasing, 
     exploration, development and production shall be promulgated 
     by the Secretary within 6 months of the date of enactment of 
     this section.
       (2) The Coastal Plain leasing program required by paragraph 
     (1) shall include the following:
       (A) The first lease sale of not less than 200,000 acres 
     shall be conducted within 12 months of the date of enactment 
     of this section.
       (B) The lease sales shall be based upon an industry 
     nomination process.
       (C) The Secretary is directed to grant to the highest 
     responsible qualified bidder or bidders by competitive 
     bidding, under regulations promulgated in advance, any oil 
     and gas lease on unleased Federal lands within the Coastal 
     Plain. These regulations may provide for the deposit of cash 
     bids in an interest-bearing account until the Secretary 
     accepts the bids, with interest earned paid to the General 
     Treasury for bids that are accepted, and to the unsuccessful 
     bidders for bids that are rejected.
       (D) Royalty payments shall not be less than 12\1/2\ 
     percent, and rental payments shall be prescribed by the 
     Secretary.
       (E) The Attorney General of the United States and the 
     Federal Trade Commission may conduct such review of lease 
     terms and lease sale activities as are necessary to ensure 
     compliance with the antitrust laws.
       (F) The size of lease tracts may be up to 11,520 acres but 
     not less than 2,560 acres, as determined by the Secretary, 
     except that the Secretary may lease smaller tracts if he 
     determines smaller tracts are necessary to promote a more 
     competitive leasing program or are necessary in certain 
     locations to mitigate reasonably foreseeable impacts on the 
     environment.
       (G) Each lease shall be issued for an initial period of up 
     to 10 years and shall be extended as long as oil or gas is 
     produced in paying quantities from the lease or unit area to 
     which the lease is committed or as drilling or reworking 
     operations as approved by the Secretary are conducted 
     thereon.
       (H) The Secretary is authorized and directed to promulgate 
     regulations and to include terms in leases to ensure that--
       (i) activities are conducted pursuant to an approved 
     exploration or development plan;
       (ii) lessees secure an appropriate performance bond to 
     cover activities;
       (iii) provision is made for the suspension, cancellation, 
     assignment, relinquishment and unitization of leases; and
       (iv) the Secretary has access to lease information and that 
     confidential, privileged or proprietary information furnished 
     by lessees is adequately protected.
       (e) Judicial Review.--Any complaint filed seeking judicial 
     review of an action of the Secretary in promulgating any 
     regulation under this section may be filed only in the United 
     States Court of Appeals for the District of Columbia, and 
     such complaint shall be filed within 90 days from the date of 
     such promulgation, or after such date if such complaint is 
     based solely on grounds arising after such 90th day, in which 
     case the complaint must be filed within 90 days after the 
     complainant knew or reasonably should have known of the 
     grounds for the complaint. Any complaint seeking judicial 
     review of any other actions of the Secretary under this 
     section may be filed in any appropriate district court of the 
     United States, and such complaint must be filed within 90 
     days from the date of the action being challenged, or after 
     such date if such complaint is based solely on grounds 
     arising after such 90th day, in which case the complaint must 
     be filed within 90 days after the complainant knew or 
     reasonably should have known of the grounds for the 
     complaint.
       (f) Administration.--(1) Section 1003 of the Alaska 
     National Interest Lands Conservation Act of 1980 (94 Stat. 
     2452; 16 U.S.C. 3143) is repealed.
       (2) This section shall be considered the primary land 
     management authorization for all activities associated with 
     exploration, development, and production from the Coastal 
     Plain. No land management review, determination, or other 
     action shall be required except as specifically authorized by 
     this section.
       (g) Protection of Fish and Wildlife Resources and Other 
     Environmental Values.--(1) Before conducting a competitive 
     oil and gas lease sale under this section, the Secretary 
     shall promulgate, within 6 months, as provided in subsection 
     (d)(1), such rules and regulations as are necessary to ensure 
     that oil and gas exploration, development, production, and 
     transportation activities undertaken in the Coastal Plain 
     achieve the reasonable protection of the fish and wildlife 
     resources, environment and subsistence uses of the Coastal 
     Plain.

[[Page 1656]]

       (2) The Secretary shall administer the provisions of this 
     section through regulations and lease terms that the 
     Secretary determines to be necessary to mitigate reasonably 
     foreseeable and significantly adverse effects on the fish and 
     wildlife, surface resources and subsistence resources of the 
     Coastal Plain.
       (3)(A) The Secretary, after consultation with the State of 
     Alaska, the city of Kaktovik, Alaska, and the North Slope 
     Borough, is authorized to close to leasing and designate up 
     to 30,000 acres of the Coastal Plain as Special Areas if the 
     Secretary determines that these lands are of such unique 
     character and interest so as to require special management 
     and regulatory protection. The Secretary shall notify the 
     Committee on Energy and Natural Resources of the Senate and 
     the Committee on Resources of the House of Representatives 90 
     days in advance of making such designations. The Secretary 
     may permit leasing of all or portions of any lands within the 
     Coastal Plain designated as Special Areas by setting lease 
     terms that limit or condition surface use and occupancy by 
     lessees of such lands but permit the use of horizontal 
     drilling technology from sites on leases located outside the 
     designated Special Areas.
       (B) Notwithstanding any other provision of law or any 
     international agreement to which the United States is a 
     party, the Secretary's sole authority to close lands within 
     the Coastal Plain to oil and gas leasing and to exploration, 
     development, and production as provided for in this part is 
     set forth in subparagraph (A).
       (4) The Secretary shall, in consultation with the State of 
     Alaska, the city of Kaktovik, Alaska, and the North Slope 
     Borough, develop guidelines to encourage the siting of 
     facilities having common use characteristics (service bases, 
     ports and docks, airports, major pipelines and roads) in a 
     manner which leads to facility consolidation, avoids 
     unnecessary duplication, utilizes existing facilities, 
     minimizes impacts on fish, wildlife, habitat and the 
     subsistence activities of residents of Native communities, 
     and avoids disruption of the lives of the residents of the 
     Village of Kaktovik and other communities.
       (5) Notwithstanding title XI of the Alaska National 
     Interest Lands Conservation Act of 1980 (94 Stat. 2457; 16 
     U.S.C. 3161 et seq.), the Secretary is authorized and 
     directed to grant, under sections 28(a) through (t) and (v) 
     through (y) of the Mineral Leasing Act (30 U.S.C. 185), 
     rights-of-way and easements across the Coastal Plain for the 
     purposes of this section, for pipeline construction, and the 
     transportation of oil and gas and related purposes.
       (6) The Secretary is authorized to close, on a seasonal 
     basis, portions of the Coastal Plain to exploratory drilling 
     activities as necessary to protect caribou calving areas and 
     other species of fish and wildlife.
       (h) Application of Environmental Laws.--The ``Final 
     Legislative Environmental Impact Statement'' (April 1987) 
     prepared pursuant to section 1002 of the Alaska National 
     Interest Lands Conservation Act of 1980 (94 Stat. 2449; 16 
     U.S.C. 3142) and section 102(2)(C) of the National 
     Environmental Policy Act of 1969 (89 Stat. 424; 42 U.S.C. 
     4332(2)(C)) is hereby determined to be adequate and legally 
     sufficient for all actions authorized pursuant to this 
     section, including all phases of oil and gas leasing, 
     exploration, development, production, transportation and 
     related activities, including the granting of rights-of-way, 
     use permits and other authorizations.
       (i) New Revenues.--(1) Notwithstanding any other provision 
     of law, all revenues received from competitive bids, sales, 
     bonuses, royalties, rents, fees, interest or other income 
     derived from the leasing of oil and gas resources within the 
     Coastal Plain shall be deposited into the Treasury of the 
     United States: Provided, That 50 percent of all such Coastal 
     Plain revenues shall be paid by the Secretary of the Treasury 
     semiannually, on March 30th and on September 30th of each 
     year, to the State of Alaska.
       (2) On March 1st of each year following the date of 
     enactment of this section, the Secretary shall prepare and 
     submit to the Congress an annual report on the revenues 
     derived and on the leasing program authorized by this 
     section.
       (j) Conveyance.--Notwithstanding the provisions of section 
     1302(h)(2) of the Alaska National Interest Lands Conservation 
     Act (16 U.S.C. 3192(h)(2)), the Secretary is authorized and 
     directed to convey (1) to the Kaktovik Inupiat Corporation 
     the surface estate of the lands described in paragraph 2 of 
     Public Land Order 6959, to the extent necessary to fulfill 
     the corporation's entitlement under section 12 of the Alaska 
     Native Claims Settlement Act (43 U.S.C. 1611), and (2) to the 
     Arctic Slope Regional Corporation the subsurface estate 
     beneath such surface estate pursuant to the August 9, 1983, 
     agreement between the Arctic Slope Regional Corporation and 
     the United States of America.
       (k) Penalty.--Any person, including any Federal official, 
     who fails to comply with any provision or mandate of this 
     section, a lease term, or a regulation promulgated under this 
     section, after notice of such failure and expiration of a 
     reasonable period for corrective action, shall be liable, 
     after hearing, for a civil penalty of not more than $10,000 
     for each day of the continuance of such failure.
       (l) Community Assistance.--There is hereby established a 
     Community Assistance Fund in the Treasury which shall be 
     maintained at a level of $5,000,000 annually from the Federal 
     share of Coastal Plain revenues and shall be available to the 
     Secretary for the purposes of this section. Organized 
     boroughs, other municipal subdivisions of the State of 
     Alaska, and recognized Indian Reorganization Act entities 
     which are impacted by activities authorized under this 
     section shall be eligible, on application to the Secretary, 
     for local assistance from the Community Assistance Fund for 
     needed social services and to provide public services and 
     facilities required in connection with supporting exploration 
     and development of the Coastal Plain.
       (m) Employment and Contracting.--As a condition of any 
     leases, permits, or other Federal authorizations granted or 
     issued pursuant to this section, a recipient of those leases, 
     permits, or authorizations shall be required to use its best 
     efforts to assure that the lessee and its agents and 
     contractors provide a fair share of employment and 
     contracting for Alaska Natives and Alaska Native Corporations 
     from throughout the State.
       (n) Use of ANWR Revenues.--
       (1) Establishment of endowment.--There is hereby 
     established in the general fund of the Treasury a separate 
     account which shall be known as the National Endowment for 
     Fish and Wildlife.
       (2) Contents.--(A) Except as provided in subparagraph (B), 
     the Endowment shall consist of revenues received from the 
     following sources:
       (i) Gifts, devises, and bequests to the Endowment.
       (ii) Amounts appropriated by the Congress to the Endowment.
       (iii) Any revenues deposited into the Treasury of the 
     United States under subsection (i), from the Federal share of 
     revenues derived from oil and gas leasing within the Coastal 
     Plain, that exceed $1,300,000,000.
       (B) After the Endowment has reached a level of $250,000,000 
     in principal, further payments to the Endowment shall consist 
     only of the following:
       (i) Gifts, devises, and bequests to the Endowment.
       (ii) Amounts appropriated by the Congress to the Endowment.
       (iii) 5 percent of the Federal royalties derived from 
     commercial production of oil and gas on Federal leases on the 
     Coastal Plain.
       (3) Establishment of fish and wildlife conservation 
     commission.--(A) To carry out the purposes of this 
     subsection, there is hereby established a commission to be 
     known as the Fish and Wildlife Conservation Commission.
       (B) The Commission shall consist of--
       (i) the Secretary of the Interior, who shall be the 
     chairman,
       (ii) 3 Members of the Senate selected by the President of 
     the Senate, and
       (iii) 3 Members of the House of Representatives selected by 
     the Speaker.
       (C) At least 1 member of the Commission selected from each 
     House of Congress shall be a member of the minority party in 
     that House.
       (D) Any Member of the House of Representatives who is a 
     member of the Commission, if reelected to the succeeding 
     Congress, may serve on the Commission notwithstanding the 
     expiration of a Congress.
       (E) Any vacancy on the Commission shall be filled in the 
     same manner as the original appointment.
       (4) Expenditures by commission.--(A) The Fish and Wildlife 
     Commission may make expenditures from the Endowment for the 
     following fish and wildlife conservation purposes:
       (i) Acquisition of important habitat lands for endangered 
     species or threatened species from owners of private 
     property. Such lands may be acquired solely on a willing 
     seller basis and shall be managed by the Secretary of the 
     Interior for the conservation of such species pursuant to the 
     terms of section 5 of the Endangered Species Act of 1973 (16 
     U.S.C. 1534).
       (ii) Provision of funding for purposes authorized under the 
     Endangered Species Act of 1973.
       (iii) Provision of funds to the North American Wetlands 
     Conservation Fund pursuant to the North American Wetlands 
     Conservation Act (16 U.S.C. 4401 et seq.).
       (B) The amount expended under subparagraph (A)(iii) each 
     fiscal year shall equal or exceed 25 percent of the total 
     expenditures from the Endowment in that fiscal year.
       (C) The Secretary of the Interior may not recommend any 
     lands or interest in lands for purchase or other forms of 
     acquisition using funds made available under the terms of 
     this section unless the Secretary of the Interior--
       (i) has determined that such lands are necessary for the 
     conservation of endangered species or other fish and 
     wildlife; and
       (ii) has consulted with the county or other unit of local 
     government in which such lands are located and with the 
     Governor of the State concerned.
       (D) Land or an interest in land may not be acquired with 
     moneys from the Endowment unless--
       (i) the acquisition thereof has been approved by the 
     Governor of the State in which the land is located; and
       (ii) the owner of the land or interest has offered the land 
     or interest for acquisition under this subsection and 
     consented to the acquisition.
       (5) Annual report.--The Commission shall, through its 
     chairman, annually report in detail to the Congress, by not 
     later than the first Monday in December, regarding the 
     operations of the Commission during the preceding fiscal 
     year.

[[Page 1657]]

       (6) State law.--The jurisdiction of any State, both civil 
     and criminal, over persons upon areas acquired under this 
     subsection shall not be changed or otherwise affected by 
     reason of the acquisition and administration of the areas by 
     the United States as endangered species habitat. Nothing in 
     this subsection is intended to interfere with the operation 
     of the game laws of the States.
       (7) Administration of areas acquired.--Areas of lands, 
     waters, or interest therein acquired or reserved pursuant to 
     this subsection shall, unless otherwise provided by law, be 
     administered by the Secretary of the Interior under rules and 
     regulations prescribed by the Secretary to conserve and 
     protect endangered species in accordance with the Endangered 
     Species Act of 1973, or to restore or develop adequate 
     wildlife habitat.
       (8) Definitions.--In this subsection:
       (A) The term ``Commission'' means the Fish and Wildlife 
     Conservation Commission established by this subsection.
       (B) The term ``Endowment'' means the National Endowment for 
     Fish and Wildlife established by this subsection.
       (9) Conforming amendment.--Section 7 of the North American 
     Wetlands Conservation Act of 1989 (16 U.S.C. 4406) is amended 
     by adding at the end the following:
       ``(e) Fish and Wildlife Commission Funding.--In addition to 
     the amounts made available under subsections (a), (b), and 
     (c) of this section, the Council may receive funds from the 
     Fish and Wildlife Commission to carry out the purposes of 
     this Act. Use of such funds shall not be subject to the cost 
     allocation requirements of section 8 of this Act.''.

     SEC. 9003. ALASKA POWER ADMINISTRATION SALE.

       (a) Definitions.--For purposes of this section:
       (1) The term ``Eklutna assets'' means the Eklutna 
     Hydroelectric Project and related assets as described in 
     section 4 and Exhibit A of the Eklutna Purchase Agreement.
       (2) The term ``Eklutna Purchase Agreement'' means the 
     August 2, 1989, Eklutna Purchase Agreement between the Alaska 
     Power Administration of the Department of Energy and the 
     Eklutna Purchasers, together with any amendments thereto 
     which were adopted before the enactment of this section.
       (3) The term ``Eklutna Purchasers'' means the Municipality 
     of Anchorage doing business as Municipal Light and Power, the 
     Chugach Electric Association, Inc. and the Matanuska Electric 
     Association, Inc.
       (4) The term ``Secretary'' means the Secretary of Energy 
     except where otherwise specified.
       (5) The term ``Snettishan assets'' means the Snettisham 
     Hydroelectric Project and related assets as described in 
     section 4 and Exhibit A of the Snettisham Purchase Agreement.
       (6) The term ``Snettisham Purchase Agreement'' means the 
     February 10, 1989, Snettisham Purchase Agreement between the 
     Alaska Power Administration of the Department of Energy and 
     the Alaska Power Authority and its successors in interest, 
     together with any amendments thereto which were adopted 
     before the enactment of this section.
       (b) Sale of Snettisham and Eklunta Assets.--
       (1) Snettisham.--The Secretary is authorized and directed 
     to sell and transfer the Snettisham assets to the State of 
     Alaska in accordance with the terms of this section and the 
     Snettisham Purchase Agreement.
       (2) Eklutna.--The Secretary is authorized and directed to 
     sell and transfer the Eklutna assets to the Eklutna 
     Purchasers in accordance with the terms of this section and 
     the Eklutna Purchase Agreement.
       (3) Cooperation of other agencies.--Other departments, 
     agencies, and instrumentalities of the United States shall 
     cooperate with the Secretary in implementing the sales and 
     transfers under this section.
       (4) Authorization of appropriations; contributed funds.--
     (A) There are authorized to be appropriated such sums as may 
     be necessary to prepare, survey, or acquire Snettisham and 
     Eklutna assets for sale and transfer under this section. Such 
     preparations and acquisitions shall provide sufficient title 
     in the assets to ensure beneficial use, enjoyment, and 
     occupancy thereof to the purchasers.
       (B) Notwithstanding any other provision of law, the Alaska 
     Power Administration is authorized to receive, administer, 
     and expend such contributed funds as may be provided by the 
     Eklutna Purchasers or customers or the Snettisham Purchasers 
     or customers for the purposes of upgrading, improving, 
     maintaining, or administering Eklutna or Snettisham. Upon the 
     termination of the Alaska Power Administration required under 
     subsection (d), the Secretary of Energy shall administer and 
     expend any remaining balances of such contributed funds for 
     the purposes intended by the contributors.
       (C) The Secretary is directed to use up to $5,000,000 from 
     unobligated balances available to the Department of Energy to 
     fund any sale preparation costs for the sales under this 
     section, and shall provide an accounting of all sale 
     preparation costs to the Committee on Resources of the House 
     of Representatives and to the Committee on Energy and Natural 
     Resources of the Senate within 60 days after completion of 
     the sale.
       (c) General Provisions.--
       (1) Rights-of-way and other lands for the eklutna 
     project.--With respect to Eklutna lands described in Exhibit 
     A of the Eklutna Purchase Agreement:
       (A) The Secretary of the Interior shall issue rights-of-way 
     to the Alaska Power Administration for subsequent 
     reassignment to the Eklutna Purchasers at no cost to the 
     Eklutna Purchasers.
       (B) Such rights-of-way shall remain effective for a period 
     equal to the life of the Eklutna hydroelectric project as 
     extended by improvements, repairs, renewals, or replacements.
       (C) Such rights-of-way shall be sufficient for the 
     operation, maintenance, repair, and replacement of, and 
     access to, the facilities of the Eklutna hydroelectric 
     project located on military lands and lands managed by the 
     Bureau of Land Management, including land selected by, but 
     not yet conveyed to, the State of Alaska.
       (D) If the Eklutna Purchasers subsequently sell or transfer 
     the Eklutna hydroelectric project to private ownership, the 
     Bureau of Land Management may assess reasonable and customary 
     fees for continued use of the rights-of-way on lands managed 
     by the Bureau of Land Management and military lands in 
     accordance with applicable law.
       (E) The Secretary shall transfer fee title to lands at 
     Anchorage Substation to the Eklutna Purchasers at no 
     additional cost if the Secretary of the Interior determines 
     that pending claims to and selections of those lands are 
     invalid or relinquished.
       (F) With respect only to the Eklutna lands identified in 
     Exhibit A of the Eklutna Purchase Agreement, the State of 
     Alaska may select, and the Secretary of the Interior shall 
     convey, to the State, improved lands under the selection 
     entitlements in section 6 of the Alaska Statehood Act (Public 
     Law 85-508; 72 Stat. 339) and the North Anchorage Land 
     Agreement of January 31, 1983. The conveyance of such lands 
     is subject to the rights-of-way provided to the Eklutna 
     Purchasers under subparagraph (A).
       (2) Lands for the snettisham project.--With respect to the 
     Snettisham lands identified in Exhibit A of the Snettisham 
     Purchase Agreement, the State of Alaska may select, and the 
     Secretary of the Interior shall convey to the State, improved 
     lands under the selection entitlement in section 6 of the 
     Alaska Statehood Act (Public Law 85-508; 72 Stat. 339).
       (3) Effect on state selections.--Notwithstanding the 
     expiration of the right of the State of Alaska to make 
     selections under section 6 of the Alaska Statehood Act 
     (Public Law 85-508; 72 Stat. 339), the State of Alaska may 
     select lands authorized for selection under this section or 
     any Purchase Agreement incorporated into or ratified by this 
     section. The State shall complete such selections within one 
     year after the date of the enactment of this section. The 
     Secretary of the Interior shall convey lands selected by the 
     State under this section notwithstanding the limitation 
     contained in section 6(b) of the Alaska Statehood Act (Public 
     Law 85-508; 72 Stat. 339) regarding the occupancy, 
     appropriation, or reservation of selected lands. Nothing in 
     this subsection shall be construed to authorize the Secretary 
     of the Interior to convey to the State of Alaska a total 
     acreage of selected lands in excess of the total acreage 
     which could be transferred to the State of Alaska pursuant to 
     the Alaska Statehood Act (Public Law 85-508; 72 Stat. 339), 
     and other applicable law.
       (4) Repeal of act of august 9, 1955.--The Act of August 9, 
     1955 (69 Stat. 618), concerning water resources 
     investigations in Alaska, is repealed.
       (5) Treatment of asset sale.--The sales of assets under 
     this section shall not be considered a disposal of Federal 
     surplus property under the Federal Property and 
     Administrative Services Act of 1949 (40 U.S.C. 484) or the 
     Surplus Property Act of 1944 (50 U.S.C. App. 1622).
       (6) Application of certain laws.--(A) The Act of July 31, 
     1950 (64 Stat. 382), shall cease to apply on the date, as 
     determined by the Secretary, when all Eklutna assets have 
     been conveyed to the Eklutna Purchasers.
       (B) Section 204 of the Flood Control Act of 1962 (Public 
     Law 87-874; 76 Stat. 1193) shall cease to apply effective on 
     the date, as determined by the Secretary, when all Snettisham 
     assets have been conveyed to the State of Alaska.
       (d) Termination of Alaska Power Administration.--
       (1) Termination of alaska power administation.--Not later 
     than one year after both of the sales authorized in this 
     section have occurred, as measured by the Transaction Dates 
     stipulated in the Purchase Agreements, the Secretary shall--
       (A) complete the business of, and close out, the Alaska 
     Power Administration;
       (B) prepare and submit to Congress a report documenting the 
     sales; and
       (C) return unobligated balances of funds appropriated for 
     the Alaska Power Administration to the Treasury of the United 
     States.
       (2) DOE organization act.--Section 302(a) of the Department 
     of Energy Organization Act (42 U.S.C. 7152(a)) is amended as 
     follows:
       (A) In paragraph (1)--
       (i) by striking out subparagraph (C); and
       (ii) by redesignating subparagraphs (D), (E), and (F) as 
     subparagraphs (C), (D), and (E) respectively.
       (B) In paragraph (2), by striking out ``the Bonneville 
     Power Administration, and the Alaska Power Administration'' 
     and inserting in lieu thereof ``and the Bonneville Power 
     Administration''.
     The amendments made by this paragraph shall take effect on 
     the date on which the Secretary submits the report referred 
     to in subparagraph (B) of paragraph (1).

[[Page 1658]]

       (e) Proceeds.--The proceeds from the sale of Snettisham and 
     Eklutna assets under this section shall be credited to 
     miscellaneous receipts in the Treasury.
       (f) Section 147(d) of Internal Revenue Code.--For purposes 
     of section 147(d) of the Internal Revenue Code of 1986, the 
     ``first use'' of Snettisham shall be considered to occur 
     pursuant to acquistion of the property by or on behalf of the 
     State of Alaska.

                      PART 2--HELIUM PRIVATIZATION

     SEC. 9011. SHORT TITLE.

       This part may be cited as the ``Helium Privatization Act of 
     1995''.

     SEC. 9012. AMENDMENT OF HELIUM ACT.

       Except as otherwise expressly provided, whenever in this 
     part an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision, the 
     reference shall be considered to be made to a section or 
     other provision of the Helium Act (50 U.S.C. 167 to 167n).

     SEC. 9013. AUTHORITY OF SECRETARY.

       Sections 3, 4, and 5 are amended to read as follows:

     ``SEC. 3. AUTHORITY OF SECRETARY.

       ``(a) Extraction and Disposal of Helium on Federal Lands.--
     (1) The Secretary may enter into agreements with private 
     parties for the recovery and disposal of helium on Federal 
     lands upon such terms and conditions as he deems fair, 
     reasonable and necessary. The Secretary may grant leasehold 
     rights to any such helium. The Secretary may not enter into 
     any agreement by which the Secretary sells such helium other 
     than to a private party with whom the Secretary has an 
     agreement for recovery and disposal of helium. Such 
     agreements may be subject to such rules and regulations as 
     may be prescribed by the Secretary.
       ``(2) Any agreement under this subsection shall be subject 
     to the existing rights of any affected Federal oil and gas 
     lessee. Each such agreement (and any extension or renewal 
     thereof) shall contain such terms and conditions as deemed 
     appropriate by the Secretary.
       ``(3) This subsection shall not in any manner affect or 
     diminish the rights and obligations of the Secretary and 
     private parties under agreements to dispose of helium 
     produced from Federal lands in existence at the enactment of 
     the Helium Privatization Act of 1995 except to the extent 
     that such agreements are renewed or extended after such date.
       ``(b) Storage, Transportation, and Sale.--The Secretary is 
     authorized to store, transport, and sell helium only in 
     accordance with this Act.
       ``(c) Monitoring and Reporting.--The Secretary is 
     authorized to monitor helium production and helium reserves 
     in the United States and to periodically prepare reports 
     regarding the amounts of helium produced and the quantity of 
     crude helium in storage in the United States.

     ``SEC. 4. STORAGE, TRANSPORTATION, AND WITHDRAWAL OF CRUDE 
                   HELIUM.

       ``(a) Storage, Transportation, and Withdrawal.--The 
     Secretary is authorized to store and transport crude helium 
     and to maintain and operate existing crude helium storage at 
     the Bureau of Mines Cliffside Field, together with related 
     helium transportation and withdrawal facilities.
       ``(b) Cessation of Production, Refining, and Marketing.--
     Effective 18 months after the date of enactment of the Helium 
     Privatization Act of 1995, the Secretary shall cease 
     producing, refining and marketing refined helium and shall 
     cease carrying out all other activities relating to helium 
     which the Secretary was authorized to carry out under this 
     Act before the date of enactment of the Helium Privatization 
     Act of 1995, except those activities described in subsection 
     (a). The amount of helium reserves owned by the United States 
     and stored in the Bureau of Mines Cliffside Field at such 
     date of cessation, less 600,000,000 cubic feet, shall be the 
     helium reserves owned by the United States required to be 
     sold pursuant to section 8(b) hereof.
       ``(c) Disposal of Facilities.--(1) Within two years after 
     the date on which the Secretary ceases producing, refining 
     and marketing refined helium and ceases all other activities 
     relating to helium in accordance with subsection (b), the 
     Secretary shall dispose of all facilities, equipment, and 
     other real and personal property, together with all interests 
     therein, held by the United States for the purpose of 
     producing, refining and marketing refined helium. The 
     disposal of such property shall be in accordance with the 
     provisions of law governing the disposal of excess or surplus 
     properties of the United States.
       ``(2) All proceeds accruing to the United States by reason 
     of the sale or other disposal of such property shall be 
     treated as moneys received under this chapter for purposes of 
     section 6(f). All costs associated with such sale and 
     disposal (including costs associated with termination of 
     personnel) and with the cessation of activities under 
     subsection (b) shall be paid from amounts available in the 
     helium production fund established under section 6(f).
       ``(3) Paragraph (1) shall not apply to any facilities, 
     equipment, or other real or personal property, or any 
     interest therein, necessary for the storage and 
     transportation of crude helium or any equipment needed to 
     maintain the purity, quality control, and quality assurance 
     of helium in the reserve.
       ``(d) Existing Contracts.--All contracts which were entered 
     into by any person with the Secretary for the purchase by 
     such person from the Secretary of refined helium and which 
     are in effect on the date of the enactment of the Helium 
     Privatization Act of 1995 shall remain in force and effect 
     until the date on which the facilities referred to in 
     subsection (c) are disposed of. Any costs associated with the 
     termination of such contracts shall be paid from the helium 
     production fund established under section 6(f).

     ``SEC. 5. FEES FOR STORAGE, TRANSPORTATION AND WITHDRAWAL.

       ``Whenever the Secretary provides helium storage, 
     withdrawal, or transportation services to any person, the 
     Secretary is authorized and directed to impose fees on such 
     person to reimburse the Secretary for the full costs of 
     providing such storage, transportation, and withdrawal. All 
     such fees received by the Secretary shall be treated as 
     moneys received under this Act for purposes of section 
     6(f).''.

     SEC. 9014. SALE OF CRUDE HELIUM.

       Section 6 is amended as follows:
       (1) Subsection (a) is amended by striking out ``from the 
     Secretary'' and inserting ``from persons who have entered 
     into enforceable contracts to purchase an equivalent amount 
     of crude helium from the Secretary''.
       (2) Subsection (b) is amended by inserting ``crude'' before 
     ``helium'' and by adding the following at the end thereof: 
     ``Except as may be required by reason of subsection (a), the 
     Secretary shall not make sales of crude helium under this 
     section in such amounts as will disrupt the market price of 
     crude helium.''.
       (3) Subsection (c) is amended by inserting ``crude'' before 
     ``helium'' the first place it appears and by striking 
     ``together with interest as provided in subsection (d) of 
     this section'' and all that follows down through the period 
     at the end of such subsection and inserting the following:
     ``all funds required to be repaid to the United States as of 
     October 1, 1995, under this section (hereinafter referred to 
     as `repayable amounts'). The price at which crude helium is 
     sold by the Secretary shall not be less than the amount 
     determined by the Secretary as follows:
       ``(1) Divide the outstanding amount of such repayable 
     amounts by the volume (in mcf) of crude helium owned by the 
     United States and stored in the Bureau of Mines Cliffside 
     Field at the time of the sale concerned.
       ``(2) Adjust the amount determined under paragraph (1) by 
     the Consumer Price Index for years beginning after December 
     31, 1995.''.
       (4) Subsection (d) is amended to read as follows:
       ``(d) Extraction of Helium From Deposits on Federal 
     Lands.--All moneys received by the Secretary from the sale or 
     disposition of helium on Federal lands shall be paid to the 
     Treasury and credited against the amounts required to be 
     repaid to the Treasury under subsection (c) of this 
     section.''.
       (5) Subsection (e) is repealed.
       (6) Subsection (f) is amended by inserting ``(1)'' after 
     ``(f)'' and by adding the following at the end thereof:
       ``(2) Within 7 days after the commencement of each fiscal 
     year after the disposal of the facilities referred to in 
     section 4(c), all amounts in such fund in excess of 
     $2,000,000 (or such lesser sum as the Secretary deems 
     necessary to carry out this Act during such fiscal year) 
     shall be paid to the Treasury and credited as provided in 
     paragraph (1). Upon repayment of all amounts referred to in 
     subsection (c), the fund established under this section shall 
     be terminated and all moneys received under this Act shall be 
     deposited in the Treasury as General Revenues.''.

     SEC. 9015. ELIMINATION OF STOCKPILE.

       Section 8 is amended to read as follows:

     ``SEC. 8. ELIMINATION OF STOCKPILE.

       ``(a) Review of Reserves.--The Secretary shall review 
     annually the known helium reserves in the United States and 
     make a determination as to the expected life of the domestic 
     helium reserves (other than Federally owned helium stored at 
     the Cliffside Reservoir) at that time.
       ``(b) Stockpile Sales.--Not later than January 1, 2005, the 
     Secretary shall commence offering for sale crude helium from 
     helium reserves owned by the United States in such minimum 
     annual amounts as would be necessary to dispose of all such 
     helium reserves in excess of 600,000,000 cubic feet (mcf) on 
     a straight-line basis between such date and January 1, 2015: 
     Provided, That the minimum price for all such sales, as 
     determined by the Secretary in consultation with the helium 
     industry, shall be such as will ensure repayment of the 
     amounts required to be repaid to the Treasury under section 
     6(c), and provided further that the minimum annual sales 
     requirement may be deferred only if, and to the extent that, 
     the Secretary is unable to arrange sales at the minimum 
     price. The sales shall be at such times during each year and 
     in such lots as the Secretary determines, in consultation 
     with the helium industry, are necessary to carry out this 
     subsection with minimum market disruption.
       ``(c) Discovery of Additional Reserves.--The discovery of 
     additional helium reserves shall not affect the duty of the 
     Secretary to make sales of helium as provided in subsection 
     (b), as the case may be.''.

     SEC. 9016. REPEAL OF AUTHORITY TO BORROW.

       Sections 12 and 15 are repealed.

     SEC. 9017. REPORTS.

       Section 16 is amended by redesignating existing section 16 
     as section 16(a) and inserting the following at the end 
     thereof:
       ``(b)(1) The Inspector General of the Department of the 
     Interior shall cause to be prepared, not later than March 31 
     following

[[Page 1659]]

      each fiscal year commencing with the date of enactment of 
     the Helium Privatization Act of 1995, annual financial 
     statements for the Helium Operations of the Bureau of Mines. 
     The Director of the Bureau of Mines shall cooperate with the 
     Inspector General in fulfilling this requirement, and shall 
     provide him with such personnel and accounting assistance as 
     may be necessary for that purpose. The financial statements 
     shall be audited by the General Accounting Office, and a 
     report on such audit shall be delivered by the General 
     Accounting Office to the Secretary of the Interior and 
     Congress, not later than June 30 following the end of the 
     fiscal year for which they are prepared. The audit shall be 
     prepared in accordance with generally accepted government 
     auditing standards.
       ``(2) The financial statements shall be comprised of the 
     following:
       ``(A) A balance sheet reflecting the overall financial 
     position of the Helium Operations, including assets and 
     liabilities thereof;
       ``(B) the Statement of Operations, reflecting the fiscal 
     period results of the Helium Operations;
       ``(C) a statement cash flows or changes in financial 
     position of the Helium Operations; and
       ``(D) a reconciliation of budget reports of the Helium 
     Operations.
       ``(3) The Statement of Operations shall include but not be 
     limited to the revenues from, and costs of, sales of crude 
     helium, the storage and transportation of crude helium, the 
     production, refining and marketing of refined helium, and the 
     maintenance and operation of helium storage facilities at the 
     Bureau of Mines Cliffside Field. The term `revenues' for this 
     purpose shall exclude (A) royalties paid to the United States 
     for production of helium or other extraction of resources, 
     except to the extent that the Helium Operations incur direct 
     costs in connection therewith, and (B) proceeds from sales of 
     assets other than inventory. The term `expenses' shall 
     include, but not be limited to (i) all labor costs of the 
     Bureau of Mines Helium Operations, and of the Department of 
     the Interior in connection therewith, and (ii) for financial 
     reporting purposes but not in connection with the 
     determination of sales prices in section 6(c), all current-
     period interest on outstanding repayable amounts (as 
     described in section 6(c)) calculated at the same rates as 
     such interest was calculated prior to the enactment of the 
     Helium Privatization Act of 1995.
       ``(4) The balance sheet shall include, but not be limited 
     to, on the asset side, the present discounted market value of 
     crude helium reserves; and on the liability side, the accrued 
     liability for principal and interest on debt to the United 
     States. For financial reporting purposes but not in 
     connection with the determination of sales prices in section 
     6(c), the balance sheet shall also include accrued but unpaid 
     interest on outstanding repayable amounts (as described in 
     section 6(c)) through the date of the report, calculated at 
     the same rates as such interest was calculated prior to the 
     enactment of the Helium Privatization Act of 1995.''.

     SEC. 9018. LAND CONVEYANCE IN POTTER COUNTY, TEXAS.

       (a) In General.--The Secretary of the Interior shall 
     transfer all right, title, and interest of the United States 
     in and to the parcel of land described in subsection (b) to 
     the Texas Plains Girl Scout Council for consideration of $1, 
     reserving to the United States such easements as may be 
     necessary for pipeline rights-of-way.
       (b) Land Description.--The parcel of land referred to in 
     subsection (a) is all those certain lots, tracts or parcels 
     of land lying and being situated in the County of Potter and 
     State of Texas, and being the East Three Hundred Thirty-One 
     (E331) acres out of Section Seventy-eight (78) in Block Nine 
     (9), B.S. & F. Survey, (sometimes known as the G. D. Landis 
     pasture) Potter County, Texas, located by certificate No. 1/
     39 and evidenced by letters patents Nos. 411 and 412 issued 
     by the State of Texas under date of November 23, 1937, and of 
     record in Vol. 66A of the Patent Records of the State of 
     Texas. The metes and bounds description of such lands is as 
     follows:
       (1) First tract.--One Hundred Seventy-one (171) acres of 
     land known as the North part of the East part of said survey 
     Seventy-eight (78) aforesaid, described by metes and bounds 
     as follows:
     Beginning at a stone 20 x 12 x 3 inches marked X, set by W. 
     D. Twichell in 1905, for the Northeast corner of this survey 
     and the Northwest corner of Section 59;
     Thence, South 0 degrees 12 minutes East with the West line of 
     said Section 59, 999.4 varas to the Northeast corner of the 
     South 160 acres of East half of Section 78;
     Thence, North 89 degrees 47 minutes West with the North line 
     of the South 150 acres of the East half, 956.8 varas to a 
     point in the East line of the West half Section 78;
     Thence North 0 degrees 10 minutes West with the East line of 
     the West half 999.4 varas to a stone 18 x 14 x 3 inches in 
     the middle of the South line of Section 79;
     Thence South 89 degrees 47 minutes East 965 varas to the 
     place of beginning.
       (2) Second tract.--One Hundred Sixty (160) acres of land 
     known as the South part of the East part of said survey No. 
     Seventy-eight (78) described by metes and bounds as follows:
     Beginning at the Southwest corner of Section 59, a stone 
     marked X and a pile of stones;
     Thence North 89 degrees 47 minutes West with the North line 
     of Section 77, 966.5 varas to the Southeast corner of the 
     West half of Section 78; Thence North 0 degrees 10 minutes 
     West with the East line of the West half of Section 78;
     Thence South 89 degrees 47 minutes East 965.8 varas to a 
     point in the East line of Section 78;
     Thence South 0 degrees 12 minutes East 934.6 varas to the 
     place of beginning.
     Containing an area of 331 acres, more or less.
                      Subtitle B--Water and Power

                PART 1--POWER MARKETING ADMINISTRATIONS

     SEC. 9201. SHORT TITLE.

       This part may be cited as the ``Power Administration Act''.

     SEC. 9202. EVALUATION OF SALES OF SOUTHEASTERN, SOUTHWESTERN, 
                   AND WESTERN AREA POWER ADMINISTRATION 
                   FACILITIES.

       (a) Repeals.--The following provisions are repealed:
       (1) Section 505 of Public Law 102-377, the Fiscal Year 1993 
     Energy and Water Development Appropriations Act.
       (2) Section 208 of Public Law 99-349, the Urgent 
     Supplemental Appropriations Act, 1986.
       (3) Section 510 of Public Law 101-514, the Fiscal Year 1991 
     Energy and Water Development appropriations Act.
       (b) Evaluation of Issues.--(1) The Secretary of Energy, the 
     Secretary of the Interior, and the Secretary of the Army 
     shall enter into arrangements with an experienced private 
     sector firm to serve as advisor to the Secretaries with 
     respect to the sale of the facilities used to generate and 
     transmit the electric power marketed by the Southeastern 
     Power Administration, the Southwestern Power Administration 
     and the Western Area Power Administration, including all 
     transmission and related structures, equipment, facilities 
     and all real, tangible and intangible property (including 
     rights-of-way) which are used in connection with, and 
     necessary for, the operation of such power generation and 
     transmission facilities.
       (2) Prior to December 31, 1996, the advisor shall provide 
     to the Secretaries and the Congress a report identifying all 
     recipients of water and power from such facilities, all 
     relevant contracts, debt obligations, equity interests, and 
     other binding agreements which apply to the facilities 
     concerned and to the sale of electric power from such 
     facilities, all assets tangible or intangible, all applicable 
     requirements relating to environmental mitigation, Indian 
     trust responsibilities, land ownership or use rights relevant 
     to the proposed transfers which could terminate based on a 
     transfer out of Federal ownership, and navigational 
     requirements which affect the operation of such facilities.
       (3) In conducting the evaluation, the Secretaries and the 
     advisor should also recognize that many of the dams and 
     reservoirs associated with the generation of electric power 
     marketed by the Power Marketing Administrations are first and 
     foremost water supply, flood control, or navigation projects. 
     In general, power generation is incidental to these primary 
     purposes. In addition, there are also secondary purposes such 
     as recreation and environmental values which are served by 
     these facilities as well as the power production. The 
     evaluation should assume that such facilities will continue 
     to be operated in a manner consistent with their current, 
     primary purposes and the evaluation directed by this section 
     shall not assume any changes in the other current operational 
     objectives of the facilities.
       (4) Such evaluation shall also include an evaluation of the 
     tax consequences, and the revenue impacts of such 
     consequences for the United States, of possible arrangements 
     for the sale of generation and transmission facilities to 
     potential transferees identified by the advisor. The report 
     shall also investigate alternative groupings of such 
     generation and transmission facilities for purposes of sale 
     in order to determine which groupings would be most desirable 
     for purposes of effectuating such sales. Proposed transfers 
     should be structured by watershed or by project unless the 
     advisor can provide satisfactory information to the 
     Secretaries that another alternative should be used. Asset 
     groupings shall specifically be designed to avoid the sale of 
     the most valuable assets while the Federal government would 
     be forced to retain the less valuable assets.

     SEC. 9203. BONNEVILLE POWER ADMINISTRATION APPROPRIATIONS 
                   REFINANCING.

       (a) Definitions.--For the purposes of this section:
       (1) The term ``Administrator'' means the Administrator of 
     the Bonneville Power Administration.
       (2) The term ``capital investment'' means a capitalized 
     cost funded by Federal appropriations that--
       (A) is for a project, facility, or separable unit or 
     feature of a project or facility;
       (B) is a cost for which the Administrator is required by 
     law to establish rates to repay to the United States Treasury 
     through the sale of electric power, transmission, or other 
     services;
       (C) excludes a Federal irrigation investment; and
       (D) excludes an investment financed by the current revenues 
     of the Administrator or by bonds issued and sold, or 
     authorized to be issued and sold, by the Administrator under 
     section 13 of the Federal Columbia River Transmission System 
     Act (16 U.S.C. 838(k)).
       (3) The term ``new capital investment'' means a capital 
     investment for a project, facility, or separable unit or 
     feature of a

[[Page 1660]]

     project or facility, placed in service after September 30, 
     1995.
       (4) The term ``old capital investment'' means a capital 
     investment whose capitalized cost--
       (A) was incurred, but not repaid, before October 1, 1995; 
     and
       (B) was for a project, facility, or separable unit or 
     feature of a project or facility, placed in service before 
     October 1, 1995.
       (5) The term ``repayment date'' means the end of the period 
     within which the Administrator's rates are to assure the 
     repayment of the principal amount of a capital investment.
       (6) The term ``Treasury rate'' means--
       (A) for an old capital investment, a rate determined by the 
     Secretary of the Treasury, taking into consideration 
     prevailing market yields, during the month preceding October 
     1, 1995, on outstanding interest-bearing obligations of the 
     United States with periods to maturity comparable to the 
     period between October 1, 1995, and the repayment date for 
     the old capital investment; and
       (B) for a new capital investment, a rate determined by the 
     Secretary of the Treasury, taking into consideration 
     prevailing market yields, during the month preceding the 
     beginning of the fiscal year in which the related project, 
     facility, or separable unit or feature is placed in service, 
     on outstanding interest-bearing obligations of the United 
     States with periods to maturity comparable to the period 
     between the beginning of the fiscal year and the repayment 
     date for the new capital investment.
       (b) New Principal Amounts.--(1) Effective October 1, 1995, 
     an old capital investment shall have a new principal amount 
     that is the sum of--
       (A) the present value of the old payment amounts for the 
     old capital investment, calculated using a discount rate 
     equal to the Treasury rate for the old capital investment; 
     and
       (B) an amount equal to $100,000,000 multiplied by a 
     fraction whose numerator is the principal amount of the old 
     payment amounts for the old capital investment and whose 
     denominator is the sum of the principal amounts of the old 
     payment amounts for all old capital investments.
       (2) With the approval of the Secretary of the Treasury 
     based solely on consistency with this Act, the Administrator 
     shall determine the new principal amounts under paragraph (1) 
     and the assignment of interest rates to the new principal 
     amounts under subsection (c).
       (3) For the purposes of this section, ``old payment 
     amounts'' means, for an old capital investment, the annual 
     interest and principal that the Administrator would have paid 
     to the United States Treasury from October 1, 1995, if this 
     section were not enacted, assuming that--
       (A) the principal were repaid--
       (i) on the repayment date the Administrator assigned before 
     October 1, 1993, to the old capital investment, or
       (ii) with respect to an old capital investment for which 
     the Administrator has not assigned a repayment date before 
     October 1, 1993, on a repayment date the Administrator shall 
     assign to the old capital investment in accordance with 
     paragraph 10(d)(1) of the version of Department of Energy 
     Order RA 6120.2 in effect on October 1, 1993; and
       (B) interest were paid--
       (i) at the interest rate the Administrator assigned before 
     October 1, 1993, to the old capital investment, or
       (ii) with respect to an old capital investment for which 
     the Administrator has not assigned an interest rate before 
     October 1, 1993, at a rate determined by the Secretary of the 
     Treasury, taking into consideration prevailing market yields, 
     during the month preceding the beginning of the fiscal year 
     in which the related project, facility, or separable unit or 
     feature is placed in service, on outstanding interest-bearing 
     obligations of the United States with periods to maturity 
     comparable to the period between the beginning of the fiscal 
     year and the repayment date for the old capital investment.
       (c) Interest Rate for New Principal Amounts.--As of October 
     1, 1995, the unpaid balance on the new principal amount 
     established for an old capital investment under subsection 
     (b) shall bear interest annually at the Treasury rate for the 
     old capital investment until the earlier of the date that the 
     new principal amount is repaid or the repayment date for the 
     new principal amount.
       (d) Repayment Dates.--As of October 1, 1995, the repayment 
     date for the new principal amount established for an old 
     capital investment under subsection (b) shall be no earlier 
     than the repayment date for the old capital investment 
     assumed in subsection (b)(3)(A).
       (e) Prepayment Limitations.--During the period October 1, 
     1995, through September 30, 2000, the total new principal 
     amounts of old capital investments, as established under 
     subsection (b), that the Administrator may pay before their 
     respective repayment dates shall not exceed $100,000,000.
       (f) Interest Rates for New Capital Investments During 
     Construction.--(1) The principal amount of a new capital 
     investment includes interest in each fiscal year of 
     construction of the related project, facility, or separable 
     unit or feature at a rate equal to the one-year rate for the 
     fiscal year on the sum of--
       (A) construction expenditures that were made from the date 
     construction commenced through the end of the fiscal year, 
     and
       (B) accrued interest during construction.
       (2) The Administrator shall not be required to pay, during 
     construction of the project, facility, or separable unit or 
     feature, the interest calculated, accrued, and capitalized 
     under paragraph (1).
       (3) For the purposes of this subsection, ``one-year rate'' 
     for a fiscal year means a rate determined by the Secretary of 
     the Treasury, taking into consideration prevailing market 
     yields, during the month preceding the beginning of the 
     fiscal year, on outstanding interest-bearing obligations of 
     the United States with periods to maturity of approximately 
     one year.
       (g) Interest Rates for New Capital Investments.--The unpaid 
     balance on the principal amount of a new capital investment 
     bears interest at the Treasury rate for the new capital 
     investment from the date the related project, facility, or 
     separable unit or feature is placed in service until the 
     earlier of the date the new capital investment is repaid or 
     the repayment date for the new capital investment.
       (h) Credits to Administrator's Payments to the United 
     States Treasury.--The Confederated Tribe of the Colville 
     Reservation Grand Coulee Dam Settlement Act (Public Law 103-
     436) is amended by striking section 6 and inserting the 
     following:

     ``SEC. 6. CREDITS TO ADMINISTRATOR'S PAYMENTS TO THE UNITED 
                   STATES TREASURY.

       ``(a) In General.--So long as the Adminisatrator makes 
     annual payments to the tribes under the settlement agreement, 
     the Administrator shall apply against amounts otherwise 
     payable by the Administrator to the United States Treasury a 
     credit that reduces the Administrator's payment in the amount 
     and for each fiscal year as follows: $15,250,000 in fiscal 
     year 1996; $15,860,000 in fiscal year 1997; $16,490,000 in 
     fiscal year 1998; $17,150,000 in fiscal year 1999; 
     $17,840,000 in fiscal year 2000; and $4,100,000 in each 
     succeeding fiscal year.
       ``(b) Definitions.--For the purposes of this section--
       ``(1) the term `settlement agreement' means that settlement 
     agreement between the United States of America and the 
     Confederated Tribes of the Colville Reservation signed by the 
     Tribes on April 16, 1994, and by the United States of America 
     on April 21, 1994, which settlement agreement resolves claims 
     of the Tribes in Docket 181-D of the Indian Claims 
     Commission, which docket has been transferred to the United 
     States Court of Federal Claims; and
       ``(2) the term `Tribes' means the Confederated Tribes of 
     the Colville Reservation, a Federally recognized Indian 
     Tribe.''.
       (i) Contract Provisions.--In each contract of the 
     Administrator that provides for the Administrator to sell 
     electric power, transmission, or related services, and that 
     is in effect after September 30, 1995, the Administrator 
     shall offer to include, or as the case may be, shall offer to 
     amend to include, provisions specifying that after September 
     30, 1995--
       (1) the Administrator shall establish rates and charges on 
     the basis that--
       (A) the principal amount of an old capital investment shall 
     be no greater than the new principal amount established under 
     subsection (b);
       (B) the interest rate applicable to the unpaid balance of 
     the new principal amount of an old capital investment shall 
     be no greater than the interest rate established under 
     subsection (c);
       (C) any payment of principal of an old capital investment 
     shall reduce the outstanding principal balance of the old 
     capital investment in the amount of the payment at the time 
     the payment is tendered; and
       (D) any payment of interest on the unpaid balance of the 
     new principal amount of an old capital investment shall be a 
     credit against the appropriate interest account in the amount 
     of the payment at the time the payment is tendered;
       (2) apart from charges necessary to repay the new principal 
     amount of an old capital investment as established under 
     subsection (b), and to pay the interest on the principal 
     amount under subsection (c), no amount may be charged for 
     return to the United States Treasury as repayment for or 
     return on an old capital investment, whether by way of rate, 
     rent, lease payment, assessment, user charge, or any other 
     fee;
       (3) amounts provided under section 1304 of title 31, United 
     States Code, shall be available to pay, and shall be the sole 
     source for payment of, a judgment against or settlement by 
     the Administrator or the United States on a claim for a 
     breach of the contract provisions required by this Act; and
       (4) the contract provisions specified in this Act shall 
     not--
       (A) preclude the Administrator from recovering, through 
     rates or other means, any tax that is generally imposed on 
     electric utilities in the United States, or
       (B) affect the Administrator's authority under applicable 
     law, including section 7(g) of the Pacific Northwest Electric 
     Power Planning and Conservation Act (16 U.S.C. 839e(g)), to--
       (i) allocate costs and benefits, including but not limited 
     to fish and wildlife costs, to rates or resources, or
       (ii) design rates.
       (j) Savings Provisions.--(1) This section does not affect 
     the obligation of the Administrator to repay the principal 
     associated with each capital investment, and to pay interest 
     on the principal, only from the ``Administrator's net 
     proceeds,'' as defined in section 13 of the Federal Columbia 
     River Transmission System Act (16 U.S.C. 838k(b)).
       (2) Except as provided in subsection (e) of this section, 
     this section does not affect the

[[Page 1661]]

     authority of the Administrator to pay all or a portion of the 
     principal amount associated with a capital investment before 
     the repayment date for the principal amount.
       (k) DOE Study.--(1) The Administrator shall undertake a 
     study to determine the effect that increases in the rates for 
     electric power sales made by the Administrator may have on 
     the customer base of the Bonneville Power Administration. 
     Such study shall identify other sources of electric power 
     that may be available to customers of the Bonneville Power 
     Administration and shall estimate the level at which higher 
     rates for power sales by the Administration may result in the 
     loss of customers by the Administration.
       (2) The Administrator shall undertake a study to determine 
     the total prior costs incurred by the Bonneville Power 
     Administration for compliance with the provisions of the 
     Endangered Species Act of 1973 and the total future costs 
     anticipated to be incurred by the Administration for 
     compliance with such provisions.
       (3) The Administrator shall submit the results of the 
     studies undertaken under this section to the Congress within 
     180 days after the date of the enactment of this Act.

                          PART 2--RECLAMATION

     SEC. 9211. PREPAYMENT OF CERTAIN REPAYMENT CONTRACTS BETWEEN 
                   THE UNITED STATES AND THE CENTRAL UTAH WATER 
                   CONSERVANCY DISTRICT.

       The second sentence of section 210 of the Central Utah 
     Project Completion Act (106 Stat. 4624) is amended to read as 
     follows: ``The Secretary of the Interior shall allow for 
     prepayment of the repayment contract between the United 
     States and the Central Utah Water Conservancy District dated 
     December 28, 1965, and supplemented on November 26, 1985, 
     providing for repayment of the municipal and industrial water 
     delivery facilities for which repayment is provided pursuant 
     to such contract, under such terms and conditions as the 
     Secretary deems appropriate to protect the interest of the 
     United States, which shall be similar to the terms and 
     conditions contained in the supplemental contract that 
     provided for the prepayment of the Jordan Aqueduct dated 
     October 28, 1993. The District shall exercise its right to 
     prepayment pursuant to this section by the end of fiscal year 
     2002.''.

     SEC. 9212. TREATMENT OF CITY OF FOLSOM AS A CENTRAL VALLEY 
                   PROJECT CONTRACTOR.

       For the purposes of being considered eligible to be a 
     transferee of Central Valley Project water to be used for 
     municipal and industrial purposes, the city of Folsom, 
     California, shall be treated as a Central Valley Project 
     contractor as of November 1, 1990.

     SEC. 9213. SLY PARK.

       (a) Short Title.--This section may be cited as the ``Sly 
     Park Unit Conveyance Act''.
       (b) Definitions.--For purposes of this section:
       (1) The term ``El Dorado Irrigation District'' or 
     ``District'' means a political subdivision of the State of 
     California duly organized, existing, and acting pursuant to 
     the laws thereof with its principal place of business in the 
     city of Placerville, El Dorado County, California.
       (2) The term ``Secretary'' means the Secretary of the 
     Interior.
       (3) The term ``Sly Park Unit'' means the Sly Park Dam and 
     Reservoir, Camp Creek Diversion Dam and Tunnel and conduits 
     and canals as authorized under the American River Act of 
     October 14, 1949 (63 Stat. 852), together with all other 
     facilities owned by the United States including those used to 
     convey and store water delivered from Sly Park, as well as 
     all recreation facilities associated thereto.
       (c) Sale of the Sly Park Unit.--
       (1) In general.--The Secretary shall, within one year after 
     the date of enactment of this Act, sell and convey to the El 
     Dorado Irrigation District the Sly Park Unit. Within such 
     one-year period, the Secretary shall also transfer and assign 
     the water rights relating to the Sly Park Unit held in trust 
     by the Secretary for diversion and storage under California 
     State permits numbered 2631, 5645A, 10473, and 10474 to the 
     El Dorado Irrigation District.
       (2) Sale price.--The sale price shall not exceed--
       (A) the construction costs ($30,926,230), as included in 
     the accounts of the Secretary, plus
       (B) interest on the construction costs allocated to 
     domestic use, at the authorized rate included in enactment of 
     the Act of October 14, 1949 (63 Stat. 852), up to an agreed 
     upon date, less
       (C) all revenues to date as collected under the terms of 
     the contract between the United States and the El Dorado 
     Irrigation District, estimated at $9,146,885.
       (3) Terms of payment.--The Secretary shall provide for a 
     payment of the purchase price under paragraph (2) on terms 
     not to exceed 20 years. The interest rate to be paid by the 
     District shall be the authorized rate included in the Act of 
     October 14, 1949 (63 Stat. 852). Section 213(c) of the 
     Reclamation Reform Act of 1982 (43 U.S.C. 390mm(c)) shall not 
     apply to the purchase of the Sly Park Unit under this 
     section.
       (4) Conveyance.--Upon signing the agreement to carry out 
     the sale required by this section, the Secretary shall convey 
     and assign to the El Dorado Irrigation District all right, 
     title, and interest of the United States in and to the Sly 
     Park Unit.
       (5) No additional environmental impact.--The Congress 
     specifically finds that (A) the sale, conveyance and 
     assignment of the Sly Park Unit and water rights under this 
     section involves the transfer of the ownership and operation 
     of an existing ongoing water project, (B) the Sly Park Unit 
     operation, facilities and water rights have been, and after 
     the sale and transfer will continue to be, committed to 
     maximum reasonable and beneficial use for existing services, 
     and (C) the sale, conveyance and assignment of the Sly Park 
     Unit and water rights does not involve any additional growth 
     or expansion of the project or other environmental impacts. 
     Consequently, the sale, conveyance and assignment of the Sly 
     Park Unit and water rights shall not be subject to 
     environmental review pursuant to the National Environmental 
     Policy Act of 1969 (42 U.S.C. 4332) or endangered species 
     review or consultation pursuant to section 7 of the 
     Endangered Species Act of 1973 (16 U.S.C. 1536).

     SEC. 9214. HETCH HETCHY DAM.

       Section 7 of the Act of December 19, 1913 (38 Stat. 242), 
     is amended--
       (1) by striking ``$30,000'' in the first sentence and 
     inserting ``$8,000,000'', and
       (2) by amending the second and third sentences to read as 
     follows: ``These funds shall be placed in a separate fund by 
     the United States and, notwithstanding any other provision of 
     law, shall not be available for obligation or expenditure 
     until appropriated by the Congress. The highest priority use 
     of the funds shall be for annual operation of Yosemite 
     National Park, with the remainder of any funds to be used to 
     fund operations of other national parks in the State of 
     California.''.
         Subtitle C--National Parks, Forests, and Public Lands

                       PART 1--CONCESSION REFORM

     SEC. 9301. SHORT TITLE.

       This part may be cited as the ``Visitor Facilities and 
     Services Enhancement Act of 1995''.

     SEC. 9302. PURPOSE.

       The purpose of this part is to ensure that quality visitor 
     facilities and services are provided by the Federal land 
     management agencies (Forest Service, United States Fish and 
     Wildlife Service, National Park Service, Bureau of Land 
     Management, Bureau of Reclamation and United States Army 
     Corps of Engineers). Each Federal land management agency 
     shall implement a program to encourage appropriate 
     development and operation of services and facilities for the 
     accommodation of visitors. The program implemented by each 
     such agency shall consist of actions which--
       (1) recognize the importance of the private sector in 
     providing a quality visitor experience on Federal lands by 
     encouraging private sector investments for facilities and 
     services on Federal lands under a fair and competitive 
     process;
       (2) establish the basis for an effective relationship 
     between the land management agencies and private businesses 
     operating on public lands and waters in efforts to serve the 
     public and to protect the resources of these areas;
       (3) measure quality and value of services provided by 
     concessioners and provide incentives for consistent 
     excellence.
       (4) ensure a fair return to the Federal Government; and
       (5) are consistent among the various agencies to the extent 
     practicable in order to increase efficiency of the Federal 
     Government and simplify requirements for concessioners.

     SEC. 9303. DEFINITIONS.

       For the purposes of this part:
       (1) The term ``adjusted gross receipts'' means gross 
     receipts less revenue derived from goods and services 
     provided on other than Federal lands or conveyed to units of 
     Government for hunting or fishing licenses or for entrance or 
     recreation fees, or from such other exclusions as the 
     Secretary concerned might apply.
       (2) The term ``agency head'' means the head of an agency or 
     his or her designated representative.
       (3) The term ``concessioner'' means a person or other 
     entity acting under a concession authorization which provides 
     public services, facilities, or activities on Federal lands 
     or waters pursuant to a concession services agreement or 
     concession license.
       (4) The term ``concession license'' means a written 
     contract between the agency head and the concessioner which 
     sets forth the terms and conditions under which the 
     concessioner is authorized to provide recreation services or 
     activities on a limited basis as well as the rights and 
     obligations of the Federal Government.
       (5) The term ``concession service agreement'' means a 
     written contract between the agency head and the concessioner 
     which sets forth the terms and conditions under which the 
     concessioner is authorized to provide visitor services, 
     facilities, or activities as well as the rights and 
     obligations of the Federal Government.
       (6) The term ``gross receipts'' means revenue from goods or 
     services provided by concession services, facilities, or 
     activities on Federal lands and waters.
       (7) The term ``performance incentive'' means a credit based 
     on past performance toward the score awarded by the Secretary 
     to a concessioner's proposal submitted in response to a 
     solicitation for the reissuance of such contract.

[[Page 1662]]

       (8) The term ``proposal'' means the complete submission for 
     a concession service agreement offered in response to the 
     solicitation for such concession service agreement.
       (9) The term ``prospectus'' means a document or documents 
     issued by the Secretary concerned and included with a 
     solicitation which sets forth the minimum requirements for 
     the award of a concession service agreement.
       (10) The term ``Secretary concerned'' means--
       (A) the Secretary of the Interior with respect to the 
     United States Fish and Wildlife Service, National Park 
     Service, Bureau of Land Management, and Bureau of 
     Reclamation;
       (B) the Secretary of Agriculture with respect to the Forest 
     Service; and
       (C) the Secretary of the Army with respect to the United 
     States Army Corps of Engineers.
       (11) The term ``solicitation'' means a request by the 
     Secretary concerned for proposals in response to a 
     prospectus.

     SEC. 9304. NATURE AND TYPES OF CONCESSION AUTHORIZATIONS.

       (a) In General.--The Secretary concerned may enter into 
     concession authorizations, as follows:
       (1) Concession services agreement.--A concession service 
     agreement shall be entered into for all concessions where the 
     Secretary concerned makes a finding that the provision of 
     concession services is in the interest of the Federal 
     Government and issues either a competitive offering for 
     concession services, facilities or activities or a 
     noncompetitive offering for such services, facilities, or 
     activities based on a finding that due to special 
     circumstances it is not in the public interest of the United 
     States to award a concession service agreement on a 
     competitive basis. Where the concessioner develops or uses 
     fixed facilities on Federal lands, the Secretary concerned 
     shall issue a lease.
       (2) Concession license.--Whenever the Secretary concerned 
     makes a finding that public enjoyment of Federal lands would 
     be enhanced through the provision of concession services and 
     that there exists no need to limit the number of 
     concessioners providing such services, he shall consider 
     entering into a concession license with a qualified 
     concessioner. Activities covered under a concession license 
     would typically be one-time, intermittent, or infrequently 
     scheduled. The Secretary concerned may not limit the number 
     of concession licenses issued for the same types of 
     activities in a particular geographic area. The Secretary 
     concerned shall monitor such concession licenses to determine 
     whether issuance of a concession service agreement would be a 
     more appropriate authorization.
       (3) Lands under multiple jurisdictions.--The Secretaries of 
     the Departments concerned shall designate an agency to be the 
     lead agency concerning concessions which conduct a single 
     operation on lands or waters under the jurisdiction of more 
     than one agency. Unless otherwise agreed to by each such 
     Secretary concerned, the lead agency shall be that agency 
     under whose jurisdiction the concessioner generates the 
     greatest amount of gross receipts. The agency so designated 
     shall issue a single authorization and collect a single fee 
     under paragraphs (1) and (2) for such operation. Such 
     authorization shall provide for use in a manner consistent 
     with the plans and policies for each agency.
       (b) Leases of Areas to States and State Third Party 
     Agreement Not Covered.--This part does not apply to leases or 
     licenses of entire areas to States or other political 
     subdivisions or to any third party agreement issued by any 
     such State or political subdivisions with respect to such 
     entire area.

     SEC. 9305. COMPETITIVE SELECTION PROCESS FOR CONCESSION 
                   SERVICE AGREEMENTS.

       (a) Award to Best Proposal.--The Secretary shall enter 
     into, and reissue, a concession service agreement with the 
     person whom the Secretary determines in accordance with this 
     section submits the best proposal through a competitive 
     process as defined in this section.
       (b) Solicitation and Prospectus.--The Secretary concerned 
     shall prepare a solicitation and prospectus which describes 
     the concession service opportunity and shall publish, in 
     appropriate locations, announcements of the availability of 
     the solicitation, prospectus, and the concession service 
     opportunity. The solicitation shall include (but need not be 
     limited to) the following:
       (1) A description of the services and facilities to be 
     provided by the concessioner.
       (2) The level of capital investment required by the 
     concessioner (if any).
       (3) Terms and conditions of the concession service 
     agreement.
       (4) Minimum facilities and services to be provided by the 
     Secretary to the concessioner and the public.
       (5) Minimum fees to the United States.
       (c) Factors and Minimum Standards in Determining Best 
     Proposal.--The prospectus shall assign a weight to each 
     factor indentified therein related to the importance of such 
     factor in the selection process. Points shall be awarded for 
     each such factor, based on the relative strength of the 
     proposal concerning that factor. In determining the best 
     proposal, the Secretary concerned shall take into 
     consideration (but shall not be limited to) the following, 
     including whether the proposal meets the minimum requirements 
     (if any) of the Secretary for each of the following:
       (1) Responsiveness to the prospectus.
       (2) Quality of visitor services taking into account the 
     nature of equipment and facilities to be provided.
       (3) Experience and performance in providing similar 
     services. This factor shall account for not less than 20 
     percent of the maximum points available under any prospectus. 
     Where the Secretary concerned determines it to be warranted 
     to provide for a high quality visitor experience, the 
     prospectus for a concession service agreement shall provide 
     greater weight to this factor based on such aspects of the 
     concession service agreement as scope or size, complexity, 
     nature of technical skills required, and site-specific 
     knowledge of the area. The similarity of the qualifying 
     experience outlined in the proposal to the nature of the 
     services required under the concession service agreement and 
     the length of such qualifying experience shall be the basis 
     for awarding points for this factor.
       (4) Record of resource protection (as appropriate for 
     services and activities with potential to impact natural or 
     cultural resources).
       (5) Financial capability.
       (6) Fees to the United States.
       (d) Selection Process.--The process for selecting the best 
     proposal shall consist of the following:
       (1) First, the Secretary concerned shall identify those 
     proposals which meet the minimum standards (if any) for the 
     factors identified under subsection (c).
       (2) Second, the Secretary concerned shall evaluate all 
     proposals identified under paragraph (1), considering all 
     factors identified under subsection (c), as well as 
     performance incentives earned under section 9306(c) and 
     renewal penalties incurred under section 9306(d).
       (3) Third, the Secretary concerned shall offer the 
     concession service agreement to the best qualified applicant 
     as determined by the evaluation under paragraph (2).
       (e) Inapplicability of NEPA to Temporary Extensions and 
     Similar Reissuance of Concessions Agreements.--The temporary 
     extension of a concession authorization, or reissuance of a 
     concession authorization to provide concession services 
     similar in nature and amount to concession services provided 
     under the previous authorization, is hereby determined to be 
     a categorical exclusion as provided for under the National 
     Environmental Policy Act of 1969 (42 U.S.C. 4331 et seq.).
       (f) Provision for Additional Related Services.--The 
     Secretary concerned may modify the concession service 
     agreement to allow concessioners to provide services closely 
     related to such agreement, if the Secretary concerned 
     determines that such changes would enhance the safety or 
     enjoyment of visitors and would not unduly restrict the award 
     of future concession service agreements.

     SEC. 9306. CONCESSIONER EVALUATIONS.

       (a) In General.--The Secretary concerned shall develop a 
     program of evaluations of the concessioners operating under a 
     concession service agreement who are providing visitor 
     services in areas under the jurisdiction of the Secretary. 
     The evaluations shall be on an annual basis over the duration 
     of the concession service agreement. In developing the 
     evaluation program, the Secretary concerned shall seek broad 
     public input from concessioners, State agencies, and other 
     interested persons. The evaluation program shall--
       (1) include the four program areas of: quality of visitor 
     services provided; resource protection (as applicable); 
     financial performance; and compliance with concession service 
     agreement provisions and pertinent laws and regulations;
       (2) define three levels of performance--
       (A) good, which shall be defined as a level of performance 
     which exceeds the requirements outlined in the prospectus, 
     but which is attainable;
       (B) satisfactory, which shall be defined as meeting the 
     requirements as contained in the prospectus; and
       (C) unsatisfactory, which shall be defined as not meeting 
     the requirements contained in the prospectus;
       (3) be based on criteria which--
       (A) are objective, measurable, and attainable; and
       (B) shall include as applicable general standards for all 
     concession operations, industry-specific standards, and 
     standards developed by the Secretary concerned in 
     consultation with the concessioner for each concession 
     service agreement;
       (4) be designed in such a manner that the annual evaluation 
     represents the overall performance of the concessioner 
     without undue weight to matters of limited importance; and
       (5) take into account factors beyond the control of the 
     concessioner, such as general market and other economic 
     fluctuations, as well as weather and other natural phenomena, 
     so that such factors may not be used as a justification for 
     denial of performance incentives.
       (b) Annual Evaluations.--
       (1) Requirements.--The Secretary concerned shall at least 
     semiannually review the performance of each concessioner and 
     shall assign an overall rating for each concessioner for each 
     year. The procedure for any performance evaluation shall be 
     provided to the concessioner prior to the beginning of any 
     evaluation period. Such procedure shall provide for adequate 
     notification of the concessioner prior to any on-site 
     evaluation and permit a representative of the concessioner to 
     observe the evaluation. The

[[Page 1663]]

     concessioner shall be entitled to a complete explanation of 
     any rating given. If the Secretary's performance evaluation 
     for any year results in an unsatisfactory rating of the 
     concessioner, the Secretary concerned shall so notify the 
     concessioner, in writing. Such notification shall identify 
     the nature of conditions which require corrective action and 
     shall provide the concessioner with a list of corrective 
     actions necessary to meet the standards.
       (2) Suspension, revocation, and termination of 
     authorization.--The Secretary concerned may suspend, revoke, 
     or terminate a concession authorization if the concessioner 
     fails to correct the conditions identified by the Secretary 
     within the limitations established by the Secretary at the 
     time notice of the unsatisfactory rating is provided to the 
     concessioner. The Secretary may immediately suspend or revoke 
     a concession authorization where necessary to protect the 
     public health or welfare.
       (c) Performance incentives.--
       (1) In evaluating the performance of a concessioner, the 
     incumbent concessioner is entitled to a performance incentive 
     of--
       (A) one percent of the maximum points available under such 
     evaluations for performance in each year in which the 
     concessioner's annual performance is rated good, as specified 
     in subsection (a)(2)(A), and
       (B) a one-time three year merit term extension upon a 
     finding that a concessioner has been rated as good in each 
     annual performance evaluation through the term of the 
     concession service agreement.
       (2) A performance incentive awarded under paragraph (1)(A) 
     may not exceed 10 percent of the maximum points available 
     under such evaluations over the life of the concession 
     service agreement.
       (d) Renewal penalty.--In evaluating the performance of a 
     concessioner, a concessioner shall be penalized one percent 
     of the maximum points available under such evaluation for 
     performance in each year in which the concessioner's annual 
     performance is found to be unsatisfactory.

     SEC. 9307. CAPITAL IMPROVEMENTS.

       (a) Private Sector Development.--It is the policy of the 
     United States to encourage the private sector to develop, 
     own, and maintain to the extent possible such public 
     recreation facilities which would enhance public use and 
     enjoyment of Federal lands as are contained in approved plans 
     developed by the Secretary concerned. Under the terms of this 
     part, concessioners may only construct or finance 
     construction under terms of section 9312 such public 
     facilities on Federal lands as are to be used by the 
     concessioner under the terms of their concession service 
     agreement or facilities which are necessary for the 
     concessioner to administer such public facilities on Federal 
     lands.
       (b) Investment Interest.--
       (1) In general.--A concessioner, who is required or 
     authorized under a concession service agreement pursuant to 
     this part to acquire or construct any structure, improvement, 
     or fixture pursuant to such agreement on Federal lands shall 
     have an investment interest therein, to the extent provided 
     by the agreement and this part. Such investment interest 
     shall not be extinguished by the expiration of such 
     agreement. Such investment interest may be assigned, 
     transferred, encumbered or relinquished.
       (2) Limitation.--Such investment interest shall not be 
     construed to include or imply any authority, privilege, or 
     right to operate or engage in any business or other activity, 
     and the use of any improvement in which the concessioner has 
     an investment interest shall be wholly subject to the 
     applicable provisions of the concession service agreement and 
     of laws and regulations relating to the area.
       (3) Federal property.--The agreement shall specify which 
     new improvements required under terms of the concession 
     service agreement, if any, shall become the property of the 
     Federal Government at the end of the agreement. No concession 
     service agreement shall provide for a concessioner to obtain 
     an investment interest in any building which is wholly owned 
     by the Federal Government. Title to the land on which such 
     structure, improvement, or fixture is placed shall remain in 
     the United States.
       (c) Sale of Assets.--If the existing concessioner is not 
     selected as the best qualified applicant at the time of 
     reissuance of a concession service agreement, the Secretary 
     concerned shall require the new concessioner to buy the 
     investment interest of the existing concessioner.
       (d) Closure of Concessioner Facilities.--In the event of a 
     decision by the Secretary concerned, that the public 
     interest, by reason of public and safety considerations or 
     for other reasons beyond the control of the concessioner, 
     requires the discontinuation or closure of facilities in 
     which the concessioner has an investment interest, the 
     Secretary shall compensate the concessioner in the amount 
     equal to the value of the investment interest.
       (e) Determination of Value of Investment Interest.--For 
     purposes of this part, the investment interest of any capital 
     improvement at the end of the concession service agreement 
     period is the actual cost of construction of such capital 
     improvement adjusted from the completion of such construction 
     by changes in the Consumer Price Index (selected in the same 
     manner as such Index is selected under section 9311(c)(2)) 
     less depreciation evidenced by the condition and prospective 
     serviceability in comparison with a new unit of like kind, 
     but not to exceed fair market value. Such value shall be 
     determined by appraisal and included in any prospectus.

     SEC. 9308. DURATION OF CONCESSION AUTHORIZATION.

       (a) Concession Service Agreement.--The standard term of a 
     concession service agreement shall be ten years. The 
     Secretary concerned may issue a concession service agreement 
     for less than ten years if he determines (in his discretion) 
     that the average annual gross receipts over the life of the 
     concession service agreement would be less than $100,000. The 
     Secretary concerned may not issue a concession service 
     agreement for less than five years. The Secretary concerned 
     shall issue a concession service agreement for longer than 
     ten years if the Secretary determines (in his discretion) 
     that such longer term is in the public interest or necessary 
     due to the extent of investment and associated financing 
     requirements and to meet the obligations assumed. The term 
     for a concession service agreement may not exceed 30 years.
       (b) Concession License.--The term for a concession license 
     may not exceed two years.
       (c) Temporary Extension.--The Secretary may agree to 
     temporary extensions of concession service agreements for up 
     to two years on a noncompetitive basis to avoid interruption 
     of services to the public.

     SEC. 9309. RATES AND CHARGES TO THE PUBLIC.

       In general, rates and charges to the public shall be set by 
     the concessioner. For concession service agreements only, a 
     concessioner's rates and charges to the public shall be 
     subject to the approval of the Secretary concerned in those 
     instances where the Secretary determines that sufficient 
     competition for such facilities and services does not exist 
     within or in close proximity to the area in which the 
     concessioner operates. In those instances, the concession 
     service agreement shall state that the reasonableness of the 
     concessioner's rates and charges to the public shall be 
     reviewed and approved by the Secretary concerned primarily by 
     comparison with those rates and charges for facilities and 
     services of comparable character under similar conditions, 
     with due consideration for length of season, seasonal 
     variations, average percentage of occupancy, accessibility, 
     availability and costs of labor and materials, type of 
     patronage, and other factors deemed significant by the 
     Secretary concerned. Such review shall be completed within 90 
     days of receipt of all necessary information, or the 
     requirement for the Secretary's approval shall be waived and 
     such rates and charges as proposed by the concessioner 
     considered to be approved for immediate use.

     SEC. 9310. TRANSFERABILITY OF CONCESSION AUTHORIZATIONS.

       (a) Concession Service Agreements.--
       (1) Approval required.--A concession service agreement is 
     transferable or assignable only upon the approval of the 
     Secretary concerned, which approval may not be unreasonably 
     withheld or delayed. The Secretary may not approve any such 
     transfer or assignment if the Secretary determines that the 
     prospective concessioner is or is likely to be unable to 
     completely satisfy all of the material requirements, terms, 
     and conditions of the agreement or that the terms of the 
     transfer or assignment would preclude providing appropriate 
     facilities or services to the public at reasonable rates.
       (2) Consideration period.--If the Secretary fails to 
     approve or disapprove a transfer or assignment under 
     paragraph (1) within 90 days after the date on which the 
     Secretary receives all necessary information requested by the 
     Secretary with respect to such transfer, the transfer or 
     assignment shall be deemed approved.
       (3) No modification of terms and conditions.--The terms and 
     conditions of the concessions service agreement shall not be 
     subject to modification by reason of any transfer or 
     assignment under this section.
       (4) Performance incentive.--Upon approval of the sale or 
     transfer, the prospective concessioner shall be entitled to 
     the benefit of performance incentives earned by the previous 
     concessioner.
       (b) Concession License.--A concession license may not be 
     transferred.

     SEC. 9311. FEES CHARGED BY THE UNITED STATES FOR CONCESSION 
                   AUTHORIZATIONS.

       (a) In General.--The Secretary concerned shall charge a fee 
     for the privilege of providing concession services pursuant 
     to this part. The fee for any concession service agreement 
     may include any of the following:
       (1) An annual cash payment for the privilege of providing 
     concession services.
       (2) The amount required for capital improvements required 
     pursuant to section 9307(a).
       (3) Fees for rental or lease of Government-owned facilities 
     or lands occupied by the concessioner.
       (4) Expenditures for maintenance of or improvements to 
     Government-owned facilities occupied by the concessioner.
       (b) Establishment of Amount.--
       (1) Minimum acceptable fee.--The Secretary concerned shall 
     establish a minimum fee for each applicable category 
     specified in paragraphs (1) through (4) of subsection (a) 
     which is acceptable to the Secretary under this section and 
     shall include the minimum fee in the prospectus under section 
     9305. This fee shall be based on historical data, where 
     available, as well as industry-specific and other market data 
     available to the Secretary concerned.
       (2) Final fee.--Except as provided by paragraph (3), the 
     final fee shall be the amount

[[Page 1664]]

     bid by the selected applicant under section 9305.
       (3) Substantially similar services in a specific geographic 
     area.--Where the Secretary concerned simultaneously offers 
     authorizations for more than one river runner, outfitter, or 
     guide concession operation to provide substantially similar 
     services in a defined geographic area, the concession fee for 
     all such concessioners shall be specified by the Secretary 
     concerned in the prospectus. The Secretary concerned shall 
     base the fee on historical data, where available, as well as 
     on industry-specific and other market data available to the 
     Secretary concerned or may establish a charge per user day.
       (c) Adjustment of Fees.--
       (1) In general.--The amount of any fee for the term of the 
     concession service agreement shall be set at the beginning of 
     the concession authorization and may only be modified on the 
     basis of inflation, if the annual payment is not determined 
     by a percentage of adjusted gross receipts (as measured by 
     changes in the Consumer Price Index), to reflect substantial 
     changes from the conditions specified in the prospectus, or 
     in the event of an unforeseen disaster.
       (2) CPI.--For the purposes of adjustments for inflation 
     under paragraph (1), the Federal agencies shall select a 
     Consumer Price Index published by the Bureau of Labor 
     Statistics and shall use such index in a consistent manner.
       (d) Concession License Fee.--The fee for a concession 
     license shall at least cover the program administrative costs 
     and may not be changed over the term of the license.

     SEC. 9312. DISPOSITION OF FEES.

       (a) Concession Improvement Account.--
       (1) In general.--The Secretary concerned shall, whenever 
     the concession service agreement requires or authorizes the 
     concessioner to make capital improvements or occupy 
     Government-owned facilities, require the concessioner to 
     establish a concession improvement account. The concessioner 
     shall deposit into this account--
       (A) all funds for capital improvements as specified in the 
     concession service agreement;
       (B) all funds for maintenance of or improvements to 
     Government-owned facilities occupied by the concessioner; and
       (C) all amounts received from the Secretary concerned 
     pursuant to subsection (b).
       (2) Terms and conditions.--The account shall be maintained 
     by the concessioner in an interest bearing account in a 
     Federally insured financial institution. The concessioner 
     shall maintain the account separately from any other funds or 
     accounts and shall not commingle the monies in the account 
     with any other moneys. The Secretary concerned may establish 
     such other terms, conditions, or requirements as the 
     Secretary determines to be necessary to ensure the financial 
     integrity of the account.
       (3) Disbursements.--The concessioner shall make 
     disbursements from the account for improvements and other 
     activities, only as specified in the concession service 
     agreement and subsection (b)(2)(C).
       (4) Records.--The concessioner shall maintain proper 
     records for all disbursements made from the account. Such 
     records shall include (but not be limited to) invoices, bank 
     statements, canceled checks, and such other information as 
     the Secretary concerned determines to be necessary.
       (5) Annual financial statement.--The concessioner shall 
     annually submit to the Secretary concerned a statement 
     reflecting total activity in the account for the preceding 
     financial year. The statement shall reflect monthly deposits, 
     expenditures by project, interest earned, and such other 
     information as the Secretary concerned requires.
       (6) Transfer of remaining balance.--Upon the termination of 
     a concession authorization, or upon the transfer of a 
     concession service agreement, any remaining balance in the 
     account shall be transferred by the concessioner to the 
     successor concessioner, to be used solely as set forth in 
     this subsection. In the event there is no successor 
     concessioner, the account balance shall be deposited in the 
     Treasury as miscellaneous receipts.
       (b) Amounts Received Relating to Privilege of Providing 
     Concession Services and Rental of Government-owned 
     Facilities.--
       (1) Deposit into treasury.--The Secretary concerned shall 
     deposit into the Treasury of the United States as 
     miscellaneous receipts amounts received for a fiscal year for 
     the privilege of providing concession services and the rental 
     of Government-owned facilities up to the amount specified in 
     the table in paragraph (3) for the National Park Service for 
     that fiscal year. For the other agencies covered under this 
     part, the Secretary concerned shall develop a schedule of 
     anticipated receipts to be deposited to the Treasury and 
     submit such schedule to the appropriate Congressional 
     committees within 18 months of the date of enactment of this 
     Act. Nothing in this part shall be construed to modify any 
     provision of law relating to sharing of Federal receipts with 
     any other level of Government.
       (2) Deposit into concession improvement accounts.--(A) 
     Amounts received by the Secretary concerned for a fiscal year 
     for the privilege of providing concession services and the 
     use of Government-owned facilities which exceed the amount 
     specified in the table in paragraph (3) for that fiscal year 
     shall be available for deposit in the succeeding fiscal year 
     into concession improvement accounts.
       (B) Of the amounts available for deposit into concession 
     improvement accounts, the Secretary shall make available to 
     each concessioner a percentage of such excess amounts which 
     bears the same ratio as the amount paid by the concessioner 
     to the Secretary concerned for a fiscal year for the 
     privilege of providing concession services and the use of 
     Government-owned facilities bears to the total amount paid to 
     the Secretary concerned by all concessioners for that fiscal 
     year for such privilege on an agency-wide basis.
       (C) Amounts made available to a concessioner under this 
     paragraph may be used only for expenditures on visitor 
     services and facilities at the area at which the funds were 
     generated.
       (3) Deposit into concession improvement accounts.--The 
     table referred to in paragraph (2), expressed by fiscal year 
     on an agency basis, is as follows:

                         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.
       (c) Audit Requirement.--Beginning with fiscal year 1998, 
     the Inspector General of the Department concerned shall 
     conduct a biennial audit of concession fees generated 
     pursuant to this part. The Inspector General shall make a 
     determination as to whether concession fees are being 
     collected and expended in accordance with this part and shall 
     submit copies of each audit to the Committee on Resources of 
     the House of Representatives and the Committee on Energy and 
     Natural Resources of the Senate.

     SEC. 9313. DISPUTE RESOLUTION.

       (a) Board of Contract Appeals.--The Board of Contract 
     Appeals within each Department shall adjudicate disputes 
     between the Federal Government and concessioners arising 
     under this part, including disputes regarding the revocation, 
     suspension, or termination of a concession authorization, 
     transfers of concession service agreements, and performance 
     evaluations of concessions. Such disputes shall be subject to 
     the Contract Disputes Act of 1978 (41 U.S.C. 601 et seq.). 
     The expiration of a concession authorization shall not be 
     subject to appeal to the Board.
       (b) Administrative Review.--Appeals of decisions may be 
     taken to the Board of Contract Appeals after one level of 
     review of decisions made within an agency.
       (c) Expedited Procedure.--Appeals of decisions to suspend, 
     revoke, or terminate a concession authorization shall be 
     considered under an expedited procedure, as provided by the 
     Secretary concerned by regulation.
       (d) Judicial Review.--
       (1) In general.--A person may seek judicial review of 
     decisions made by the Board. Such review shall be conducted 
     by the court with jurisdiction on a de novo basis.
       (2) Concession service agreements.--Judicial review of 
     decisions rendered by the Board regarding concession service 
     agreements shall be to the United States Court of Federal 
     Claims in accordance with section 1491 of title 28, United 
     States Code (commonly referred to as the ``Tucker Act'').
       (3) Concession licenses.--Judicial review of decisions 
     rendered by the Board regarding concession licenses shall be 
     to the appropriate Federal District Court.
       (d) Inapplicability of Certain Provisions.--Disputes 
     arising under this part shall not be subject to the 
     jurisdiction of the General Accounting Office to review bid 
     protests under the Competition in Contracting Act of 1984.

     SEC. 9314. RECORDKEEPING.

       (a) Maintenance and Access.--Each concessioner shall keep 
     such records as the Secretary concerned may prescribe to 
     enable the Secretary to determine that all terms of the 
     concession authorization have been and are being faithfully 
     performed, and the Secretary and his duly authorized 
     representatives shall, for the purpose of audit and 
     examination, have access at reasonable times and locations to 
     such records and to other books, documents, and papers of the 
     concessioner pertinent to the concession authorization and 
     all the terms and conditions thereof.
       (b) Access by Comptroller General.--The Comptroller General 
     of the United States or any of his duly authorized 
     representatives shall, until the expiration of five calendar 
     years after the close of the business year of each 
     concessioner have access to and the right to examine any 
     pertinent books, documents, papers, and records of the 
     concessioner related to the concession authorization 
     involved.

     SEC. 9315. APPLICATION OF GENERAL GOVERNMENTAL ACQUISITION 
                   REQUIREMENTS.

       The following laws and regulations shall not apply to 
     concession service agreements and concession licenses under 
     this part:
       (1) Title III of the Federal Property and Administrative 
     Services Act of 1949 (41 U.S.C. 251-266).
       (2) The Office of Federal Procurement Policy Act (41 U.S.C. 
     401 et seq.).
       (3) The Federal Acquisition Streamlining Act of 1994 
     (Public Law 103-355).
       (4) The Brooks Automatic Data Processing Act (40 U.S.C. 
     759).
       (5) Chapters 137 and 141 of title 10, United States Code.

[[Page 1665]]

       (6) The Federal Acquisition Regulation and any laws not 
     listed in paragraphs (1) through (5) providing authority to 
     promulgate regulations in the Federal Acquisition Regulation.
       (7) The Act of June 20, 1936 (20 U.S.C. 107; commonly 
     referred to as the ``Randolph-Sheppard Act'') and the Service 
     Contract Act of 1965 (41 U.S.C. 351 et seq.).

     SEC. 9316. RULES OF CONSTRUCTION.

       Concession programs of an agency on Federal lands and 
     waters subject to this part shall be fully consistent with 
     the agency's mission and laws applicable to the agency. 
     Nothing in this part shall be construed as limiting or 
     restricting any right, title, or interest of the United 
     States in any land or resources.

     SEC. 9317. REGULATIONS.

       (a) In General.--Pursuant to enactment of this part, no new 
     concession authorization may be issued, nor may any existing 
     concession authorization remain in effect after two years 
     after the date of the enactment of this Act, unless 
     regulations fully implementing this part are in effect. 
     During such two-year period, the Secretary may only extend an 
     existing concession authorization for a period ending at the 
     end of such two-year period. Such extensions shall be made in 
     accordance with the applicable provisions of law specified in 
     section 9318, as such provisions were in effect on the day 
     before the date of the enactment of this Act. The Secretary 
     of the Interior, Secretary of Agriculture, and Secretary of 
     the Army shall develop a single set of regulations which 
     specify a uniform set of recordkeeping requirements for all 
     concessioners with respect to implementation of this part.
       (b) Qualifications of Agency Personnel Assigned Concession 
     Management Duties.--The Secretary, by regulation under 
     subsection (a) and taking into account the provisions of this 
     part, shall specify the minimum training and qualifications 
     required for agency personnel assigned predominantly to 
     concession management duties, including (but not limited to) 
     competency in business management, public health and safety, 
     and the delivery of quality customer services.

     SEC. 9318. RELATIONSHIP TO OTHER EXISTING LAWS.

       (a) Repeals.--
       (1) The Act entitled ``An Act relating to the establishment 
     of concession policies in the areas administered by the 
     National Park Service and for other purposes'' (16 U.S.C. 20-
     20g) approved October 9, 1965, is repealed.
       (2) The last paragraph under the heading ``forest service'' 
     in the Act of March 4, 1915 (38 Stat. 1101), as amended by 
     the Act of July 28, 1956 (chap. 771; 70 Stat. 708) (16 U.S.C. 
     497), is repealed.
       (3) Section 7 of the Act of April 24, 1950 (16 U.S.C. 580d) 
     is repealed.
       (b) Superseded Provisions.--The provisions of this part 
     shall supersede the provisions of the following Acts as they 
     pertain to concessions management:
       (1) The Federal Land Policy and Management Act of 1976 
     (Oct. 21, 1976).
       (2) Public Law 87-714 (16 U.S.C. 460k et seq.; commonly 
     known as the ``Refuge Recreation Act'').
       (3) The National Wildlife Refuge System Administration Act 
     of 1966 (16 U.S.C. 668dd).
       (c) Conforming Amendment.--The fourth sentence of section 3 
     of the Act of August 25, 1916 (16 U.S.C. 3; 39 Stat. 535), is 
     amended by striking all through ``no natural'' and inserting 
     in lieu thereof ``No natural''.
       (d) Modified Provisions.--The second sentence of section 4 
     of the Act entitled ``An Act authorizing the construction of 
     certain public works on rivers and harbors for flood control, 
     and for other purposes'' (16 U.S.C. 460d) is amended by 
     inserting ``, except for commercial concessions purposes'' 
     the first place it appears after ``public interest''.
       (e) Savings.--
       (1) In general.--The repeal of any provision, the 
     superseding of any provision, and the amendment of any 
     provision, of an Act referred to in subsections (a), (b), or 
     (c) shall not affect the validity of any authorizations 
     entered into under any such Act. The provisions of this part 
     shall apply to any such authorizations, except to the extent 
     such provisions are inconsistent with the express terms and 
     conditions of such authorizations.
       (2) Right of renewal.--The right of renewal explicitly 
     provided for by any concession contract under any such 
     provision shall be preserved for a single renewal of a 
     contract following the enactment of, or concession 
     authorization under, this part.
       (3) Value of capital improvements or possessory interest.--
     Nothing in this part shall be construed to change the value 
     of existing capital improvements or possessory interest as 
     identified in concession contracts entered into before the 
     enactment of this Act.
       (4) ANILCA.--Nothing in this part shall be construed to 
     amend, supersede or otherwise affect any provision of the 
     Alaska National Interest Lands Conservation Act (16 U.S.C. 
     3101 et seq.) relating to revenue-producing visitor services.
       (5) Ski area permits.--No provision of this part shall 
     apply to any ski area permittee operating on lands 
     administered by the Forest Service.
       (6) Procedures for considering existing concessioners in 
     reissuance of contracts.--In the case of any concession 
     contract which has expired prior to the date of the enactment 
     of this Act, or within five years after the date of the 
     enactment of this Act, the incumbent concessioner shall be 
     entitled to a one-time bonus of five percent of the maximum 
     points available in the reissuance of a previous concession 
     authorization. For any concession contract entered into prior 
     to the date of enactment of this Act, which is projected to 
     terminate five years or later after the enactment of this 
     Act, any concessioner shall be entitled to a performance 
     incentive as outlined in this part. The concessioner shall be 
     entitled to an evaluation for the purposes of section 9306 of 
     good for each year in which the Secretary concerned does not 
     complete an evaluation as provided for in this part.

                   PART 2--NATIONAL FOREST SKI AREAS

     SEC. 9321. PRIVATIZATION OF FOREST SERVICE SKI AREAS.

       (a) Authorization To Sell.--
       (1) In general.--Not later than five years after the date 
     of enactment of this part, the Secretary of Agriculture shall 
     offer to sell not less than 40 ski areas to the qualifying 
     ski area operator. Any such sale shall provide for 
     continuation of public access for diverse recreational uses. 
     The Secretary shall offer such areas for sale only after 
     consultation with State and local governments. Any such sale 
     shall be at fair market value and, subject to valid existing 
     rights, shall transfer all right, title, and interest of the 
     United States in and to the lands. In any such sale, the 
     Secretary shall establish the minimum acceptable bid based on 
     the appraised fair market value of such lands.
       (2) Qualifying lands.--For the purposes of subsection (a), 
     lands are qualifying concession lands if such lands are--
       (A) subject to a lease on the date of the enactment of this 
     Act for use as a ski area with improvements with a fair 
     market value greater than $2,000,000; and
       (B) located either adjacent to the boundary of the Federal 
     lands or adjacent to other significant private inholdings.
       (b) Appraisal.--
       (1) In general.--The Secretary shall provide for an 
     independent appraisal of the lands and interests therein to 
     be transferred pursuant to subsection (a). The appraiser 
     shall--
       (A) utilize nationally recognized appraisal standards, 
     including to the extent appropriate the uniform appraisal 
     standards for Federal land acquisition; and
       (B) not include the value of any improvement placed on the 
     lands by the concessioner.
       (2) Appraisal report.--The appraiser shall submit a 
     detailed report to the Secretary.
       (c) Additional Lands.--In addition to the national forest 
     ski area, the Secretary may transfer by sale or exchange 
     additional National Forest System lands for the purpose of 
     adding such lands to and operating them as part of a ski area 
     sold under subsection (a). The transfer of additional lands 
     under this subsection shall be in accordance with this part 
     and the laws generally applicable to the National Forest 
     System.
       (d) Use of Proceeds by the Appropriate Secretary.--The 
     Secretary may retain 50 percent of the funds generated 
     through sales under this section to acquire other high 
     priority lands identified for acquisition in any forest land 
     and resource management plan. The remaining 50 percent of 
     such amount shall be deposited in the Treasury as 
     miscellaneous receipts.

     SEC. 9322. SKI AREA PERMIT FEES AND WITHDRAWAL OF SKI AREAS 
                   FROM OPERATION OF MINING LAWS.

       The National Forest Ski Area Permit Act of 1986 (16 U.S.C. 
     497b) is amended by adding at the end the following new 
     sections:

     ``SEC. 4. SKI AREA PERMIT FEES.

       ``(a) Ski Area Permit Fee.--
       ``(1) In general.--Except as provided by paragraph (2), 
     after the date of the enactment of this section, the fee for 
     all ski area permits on National Forest System lands shall be 
     calculated, charged, and paid only as set forth in subsection 
     (b).
       ``(2) Exception.--Paragraph (1) does not apply to any ski 
     area where the existing permit in effect on the date of 
     enactment of this section specifies a different method to 
     calculate the fee. In any such situation the terms of such 
     permit shall prevail, unless the permit holder notifies the 
     Forest Service that the permit holder agrees to adopt the 
     method of fee calculation specified in this section. The 
     Forest Service should encourage such permit holders to 
     consider adopting the new method of fee calculation in order 
     to reduce its administrative costs.
       ``(b) Method of Calculation.--
       ``(1) Determination of adjusted gross revenue subject to 
     fee.--The Secretary of Agriculture shall calculate the ski 
     area permit fee to be charged a ski area permittee by first 
     determining the permittee's adjusted gross revenue to be 
     subject to the permit fee. The permittee's adjusted gross 
     revenue is equal to the sum of the following:
       ``(A) The permittee's gross revenues from alpine lift 
     ticket and alpine season pass sales plus revenue from alpine 
     ski school operations, with such total multiplied by the 
     permittee's slope transport feet percentage on National 
     Forest System lands.
       ``(B) The permittee's gross revenues from nordic ski use 
     pass sales and nordic ski school operations, with such total 
     multiplied by the permittee's percentage of nordic trails on 
     National Forest System lands.
       ``(C) The permittee's gross revenues from ancillary 
     facilities physically located on National Forest System 
     lands, including all permittee or subpermittee lodging, food 
     service, rental shops, parking, and other ancillary 
     operations.
       ``(2) Determination of ski area permit fee.--The Secretary 
     shall determine the ski

[[Page 1666]]

     area permit fee to be charged a ski area permittee by 
     multiplying adjusted gross revenue determined under paragraph 
     (1) for the permittee by the following percentages for each 
     revenue bracket and adding the total for each revenue 
     bracket:
       ``(A) 1.5 percent of all adjusted gross revenue below 
     $3,000,000.
       ``(B) 2.5 percent for adjusted gross revenue between 
     $3,000,000 and $15,000,000.
       ``(C) 2.75 percent for adjusted gross revenue between 
     $15,000,000 and $50,000,000.
       ``(D) 4.0 percent for the amount of adjusted gross revenue 
     that exceeds $50,000,000.
       ``(3) Slope transport feet percentage.--In cases where ski 
     areas are only partially located on National Forest System 
     lands, the slope transport feet percentage on national forest 
     land referred to in paragraph (1) shall be calculated as 
     generally described in the Forest Service Manual in effect as 
     of January 1, 1992.
       ``(4) Annual adjustment of adjusted gross revenue.--In 
     order to insure that the ski area permit fee set forth in 
     this subsection remains fair and equitable to both the United 
     States and ski area permittees, the Secretary shall adjust, 
     on an annual basis, the adjusted gross revenue figures for 
     each revenue bracket in subparagraphs (A) through (D) of 
     paragraph (2) by the percent increase or decrease in the 
     national Consumer Price Index for the preceding calendar 
     year.
       ``(c) Minimum Fee.--In cases where an area of National 
     Forest System land is under a ski area permit but the 
     permittee does not have revenue or sales qualifying for fee 
     payment pursuant to subsection (a), the permittee shall pay 
     an annual minimum fee of $2 for each acre of National Forest 
     System land under permit. Rental fees imposed under this 
     subsection shall be paid at the time specified in subsection 
     (d).
       ``(d) Time for Payment.--The fee set forth in subsection 
     (b) shall be due on June 1 of each year and shall be paid or 
     prepaid by the permittee on a monthly, quarterly, annual, or 
     other schedule as determined appropriate by the Secretary in 
     consultation with the permittee. It is the intention of 
     Congress that unless mutually agreed otherwise by the 
     Secretary and the permittee, the payment or prepayment 
     schedule shall conform to the permittee's schedule in effect 
     prior to the enactment of this section. To simplify 
     bookkeeping and fee calculation burdens on the permittee and 
     the Forest Service, the Secretary shall each year provide the 
     permittee with a standardized form and worksheets (including 
     annual fee calculations brackets and rates) to be utilized 
     for fee calculation and submitted with the fee payment. 
     Information provided on such forms shall be compiled by the 
     Secretary annually and kept in the Office of the Chief, 
     United States Forest Service.
       ``(e) Definitions.--To simplify bookkeeping and 
     administrative burdens on ski area permittees and the Forest 
     Service, as used in this section, the terms `revenue' and 
     `sales' mean actual income from sales. Such terms do not 
     include sales of operating equipment, refunds, rent paid to 
     the permittee by sublessees, sponsor contributions to special 
     events or any amounts attributable to employee gratuities, 
     discounts, complimentary lift tickets, or other goods or 
     services (except for bartered goods) for which the permittee 
     does not receive money.
       ``(f) Effective Date for Fees.--The ski area permit fees as 
     provided under this section shall become effective on July 1, 
     1996, and cover receipts retroactive to July 1, 1995. If a 
     ski area permittee has paid fees for the 12-month period 
     ending on June 30, 1996, under the graduated rate fee system 
     formula in effect prior to the date of the enactment of this 
     section, such fees shall be credited toward the new ski area 
     permit fee due for that period under this section.
       ``(g) Report on Fair Market Value.--No later than five 
     years after the date of enactment of this section and every 
     10 years thereafter, the Secretary shall submit to the 
     Committee on Energy and Natural Resources of the United 
     States Senate and the Committees of Agriculture and Resources 
     of the United States House of Representatives a report 
     analyzing whether the ski area permit fee system legislated 
     by this section is returning a fair market value rental to 
     the United States together with any recommendations the 
     Secretary may have for modifications in the system.
       ``(h) Transition Period.--Where the new fee provided for in 
     this section results in an increase in permit fee greater 
     than one percent of the permittee's adjusted gross revenue 
     (as defined in subsection (b)(1)), the new fee shall be 
     phased in over a three year period in a manner providing for 
     increases of approximately equal increments.
       ``(i) Applicability of NEPA to Reissuance of Ski Area 
     Permits.--The reissuance of a ski area permit to provide 
     activities similar in nature and amount to the activities 
     provided under the previous permit is hereby determined to be 
     a categorical exclusion as provided for under the National 
     Environmental Policy Act of 1969 (42 U.S.C. 4331 et seq.).

     ``SEC. 5. WITHDRAWAL OF SKI AREAS FROM OPERATION OF MINING 
                   LAWS.

       ``Subject to valid existing rights, all lands located 
     within the boundaries of ski area permits issued prior to, 
     on, or after the date of the enactment of this section 
     pursuant to the authority of the Act of March 4, 1915 (16 
     U.S.C. 497), the Act of June 4, 1897 (16 U.S.C. 473 et seq.), 
     or section 3 of this Act are hereby and henceforth 
     automatically withdrawn from all forms of appropriation under 
     the mining laws and from disposition under all laws 
     pertaining to mineral and geothermal leasing. Such withdrawal 
     shall continue for the full term of the permit and any 
     modification, reissuance, or renewal of the permit. Such 
     withdrawal shall be canceled automatically upon expiration or 
     other termination of the permit unless, at the request of the 
     Secretary of Agriculture, the Secretary of the Interior 
     determines to continue the withdrawal. Upon cancellation of 
     the withdrawal, the land shall be automatically restored to 
     all appropriation not otherwise restricted under the public 
     land laws.''.

                   PART 3--DOMESTIC LIVESTOCK GRAZING

     SEC. 9331. APPLICABLE REGULATIONS.

       (a) BLM Lands.--Except as otherwise provided by this part, 
     grazing of domestic livestock on lands administered by the 
     Bureau of Land Management shall be in accordance with part 
     1780 and part 4100 of title 43, Code of Federal Regulations, 
     as in effect on January 1, 1995.
       (b) Forest Service Lands.--Except as otherwise provided by 
     this part, grazing of domestic livestock on lands 
     administered by the Forest Service shall, to the extent 
     possible, be in accordance with regulations, which the 
     Secretary of Agriculture shall promulgate, which are 
     substantially similar to the regulations referred to in 
     subsection (a). Regulations promulgated under this subsection 
     may differ from the regulations referred to in subsection (a) 
     to the extent necessary to conform to the laws governing the 
     National Forest System (other than this part).
       (c) Federal Lands.--For the purposes of this part, the term 
     ``Federal lands'' means lands administered by the Bureau of 
     Land Management and lands administered by the Forest Service.

     SEC. 9332. FEES AND CHARGES.

       (a) Basic Fee.--The basic fee for each animal unit month in 
     a grazing fee year to be determined by the Bureau of Land 
     Management and the Forest Service shall be equal to the 3-
     year average of the total gross value of production for beef 
     cattle, as compiled by the Economic Research Service of the 
     Department of Agriculture in accordance with subsection (b) 
     on the basis of economic data published by the Service in the 
     Economic Indicators of the Farm Sector: Cost of Production--
     Major Field Crops & Livestock and Dairy for the 3 years 
     preceding the grazing fee year, multiplied by the 10 year 
     average of the United States Treasury Securities 6-month bill 
     ``new issue'' rate and divided by 12.
       (b) Criteria.--The Economic Research Service of the 
     Department of Agriculture shall continue to compile the gross 
     production value of production of beef cattle as reported in 
     a dollar per bred cow basis in the ``U.S. Cow-Calf Production 
     Cash Costs and Returns''.
       (c) Surcharge.--
       (1) In general.--A surcharge shall be added to the grazing 
     fee billings for authorized grazing of livestock owned by 
     persons other than the permittee or lessee except where--
       (A) such use is made by livestock owned by a spouse, child, 
     or grandchild or their respective spouse of the permittee and 
     lessee; or
       (B) the permittee or lessee is unable to make full grazing 
     use, as authorized by a grazing permit or lease, due to the 
     infirmed condition or death of the permittee or lessee.
       (2) Treatment as additional fee.--The surcharge shall be 
     over and above any other fees that may be charged for using 
     public land forage.
       (3) Prior payment required.--Surcharges shall be paid prior 
     to grazing use.
       (4) Amount.--The surcharge for authorized pasturing of 
     livestock owned by persons other than the permittee or lessee 
     shall be equal to 25 percent of the difference between the 
     current year's Federal grazing fee and the prior year's 
     private grazing land lease rate per AUM for the appropriate 
     State as compiled by the National Agricultural Statistics 
     Service.
       (5) In general.--The Bureau of Land Management and the 
     Forest Service shall make a determination under subsection 
     (a) based on the following information gathered by the 
     National Agriculture Statistics Service of the Department of 
     Agriculture with respect to the largest single grazing lease 
     of each grazing operator (in terms of dollars):
       (A) Whether the operator charged--
       (i) per acre;
       (ii) per head per month;
       (iii) per pound of gain;
       (iv) per hundredweight of gain; or
       (v) by another measure, and the rate charged.
       (B)(i) The estimated average pounds gained per season for 
     the grazing lease.
       (ii) The total dollar amount estimated to be realized from 
     the grazing lease.
       (iii) Grazing lease acreage.
       (iv) The State and county where the grazing lease is 
     located.
       (C) The classes of livestock grazed.
       (D) The term of the grazing lease.
       (E)(i) Whether grazing lease payments are paid if no 
     grazing occurred.
       (ii) Whether the grazing lease contains a take or pay 
     provision.
       (F) Additional information on whether the following are 
     provided by the landlord on a 5-year basis:
       (i) Fencing maintenance.
       (ii) Animal management and oversight.
       (iii) Water maintenance.
       (iv) Salt and minerals.
       (v) Other service (specified).
       (vi) No services.
       (vii) Hunting.
       (viii) Fishing.

[[Page 1667]]

       (ix) Other (specified).
       (x) None.
       (6) Private native rangeland.--For the purpose of 
     determining rates for grazing leases of private native 
     rangeland, rates for irrigated pasture, crop aftermath, and 
     dryland winter wheat shall be excluded.

     SEC. 9333. ANIMAL UNIT MONTH.

       (a) Definition of Animal Unit Month.--The term ``animal 
     unit month'' means 1 month's use and occupancy of range by--
       (1) 1 cow, bull, steer, heifer, horse, burro, or mule, 7 
     sheep, or 7 goats, each of which is 6 months of age or older 
     on the date on which the animal begins grazing on Federal 
     land;
       (2) any such animal regardless of age if the animal is 
     weaned on the date on which the animal begins grazing on 
     Federal land; and
       (3) any such animal that will become 12 months of age 
     during the period of use authorized under a grazing permit or 
     grazing lease.
       (b) Livestock Not Counted.--There shall not be counted as 
     an animal unit month the use of Federal land for grazing by 
     an animal that is less than 6 months of age on the date on 
     which the animal begins grazing on Federal land and is the 
     natural progeny of an animal on which a grazing fee is paid 
     if the animal is removed from the Federal land before 
     becoming 12 months of age.

     SEC. 9334. TERM OF GRAZING PERMITS OR GRAZING LEASES.

       A grazing permit or grazing lease shall be issued for a 
     term of 15 years unless--
       (1) the land is pending disposal;
       (2) the land will be devoted to a public purpose that 
     precludes grazing prior to the end of 15 years; or
       (3) the Secretary determines that it would be in the best 
     interest of sound land management to specify a shorter term, 
     if the decision to specify a shorter term is supported by 
     appropriate and accepted resource analysis and evaluation.

     SEC. 9335. CONFORMANCE WITH LAND USE PLAN.

       Livestock grazing activities and management actions 
     approved by the Secretary of the Interior or the Secretary of 
     Agriculture, as the case may be--
       (1) may include any such activities as are not clearly 
     prohibited by a land use plan; and
       (2) shall not require any consideration under the National 
     Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) in 
     addition to the studies supporting the land use plan.

     SEC. 9336. EFFECTIVE DATE.

       This part shall apply to grazing on Federal lands on and 
     after the date of the enactment of this Act.

     PART 4--REGIONAL DISPOSAL FACILITY OF SOUTHWESTERN LOW LEVEL 
                   RADIOACTIVE WASTE DISPOSAL COMPACT

     SEC. 9341. CONVEYANCE OF PROPERTY.

       (a) Conveyance.--Upon the tendering of $500,000 on behalf 
     of the State of California and the release of the United 
     States by the State of California from any liability for 
     claims relating to the property described in subsection (b), 
     all right, title and interest of the United States in and to 
     said lands and improvements thereon are conveyed to the 
     Department of Health Services of the State of California: 
     Provided, That the property shall revert to the United States 
     if the property is not used as a low-level radioactive waste 
     disposal facility.
       (b) Description.--The lands conveyed are those depicted on 
     a map designated USGS 7.5 minute quadrangle, west of Flattop 
     Mtn, CA 1984, entitled ``Location Map for Ward Valley Site'', 
     located in San Bernardino Meridian, Township 9 North, Range 
     19 East.
       (c) Title.--The Secretary of the Interior shall issue 
     evidence of title pursuant to this Act notwithstanding any 
     other provision of law. The Southwestern Low-Level 
     Radioactive Waste Disposal Compact's Ward Valley regional 
     disposal facility and transfer of the land are in compliance 
     with any applicable provisions of section 7 of Endangered 
     Species Act of 1973 (16 U.S.C. 1536) and the National 
     Environmental Policy Act of 1969 (42 U.S.C. 4332).
       (d) Deposit of Funds.--Sums received pursuant to subsection 
     (a) shall be deposited as miscellaneous receipts in the 
     Treasury of the United States.
       (e) Expiration of Authority.--This authority expires 
     October 1, 2010.

     SEC. 9342. CONVEYANCE OF EASEMENTS.

       Concurrent with the conveyance property described in 
     section 9341(b) to the Department of Health Services of the 
     State of California, all necessary easements for utilities 
     and ingress and egress to said lands described in section 
     9341(b) of this Act and the right to improve those easements, 
     are also conveyed to the Department of Health Services of the 
     State of California: Provided, That the Department of Health 
     Services right-of-way easements revert to the United States 
     if the lands referenced in section 9341 are not licensed and 
     used as a low-level radioactive waste disposal facility.
                        Subtitle D--Territories

          PART 1--COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS

     SEC. 9401. TERMINATION OF ANNUAL DIRECT GRANT ASSISTANCE.

       (a) Termination.--Pursuant to section 704(d) of the 
     Covenant to Establish a Commonwealth of the Northern Mariana 
     Islands in Political Union with the United States of America 
     (48 U.S.C. 1681 note), the annual payments under section 702 
     of the Covenant shall terminate as of September 30, 1995.
       (b) Repeal.--Sections 3 and 4 of the Act of March 24, 1976 
     (Public Law 94-241; 48 U.S.C. 1681 note), as amended, are 
     repealed, effective October 1, 1995.
       (c) Removal of Authority To Obligate Certain Funds.--
     Amounts appropriated under title VII of the Covenant to 
     Establish a Commonwealth of the Northern Mariana Islands in 
     Political Union with the United States of America, and under 
     sections 3 and 4 of Public Law 94-241 (48 U.S.C. 1681), which 
     are not obligated as of the date of the enactment of this Act 
     may not be obligated after such date.
       (d) Conforming Amendments.--Section 5 of such Act (48 
     U.S.C. 1681 note) is amended--
       (1) by striking out ``agreement identified in section 3 of 
     this Act'' and inserting in lieu thereof ``Agreement of the 
     Special Representatives on Future United States Financial 
     Assistance for the Government of the Northern Mariana 
     Islands, executed July 10, 1985, between the special 
     representative of the President of the United States and the 
     special representatives of the Governor of the Northern 
     Mariana Islands''; and
       (2) by striking out ``Committee on Interior and Insular 
     Affairs'' and inserting in lieu thereof ``Committee on 
     Resources''.

            PART 2--TERRITORIAL ADMINISTRATIVE CESSATION ACT

     SEC. 9421. SHORT TITLE.

       This part may be cited as the ``Territorial Administrative 
     Cessation Act''.

     SEC. 9422. CONGRESSIONAL FINDINGS.

       The Congress finds that--
       (1) each of the four political subdivisions of the United 
     Nations Trust Territory of the Pacific Islands, known as the 
     Japanese Mandated Islands, have successfully entered into 
     distinct self-governing entities, thereby culminating in the 
     final termination of the Trusteeship and the end of the 
     trusteeship responsibilities of the United States as 
     administering authority of the Trust Territory on October 1, 
     1994;
       (2) the United States territories have developed 
     progressively increased local self-government over the past 
     five decades;
       (3) the territories predominantly deal directly with 
     Federal agencies and departments, as a State would;
       (4) the administering responsibilities of the Department of 
     the Interior with respect to the insular areas has declined 
     substantially during the past five decades; and
       (5) Federal-territorial relations can be enhanced and 
     Federal fiscal conditions improved by the elimination of 
     unnecessary Federal bureaucracy.

     SEC. 9423. ELIMINATION OF OFFICE OF TERRITORIAL AND 
                   INTERNATIONAL AFFAIRS.

       (a) In General.--The Office of Territorial and 
     International Affairs of the Department of the Interior, 
     established pursuant to the Order of the Secretary of the 
     Interior 3046, of February 14, 1980, as amended, is hereby 
     abolished.
       (b) Termination of Position of Assistant Secretary.--
     Section 5315 of title 5, United States Code, is amended by 
     striking ``Assistant Secretaries of the Interior (6)'' and 
     inserting ``Assistant Secretaries of the Interior (5)''.
       (c) Effective Date.--Subsection (a) and the amendment made 
     by subsection (b) shall take effect on the first day of the 
     first fiscal year that begins after the date of the enactment 
     of this Act.

     SEC. 9424. CERTAIN ACTIVITIES NOT FUNDED.

       Amounts may not be made available for the following program 
     activities for assistance to territories for fiscal years 
     beginning after September 30, 1995, as identified under the 
     appropriations account numbered 14-0412-0-1-808:
       (1) technical assistance, item 00.12;
       (2) maintenance assistance, item 00.14;
       (3) disaster fund, item 00.17; and
       (4) insular management controls, item 00.19.
                          Subtitle E--Minerals

                        PART 1--HARDROCK MINING

     SEC. 9501. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds and declares that--
       (1) a secure and reliable supply of locatable minerals is 
     essential to the industrial base of the United States, 
     national security, and balance of trade;
       (2) many of the deposits of locatable minerals that may be 
     commercially developed are on Federal lands as that term is 
     defined in this Act, and are difficult and expensive to 
     discover, mine, extract and process;
       (3) the national need for locatable minerals will continue 
     to expand, and without a strong mining industry the demand 
     for the minerals will exceed domestic sources of supply;
       (4) mining of locatable minerals is an extremely high-risk, 
     capital-intensive endeavor, which, to attract necessary 
     investment, requires certainty and predictability in access 
     to Federal lands in establishment of mining titles, and in 
     the rights of owners of mining claims or sites to develop 
     minerals;
       (5) the national interest is to foster and encourage 
     private enterprise in the development of a domestic minerals 
     industry to maintain and create high-paying jobs and the 
     various Federal, State, and local taxes paid by the mining 
     industry in the United States;
       (6) changes in the general mining laws of the United States 
     to provide more direct economic return to the United States 
     and greater protection of public resources are desirable, so 
     long as these changes do not act as a disincentive to 
     development of minerals, adversely affect employment in the 
     mining industry or in industries that provide goods

[[Page 1668]]

      and services required for mining activities, interfere with 
     a secure and reliable domestic supply of minerals, or 
     adversely affect the balance of trade of the United States; 
     and
       (7) mining claims, mill sites and tunnel sites located 
     under the general mining laws are property interests, and any 
     law or regulation that substantially impairs existing 
     property rights may expose the Federal Government to takings 
     claims under the fifth amendment to the United States 
     Constitution.
       (b) Purpose.--It is the purpose of this subtitle to--
       (1) affirm and maintain the policy established in section 2 
     of the Mining and Minerals Policy Act of 1970;
       (2) promote exploration for and the development of a secure 
     and reliable domestic source of locatable minerals;
       (3) provide for increased Federal revenue from the location 
     and production of locatable minerals from Federal lands 
     through patent payments and royalties; and
       (4) recognize that unpatented mining claims, mill sites and 
     tunnel sites are property rights in the fullest sense and 
     avoid, to the greatest extent possible, claims of takings of 
     existing property rights under the general mining laws that 
     could require compensation under the fifth amendment to the 
     United States Constitution.

     SEC. 9502. PATENTS UNDER THE GENERAL MINING LAW.

       (a) In General.--Any patent issued by the United States 
     under the general mining laws after the date of the enactment 
     of this Act for any interest in land covered by a mining 
     claim or site under such laws shall be issued only--
       (1) upon payment by the owner of the mining claim or site 
     of the fair market value for the interest in the land owned 
     by the United States exclusive of, and without regard to, the 
     mineral deposits in the land or the use of such land for 
     mineral activities unless the requirements of subsection (b) 
     are met, and
       (2) subject to a reservation by the United States of the 
     royalty provided in section 9503(a), unless the requirements 
     in subsection (b) are met.
       (b) Patent Transition.--(1) Subsection (a) shall not apply 
     to any mining claim or site if--
       (A) the claimant establishes that the claim or site 
     constituted a valid mining claim as of the date of the 
     enactment of this Act; and
       (B) the claimant has filed a patent application or mineral 
     survey application prior to the date of the enactment of this 
     Act, or files such an application with the Bureau of Land 
     Management before the date 2 years after the date of the 
     enactment of this Act. A patent application or mineral survey 
     application referred to in this subparagraph shall be deemed 
     timely, notwithstanding that the application may be corrected 
     or supplemented and resubmitted thereafter.
       (2) During the 2-year period in paragraph (1)(B), or while 
     there is pending a mineral survey or patent application to 
     which this subsection applies, an owner of the mining claim 
     or site may continue work on a mining claim or site directed 
     toward establishment and confirmation of entitlement to a 
     patent, and may amend the application as necessary.
       (3) Where access to any mining claim or site has been 
     denied or impeded by the action or inaction of any Federal 
     official, agency, or court during all or part of the 5-year 
     period preceding the date of enactment of this Act, including 
     any mining claim or site within the area described in section 
     106 of Public Law 103-433, and the mining claim or site may 
     require further exploration or development in order for the 
     claimant to file a patent application or a mineral survey 
     application and otherwise meet the requirements of paragraph 
     (1), the claimant may, within 1 year after the date of 
     enactment of this Act, submit a certified written statement 
     to the Secretary describing the access denial or impediment, 
     and shall then have a period of 10 years from the date of 
     enactment of this Act or the termination of such access 
     denial or impediment, whichever occurs first, to conduct such 
     mineral exploration or development activities, file a patent 
     application or mineral survey application, and otherwise meet 
     the requirements of paragraph (1).
       (c) Payment Plan.--(1) Any owner grossing less than 
     $500,000 annually shall qualify for a payment plan. Upon 
     completion of the patent process, the owner of the mining 
     claim may purchase the surface estate under the following 
     conditions:
       (A) Payment to be amortized over 5 years with 5 equal 
     annual payments, including principal and interest.
       (B) Interest shall be calculated per annum at a rate of 2 
     percent over the ``Treasury Current Value of Funds Rate'' on 
     the date of execution of the payment plan agreement.
       (2) The purchaser shall be notified by certified mail after 
     60 days of delinquent payments and have 90 days from receipt 
     of notification to correct the delinquency. Repossession 
     shall be by and under the laws of repossession, foreclosure, 
     and replevin of the State wherein the land is situated.
       (d) Repeal of Patenting Moratorium; Processing of Patent 
     Applications.--Sections ____ and ____ of Public Law ____ are 
     hereby repealed. The Secretary of the Interior shall 
     diligently process all patent applications under the general 
     mining laws pending on the date of enactment and shall make 
     determinations for all such applications regarding patent 
     issuance within 2 years.

     SEC. 9503. ROYALTY UNDER THE GENERAL MINING LAW.

       (a) In General.--The production and sale of locatable 
     minerals (including associated minerals) from any unpatented 
     mining claim (other than those from Federal lands to which 
     subsection 9502(b) applies) or any mining claim patented 
     under section 9502(a) shall be subject to a royalty of 3.5 
     percent on the net proceeds from such production mined and 
     sold from such claim.
       (b) Royalty Exclusion.--(1) The royalty payable under this 
     section shall be waived for any person or corporation with 
     annual net proceeds from mineral production subject to 
     subsection (a) of less than $50,000.
       (2) Where mining operations subject to this section are 
     conducted in 2 or more places by 1 person or corporation, the 
     operations shall be considered a single operation the 
     aggregate net proceeds from which shall be subject to the 
     $50,000 limitation set forth in this subsection.
       (3) No royalty shall be payable under this section with 
     respect to minerals processed at a facility by the same 
     person or entity which extracted the minerals if an urban 
     development action grant has been made under section 119 of 
     the Housing and Community Development Act of 1974 with 
     respect to any portion of such facility.
       (4) The obligation to pay royalties under this section 
     shall accrue only upon the sale of locatable minerals or 
     mineral products produced from a mining claim subject to such 
     royalty, and not upon the stockpiling of the same for future 
     processing.
       (c) Definitions.--For the purposes of this subtitle:
       (1) The term ``net proceeds'' means gross yield, less the 
     sum of the following deductions for costs incurred prior to 
     sale or value determination, and none other:
       (A) The actual cost of extracting the locatable mineral.
       (B) The actual cost of transporting the locatable mineral 
     from the claim to the place or places of reduction, 
     beneficiation, refining, and sale.
       (C) The actual cost of crushing, processing, reduction, 
     beneficiation, refining, and sale of the locatable mineral.
       (D) The actual cost of marketing and delivering the 
     locatable mineral and the conversion of the locatable mineral 
     into money.
       (E) The actual cost of maintenance and repairs of--
       (i) all machinery, equipment, apparatus, and facilities 
     used in the mine;
       (ii) all crushing, milling, leaching, refining, smelting, 
     and reduction works, plants, and facilities; and
       (iii) all facilities and equipment for transportation.
       (F) The actual cost for support personnel and support 
     services at the mine site, including without limitation, 
     accounting, assaying, drafting and mapping, computer 
     services, surveying, housing, camp, and office expenses, 
     safety, and security.
       (G) The actual cost of engineering, sampling, and assaying 
     pertaining to development and production.
       (H) The actual cost of permitting, reclamation, 
     environmental compliance and monitoring.
       (I) The actual cost of fire and other insurance on the 
     machinery, equipment, apparatus, works, plants, and 
     facilities mentioned in subparagraph (E).
       (J) Depreciation of the original capitalized cost of the 
     machinery, equipment, apparatus, works, plants, and 
     facilities listed in subparagraph (E). The annual 
     depreciation charge shall consist of amortization of the 
     original cost in the manner consistent with the Internal 
     Revenue Code of 1986, as amended from time to time. The 
     probable life of the property represented by the original 
     cost must be considered in computing the depreciation charge.
       (K) All money expended for premiums for industrial 
     insurance, and the owner paid cost of hospital and medical 
     attention and accident benefits and group insurance for all 
     employees engaged in the production or processing of 
     locatable minerals.
       (L) All money paid as contributions or payments under State 
     unemployment compensation law, all money paid as 
     contributions under the Federal Social Security Act, and all 
     money paid to State government in real property taxes and 
     severance or other taxes measured or levied on production, or 
     Federal excise tax payments and payments as fees or charges 
     for use of the Federal lands from which the locatable 
     minerals are produced.
       (M) The actual cost of the developmental work in or about 
     the mine or upon a group of mines when operated as a unit.
       (2) The term ``gross yield'' shall having the following 
     meaning:
       (A) In the case of sales of gold and silver ore, 
     concentrates or bullion, or the sales of other locatable 
     minerals in the form of ore or concentrates, the term ``gross 
     yield'' means the actual proceeds of sale of such ore, 
     concentrates or bullion.
       (B) In the case of sales of beneficiated products from 
     locatable minerals other than those subject to subparagraph 
     (A) (including cathode, anode or copper rod or wire, or other 
     products fabricated from the locatable minerals), the term 
     ``gross yield'' means the gross income from mining derived 
     from the first commercially marketable product determined in 
     the same manner as under section 613 of the Internal Revenue 
     Code of 1986.
       (C) If ore, concentrates, beneficiated or fabricated 
     products, or locatable minerals are used or consumed and are 
     not sold in an arms length transaction, the term ``gross 
     yield'' means the reasonable fair market value of the ore, 
     concentrates, beneficiated or fabricated products at the mine 
     or well

[[Page 1669]]

     head determined from the first applicable of the following:
       (i) Published or other competitive selling prices of 
     locatable minerals of like kind and grade.
       (ii) Any proceeds of sale.
       (iii) Value received in exchange for any thing or service.
       (iv) The value of any locatable minerals in kind or used or 
     consumed in a manufacturing process or in providing a 
     service.
     Without limiting the foregoing, the profits or losses 
     incurred in connection with forward sales, futures or 
     commodity options trading, metal loans, or any other price 
     hedging or speculative activity or arrangement shall not be 
     included in gross yield.
       (3) The term ``Secretary'' means the Secretary of the 
     Interior.
       (d) Limitations and Allocations of Net Proceeds, Gross 
     Yield, and Allowable Costs.--(1) The deductions listed in 
     subsection (c)(1) are intended to allow a reasonable 
     allowance for overhead. Such deductions shall not include any 
     expenditures for salaries, or any portion of salaries, of any 
     person not actually engaged in--
       (A) the working of the mine;
       (B) the operating of the leach pads, ponds, plants, mills, 
     smelters, or reduction works;
       (C) the operating of the facilities or equipment for 
     transportation; or
       (D) superintending the management of any of those 
     operations described in subparagraphs (A) through (C).
       (2) Ores or solutions of locatable minerals subject to the 
     royalty requirements of this section may be extracted from 
     mines comprised of mining claims and lands other than mining 
     claims and ore or solutions of locatable minerals subject to 
     the royalty requirements of this section may be commingled 
     with ores or solutions from lands other than mining claims. 
     In any such case, for purposes of determining the amount of 
     royalties payable under this section--
       (A) the operator shall first sample, weigh or measure, and 
     assay the same in accordance with accepted industry 
     standards; and
       (B) gross yield, allowable costs and net proceeds for 
     royalty purposes shall be allocated in proportion to mineral 
     products recovered from the mining claims in accordance with 
     accepted industry standards.
       (e) Liability for Royalty Payments.--The owner or co-owners 
     of a mining claim subject to a royalty under this section 
     shall be liable for such royalty to the extent of the 
     interest in such claim owned. As used in this subsection, the 
     terms ``owner'' and ``co-owner'' mean the person or persons 
     owning the right to mine locatable minerals from such claim 
     and receiving the net proceeds of such sale. No person who 
     makes any royalty payment attributable to the interest of the 
     owner or co-owners liable therefor shall become liable to the 
     United States for such royalty as a result of making such 
     payment on behalf of such owner or co-owners.
       (f) Time and Manner of Payment.--(1) Royalty payments for 
     production from any mining claim subject to the royalty 
     payable under this section shall be due to the United States 
     at the end of the month following the end of the calendar 
     quarter in which the net proceeds from the sale of such 
     production are received by the owner or co-owners. Royalty 
     payments may be made based upon good faith estimates of the 
     gross yield, net proceeds and the quantity of ore, 
     concentrates, or other beneficiated or fabricated products of 
     locatable minerals, subject to adjustment when the actual 
     annual gross yield, net proceeds and quantity are determined 
     by the owner of the mining claim or site or co-owners.
       (2) Each royalty payment or adjustment shall be accompanied 
     by a statement containing each of the following:
       (A) The name and Bureau of Land Management serial number of 
     the mining claim or claims from which ores, concentrates, 
     solutions or beneficiated products of locatable minerals 
     subject to the royalty required in this section were produced 
     and sold for the period covered by such payment or 
     adjustment.
       (B) The estimated (or actual, if determined) quantity of 
     such ore, concentrates, solutions or beneficiated or 
     fabricated products produced and sold from such mining claim 
     or claims for such period.
       (C) The estimated (or actual, if determined) gross yield 
     from the production and sale of such ore, concentrates, 
     solutions or beneficiated products for such period.
       (D) The estimated (or actual, if determined) net proceeds 
     from the production and sale of such ores, concentrates, 
     solutions or beneficiated products for such period, including 
     an itemization of the applicable deductions described in 
     subsection (c)(1).
       (E) The estimated (or actual, if determined) royalty due to 
     the United States, or adjustment due to the United States or 
     such owner or co-owners, for such period.
       (3) In lieu of receiving a refund under subsection (h), the 
     owner or co-owners may elect to apply any adjustment due to 
     such owner or co-owners as an offset against royalties due 
     from such owner or co-owners to the United States under this 
     Act, regardless of whether such royalties are due for 
     production and sale from the same mining claim or claims.
       (g) Recordkeeping and Reporting Requirements.--(1) An 
     owner, operator, or other person directly involved in the 
     conduct of mineral activities, transportation, purchase, or 
     sale of locatable minerals, concentrates, or products derived 
     therefrom, subject to the royalty under this section, through 
     the point of royalty computation, shall establish and 
     maintain any records, make any reports, and provide any 
     information that the Secretary may reasonably require for the 
     purposes of implementing this section or determining 
     compliance with regulations or orders under this section. 
     Upon the request of the Secretary when conducting an audit or 
     investigation pursuant to subsection (i), the appropriate 
     records, reports, or information required by this subsection 
     shall be made available for inspection and duplication by the 
     Secretary.
       (2) Records required by the Secretary under this section 
     shall be maintained for 3 years after the records are 
     generated unless the Secretary notifies the record holder 
     that he or she has initiated an audit or investigation 
     specifically identifying and involving such records and that 
     such records must be maintained for a longer period. When an 
     audit or investigation is under way, such records shall be 
     maintained until the earlier of the date that the Secretary 
     releases the record holder of the obligation to maintain such 
     records or the date that the limitations period applicable to 
     such audit or investigation under subsection (i) expires.
       (h) Interest Assessments.--(1) If royalty payments under 
     this section are not received by the Secretary on the date 
     that such payments are due, or if such payments are less than 
     the amount due, the Secretary shall charge interest on such 
     unpaid amount. Interest under this subsection shall be 
     computed at the rate published by the Department of the 
     Treasury as the ``Treasury Current Value of Funds Rate.'' In 
     the case of an underpayment or partial payment, interest 
     shall be computed and charged only on the amount of the 
     deficiency and not on the total amount, and only for the 
     number of days such payment is late. No other late payment or 
     underpayment charge or penalty shall be charged with respect 
     to royalties under this section.
       (2) In any case in which royalty payments are made in 
     excess of the amount due, or amounts are held by the 
     Secretary pending the outcome of any appeal in which the 
     Secretary does not prevail, the Secretary shall promptly 
     refund such overpayments or pay such amounts to the person or 
     persons entitled thereto, together with interest thereon for 
     the number of days such overpayment or amounts were held by 
     the Secretary, with the addition of interest charged against 
     the United States computed at the rate published by the 
     Department of the Treasury as the ``Treasury Current Value of 
     Funds Rate.''
       (i) Audits, Payment Demands and Limitations.--(1) The 
     Secretary may conduct, after notice, any audit reasonably 
     necessary and appropriate to verify the payments required 
     under this section.
       (2) The Secretary shall send or issue any billing or demand 
     letter for royalty due on locatable minerals produced and 
     sold from any mining claim subject to royalty required by 
     this section not later than 3 years after the date such 
     royalty was due and must specifically identify the production 
     involved, the royalty allegedly due and the basis for the 
     claim. No action, proceeding or claim for royalty due on 
     locatable minerals produced and sold, or relating to such 
     production, may be brought by the United States, including 
     but not limited to any claim for additional royalties or 
     claim of the right to offset the amount of such additional 
     royalties against amounts owed to any person by the United 
     States, unless judicial suit or administrative proceedings 
     are commenced to recover specific amounts claimed to be due 
     prior to the expiration of 3 years from the date such royalty 
     is alleged to have been due.
       (j) Transitional Rules.--Any mining claim for which a 
     patent is issued pursuant to section 9502(b) shall not be 
     subject to the obligation to pay the royalty pursuant to this 
     section. Royalty payments for any claim processed under 
     section 9502(b) shall be suspended pending final 
     determination of the right to patent. For any such claim that 
     is determined not to qualify for the issuance of a patent 
     under section 9502(b), royalties shall be payable under this 
     section on production after the date of enactment of this 
     Act, plus interest computed at the rate published by the 
     Department of the Treasury as the ``Treasury Current Value of 
     Funds Rate'' on production after such date of enactment and 
     before the date of such determination.
       (k) Disbursement of Revenues.--The receipts from royalties 
     collected under this section shall be disbursed as follows:
       (1) Two-thirds of such receipts shall be paid into the 
     Treasury of the United States and deposited as miscellaneous 
     receipts.
       (2) One-third of such receipts shall be paid by the 
     Secretary of the Treasury to the State in which the mining 
     claim from which production occurred is located.
       (l) No Implied Covenants.--The owner of a mining claim 
     subject to the provisions of this title shall have no 
     obligation, express or implied, to explore for, develop, 
     produce or market locatable minerals as a result of the 
     obligation to pay a royalty hereunder, and the timing, 
     nature, extent and manner of exploring, developing, mining 
     and marketing such locatable minerals shall be in the sole 
     discretion of the claim owner.

     SEC. 9504. MINERAL MATERIALS.

       (a) Determinations.--Section 3 of the Act of July 23, 1955 
     (30 U.S.C. 611), is amended as follows:
       (1) Insert ``(a)'' before the first sentence.
       (2) Add the following new subsection at the end thereof:
       ``(b)(1) Subject to valid existing rights, after the date 
     of enactment of this subsection, notwithstanding the 
     reference to

[[Page 1670]]

      common varieties in subsection (a) and to the exception to 
     such term relating to a deposit of materials with some 
     property giving it distinct and special value, all deposits 
     of mineral materials referred to in such subsection, 
     including the block pumice referred to in such subsection, 
     shall be subject to disposal only under the terms and 
     conditions of the Materials Act of 1947.
       ``(2) For purposes of paragraph (1), the term `valid 
     existing rights' means that a mining claim located for any 
     such mineral material had some property giving it the 
     distinct and special value referred to in subsection (a), or 
     as the case may be, met the definition of block pumice 
     referred to in such subsection, was properly located and 
     maintained under the general mining laws prior to the date of 
     the enactment of this subsection, and was supported by a 
     discovery of a valuable mineral deposit within the meaning of 
     the general mining laws as in effect immediately prior to 
     such date of enactment and that such claim continues to be 
     valid under this Act.''.
       (b) Identified Deposits.--In order to assure that the 
     Secretary has the authority to provide for the development of 
     mineral materials which, in order to justify the investment 
     necessary for the development of the appropriate mine, quarry 
     or other workings and related facilities, may require longer 
     and more secure tenure than is provided by sales contracts 
     under the Act entitled ``An Act to provide for the disposal 
     of materials on the public lands of the United States'', 
     approved July 31, 1947 (30 U.S.C. 602), and in order to 
     provide flexibility with regard to the manner of disposition 
     of mineral materials section 2 of such Act is amended by 
     adding at the end the following:
       ``(b) Identified Deposits.--(1) Lands known to contain 
     valuable deposits of mineral materials subject to this Act 
     and subsequent amendments and not covered by any contract, 
     permit, or lease under this section shall also be subject to 
     disposition by lease under this Act by the Secretary of the 
     Interior through advertisement, competitive bidding, or such 
     other methods as he may by general regulations adopt, and in 
     such reasonably compact areas as he shall fix.
       ``(2) All leases will be conditioned upon--
       ``(A) the payment by the lessee of such royalty as may be 
     fixed in the lease, not less than two percent of the quantity 
     or gross value of the output of mineral materials, and
       ``(B) the payment in advance of a rental of 25 cents per 
     acre for the first calendar year or fraction thereof; 50 
     cents per acre for the second, third, fourth, and fifth 
     years, respectively; and $1 per acre per annum thereafter 
     during the continuance of the lease, such rental for that 
     year being credited against royalties accruing for that year.
       ``(3)(A) Any lease issued under this subsection shall be 
     for a term of 20 years and so long thereafter as the lessee 
     complies with the terms and conditions of the lease and upon 
     the further condition that at the end of each 20-year period 
     succeeding the date of the lease such reasonable adjustment 
     of the terms and conditions thereof may be made therein as 
     may be prescribed by the Secretary of the Interior unless 
     otherwise provided by law at the expiration of such periods.
       ``(B) Leases shall be conditioned upon a minimum annual 
     production or the payment of a minimum royalty in lieu 
     thereof, except when production is interrupted by strikes, 
     the elements, or casualties not attributable to the lessee.
       ``(C) The Secretary of the Interior may permit suspension 
     of operations under any such leases when marketing conditions 
     are such that the leases cannot be operated except at a loss.
       ``(D) The Secretary upon application by the lessee prior to 
     the expiration of any existing lease in good standing shall 
     amend such lease to provide for the same tenure and to 
     contain the same conditions, including adjustment at the end 
     of each 20-year period succeeding the date of said lease, as 
     provided for in this subsection.
       ``(c) Other Lands.--(1) The Secretary of the Interior is 
     hereby authorized, under such rules and regulations as he may 
     prescribe, to grant to any qualified applicant a prospecting 
     permit which shall give the exclusive right to prospect for 
     mineral materials in lands belonging to the United States 
     which are not subject to subsection (b), and are not covered 
     by a contract, permit, or lease under this Act, except that a 
     prospecting permit shall not exceed a period of 2 years and 
     the area to be included in such a permit shall not exceed 
     2,560 acres of land in reasonably compact form.
       ``(2) The Secretary of the Interior shall reserve and may 
     exercise the authority to cancel any prospecting permit upon 
     failure by the permittee to exercise due diligence in the 
     prosecution of the prospecting work in accordance with the 
     terms and conditions stated in the permit, and shall insert 
     in every such permit issued under the provisions of this Act 
     appropriate provisions for its cancellation by him.
       ``(3) Upon showing to the satisfaction of the Secretary of 
     the Interior that valuable deposits of one of the mineral 
     materials subject to the Materials Act of 1947 have been 
     discovered by the permittee within the area covered by his 
     permit, and that such land is valuable therefor, the 
     permittee shall be entitled to a lease for any or all of the 
     land embraced in the prospecting permit, at a royalty of not 
     less than two percent of the quantity or gross value of the 
     output of the mineral materials at the point of shipment to 
     market, such lease to be taken in compact form by legal 
     subdivisions of the public land surveys, or if the land be 
     not surveyed, by survey executed at the cost of the permittee 
     in accordance with regulations prescribed by the Secretary of 
     the Interior.''.
       (d) Mineral Materials Disposal Clarification.--Section 4 of 
     the Act of July 23, 1955 (30 U.S.C. 612), as amended as 
     follows:
       (1) In subsection (b) insert ``and mineral material'' after 
     ``vegetative''.
       (2) In subsection (c) insert ``and mineral material'' after 
     ``vegetative''.
       (e) Conforming Amendment.--Section 1 of the Act of July 31, 
     1947, entitled ``An Act to provide for the disposal of 
     materials on the public lands of the United States'' (30 
     U.S.C. 601 and following) is amended by striking ``common 
     varieties of'' in the first sentence.
       (f) Short Titles.--
       (1) Surface resources.--The Act of July 23, 1955, is 
     amended by inserting after section 7 the following new 
     section:
       ``Sec. 8. This Act may be cited as the `Surface Resources 
     Act of 1955'.''.
       (2) Mineral materials.--The Act of July 31, 1947, entitled 
     ``An Act to provide for the disposal of materials on the 
     public lands of the United States'' (30 U.S.C. 601 and 
     following) is amended by inserting after section 4 the 
     following new section:
       ``Sec. 5. This Act may be cited as the `Materials Act of 
     1947'.''.
       (g) Repeals.--(1) Subject to valid existing rights, the Act 
     of August 4, 1892 (27 Stat. 348, 30 U.S.C. 161), commonly 
     known as the Building Stone Act, is hereby repealed.
       (2) Subject to valid existing rights, the Act of January 
     31, 1901 (30 U.S.C. 162), commonly known as the Saline Placer 
     Act, is hereby repealed.
       (h) Authorization for Disposal of Mineral Materials by 
     Contract.--Section 2(a) of the Act entitled ``An Act to 
     provide for the disposal of materials on the public lands of 
     the United States'', approved July 31, 1947 (30 U.S.C. 
     602(a)), is amended--
       (1) by striking the period at the end of paragraph (3) and 
     inserting ``or, if''; and
       (2) by adding after paragraph (3) the following:
       ``(4) the material is a mineral material.''.
       (i) Sodium.--Section 24 of the Mineral Leasing Act (30 
     U.S.C. 181 et seq.) is amended by inserting after ``2 per 
     centum'' in each place it appears the following: ``and not 
     greater than five and one-half per centum''. Any rate under 
     section 24 of the Mineral Leasing Act (30 U.S.C. 181) in 
     excess of five and one-half per centum shall not be allowed 
     unless the following conditions are met:
       (1) the Secretary, in consultation with the Secretary of 
     Commerce and the United States Trade Representative, finds 
     that any increase in the royalty rate for sodium will not 
     have an adverse effect on the export of domestically produced 
     soda ash;
       (2) the Secretary reports this finding of no ``adverse 
     effect'' to Congress and recommends an additional proposed 
     royalty rate increase; and
       (3) the Congress, within 360 days, approves the Secretary's 
     recommendation.
     The Secretary shall, within 90 days, offer for competitive 
     bid all tracts for which there are applications pending on 
     sodium leases.

     SEC. 9505. CLAIM MAINTENANCE REQUIREMENTS.

       (a) Maintenance Fees.--
       (1) Annual maintenance fee.--After the date of enactment of 
     this Act, the owner of each unpatented mining claim or site 
     located pursuant to the general mining laws, whether located 
     before or after the enactment of this Act, shall pay to the 
     Secretary in advance on or before September 1 of each year, 
     until a patent has been issued therefor, an annual 
     maintenance fee per mining claim or site.
       (2) Initial maintenance fee.--The owner of each unpatented 
     mining claim or site located after the date of enactment of 
     this Act pursuant to the general mining laws shall pay to the 
     Secretary, at the time the copy of the notice or certificate 
     of location is filed with the Bureau of Land Management 
     pursuant to section 314(b) of the Federal Land Policy and 
     Management Act of 1976 (43 U.S.C. 1744(b)), the location fee 
     required under subsection (i) of this section, in lieu of the 
     annual maintenance fee of $100 per mining claim or site for 
     the assessment year which includes the date of location of 
     such mining claim or site.
       (3) Exemption.--The owner of any mining claim or site who 
     certifies in writing to the Secretary on or before the first 
     day of any assessment year that access to such mining claim 
     or site was denied or impeded during the prior assessment 
     year by the action or inaction of any local, State, or 
     Federal governmental officer, agency, or court, or by any 
     Indian tribal authority, shall be exempt from the annual 
     maintenance fee requirements of paragraph (1) for the 
     assessment year following the filing of the certification.
       (4) Amount of annual maintenance fee.--For each assessment 
     year the annual maintenance fee payable under paragraph (1) 
     for a claim or site referred to in paragraph (1) shall be in 
     the amount specified in Table 1.
       

                                 TABLE 1
------------------------------------------------------------------------
                                                  Amount of Fee Per Site
                Assessment Year                          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
------------------------------------------------------------------------

     For purposes of applying Table 1 in the case of claims filed 
     before the enactment of this

[[Page 1671]]

     Act, the portion of the assessment year in which this Act is 
     enacted shall be treated as the first assessment year.
       (5) Effect of forfeiture.--No owner or co-owner of a mining 
     claim or site which has been forfeited because the 
     maintenance fee has not been paid and no person who is a 
     related person of any such owner or co-owner may relocate a 
     new claim on any part of lands located within the forfeited 
     claim for a period of 18 months after the date of forfeiture.
       (6) Deposit of fees.--The full amount of all fees paid 
     under this subsection shall be deposited in the General Fund 
     of the Treasury.
       (b) Annual Labor.--(1) Amounts expended on activities that 
     qualify as annual labor under the general mining laws may be 
     credited on a dollar for dollar basis towards up to 75 
     percent of the annual maintenance fee payable under this 
     section for the following assessment year.
       (2) Subject to the 75 percent limit set forth in paragraph 
     (1), the excess of amounts expended for annual labor 
     performed in any one year over such 75 percent limit may be 
     applied to the maintenance fee due in subsequent years for a 
     period of up to three years.
       (3) In order to receive credit under this subsection for 
     annual labor work or excess annual labor, the description and 
     value of the work must be included in the statement required 
     in subsection (e) and the statement must be timely filed.
       (4) Annual labor performed on an individual mining claim or 
     site within a group of contiguous claims may be credited 
     towards the aggregate amount of maintenance fees due on all 
     of the contiguous claims within that group.
       (c) Work Qualifying as Annual Labor.--(1) Only work which 
     directly benefits or develops a mining claim or facilitates 
     the extraction of ore qualifies as annual labor. Acceptable 
     labor and improvements include any of the following:
       (A) Drilling or excavating, including ore extraction.
       (B) Mining costs directly associated with the production of 
     ore.
       (C) Prospecting work which benefits the location or a 
     contiguous location.
       (D) Development work toward an actual mine, such as shafts, 
     tunnels, crosscuts and drifts, settling ponds and dams.
       (E) Bringing in water for direct mining or milling 
     purposes.
       (F) Clearing of brush, timber, debris, or overburden where 
     necessary to facilitate the extraction or processing of 
     minerals.
       (G) Construction of trails, roads, or landing strips 
     providing access to claims.
       (H) Construction costs of worker housing, mills, and 
     equipment storage buildings where reasonably necessary for 
     the development of the location.
       (I) Reasonable value of the use of equipment for 
     prospecting, mining, or development purposes on the location.
       (J) Repairs of equipment used for prospecting, sampling, or 
     production of minerals provided that such equipment has been 
     on site during the assessment year.
       (K) Cost of moving workers, materials, and equipment among 
     contiguous locations.
       (L) Watchman services of a bona fide employed watchman on 
     the property where reasonably necessary to protect mining 
     equipment of substantial value.
       (M) Activities covered under section 1 of the Act of 
     September 2, 1958 (30 U.S.C. 28-1), as amended.
       (N) Reclamation conducted pursuant to State or Federal 
     surface management regulations.
       (O) Other activities which the Secretary may determine 
     qualify as annual labor.
       (2) The following activities do not qualify as annual 
     labor:
       (A) Work involved in maintaining the location such as 
     brushing and marking boundaries or replacing corner posts and 
     location notices.
       (B) Transportation of workers to or from the location.
       (C) Prospecting or exploration work not conducted within 
     the location or a contiguous location.
       (d) Amendments of Public Law 85-876.--The Act of September 
     2, 1958 (Public Law 85-876; 30 U.S.C. 28-1), is amended as 
     follows:
       (1) Section 1 is amended by inserting ``mineral activities, 
     environmental baseline monitoring, and'' after ``without 
     being limited to'' and before ``geological, geochemical and 
     geophysical surveys'' and by striking ``Such'' at the 
     beginning of the last sentence and inserting ``Airborne''.
       (2) Section 2(d) is amended by inserting ``environmental 
     baseline monitoring or'' after ``experience to conduct'' and 
     before ``geological, geochemical or geophysical surveys''.
       (3) Section 2 is amended by adding at the end of the 
     following new subsection at the end thereof:
       ``(e) The term `environmental baseline monitoring' means 
     activities for collecting, reviewing and analyzing 
     information concerning soil, vegetation, wildlife, mineral, 
     air, water, cultural, historical, archaeological or other 
     resources related to planning for or complying with Federal 
     and State environmental or permitting requirements applicable 
     to potential or proposed mineral activities on the 
     claim(s).''.
       (e) Maintenance Fee Statement.--Each payment under 
     subsection (a) of this section shall be accompanied by a 
     statement which reasonably identifies the mining claim or 
     site for which the maintenance fee is being paid. The 
     statement required under this subsection shall be in lieu of 
     any annual filing requirements for mining claims or sites, 
     under any other Federal law, but shall not supersede any such 
     filing requirement under applicable State law.
       (f) Annual Labor Report.--When the value of annual labor is 
     credited towards part or all of the maintenance fee, subject 
     to the 75-percent limit set forth in subsection (b)(1), the 
     following shall apply:
       (1) The maintenance fee statement required in subsection 
     (e) must also state the dates of performance of the labor, 
     describe the character and total value of the improvements 
     made or the labor performed, the amount of labor used as a 
     credit toward the maintenance fee for the current year, and 
     the value of excess labor performed in previous years which 
     is to be applied to the maintenance fee for the current year.
       (2) Documentation which reasonably supports the activities 
     or improvements claimed must accompany the maintenance fee 
     statement. Such documentation may include, but is not limited 
     to, copies of maps showing sample locations, drill locations, 
     or survey data; environmental baseline data; reports on 
     geology, geochemistry, or geophysics by qualified experts; 
     drill results; or engineering reports by qualified engineers.
       (3) All supporting material filed pursuant to paragraph (2) 
     shall remain confidential in accordance with section 552 of 
     title 5 of the United States Code as long as the location is 
     maintained and for a period of one year after the location is 
     abandoned, after which all data filed shall be considered 
     public information.
       (g) Effect of Compliance as Against Subsequent Locators.--
     (1) Except as provided in paragraph (2), after the date of 
     enactment of this Act, compliance with the requirements of 
     this section shall, from the time the location notice or 
     certificate is posted on the land under applicable State law, 
     confer upon the owner of any unpatented mining claim or site, 
     whether located before or after the date of enactment of this 
     Act, an exclusive right of possession, as against subsequent 
     locators, of the land included in such mining claim or site 
     under the general mining laws. If more than one mining claim 
     or site owned or controlled by the same claim or site owner 
     covers substantially the same land, by reason of the location 
     of one or more mining claims or sites on such land, the 
     amendment or relocation of any such mining claim or site, or 
     otherwise, such exclusive right of possession shall extend to 
     all such mining claims or sites, effective from the time the 
     location notice or certificate for the initial mining claim 
     or site was posted on such land under applicable State law. 
     The order of location, amendment, or relocation of any such 
     mining claims or sites on such land shall not affect the 
     validity of any such mining claim or site. Such owner of the 
     mining claim or site shall not be required to be in actual, 
     physical occupation of such land and shall not be required to 
     exclude rival locators from such land. Such exclusive right 
     of possession shall be subject to applicable Federal law, 
     including the Multiple Mineral Development Act of 1954 (30 
     U.S.C. 521-31), the Materials Act of 1947 (30 U.S.C. 601-604) 
     and the Surface Resources Act of 1955 (30 U.S.C. 611-15) to 
     the extent applicable, and shall neither enlarge nor diminish 
     any rights of such owner of the mining claim or site as 
     against the United States in such land. This paragraph shall 
     supersede the common law doctrine of pedis possessio.
       (2) Conflicts over the right of exclusive possession of 
     land included in any mining claim or site shall be determined 
     in proceedings between owners of mining claims or sites under 
     the provisions of section 910 of the Revised Statutes (30 
     U.S.C. 53) and other applicable law, including but not 
     limited to each of the following:
       (A) Any conflict based upon circumstances existing as of 
     the date of enactment of this Act between mining claims or 
     sites located before the date of enactment of this Act, shall 
     be resolved under the law in effect on the day prior to the 
     date of enactment of this Act, including the common law 
     doctrine of pedis possessio.
       (B) Any conflict arising on or after the date of enactment 
     of this Act between mining claims or sites located before, on 
     or after the date of enactment over whether either owner of 
     the mining claim or site has complied with the requirements 
     of this section, shall be resolved under this Act.
       (h) Failure of Co-Owner To Contribute.--Upon the failure of 
     any one or more of several co-owners of any mining claim or 
     site to contribute such co-owner or owners' portion of any 
     location or maintenance fee payable under this section, any 
     co-owner who has paid such fee may, after the payment due 
     date, serve the delinquent co-owner or owners with notice of 
     such failure in writing or, if such delinquent co-owner or 
     owners cannot be located after reasonable efforts, by 
     publication in a general circulation newspaper published in a 
     location nearest the mining claim or site at least once a 
     week for at least 90 days. If at the expiration of 90 days 
     after such notice in writing or by publication, any 
     delinquent co-owner fails or refuses to contribute the owed 
     portion, such co-owner or owners' interest shall become the 
     property of the owner or co-owners who have paid the required 
     fee.
       (i) Location Fee.--The owner of each unpatented mining 
     claim or site located on or after the date of enactment of 
     this Act pursuant to the general mining laws shall pay to the 
     Secretary, at the time the notice or certificate of location 
     is filed with the Bureau of Land Management pursuant to sub

[[Page 1672]]

     section 314(b) of the Federal Land Policy and Management Act 
     of 1976 (43 U.S.C. 1744(b)), a location fee of $25.00 per 
     mining claim or site. The full amount of all fees paid under 
     this subsection shall be deposited in the General Fund of the 
     Treasury. Effective on the date of the enactment of this Act, 
     section 10102 of the Omnibus Budget Reconciliation Act of 
     1993 (107 Stat. 406; 30 U.S.C. 28g) is repealed.
       (j) Credit Against Maintenance Fee.--(1) Except as provided 
     in paragraph (2), the annual maintenance fee payable for any 
     unpatented mining claim or site for any assessment year shall 
     be reduced by the amount of royalty paid by such claimholder 
     for such mining claim or site, or for any contiguous mining 
     claim or site, during the prior assessment year.
       (2) Royalties paid during any assessment year prior to the 
     first full assessment year commencing after the enactment of 
     this Act shall not reduce the amount of any maintenance fee.
       (k) Oil Shale Claims Subject to Claim Maintenance Fee Under 
     Energy Policy Act of 1992.--This section shall not apply to 
     any oil shale claims for which a fee is required to be paid 
     under paragraph 2511(e)(2) of the Energy Policy Act of 1992 
     (30 U.S.C. 242(e)(2)).
       (l) Failure To Comply.--The failure of the owner of the 
     mining claim or site to pay any claim maintenance fee or 
     location fee for a mining claim or site on or before the date 
     such payment is due under this section shall constitute 
     forfeiture of the mining claim or site and such mining claim 
     or site shall be null and void, effective as of the day after 
     the date such payment is due, except that if such maintenance 
     fee or location fee is paid or tendered on or before the 30th 
     day after such payment was due under subsection of this 
     section, such mining claim or site shall not be forfeited or 
     null or void, and such maintenance fee or location fee shall 
     be deemed timely paid.
       (m) Amendment of FLPMA Filing Requirements.--(1) Section 
     314(a) of the Federal Land Policy and Management Act of 1976 
     (43 U.S.C. 1744(a)) is hereby repealed.
       (2) Section 314(c) of the Federal Land Policy and 
     Management Act of 1976 (43 U.S.C. 1744(c)) is amended to read 
     as follows:
       ``(c) Failure To File as Constituting Forfeiture; Defective 
     or Untimely Filing.--The failure to timely file the copy of 
     the notice or certificate of location as required by 
     subsection (b) shall constitute forfeiture of the mining 
     claim and such claim shall be null and void by operation of 
     law; except that it shall not be considered a failure to file 
     if the notice or certificate of location is defective or not 
     timely filed for record under other State or Federal laws 
     permitting or requiring the filing or recording thereof, or 
     if the copy of the notice or certificate is filed by or on 
     behalf of some but not all of the owners of the claim.''.
       (n) Related Persons.--As used in this section, the term 
     ``related persons'' includes--
       (1) the spouse and dependent children (as defined in 
     section 152 of the Internal Revenue Code of 1986), of the 
     owner of the mining claim or site; and
       (2) a person controlled by, controlling, or under common 
     control with the owner of the mining claim or site.
       (o) Repeal.--Section 10101 of the Omnibus Budget 
     Reconciliation Act of 1993 (107 Stat. 406; 30 U.S.C. 28g) is 
     repealed, effective with respect to assessment year 
     commencing after the enactment of this Act.
       (p) Periodic Review of Fee Structure.--Beginning in the 
     year 2005 and at 10 year intervals thereafter, the Secretary 
     shall review the costs incurred by the Secretary to 
     administer mining claims for locatable minerals under the 
     general mining laws and the structure and level of 
     maintenance and location fees received by the Secretary with 
     respect to such claims. The Secretary shall determine if the 
     revenues from such fees is adequate to cover such costs, 
     taking inflation and other appropriate factors into account. 
     The Secretary shall submit the results of each such review to 
     the Congress, together with such legislative recommendations 
     as the Secretary deems appropriate.

                 PART 2--FEDERAL OIL AND GAS ROYALTIES

     SEC. 9511. SHORT TITLE.

       This part may be cited as the ``Federal Oil and Gas Royalty 
     Simplification and Fairness Act of 1995''.

     SEC. 9512. DEFINITIONS.

       (a) In General.--Section 3 of the Federal Oil and Gas 
     Royalty Management Act of 1982 (30 U.S.C. 1701 et seq.) is 
     amended--
       (1) by amending paragraph (7) to read as follows:
       ``(7) `lessee' means any person to whom the United States, 
     an Indian tribe, or an Indian allottee issues a lease or any 
     person to whom operating rights have been assigned;''; and
       (2) by striking ``and'' at the end of paragraph (15), by 
     striking the period at the end of paragraph (16) and 
     inserting a semicolon, and by adding at the end the 
     following:
       ``(17) `adjustment' means an amendment to a previously 
     filed report on an obligation, and any additional payment or 
     credit, if any, applicable thereto, to rectify an 
     underpayment or overpayment on a lease;
       ``(18) `administrative proceeding' means any agency process 
     in which a demand, decision or order issued by the Secretary 
     is subject to appeal or has been appealed;
       ``(19) `assessment' means any fee or charge levied or 
     imposed by the Secretary or the United States other than--
       ``(A) the principal amount of any royalty, minimum royalty, 
     rental, bonus, net profit share or proceed of sale;
       ``(B) any interest; or
       ``(C) any civil or criminal penalty;
       ``(20) `commence' means--
       ``(A) with respect to a judicial proceeding, the service of 
     a complaint, petition, counterclaim, crossclaim, or other 
     pleading seeking affirmative relief or seeking credit or 
     recoupment; or
       ``(B) with respect to a demand, the receipt by the 
     Secretary or a lessee of the demand;
       ``(21) `credit' means the application of an overpayment (in 
     whole or in part) against an obligation which has become due 
     to discharge, cancel or reduce the obligation;
       ``(22) `demand' means--
       ``(A) an order to pay issued by the Secretary; or
       ``(B) a separate written request by a lessee which asserts 
     an obligation due the lessee,
     but does not mean any royalty or production report, or any 
     information contained therein, required by the Secretary;
       ``(23) `obligation' means--
       ``(A) any duty of the Secretary or the United States--
       ``(i) to take oil or gas royalty in kind; or
       ``(ii) to pay, refund, offset, or credit monies including 
     but not limited to--

       ``(I) the principal amount of any royalty, minimum royalty, 
     rental, bonus, net profit share or proceed of sale; or
       ``(II) any interest;

       ``(B) any duty of a lessee--
       ``(i) to deliver oil or gas royalty in kind; or
       ``(ii) to pay, offset or credit monies including but not 
     limited to--

       ``(I) the principal amount of any royalty, minimum royalty, 
     rental, bonus, net profit share or proceed of sale;
       ``(II) any interest;
       ``(III) any penalty; or
       ``(IV) any assessment,

     which arises from or relates to any lease administered by the 
     Secretary for, or any mineral leasing law related to, the 
     exploration, production and development of oil or gas on 
     Federal lands or the Outer Continental Shelf;
       ``(24) `order to pay' means a written order issued by the 
     Secretary or the United States which--
       ``(A) asserts a definite and quantified obligation; and
       ``(B) specifically identifies the obligation by lease, 
     production month and amount of such obligation ordered to be 
     paid, as well as the reason or reasons such obligation is 
     claimed to be due,
     but such term does not include any other communication or 
     action by or on behalf of the Secretary or the United States;
       ``(25) `overpayment' means any payment by a lessee in 
     excess of an amount legally required to be paid on an 
     obligation and includes the portion of any estimated payment 
     for a production month that is in excess of the royalties due 
     for that month;
       ``(26) `payment' means satisfaction, in whole or in part, 
     of an obligation;
       ``(27) `penalty' means a statutorily authorized civil fine 
     levied or imposed by the Secretary or the United States for a 
     violation of this Act, any mineral leasing law, or a term or 
     provision of a lease administered by the Secretary;
       ``(28) `refund' means the return of an overpayment by the 
     Secretary or the United States by the drawing of funds from 
     the United States Treasury;
       ``(29) `State concerned' means, with respect to a lease, a 
     State which receives a portion of royalties under this Act 
     from such lease; and
       ``(30) `underpayment' means any payment or nonpayment by a 
     lessee that is less than the amount legally required to be 
     paid on an obligation.''.
       (b) Lessee Liability.--Section 102(a) of the Federal Oil 
     and Gas Royalty Management Act of 1982 (30 U.S.C. 1712(a)) is 
     amended to read as follows:
       ``(a) A lessee who is required to make any royalty or other 
     payment under a lease or under the mineral leasing laws, 
     shall make such payments in the time and manner as may be 
     specified by the Secretary. A lessee may designate a person 
     to act on the lessee's behalf and shall notify the Secretary 
     in writing of such designation. The person to whom the United 
     States issues a lease or the person by whom operating rights 
     are currently owned, but not both, shall remain primarily 
     liable for its obligations.''.

     SEC. 9513. LIMITATION PERIODS.

       (a) In General.--The Federal Oil and Gas Royalty Management 
     Act of 1982 (30 U.S.C. 1701 et seq.) is amended by adding 
     after section 114 the following new section:

     ``SEC. 115. LIMITATION PERIODS AND AGENCY ACTIONS.

       ``(a) In General.--A judicial proceeding or demand which 
     arises from, or relates to an obligation, shall be commenced 
     within six years from the date on which the obligation 
     becomes due and if not so commenced shall be barred, except 
     as otherwise provided by this section.
       ``(b) Obligation Becomes Due.--
       ``(1) In general.--For purposes of this Act, an obligation 
     becomes due when the right to enforce the obligation is 
     fixed.
       ``(2) Royalty obligations.--The right to enforce the 
     royalty obligation for a production month for a lease is 
     fixed for purposes of this Act on the last day of the 
     calendar month following the month in which oil or gas is 
     produced.
       ``(c) Tolling of Limitation Period.--The running of the 
     limitation period under subsection (a) shall not be 
     suspended, tolled, ex

[[Page 1673]]

     tended, or enlarged for any obligation for any reason by any 
     action, including an action by the Secretary or the United 
     States, other than the following:
       ``(1) Tolling agreement.--A written agreement executed 
     during the limitation period between the Secretary and a 
     lessee which tolls the limitation period for the amount of 
     time during which the agreement is in effect.
       ``(2) Subpoena.--The issuance of a subpoena in accordance 
     with the provisions of section 107(c) shall toll the 
     limitation period with respect to the obligation which is the 
     subject of a subpoena only for the period beginning on the 
     date the lessee receives the subpoena and ending on the date 
     on which (A) the lessee has produced such subpoenaed records 
     for the subject obligation, (B) the Secretary receives 
     written notice that the subpoenaed records for the subject 
     obligation are not in existence or are not in the lessee's 
     possession or control, or (C) a court has determined in a 
     final decision that such records are not required to be 
     produced, whichever occurs first.
       ``(3) Fraud or concealment.--Any fraud or concealment by a 
     lessee in an attempt to defeat or evade an obligation in 
     which case the limitation period shall be tolled for the 
     period of such fraud or such concealment.
       ``(4) Tolling request.--A written tolling request from a 
     lessee based upon the lessee's representation that the 
     lessee's entitlement to an overpayment has not been finally 
     determined. The limitation period shall be tolled pursuant to 
     this paragraph from the date the Secretary receives the 
     tolling request until the earlier of the end of the requested 
     period or 12 months after the date the Secretary receives the 
     tolling request, but is subject to successive 12-month 
     renewals by the lessee made prior to the expiration of the 
     then applicable 12-month period. The tolling request shall be 
     sufficient if it identifies--
       ``(A) the person who made the potential overpayment;
       ``(B) the leases and production months involved in the 
     potential overpayment; and
       ``(C) the reasons the lessee believes that it may later be 
     entitled to a refund of the overpayment.
       ``(5) Order to perform a restructured accounting.--The 
     issuance of a notice under section 107(d)(4) that the lessee 
     has not adequately performed a restructured accounting shall 
     toll the limitation period with respect to the obligation 
     which is the subject of the notice only for the period 
     beginning on the date the lessee receives the notice and 
     ending on the date on which (A) the Secretary receives 
     written notice the accounting or other requirement has been 
     performed, or (B) a court has determined in a final decision 
     that the lessee is not required to perform the accounting, 
     whichever occurs first.
       ``(d) Termination of Limitation Period.--The limitation 
     period shall be terminated in the event--
       ``(1) the Secretary has notified the lessee in writing that 
     a time period is closed to further audit; or
       ``(2) the Secretary and a lessee have so agreed in writing.
       ``(e) Final Agency Action.--
       ``(1) 3-year period.--The Secretary shall issue a final 
     decision in any administrative proceeding, including any 
     administrative proceedings pending on the date of enactment 
     of the Federal Oil and Gas Royalty Simplification and 
     Fairness Act of 1995, within three years from the date such 
     proceeding was initiated or three years from the date of such 
     enactment, whichever is later. The three-year period may be 
     extended by any period of time agreed upon in writing by the 
     Secretary and the lessee.
       ``(2) Effect of failure to issue decision.--
       ``(A) In general.--If no such decision has been issued by 
     the Secretary within the three-year period referred to in 
     paragraph (1)--
       ``(i) the Secretary shall be deemed to have issued and 
     granted a decision in favor of the lessee or lessees as to 
     any nonmonetary obligation and any monetary obligation the 
     principal amount of which is less than $2,500; and
       ``(ii) the Secretary shall be deemed to have issued a final 
     decision in favor of the Secretary, which decision shall be 
     deemed to affirm those issues for which the agency rendered a 
     decision prior to the end of such period, as to any monetary 
     obligation the principal amount of which is $2,500 or more, 
     and the lessee shall have a right to a de novo judicial 
     review of such deemed final decision.
       ``(B) No precedential effect on other proceedings.--Deemed 
     decisions under subparagraph (A) shall have no precedential 
     effect in any judicial or administrative proceeding or for 
     any other purpose.
       ``(f) Administrative Settlement.--During the pendency of 
     any administrative proceeding, the parties shall hold at 
     least one settlement consultation for the purpose of 
     discussing disputed matters between the parties. For purposes 
     of settlement, the Secretary may take such action as is 
     appropriate to compromise and settle a disputed obligation, 
     including interest and allowing offsetting of obligations 
     among leases. The Secretary and the State concerned shall 
     seek to resolve disputes with a lessee in as expeditious a 
     manner as possible, through settlement negotiations and other 
     alternative dispute resolution processes methods. If any 
     dispute involving an obligation due is not resolved by the 
     end of the six-year period beginning on the date the 
     obligation became due, the amount of interest otherwise 
     payable with respect to the obligation shall accrue after 
     such six-year period at the rate--
       ``(1) for purposes of section 111(h), reduced each year 
     thereafter by two additional percentage points from the rate 
     in effect under this subsection for the previous year (but 
     not less than zero); and
       ``(2) for purposes of section 111(a), reduced each year 
     thereafter by one additional percentage point from the rate 
     in effect under this subsection for the previous year (but 
     not less than zero).
       ``(g) Limitation on Certain Actions.--When an action on or 
     enforcement of an obligation under the mineral leasing laws 
     is barred under this section--
       ``(1) no other or further action regarding that obligation, 
     including (but not limited to) the issuance of any order, 
     request, demand or other communication seeking any document, 
     accounting, determination, calculation, recalculation, 
     payment, principal, interest, assessment, or penalty or the 
     initiation, pursuit or completion of an audit with respect to 
     that obligation may be taken; and
       ``(2) no other equitable or legal remedy, whether under 
     statute or common law, with respect to an action on or an 
     enforcement of said obligation may be pursued.
       ``(h) Judicial Review.--In the event a demand subject to 
     this section is timely commenced, a judicial proceeding 
     challenging the final agency action with respect to such 
     demand shall be deemed timely so long as such judicial 
     proceeding is commenced within 180 days from receipt of 
     notice by the lessee of the final agency action.
       ``(i) Implementation of Final Decision.--In the event a 
     judicial proceeding or demand subject to this section is 
     timely commenced and thereafter the limitation period in this 
     section lapses during the pendency of such proceeding, any 
     party to such proceeding shall not be barred from taking such 
     action as is required or necessary to implement a final 
     unappealable judicial or administrative decision, including 
     any action required or necessary to implement such decision 
     by the recovery or recoupment of an underpayment or 
     overpayment by means of refund or credit.
       ``(j) Stay of Payment Obligation Pending Review.--Any party 
     ordered by the Secretary or the United States to pay any 
     obligation (other than an assessment) shall be entitled to a 
     stay of such payment without bond or other surety instrument 
     pending an administrative or judicial proceeding if the party 
     periodically demonstrates to the satisfaction of the 
     Secretary that such party is financially solvent or otherwise 
     able to pay the obligation. In the event the party is not 
     able to so demonstrate, the Secretary may require a bond or 
     other surety instrument satisfactory to cover the obligation. 
     Any party ordered by the Secretary to pay an assessment shall 
     be entitled to a stay without bond or other surety 
     instrument.
       ``(k) Inapplicability of the Other Statutes of 
     Limitation.--The limitations set forth in sections 2401, 
     2415, 2416, and 2462 of title 28, United States Code, section 
     42 of the Mineral Leasing Act (30 U.S.C. 226-2) and section 
     3716 of title 31, United States Code, shall not apply to any 
     obligation to which this Act applies.''.
       (b) Subpoena.--Section 107 of the Federal Oil and Gas 
     Royalty Management Act of 1982 (30 U.S.C. 1717) is amended by 
     adding at the end the following:
       ``(c) Rules Regarding Issuance of Subpoena Relating to 
     Reporting and Payment of an Obligation Due.--
       ``(1) In general.--A subpoena which requires a lessee to 
     produce records necessary to determine the proper reporting 
     and payment of an obligation due the Secretary may be issued 
     under this section only by an Assistant Secretary of the 
     Interior and an acting Assistant Secretary of the Interior 
     who is a schedule C employee (as defined by section 213.3301 
     of title 5, Code of Federal Regulations) and may not be 
     delegated.
       ``(2) Prior written request required.--A subpoena described 
     in paragraph (1) may only be issued against a lessee during 
     the limitation period provided in section 115 and only after 
     the Secretary has in writing requested the records from the 
     lessee related to the obligation which is the subject of the 
     subpoena and has determined that--
       ``(A) the lessee has failed to respond within a reasonable 
     period of time to the Secretary's written request for such 
     records necessary for an audit, investigation or other 
     inquiry made in accordance with the Secretary's 
     responsibilities under this Act;
       ``(B) the lessee has in writing denied the Secretary's 
     written request to produce such records in the lessee's 
     possession or control necessary for an audit, investigation 
     or other inquiry made in accordance with the Secretary's 
     responsibilities under this Act; or
       ``(C) the lessee has unreasonably delayed in producing 
     records necessary for an audit, investigation or other 
     inquiry made in accordance with the Secretary's 
     responsibilities under this Act after the Secretary's written 
     request.
       ``(3) Reasonable period for compliance with written 
     request.--In seeking records, the Secretary shall afford the 
     lessee a reasonable period of time after a written request by 
     the Secretary in which to provide such records prior to the 
     issuance of any subpoena.''.
       (c) Restructured Accounting.--Section 107 of the Federal 
     Oil and Gas Royalty Management Act of 1982 (30 U.S.C. 1717), 
     as amended by subsection (b) of this section, is amended by 
     adding at the end the following:
       ``(d) Restructured Accounting.--
       ``(1) In general.--The Secretary shall issue an order to 
     perform a restructured accounting when the Secretary 
     determines during an

[[Page 1674]]

      in-depth audit of a lessee that the lessee should 
     recalculate royalty due on an obligation based upon the 
     Secretary's finding that the lessee has made identified 
     underpayments or overpayments which are demonstrated by the 
     Secretary to be based upon repeated, systemic reporting 
     errors for a significant number of leases or a single lease 
     for a significant number of reporting months with the same 
     type of error which constitutes a pattern of violations and 
     which are likely to result in either significant 
     underpayments or overpayments.
       ``(2) Delegation.--The power of the Secretary to issue an 
     order to perform a restructured accounting may not be 
     delegated below the most senior career professional position 
     having responsibility for the royalty management program, 
     which position is currently designated as the `Associate 
     Director for Royalty Management'. An order to perform a 
     restructured accounting shall--
       ``(A) be issued within a reasonable period of time from 
     when the audit identifies the systemic, reporting errors;
       ``(B) specify the reasons and factual bases for such order; 
     and
       ``(C) be specifically identified as an `order to perform a 
     restructured accounting'.
       ``(3) Order to perform.--An order to perform a restructured 
     accounting shall not include any other communication or 
     action by or on behalf of the Secretary or the United States.
       ``(4) Notice.--If a lessee fails to adequately perform a 
     restructured accounting pursuant to this subsection, a notice 
     shall be issued to the lessee that the restructured 
     accounting has not been adequately performed. Such notice may 
     be issued under this section only by an Assistant Secretary 
     of the Interior or an acting Assistant Secretary of the 
     Interior who is a schedule C employee (as defined by section 
     213.3301 of title 5, Code of Federal Regulations) and may not 
     be delegated.''.
       (d) State Suits.--Section 204 of the Federal Oil and Gas 
     Royalty Management Act of 1982 (30 U.S.C. 1751) is amended by 
     adding at the end the following:
       ``(d) With respect to an obligation, a State bringing an 
     action under this section shall enjoy no greater rights than 
     the Secretary enjoys under this Act.''.
       (e) Clerical Amendment.--The table of contents in section 1 
     of such Act (30 U.S.C. 1701) is amended by adding after the 
     item relating to section 114 the following new item:

``Sec. 115. Limitation periods and agency actions.''.

     SEC. 9514. ADJUSTMENT AND REFUNDS.

       (a) In General.--The Federal Oil and Gas Royalty Management 
     Act of 1982 (30 U.S.C. 1701 et seq.) is amended by adding 
     after section 111 the following new section:

     ``SEC. 111A. ADJUSTMENTS AND REFUNDS.

       ``(a) Adjustments.--
       ``(1) If, during the adjustment period, a lessee determines 
     that an adjustment or refund request is necessary to correct 
     an underpayment or overpayment of an obligation, the lessee 
     shall make such adjustment or request a refund within a 
     reasonable period of time and only during the adjustment 
     period. The filing of a royalty report which reflects the 
     underpayment or overpayment of an obligation shall constitute 
     prior written notice to the Secretary of an adjustment.
       ``(2)(A) For any adjustment, the lessee shall calculate and 
     report the interest due attributable to such adjustment at 
     the same time the lessee adjusts the principal amount of the 
     subject obligation, except as provided by subparagraph (B).
       ``(B) In the case of a lessee on whom the Secretary 
     determines that subparagraph (A) would impose a hardship, the 
     Secretary shall calculate the interest due and notify the 
     lessee within a reasonable time of the amount of interest 
     due, unless such lessee elects to calculate and report 
     interest in accordance with subparagraph (A).
       ``(3) An adjustment or a request for a refund for an 
     obligation may be made after the adjustment period only upon 
     written notice to and approval by the Secretary during an 
     audit of the period which includes the production month for 
     which the adjustment is being made. If an overpayment is 
     identified during an audit, then the Secretary shall allow a 
     credit or refund in the amount of the overpayment.
       ``(4) For purposes of this section, the adjustment period 
     for any obligation shall be the five-year period following 
     the date on which an obligation became due. The adjustment 
     period shall be suspended, tolled, extended, enlarged, or 
     terminated by the same actions as the limitation period in 
     section 115.
       ``(b) Refunds.--
       ``(1) In general.--A request for refund is sufficient if 
     it--
       ``(A) is made in writing to the Secretary and, for purposes 
     of section 115, is specifically identified as a demand;
       ``(B) identifies the person entitled to such refund;
       ``(C) provides the Secretary information that reasonably 
     enables the Secretary to identify the overpayment for which 
     such refund is sought; and
       ``(D) provides the reasons why the payment was an 
     overpayment.
       ``(2) Payment by secretary of the treasury.--The Secretary 
     shall certify the amount of the refund to be paid under 
     paragraph (1) to the Secretary of the Treasury who shall make 
     such refund. Such refund shall be paid from amounts received 
     as current receipts from sales, bonuses, royalties (including 
     interest charges collected under this section) and rentals of 
     the public lands and the Outer Continental Shelf under the 
     provisions of the Mineral Leasing Act and the Outer 
     Continental Shelf Lands Act, which are not payable to a State 
     or the Reclamation Fund. The portion of any such refund 
     attributable to any amounts previously disbursed to a State, 
     the Reclamation Fund, or any recipient prescribed by law 
     shall be deducted from the next disbursements to that 
     recipient made under the applicable law. Such amounts 
     deducted from subsequent disbursements shall be credited to 
     miscellaneous receipts in the Treasury.
       ``(3) Payment period.--A refund under this subsection shall 
     be paid or denied (with an explanation of the reasons for the 
     denial) within 120 days of the date on which the request for 
     refund is received by the Secretary. Such refund shall be 
     subject to later audit by the Secretary and subject to the 
     provisions of this Act.
       ``(4) Prohibition against reduction of refunds or 
     credits.--In no event shall the Secretary directly or 
     indirectly claim any amount or amounts against, or reduce any 
     refund or credit (or interest accrued thereon) by the amount 
     of any obligation the enforcement of which is barred by 
     section 115.''.
       (b) Clerical Amendment.--The table of contents in section 1 
     of such Act (30 U.S.C. 1701) is amended by adding after the 
     item relating to section 111 the following new item:

``Sec. 111A. Adjustments and refunds.''.

     SEC. 9515. REQUIRED RECORDKEEPING.

       Section 103 of the Federal Oil and Gas Royalty Management 
     Act of 1982 (30 U.S.C. 1713(b)) is amended by adding at the 
     end the following:
       ``(c) Records required by the Secretary for the purpose of 
     determining compliance with any applicable mineral leasing 
     law, lease provision, regulation or order with respect to oil 
     and gas leases from Federal lands or the Outer Continental 
     Shelf shall be maintained for the same period of time during 
     which a judicial proceeding or demand may be commenced under 
     section 115(a). If a judicial proceeding or demand is timely 
     commenced, the record holder shall maintain such records 
     until the final nonappealable decision in such judicial 
     proceeding is made, or with respect to that demand is 
     rendered, unless the Secretary authorizes in writing an 
     earlier release of the requirement to maintain such records. 
     Notwithstanding anything herein to the contrary, under no 
     circumstance shall a record holder be required to maintain or 
     produce any record relating to an obligation for any time 
     period which is barred by the applicable limitation in 
     section 115.''.

     SEC. 9516. ROYALTY INTEREST, PENALTIES, AND PAYMENTS.

       (a) Period.--Section 111(f) of the Federal Oil and Gas 
     Royalty Management Act of 1982 (30 U.S.C. 1721(f)) is amended 
     to read as follows:
       ``(f) Upon a determination that it will further the 
     effective and efficient performance of his duties and 
     responsibilities, the Secretary may waive or forego such 
     interest in whole or in part. Interest shall be charged under 
     this section only for the number of days a payment is 
     late.''.
       (b) Lessee Interest.--Section 111 of the Federal Oil and 
     Gas Royalty Management Act of 1982 (30 U.S.C. 1721) is 
     amended by adding after subsection (g) the following:
       ``(h) Interest shall be allowed and the Secretary shall pay 
     or credit such interest on any overpayment, with such 
     interest to accrue from the date such overpayment was made, 
     at the rate obtained by applying the provisions of 
     subparagraphs (A) and (B) of section 6621(a)(1) of the 
     Internal Revenue Code of 1986. Interest which has accrued on 
     any overpayment may be applied to reduce an underpayment. 
     This subsection applies to overpayments made later than six 
     months after the date of enactment of this subsection or 
     September 1, 1996, whichever is later. Such interest shall be 
     paid from amounts received as current receipts from sales, 
     bonuses, royalties (including interest charges collected 
     under this section) and rentals of the public lands and the 
     Outer Continental Shelf under the provisions of the Mineral 
     Leasing Act, and the Outer Continental Shelf Lands Act, which 
     are not payable to a State or the Reclamation Fund. The 
     portion of any such interest payment attributable to any 
     amounts previously disbursed to a State, the Reclamation 
     Fund, or any other recipient designated by law shall be 
     deducted from the next disbursements to that recipient made 
     under the applicable law. Such amounts deducted from 
     subsequent disbursements shall be credited to miscellaneous 
     receipts in the Treasury.''.
       (c) Limitation on Interest.--Section 111 of such Act, as 
     amended by subsection (b) of this Act, is further amended by 
     adding at the end the following:
       ``(i) Upon a determination by the Secretary that an 
     excessive overpayment (based upon all obligations of a lessee 
     for a given reporting month) was made for the sole purpose of 
     receiving interest, interest shall not be paid on the 
     excessive amount of such overpayment. For purposes of this 
     Act, an `excessive overpayment' shall be the amount that any 
     overpayment a lessee pays for a given reporting month 
     (excluding payments for demands for obligations as a result 
     of judicial or administrative proceedings for settlement 
     agreements and for other similar payments) for the aggregate 
     of all of its Federal leases exceeds 25 percent of the total 
     royalties paid that month for those leases.''.
       (d) Estimated Payment.--Section 111 of such Act, as amended 
     by subsections (b) and

[[Page 1675]]

      (c) of this Act, is further amended by adding at the end the 
     following:
       ``(j) A lessee may make a payment for the approximate 
     amount of royalties (hereinafter in this subsection 
     `estimated payment') that would otherwise be due to the 
     Secretary for such lease to avoid underpayment or nonpayment 
     interest charges. When an estimated payment is made, actual 
     royalties become due at the end of the month following the 
     period covered by the estimated payment. If the lessee makes 
     a payment for such actual royalties, the lessee may apply the 
     estimated payment to future royalties. Any estimated payment 
     may be adjusted, recouped, or reinstated at any time by the 
     lessee.''.
       (e) Volume Allocation of Oil and Gas Production.--Section 
     111 of such Act (30 U.S.C. 1721), as amended by subsections 
     (b) through (d) of this Act, is amended by adding at the end 
     the following:
       ``(k)(1) Except as otherwise provided by this subsection--
       ``(A) a lessee of a lease in a unit or communitization 
     agreement which contains only Federal leases with the same 
     royalty rate and funds distribution must report and pay 
     royalties on oil and gas production for each production month 
     based on the actual volume of production sold by or on behalf 
     of that lessee;
       ``(B) a lessee of a lease in any other unit or 
     communitization agreement must report and pay royalties on 
     oil and gas production for each production month based on the 
     volume of oil and gas produced from such agreement and 
     allocated to the lease in accordance with the terms of the 
     agreement; and
       ``(C) a lessee of a lease that is not contained in a unit 
     or communitization agreement must report and pay royalties on 
     oil and gas production for each production month based on the 
     actual volume of production sold by or on behalf of that 
     lessee.
       ``(2) This subsection applies only to requirements for 
     reporting and paying royalties. Nothing in this subsection is 
     intended to alter a lessee's liability for royalties on oil 
     or gas production based on the share of production allocated 
     to the lease in accordance with the terms of the lease, a 
     unit or communitization agreement, or any other agreement.
       ``(3) For any unit or communitization agreement, if all 
     lessees contractually agree to an alternative method of 
     royalty reporting and payment, the lessees may submit such 
     alternative method to the Secretary for approval and make 
     payments in accordance with such approved alternative method 
     so long as such alternative method does not reduce the amount 
     of the royalty obligation.
       ``(4) The Secretary shall grant an exception from the 
     reporting and payment requirements for marginal properties by 
     allowing for any calendar year or portion thereof royalties 
     to be paid each month based on the volume of production sold. 
     Interest shall not accrue on the difference for the entire 
     calendar year or portion thereof between the amount of oil 
     and gas actually sold and the share of production allocated 
     to the lease until the beginning of the month following 
     calendar year or portion thereof. Any additional royalties 
     due or overpaid royalties and associated interest shall be 
     paid, refunded, or credited within six months after the end 
     of each calendar year in which royalties are paid based on 
     volumes of production sold. For the purpose of this 
     subsection, the term `marginal property' means a lease that 
     produces on average the combined equivalent of less than 15 
     barrels of oil per day or 90 thousand cubic feet of gas per 
     day, or a combination thereof, determined by dividing the 
     average daily production of domestic crude oil and domestic 
     natural gas from producing wells on such lease by the number 
     of such wells, unless the Secretary, together with the State 
     concerned, determines that a different production is more 
     appropriate.
       ``(5) Not later than two years after the date of the 
     enactment of this subsection, the Secretary shall issue any 
     appropriate demand for all outstanding royalty payment 
     disputes regarding who is required to report and pay 
     royalties on production from units and communitization 
     agreements outstanding on the date of the enactment of this 
     subsection, and collect royalty amounts owed on such 
     production.''.
       (f) Production Allocation.--Section 111 of such Act (30 
     U.S.C. 1721), as amended by subsections (b) through (e) of 
     this Act, is amended by adding at the end the following:
       ``(l) The Secretary shall issue all determinations of 
     allocations of production for units and communitization 
     agreements within 120 days of a request for determination. If 
     the Secretary fails to issue a determination within such 120-
     day period, the Secretary shall waive interest due on 
     obligations subject to the determination until the end of the 
     month following the month in which the determination is 
     made.''.

     SEC. 9517. LIMITATION ON ASSESSMENTS.

       Section 111 of the Federal Oil and Gas Royalty Management 
     Act of 1982 (30 U.S.C. 1721), as amended by section 9516, is 
     further amended by adding at the end the following:
       ``(m)(1) After the date of enactment of this subsection, 
     the Secretary shall not impose any assessment for any late 
     payment or underpayment. After the date of enactment of this 
     subsection, the Secretary may impose an assessment only for 
     erroneous reports submitted by lessees subject to the 
     limitations of paragraph (2). Nothing in this section shall 
     prohibit the Secretary from imposing penalties or interest 
     under other sections of this Act for late payments or 
     underpayments.
       ``(2) No assessment for erroneous reports shall be imposed 
     for 18 months following the date of enactment of this 
     subsection, or until the Secretary issues a final rule which 
     provides for imposition of an assessment only on a lessee who 
     chronically submits erroneous reports and which establishes 
     what constitutes chronic errors for a lessee, whichever is 
     later. However, if the Secretary determines during that 18-
     month period that the reporting error rate for all reporters 
     for all Federal leases has increased by one-third for three 
     consecutive report months for either production reporting or 
     royalty reporting over the 12 months preceding the date of 
     enactment of this subsection, the Secretary may impose an 
     assessment for erroneous reports only for the increased 
     category of report under regulations in effect on the date of 
     enactment of this subsection.''.

     SEC. 9518. ALTERNATIVES FOR MARGINAL PROPERTIES.

       (a) In General.--The Federal Oil and Gas Royalty Management 
     Act of 1982 (30 U.S.C. 1701 et seq.), as amended by section 
     9513 of this Act, is further amended by adding at the end the 
     following:

     ``SEC. 116. ALTERNATIVES FOR MARGINAL PROPERTIES.

       ``(a) Selling the Revenue Stream.--
       ``(1) In general.--Notwithstanding the provisions of any 
     lease to the contrary, upon request of the lessee or a State 
     under section 205(g), the Secretary shall authorize a lessee 
     for a marginal property and for a lease, the administration 
     of which is not cost-effective for the Secretary to 
     administer, to make a prepayment in lieu of royalty payments 
     under the lease for the remainder of the lease term. For the 
     purposes of this section, the term `marginal property' has 
     the same meaning given such term in section 111(k)(4), unless 
     the Secretary, together with each State in which such 
     marginal production occurs, determines that a different 
     definition of marginal property better achieves the purpose 
     of this section.
       ``(2) Marginal properties.--For marginal properties, 
     prepayments under paragraph (1) shall begin--
       ``(A) in the case of those properties producing on average 
     $500 or less per month in total royalties to the United 
     States, two years after the date of the enactment of this 
     section;
       ``(B) in the case of those properties producing on average 
     more than $500 but $1,000 or less per month in total 
     royalties to the United States, three years after the date of 
     the enactment of this section;
       ``(C) in the case of those properties producing on average 
     more than $1,000 but $1,500 or less per month in total 
     royalties to the United States, four years after the date of 
     the enactment of this section; and
       ``(D) in the case of those properties not described in 
     subparagraphs (A) through (C), five years after the date of 
     the enactment of this section.
       ``(3) Administration not cost-effective.--For a lease, the 
     administration of which is not cost-effective for the 
     Secretary to administer, prepayments under paragraph (1) 
     shall begin on the date of the enactment of this section.
       ``(4) Satisfaction of royalty obligation.--A lessee who 
     makes a prepayment under this section shall have satisfied in 
     full its obligation to pay royalty on production from the 
     lease or a portion of a lease and shall not be required to 
     submit any royalty reports to the Secretary. The prepayment 
     shall be shared by the Secretary with any State or other 
     recipient to the same extent as any royalty payment for such 
     lease.
       ``(5) Valuation.--The prepayment authorized under this 
     section shall only occur if the Secretary, the State 
     concerned, and the lessee determine that such prepayment is 
     based on the present value of the projected remaining 
     royalties from the production from the lease, based on 
     appropriate nominal discount rate for a comparable term. 
     Prior to accepting such prepayment, the Secretary and State 
     concerned shall agree that such prepayment is in the best 
     interest of the United States and the State concerned.
       ``(b) Alternative Accounting and Auditing Requirements.--
       ``(1) In general.--Within one year after the date of the 
     enactment of this section, for the marginal properties 
     referenced in subsection (a)(1), the Secretary shall provide 
     accounting, reporting, and auditing relief that will 
     encourage lessees to continue to produce and develop such 
     properties: Provided, That such relief will only be available 
     to lessees in a State that concurs. Prior to granting such 
     relief, the Secretary and the State concerned shall agree 
     that the type of marginal wells and relief provided under 
     this paragraph is in the best interest of the United States 
     and the State concerned.
       ``(2) Payment date.--For leases subject to this section, 
     the Secretary may allow royalties to be paid later than the 
     time specified in the lease.''.
       (b) Clerical Amendment.--The table of contents in section 1 
     of such Act (30 U.S.C. 1701) is amended by adding after the 
     item relating to section 115 the following new item:

``Sec. 116. Alternatives for marginal properties.''.

     SEC. 9519. ROYALTY IN KIND.

       (a) In General.--
       (1) OCS.--Section 27(a)(1) of the Outer Continental Shelf 
     Lands Act (43 U.S.C. 1353(a)(1)) is amended by adding at the 
     end the following:
     ``Any royalty or net profit share of oil or gas accruing to 
     the United States under any

[[Page 1676]]

     such lease, at the Secretary's option, may be taken in kind 
     at or near the lease (unless the lease expressly provides for 
     delivery at a different location) upon prior written notice 
     given reasonably in advance by the Secretary to the lessee. 
     Once the United States has commenced taking royalty in kind, 
     it shall continue to do so until a reasonable time after the 
     Secretary has provided written notice reasonably in advance 
     to the lessee that it will resume taking royalty in value. 
     Delivery of royalty in kind by the lessee shall satisfy in 
     full the lessee's royalty obligation. Once the oil or gas is 
     delivered, the lessee shall not be subject to the reporting 
     and recordkeeping requirements under section 103 for its 
     share of oil and gas production other than records necessary 
     to verify the quantity of oil or gas delivered.''.
       (2) Onshore.--Section 36 of the Mineral Leasing Act (30 
     U.S.C. 192) is amended by adding at the end the following 
     undesignated paragraph:
       ``Notwithstanding the provisions of the previous paragraph, 
     any royalty or net profit share of oil or gas accruing to the 
     United States under any lease issued or maintained by the 
     Secretary for the exploration, production and development of 
     oil and gas on Federal lands, at the Secretary's option, may 
     be taken in kind at or near the lease (unless the lease 
     expressly provides for delivery at a different location) 
     after prior written notice given reasonably in advance by the 
     Secretary to the lessee. Once the United States has commenced 
     taking royalty in kind, it shall continue to do so until a 
     reasonable time after the Secretary has provided written 
     notice reasonably in advance to the lessee that it will 
     resume taking royalty in value. Delivery of royalty in kind 
     by the lessee shall satisfy in full the lessee's royalty 
     obligation. Once the oil or gas is delivered, the lessee 
     shall not be subject to the reporting and recordkeeping 
     requirements under section 103 for its share of oil and gas 
     production other than records necessary to verify the 
     quantity of oil or gas delivered.''.
       (b) Sale.--Sections 27(b)(1) and (c)(1) of the Outer 
     Continental Shelf Lands Act (43 U.S.C. 1353(c)(1)) are each 
     amended by striking ``competitive bidding for not more than 
     its regulated price, or, if no regulated price applies, not 
     less than its fair market value'' and inserting ``competitive 
     bidding or private sale''.

     SEC. 9520. ROYALTY SIMPLIFICATION AND COST-EFFECTIVE AUDIT 
                   AND COLLECTION REQUIREMENTS.

       (a) In General.--Section 101 of the Federal Oil and Gas 
     Royalty Management Act of 1982 (30 U.S.C. 1711) is amended by 
     adding at the end the following:
       ``(d)(1) For the purpose of reducing costs and increasing 
     net royalties to the United States and the States, the 
     Secretary, in consultation with States concerned, shall, 
     within one year after the date of the enactment of this 
     subsection, streamline and simplify current royalty 
     management requirements and practices, including royalty 
     reporting, instructions, audits and collections. This 
     streamlining and simplification shall specifically include--
       ``(A) elimination of all unnecessary royalty and production 
     reports;
       ``(B) modification and simplification of remaining reports 
     and associated instructions to eliminate redundant or 
     unnecessary reports and information that are provided or can 
     be obtained from other required reports, forms, computer 
     databases or government agencies;
       ``(C) elimination or modifications of accounting, 
     reporting, audit and collection requirements that are not 
     cost-effective, particularly those associated with de minimis 
     monetary amounts;
       ``(D) implementation of specific recommendations and 
     comments contained in Secretarial sponsored teams, 
     rulemakings, and studies or those participated in by the 
     Secretary to the extent these recommendations simplify and 
     streamline royalty management requirements without adversely 
     affecting the Secretary's ability to meet obligations under 
     this Act or other mineral leasing statutes;
       ``(E) recommendations and comments submitted by interested 
     parties to the extent these recommendations and comments 
     simplify and streamline royalty management requirements 
     without adversely affecting the Secretary's ability to meet 
     obligations under this Act or other mineral leasing statutes.
       ``(2) The Secretary shall submit to the Congress a progress 
     report on the implementation of this section within six 
     months from date of enactment of this Act, and a final report 
     within 12 months from date of enactment of this Act. These 
     reports shall include--
       ``(A) a description of the extent to which the Secretary 
     has implemented the requirements in paragraph (1), including 
     a list of specific initiatives implemented;
       ``(B) a list and description of additional initiatives 
     identified by the Secretary to simplify and streamline 
     royalty management requirements and practices; and
       ``(C) cost savings of implemented initiatives including 
     impact on net-receipts sharing for States.
       ``(3) If the Secretary and the State concerned determines 
     that the cost of accounting and auditing for and collecting 
     of any obligation due for any oil and gas production exceeds 
     the amount of the obligation to be collected, the Secretary 
     shall waive such obligation.
       ``(4) The Secretary and the State concerned shall not 
     perform accounting, reporting, or audit activities if the 
     Secretary and the State concerned determines that the cost of 
     conducting the activity exceeds the expected amount to be 
     collected by the activity.
       ``(5) The Secretary and the State concerned shall develop a 
     reporting and audit strategy which eliminates multiple or 
     redundant reporting of information.''.
       (b) Paperwork Reduction.--Section 107 of the Federal Oil 
     and Gas Royalty Management Act of 1982 (30 U.S.C. 1717), as 
     amended by section 9513(b) and (c), is amended by adding at 
     the end the following:
       ``(e) Paperwork Reduction.--Administrative actions and 
     investigations (including, but not limited to, accounting 
     collection and audits) under this Act involving obligations 
     shall be subject to section 3518(c)(1)(B) of title 44, United 
     States Code.''.

     SEC. 9521. REPEALS.

       (a) FOGRMA.--Section 307 of the Federal Oil and Gas Royalty 
     Management Act of 1982 (30 U.S.C. 1755), is repealed. Section 
     1 of such Act (relating to the table of contents) is amended 
     by striking out the item relating to section 307.
       (b) OCSLA.--Effective on the date of the enactment of this 
     Act, section 10 of the Outer Continental Shelf Lands Act (43 
     U.S.C. 1339) is repealed.

     SEC. 9522. DELEGATION TO STATES.

       (a) General Authority.--Section 205(a) of the Federal Oil 
     and Gas Royalty Management Act of 1982 (30 U.S.C. 1735(a)) is 
     amended to read as follows:
       ``(a) Upon written request of any State, the Secretary is 
     authorized to delegate, in accordance with the provisions of 
     this section, all or part of the authorities and 
     responsibilities of the Secretary under this Act to conduct 
     inspections, such production and royalty accounting duties 
     and responsibilities as the Secretary determines are legally 
     delegable, all audit coverage, and investigations to any 
     State with respect to all Federal lands within the State.''.
       (b) Standardized Reporting.--Section 205(b) of such Act (30 
     U.S.C. 1735(b)) is amended--
       (1) by striking ``and'' at the end of paragraph (2);
       (2) by striking the comma at the end of paragraph (3) and 
     inserting ``; and''; and
       (3) by inserting after paragraph (3) the following:
       ``(4) the State agrees to adopt Federal standardized 
     reporting for Federal royalty accounting and collection 
     purposes,''.
       (c) Cost Effective Collection of De Minimis Royalty 
     Amounts.--Section 205 of such Act (30 U.S.C. 1735) is amended 
     by adding at the end the following:
       ``(g) Upon written request of any State, the Secretary is 
     authorized to delegate for any year the responsibility to 
     collect royalties from all Federal leases within the State if 
     the average amount per year of mineral revenues received by 
     the State on all such leases under all Federal mineral 
     leasing laws for the previous five years is less than 
     $100,000. The State may also request that the Secretary sell 
     the revenue stream from all or part of the Federal leases 
     within the State in accordance with section 116 of the 
     Federal Oil and Gas Royalty Management Act of 1982, as added 
     by section 9518 of the Federal Oil and Gas Royalty 
     Simplification and Fairness Act of 1995.''.

     SEC. 9523. PERFORMANCE STANDARD.

       Section 109 of the Federal Oil and Gas Royalty Management 
     Act of 1982 (30 U.S.C. 1719) is amended in subsections (c) 
     and (d), by striking ``knowingly or willfully'' and inserting 
     ``by willful misconduct or gross negligence'' each place it 
     appears.

     SEC. 9524. INDIAN LANDS.

       The amendments made by this part shall not apply with 
     respect to Indian lands, and the provisions of the Federal 
     Oil and Gas Royalty Management Act of 1982 as in effect on 
     the day before the date of enactment of this Act shall 
     continue to apply after such date with respect to Indian 
     lands.

     SEC. 9525. PRIVATE LANDS.

       This part shall not apply to any privately owned minerals.

     SEC. 9526. EFFECTIVE DATE.

       Except as provided by section 115(e), section 111(h), 
     section 111(k)(5), and section 116 of the Federal Oil and Gas 
     Royalty Management Act of 1982 (as added by this part), this 
     part, and the amendments made by this part, shall apply with 
     respect to the production of oil and gas after the first day 
     of the month following the date of the enactment of this Act.
                       Subtitle F--Indian Gaming

     SEC. 9601. INDIAN GAMING.

       (a) Commission Funding.--Section 18(a) of the Indian Gaming 
     Regulatory Act (25 U.S.C. 2717(a)) is amended by striking out 
     ``$1,500,000'' each place it appears and inserting in lieu 
     thereof ``$2,500,000''.
       (b) Authorization of Appropriations.--Section 19(a) of the 
     Indian Gaming Regulatory Act (25 U.S.C. 2718(a)) is amended 
     by striking out all after ``(a)'' and inserting in lieu 
     thereof the following: ``Notwithstanding the provisions of 
     section 18, no funds may be authorized to be appropriated for 
     the operation of the Commission.''.
                        Subtitle G--Consultation

     SEC. 9701. CONSULTATION.

       Section 7(d) of the Endangered Species Act of 1973 (16 
     U.S.C. 1536(d)) is amended to read as follows:
       ``(d) Limitation on Commitment of Resources.--After 
     initiation of consultation required under subsection (a)(2) 
     of this section, the Federal agency and the permit or

[[Page 1677]]

     license applicant shall not make any irreversible or 
     irretrievable commitment of resources with respect to the 
     agency action which has the effect of foreclosing the 
     formulation or implementation of any reasonable and prudent 
     alternative measures which would not violate subsection 
     (a)(2) of this section. This limitation on the commitment of 
     resources is only applicable to consultations regarding site-
     specific projects and activities, and shall not apply to any 
     consultation regarding an agency's periodic or long-term 
     planning activities, mission or policy statements, 
     programmatic documents, or general policies, regulations, or 
     activities, whether or not such consultation has previously 
     been initiated pursuant to a court order, and regardless of 
     the date on which consultation was ordered or initiated.''.
                          Subtitle H--Mapping

     SEC. 9801. SHORT TITLE.

       This subtitle may be cited as the ``Department of the 
     Interior Surveying and Mapping Efficiency and Economic 
     Opportunity Act of 1995''.

     SEC. 9802. SURVEYING AND MAPPING CONTRACTING PROGRAM.

       In order to provide private firms, including small and 
     small disadvantaged businesses, ample opportunities to 
     provide quality services to the Department of the Interior 
     (hereinafter referred to as the ``Department''), the 
     Secretary of the Interior (hereinafter referred to as the 
     ``Secretary'') shall conduct a surveying and mapping 
     contracting program.

     SEC. 9803. INVENTORY OF ACTIVITIES.

       (a) Publication of Inventory.--Not later than 90 days after 
     the date of enactment of this Act, the Secretary, in 
     consultation with the Administrator of the Office of Federal 
     Procurement Policy, the Administrator of the Small Business 
     Administration and the trade association of private surveying 
     and mapping firms, shall publish an inventory of surveying 
     and mapping activities in the Department of the Interior for 
     the last fiscal year completed prior to the date of enactment 
     of this Act.
       (b) Items Included.--The inventory shall include each of 
     the following:
       (1) The total dollar value of surveying and mapping 
     activities in each agency of the Department.
       (2) The total dollar value of surveying and mapping 
     activities in each agency of the Department performed by 
     contract with private sector firms.
       (3) The total dollar value of surveying and mapping 
     activities in each agency of the Department performed by 
     personnel of the Department.
       (4) The total dollar value of surveying and mapping 
     activities in each agency of the Department performed for any 
     other department or agency of the Federal Government.
       (5) The total dollar value of surveying and mapping 
     activities in each agency of the Department performed for any 
     State or political subdivision thereof, or for any foreign 
     government.
       (6) The total number of personnel involved in surveying and 
     mapping activities in each agency of the Department.

     SEC. 9804. PLAN TO INCREASE USE OF CONTRACTS.

       (a) Establishment.--Based on the inventory conducted 
     pursuant to section 9803 of this Act, not later than 180 days 
     after the date of enactment of this Act, the Secretary, in 
     consultation with the Administrator of the Office of Federal 
     Procurement Policy, the Administrator of the Small Business 
     Administration and the trade association of private surveying 
     and mapping firms, shall develop and implement a plan to 
     increase the use of contracts with private firms for 
     surveying and mapping services.
       (b) Items Included in Plan.--The plan established pursuant 
     to subsection (a) of this section shall include, but not be 
     limited to each of the following:
       (1) A reduction of surveying and mapping activities by 
     personnel in the Department that duplicate capabilities 
     available by contract from the private sector.
       (2) A reduction of acquisition and maintenance of surveying 
     and mapping equipment that duplicate capabilities and capital 
     investment already made by the private sector.
       (3) The elimination of unfair Government competition in 
     activities in which the Department uses its personnel to 
     perform surveying and mapping for which it shares the cost 
     with, is reimbursed for, or makes a grant to any other agency 
     of the Federal Government, a State or political subdivision 
     thereof, or a foreign government, for such activities, when 
     such activities can be obtained by contract from the private 
     sector.
       (4) The use of contracts to perform surveying and mapping 
     requirements of the Department created through attrition.
       (5) The enhancement of the leadership role of the 
     Department of the Interior in--
       (A) the preparation of standards and specifications;
       (B) research in surveying and mapping instrumentation and 
     procedures, and the prompt transfer of technology to the 
     private sector;
       (C) providing technical guidance, coordination, cost 
     sharing, cooperative efforts and administration in the use of 
     Federal funds for surveying and mapping activities, and the 
     development of geographic information systems, that are 
     performed by the private sector by the contract to Federal, 
     State, and local government agencies;
       (D) establishing a schedule with quantifiable goals for 
     increasing the use of contracts with private sector for 
     current and future surveying and mapping activities; and
       (E) using Department personnel to perform only those 
     surveying and mapping activities that are inherently 
     governmental in nature, necessary to keep current the skills 
     of such personnel for evaluating contractor performance and 
     administering contracts, and to perform basic research.

     SEC. 9805. REPORTS.

       The Secretary shall transmit to the Committee on Resources 
     of the House of Representatives and the Committee on Energy 
     and Natural Resources of the Senate a report on 
     implementation of the program not later than January 15 of 
     each year.

     SEC. 9806. DEFINITIONS.

       As used in this subtitle:
       (1) The term ``surveying and mapping'' means collecting, 
     storing, retrieving, or disseminating graphical or digital 
     data depicting natural or man-made physical features, 
     phenomena and boundaries of the earth and any information 
     related thereto, including but not limited to data shown on 
     or in relation to surveys, maps, and charts.
       (2) The ``contract'' means an instrument to retain private 
     firms with licensed, certified, or otherwise qualified 
     professionals in such fields as surveying, photogrammetry, 
     cartography, and geodesy, which shall be awarded in 
     accordance with the selection procedures in title IX of the 
     Federal Property and Administrative Services Act of 1949 (40 
     U.S.C. 541 and following).
        TITLE X--COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
                      Subtitle A--Water Resources

     SEC. 10001. COMMERCIAL CONCESSIONS AT CORPS OF ENGINEERS 
                   PROJECTS.

       Notwithstanding part 1 of subtitle C of title IX of this 
     Act, the Secretary of the Army shall not modify any 
     concession service agreement, concession license, or similar 
     instrument (or any policy or procedure relating to such 
     agreement, license, or agreement) except to the extent that 
     such modification is permitted under laws in effect on the 
     day before the date of the enactment of this Act.

     SEC. 10002. FEMA RADIOLOGICAL EMERGENCY PREPAREDNESS FEES.

       (a) In General.--The Director of the Federal Emergency 
     Management Agency may assess and collect fees applicable to 
     persons subject to radiological emergency preparedness 
     regulations issued by the Director.
       (b) Requirements.--The assessment and collection of fees by 
     the Director under subsection (a) shall be fair and equitable 
     and shall reflect the full amount of costs to the Agency of 
     providing radiological emergency planning, preparedness, 
     response, and associated services. Such fees shall be 
     assessed by the Director in a manner which reflects the use 
     of resources of the Agency for classes of regulated persons 
     and the administrative costs of collecting such fees.
       (c) Amount of Fees.--The aggregate amount of fees assessed 
     under subsection (a) in a fiscal year shall approximate, but 
     not be less than, 100 percent of the amounts anticipated by 
     the Director to be obligated for the radiological emergency 
     preparedness program of the Agency for such fiscal year.
       (d) Deposit of Fees in Treasury.--Fees received pursuant to 
     subsection (a) shall be deposited in the general fund of the 
     Treasury as offsetting receipts.
       (e) Expiration of Authority.--The authority of the Director 
     to assess and collect fees under subsection (a) shall expire 
     on September 30, 2002.
                   Subtitle B--Ocean Shipping Reform

     SEC. 10201. SHORT TITLE.

       This subtitle may be cited as the ``Ocean Shipping Reform 
     Act of 1995''.

                    CHAPTER 1--OCEAN SHIPPING REFORM

     SEC. 10211. PURPOSES.

       Section 2 of the Shipping Act of 1984 (46 U.S.C. App. 1701) 
     is amended--
       (1) by striking ``and'' at the end of paragraph (2);
       (2) by striking the period at the end of paragraph (3) and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(4) to permit carriers and shippers to develop 
     transportation arrangements to meet their specific needs.''.

     SEC. 10212. DEFINITIONS.

       Section 3 of the Shipping Act of 1984 (46 U.S.C. App. 1702) 
     is amended--
       (1) effective January 1, 1997--
       (A) by striking paragraph (9); and
       (B) by redesignating paragraphs (10) through (19) as 
     paragraphs (9) through (18), respectively; and
       (2) effective June 1, 1997--
       (A) by striking paragraph (4);
       (B) in paragraph (7) by striking ``a common tariff;'' and 
     inserting ``a common schedule of transportation rates, 
     charges, classifications, rules, and practices;'';
       (C) by striking paragraph (10) (as redesignated by 
     paragraph (1) of this section);
       (D) by striking paragraph (13) (as redesignated by 
     paragraph (1) of this section);
       (E) by striking paragraph (16) (as redesignated by 
     paragraph (1) of this section);
       (F) by striking paragraph (18) (as redesignated by 
     paragraph (1) of this section) and inserting the following:
       ``(18) `ocean freight forwarder' means a person that--
       ``(A)(i) in the United States, dispatches shipments from 
     the United States via a common carrier and books or otherwise 
     arranges space for those shipments on behalf of shippers; or

[[Page 1678]]

       ``(ii) processes the documentation or performs related 
     activities incident to those shipments; or
       ``(B) acts as a common carrier that does not operate the 
     vessels by which the ocean transportation is provided, and is 
     a shipper in its relationship with an ocean common 
     carrier.'';
       (G) by striking paragraph (21);
       (H) in paragraph (23)--
       (i) by striking ``or'' the second place it appears and 
     inserting a comma; and
       (ii) by striking the period and inserting ``, a shippers' 
     association, or an ocean freight forwarder that accepts 
     responsibility for payment of the ocean freight.'';
       (I) by striking paragraph (24) and inserting the following:
       ``(24) `shippers' association' means a group of shippers 
     that consolidates or distributes freight, on a nonprofit 
     basis for the members of the group in order to secure 
     carload, truckload, or other volume rates or ocean 
     transportation contracts.''; and
       (J) by inserting after paragraph (18) (as redesignated by 
     paragraph (1) of this section) the following:
       ``(19) `ocean transportation contract' means a contract in 
     writing separate from the bill of lading or receipt between 1 
     or more common carriers or a conference and 1 or more 
     shippers to provide specified services under specified rates 
     and conditions.''.

     SEC. 10213. AGREEMENTS WITHIN THE SCOPE OF THE ACT.

       Effective June 1, 1997, section 4(a) of the Shipping Act of 
     1984 (46 U.S.C. App. 1703(a)) is amended--
       (1) in paragraph (5) by striking ``non-vessel-operating 
     common carriers'' and inserting ``ocean freight forwarders''; 
     and
       (2) by striking paragraph (7) and inserting the following:
       ``(7) discuss any matter related to ocean transportation 
     contracts, and enter ocean transportation contracts and 
     agreements related to those contracts.''.

     SEC. 10214. AGREEMENTS.

       Section 5 of the Shipping Act of 1984 (46 U.S.C. App. 1704) 
     is amended--
       (1) effective January 1, 1997--
       (A) in subsection (b)(4) by striking ``at the request of 
     any member, require an independent neutral body to police 
     fully'' and inserting ``state the provisions, if any, for the 
     policing of'';
       (B) in subsection (b)(7) by striking ``and'' at the end;
       (C) in subsection (b)(8) by striking the period and 
     inserting ``; and''; and
       (D) by adding at the end of subsection (b) the following:
       ``(9) provide that a member of the conference may enter 
     individual and independent negotiations and may conclude 
     individual and independent service contracts under section 8 
     of this Act.'';
       (2) effective June 1, 1997--
       (A) by striking subsection (b)(8) and inserting the 
     following:
       ``(8) provide that any member of the conference may take 
     independent action on any rate or service item agreed upon by 
     the conference for transportation provided under section 8(a) 
     of this Act upon not more than 3 business days' notice to the 
     conference, and that the conference will provide the new rate 
     or service item for use by that member, effective no later 
     than 3 business days after receipt of that notice, and by any 
     other member that notifies the conference that it elects to 
     adopt the independent rate or service item on or after its 
     effective date, in lieu of the existing conference provision 
     for that rate or service item;'';
       (B) in subsection (b)(9) by striking ``service'' and 
     inserting ``ocean transportation'' and by striking the period 
     at the end and inserting ``; and'';
       (C) by adding at the end of subsection (b) the following:
       ``(10) prohibit the conference from--
       ``(A) prohibiting or restricting the members of the 
     conference from engaging in individual negotiations for ocean 
     transportation contracts under section 8(b) with 1 or more 
     shippers; and
       ``(B) issuing mandatory rules or requirements affecting 
     ocean transportation contracts that may be entered by 1 or 
     more members of the conference, except that a conference may 
     require that a member of the conference disclose the 
     existence of an existing individual ocean transportation 
     contract or negotiations on an ocean transportation contract, 
     when the conference enters negotiations on an ocean 
     transportation contract with the same shipper.''; and
       (D) in subsection (e) by striking ``carrier that are 
     required to be set forth in a tariff,'' and inserting 
     ``carrier,''.

     SEC. 10215. EXEMPTION FROM ANTITRUST LAWS.

       Section 7 of the Shipping Act of 1984 (46 U.S.C. App. 1706) 
     is amended--
       (1) by striking subsection (a)(6) and inserting the 
     following:
       ``(6) subject to section 20(e)(2) of this Act, any 
     agreement, modification, or cancellation, in effect before 
     the effective date of this Act and any tariff, rate, fare, 
     charge, classification, rule, or regulation explanatory 
     thereof implementing that agreement, modification, or 
     cancellation.''; and
       (2) in subsection (c)(1) by striking ``agency'' and 
     inserting ``agency, department,''.

     SEC. 10216. COMMON AND CONTRACT CARRIAGE.

       (a) In General.--Effective June 1, 1997--
       (1) section 502 of the High Seas Driftnet Fisheries 
     Enforcement Act (46 U.S.C. App. 1707a) is repealed; and
       (2) section 8 of the Shipping Act of 1984 (46 U.S.C. App. 
     1707) is amended to read as follows:

     ``SEC. 8. COMMON AND CONTRACT CARRIAGE.

       ``(a) Common Carriage.--
       ``(1) A common carrier and a conference shall make 
     available a schedule of transportation rates which shall 
     include the rates, terms, and conditions for transportation 
     services not governed by an ocean transportation contract, 
     and shall provide the schedule of transportation rates, in 
     writing, upon the request of any person. A common carrier and 
     a conference may assess a reasonable charge for complying 
     with a request for a rate, term, and condition, except that 
     the charge may not exceed the cost of providing the 
     information requested.
       ``(2) A dispute between a common carrier or conference and 
     a person as to the applicability of the rates, terms, and 
     conditions for ocean transportation services shall be decided 
     in an appropriate State or Federal court of competent 
     jurisdiction, unless the parties otherwise agree.
       ``(3) A claim concerning a rate for ocean transportation 
     services which involves false billing, false classification, 
     false weighing, false report of weight, or false measurement 
     shall be decided in an appropriate State or Federal court of 
     competent jurisdiction, unless the parties otherwise agree.
       ``(b) Contract Carriage.--
       ``(1) 1 or more common carriers or a conference may enter 
     into an ocean transportation contract with 1 or more 
     shippers. A common carrier may enter into ocean 
     transportation contracts without limitations concerning the 
     number of ocean transportation contracts or the amount of 
     cargo or space involved. The status of a common carrier as an 
     ocean common carrier is not affected by the number or terms 
     of ocean transportation contracts entered.
       ``(2) A party to an ocean transportation contract entered 
     under this section shall have no duty in connection with 
     services provided under the contract other than the duties 
     specified by the terms of the contract.
       ``(3)(A) An ocean transportation contract or the 
     transportation provided under that contract may not be 
     challenged in any court on the grounds that the contract 
     violates a provision of this Act.
       ``(B) The exclusive remedy for an alleged breach of an 
     ocean transportation contract is an action in an appropriate 
     State or Federal court of competent jurisdiction, unless the 
     parties otherwise agree.
       ``(4) The requirements and prohibitions concerning 
     contracting by conferences contained in sections 5(b) (9) and 
     (10) of this Act shall also apply to any agreement among one 
     or more ocean common carriers that is filed under section 
     5(a) of this Act.''.
       (b) Confidentiality of Contracts.--Effective January 1, 
     1998, section 8(b) of the Shipping Act of 1984 (46 U.S.C. 
     App. 1707(b)), as amended by subsection (a) of this section, 
     is amended by adding at the end the following:
       ``(5) A contract entered under this section may be made on 
     a confidential basis, upon agreement of the parties. An ocean 
     common carrier that is a member of a conference agreement may 
     not be prohibited or restricted from agreeing with 1 or more 
     shippers that the parties to the contract will not disclose 
     the rates, services, terms, or conditions of that contract to 
     any other member of the agreement, to the conference, to any 
     other carrier, shipper, conference, or to any other third 
     party.''.

     SEC. 10217. PROHIBITED ACTS.

       Section 10 of the Shipping Act of 1984 (46 U.S.C. App. 
     1709) is amended--
       (1) effective January 1, 1997, in subsection (b)--
       (A) by striking paragraph (1) and inserting the following:
       ``(1) except for service contracts, subject a person, 
     place, port, or shipper to unreasonable discrimination;''; 
     and
       (B) by striking paragraphs (2), (3), (4), and (8);
       (2) effective June 1, 1997, by striking subsection (b) and 
     inserting the following:
       ``(b) Common Carriers.--No common carrier, either alone or 
     in conjunction with any other person, directly or indirectly, 
     may--
       ``(1) except for ocean transportation contracts, subject a 
     person, place, port, or shipper to unreasonable 
     discrimination;
       ``(2) retaliate against any shipper by refusing, or 
     threatening to refuse, cargo space accommodations when 
     available, or resort to other unfair or unjustly 
     discriminatory methods because the shipper has patronized 
     another carrier or has filed a complaint, or for any other 
     reason;
       ``(3) employ any fighting ship;
       ``(4) subject any particular person, locality, class, or 
     type of shipper or description of traffic to an unreasonable 
     refusal to deal;
       ``(5) refuse to negotiate with a shippers' association;
       ``(6) knowingly and willfully accept cargo from or 
     transport cargo for the account of an ocean freight forwarder 
     that does not have a bond, insurance, or other surety as 
     required by section 19;
       ``(7) knowingly and willfully enter into an ocean 
     transportation contract with an ocean freight forwarder or in 
     which an ocean freight forwarder is listed as an affiliate 
     that does not have a bond, insurance, or other surety as 
     required by section 19; or
       ``(8)(A) knowingly disclose, offer, solicit, or receive any 
     information concerning the nature, kind, quantity, 
     destination, consignee, or routing of any property tendered 
     or delivered to a common carrier without the consent of the 
     shipper or consignee if that information--
       ``(i) may be used to the detriment or prejudice of the 
     shipper or consignee;

[[Page 1679]]

       ``(ii) may improperly disclose its business transaction to 
     a competitor; or
       ``(iii) may be used to the detriment or prejudice of any 
     common carrier;
     except that nothing in this paragraph shall be construed to 
     prevent providing the information, in response to legal 
     process, to the United States, or to an independent neutral 
     body operating within the scope of its authority to fulfill 
     the policing obligations of the parties to an agreement 
     effective under this Act. Nor shall it be prohibited for any 
     ocean common carrier that is a party to a conference 
     agreement approved under this Act, or any receiver, trustee, 
     lessee, agent, or employee of that carrier, or any other 
     person authorized by that carrier to receive information, to 
     give information to the conference or any person, firm, 
     corporation, or agency designated by the conference or to 
     prevent the conference or its designee from soliciting or 
     receiving information for the purpose of determining whether 
     a shipper or consignee has breached an agreement with a 
     conference or for the purpose of determining whether a member 
     of the conference has breached the conference agreement or 
     for the purpose of compiling statistics of cargo movement, 
     but the use of that information for any other purpose 
     prohibited by this Act or any other Act is prohibited; and
       ``(B) after December 31, 1997, the rates, services, terms, 
     and conditions of an ocean transportation contract may not be 
     disclosed under this paragraph if the contract has been made 
     on a confidential basis under section 8(b) of this Act.
     The exclusive remedy for a disclosure under this paragraph 
     shall be an action for breach of contract as provided in 
     section 8(b)(3) of this Act.'';
       (3) effective June 1, 1997--
       (A) by striking subsection (c)(1) and inserting the 
     following:
       ``(1) boycott, take any concerted action resulting in an 
     unreasonable refusal to deal, or implement a policy or 
     practice that results in an unreasonable refusal to deal;'';
       (B) in subsection (c)(5) by inserting ``as defined in 
     section 3(14)(A) of this Act'' after ``freight forwarder''; 
     and
       (C) in subsection (c)(6) by striking ``a service 
     contract.'' and inserting ``an ocean transportation 
     contract.''; and
       (4) effective June 1, 1997, in subsection (d)(3) by 
     striking ``subsection (b) (11), (12), and (16)'' and 
     inserting ``paragraphs (1), (4), and (8) of subsection (b)''.

     SEC. 10218. REPARATIONS.

       Effective June 1, 1997, section 11(g) of the Shipping Act 
     of 1984 (46 U.S.C. App. 1710(g)) is amended--
       (1) by inserting ``or counter-complainant'' after 
     ``complainant'' the second place it appears;
       (2) by striking ``10(b) (5) or (7)'' and inserting ``10(b) 
     (2) or (3)''; and
       (3) by striking the last sentence.

     SEC. 10219. FOREIGN LAWS AND PRACTICES.

       Effective on June 1, 1997, section 10002 of the Foreign 
     Shipping Practices Act of 1988 (46 U.S.C. App. 1710a) is 
     amended--
       (1) in subsection (a)(1)--
       (A) by striking `` `non-vessel-operating common 
     carrier',''; and
       (B) by inserting `` `ocean freight forwarder','' after `` 
     `ocean common carrier','';
       (2) in subsection (a)(4) by striking ``non-vessel-operating 
     common carrier operations,'';
       (3) in subsection (e)(1) by striking subparagraphs (B), 
     (C), and (D) and inserting the following:
       ``(B) suspension, in whole or in part, of the right of an 
     ocean common carrier to operate under any agreement filed 
     with the Secretary, including agreements authorizing 
     preferential treatment at terminals, preferential terminal 
     leases, space chartering, or pooling of cargo or revenues 
     with other ocean common carriers; and
       ``(C) a fee, not to exceed $1,000,000 per voyage.''; and
       (4) in subsection (h) by striking ``section 13(b)(5) of the 
     Shipping Act of 1984 (46 U.S.C. App. 1712(b)(5))'' and 
     inserting ``section 13(b)(2) of the Shipping Act of 1984 (46 
     U.S.C. App. 1712(b)(2))''.

     SEC. 10220. PENALTIES.

       Effective June 1, 1997, section 13 of the Shipping Act of 
     1984 (46 U.S.C. App. 1712) is amended--
       (1) in subsection (b)--
       (A) by striking paragraphs (1) and (3) and redesignating 
     paragraphs (2), (4), (5), and (6) as paragraphs (1), (2), 
     (3), and (4), respectively;
       (B) by striking paragraph (1), as so redesignated, and 
     inserting the following:
       ``(1) If the Secretary finds, after notice and an 
     opportunity for a hearing, that a common carrier has failed 
     to supply information ordered to be produced or compelled by 
     subpoena under section 12 of this Act, the Secretary may 
     request that the Secretary of the Treasury refuse or revoke 
     any clearance required for a vessel operated by that common 
     carrier. Upon request by the Secretary, the Secretary of the 
     Treasury shall, with respect to the vessel concerned, refuse 
     or revoke any clearance required by section 4197 of the 
     Revised Statutes of the United States (46 U.S.C. App. 91).''; 
     and
       (C) in paragraph (3), as so redesignated, by striking 
     ``finds appropriate,'' and all that follows through the 
     period at the end and inserting ``finds appropriate including 
     the imposition of the penalties authorized under paragraph 
     (2).''; and
       (2) in subsection (f)(1) by striking ``section 10 (a)(1), 
     (b)(1), or (b)(4)'' and inserting ``section 10(a)(1)''.

     SEC. 10221. REPORTS.

       (a) In General.--Effective January 1, 1997, section 15 of 
     the Shipping Act of 1984 (46 U.S.C. App. 1714) is amended--
       (1) in the section heading by striking ``and 
     certificates'';
       (2) by striking ``(a) Reports.--''; and
       (3) by striking subsection (b).
       (b) Clerical Amendment.--The table of contents contained in 
     the first section of such Act (46 U.S.C. App. 1701) is 
     amended by striking the item relating to section 15 and 
     inserting the following:

``Sec. 15. Reports.''.

     SEC. 10222. REGULATIONS.

       Section 17 of the Shipping Act of 1984 (46 U.S.C. App. 
     1716) is amended--
       (1) by striking ``(a)''; and
       (2) by striking subsection (b).

     SEC. 10223. REPEAL.

       (a) Repeal.--Section 18 of the Shipping Act of 1984 (46 
     U.S.C. App. 1717) is repealed.
       (b) Clerical Amendment.--The table of contents contained in 
     the first section of such Act (46 U.S.C. App. 1701) is 
     amended by striking the item relating to section 18.

     SEC. 10224. OCEAN FREIGHT FORWARDERS.

       Effective June 1, 1997, section 19 of the Shipping Act of 
     1984 (46 U.S.C. App. 1718) is amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a) License.--No person in the United States may act as 
     an ocean freight forwarder unless that person holds a license 
     issued by the Commission. The Commission shall issue a 
     forwarder's license to any person that the Commission 
     determines to be qualified by experience and character to 
     render forwarding services.'';
       (2) by redesignating subsections (b), (c), and (d) as 
     subsections (c), (d), and (e), respectively;
       (3) by inserting after subsection (a) the following:
       ``(b) Financial Responsibility.--
       ``(1) No person may act as an ocean freight forwarder 
     unless that person furnishes a bond, proof of insurance, or 
     other surety in a form and amount determined by the 
     Commission to insure financial responsibility that is issued 
     by a surety company found acceptable by the Secretary of the 
     Treasury.
       ``(2) A bond, insurance, or other surety obtained pursuant 
     to this section shall be available to pay any judgment for 
     damages against an ocean freight forwarder arising from its 
     transportation-related activities under this Act or order for 
     reparation issued pursuant to section 11 or 14 of this Act.
       ``(3) An ocean freight forwarder not domiciled in the 
     United States shall designate a resident agent in the United 
     States for receipt of service of judicial and administrative 
     process, including subpoenas.'';
       (4) in subsection (c), as redesignated by paragraph (2) of 
     this section, by striking ``a bond in accordance with 
     subsection (a)(2)'' and inserting ``a bond, proof of 
     insurance, or other surety in accordance with subsection 
     (b)(1)''; and
       (5) in subsection (e), as redesignated by paragraph (2) of 
     this section--
       (A) by striking paragraph (3) and redesignating paragraph 
     (4) as paragraph (3); and
       (B) by adding at the end the following:
       ``(4) No conference or group of 2 or more ocean common 
     carriers in the foreign commerce of the United States that is 
     authorized to agree upon the level of compensation paid to an 
     ocean freight forwarder, as defined in section 3(18)(A) of 
     this Act, may--
       ``(A) deny to any member of the conference or group the 
     right, upon notice of not more than 3 business days, to take 
     independent action on any level of compensation paid to an 
     ocean freight forwarder; or
       ``(B) agree to limit the payment of compensation to an 
     ocean freight forwarder, as defined in section 3(18)(A) of 
     this Act, to less than 1.25 percent of the aggregate of all 
     rates and charges which are applicable under a common 
     schedule of transportation rates provided under section 8(a) 
     of this Act, and which are assessed against the cargo on 
     which the forwarding services are provided.''.

     SEC. 10225. EFFECTS ON CERTAIN AGREEMENTS AND CONTRACTS.

       Section 20(e) of the Shipping Act of 1984 (46 U.S.C. App. 
     1719) is amended to read as follows:
       ``(e) Savings Provisions.--
       ``(1) Each service contract entered into by a shipper and 
     an ocean common carrier or conference before the date of the 
     enactment of the Ocean Shipping Reform Act of 1995 may remain 
     in full force and effect according to its terms.
       ``(2) This Act and the amendments made by this Act shall 
     not affect any suit--
       ``(A) filed before the date of the enactment of the Ocean 
     Shipping Reform Act of 1995;
       ``(B) with respect to claims arising out of conduct engaged 
     in before the date of the enactment of the Ocean Shipping 
     Reform Act of 1995, filed within 1 year after the date of the 
     enactment of the Ocean Shipping Reform Act of 1995;
       ``(C) with respect to claims arising out of conduct engaged 
     in after the date of the enactment of the Ocean Shipping 
     Reform Act of 1995 but before January 1, 1997, pertaining to 
     a violation of section 10(b) (1), (2), (3), (4), or (8), as 
     in effect before January 1, 1997, filed by June 1, 1997;
       ``(D) with respect to claims pertaining to the failure of a 
     common carrier or conference to file its tariffs or service 
     contracts in accordance with this Act in the period beginning 
     January 1, 1997, and ending June 1, 1997, filed by December 
     31, 1997; or

[[Page 1680]]

       ``(E) with respect to claims arising out of conduct engaged 
     in on or after the date of the enactment of the Ocean 
     Shipping Reform Act of 1995 but before June 1, 1997, filed by 
     December 31, 1997.''.

     SEC. 10226. REPEAL.

       (a) Repeal.--Effective June 1, 1997, section 23 of the 
     Shipping Act of 1984 (46 U.S.C. App. 1721) is repealed.
       (b) Clerical Amendment.--Effective June 1, 1997, the table 
     of contents contained in the first section of such Act (46 
     U.S.C. App. 1701) is amended by striking the item relating to 
     section 23.

     SEC. 10227. MARINE TERMINAL OPERATOR SCHEDULES.

       (a) In General.--Effective June 1, 1997, the Shipping Act 
     of 1984 (46 U.S.C. App. 1701 et seq.) is amended by adding at 
     the end the following:

     ``SEC. 24. MARINE TERMINAL OPERATOR SCHEDULES.

       ``A marine terminal operator shall make available to the 
     public a schedule of rates, regulations, and practices, 
     including limitations of liability, pertaining to receiving, 
     delivering, handling, or storing property at its marine 
     terminal. The schedule shall be enforceable as an implied 
     contract, without proof of actual knowledge of its 
     provisions, for any activity by the marine terminal operator 
     that is taken to--
       ``(1) efficiently transfer property between transportation 
     modes;
       ``(2) protect property from damage or loss;
       ``(3) comply with any governmental requirement; or
       ``(4) store property in excess of the terms of any other 
     contract or agreement, if any, entered into by the marine 
     terminal operator.''.
       (b) Clerical Amendment.--The table of contents contained in 
     the first section of such Act (46 U.S.C. App. 1701) is 
     amended by adding at the end the following:

``Sec. 24. Marine terminal operator schedules.''.

               CHAPTER 2--CONTROLLED CARRIERS AMENDMENTS

     SEC. 10231. CONTROLLED CARRIERS.

       Effective June 1, 1997, section 9 of the Shipping Act of 
     1984 (46 U.S.C. App. 1708) is amended--
       (1)(A) in the first sentence of subsection (a)--
       (i) by striking ``in its tariffs or service contracts filed 
     with the Commission''; and
       (ii) by striking ``in those tariffs or service contracts''; 
     and
       (B) in the last sentence of subsection (a) by striking 
     ``filed by a controlled carrier'';
       (2) in paragraphs (1) and (2) of subsection (b) by striking 
     ``filed'' and inserting ``published'';
       (3) in subsection (c) by striking the first sentence;
       (4) by striking subsection (d) and inserting the following:
       ``(d) Within 120 days of the receipt of information 
     requested by the Secretary under this section, the Secretary 
     shall determine whether the rates, charges, classifications, 
     rules, or regulations of a controlled carrier may be unjust 
     and unreasonable. If so, the Secretary shall issue an order 
     to the controlled carrier to show cause why those rates, 
     charges, classifications, rules, or regulations should not be 
     approved. Pending a determination, the Secretary may suspend 
     the rates, charges, classifications, rules, or regulations at 
     any time. No period of suspension may be greater than 180 
     days. Whenever the Secretary has suspended any rates, 
     charges, classifications, rules, or regulations under this 
     subsection, the affected carrier may publish and, after 
     notification to the Secretary, assess new rates, charges, 
     classifications, rules, or regulations--except that the 
     Secretary may reject the new rates, charges, classifications, 
     rules, or regulations if the Secretary determines that they 
     are unreasonable.'';
       (5) in subsection (f) by striking ``This'' and inserting 
     ``Subject to subsection (g), this''; and
       (6) by adding at the end the following:
       ``(g) The rate standards, information submissions, 
     remedies, reviews, and penalties in this section shall also 
     apply to ocean common carriers that are not controlled, but 
     who have been determined by the Secretary to be structurally 
     or financially affiliated with nontransportation entities or 
     organizations (government or private) in such a way as to 
     affect their pricing or marketplace behavior in an unfair, 
     predatory, or anticompetitive way that disadvantages an ocean 
     common carrier or carriers. The Secretary may make such 
     determinations upon request of any person or upon the 
     Secretary's own motion, after conducting an investigation and 
     a public hearing.
       ``(h) The Secretary shall issue regulations by June 1, 
     1997, that prescribe the procedures and requirements that 
     would govern how price and other information is to be 
     submitted by controlled carriers and carriers subject to 
     determinations made under subsection (g) when such 
     information would be needed to determine whether prices 
     charged by these carriers are unfair, predatory, or 
     anticompetitive.
       ``(i) In any instance where information provided to the 
     Secretary under this section does not result in an 
     affirmative finding or enforcement action by the Secretary 
     that information may not be made public and shall be exempt 
     from disclosure under section 552 of title 5, United States 
     Code, except as may be relevant to an administrative or 
     judicial action or proceeding. This section does not prevent 
     disclosure to either body of Congress or to a duly authorized 
     committee or subcommittee of Congress.''.

     SEC. 10232. NEGOTIATING STRATEGY TO REDUCE GOVERNMENT 
                   OWNERSHIP AND CONTROL OF COMMON CARRIERS.

       Not later than January 1, 1997, the Secretary of 
     Transportation shall develop, submit to Congress, and begin 
     implementing a negotiation strategy to persuade foreign 
     governments to divest themselves of ownership and control of 
     ocean common carriers (as that term is defined in section 
     3(18) of the Shipping Act of 1984 (46 U.S.C. App. 1702).

     SEC. 10233. ANNUAL REPORT BY THE SECRETARY.

       Not later than September 30, 1998, and annually thereafter, 
     the Secretary shall report to Congress on the actions taken 
     under the Foreign Shipping Practices Act (46 U.S.C. App. 
     1708), section 9 of the Shipping Act of 1984 (46 U.S.C. App. 
     1708), and section 10232 of this Act and the effect on United 
     States maritime employment of laws, rules, regulations, 
     policies, or practices of foreign governments, or any 
     practices of foreign carriers or other persons providing 
     maritime or maritime-related services in a foreign country 
     that result in the existence of conditions that adversely 
     affect the operations of United States carriers in United 
     States oceanborne trade.

       CHAPTER 3--ELIMINATION OF THE FEDERAL MARITIME COMMISSION

     SEC. 10241. PLAN FOR AGENCY TERMINATION.

       (a) In General.--No later than 30 days after the date of 
     the enactment of this Act, the Director of the Office of 
     Management and Budget, in consultation with the Secretary of 
     Transportation, shall submit to Congress a plan to eliminate 
     the Federal Maritime Commission no later than October 1, 
     1997. The plan shall include a timetable for the transfer of 
     remaining functions of the Federal Maritime Commission to the 
     Secretary of Transportation beginning as soon as feasible in 
     fiscal year 1996. The plan shall also address matters related 
     to personnel and other resources necessary for the Secretary 
     of Transportation to perform the remaining functions of the 
     Federal Maritime Commission.
       (b) Implementation.--The Director of the Office of 
     Management and Budget shall implement the plan to eliminate 
     the Federal Maritime Commission submitted to Congress under 
     subsection (a) beginning as soon as feasible in fiscal year 
     1996.
       (c) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as may be necessary to carry out 
     this subtitle and the amendments made by this subtitle.
             Subtitle C--Midewin National Tallgrass Prairie

                     CHAPTER 1--GENERAL PROVISIONS

     SEC. 10301. SHORT TITLE.

       This subtitle may be cited as the ``Illinois Land 
     Conservation Act of 1995''.

     SEC. 10302. DEFINITIONS.

       For purposes of this subtitle, the following definitions 
     apply:
       (1) Administrator.--The term ``Administrator'' means the 
     Administrator of the United States Environmental Protection 
     Agency.
       (2) Agricultural purposes.--The term ``agricultural 
     purposes'' means the use of land for row crops, pasture, hay, 
     and grazing.
       (3) Arsenal.--The term ``Arsenal'' means the Joliet Army 
     Ammunition Plant located in the State of Illinois.
       (4) CERCLA.--The term ``CERCLA'' means the Comprehensive 
     Environmental Response, Compensation, and Liability Act of 
     1980 (42 U.S.C. 9601 et seq.).
       (5) Defense environmental restoration program.--The term 
     ``Defense Environmental Restoration Program'' means the 
     program of environmental restoration for defense 
     installations established by the Secretary of Defense under 
     section 2701 of title 10, United States Code.
       (6) Environmental law.--The term ``environmental law'' 
     means all applicable Federal, State, and local laws, 
     regulations, and requirements related to protection of human 
     health, natural and cultural resources, or the environment, 
     including CERCLA, the Solid Waste Disposal Act (42 U.S.C. 
     6901 et seq.), the Federal Water Pollution Control Act (33 
     U.S.C. 1251 et seq.), the Clean Air Act (42 U.S.C. 7401 et 
     seq.), the Federal Insecticide, Fungicide, and Rodenticide 
     Act (7 U.S.C. 136 et seq.), the Toxic Substances Control Act 
     (15 U.S.C. 2601 et seq.), and the Safe Drinking Water Act (42 
     U.S.C. 300f et seq.).
       (7) Hazardous waste.--The term ``hazardous substance'' has 
     the meaning given such term by section 101(14) of CERCLA (42 
     U.S.C. 9601(14)).
       (8) MNP.--The term ``MNP'' means the Midewin National 
     Tallgrass Prairie established pursuant to section 10314 and 
     managed as a part of the National Forest System.
       (9) National cemetery.--The term ``national cemetery'' 
     means a cemetery established and operated as part of the 
     National Cemetery System of the Department of Veterans 
     Affairs and subject to the provisions of chapter 24 of title 
     38, United States Code.
       (10) Person.--The term ``person'' has the meaning given 
     such term by section 101(21) of CERCLA (42 U.S.C. 9601(21)).
       (11) Pollutant or contaminant.--The term ``pollutant or 
     contaminant'' has the meaning given such term by section 
     101(33) of CERCLA (42 U.S.C. 9601(33)).
       (12) Release.--The term ``release'' has the meaning given 
     such term by section 101(22) of CERCLA (42 U.S.C. 9601(22)).

[[Page 1681]]

       (13) Response action.--The term ``response action'' has the 
     meaning given the term ``response'' by section 101(25) of 
     CERCLA (42 U.S.C. 9601(25)).

   CHAPTER 2--CONVERSION OF JOLIET ARMY AMMUNITION PLANT TO MIDEWIN 
                       NATIONAL TALLGRASS PRAIRIE

     SEC. 10311. PRINCIPLES OF TRANSFER.

       (a) Land Use Plan.--The Congress ratifies in principle the 
     proposals generally identified by the land use plan which was 
     developed by the Joliet Arsenal Citizen Planning Commission 
     and unanimously approved on May 30, 1995.
       (b) Transfer Without Reimbursement.--The area constituting 
     the Midewin National Tallgrass Prairie shall be transferred, 
     without reimbursement, to the Secretary of Agriculture.
       (c) Management of MNP.--Management by the Secretary of 
     Agriculture of those portions of the Arsenal transferred to 
     the Secretary under this subtitle shall be in accordance with 
     sections 10314 and 10315 regarding the Midewin National 
     Tallgrass Prairie.
       (d) Security Measures.--The Secretary of the Army and the 
     Secretary of Agriculture shall each provide and maintain 
     physical and other security measures on such portion of the 
     Arsenal as is under the administrative jurisdiction of such 
     Secretary. Such security measures (which may include fences 
     and natural barriers) shall include measures to prevent 
     members of the public from gaining unauthorized access to 
     such portions of the Arsenal as are under the administrative 
     jurisdiction of such Secretary and that may endanger health 
     or safety.
       (e) Cooperative Agreements.--The Secretary of the Army, the 
     Secretary of Agriculture, and the Administrator are 
     individually and collectively authorized to enter into 
     cooperative agreements and memoranda of understanding among 
     each other and with other affected Federal agencies, State 
     and local governments, private organizations, and 
     corporations to carry out the purposes for which the Midewin 
     National Tallgrass Prairie is established.
       (f) Interim Activities of the Secretary of Agriculture.--
     Prior to transfer and subject to such reasonable terms and 
     conditions as the Secretary of the Army may prescribe, the 
     Secretary of Agriculture may enter upon the Arsenal property 
     for purposes related to planning, resource inventory, fish 
     and wildlife habitat manipulation (which may include 
     prescribed burning), and other such activities consistent 
     with the purposes for which the Midewin National Tallgrass 
     Prairie is established.

     SEC. 10312. TRANSFER OF MANAGEMENT RESPONSIBILITIES AND 
                   JURISDICTION OVER ARSENAL.

       (a) Initial Transfer of Jurisdiction.--Within 6 months 
     after the date of the enactment of this Act, the Secretary of 
     the Army shall effect the transfer of those portions of the 
     Arsenal property identified for transfer to the Secretary of 
     Agriculture pursuant to subsection (d). The Secretary of the 
     Army shall transfer to the Secretary of Agriculture only 
     those portions of the Arsenal for which the Secretary of the 
     Army and the Administrator concur that no further action is 
     required under any environmental law and which therefore have 
     been eliminated from the areas to be further studied pursuant 
     to the Defense Environmental Restoration Program for the 
     Arsenal. Within 4 months after the date of the enactment of 
     this Act, the Secretary of the Army and the Administrator 
     shall provide to the Secretary of Agriculture all existing 
     documentation supporting such finding and all existing 
     information relating to the environmental conditions of the 
     portions of the Arsenal to be transferred to the Secretary of 
     Agriculture pursuant to this subsection.
       (b) Additional Transfers.--The Secretary of the Army shall 
     transfer to the Secretary of Agriculture in accordance with 
     section 10316(c) any portion of the property generally 
     identified in subsection (d) and not transferred under 
     subsection (a) after the Secretary of the Army and the 
     Administrator concur that no further action is required at 
     that portion of property under any environmental law and that 
     such portion is therefore eliminated from the areas to be 
     further studied pursuant to the Defense Environmental 
     Restoration Program for the Arsenal. At least 2 months before 
     any transfer under this subsection, the Secretary of the Army 
     and the Administrator shall provide to the Secretary of 
     Agriculture all existing documentation supporting such 
     finding and all existing information relating to the 
     environmental conditions of the portion of the Arsenal to be 
     transferred. Transfer of jurisdiction pursuant to this 
     subsection may be accomplished on a parcel-by-parcel basis.
       (c) Effect on Continued Responsibilities and Liability of 
     Secretary of the Army.--Subsections (a) and (b), and their 
     requirements, shall not in any way affect the 
     responsibilities and liabilities of the Secretary of the Army 
     specified in section 10313.
       (d) Identification of Portions for Transfer for MNP.--The 
     lands to be transferred to the Secretary of Agriculture under 
     subsections (a) and (b) shall be identified on a map or maps 
     which shall be agreed to by the Secretary of the Army and the 
     Secretary of Agriculture. Generally, the land to be 
     transferred to the Secretary of Agriculture shall be all the 
     real property and improvements comprising the Arsenal, except 
     for lands and facilities described in subsection (e) or 
     designated for transfer or disposal under section 10316 or 
     chapter 3.
       (e) Property Used for Environmental Cleanup.--
       (1) Retention.--The Secretary of the Army shall retain 
     jurisdiction, authority, and control over real property at 
     the Arsenal to be used for--
       (A) water treatment;
       (B) the treatment, storage, or disposal of any hazardous 
     substance, pollutant or contaminant, hazardous material, or 
     petroleum products or their derivatives;
       (C) other purposes related to any response action at the 
     Arsenal; and
       (D) other actions required at the Arsenal under any 
     environmental law to remediate contamination or conditions of 
     noncompliance with any environmental law.
       (2) Conditions.--The Secretary of the Army shall consult 
     with the Secretary of Agriculture regarding the 
     identification and management of the real property retained 
     under this subsection and ensure that activities carried out 
     on that property are consistent, to the extent practicable, 
     with the purposes for which the Midewin National Tallgrass 
     Prairie is established, as specified in section 10314(c), and 
     with the other provisions of sections 10314 and 10315.
       (3) Priority of response actions.--In the case of any 
     conflict between management of the property by the Secretary 
     of Agriculture and any response action, or any other action 
     required under any other environmental law, including actions 
     to remediate petroleum products of their derivatives, the 
     response action or other action shall take priority.
       (f) Surveys.--All costs of necessary surveys for the 
     transfer of jurisdiction of Arsenal property from the 
     Secretary of the Army to the Secretary of Agriculture shall 
     be borne by the Secretary of Agriculture.

     SEC. 10313. CONTINUATION OF RESPONSIBILITY AND LIABILITY OF 
                   SECRETARY OF THE ARMY FOR ENVIRONMENTAL 
                   CLEANUP.

       (a) Responsibility.--The liabilities and responsibilities 
     of the Secretary of the Army under any environmental law 
     shall not transfer under any circumstances to the Secretary 
     of Agriculture as a result of the property transfers made 
     under section 10312 or section 10316, or as a result of 
     interim activities of the Secretary of Agriculture on Arsenal 
     property under section 10311(f). With respect to the real 
     property at the Arsenal, the Secretary of the Army shall 
     remain liable for and continue to carry out--
       (1) all response actions required under CERCLA at or 
     related to the property;
       (2) all remediation actions required under any other 
     environmental law at or related to the property; and
       (3) all actions required under any other environmental law 
     to remediate petroleum products or their derivatives 
     (including motor oil and aviation fuel) at or related to the 
     property.
       (b) Liability.--
       (1) In general.--Nothing in this Act shall be construed to 
     effect, modify, amend, repeal, alter, limit, or otherwise 
     change, directly or indirectly, the responsibilities or 
     liabilities under any environmental law of any person 
     (including the Secretary of Agriculture), except as provided 
     in paragraph (3) with respect to the Secretary of 
     Agriculture.
       (2) Liability of secretary of the army.--The Secretary of 
     the Army shall retain any obligation or other liability at 
     the Arsenal that the Secretary may have under CERCLA and 
     other environmental laws. Following transfer of any portions 
     of the Arsenal pursuant to this Act, the Secretary of the 
     Army shall be accorded all easements and access to such 
     property as may be reasonably required to carry out such 
     obligation or satisfy such liability.
       (3) Special rules for secretary of agriculture.--The 
     Secretary of Agriculture shall not be responsible or liable 
     under any environmental law for matters which are in any way 
     related directly or indirectly to activities of the Secretary 
     of the Army, or any party acting under the authority of the 
     Secretary in connection with the Defense Environmental 
     Restoration Program, at the Arsenal and which are for any of 
     the following:
       (A) Costs of response actions required under CERCLA at or 
     related to the Arsenal.
       (B) Costs, penalties, or fines related to noncompliance 
     with any environmental law at or related to the Arsenal or 
     related to the presence, release, or threat of release of any 
     hazardous substance, pollutant, contaminant, hazardous waste 
     or hazardous material of any kind at or related to the 
     Arsenal, including contamination resulting from migration of 
     hazardous substances, pollutants, contaminants, hazardous 
     materials, or petroleum products or their derivatives 
     disposed during activities of the Department of the Army.
       (C) Costs of actions necessary to remedy such noncompliance 
     or other problem specified in subparagraph (B).
       (c) Payment of Response Action Costs.--Any Federal 
     department or agency that had or has operations at the 
     Arsenal resulting in the release or threatened release of 
     hazardous substances, pollutants, or contaminants shall pay 
     the cost of related response actions, or related actions 
     under other environmental laws, including actions to 
     remediate petroleum products or their derivatives.
       (d) Consultation.--The Secretary of Agriculture shall 
     consult with the Secretary of the Army with respect to the 
     Secretary of Agriculture's management of real property 
     included in the Midewin National Tallgrass Prairie subject to 
     any response action or other action at the Arsenal being 
     carried out by or under the authority of the Secretary of the 
     Army under any environmental law. The Secretary of 
     Agriculture shall consult with the Secretary of the Army 
     prior to under

[[Page 1682]]

     taking any activities on the Midewin National Tallgrass 
     Prairie that may disturb the property to ensure that such 
     activities will not exacerbate contamination problems or 
     interfere with performance by the Secretary of the Army of 
     response actions at the property. In carrying out response 
     actions at the Arsenal, the Secretary of the Army shall 
     consult with the Secretary of Agriculture to ensure that such 
     actions are carried out in a manner consistent with the 
     purposes for which the Midewin National Tallgrass Prairie is 
     established, as specified in section 10314(c), and the other 
     provisions of sections 10314 and 10315.

     SEC. 10314. ESTABLISHMENT AND ADMINISTRATION OF MIDEWIN 
                   NATIONAL TALLGRASS PRAIRIE.

       (a) Establishment.--On the effective date of the initial 
     transfer of jurisdiction of portions of the Arsenal to the 
     Secretary of Agriculture under section 10312(a), the 
     Secretary of Agriculture shall establish the Midewin National 
     Tallgrass Prairie. The MNP shall--
       (1) be administered by the Secretary of Agriculture; and
       (2) consist of the real property so transferred and such 
     other portions of the Arsenal subsequently transferred under 
     section 10312(b) or 10316.
       (b) Administration.--
       (1) In general.--The Secretary of Agriculture shall manage 
     the Midewin National Tallgrass Prairie as a part of the 
     National Forest System in accordance with this Act and the 
     laws, rules, and regulations pertaining to the National 
     Forest System, except that the Bankhead-Jones Farm Tenant Act 
     of 1937 (7 U.S.C. 1010-1012) shall not apply to the MNP.
       (2) Initial management activities.--In order to expedite 
     the administration and public use of the Midewin National 
     Tallgrass Prairie, the Secretary of Agriculture may conduct 
     management activities at the MNP to effectuate the purposes 
     for which the MNP is established, as specified in subsection 
     (c), in advance of the development of a land and resource 
     management plan for the MNP.
       (3) Land and resource management plan.--In developing a 
     land and resource management plan for the Midewin National 
     Tallgrass Prairie, the Secretary of Agriculture shall consult 
     with the Illinois Department of Conservation and local 
     governments adjacent to the MNP and provide an opportunity 
     for public comment. Any parcel transferred to the Secretary 
     of Agriculture under this Act after the development of a land 
     and resource management plan for the MNP may be managed in 
     accordance with such plan without need for an amendment to 
     the plan.
       (c) Purposes of the Midewin National Tallgrass Prairie.--
     The Midewin National Tallgrass Prairie is established to be 
     managed for National Forest System purposes, including the 
     following:
       (1) To manage the land and water resources of the MNP in a 
     manner that will conserve and enhance the native populations 
     and habitats of fish, wildlife, and plants.
       (2) To provide opportunities for scientific, environmental, 
     and land use education and research.
       (3) To allow the continuation of agricultural uses of lands 
     within the MNP consistent with section 10315(b).
       (4) To provide a variety of recreation opportunities that 
     are not inconsistent with the preceding purposes.
       (d) Other Land Acquisition for MNP.--
       (1) Land acquisition funds.--Notwithstanding section 7 of 
     the Land and Water Conservation Fund Act of 1965 (16 U.S.C. 
     460l-9), monies appropriated from the Land and Water 
     Conservation Fund established under section 2 of such Act (16 
     U.S.C. 460l-5) shall be available for acquisition of lands 
     and interests in land for inclusion in the Midewin National 
     Tallgrass Prairie.
       (2) Acquisition of private lands.--Acquisition of private 
     lands for inclusion in the Midewin National Tallgrass Prairie 
     shall be on a willing seller basis only.
       (e) Cooperation With States, Local Governments and Other 
     Entities.--In the management of the Midewin National 
     Tallgrass Prairie, the Secretary of Agriculture is authorized 
     and encouraged to cooperate with appropriate Federal, State, 
     and local governmental agencies, private organizations and 
     corporations. Such cooperation may include cooperative 
     agreements as well as the exercise of the existing 
     authorities of the Secretary under the Cooperative Forestry 
     Assistance Act of 1978 and the Forest and Rangeland Renewable 
     Resources Research Act of 1978. The objects of such 
     cooperation may include public education, land and resource 
     protection and cooperative management among government, 
     corporate, and private landowners in a manner which furthers 
     the purposes for which the Midewin National Tallgrass Prairie 
     is established.

     SEC. 10315. SPECIAL MANAGEMENT REQUIREMENTS FOR MIDEWIN 
                   NATIONAL TALLGRASS PRAIRIE.

       (a) Prohibition Against the Construction of New Through 
     Roads.--No new construction of any highway, public road, or 
     any part of the interstate system, whether Federal, State, or 
     local, shall be permitted through or across any portion of 
     the Midewin National Tallgrass Prairie. Nothing herein shall 
     preclude construction and maintenance of roads for use within 
     the MNP or the granting of authorizations for utility rights-
     of-way under applicable Federal law or preclude such access 
     as is necessary. Nothing herein shall preclude necessary 
     access by the Secretary of the Army for purposes of 
     restoration and cleanup as provided in this subtitle.
       (b) Agricultural Leases and Special Use Authorizations.--
     Within the Midewin National Tallgrass Prairie, use of the 
     lands for agricultural purposes shall be permitted subject to 
     the following terms and conditions:
       (1) If, at the time of transfer of jurisdiction under 
     section 10312, there exists any lease issued by the 
     Department of the Army, Department of Defense, or any other 
     agency thereof, for agricultural purposes upon the parcel 
     transferred, the Secretary of Agriculture, upon transfer of 
     jurisdiction, shall convert the lease to a special use 
     authorization, the terms of which shall be identical in 
     substance to the lease that existed prior to the transfer, 
     including the expiration date and any payments owed the 
     United States.
       (2) The Secretary of Agriculture may issue special use 
     authorizations to persons for use of the Midewin National 
     Tallgrass Prairie for agricultural purposes. Special use 
     authorizations issued pursuant to this paragraph shall 
     include terms and conditions as the Secretary of Agriculture 
     may deem appropriate.
       (3) No agricultural special use authorization shall be 
     issued for agricultural purposes which has a term extending 
     beyond the date 20 years from the date of the enactment of 
     this Act, except that nothing in this Act shall preclude the 
     Secretary of Agriculture from issuing agricultural special 
     use authorizations or grazing permits which are effective 
     after 20 years from the date of the enactment of this Act for 
     purposes primarily related to erosion control, provision for 
     food and habitat for fish and wildlife, or other resource 
     management activities consistent with the purposes of the 
     Midewin National Tallgrass Prairie.
       (c) Treatment of Rental Fees.--Monies received pursuant to 
     subsection (b) shall be subject to distribution to the State 
     of Illinois and affected counties pursuant to the Acts of May 
     23, 1908, and March 1, 1911 (16 U.S.C. 500). All such monies 
     not distributed pursuant to such Acts shall be deposited into 
     the Treasury and shall constitute a special fund, which shall 
     be available to the Secretary of Agriculture, in such amounts 
     as are provided in advance in appropriation Acts, to cover 
     the cost to the United States of such prairie-improvement 
     work as the Secretary may direct. Any portion of any deposit 
     made to the fund which the Secretary determines to be in 
     excess of the cost of doing such work shall be transferred, 
     upon such determination, to miscellaneous receipts, Forest 
     Service Fund, as a National Forest receipt of the fiscal year 
     in which such transfer is made.
       (d) User Fees.--The Secretary of Agriculture is authorized 
     to charge reasonable fees for the admission, occupancy, and 
     use of the Midewin National Tallgrass Prairie and may 
     prescribe a fee schedule providing for reduced, or a waiver 
     of, fees for persons or groups engaged in authorized 
     activities including those providing volunteer services, 
     research, or education. The Secretary shall permit admission, 
     occupancy, and use at no additional charge for persons 
     possessing a valid Golden Eagle Passport or Golden Age 
     Passport.
       (e) Salvage of Improvements.--The Secretary of Agriculture 
     may sell for salvage value any facilities and improvements 
     which have been transferred to the Secretary pursuant to this 
     subtitle.
       (f) Treatment of User Fees and Salvage Receipts.--Monies 
     collected pursuant to subsections (d) and (e) shall be 
     covered into the Treasury and constitute a special fund to be 
     known as the Midewin National Tallgrass Prairie Restoration 
     Fund. Deposits in the Midewin National Tallgrass Prairie 
     Restoration Fund shall be available to the Secretary of 
     Agriculture, in such amounts as are provided in advance in 
     appropriation Acts, for restoration and administration of the 
     Midewin National Tallgrass Prairie, including construction of 
     a visitor and education center, restoration of ecosystems, 
     construction of recreational facilities (such as trails), 
     construction of administrative offices, and operation and 
     maintenance of the MNP.

     SEC. 10316. SPECIAL DISPOSAL RULES FOR CERTAIN ARSENAL 
                   PARCELS INTENDED FOR MNP.

       (a) Description of Parcels.--Except as provided in 
     subsection (b), the following areas are designated for 
     transfer or disposal pursuant to subsection (c):
       (1) Manufacturing Area--Study Area 1--Southern Ash Pile, 
     Study Area 2--Explosive Burning Ground, Study Area 3--
     Flashing Grounds, Study Area 4--Lead Azide Area, Study Area 
     10--Toluene Tank Farms, Study Area 11--Landfill, Study Area 
     12--Sellite Manufacturing Area, Study Area 14--Former Pond 
     Area, Study Area 15--Sewage Treatment Plant.
       (2) Load Assemble Packing Area--Group 61: Study Area L1, 
     Explosive Burning Ground: Study Area L2, Demolition Area: 
     Study Area L3, Landfill Area: Study Area L4, Salvage Yard: 
     Study Area L5, Group 1: Study Area L7, Group 2: Study Area 
     L8, Group 3: Study Area L9, Group 3A: Study Area L10, Group 
     4: Study Area L14, Group 5: Study Area L15, Group 8: Study 
     Area L18, Group 9: Study Area L19, Group 27: Study Area L23, 
     Group 62: Study Area L25, PVC Area: Study Area L33, including 
     all associated inventoried buildings and structures as 
     identified in the Joliet Army Ammunition Plant Plantwide 
     Building and Structures Report and the contaminate study 
     sites for both the Manufacturing and Load Assembly and 
     Packing sides of the Joliet Arsenal as delineated in the 
     Dames and Moore Final Report, Proposed Future Land Use Map, 
     dated May 30, 1995.
       (b) Exception.--The parcels described in subsection (a) 
     shall not include the property

[[Page 1683]]

      at the Arsenal designated for disposal under chapter 3.
       (c) Initial Offer to Secretary of Agriculture.--Within 6 
     months after the construction and installation of any 
     remedial design approved by the Administrator and required 
     for any lands described in subsection (a), the Administrator 
     shall provide to the Secretary of Agriculture all existing 
     information regarding the implementation of such remedy, 
     including information regarding its effectiveness. Within 3 
     months after the Administrator provides such information to 
     the Secretary of Agriculture, the Secretary of the Army shall 
     offer the Secretary of Agriculture the option of accepting a 
     transfer of the areas described in subsection (a), without 
     reimbursement, to be added to the Midewin National Tallgrass 
     Prairie and subject to the terms and conditions, including 
     the limitations on liability, contained in this subtitle. In 
     the event the Secretary of Agriculture declines such offer, 
     the property may be disposed of as the Secretary of the Army 
     would ordinarily dispose of such property under applicable 
     provisions of law. Any sale or other transfer of property 
     conducted pursuant to this subsection may be accomplished on 
     a parcel-by-parcel basis.

    CHAPTER 3--OTHER REAL PROPERTY DISPOSALS INVOLVING JOLIET ARMY 
                            AMMUNITION PLANT

     SEC. 10321. DISPOSAL OF CERTAIN REAL PROPERTY AT ARSENAL FOR 
                   A NATIONAL CEMETERY.

       (a) Transfer Required.--Subject to section 10331, the 
     Secretary of the Army shall transfer, without reimbursement, 
     to the Secretary of Veterans Affairs the parcel of real 
     property at the Arsenal described in subsection (b) for use 
     as a national cemetery.
       (b) Description of Property.--The real property to be 
     transferred under subsection (a) is a parcel of real property 
     at the Arsenal consisting of approximately 982 acres, the 
     approximate legal description of which includes part of 
     sections 30 and 31 Jackson Township, T34N R10E, and part of 
     sections 25 and 36 Channahon Township, T34N R9E, Will County, 
     Illinois, as depicted in the Arsenal Land Use Concept.
       (c) Security Measures.--The Secretary of Veterans Affairs 
     shall provide and maintain physical and other security 
     measures on the real property transferred under subsection 
     (a). Such security measures (which may include fences and 
     natural barriers) shall include measures to prevent members 
     of the public from gaining unauthorized access to the portion 
     of the Arsenal that is under the administrative jurisdiction 
     of the Secretary of Veterans Affairs and that may endanger 
     health or safety.
       (d) Surveys.--All costs of necessary surveys for the 
     transfer of jurisdiction of Arsenal properties from the 
     Secretary of the Army to the Secretary of Veterans Affairs 
     shall be borne solely by the Secretary of Veterans Affairs.

     SEC. 10322. DISPOSAL OF CERTAIN REAL PROPERTY AT ARSENAL FOR 
                   A COUNTY LANDFILL.

       (a) Transfer Required.--Subject to section 10331, the 
     Secretary of the Army shall transfer, without compensation, 
     to Will County, Illinois, all right, title, and interest of 
     the United States in and to the parcel of real property at 
     the Arsenal described in subsection (b), which shall be 
     operated as a landfill by the County.
       (b) Description of Property.--The real property to be 
     transferred under subsection (a) is a parcel of real property 
     at the Arsenal consisting of approximately 455 acres, the 
     approximate legal description of which includes part of 
     sections 8 and 17, Florence Township, T33N R10E, Will County, 
     Illinois, as depicted in the Arsenal Land Use Concept.
       (c) Condition on Conveyance.--The conveyance shall be 
     subject to the condition that the Army (or its agents or 
     assigns) may use the landfill established on the real 
     property transferred under subsection (a) for the disposal of 
     construction debris, refuse, and other nonhazardous materials 
     from the restoration and cleanup of the Arsenal property as 
     provided for in this Act. Such use shall be at no cost to the 
     Federal Government.
       (d) Reversionary Interest.--During the 5-year period 
     beginning on the date the Secretary of the Army makes the 
     conveyance under subsection (a), if the Secretary of the Army 
     determines that the conveyed real property is not being 
     operated as a landfill or that Will County, Illinois, is in 
     violation of the condition specified in subsection (c), then, 
     at the option of the United States, all right, title, and 
     interest in and to the property, including improvements 
     thereon, shall be subject to reversion to the United States. 
     In the event the United States exercises its option to cause 
     the property to revert, the United States shall have the 
     right of immediate entry onto the property. Any determination 
     of the Secretary of the Army under this subsection shall be 
     made on the record after an opportunity for a hearing.
       (e) Surveys.--All costs of necessary surveys for the 
     transfer of real property under this section shall be borne 
     by Will County, Illinois.
       (f) Additional Terms and Conditions.--The Secretary of the 
     Army may require such additional terms and conditions in 
     connection with the conveyance under this section as the 
     Secretary of the Army considers appropriate to protect the 
     interests of the United States.

     SEC. 10323. DISPOSAL OF CERTAIN REAL PROPERTY AT ARSENAL FOR 
                   ECONOMIC DEVELOPMENT.

       (a) Transfer Required.--Subject to section 10331, the 
     Secretary of the Army shall transfer to the State of 
     Illinois, all right, title, and interest of the United States 
     in and to the parcel of real property at the Arsenal 
     described in subsection (b), which shall be used for economic 
     redevelopment to replace all or a part of the economic 
     activity lost at the Arsenal.
       (b) Description of Property.--The real property to be 
     transferred under subsection (a) is a parcel of real property 
     at the Arsenal consisting of--
       (1) approximately 1,900 acres, the approximate legal 
     description of which includes part of section 30, Jackson 
     Township, Township 34 North, Range 10 East, and sections or 
     parts of sections 24, 25, 26, 35, and 36, Township 34 North, 
     Range 9 East, in Channahon Township, an area of 9.77 acres 
     around the Des Plaines River Pump Station located in the 
     southeast quarter of section 15, Township 34 North, Range 9 
     East of the Third Principal Meridian, in Channahon Township, 
     and an area of 511 feet by 596 feet around the Kankakee River 
     Pump Station in the Northwest Quarter of section 5, Township 
     33 North, Range 9 East, east of the Third Principal Meridian 
     in Wilmington Township, containing 6.99 acres, located along 
     the easterly side of the Kankakee Cut-Off in Will County, 
     Illinois, as depicted in the Arsenal Re-Use Concept, and the 
     connecting piping to the northern industrial site, as 
     described by the United States Army Report of Availability, 
     dated 13 December 1993; and
       (2) approximately 1,100 acres, the approximate legal 
     description of which includes part of sections 16, 17, 18 
     Florence Township, Township 33 North, Range 10 East, Will 
     County, Illinois, as depicted in the Arsenal Land Use 
     Concept.
       (c) Consideration.--The transfer under subsection (a) shall 
     be made without consideration. However, the transfer shall be 
     subject to the condition that, if the State of Illinois 
     reconveys all or any part of the transferred property to a 
     non-Federal entity, the State shall pay to the United States 
     an amount equal to the fair market value of the reconveyed 
     property. The Secretary of the Army shall determine the fair 
     market value of any property reconveyed by the State as of 
     the time of the reconveyance, excluding the value of 
     improvements made to the property by the State. The Secretary 
     may treat a lease of the property as a reconveyance if the 
     Secretary determines that the lease was used in an effort to 
     avoid operation of this subsection. Amounts received under 
     this subsection shall be deposited in the general fund of the 
     Treasury for purposes of deficit reduction.
       (d) Other Conditions of Conveyance.--
       (1) Redevelopment authority.--The transfer under subsection 
     (a) shall be subject to the further condition that the 
     Governor of the State of Illinois establish a redevelopment 
     authority to be responsible for overseeing the economic 
     redevelopment of the transferred land.
       (2) Time for establishment.--To satisfy the condition 
     specified in paragraph (1), the redevelopment authority shall 
     be established within 1 year after the date of the enactment 
     of this Act.
       (e) Reversionary Interest.--During the 20-year period 
     beginning on the date the Secretary of the Army makes the 
     transfer under subsection (a), if the Secretary determines 
     that a condition specified in subsection (c) or (d) is not 
     being satisfied or that the transferred land is not being 
     used for economic development purposes, then, at the option 
     of the United States, all right, title, and interest in and 
     to the property, including improvements thereon, shall be 
     subject to reversion to the United States. In the event the 
     United States exercises its option to cause the property to 
     revert, the United States shall have the right of immediate 
     entry onto the property. Any determination of the Secretary 
     under this subsection shall be made on the record after an 
     opportunity for a hearing.
       (f) Surveys.--All costs of necessary surveys for the 
     transfer of real property under this section shall be borne 
     by the State of Illinois.
       (g) Additional Terms and Conditions.--The Secretary of the 
     Army may require such additional terms and conditions in 
     connection with the transfer under this section as the 
     Secretary considers appropriate to protect the interests of 
     the United States.

                  CHAPTER 4--MISCELLANEOUS PROVISIONS

     SEC. 10331. DEGREE OF ENVIRONMENTAL CLEANUP.

       (a) In General.--Nothing in this Act shall be construed to 
     restrict or lessen the degree of cleanup at the Arsenal 
     required to be carried out under provisions of any 
     environmental law.
       (b) Response Action.--The establishment of the Midewin 
     National Tallgrass Prairie under chapter 2 and the additional 
     real property transfers and disposals required under chapter 
     3 shall not restrict or lessen in any way any response action 
     or degree of cleanup under CERCLA or other environmental law, 
     or any response action required under any environmental law 
     to remediate petroleum products or their derivatives 
     (including motor oil and aviation fuel), required to be 
     carried out under the authority of the Secretary of the Army 
     at the Arsenal and surrounding areas, except to the extent 
     otherwise allowable under such laws.
       (c) Environmental Quality of Property.--Any contract for 
     sale, deed, or other transfer of real property under chapter 
     3 shall be carried out in compliance with all applicable 
     provisions of section 120(h) of CERCLA and other 
     environmental laws.

[[Page 1684]]

                  Subtitle D--Miscellaneous Provisions

     SEC. 10401. EXTENSION OF HIGHER VESSEL TONNAGE DUTIES.

       (a) Extension of Duties.--Section 36 of the Act of August 
     5, 1909 (36 Stat. 111; 46 App. U.S.C. 121), is amended by 
     striking ``for fiscal years 1991, 1992, 1993, 1994, 1995, 
     1996, 1997, 1998,'' each place it appears and inserting ``for 
     fiscal years through fiscal year 2002,''.
       (b) Conforming Amendment.--The Act entitled ``An Act 
     concerning tonnage duties on vessels entering otherwise than 
     by sea'', approved March 8, 1910 (36 Stat. 234; 46 App. 
     U.S.C. 132), is amended by striking ``for fiscal years 1991, 
     1992, 1993, 1994, 1995, 1996, 1997, and 1998,'' and inserting 
     ``for fiscal years through fiscal year 2002,''.

     SEC. 10402. SALE OF GOVERNORS ISLAND, NEW YORK.

       (a) In General.--Notwithstanding any other provision of 
     law, the Administrator of General Services shall dispose of 
     by sale at fair market value all rights, title, and interests 
     of the United States in and to the land of, and improvements 
     to, Governors Island, New York.
       (b) Right of First Refusal.--Before a sale is made under 
     subsection (a) to any other parties, the State of New York 
     and the city of New York shall be given the right of first 
     refusal to purchase all or part of Governors Island. Such 
     right may be exercised by either the State of New York or the 
     city of New York or by both parties acting jointly.
       (c) Proceeds.--Proceeds from the disposal of Governors 
     Island under subsection (a) shall be deposited in the general 
     fund of the Treasury and credited as miscellaneous receipts.

     SEC. 10403. SALE OF AIR RIGHTS.

       (a) In General.--Notwithstanding any other provision of 
     law, the Administrator of General Services shall sell, at 
     fair market value and in a manner to be determined by the 
     Administrator, the air rights adjacent to Washington Union 
     Station described in subsection (b), including air rights 
     conveyed to the Administrator under subsection (d). The 
     Administrator shall complete the sale by such date as is 
     necessary to ensure that the proceeds from the sale will be 
     deposited in accordance with subsection (c).
       (b) Description.--The air rights referred to in subsection 
     (a) total approximately 16.5 acres and are depicted on the 
     plat map of the District of Columbia as follows:
       (1) Part of lot 172, square 720.
       (2) Part of lots 172 and 823, square 720.
       (3) Part of lot 811, square 717.
       (c) Proceeds.--Before September 30, 1996, proceeds from the 
     sale of air rights under subsection (a) shall be deposited in 
     the general fund of the Treasury and credited as 
     miscellaneous receipts.
       (d) Conveyance of Amtrak Air Rights.--
       (1) General rule.--As a condition of future Federal 
     financial assistance, Amtrak shall convey to the 
     Administrator of General Services on or before December 31, 
     1995, at no charge, all of the air rights of Amtrak described 
     in subsection (b).
       (2) Failure to comply.--If Amtrak does not meet the 
     condition established by paragraph (1), Amtrak shall be 
     prohibited from obligating Federal funds after March 1, 1996.
                TITLE XI--COMMITTEE ON VETERANS' AFFAIRS

     SEC. 11001. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This title may be cited as the ``Veterans 
     Reconciliation Act of 1995''.
       (b) Table of Contents.--The contents of this title 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.
             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.

       (a) Hospital and Medical Care.--Section 8013(e) of the 
     Omnibus Budget Reconciliation Act of 1990 (38 U.S.C. 1710 
     note) is amended by striking out ``September 30, 1998'' and 
     inserting in lieu thereof ``September 30, 2002''.
       (b) Outpatient Medications.--Section 1722A(c) of title 38, 
     United States Code, is amended by striking out ``September 
     30, 1998'' and inserting in lieu thereof ``September 30, 
     2002''.

     SEC. 11012. MEDICAL CARE COST RECOVERY AUTHORITY.

       Section 1729(a)(2)(E) of title 38, United States Code, is 
     amended by striking out ``before October 1, 1998,'' and 
     inserting ``before October 1, 2002,''.

     SEC. 11013. INCOME VERIFICATION AUTHORITY.

       Section 5317(g) of title 38, United States Code, is amended 
     by striking out ``September 30, 1998'' and inserting in lieu 
     thereof ``September 30, 2002''.

     SEC. 11014. LIMITATION ON PENSION FOR CERTAIN RECIPIENTS OF 
                   MEDICAID-COVERED NURSING HOME CARE.

       Section 5503(f)(7) of title 38, United States Code, is 
     amended by striking out ``September 30, 1998'' and inserting 
     in lieu thereof ``September 30, 2002''.

     SEC. 11015. HOME LOAN FEES.

       Section 3729(a) of title 38, United States Code, is 
     amended--
       (1) in paragraph (4), by striking out ``October 1, 1998'' 
     and inserting in lieu thereof ``October 1, 2002''; and
       (2) in paragraph (5)(C), by striking out ``October 1, 
     1998'' and inserting in lieu thereof ``October 1, 2002''.

     SEC. 11016. PROCEDURES APPLICABLE TO LIQUIDATION SALES ON 
                   DEFAULTED HOME LOANS GUARANTEED BY THE 
                   DEPARTMENT OF VETERANS AFFAIRS.

       Section 3732(c)(11) of title 38, United States Code, is 
     amended by striking out ``October 1, 1998'' and inserting 
     ``October 1, 2002''.
                       Subtitle B--Other Matters

     SEC. 11021. REVISION TO PRESCRIPTION DRUG COPAYMENT.

       (a) Increase in Amount of Copayment.--Section 1722A(a) of 
     title 38, United States Code, is amended--
       (1) in paragraph (1), by striking out ``$2'' and inserting 
     in lieu thereof ``$3'';
       (2) by striking out paragraph (2); and
       (3) by redesignating paragraph (3) as paragraph (2).
       (b) Recovery of Indebtedness.--(1) Section 5302 of such 
     title is amended by adding at the end the following new 
     subsection:
       ``(f) The Secretary may not waive under this section the 
     recovery of any payment or the collection of any indebtedness 
     owed under section 1722A of this title.''.
       (2) The amendment made by paragraph (1) shall apply with 
     respect to amounts that become due to the United States under 
     section 1722A of title 38, United States Code, on or after 
     the date of the enactment of this Act.

     SEC. 11022. ROUNDING DOWN OF COST-OF-LIVING ADJUSTMENTS IN 
                   COMPENSATION AND DIC RATES.

       (a) Fiscal Year 1996 COLA.--(1) Effective as of December 1, 
     1995, the Secretary of Veterans Affairs shall recompute any 
     increase in an adjustment that is otherwise provided by law 
     to be effective during fiscal year 1996 in the rates of 
     disability compensation and dependency and indemnity 
     compensation paid by the Secretary as such rates were in 
     effect on November 30, 1995. The recomputation shall provide 
     for the same percentage increase as provided under such law, 
     but with amounts so recomputed (if not a whole dollar amount) 
     rounded down to the next lower whole dollar amount (rather 
     than to the nearest whole dollar amount) and with each old-
     law DIC rate increased by the amount by which the new-law DIC 
     rate is increased (rather than by a uniform percentage).
       (2) For purposes of paragraph (1):
       (A) The term ``old-law DIC rate'' means a dollar amount in 
     effect under section 1311(a)(3) of title 38, United States 
     Code.
       (B) The term ``new-law DIC rate'' means the dollar amount 
     in effect under section 1311(a)(1) of title 38, United States 
     Code.
       (b) Out-Year Compensation COLAs.--(1) Chapter 11 of title 
     38, United States Code, is amended by inserting after section 
     1102 the following new section:

     ``Sec. 1103. Cost-of-living adjustments

       ``(a) In the computation of cost-of-living adjustments for 
     fiscal years 1997 through 2002 in the rates of, and dollar 
     limitations applicable to, compensation payable under this 
     chapter, such adjustments shall be made by a uniform 
     percentage that is no more than the percentage equal to the 
     social security increase for that fiscal year, with all 
     increased monthly rates and limitations (other than increased 
     rates or limitations equal to a whole dollar amount) rounded 
     down to the next lower whole dollar amount.
       ``(b) For purposes of this section, the term `social 
     security increase' means the percentage by which benefit 
     amounts payable under title II of the Social Security Act (42 
     U.S.C. 401 et seq.) are increased for any fiscal year as a 
     result of a determination under section 215(i) of such Act 
     (42 U.S.C. 415(i)).''.
       (2) The table of sections at the beginning of such chapter 
     is amended by inserting after the item relating to section 
     1102 the following new item:

``1103. Cost-of-living adjustments.''.

[[Page 1685]]

       (c) Out-Year DIC COLAs.--(1) Chapter 13 of title 38, United 
     States Code, is amended by inserting after section 1302 the 
     following new section:

     ``Sec. 1303. Cost-of-living adjustments

       ``(a) In the computation of cost-of-living adjustments for 
     fiscal years 1997 through 2002 in the rates of dependency and 
     indemnity compensation payable under this chapter, such 
     adjustments (except as provided in subsection (b)) shall be 
     made by a uniform percentage that is no more than the 
     percentage equal to the social security increase for that 
     fiscal year, with all increased monthly rates (other than 
     increased rates equal to a whole dollar amount) rounded down 
     to the next lower whole dollar amount.
       ``(b)(1) Cost-of-living adjustments for each of fiscal 
     years 1997 through 2002 in old-law DIC rates shall be in a 
     whole dollar amount that is no greater than the amount by 
     which the new-law DIC rate is increased for that fiscal year 
     as determined under subsection (a).
       ``(2) For purposes of paragraph (1):
       ``(A) The term `old-law DIC rates' means the dollar amounts 
     in effect under section 1311(a)(3) of this title.
       ``(B) The term `new-law DIC rate' means the dollar amount 
     in effect under section 1311(a)(1) of this title.
       ``(c) For purposes of this section, the term `social 
     security increase' means the percentage by which benefit 
     amounts payable under title II of the Social Security Act (42 
     U.S.C. 401 et seq.) are increased for any fiscal year as a 
     result of a determination under section 215(i) of such Act 
     (42 U.S.C. 415(i)).''.
       (2) The table of sections at the beginning of such chapter 
     is amended by inserting after the item relating to section 
     1302 the following new item:

``1303. Cost-of-living adjustments.''.

     SEC. 11023. REVISED STANDARD FOR LIABILITY FOR INJURIES 
                   RESULTING FROM DEPARTMENT OF VETERANS AFFAIRS 
                   TREATMENT.

       (a) Revised Standard.--Section 1151 of title 38, United 
     States Code, is amended--
       (1) by designating the second sentence as subsection (c);
       (2) by striking out the first sentence and inserting in 
     lieu thereof the following:
       ``(a) Compensation under this chapter and dependency and 
     indemnity compensation under chapter 13 of this title shall 
     be awarded for a qualifying additional disability of a 
     veteran or the qualifying death of a veteran in the same 
     manner as if such disability or death were service-connected.
       ``(b)(1) For purposes of this section, a disability or 
     death is a qualifying additional disability or a qualifying 
     death only if the disability or death--
       ``(A) was caused by Department health care and was a 
     proximate result of--
       ``(i) negligence on the part of the Department in 
     furnishing the Department health care; or
       ``(ii) an event not reasonably foreseeable; or
       ``(B) was incurred as a proximate result of the provision 
     of training and rehabilitation services by the Secretary 
     (including by a service-provider used by the Secretary for 
     such purpose under section 3115 of this title) as part of an 
     approved rehabilitation program under chapter 31 of this 
     title.
       ``(2) For purposes of this section, the term `Department 
     health care' means hospital care, medical or surgical 
     treatment, or an examination that is furnished under any law 
     administered by the Secretary to a veteran by a Department 
     employee or in a Department facility (as defined in section 
     1701(3)(A) of this title).
       ``(3) A disability or death of a veteran which is the 
     result of the veteran's willful misconduct is not a 
     qualifying disability or death for purposes of this 
     section.''; and
       (3) by adding at the end the following:
       ``(d) Effective with respect to injuries, aggravations of 
     injuries, and deaths occurring after September 30, 2002, a 
     disability or death is a qualifying additional disability or 
     a qualifying death for purposes of this section 
     (notwithstanding the provisions of subsection (b)(1)) if the 
     disability or death--
       ``(1) was the result of Department health care; or
       ``(2) was the result of the pursuit of a course of 
     vocational rehabilitation under chapter 31 of this title.''.
       (b) Conforming Amendments.--Subsection (c) of such section, 
     as designated by subsection (a)(1), is amended--
       (1) by striking out ``, aggravation,'' both places it 
     appears; and
       (2) by striking out ``sentence'' and inserting in lieu 
     thereof ``subsection''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any administrative or judicial determination 
     of eligibility for benefits under section 1151 of title 38, 
     United States Code, based on a claim that is received by the 
     Secretary on or after October 1, 1995, including any such 
     determination based on an original application or an 
     application seeking to reopen, revise, reconsider, or 
     otherwise readjudicate any claim for benefits under section 
     1151 of that title or any predecessor provision of law.

     SEC. 11024. ENHANCED LOAN ASSET SALE AUTHORITY.

       Section 3720(h)(2) of title 38, United States Code, is 
     amended by striking out ``December 31, 1995'' and inserting 
     in lieu thereof ``September 30, 1996''.

     SEC. 11025. WITHHOLDING OF PAYMENTS AND BENEFITS.

       (a) Notice Required in Lieu of Consent or Court Order.--
     Section 3726 of title 38, United States Code, is amended by 
     striking out ``unless'' and all that follows and inserting in 
     lieu thereof the following: ``unless the Secretary provides 
     such veteran or surviving spouse with notice by certified 
     mail with return receipt requested of the authority of the 
     Secretary to waive the payment of indebtedness under section 
     5302(b) of this title. If the Secretary does not waive the 
     entire amount of the liability, the Secretary shall then 
     determine whether the veteran or surviving spouse should be 
     released from liability under section 3713(b) of this title. 
     If the Secretary determines that the veteran or surviving 
     spouse should not be released from liability, the Secretary 
     shall notify the veteran or surviving spouse of that 
     determination and provide a notice of the procedure for 
     appealing that determination, unless the Secretary has 
     previously made such determination and notified the veteran 
     or surviving spouse of the procedure for appealing the 
     determination.''.
       (b) Conforming Amendment.--Section 5302(b) of such title is 
     amended by inserting ``with return receipt requested'' after 
     ``certified mail''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to any indebtedness to the United 
     States arising pursuant to chapter 37 of title 38, United 
     States Code, before, on, or after the date of the enactment 
     of this Act.
               Subtitle C--Health Care Eligibility Reform

     SEC. 11031. HOSPITAL CARE AND MEDICAL SERVICES.

       (a) Eligibility for Care.--Section 1710(a) of title 38, 
     United States Code, is amended by striking out paragraphs (1) 
     and (2) and inserting the following:
       ``(a)(1) The Secretary shall, to the extent and in the 
     amount provided in advance in appropriations Acts for these 
     purposes, provide hospital care and medical services, and may 
     provide nursing home care, which the Secretary determines is 
     needed to any veteran--
       ``(A) with a compensable service-connected disability;
       ``(B) whose discharge or release from active military, 
     naval, or air service was for a compensable disability that 
     was incurred or aggravated in the line of duty;
       ``(C) who is in receipt of, or who, but for a suspension 
     pursuant to section 1151 of this title (or both a suspension 
     and the receipt of retired pay), would be entitled to 
     disability compensation, but only to the extent that such 
     veteran's continuing eligibility for such care is provided 
     for in the judgment or settlement provided for in such 
     section;
       ``(D) who is a former prisoner of war;
       ``(E) of the Mexican border period or of World War I;
       ``(F) who was exposed to a toxic substance, radiation, or 
     environmental hazard, as provided in subsection (e); and
       ``(G) who is unable to defray the expenses of necessary 
     care as determined under section 1722(a) of this title.
       ``(2) In the case of a veteran who is not described in 
     paragraph (1), the Secretary may, to the extent resources and 
     facilities are available and subject to the provisions of 
     subsection (f), furnish hospital care, medical services, and 
     nursing home care which the Secretary determines is 
     needed.''.
       (b) Conforming Amendments.--(1) Section 1710(e) of such 
     title is amended--
       (A) in paragraph (1), by striking out ``hospital care and 
     nursing home care'' in subparagraphs (A), (B), and (C) and 
     inserting in lieu thereof ``hospital care, medical services, 
     and nursing home care'';
       (B) in paragraph (2), by inserting ``and medical services'' 
     after ``Hospital and nursing home care''; and
       (C) by striking out ``subsection (a)(1)(G) of this 
     section'' each place it appears and inserting in lieu thereof 
     ``subsection (a)(1)(F)''.
       (2) Chapter 17 of such title is amended--
       (A) by redesignating subsection (g) of section 1710 as 
     subsection (h); and
       (B) by transferring subsection (f) of section 1712 of such 
     title to section 1710 so as to appear after subsection (f), 
     redesignating such subsection as subsection (g), and amending 
     such subsection by striking out ``section 1710(a)(2) of this 
     title'' in paragraph (1) and inserting in lieu thereof 
     ``subsection (a)(2) of this section''.
       (3) Section 1712 of such title is amended--
       (A) by striking out subsections (a) and (i); and
       (B) by redesignating subsections (b), (c), (d), (h) and 
     (j), as subsections (a), (b), (c), (d), and (e), 
     respectively.

     SEC. 11032. EXTENSION OF AUTHORITY TO PRIORITY HEALTH CARE 
                   FOR PERSIAN GULF VETERANS.

       Section 1710(e)(3) of title 38, United States Code, is 
     amended by striking out ``December 31, 1995'' and inserting 
     in lieu thereof ``December 31, 1998''.

     SEC. 11033. PROSTHETICS.

       (a) Eligibility for Prosthetics.--Section 1701(6)(A)(i) of 
     title 38, United States Code, is amended--
       (1) by striking out ``(in the case of a person otherwise 
     receiving care or services under this chapter)'' and 
     ``(except under the conditions described in section 
     1712(a)(5)(A) of this title),'';
       (2) by inserting ``(in the case of a person otherwise 
     receiving care or services under this chapter)'' before 
     ``wheelchairs,''; and
       (3) by inserting ``except that the Secretary may not 
     furnish sensori-neural aids other than in accordance with 
     guidelines which the Secretary shall prescribe,'' after 
     ``reasonable and necessary,''.
       (b) Regulations.--Not later than 30 days after the date of 
     the enactment of this Act,

[[Page 1686]]

     the Secretary of Veterans Affairs shall prescribe the 
     guidelines required by the amendments made by subsection (a) 
     and shall furnish a copy of those guidelines to the 
     Committees on Veterans' Affairs of the Senate and House of 
     Representatives.

     SEC. 11034. MANAGEMENT OF HEALTH CARE.

       (a) In General.--(1) Chapter 17 of title 38, United States 
     Code, is amended by inserting after section 1704 the 
     following new sections:

     ``Sec. 1705. Management of health care: patient enrollment 
       system

       ``(a) In managing the provision of hospital care and 
     medical services under section 1710(a)(1) of this title, the 
     Secretary, in accordance with regulations the Secretary shall 
     prescribe, shall establish and operate a system of annual 
     patient enrollment. The Secretary shall manage the enrollment 
     of veterans in accordance with the following priorities, in 
     the order listed:
       ``(1) Veterans with service-connected disabilities rated 30 
     percent or greater.
       ``(2) Veterans who are former prisoners of war and veterans 
     with service connected disabilities rated 10 percent or 20 
     percent.
       ``(3) Veterans who are in receipt of increased pension 
     based on a need of regular aid and attendance or by reason of 
     being permanently housebound and other veterans who are 
     catastrophically disabled.
       ``(4) Veterans not covered by paragraphs (1) through (3) 
     who are unable to defray the expenses of necessary care as 
     determined under section 1722(a) of this title.
       ``(5) All other veterans eligible for hospital care, 
     medical services, and nursing home care under section 
     1710(a)(1) of this title.
       ``(b) In the design of an enrollment system under 
     subsection (a), the Secretary--
       ``(1) shall ensure that the system will be managed in a 
     manner to ensure that the provision of care to enrollees is 
     timely and acceptable in quality;
       ``(2) may establish additional priorities within each 
     priority group specified in subsection (a), as the Secretary 
     determines necessary; and
       ``(3) may provide for exceptions to the specified 
     priorities where dictated by compelling medical reasons.

     ``Sec. 1706. Management of health care: other requirements

       ``(a) In managing the provision of hospital care and 
     medical services under section 1710(a) of this title, the 
     Secretary shall, to the extent feasible, design, establish 
     and manage health care programs in such a manner as to 
     promote cost-effective delivery of health care services in 
     the most clinically appropriate setting.
       ``(b) In managing the provision of hospital care and 
     medical services under section 1710(a) of this title, the 
     Secretary--
       ``(1) may contract for hospital care and medical services 
     when Department facilities are not capable of furnishing such 
     care and services economically, and
       ``(2) shall make such rules and regulations regarding 
     acquisition procedures or policies as the Secretary considers 
     appropriate to provide such needed care and services.
       ``(c) In managing the provision of hospital care and 
     medical services under section 1710(a) of this title, the 
     Secretary shall ensure that the Department maintains its 
     capacity to provide for the specialized treatment and 
     rehabilitative needs of disabled veterans described in 
     section 1710(a) of this title (including veterans with spinal 
     cord dysfunction, blindness, amputations, and mental illness) 
     within distinct programs or facilities of the Department that 
     are dedicated to the specialized needs of those veterans in a 
     manner that (1) affords those veterans reasonable access to 
     care and services for those specialized needs, and (2) 
     ensures that overall capacity of the Department to provide 
     such services is not reduced below the capacity of the 
     Department, nationwide, to provide those services, as of the 
     date of the enactment of this section.
       ``(d) In managing the provision of hospital care and 
     medical services under section 1710(a) of this title, the 
     Secretary shall ensure that any veteran with a service-
     connected disability is provided all benefits under this 
     chapter for which that veteran was eligible before the date 
     of the enactment of this section.''.
       (2) The table of sections at the beginning of chapter 17 of 
     such title is amended by inserting after the item relating to 
     section 1704 the following new items:

``1705. Management of health care: patient enrollment system.
``1706. Management of health care: other requirements.''.
       (b) Conforming Amendments to Section 1703.--(1) Section 
     1703 of such title is amended--
       (A) by striking out subsections (a) and (b); and
       (B) in subsection (c) by--
       (i) striking out ``(c)'', and
       (ii) striking out ``this section, sections'' and inserting 
     in lieu thereof ``sections 1710,''.
       (2)(A) The heading of such section is amended to read as 
     follows:

     ``Sec. 1703. Annual report on furnishing of care and services 
       by contract''.

       (B) The item relating to such section in the table of 
     sections at the beginning of chapter 17 of such title is 
     amended to read as follows:

``1703. Annual report on furnishing of care and services by 
              contract.''.

     SEC. 11035. IMPROVED EFFICIENCY IN HEALTH CARE RESOURCE 
                   MANAGEMENT.

       (a) Repeal of Sunset Provision.--Section 204 of the 
     Veterans Health Care Act of 1992 (Public Law 102-585; 106 
     Stat. 4950) is repealed.
       (b) Cost Recovery.--Title II of such Act is further amended 
     by adding at the end the following new section:

     ``SEC. 207. AUTHORITY TO BILL HEALTH-PLAN CONTRACTS.

       ``(a) Right To Recover.--In the case of a primary 
     beneficiary (as described in section 201(2)(B)) who has 
     coverage under a health-plan contract, as defined in section 
     1729(i)(1)(A) of title 38, United States Code, and who is 
     furnished care or services by a Department medical facility 
     pursuant to this title, the United States shall have the 
     right to recover or collect charges for such care or services 
     from such health-plan contract to the extent that the 
     beneficiary (or the provider of the care or services) would 
     be eligible to receive payment for such care or services from 
     such health-plan contract if the care or services had not 
     been furnished by a department or agency of the United 
     States. Any funds received from such health-plan contract 
     shall be credited to funds that have been allotted to the 
     facility that furnished the care or services.
       ``(b) Enforcement.--The right of the United States to 
     recover under such a beneficiary's health-plan contract shall 
     be enforceable in the same manner as that provided by 
     subsections (a)(3), (b), (c)(1), (d), (f), (h), and (i) of 
     section 1729 of title 38, United States Code.''.

     SEC. 11036. SHARING AGREEMENTS FOR SPECIALIZED MEDICAL 
                   RESOURCES.

       (a) Repeal of Section 8151.--(1) Subchapter IV of chapter 
     81 of title 38, United States Code, is amended--
       (A) by striking out section 8151; and
       (B) by redesignating sections 8152, 8153, 8154, 8155, 8156, 
     8157, and 8158 as sections 8151, 8152, 8153, 8154, 8155, 
     8156, and 8157, respectively.
       (2) The table of sections at the beginning of chapter 81 is 
     amended--
       (A) by striking out the item relating to section 8151; and
       (B) by revising the items relating to sections 8152, 8153, 
     8154, 8155, 8156, 8157, and 8158 to reflect the 
     redesignations by paragraph (1)(B).
       (b) Revised Authority for Sharing Agreements.--Section 8152 
     of such title, as redesignated by subsection (a)(1)(B), is 
     amended--
       (1) in subsection (a)(1)(A)--
       (A) by striking out ``specialized medical resources'' and 
     inserting in lieu thereof ``health-care resources''; and
       (B) by striking out ``other'' and all that follows through 
     ``medical schools'' and inserting in lieu thereof ``any 
     medical school, health-care provider, health-care plan, 
     insurer, or other entity or individual'';
       (2) in subsection (a)(2) by striking out ``only'' and all 
     that follows through ``are not'' and inserting in lieu 
     thereof ``if such resources are not, or would not be,'';
       (3) in subsection (b), by striking out ``reciprocal 
     reimbursement'' in the first sentence and all that follows 
     through the period at the end of that sentence and inserting 
     in lieu thereof ``payment to the Department in accordance 
     with procedures that provide appropriate flexibility to 
     negotiate payment which is in the best interest of the 
     Government.'';
       (4) in subsection (d), by striking out ``preclude such 
     payment, in accordance with--'' and all that follows through 
     ``to such facility therefor'' and inserting in lieu thereof 
     ``preclude such payment to such facility for such care or 
     services'';
       (5) by redesignating subsection (e) as subsection (f); and
       (6) by inserting after subsection (d) the following new 
     subsection (e):
       ``(e) The Secretary may make an arrangement that authorizes 
     the furnishing of services by the Secretary under this 
     section to individuals who are not veterans only if the 
     Secretary determines--
       ``(1) that such an arrangement will not result in the 
     denial of, or a delay in providing access to, care to any 
     veteran at that facility; and
       ``(2) that such an arrangement--
       ``(A) is necessary to maintain an acceptable level and 
     quality of service to veterans at that facility; or
       ``(B) will result in the improvement of services to 
     eligible veterans at that facility.''.
       (c) Cross-Reference Amendments.--(1) Section 8110(c)(3)(A) 
     of such title is amended by striking out ``8153'' and 
     inserting in lieu thereof ``8152''.
       (2) Subsection (b) of section 8154 of such title (as 
     redesignated by subsection (a)(1)(B)) is amended by striking 
     out ``section 8154'' and inserting in lieu thereof ``section 
     8153''.
       (3) Section 8156 of such title (as redesignated by 
     subsection (a)(1)(B)) is amended--
       (A) in subsection (a), by striking out ``section 8153(a)'' 
     and inserting in lieu thereof ``section 8152(a)''; and
       (B) in subsection (b)(3), by striking out ``section 8153'' 
     and inserting in lieu thereof ``section 8152''.
       (4) Subsection (a) of section 8157 of such title (as 
     redesignated by subsection (a)(1)(B)) is amended--
       (A) in the matter preceding paragraph (1), by striking out 
     ``section 8157'' and ``section 8153(a)'' and inserting in 
     lieu thereof ``section 8156'' and ``section 8152(a)'', 
     respectively; and
       (B) in paragraph (1), by striking out ``section 
     8157(b)(4)'' and inserting in lieu thereof ``section 
     8156(b)(4)''.

[[Page 1687]]

     SEC. 11037. PERSONNEL FURNISHING SHARED RESOURCES.

       Section 712(b)(2) of title 38, United States Code, is 
     amended--
       (1) by striking out ``the sum of--'' and inserting in lieu 
     thereof ``the sum of the following:'';
       (2) by capitalizing the first letter of the first word of 
     each of subparagraphs (A) and (B);
       (3) by striking out ``; and'' at the end of subparagraph 
     (A) and inserting in lieu thereof a period; and
       (4) by adding at the end the following:
       ``(C) The number of such positions in the Department during 
     that fiscal year held by persons involved in providing 
     health-care resources under section 8111 or 8152 of this 
     title.''.
                            TITLE XII--TRADE
  Subtitle A--Technical Corrections and Miscellaneous Trade Provisions

     SEC. 12001. PAYMENT OF DUTIES AND FEES.

       (a) Interest Accrual.--Section 505(c) of the Tariff Act of 
     1930 (19 U.S.C. 1505(c)) is amended in the second sentence by 
     inserting after ``duties, fees, and interest'' the following: 
     ``or, in a case in which a claim is made under section 
     520(d), from the date on which such claim is made,''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to claims made pursuant to section 520(d) of the 
     Tariff Act of 1930 on or after April 25, 1995.

     SEC. 12002. OTHER TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Examination of Books and Witnesses.--Section 509(a)(2) 
     of the Tariff Act of 1930 (19 U.S.C. 1509(a)(2)) is amended 
     by striking ``(c)(1)(A)'' and inserting ``(d)(1)(A)''.
       (b) Requirement for Certificate for Importation of 
     Alcoholic Liquors in Small Vessels.--Section 7 of the Act of 
     August 5, 1935 (19 U.S.C. 1707; 49 Stat. 520), is repealed.
       (c) Manifests.--Section 431(c)(1) of the Tariff Act of 1930 
     (19 U.S.C. 1431(c)(1)) is amended in the matter preceding 
     subparagraph (A) by striking ``such manifest'' and inserting 
     ``a vessel manifest''.
       (d) Documentation for Entry of Merchandise.--Section 
     484(a)(1) of the Tariff Act of 1930 (19 U.S.C. 1484(a)(1)) is 
     amended in the matter preceding subparagraph (A) by striking 
     ``553, and 336(j)'' and inserting ``and 553''.
       (e) Penalties for Certain Violations.--Section 592 of the 
     Tariff Act of 1930 (19 U.S.C. 1592) is amended--
       (1) in subsection (a)(1), by striking ``lawful duty'' and 
     inserting ``lawful duty, tax, or fee''; and
       (2) in subsections (b)(1)(A)(vi), (c)(2)(A)(ii), 
     (c)(3)(A)(ii), (c)(4)(A)(i), and (c)(4)(B) by striking 
     ``lawful duties'' each place it appears and inserting 
     ``lawful duties, taxes, and fees''.
       (f) Deprivation of Lawful Duties, Taxes, or Fees.--Section 
     592(d) of the Tariff Act of 1930 (19 U.S.C. 1592(d)) is 
     amended by striking ``or fees be restored'' and inserting 
     ``and fees be restored''.
       (g) Reconciliation Treated as Entry for Recordkeeping.--
       (1) Section 401(s) of the Tariff Act of 1930 (19 U.S.C. 
     1401(s)) is amended by inserting ``recordkeeping,'' after 
     ``reliquidation,''.
       (2) Section 508(c)(1) of such Act (19 U.S.C. 1508(c)(1)) is 
     amended by inserting ``, filing of a reconciliation,'' after 
     ``entry''.
       (h) Extension of Liquidation.--Section 504(d) of the Tariff 
     Act of 1930 (19 U.S.C. 1504(d)) is amended by inserting ``, 
     unless liquidation is extended under subsection (b),'' after 
     ``shall liquidate the entry''.
       (i) Exemption From Duty for Personal and Household Goods 
     Accompanying Returning Residents.--Section 321(a)(2)(B) of 
     the Tariff Act of 1930 (19 U.S.C. 1321(a)(2)(B)) is amended 
     by inserting ``, 9804.00.65,'' after ``9804.00.30''.
       (j) Debt Collection.--Section 631(a) of the Tariff Act of 
     1930 (19 U.S.C. 1631(a)) is amended--
       (1) by inserting after ``law,'' the following: ``including 
     section 3302 of title 31, United States Code, and subchapters 
     I and II of chapter 37 of such title,''; and
       (2) by inserting ``and the expenses associated with 
     recovering such indebtedness,'' after ``Government,''.
       (k) Examination of Books and Witnesses.--Section 509(b) of 
     the Tariff Act of 1930 (19 U.S.C. 1509(b)) is amended in 
     paragraphs (3) and (4) by striking ``appropriate regional 
     commissioner'' and inserting ``officer designated pursuant to 
     regulations''.
       (l) Review of Protests.--Section 515(d) of the Tariff Act 
     of 1930 (19 U.S.C. 1515(d)) is amended by striking ``district 
     director'' and inserting ``port director''.
       (m) Effective Date.--The amendments made by this section 
     apply as of December 8, 1993.

     SEC. 12003. CLARIFICATION REGARDING THE APPLICATION OF 
                   CUSTOMS USER FEES.

       (a) In General.--Subparagraph (D) of section 13031(b)(8) of 
     the Consolidated Omnibus Budget Reconciliation Act of 1985 
     (19 U.S.C. 58c(b)(8)(D)) is amended--
       (1) in clause (iv)--
       (A) by striking ``subparagraph 9802.00.80 of such 
     Schedules'' and inserting ``heading 9802.00.80 of such 
     Schedule''; and
       (B) by striking ``and'' at the end of clause (iv);
       (2) by striking the period at the end of clause (v) and 
     inserting ``; and''; and
       (3) by inserting after clause (v) the following new clause:
       ``(vi) in the case of merchandise entered from a foreign 
     trade zone (other than merchandise to which clause (v) 
     applies), be applied only to the value of the privileged or 
     nonprivileged foreign status merchandise under section 3 of 
     the Act of June 18, 1934 (commonly known as the Foreign Trade 
     Zones Act, 19 U.S.C. 81c).''.
       (b) Effective Date.--The amendments made by subsection (a) 
     apply to--
       (1) any entry made from a foreign trade zone on or after 
     the 15th day after the date of the enactment of this Act; and
       (2) any entry made from a foreign trade zone after November 
     30, 1986, and before such 15th day if liquidation of the 
     entry was not final before such 15th day.
       (c) Application of Fees to Certain Agricultural Products.--
     The amendment made by section 111(b)(2)(D)(iv) of the Customs 
     and Trade Act of 1990 shall apply to--
       (1) any entry made from a foreign trade zone on or after 
     the 15th day after the date of the enactment of this Act; and
       (2) any entry made from a foreign trade zone after November 
     30, 1986, and before such 15th day if the liquidation of the 
     entry was not final before such 15th day.

     SEC. 12004. TECHNICAL AMENDMENT TO THE CUSTOMS AND TRADE ACT 
                   OF 1990.

       Subsection (b) of section 484H of the Customs and Trade Act 
     of 1990 (19 U.S.C. 1553 note) is amended by striking ``, or 
     withdrawn from warehouse for consumption,'' and inserting 
     ``for transportation in bond''.

     SEC. 12005. TECHNICAL AMENDMENTS REGARDING CERTAIN 
                   BENEFICIARY COUNTRIES.

       (a) Caribbean Basin Economic Recovery Act.--Section 
     213(h)(1) of the Caribbean Basin Economic Recovery Act (19 
     U.S.C. 2703(h)(1)) is amended by adding at the end thereof 
     the following flush sentence:
     ``The duty reductions provided for under this paragraph shall 
     not apply to textile and apparel articles which are subject 
     to textile agreements.''.
       (b) Andean Trade Preference Act.--Section 204(c)(1) of the 
     Andean Trade Preference Act (19 U.S.C. 3203(c)(1)) is amended 
     by adding at the end thereof the following flush sentence:
     ``The duty reductions provided for under this paragraph shall 
     not apply to textile and apparel articles which are subject 
     to textile agreements.''.
       (c) Effective Date.--The amendments made by this section 
     apply with respect to--
       (1) articles entered, or withdrawn from warehouse for 
     consumption, on or after the 15th day after the date of the 
     enactment of this Act, and
       (2) articles entered after December 31, 1991, and before 
     such 15th day, if the liquidation of the entry of such 
     articles was not final before such 15th day.

     SEC. 12006. CLARIFICATION OF FEES FOR CERTAIN CUSTOMS 
                   SERVICES.

       (a) In General.--Section 13031(b)(9)(A) of the Consolidated 
     Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 
     58c(b)(9)(A)) is amended--
       (1) by striking ``centralized hub facility or'' in clause 
     (i); and
       (2) in clause (ii)--
       (A) by striking ``facility--'' and inserting ``facility or 
     centralized hub facility--'',
       (B) by striking ``customs inspectional'' in subclause (I), 
     and
       (C) by striking ``at the facility'' in subclause (I) and 
     inserting ``for the facility''.
       (b) Definitions.--Section 13031(b)(9)(B)(i) of the 
     Consolidated Omnibus Budget Reconciliation Act of 1985 (19 
     U.S.C. 58c(b)(9)(B)(i)) is amended--
       (1) by striking ``, as in effect on July 30, 1990'', and
       (2) by adding at the end thereof the following new 
     sentence: ``Nothing in this paragraph shall be construed as 
     prohibiting the Secretary of the Treasury from processing 
     merchandise that is informally entered or released at any 
     centralized hub facility or express consignment carrier 
     facility during the normal operating hours of the Customs 
     Service, subject to reimbursement and payment under 
     subparagraph (A).''.
       (c) Citation.--Section 13031(b)(9)(B)(ii) of the 
     Consolidated Omnibus Budget Reconciliation Act of 1985 (19 
     U.S.C. 58c(b)(9)(B)(ii)) is amended by striking ``section 236 
     of the Tariff and Trade Act of 1984'' and inserting ``section 
     236 of the Trade and Tariff Act of 1984''.

     SEC. 12007. SPECIAL RULE FOR EXTENDING TIME FOR FILING 
                   DRAWBACK CLAIMS.

       Section 313(r) of the Tariff Act of 1930 (19 U.S.C. 
     1313(r)) is amended by adding at the end the following:
       ``(3)(A)(i) Subject to clause (ii), the Customs Service 
     may, notwithstanding the limitation set forth in paragraph 
     (1), extend the time for filing a drawback claim for a period 
     not to exceed 18 months, if--
       ``(I) the claimant establishes to the satisfaction of the 
     Customs Service that the claimant was unable to file the 
     drawback claim because of an event declared by the President 
     to be a major disaster on or after January 1, 1994; and
       ``(II) the claimant files a request for such extension with 
     the Customs Service within one year from the last day of the 
     3-year period referred to in paragraph (1).
       ``(ii) In the case of a major disaster occurring on or 
     after January 1, 1994, and before the date of the enactment 
     of this paragraph--
       ``(I) the Customs Service may extend the time for filing 
     the drawback claim for a period not to exceed 1 year; and
       ``(II) the request under clause (i)(II) must be filed not 
     later than 1 year from the date of the enactment of this 
     paragraph.
       ``(B) If an extension is granted with respect to a request 
     filed under this paragraph, the periods of time for retaining 
     records set forth in subsection (t) of this section and

[[Page 1688]]

     section 508(c)(3) shall be extended for an additional 18 
     months or, in a case to which subparagraph (A)(ii) applies, 
     for a period not to exceed 1 year from the date the claim is 
     filed.
       ``(C) For purposes of this paragraph, the term `major 
     disaster' has the meaning given that term in section 102(2) 
     of the Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act (42 U.S.C. 5122(2)).''.

     SEC. 12008. TREATMENT OF CERTAIN ENTRIES.

       (a) Liquidation or Reliquidation of Entries.--
     Notwithstanding sections 514 and 520 of the Tariff Act of 
     1930 (19 U.S.C. 1514 and 1520), and any other provision of 
     law, the United States Customs Service shall liquidate or 
     reliquidate those entry numbers made at New York, New York, 
     which are listed in subsection (c), in accordance with the 
     final results of the administrative review, covering the 
     period from May 1, 1984, through March 31, 1985, undertaken 
     by the International Trade Administration of the Department 
     of Commerce for such entries (case number A-580-008).
       (b) Payment of Amounts Owed.--Any amounts owed by the 
     United States pursuant to the liquidation or reliquidation of 
     an entry under subsection (a) shall be paid by the Customs 
     Service within 90 days after such liquidation or 
     reliquidation.
       (c) Entry List.--The entries referred to in subsection (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.

     SEC. 12009. TEMPORARY DUTY SUSPENSION FOR PERSONAL EFFECTS OF 
                   PARTICIPANTS IN CERTAIN WORLD ATHLETIC EVENTS.

       (a) In General.--Subchapter II of chapter 99 of the 
     Harmonized Tariff Schedule of the United States is amended by 
     inserting in numerical sequence the following new heading:

       

``    9902.98.05    Any of the        Free              No change         Free              On or before
                     following                                                              2/1/99            ''
                     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......

       (b) Taxes and Fees Not To Apply.--The articles described in 
     heading 9902.98.05 of the Harmonized Tariff Schedule of the 
     United States (as added by subsection (a)) shall be free of 
     taxes and fees which may be otherwise applicable.
       (c) Effective Date.--The amendment made by this section 
     applies to articles entered, or withdrawn from warehouse for 
     consumption, on or after the 15th day after the date of the 
     enactment of this Act.

     SEC. 12010. MISCELLANEOUS TECHNICAL CORRECTIONS.

       (a) Drawback and Refunds.--Section 313(s)(2)(B) of the 
     Tariff Act of 1930 (19 U.S.C. 1313(s)(2)(B)) is amended by 
     striking ``successor'' the first place it appears and 
     inserting ``predecessor''.
       (b) Trade Act of 1974.--Section 301(c)(4) of the Trade Act 
     of 1974 (19 U.S.C. 2411(c)(4)) is amended by striking 
     ``(1)(C)(iii)'' and inserting ``(1)(D)(iii)''.

     SEC. 12011. URUGUAY ROUND AGREEMENTS ACT.

       Section 405(b) of the Uruguay Round Agreements Act (19 
     U.S.C. 3602(b)) is amended--
       (1) in paragraph (1) by striking ``1(a)'' and inserting 
     ``1(b)''; and
       (2) in paragraph (2) by striking ``1(b)'' and inserting 
     ``1(a)''.

     SEC. 12012. FILING OF CERTIFICATIONS FOR CIVIL AIRCRAFT 
                   PARTS.

       General Note 6 of the Harmonized Tariff Schedule of the 
     United States is amended--
       (1) by inserting ``or electronic'' after ``shall file a 
     written''; and
       (2) by striking ``with the appropriate customs officer'' 
     and inserting ``with the United States Customs Service''.

     SEC. 12013. EXEMPTION REGARDING CERTAIN VESSEL REPAIRS.

       (a) Temporary Exemption Extended.--Section 484E(b)(2)(B) of 
     the Customs and Trade Act of 1990 (19 U.S.C. 1466 note) is 
     amended by striking ``December 31, 1992'' and inserting 
     ``December 31, 1994''.
       (b) Effective Date.--The amendment made by this section 
     applies to any entry made after December 31, 1992, and before 
     January 1, 1995.

     SEC. 12014. FEES FOR CERTAIN CUSTOMS SERVICES.

       (a) In General.--Section 13031(a)(5) of the Consolidated 
     Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 
     58c(a)(5)) is amended--
       (1) in subparagraph (A), by inserting ``a place'' after 
     ``aircraft from''; and
       (2) in subparagraph (B), by striking ``subsection 
     (b)(1)(A)'' and inserting ``subsection (b)(1)(A)(i)''.
       (b) Limitation on Fees.--Section 13031(b)(1) of the 
     Consolidated Omnibus Budget Reconciliation Act of 1985 (19 
     U.S.C. 58c(b)(1)) is amended to read as follows:
       ``(b) Limitations on Fees.--(1)(A) No fee may be charged 
     under subsection (a) of this section for customs services 
     provided in connection with--
       ``(i) the arrival of any passenger whose journey--
       ``(I) originated in--
       ``(aa) Canada,
       ``(bb) Mexico,
       ``(cc) a territory or possession of the United States, or
       ``(dd) any adjacent island (within the meaning of section 
     101(b)(5) of the Immigration and Nationality Act (8 U.S.C. 
     1101(b)(5))), or
       ``(II) originated in the United States and was limited to--
       ``(aa) Canada,
       ``(bb) Mexico,
       ``(cc) territories and possessions of the United States, 
     and
       ``(dd) such adjacent islands;
       ``(ii) the arrival of any railroad car the journey of which 
     originates and terminates in the same country, but only if no 
     passengers board or disembark from the train and no cargo is 
     loaded or unloaded from such car while the car is within any 
     country other than the country in which such car originates 
     and terminates;
       ``(iii) the arrival of any ferry; or
       ``(iv) the arrival of any passenger on board a commercial 
     vessel traveling only between ports which are within the 
     customs territory of the United States.
       ``(B) The exemption provided for in subparagraph (A) shall 
     not apply in the case of the arrival of any passenger on 
     board a commercial vessel whose journey originates and 
     terminates at the same place in the United States if there 
     are no intervening stops.
       ``(C) The exemption provided for in subparagraph (A)(i) 
     shall not apply to fiscal years 1994, 1995, 1996, and 
     1997.''.
       (c) Fee Assessed Only Once.--Section 13031(b)(4) of the 
     Consolidated Omnibus Budget Reconciliation Act of 1985 (19 
     U.S.C. 58c(b)(4)) is amended--
       (1) by redesignating subparagraphs (A) and (B) as clauses 
     (i) and (ii), respectively;
       (2) by striking ``No fee'' and inserting ``(A) No fee''; 
     and
       (3) by adding at the end the following new subparagraph:
       ``(B) In the case of a commercial vessel making a single 
     voyage involving 2 or more United States ports with respect 
     to which the passengers would otherwise be charged a fee 
     pursuant to subsection (a)(5), such fee shall be charged only 
     1 time for each passenger.''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect as if included in the amendments made by 
     section 521 of the North American Free Trade Agreement 
     Implementation Act.

     SEC. 12015. TECHNICAL CORRECTION TO CERTAIN CHEMICAL 
                   DESCRIPTION.

       (a) Amendment to Subheading 2933.90.02.--The article 
     description for subheading 2933.90.02 of the Harmonized 
     Tariff Schedule of the United States is amended by striking 
     ``(Quizalofop ethyl)''.
       (b) Effective Date.--
       (1) General rule.--The amendment made by this section 
     applies to articles entered, or withdrawn from warehouse for 
     consumption, on or after the 15th day after the date of the 
     enactment of this Act.
       (2) Retroactive provision.--Notwithstanding section 514 of 
     the Tariff Act of 1930 or any other provision of law, upon 
     proper request (which includes sufficient information to 
     identify and locate the entry) filed with the Customs Service 
     on or before the date that is 180 days after the date of the 
     enactment of this Act, any entry, or withdrawal from 
     warehouse for consumption, of an article that occurred--
       (A) after December 31, 1994, and before the date that is 15 
     days after the date of the enactment of this Act, and

[[Page 1689]]

       (B) with respect to which there would have been no duty or 
     a lesser duty if the amendment made by subsection (a) applied 
     to such entry or withdrawal,
     shall be liquidated or reliquidated as though such amendment 
     applied to such entry or withdrawal.

     SEC. 12016. MARKING OF IMPORTED ARTICLES AND CONTAINERS.

       (a) In General.--Section 304 of the Tariff Act of 1930 (19 
     U.S.C.1304) is amended--
       (1) by redesignating subsections (f), (g), (h), and (i) as 
     subsections (i), (j), (k), and (l), respectively, and
       (2) by inserting after subsection (e) the following new 
     subsections:
       ``(f) Marking of Metal Forgings.--The marking requirements 
     of subsections (a) and (b) shall not apply to--
       ``(1) metal forgings that--
       ``(A) are imported for processing into finished hand tools 
     in the United States, and
       ``(B) have not been improved in condition beyond rough 
     burring, trimming, grinding, turning, hammering, chiseling, 
     or filing; and
       ``(2) hand tools made from metal forgings described in 
     paragraph (1).
       ``(g) Marking of Certain Coffee and Tea Products.--The 
     marking requirements of subsections (a) and (b) shall not 
     apply to articles described in subheading 0901.21, 0901.22, 
     0902.10, 0902.20, 0902.30, 0902.40, 2101.10, or 2101.20 of 
     the Harmonized Tariff Schedule of the United States, as in 
     effect on January 1, 1995.
       ``(h) Marking of Spices.--The marking requirements of 
     subsections (a) and (b) shall not apply to articles provided 
     for under subheadings 0904.11, 0904.12, 0904.20, 0905.00, 
     0906.10, 0906.20, 0907.00, 0908.10, 0908.20, 0908.30, 
     0909.10, 0909.20, 0909.30, 0909.40, 0909.50, 0910.10, 
     0910.20, 0910.30, 0910.40, 0910.50, 0910.91, 0910.99, 
     1106.20, 1207.40, 1207.50, 1207.91, 1404.90, and 3302.10, and 
     items classifiable in categories 0712.90.60, 0712.90.8080, 
     1209.91.2000, 1211.90.2000, 1211.90.8040, 1211.90.8050, 
     1211.90.8090, 2006.00.3000, 2918.13.2000, 3203.00.8000, 
     3301.90.1010, 3301.90.1020, and 3301.90.1050 of the 
     Harmonized Tariff Schedule of the United States, as in effect 
     on January 1, 1995.''.
       (b) Effective Date.--The amendments made by this section 
     apply to goods entered, or withdrawn from warehouse for 
     consumption, on or after the date of the enactment of this 
     Act.

     SEC. 12017. RELIQUIDATING ENTRY OF WARP KNITTING MACHINES.

       Notwithstanding section 514 of the Tariff Act of 1930 (19 
     U.S.C. 1514) or any other provision of law, upon proper 
     request filed with the Customs Service before the 180th day 
     after the date of the enactment of this Act, the Secretary of 
     the Treasury shall--
       (1) liquidate or reliquidate as duty free Entry No. 100-
     3022436-3, made on July 12, 1989, at the port of Charleston, 
     South Carolina; and
       (2) refund any duties and interest paid with respect to 
     such entry.

     SEC. 12018. IDENTIFICATION OF TRADE EXPANSION PRIORITIES.

       Section 310(a)(1) of the Trade Act of 1974 (19 U.S.C. 
     2420(a)(1)) is amended by striking ``calendar year 1995'' and 
     inserting ``each of calendar years 1995 through 2000''.
             Subtitle B--Generalized System of Preferences

     SEC. 12101. SHORT TITLE.

       This subtitle may be cited as the ``GSP Renewal Act of 
     1995''.

     SEC. 12102. GENERALIZED SYSTEM OF PREFERENCES.

       (a) In General.--Title V of the Trade Act of 1974 is 
     amended to read as follows:
              ``TITLE V--GENERALIZED SYSTEM OF PREFERENCES

     ``SEC. 501. AUTHORITY TO EXTEND PREFERENCES.

       ``The President may provide duty-free treatment for any 
     eligible article from any beneficiary developing country in 
     accordance with the provisions of this title. In taking any 
     such action, the President shall have due regard for--
       ``(1) the effect such action will have on furthering the 
     economic development of developing countries through the 
     expansion of their exports;
       ``(2) the extent to which other major developed countries 
     are undertaking a comparable effort to assist developing 
     countries by granting generalized preferences with respect to 
     imports of products of such countries;
       ``(3) the anticipated impact of such action on United 
     States producers of like or directly competitive products; 
     and
       ``(4) the extent of the beneficiary developing country's 
     competitiveness with respect to eligible articles.

     ``SEC. 502. DESIGNATION OF BENEFICIARY DEVELOPING COUNTRIES.

       ``(a) Authority To Designate Countries.--
       ``(1) Beneficiary developing countries.--The President is 
     authorized to designate countries as beneficiary developing 
     countries for purposes of this title.
       ``(2) Least-developed beneficiary developing countries.--
     The President is authorized to designate any beneficiary 
     developing country as a least-developed beneficiary 
     developing country for purposes of this title, based on the 
     considerations in section 501 and subsection (c) of this 
     section.
       ``(b) Countries Ineligible for Country Designation.--
       ``(1) Specific countries.--The following countries may not 
     be designated as beneficiary developing countries for 
     purposes of this title:
       ``(A) Australia.
       ``(B) Canada.
       ``(C) European Union member states.
       ``(D) Iceland.
       ``(E) Japan.
       ``(F) Monaco.
       ``(G) New Zealand.
       ``(H) Norway.
       ``(I) Switzerland.
       ``(2) Other bases for ineligibility.--The President shall 
     not designate any country a beneficiary developing country 
     under this title if any of the following applies:
       ``(A) Such country is a Communist country, unless--
       ``(i) the products of such country receive 
     nondiscriminatory treatment,
       ``(ii) such country is a WTO Member (as such term is 
     defined in section 2 of the Uruguay Round Agreements Act,) 
     and a member of the International Monetary Fund, and
       ``(iii) such country is not dominated or controlled by 
     international communism.
       ``(B) Such country is a party to an arrangement of 
     countries and participates in any action pursuant to such 
     arrangement, the effect of which is--
       ``(i) to withhold supplies of vital commodity resources 
     from international trade or to raise the price of such 
     commodities to an unreasonable level, and
       ``(ii) to cause serious disruption of the world economy.
       ``(C) Such country affords preferential treatment to the 
     products of a developed country, other than the United 
     States, which has, or is likely to have, a significant 
     adverse effect on United States commerce.
       ``(D)(i) Such country--
       ``(I) has nationalized, expropriated, or otherwise seized 
     ownership or control of property, including patents, 
     trademarks, or copyrights, owned by a United States citizen 
     or by a corporation, partnership, or association which is 50 
     percent or more beneficially owned by United States citizens,
       ``(II) has taken steps to repudiate or nullify an existing 
     contract or agreement with a United States citizen or a 
     corporation, partnership, or association which is 50 percent 
     or more beneficially owned by United States citizens, the 
     effect of which is to nationalize, expropriate, or otherwise 
     seize ownership or control of property, including patents, 
     trademarks, or copyrights, so owned, or
       ``(III) has imposed or enforced taxes or other exactions, 
     restrictive maintenance or operational conditions, or other 
     measures with respect to property, including patents, 
     trademarks, or copyrights, so owned, the effect of which is 
     to nationalize, expropriate, or otherwise seize ownership or 
     control of such property,
     unless clause (ii) applies.
       ``(ii) This clause applies if the President determines 
     that--
       ``(I) prompt, adequate, and effective compensation has been 
     or is being made to the citizen, corporation, partnership, or 
     association referred to in clause (i),
       ``(II) good faith negotiations to provide prompt, adequate, 
     and effective compensation under the applicable provisions of 
     international law are in progress, or the country described 
     in clause (i) is otherwise taking steps to discharge its 
     obligations under international law with respect to such 
     citizen, corporation, partnership, or association, or
       ``(III) a dispute involving such citizen, corporation, 
     partnership, or association over compensation for such a 
     seizure has been submitted to arbitration under the 
     provisions of the Convention for the Settlement of Investment 
     Disputes, or in another mutually agreed upon forum,
     and the President promptly furnishes a copy of such 
     determination to the Senate and House of Representatives.
       ``(E) Such country fails to act in good faith in 
     recognizing as binding or in enforcing arbitral awards in 
     favor of United States citizens or a corporation, 
     partnership, or association which is 50 percent or more 
     beneficially owned by United States citizens, which have been 
     made by arbitrators appointed for each case or by permanent 
     arbitral bodies to which the parties involved have submitted 
     their dispute.
       ``(F) Such country aids or abets, by granting sanctuary 
     from prosecution to, any individual or group which has 
     committed an act of international terrorism.
       ``(G) Such country has not taken or is not taking steps to 
     afford internationally recognized worker rights to workers in 
     the country (including any designated zone in that country).
     Subparagraphs (D), (E), (F), and (G) shall not prevent the 
     designation of any country as a beneficiary developing 
     country under this title if the President determines that 
     such designation will be in the national economic interest of 
     the United States and reports such determination to the 
     Congress with the reasons therefor.
       ``(c) Factors Affecting Country Designation.--In 
     determining whether to designate any country as a beneficiary 
     developing country under this title, the President shall take 
     into account--
       ``(1) an expression by such country of its desire to be so 
     designated;
       ``(2) the level of economic development of such country, 
     including its per capita gross national product, the living 
     standards of its inhabitants, and any other economic factors 
     which the President deems appropriate;
       ``(3) the extent to which other major developed countries 
     are extending generalized

[[Page 1690]]

      preferential tariff treatment to such country;
       ``(4) the extent to which such country has assured the 
     United States that it will provide equitable and reasonable 
     access to the markets and basic commodity resources of such 
     country and the extent to which such country has assured the 
     United States that it will refrain from engaging in 
     unreasonable export practices;
       ``(5) whether such country is providing adequate and 
     effective protection of intellectual property rights;
       ``(6) the extent to which such country has taken action 
     to--
       ``(A) reduce trade distorting investment practices and 
     policies (including export performance requirements); and
       ``(B) reduce or eliminate barriers to trade in services;
       ``(7) whether or not such country has taken or is taking 
     steps to afford to workers in that country (including any 
     designated zone in that country) internationally recognized 
     worker rights; and
       ``(8) the extent to which such country fails to cooperate 
     with the United States in preventing the proliferation of 
     nuclear weapons, nuclear weapons components, and nuclear 
     weapons delivery systems, or in preventing illegal drug 
     trafficking.
     A country may be found to not provide adequate and effective 
     protection of intellectual property rights under paragraph 
     (5) and section 503(d)(2)(B), notwithstanding the fact that 
     it may be in compliance with the specific obligations of the 
     Agreement on Trade-Related Aspects of Intellectual Property 
     Rights referred to in section 101(d)(15) of the Uruguay Round 
     Agreements Act.
       ``(d) Withdrawal, Suspension, or Limitation of Country 
     Designation.--
       ``(1) In general.--The President may withdraw, suspend, or 
     limit the application of the duty-free treatment accorded 
     under this title with respect to any country. Except in 
     exceptional circumstances, the President, before taking any 
     action under this subsection, shall provide a period for the 
     submission of public comments on the matter under 
     consideration, and in taking any action under this 
     subsection, the President shall consider the factors set 
     forth in section 501 and subsection (c) of this section, and 
     comments received from the public.
       ``(2) Changed circumstances.--The President shall, after 
     complying with the requirements of subsection (f)(2), 
     withdraw or suspend the designation of any country as a 
     beneficiary developing country if, after such designation, 
     the President determines that as the result of changed 
     circumstances such country would be barred from designation 
     as a beneficiary developing country under subsection (b)(2). 
     Such country shall cease to be a beneficiary developing 
     country on the day on which the President issues an Executive 
     order or Presidential proclamation revoking the designation 
     of such country under this title.
       ``(e) Mandatory Graduation of Beneficiary Developing 
     Countries.--If the President determines that a beneficiary 
     developing country has become a `high income' country, as 
     defined by the official statistics of the International Bank 
     for Reconstruction and Development, then the President shall 
     terminate the designation of such country as a beneficiary 
     developing country for purposes of this title, effective on 
     January 1 of the second year following the year in which such 
     determination is made.
       ``(f) Congressional Notification.--
       ``(1) Notification of designation.--
       ``(A) In general.--Before the President designates any 
     country as a beneficiary developing country under this title, 
     the President shall notify the Congress of the President's 
     intention to make such designation, together with the 
     considerations entering into such decision.
       ``(B) Designation as least-developed beneficiary developing 
     country.--At least 60 days before the President designates 
     any country as a least-developed beneficiary developing 
     country, the President shall notify the Congress of the 
     President's intention to make such designation.
       ``(2) Notification of termination.--If the President has 
     designated any country as a beneficiary developing country 
     under this title, the President shall not terminate such 
     designation unless, at least 60 days before such termination, 
     the President has notified the Congress and has notified such 
     country of the President's intention to terminate such 
     designation, together with the considerations entering into 
     such decision.

     ``SEC. 503. DESIGNATION OF ELIGIBLE ARTICLES.

       ``(a) Eligible Articles.--
       ``(1) Designation.--
       ``(A) In general.--Except as provided in subsection (b), 
     the President is authorized to designate articles as eligible 
     articles for all beneficiary developing countries for 
     purposes of this title by Executive order or Presidential 
     proclamation after receiving the advice of the International 
     Trade Commission in accordance with subsection (e).
       ``(B) Least-developed beneficiary developing countries.--
     Except as provided in subsection (b), the President is 
     authorized to designate additional articles as eligible 
     articles only for countries designated as least-developed 
     beneficiary developing countries under section 502(a)(2) if, 
     after receiving the advice of the International Trade 
     Commission in accordance with subsection (e) of this section, 
     the President determines that such articles are not import-
     sensitive in the context of imports from least-developed 
     beneficiary developing countries.
       ``(C) Three-year rule.--If, after receiving the advice of 
     the International Trade Commission under subsection (e), an 
     article has been formally considered for designation as an 
     eligible article under this title and denied such 
     designation, such article may not be reconsidered for such 
     designation for a period of three years after such denial.
       ``(2) Rule of origin.--
       ``(A) General rule.--The duty-free treatment provided under 
     this title shall apply to any eligible article which is the 
     growth, product, or manufacture of a beneficiary developing 
     country if--
       ``(i) that article is imported directly from a beneficiary 
     developing country into the customs territory of the United 
     States; and
       ``(ii) the sum of--

       ``(I) the cost or value of the materials produced in the 
     beneficiary developing country or any two or more countries 
     which are members of the same association of countries which 
     is treated as one country under section 506(2), plus
       ``(II) the direct costs of processing operations performed 
     in such beneficiary developing country or such member 
     countries,

     is not less than 35 percent of the appraised value of such 
     article at the time it is entered.
       ``(B) Exclusions.--An article shall not be treated as the 
     growth, product, or manufacture of a beneficiary developing 
     country by virtue of having merely undergone--
       ``(i) simple combining or packaging operations, or
       ``(ii) mere dilution with water or mere dilution with 
     another substance that does not materially alter the 
     characteristics of the article.
       ``(3) Regulations.--The Secretary of the Treasury, after 
     consulting with the United States Trade Representative, shall 
     prescribe such regulations as may be necessary to carry out 
     paragraph (2), including, but not limited to, regulations 
     providing that, in order to be eligible for duty-free 
     treatment under this title, an article--
       ``(A) must be wholly the growth, product, or manufacture of 
     a beneficiary developing country, or
       ``(B) must be a new or different article of commerce which 
     has been grown, produced, or manufactured in the beneficiary 
     developing country.
       ``(b) Articles That May Not Be Designated As Eligible 
     Articles.--
       ``(1) Import sensitive articles.--The President may not 
     designate any article as an eligible article under subsection 
     (a) if such article is within one of the following categories 
     of import-sensitive articles:
       ``(A) Textile and apparel articles which were not eligible 
     articles for purposes of this title on January 1, 1994, as 
     this title was in effect on such date.
       ``(B) Import-sensitive electronic articles.
       ``(C) Import-sensitive steel articles.
       ``(D) Footwear, handbags, luggage, flat goods, work gloves, 
     and leather wearing apparel which were not eligible articles 
     for purposes of this title on January 1, 1995, as this title 
     was in effect on such date.
       ``(E) Import-sensitive semimanufactured and manufactured 
     glass products.
       ``(F) Any other articles which the President determines to 
     be import-sensitive in the context of the Generalized System 
     of Preferences.
       ``(2) Articles against which other actions taken.--An 
     article shall not be an eligible article for purposes of this 
     title for any period during which such article is the subject 
     of any action proclaimed pursuant to section 203 of this Act 
     (19 U.S.C. 2253) or section 232 or 351 of the Trade Expansion 
     Act of 1962 (19 U.S.C. 1862, 1981).
       ``(3) Agricultural products.--No quantity of an 
     agricultural product subject to a tariff-rate quota that 
     exceeds the in-quota quantity shall be eligible for duty-free 
     treatment under this title.
       ``(c) Withdrawal, Suspension, or Limitation of Duty-Free 
     Treatment; Competitive Need Limitation.--
       ``(1) In general.--The President may withdraw, suspend, or 
     limit the application of the duty-free treatment accorded 
     under this title with respect to any article, except that no 
     rate of duty may be established with respect to any article 
     pursuant to this subsection other than the rate which would 
     apply but for this title. In taking any action under this 
     subsection, the President shall consider the factors set 
     forth in sections 501 and 502(c).
       ``(2) Competitive need limitation.--
       ``(A) Basis for withdrawal of duty-free treatment.--Except 
     as provided in this paragraph and subject to subsection (d), 
     whenever the President determines that a beneficiary 
     developing country has exported (directly or indirectly) to 
     the United States during any calendar year beginning after 
     December 31, 1995--
       ``(i) a quantity of an eligible article having an appraised 
     value in excess of $75,000,000, except that, in applying this 
     clause, the amount of $75,000,000 shall be increased by 
     $5,000,000 on January 1 of each calendar year after calendar 
     year 1995, or
       ``(ii) a quantity of an eligible article equal to or 
     exceeding 50 percent of the appraised value of the total 
     imports of that article into the United States during the 
     calendar year,
     then the President shall, not later than July 1 of the next 
     calendar year, terminate the duty-free treatment for that 
     article from that beneficiary developing country.
       ``(B) Country defined.--For purposes of this paragraph, the 
     term `country' does not include an association of countries 
     which is treated as one country under section 506(2), but 
     does include a country which is a member of any such 
     association.

[[Page 1691]]

       ``(C) Redesignations.--A country which is no longer treated 
     as a beneficiary developing country with respect to an 
     eligible article by reason of subparagraph (A) may be 
     redesignated a beneficiary developing country with respect to 
     such article, subject to the considerations set forth in 
     sections 501 and 502, if imports of such article from such 
     country did not exceed the limitations in subparagraph (A) 
     during the preceding calendar year.
       ``(D) Least-developed beneficiary developing countries.--
     Subparagraph (A) shall not apply to any least-developed 
     beneficiary developing country.
       ``(E) Articles not produced in the united states 
     excluded.--Subparagraph (A)(ii) shall not apply with respect 
     to any eligible article if a like or directly competitive 
     article was not produced in the United States on January 1, 
     1995.
       ``(F) De minimis waivers.--The President may disregard 
     subparagraph (A)(ii) with respect to any eligible article 
     from any beneficiary developing country if the appraised 
     value of the total imports of such article into the United 
     States during calendar year 1995 or any calendar year 
     thereafter does not exceed $13,000,000, except that, in 
     applying this subparagraph, the amount of $13,000,000 shall 
     be increased by $500,000 on January 1 of each calendar year 
     after calendar year 1995.
       ``(d) Waiver of Competitive Need Limitation.--
       ``(1) In general.--The President may waive the application 
     of subsection (c)(2) with respect to any eligible article of 
     any beneficiary developing country if, before July 1 of the 
     calendar year beginning after the calendar year for which a 
     determination described in subsection (c)(2)(A) was made with 
     respect to such eligible article, the President--
       ``(A) receives the advice of the International Trade 
     Commission under section 332 of the Tariff Act of 1930 on 
     whether any industry in the United States is likely to be 
     adversely affected by such waiver,
       ``(B) determines, based on the considerations described in 
     sections 501 and 502(c) and the advice described in 
     subparagraph (A), that such waiver is in the national 
     economic interest of the United States, and
       ``(C) publishes the determination described in subparagraph 
     (B) in the Federal Register.
       ``(2) Considerations by the president.--In making any 
     determination under paragraph (1), the President shall give 
     great weight to--
       ``(A) the extent to which the beneficiary developing 
     country has assured the United States that such country will 
     provide equitable and reasonable access to the markets and 
     basic commodity resources of such country, and
       ``(B) the extent to which such country provides adequate 
     and effective protection of intellectual property rights.
       ``(3) Effective period of waiver.--Any waiver granted under 
     this subsection shall remain in effect until the President 
     determines that such waiver is no longer warranted due to 
     changed circumstances.
       ``(e) International Trade Commission Advice.--Before 
     designating articles as eligible articles under section 
     503(a)(1), the President shall publish and furnish the 
     International Trade Commission with lists of articles which 
     may be considered for designation as eligible articles for 
     purposes of this title. The provisions of sections 131, 132, 
     133, and 134 shall be complied with as though action under 
     section 501 and this section were action under section 123 to 
     carry out a trade agreement entered into under section 123.
       ``(f) Special Rule Concerning Puerto Rico.--No action under 
     this title may affect any tariff duty imposed by the 
     Legislature of Puerto Rico pursuant to section 319 of the 
     Tariff Act of 1930 on coffee imported into Puerto Rico.

     ``SEC. 504. REVIEW AND REPORTS TO CONGRESS.

       ``(a) Report on Operation of Title.--On or before July 31, 
     1997, the President shall submit to the Congress a full and 
     complete report regarding the operation of this title.
       ``(b) Annual Reports on Worker Rights.--The President shall 
     submit an annual report to the Congress on the status of 
     internationally recognized worker rights within each 
     beneficiary developing country.

     ``SEC. 505. DATE OF TERMINATION.

       ``No duty-free treatment provided under this title shall 
     remain in effect after December 31, 1997.

     ``SEC. 506. DEFINITIONS.

       ``For purposes of this title:
       ``(1) Beneficiary developing country.--The term 
     `beneficiary developing country' means any country with 
     respect to which there is in effect an Executive order or 
     Presidential proclamation by the President designating such 
     country as a beneficiary developing country for purposes of 
     this title.
       ``(2) Country.--The term `country' means any foreign 
     country or territory, including any overseas dependent 
     territory or possession of a foreign country, or the Trust 
     Territory of the Pacific Islands. In the case of an 
     association of countries which is a free trade area or 
     customs union, or which is contributing to comprehensive 
     regional economic integration among its members through 
     appropriate means, including, but not limited to, the 
     reduction of duties, the President may by Executive order or 
     Presidential proclamation provide that all members of such 
     association other than members which are barred from 
     designation under section 502(b) shall be treated as one 
     country for purposes of this title.
       ``(3) Entered.--The term `entered' means entered, or 
     withdrawn from warehouse for consumption, in the customs 
     territory of the United States.
       ``(4) Internationally recognized worker rights.--The term 
     `internationally recognized worker rights' includes--
       ``(A) the right of association;
       ``(B) the right to organize and bargain collectively;
       ``(C) a prohibition on the use of any form of forced or 
     compulsory labor;
       ``(D) a minimum age for the employment of children; and
       ``(E) acceptable conditions of work with respect to minimum 
     wages, hours of work, and occupational safety and health.
       ``(5) Least-developed beneficiary developing country.--The 
     term `least-developed beneficiary developing country' means a 
     beneficiary developing country that is designated as a least-
     developed beneficiary developing country under section 
     502(a)(2).''.
       (b) Table of Contents.--The items relating to title V in 
     the table of contents of the Trade Act of 1974 are amended to 
     read as follows:

              ``TITLE V--GENERALIZED SYSTEM OF PREFERENCES

``Sec. 501. Authority to extend preferences.
``Sec. 502. Designation of beneficiary developing countries.
``Sec. 503. Designation of eligible articles.
``Sec. 504. Review and reports to Congress.
``Sec. 505. Date of termination.
``Sec. 506. Definitions.''.

     SEC. 12103. RETROACTIVE APPLICATION FOR CERTAIN LIQUIDATIONS 
                   AND RELIQUIDATIONS.

       (a) In General.--Notwithstanding section 514 of the Tariff 
     Act of 1930 or any other provision of law and subject to 
     subsection (b), the entry--
       (1) of any article to which duty-free treatment under title 
     V of the Trade Act of 1974 would have applied if the entry 
     had been made on July 31, 1995, and
       (2) that was made after July 31, 1995, and before the date 
     of the enactment of this Act,
     shall be liquidated or reliquidated as free of duty, and the 
     Secretary of the Treasury shall refund any duty paid with 
     respect to such entry. As used in this subsection, the term 
     ``entry'' includes a withdrawal from warehouse for 
     consumption.
       (b) Requests.--Liquidation or reliquidation may be made 
     under subsection (a) with respect to an entry only if a 
     request therefor is filed with the Customs Service, within 
     180 days after the date of the enactment of this Act, that 
     contains sufficient information to enable the Customs 
     Service--
       (1) to locate the entry; or
       (2) to reconstruct the entry if it cannot be located.
       (c) Treatment of Certain Entries of Buffalo Leather.--
     Notwithstanding section 514 of the Tariff Act of 1930 or any 
     other provision of law, buffalo leather, provided for under 
     subheading 4104.39.20 of the Harmonized Tariff Schedule of 
     the United States, that is a product of Thailand and entered 
     into the United States under entry numbers M42-1113868-8 and 
     M42-1113939-7, shall be liquidated or reliquidated, as 
     appropriate, as if entered on June 30, 1995.

     SEC. 12104. CONFORMING AMENDMENTS.

       (a) Trade Laws.--
       (1) Section 1211(b) of the Omnibus Trade and 
     Competitiveness Act of 1988 (19 U.S.C. 3011(b)) is amended--
       (A) in paragraph (1), by striking ``(19 U.S.C. 2463(a), 
     2464(c)(3))'' and inserting ``(as in effect on the day before 
     the date of the enactment of the GSP Renewal Act of 1995)''; 
     and
       (B) in paragraph (2), by striking ``(19 U.S.C. 
     2464(c)(1))'' and inserting the follow=

     ing: ``(as in effect on the day before the date of the 
     enactment of the GSP Renewal Act of 1995)''.
       (2) Section 203(c)(7) of the Andean Trade Preference Act 
     (19 U.S.C. 3202(c)(7)) is amended by striking ``502(a)(4)'' 
     and inserting ``506(4)''.
       (3) Section 212(b)(7) of the Caribbean Basin Economic 
     Recovery Act (19 U.S.C. 2702(b)(7)) is amended by striking 
     ``502(a)(4)'' and inserting ``506(4)''.
       (4) General note 3(a)(iv)(C) of the Harmonized Tariff 
     Schedule of the United States is amended by striking 
     ``sections 503(b) and 504(c)'' and inserting ``subsections 
     (a), (c), and (d) of section 503''.
       (b) Other Laws.--
       (1) Section 871(f)(2)(B) of the Internal Revenue Code of 
     1986 is amended by striking ``within the meaning of section 
     502'' and inserting ``under title V''.
       (2) Section 2202(8) of the Export Enhancement Act of 1988 
     (15 U.S.C. 4711(8)) is amended by striking ``502(a)(4)'' and 
     inserting ``506(4)''.
       (3) Section 231A(a) of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2191a(a)) is amended--
       (A) in paragraph (1) by striking ``502(a)(4) of the Trade 
     Act of 1974 (19 U.S.C. 2462(a)(4))'' and inserting ``506(4) 
     of the Trade Act of 1974'';
       (B) in paragraph (2) by striking ``505(c) of the Trade Act 
     of 1974 (19 U.S.C. 2465(c))'' and inserting ``504(b) of the 
     Trade Act of 1974''; and
       (C) in paragraph (4) by striking ``502(a)(4)'' and 
     inserting ``506(4)''.
                Subtitle C--Trade Adjustment Assistance

     SEC. 12201. MODIFICATION OF TRADE ADJUSTMENT ASSISTANCE.

       (a) Requirement of Training.--(1) Section 231(c) of the 
     Trade Act of 1974 (19 U.S.C. 2291) is amended--
       (A) in paragraph (1)(A) and (B) by striking ``it is not 
     feasible or appropriate to approve

[[Page 1692]]

     a training program'' and inserting ``a training program is 
     not available''; and
       (B) in paragraph (2)(A) and (B) by striking ``it is 
     feasible or appropriate to approve a training program'' and 
     inserting ``a training program is available''.
       (2) Section 233(b) of such Act (19 U.S.C. 2293(b)) is 
     repealed.
       (3) Paragraph (3) of section 250(d) of the Trade Act of 
     1974 (19 U.S.C. 2331(d)) is amended--
       (A) by striking ``it is not feasible or appropriate to 
     approve a training program'' in subparagraph (A) and 
     inserting ``a training program is not available'', and
       (B) by striking ``notwithstanding the provisions of section 
     233(b),'' in subparagraph (B).
       (b) Termination of Relocation Allowances.--(1) Section 238 
     of the Trade Act of 1974 (19 U.S.C. 2298), and the item 
     relating to that section in the table of contents for that 
     Act, are repealed.
       (2) Section 250(d) of the Trade Act of 1974 (19 U.S.C. 
     2331(d)) is amended by striking paragraph (5).
       (c) Termination of Program.--Section 285(c) of the Trade 
     Act of 1974 (19 U.S.C. 2271 preceding note) is amended--
       (1) in paragraph (1), by striking ``1998'' and inserting 
     ``2000''; and
       (2) by amending paragraph (2) to read as follows:
       ``(2) No assistance, vouchers, allowances, or other 
     payments may be provided under subchapter D of chapter 2 
     after September 30, 1998.''.
       (d) Extension of Authorization.--(1) Section 245(a) of the 
     Trade Act of 1974 (19 U.S.C. 2317(a)) is amended by striking 
     ``and 1998'' and inserting ``1998, 1999, and 2000''.
       (2) Section 256(b) of the Trade Act of 1974 (19 U.S.C. 
     2346(a)) is amended by striking ``and 1998'' and inserting 
     ``1998, 1999, and 2000''.
       (e) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall take effect on the date 
     of the enactment of this Act.
       (2) Subsections (a) and (b).--The amendments made by 
     subsections (a) and (b) shall take effect on October 1, 1996.
    TITLE XIII--COMMITTEE ON WAYS AND MEANS--REVENUE RECONCILIATION

     SEC. 13001. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This title may be cited as the ``Revenue 
     Reconciliation Act of 1995''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this title an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents for this 
     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.

       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.

          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 
              company-owned 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.

[[Page 1693]]

Sec. 13606. Depreciation under income forecast method.
Sec. 13607. Transfers of excess pension assets.

                         Part II--Legal Reforms

Sec. 13611. Repeal of exclusion for punitive damages and for damages 
              not attributable to physical injuries or sickness.
Sec. 13612. Reporting of certain payments made to attorneys.

 Part III--Treatment of Individuals Who Lose United States Citizenship

Sec. 13616. Revision of income, estate, and gift taxes on individuals 
              who lose United States citizenship.
Sec. 13617. Information on individuals losing United States 
              citizenship.
Sec. 13618. Report on tax compliance by United States citizens and 
              residents living abroad.

             Part IV--Reforms Relating to Energy Provisions

Sec. 13621. Termination of credit for electricity produced from certain 
              renewable resources.
Sec. 13622. 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

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.
           Subtitle A--Extension of Expiring Provisions, Etc.

              PART I--EXTENSIONS THROUGH DECEMBER 31, 1997

     SEC. 13101. WORK OPPORTUNITY TAX CREDIT.

       (a) Amount of Credit.--Subsection (a) of section 51 is 
     amended by striking ``40 percent'' and inserting ``35 
     percent''.
       (b) Members of Targeted Groups.--Subsection (d) of section 
     51 is amended to read as follows:
       ``(d) Members of Targeted Groups.--For purposes of this 
     subpart--
       ``(1) In general.--An individual is a member of a targeted 
     group if such individual is--
       ``(A) a qualified AFDC recipient,
       ``(B) a qualified ex-felon,
       ``(C) a high-risk youth,
       ``(D) a vocational rehabilitation referral, or
       ``(E) a qualified summer youth employee.
       ``(2) Qualified afdc recipient.--
       ``(A) In general.--The term `qualified AFDC recipient' 
     means any individual who is certified by the designated local 
     agency as being a member of a family receiving assistance 
     under an AFDC program for at least a 9-month period ending 
     during the 9-month period ending on the hiring date.
       ``(B) AFDC program.--For purposes of this paragraph, the 
     term `AFDC program' means any program providing aid under a 
     State plan approved under part A of title IV of the Social 
     Security Act (relating to aid to families with dependent 
     children) and any successor of such program.
       ``(C) Special rules for veterans.--In the case of a 
     veteran, subparagraph (A) shall be applied by substituting 
     `12-month' for `9-month' the second place it appears.
       ``(D) Veteran.--For purposes of subparagraph (C), the term 
     `veteran' means any individual who is certified by the 
     designated local agency as--
       ``(i)(I) having served on active duty (other than active 
     duty for training) in the Armed Forces of the United States 
     for a period of more than 180 days, or
       ``(II) having been discharged or released from active duty 
     in the Armed Forces of the United States for a service-
     connected disability, and
       ``(ii) not having any day during the 60-day period ending 
     on the hiring date which was a day of extended active duty in 
     the Armed Forces of the United States.
     For purposes of clause (ii), the term `extended active duty' 
     means a period of more than 90 days during which the 
     individual was on active duty (other than active duty for 
     training).
       ``(3) Qualified ex-felon.--The term `qualified ex-felon' 
     means any individual who is certified by the designated local 
     agency--
       ``(A) as having been convicted of a felony under any 
     statute of the United States or any State,
       ``(B) as having a hiring date which is not more than 1 year 
     after the last date on which such individual was so convicted 
     or was released from prison, and
       ``(C) as being a member of a family which had an income 
     during the 6 months immediately preceding the earlier of the 
     month in which such income determination occurs or the month 
     in which the hiring date occurs, which, on an annual basis, 
     would be 70 percent or less of the Bureau of Labor Statistics 
     lower living standard.
     Any determination under subparagraph (C) shall be valid for 
     the 45-day period beginning on the date such determination is 
     made.
       ``(4) High-risk youth.--
       ``(A) In general.--The term `high-risk youth' means any 
     individual who is certified by the designated local agency--
       ``(i) as having attained age 18 but not age 25 on the 
     hiring date, and
       ``(ii) as having his principal place of abode within an 
     empowerment zone or enterprise community.
       ``(B) Youth must continue to reside in zone.--In the case 
     of a high-risk youth, the term `qualified wages' shall not 
     include wages paid or incurred for services performed while 
     such youth's principal place of abode is outside an 
     empowerment zone or enterprise community.
       ``(5) Vocational rehabilitation referral.--The term 
     `vocational rehabilitation referral' means any individual who 
     is certified by the designated local agency as--
       ``(A) having a physical or mental disability which, for 
     such individual, constitutes or results in a substantial 
     handicap to employment, and
       ``(B) having been referred to the employer upon completion 
     of (or while receiving) rehabilitative services pursuant to--
       ``(i) an individualized written rehabilitation plan under a 
     State plan for vocational rehabilitation services approved 
     under the Rehabilitation Act of 1973, or
       ``(ii) a program of vocational rehabilitation carried out 
     under chapter 31 of title 38, United States Code.
       ``(6) Qualified summer youth employee.--
       ``(A) In general.--The term `qualified summer youth 
     employee' means any individual--
       ``(i) who performs services for the employer between May 1 
     and September 15,
       ``(ii) who is certified by the designated local agency as 
     having attained age 16 but not 18 on the hiring date (or if 
     later, on May 1 of the calendar year involved),
       ``(iii) who has not been an employee of the employer during 
     any period prior to the 90-day period described in 
     subparagraph (B)(i), and
       ``(iv) who is certified by the designated local agency as 
     having his principal place of abode within an empowerment 
     zone or enterprise community.
       ``(B) Special rules for determining amount of credit.--For 
     purposes of applying this subpart to wages paid or incurred 
     to any qualified summer youth employee--

[[Page 1694]]

       ``(i) subsection (b)(2) shall be applied by substituting 
     `any 90-day period between May 1 and September 15' for `the 
     1-year period beginning with the day the individual begins 
     work for the employer', and
       ``(ii) subsection (b)(3) shall be applied by substituting 
     `$3,000' for `$6,000'.
     The preceding sentence shall not apply to an individual who, 
     with respect to the same employer, is certified as a member 
     of another targeted group after such individual has been a 
     qualified summer youth employee.
       ``(C) Youth must continue to reside in zone.--Paragraph 
     (4)(B) shall apply for purposes of this paragraph.
       ``(7) Hiring date.--The term `hiring date' means the day 
     the individual is hired by the employer.
       ``(8) Designated local agency.--The term `designated local 
     agency' means a State employment security agency established 
     in accordance with the Act of June 6, 1933, as amended (29 
     U.S.C. 49-49n).
       ``(9) Special rules for certifications.--
       ``(A) In general.--An individual shall not be treated as a 
     member of a targeted group unless--
       ``(i) on or before the day on which such individual begins 
     work for the employer, the employer has received a 
     certification from a designated local agency that such 
     individual is a member of a targeted group, or
       ``(ii)(I) on or before the day the individual is offered 
     employment with the employer, a pre-screening notice is 
     completed with respect to such individual, and
       ``(II) not later than the 14th day after the individual 
     begins work for the employer, the employer submits such 
     notice to the designated local agency as part of a written 
     request for such a certification from such agency.
     For purposes of this paragraph, the term `pre-screening 
     notice' means a document (in such form as the Secretary shall 
     prescribe) which is signed by the employer and the individual 
     under penalties of perjury and which contains information 
     provided by the individual on the basis of which the employer 
     believes that the individual is a member of a targeted group.
       ``(B) Incorrect certifications.--If--
       ``(i) an individual has been certified by a designated 
     local agency as a member of a targeted group, and
       ``(ii) such certification is incorrect because it was based 
     on false information provided by such individual,
     the certification shall be revoked and wages paid by the 
     employer after the date on which notice of revocation is 
     received by the employer shall not be treated as qualified 
     wages.
       ``(C) Explanation of denial of request.--If a designated 
     local agency denies a request for certification of membership 
     in a targeted group, such agency shall provide to the person 
     making such request a written explanation of the reasons for 
     such denial.''
       (c) Minimum Employment Period.--Paragraph (3) of section 
     51(i) is amended to read as follows:
       ``(3) Individuals not meeting minimum employment period.--
     No wages shall be taken into account under subsection (a) 
     with respect to any individual unless such individual 
     either--
       ``(A) is employed by the employer at least 180 days (20 
     days in the case of a qualified summer youth employee), or
       ``(B) has completed at least 500 hours (120 hours in the 
     case of a qualified summer youth employee) of services 
     performed for the employer.''
       (d) Definition of Wages.--Subsection (c) of section 51 is 
     amended by striking paragraph (3).
       (e) Termination.--Paragraph (4) of section 51(c) is amended 
     to read as follows:
       ``(3) Termination.--The term `wages' shall not include any 
     amount paid or incurred to an individual who begins work for 
     the employer--
       ``(A) after December 31, 1994, and before January 1, 1996, 
     or
       ``(B) after December 31, 1997.''
       (f) Redesignation of Credit.--
       (1) Sections 38(b)(2) and 51(a) are each amended by 
     striking ``targeted jobs credit'' and inserting ``work 
     opportunity credit''.
       (2) The subpart heading for subpart F of part IV of 
     subchapter A of chapter 1 is amended by striking ``Targeted 
     Jobs Credit'' and inserting ``Work Opportunity Credit''.
       (3) The table of subparts for such part IV is amended by 
     striking ``targeted jobs credit'' and inserting ``work 
     opportunity credit''.
       (g) Business Awareness Program.--The Secretary of Labor 
     shall implement a program to encourage small businesses to 
     use the services of local agencies to identify individuals 
     who qualify to be certified as members of targeted groups (as 
     defined in section 51 of the Internal Revenue Code of 1986, 
     as amended by this section). Such Secretary, and the heads of 
     other Federal agencies, shall make every effort to encourage 
     small businesses to benefit from the credit allowable under 
     such section by simplifying procedures to the extent 
     possible.
       (h) Technical Amendments.--
       (1) Paragraph (1) of section 51(c) is amended by striking 
     ``, subsection (d)(8)(D),''.
       (2) Paragraph (3) of section 51(i) is amended by striking 
     ``(d)(12)'' each place it appears and inserting ``(d)(6)''.
       (i) Effective Date.--The amendments made by this section 
     shall apply to individuals who begin work for the employer 
     after December 31, 1995.

     SEC. 13102. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE 
                   PROGRAMS.

       (a) Extension.--Subsection (d) of section 127 (relating to 
     educational assistance programs) is amended by striking 
     ``December 31, 1994'' and inserting ``December 31, 1997''.
       (b) Limitation to Education Below Graduate Level.--The last 
     sentence of section 127(c)(1) is amended by inserting before 
     the period ``or at the graduate level''.
       (c) Effective Dates.--
       (1) Extension.--The amendment made by subsection (a) shall 
     apply to taxable years beginning after December 31, 1994.
       (2) Limitation.--The amendment made by subsection (b) shall 
     apply to taxable years beginning after December 31, 1995.

     SEC. 13103. RESEARCH CREDIT.

       (a) In General.--Subsection (h) of section 41 (relating to 
     credit for research activities) is amended--
       (1) by striking ``June 30, 1995'' each place it appears and 
     inserting ``December 31, 1997'', and
       (2) by striking ``July 1, 1995'' each place it appears and 
     inserting ``January 1, 1998''.
       (b) Base Amount for Start-up Companies.--Clause (i) of 
     section 41(c)(3)(B) (relating to start-up companies) is 
     amended to read as follows:
       ``(i)  Taxpayers to which subparagraph applies.--The fixed-
     base percentage shall be determined under this subparagraph 
     if--

       ``(I) the first taxable year in which a taxpayer had both 
     gross receipts and qualified research expenses begins after 
     December 31, 1983, or
       ``(II) there are fewer than 3 taxable years beginning after 
     December 31, 1983, and before January 1, 1989, in which the 
     taxpayer had both gross receipts and qualified research 
     expenses.''

       (c) Election of Alternative Incremental Credit.--Subsection 
     (c) of section 41 is amended by redesignating paragraphs (4) 
     and (5) as paragraphs (5) and (6), respectively, and by 
     inserting after paragraph (3) the following new paragraph:
       ``(4) Election of alternative incremental credit.--
       ``(A) In general.--At the election of the taxpayer, the 
     credit determined under subsection (a)(1) shall be equal to 
     the sum of--
       ``(i) 1.65 percent of so much of the qualified research 
     expenses for the taxable year as exceeds 1 percent of the 
     average described in subsection (c)(1)(B) but does not exceed 
     1.5 percent of such average,
       ``(ii) 2.2 percent of so much of such expenses as exceeds 
     1.5 percent of such average but does not exceed 2 percent of 
     such average, and
       ``(iii) 2.75 percent of so much of such expenses as exceeds 
     2 percent of such average.
       ``(B) Election.--An election under this paragraph may be 
     made only for the first taxable year of the taxpayer 
     beginning after June 30, 1995. Such an election shall apply 
     to the taxable year for which made and all succeeding taxable 
     years unless revoked with the consent of the Secretary.''
       (d) Increased Credit for Contract Research Expenses With 
     Respect to Certain Research Consortia.--Paragraph (3) of 
     section 41(b) is amended by adding at the end the following 
     new subparagraph:
       ``(C) Amounts paid to certain research consortia.--
       ``(i) In general.--Subparagraph (A) shall be applied by 
     substituting `75 percent' for `65 percent' with respect to 
     amounts paid or incurred by the taxpayer to a qualified 
     research consortium for qualified research.
       ``(ii) Qualified research consortium.--The term `qualified 
     research consortium' means any organization described in 
     subsection (e)(6)(B) if--

       ``(I) at least 15 unrelated taxpayers paid (during the 
     calendar year in which the taxable year of the taxpayer 
     begins) amounts to such organization for qualified research,
       ``(II) no 3 persons paid during such calendar year more 
     than 50 percent of the total amounts paid during such 
     calendar year for qualified research, and
       ``(III) no person contributed more than 20 percent of such 
     total amounts.

     For purposes of subclause (I), all persons treated as a 
     single employer under subsection (a) or (b) of section 52 
     shall be treated as related taxpayers.''
       (e) Conforming Amendment.--Subparagraph (D) of section 
     28(b)(1) is amended by striking ``June 30, 1995'' and 
     inserting ``December 31, 1997''.
       (f) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     ending after June 30, 1995.
       (2) Subsections (c) and (d).--The amendments made by 
     subsections (c) and (d) shall apply to taxable years 
     beginning after June 30, 1995.

     SEC. 13104. CONTRIBUTIONS OF STOCK TO PRIVATE FOUNDATIONS.

       (a) In General.--Subparagraph (D) of section 170(e)(5) is 
     amended by striking ``December 31, 1994'' and inserting 
     ``December 31, 1997''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made after December 31, 1994.

     SEC. 13105. CREDIT FOR CLINICAL TESTING EXPENSES.

       (a) In General.--Subsection (e) of section 28 is amended by 
     striking ``December 31, 1994'' and inserting ``December 31, 
     1997''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years ending after December 31, 1994.

[[Page 1695]]

 PART II--PERMANENT EXTENSION OF FUTA EXEMPTION FOR ALIEN AGRICULTURAL 
                                WORKERS

     SEC. 13106. FUTA EXEMPTION FOR ALIEN AGRICULTURAL WORKERS.

       (a) In General.--Subparagraph (B) of section 3306(c)(1) 
     (defining employment) is amended by striking ``before January 
     1, 1995,''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to services performed after December 31, 1994.

                   PART III--COMMERCIAL AVIATION FUEL

     SEC. 13111. DELAY OF SCHEDULED INCREASE IN TAX ON FUEL USED 
                   IN COMMERCIAL AVIATION.

       (a) 2-Year Delay.--Sections 4092(b)(2), 6421(f)(2)(B), and 
     6427(l)(4)(B) are each amended by striking ``September 30, 
     1995'' and inserting ``September 30, 1997''.
       (b) Conforming Amendment.--Section 13245 of the Omnibus 
     Budget Reconciliation Act of 1993 is hereby repealed.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     take effect on September 30, 1995.
       (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.
       (d) Floor Stocks Tax.--
       (1) Imposition of tax.--In the case of commercial aviation 
     fuel which is held by any person on October 1, 1997, there is 
     hereby imposed a floor stocks tax equal to 4.3 cents per 
     gallon.
       (2) Liability for tax and method of payment.--
       (A) Liability for tax.--A person holding aviation fuel on 
     October 1, 1997, to which the tax imposed by paragraph (1) 
     applies shall be liable for such tax.
       (B) Method of payment.--The tax imposed by paragraph (1) 
     shall be paid in such manner as the Secretary shall 
     prescribe.
       (C) Time for payment.--The tax imposed by paragraph (1) 
     shall be paid on or before April 30, 1998.
       (3) Definitions.--For purposes of this subsection--
       (A) Held by a person.--Aviation fuel shall be considered as 
     ``held by a person'' if title thereto has passed to such 
     person (whether or not delivery to the person has been made).
       (B) Commercial aviation fuel.--The term ``commercial 
     aviation fuel'' means aviation fuel (as defined in section 
     4093 of such Code) which is held on October 1, 1997, for sale 
     or use in commercial aviation (as defined in section 4092(b) 
     of such Code).
       (C) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury or his delegate.
       (4) Exception for exempt uses.--The tax imposed by 
     paragraph (1) shall not apply to aviation fuel held by any 
     person exclusively for any use for which a credit or refund 
     of the entire tax imposed by section 4091 of such Code (other 
     than the rate imposed by section 4091(b)(2) of such Code) is 
     allowable for aviation fuel so used.
       (5) Exception for certain amounts of fuel.--
       (A) In general.--No tax shall be imposed by paragraph (1) 
     on aviation fuel held on October 1, 1997, by any person if 
     the aggregate amount of commercial aviation fuel held by such 
     person on such date does not exceed 2,000 gallons. The 
     preceding sentence shall apply only if such person submits to 
     the Secretary (at the time and in the manner required by the 
     Secretary) such information as the Secretary shall require 
     for purposes of this paragraph.
       (B) Exempt fuel.--For purposes of subparagraph (A), there 
     shall not be taken into account fuel held by any person which 
     is exempt from the tax imposed by paragraph (1) by reason of 
     paragraph (4).
       (C) Controlled groups.--For purposes of this paragraph--
       (i) Corporations.--

       (I) In general.--All persons treated as a controlled group 
     shall be treated as 1 person.
       (II) Controlled group.--The term ``controlled group'' has 
     the meaning given to such term by subsection (a) of section 
     1563 of such Code; except that for such purposes the phrase 
     ``more than 50 percent'' shall be substituted for the phrase 
     ``at least 80 percent'' each place it appears in such 
     subsection.

       (ii) Nonincorporated persons under common control.--Under 
     regulations prescribed by the Secretary, principles similar 
     to the principles of clause (i) shall apply to a group of 
     persons under common control where 1 or more of such persons 
     is not a corporation.
       (6) Other laws applicable.--All provisions of law, 
     including penalties, applicable with respect to the taxes 
     imposed by section 4091 of such Code shall, insofar as 
     applicable and not inconsistent with the provisions of this 
     subsection, apply with respect to the floor stock taxes 
     imposed by paragraph (1) to the same extent as if such taxes 
     were imposed by such section 4091.
       (f) Study.--The Secretary of the Treasury or his delegate 
     shall, in consultation with the Secretary of Transportation, 
     conduct a study of the Federal excise tax burdens on each of 
     the various modes of transportation and the benefits provided 
     to each such mode from revenues derived from such excise 
     taxes. The results of such study shall be submitted not later 
     than June 30, 1996, to the Committee on Ways and Means of the 
     House of Representatives and the Committee on Finance of the 
     Senate.

    PART IV--EXTENSION OF AIRPORT AND AIRWAY TRUST FUND EXCISE TAXES

     SEC. 13116. EXTENSION OF AIRPORT AND AIRWAY TRUST FUND EXCISE 
                   TAXES.

       (a) Fuel Tax.--
       (1) Subparagraph (A) of section 4091(b)(3) is amended by 
     striking ``January 1, 1996'' and inserting ``October 1, 
     1996''.
       (2) Paragraph (2) of section 4081(d), as amended by section 
     14721 of this Act, is amended by striking ``January 1, 1996'' 
     and inserting ``October 1, 1996''.
       (b) Ticket Taxes.--Sections 4261(g) and 4271(d) are each 
     amended by striking ``January 1, 1996'' and inserting 
     ``October 1, 1996''.
       (c) Transfer to Airport and Airway Trust Fund.--
       (1) Subsection (b) of section 9502 is amended by striking 
     ``January 1, 1996'' each place it appears and inserting 
     ``October 1, 1996''.
       (2) Paragraph (3) of section 9502(f) is amended by striking 
     ``December 31, 1995'' and inserting ``September 30, 1996''.
                  Subtitle B--Medical Savings Accounts

     SEC. 13201. MEDICAL SAVINGS ACCOUNTS.

       (a) In General.--Part VII of subchapter B of chapter 1 
     (relating to additional itemized deductions for individuals) 
     is amended by redesignating section 220 as section 221 and by 
     inserting after section 219 the following new section:

     ``SEC. 220. MEDICAL SAVINGS ACCOUNTS.

       ``(a) Deduction Allowed.--In the case of an individual who 
     is an eligible individual for any month during the taxable 
     year, there shall be allowed as a deduction for the taxable 
     year an amount equal to the aggregate amount paid in cash 
     during such taxable year by such individual to a medical 
     savings account of such individual.
       ``(b) Limitations.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, the amount allowable as a deduction under 
     subsection (a) to an individual for the taxable year shall 
     not exceed the lesser of--
       ``(A) $2,500, or
       ``(B) the deductible under the catastrophic health plan 
     covering such individual.
     If the catastrophic health plan covering such individual 
     provides coverage for any other eligible individual who is 
     the spouse or any dependent (as defined in section 152) of 
     the taxpayer, subparagraph (A) shall be applied by 
     substituting `$5,000' for `$2,500'. The preceding sentence 
     shall not apply if the spouse or any dependent (as so 
     defined) of such individual is covered under any other 
     catastrophic health plan.
       ``(2) Special rule for married individuals.--
       ``(A) In general.--This subsection shall be applied 
     separately for each married individual.
       ``(B) Special rule.--If individuals who are married to each 
     other are covered under the same catastrophic health plan, 
     then the amounts applicable under subparagraphs (A) and (B) 
     of paragraph (1) shall be divided equally between them unless 
     they agree on a different division.
       ``(3) Coordination with exclusion for employer 
     contributions.--No deduction shall be allowed under this 
     section for any amount paid for any taxable year to a medical 
     savings account of an individual if--
       ``(A) any amount is paid to any medical savings account of 
     such individual which is excludable from gross income under 
     section 106(b) for such year, or
       ``(B) in a case described in paragraph (2), any amount is 
     paid to any medical savings account of either spouse which is 
     so excludable for such year.
       ``(4) Proration of limitation.--
       ``(A) In general.--The limitation under paragraph (1) shall 
     be the sum of the monthly limitations for months during the 
     taxable year that the individual is an eligible individual 
     if--
       ``(i) such individual is not an eligible individual for all 
     months of the taxable year,
       ``(ii) the deductible under the catastrophic health plan 
     covering such individual is not the same throughout such 
     taxable year, or
       ``(iii) such limitation is determined using the next to the 
     last sentence of paragraph (1) for some but not all months 
     during such taxable year.
       ``(B) Monthly limitation.--The monthly limitation for any 
     month shall be an amount equal to \1/12\ of the limitation 
     which would (but for this paragraph and paragraph (3)) be 
     determined under paragraph (1) if the facts and circumstances 
     as of the first day of such month that such individual is 
     covered under a catastrophic health plan were true for the 
     entire taxable year.
       ``(5) Denial of deduction to dependents.--No deduction 
     shall be allowed under this section to any individual with 
     respect to whom a deduction under section 151 is allowable to 
     another taxpayer for a taxable year beginning in the calendar 
     year in which such individual's taxable year begins.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Eligible individual.--
       ``(A) In general.--The term `eligible individual' means, 
     with respect to any month, any individual--
       ``(i) who is covered under a catastrophic health plan at 
     any time during such month, and
       ``(ii) who is not, while covered under a catastrophic 
     health plan, covered under any health plan--

       ``(I) which is not a catastrophic health plan, and
       ``(II) which provides coverage for any benefit which is 
     covered under the catastrophic health plan.

       ``(B) Certain coverage disregarded.--Subparagraph (A)(ii) 
     shall be applied without regard to--

[[Page 1696]]

       ``(i) coverage for any benefit provided by permitted 
     insurance, and
       ``(ii) coverage (whether through insurance or otherwise) 
     for accidents, dental care, vision care, or long-term care.
       ``(2) Catastrophic health plan.--The term `catastrophic 
     health plan' means any health plan which provides no 
     compensation for an individual's expenses covered by the plan 
     for any calendar year to the extent such expenses for such 
     calendar year do not exceed $1,500 ($3,000 if the 
     catastrophic health plan covering the taxpayer provides 
     coverage for more than 1 individual) or such higher amounts 
     as may be specified by the plan.
       ``(3) Permitted insurance.--The term `permitted insurance' 
     means--
       ``(A) Medicare supplemental insurance,
       ``(B) insurance if substantially all of the coverage 
     provided under such insurance relates to--
       ``(i) liabilities incurred under workers' compensation 
     laws,
       ``(ii) tort liabilities,
       ``(iii) liabilities relating to ownership or use of 
     property,
       ``(iv) credit insurance, or
       ``(v) such other similar liabilities as the Secretary may 
     specify by regulations,
       ``(C) insurance for a specified disease or illness, and
       ``(D) insurance paying a fixed amount per day (or other 
     period) of hospitalization.
       ``(d) Medical Savings Account.--For purposes of this 
     section--
       ``(1) Medical savings account.--The term `medical savings 
     account' means a trust created or organized in the United 
     States exclusively for the purpose of paying the qualified 
     medical expenses of the account holder, but only if the 
     written governing instrument creating the trust meets the 
     following requirements:
       ``(A) Except in the case of a rollover contribution 
     described in subsection (f)(4), no contribution will be 
     accepted unless it is in cash.
       ``(B) The trustee is a bank (as defined in section 408(n)), 
     an insurance company (as defined in section 816), or another 
     person who demonstrates to the satisfaction of the Secretary 
     that the manner in which such person will administer the 
     trust will be consistent with the requirements of this 
     section.
       ``(C) No part of the trust assets will be invested in life 
     insurance contracts.
       ``(D) The assets of the trust will not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       ``(E) The interest of an individual in the balance in his 
     account is nonforfeitable.
       ``(2) Qualified medical expenses.--
       ``(A) In general.--The term `qualified medical expenses' 
     means, with respect to an account holder, amounts paid by 
     such holder--
       ``(i) for medical care (as defined in section 213(d)) for 
     such individual, the spouse of such individual, and any 
     dependent (as defined in section 152) of such individual, but 
     only to the extent such amounts are not compensated for by 
     insurance or otherwise, or
       ``(ii) for long-term care insurance for such individual, 
     spouse, or dependent.
       ``(B) Health insurance may not be purchased from account.--
     Subparagraph (A)(i) shall not apply to any payment for 
     insurance.
       ``(3) Account holder.--The term `account holder' means the 
     individual on whose behalf the medical savings account was 
     established.
       ``(4) Certain rules to apply.--Rules similar to the 
     following rules shall apply for purposes of this section:
       ``(A) Section 219(d)(2) (relating to no deduction for 
     rollovers).
       ``(B) Section 219(f)(3) (relating to time when 
     contributions deemed made).
       ``(C) Except as provided in section 106(b), section 
     219(f)(5) (relating to employer payments).
       ``(D) Section 408(g) (relating to community property laws).
       ``(E) Section 408(h) (relating to custodial accounts).
       ``(e) Tax Treatment of Accounts.--
       ``(1) Account taxed as grantor trust.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the account holder of a medical savings account shall be 
     treated for purposes of this title as the owner of such 
     account and shall be subject to tax thereon in accordance 
     with subpart E of part I of subchapter J of this chapter 
     (relating to grantors and others treated as substantial 
     owners).
       ``(B) Treatment of capital losses.--With respect to assets 
     held in a medical savings account, any capital loss for a 
     taxable year from the sale or exchange of such an asset shall 
     be allowed only to the extent of capital gains from such 
     assets for such taxable year. Any capital loss which is 
     disallowed under the preceding sentence shall be treated as a 
     capital loss from the sale or exchange of such an asset in 
     the next taxable year. For purposes of this subparagraph, all 
     medical savings accounts of the account holder shall be 
     treated as 1 account.
       ``(2) Account assets treated as distributed in the case of 
     prohibited transactions or account pledged as security for 
     loan.--Rules similar to the rules of paragraphs (2) and (4) 
     of section 408(e) shall apply to medical savings accounts, 
     and any amount treated as distributed under such rules shall 
     be treated as not used to pay qualified medical expenses.
       ``(3) Treatment of account after death of account holder.--
       ``(A) In general.--A trust shall not constitute a medical 
     savings account unless the written governing instrument 
     provides that, if the account holder dies while there is a 
     balance in the account, the entire balance of the account 
     holder will be distributed within 5 years after the death of 
     the account holder.
       ``(B) Exception where spouse becomes account holder.--
     Subparagraph (A) shall not apply if the account is payable to 
     (or for the benefit of) the surviving spouse of the decedent.
       ``(f) Tax Treatment of Distributions.--
       ``(1) Inclusion of amounts not used for qualified medical 
     expenses.--
       ``(A) In general.--No amount shall be included in the gross 
     income of the account holder by reason of a payment or 
     distribution from a medical savings account which is used 
     exclusively to pay the qualified medical expenses of the 
     account holder. Any amount paid or distributed from a medical 
     savings account which is not so used shall be included in the 
     gross income of such holder to the extent such amount does 
     not exceed the excess of--
       ``(i) the aggregate contributions to such account which 
     were allowed as a deduction under this section or which were 
     excluded under section 106(b), over
       ``(ii) the aggregate prior payments or distributions from 
     such account which were includible in gross income under this 
     paragraph.
       ``(B) Special rules.--For purposes of subparagraph (A)--
       ``(i) all medical savings accounts of the account holder 
     shall be treated as 1 account,
       ``(ii) all payments and distributions during any taxable 
     year shall be treated as 1 distribution, and
       ``(iii) any distribution of property shall be taken into 
     account at its fair market value on the date of the 
     distribution.
       ``(2) Penalty for distributions not used for qualified 
     medical expenses.--
       ``(A) In general.--The tax imposed by this chapter for any 
     taxable year in which there is a payment or distribution from 
     a medical savings account which is not used exclusively to 
     pay the qualified medical expenses of the account holder 
     shall be increased by 10 percent of the amount of such 
     payment or distribution which is includible in gross income 
     under paragraph (1).
       ``(B) Exceptions.--Subparagraph (A) shall not apply if the 
     payment or distribution is made on or after the date the 
     account holder--
       ``(i) attains age 59\1/2\,
       ``(ii) becomes disabled within the meaning of section 
     72(m)(7), or
       ``(iii) dies.
       ``(3) Withdrawal of excess contributions.--Paragraph (1) 
     shall not apply to the distribution of any contribution paid 
     during a taxable year to a medical savings account if--
       ``(A) such distribution is received on or before the day 
     prescribed by law (including extensions of time) for filing 
     such individual's return for such taxable year,
       ``(B) no deduction is allowed under this section with 
     respect to such contribution, and
       ``(C) such distribution is accompanied by the amount of net 
     income attributable to such contribution.
     In the case of such a distribution, for purposes of section 
     61, any net income described in subparagraph (C) shall be 
     deemed to have been earned and receivable in the taxable year 
     in which such contribution is made.
       ``(4) Rollovers.--Paragraph (1) shall not apply to any 
     amount paid or distributed out of a medical savings account 
     to the account holder if the entire amount received 
     (including money and any other property) is paid into another 
     medical savings account for the benefit of such holder not 
     later than the 60th day after the day on which he received 
     the payment or distribution.
       ``(5) Coordination with medical expense deduction.--For 
     purposes of section 213, any payment or distribution out of a 
     medical savings account for qualified medical expenses shall 
     not be treated as an expense paid for medical care to the 
     extent of the amount of such payment or distribution which is 
     excludable from gross income solely by reason of paragraph 
     (1)(A).
       ``(g) Cost-of-Living Adjustment.--
       ``(1) In general.--In the case of any taxable year 
     beginning in a calendar year after 1996, each dollar amount 
     in subsection (b)(1) or in subsection (c)(2) shall be 
     increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the medical care cost adjustment for such calendar 
     year.
     If any increase under the preceding sentence is not a 
     multiple of $50, such increase shall be rounded to the 
     nearest multiple of $50.
       ``(2) Medical care cost adjustment.--For purposes of 
     paragraph (1), the medical care cost adjustment for any 
     calendar year is the percentage (if any) by which--
       ``(A) the medical care component of the Consumer Price 
     Index (as defined in section 1(f)(5)) for August of the 
     preceding calendar year, exceeds
       ``(B) such component for August of 1995.
       ``(h) Reports.--The trustee of a medical savings account 
     shall make such reports regarding such account to the 
     Secretary and to the account holder with respect to 
     contributions, distributions, and such other matters as the 
     Secretary may require under regulations. The reports required 
     by this subsection shall be filed at such time and in such 
     manner and furnished to such individuals at such time and in 
     such manner as may be required by those regulations.''
       (b) Deduction Allowed Whether or Not Individual Itemizes 
     Other Deductions.--

[[Page 1697]]

     Subsection (a) of section 62 is amended by inserting after 
     paragraph (15) the following new paragraph:
       ``(16) Medical savings accounts.--The deduction allowed by 
     section 220.''
       (c) Exclusions for Employer Contributions to Medical 
     Savings Accounts.--
       (1) Exclusion from income tax.--The text of section 106 
     (relating to contributions by employer to accident and health 
     plans) is amended to read as follows:
       ``(a) General Rule.--Gross income of an employee does not 
     include employer-provided coverage under an accident or 
     health plan.
       ``(b) Contributions to Medical Savings Accounts.--
       ``(1) In general.--In the case of an employee who is an 
     eligible individual, gross income does not include amounts 
     contributed by such employee's employer to any medical 
     savings account of such employee.
       ``(2) Coordination with deduction limitation.--The amount 
     excluded from the gross income of an employee under this 
     subsection for any taxable year shall not exceed the 
     limitation under section 220(b)(1) (determined without regard 
     to this subsection) which is applicable to such employee for 
     such taxable year.''
       ``(3) No constructive receipt.--No amount shall be included 
     in the gross income of any employee solely because the 
     employee may choose between the contributions referred to in 
     paragraph (1) and employer contributions to another health 
     plan of the employer.
       ``(4) Special rule for deduction of employer 
     contributions.--Any employer contribution to a medical 
     savings account, if otherwise allowable as a deduction under 
     this chapter, shall be allowed only for the taxable year in 
     which paid.
       ``(5) Definitions.--For purposes of this subsection, the 
     terms `eligible individual' and `medical savings account' 
     have the respective meanings given to such terms by section 
     220.''
       (2) Exclusion from employment taxes.--
       (A) Social security taxes.--
       (i) Subsection (a) of section 3121 is amended by striking 
     ``or'' at the end of paragraph (20), by striking the period 
     at the end of paragraph (21) and inserting ``; or'', and by 
     inserting after paragraph (21) the following new paragraph:
       ``(22) any payment made to or for the benefit of an 
     employee if at the time of such payment it is reasonable to 
     believe that the employee will be able to exclude such 
     payment from income under section 106(b).''
       (ii) Subsection (a) of section 209 of the Social Security 
     Act is amended by striking ``or'' at the end of paragraph 
     (17), by striking the period at the end of paragraph (18) and 
     inserting ``; or'', and by inserting after paragraph (18) the 
     following new paragraph:
       ``(19) any payment made to or for the benefit of an 
     employee if at the time of such payment it is reasonable to 
     believe that the employee will be able to exclude such 
     payment from income under section 106(b) of the Internal 
     Revenue Code of 1986.''
       (B) Railroad retirement tax.--Subsection (e) of section 
     3231 is amended by adding at the end the following new 
     paragraph:
       ``(10) medical savings account contributions.--The term 
     `compensation' shall not include any payment made to or for 
     the benefit of an employee if at the time of such payment it 
     is reasonable to believe that the employee will be able to 
     exclude such payment from income under section 106(b).''
       (C) Unemployment tax.--Subsection (b) of section 3306 is 
     amended by striking ``or'' at the end of paragraph (15), by 
     striking the period at the end of paragraph (16) and 
     inserting ``; or'', and by inserting after paragraph (16) the 
     following new paragraph:
       ``(17) any payment made to or for the benefit of an 
     employee if at the time of such payment it is reasonable to 
     believe that the employee will be able to exclude such 
     payment from income under section 106(b).''
       (D) Withholding tax.--Subsection (a) of section 3401 is 
     amended by striking ``or'' at the end of paragraph (19), by 
     striking the period at the end of paragraph (20) and 
     inserting ``; or'', and by inserting after paragraph (20) the 
     following new paragraph:
       ``(21) any payment made to or for the benefit of an 
     employee if at the time of such payment it is reasonable to 
     believe that the employee will be able to exclude such 
     payment from income under section 106(b).''
       (d) Medical Savings Account Contributions Not Available 
     Under Cafeteria Plans.--Subsection (f) of section 125 is 
     amended by inserting ``106(b),'' before ``117''.
       (e) Tax on Prohibited Transactions.--Section 4975 (relating 
     to tax on prohibited transactions) is amended--
       (1) by adding at the end of subsection (c) the following 
     new paragraph:
       ``(4) Special rule for medical savings accounts.--An 
     individual for whose benefit a medical savings account 
     (within the meaning of section 220(d)) is established shall 
     be exempt from the tax imposed by this section with respect 
     to any transaction concerning such account (which would 
     otherwise be taxable under this section) if, with respect to 
     such transaction, the account ceases to be a medical savings 
     account by reason of the application of section 220(e)(2) to 
     such account.'', and
       (2) by inserting ``or a medical savings account described 
     in section 220(d)'' in subsection (e)(1) after ``described in 
     section 408(a)''.
       (f) Failure To Provide Reports on Medical Savings 
     Accounts.--Section 6693 (relating to failure to provide 
     reports on individual retirement accounts or annuities) is 
     amended--
       (1) by inserting ``or on medical savings accounts'' after 
     ``annuities'' in the heading of such section, and
       (2) by adding at the end of subsection (a) the following: 
     ``The person required by section 220(h) to file a report 
     regarding a medical savings account at the time and in the 
     manner required by such section shall pay a penalty of $50 
     for each failure to so file unless it is shown that such 
     failure is due to reasonable cause.''
       (g) Clerical Amendments.--
       (1) The table of sections for part VII of subchapter B of 
     chapter 1 is amended by striking the last item and inserting 
     the following:

``Sec. 220. Medical savings accounts.
``Sec. 221. Cross reference.''
       (2) The table of sections for subchapter B of chapter 68 is 
     amended by inserting ``or on medical savings accounts'' after 
     ``annuities'' in the item relating to section 6693.
       (h) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
          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.

       (a) General Rule.--Section 7802 (relating to Commissioner 
     of Internal Revenue; Assistant Commissioner (Employee Plans 
     and Exempt Organizations)) is amended by adding at the end 
     the following new subsection:
       ``(d) Office of Taxpayer Advocate.--
       ``(1) In general.--There is established in the Internal 
     Revenue Service an office to be known as the `Office of the 
     Taxpayer Advocate'. Such office shall be under the 
     supervision and direction of an official to be known as the 
     `Taxpayer Advocate' who shall be appointed by and report 
     directly to the Commissioner of Internal Revenue. The 
     Taxpayer Advocate shall be entitled to compensation at the 
     same rate as the highest level official reporting directly to 
     the Deputy Commissioner of the Internal Revenue Service.
       ``(2) Functions of office.--
       ``(A) In general.--It shall be the function of the Office 
     of Taxpayer Advocate to--
       ``(i) assist taxpayers in resolving problems with the 
     Internal Revenue Service,
       ``(ii) identify areas in which taxpayers have problems in 
     dealings with the Internal Revenue Service,
       ``(iii) to the extent possible, propose changes in the 
     administrative practices of the Internal Revenue Service to 
     mitigate problems identified under clause (ii), and
       ``(iv) identify potential legislative changes which may be 
     appropriate to mitigate such problems.
       ``(B) Annual reports.--
       ``(i) Objectives.--Not later than June 30 of each calendar 
     year after 1995, the Taxpayer Advocate shall report to the 
     Committee on Ways and Means of the House of Representatives 
     and the Committee on Finance of the Senate on the objectives 
     of the Taxpayer Advocate for the fiscal year beginning in 
     such calendar year. Any such report shall contain full and 
     substantive analysis, in addition to statistical information.
       ``(ii) Activities.--Not later than December 31 of each 
     calendar year after 1995, the Taxpayer Advocate shall report 
     to the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate on 
     the activities of the Taxpayer Advocate during the fiscal 
     year ending during such calendar year. Any such report shall 
     contain full and substantive analysis, in addition to 
     statistical information, and shall--

       ``(I) identify the initiatives the Taxpayer Advocate has 
     taken on improving taxpayer services and Internal Revenue 
     Service responsiveness,
       ``(II) contain recommendations received from individuals 
     with the authority to issue Taxpayer Assistance Orders under 
     section 7811,
       ``(III) contain a summary of at least 20 of the most 
     serious problems encountered by taxpayers, including a 
     description of the nature of such problems,
       ``(IV) contain an inventory of the items described in 
     subclauses (I), (II), and (III) for which action has been 
     taken and the result of such action,
       ``(V) contain an inventory of the items described in 
     subclauses (I), (II), and (III) for which action remains to 
     be completed and the period during which each item has 
     remained on such inventory,
       ``(VI) contain an inventory of the items described in 
     subclauses (II) and (III) for which no action has been taken, 
     the period during which each item has remained on such 
     inventory, the reasons for the inaction, and identify any 
     Internal Revenue Service official who is responsible for such 
     inaction,
       ``(VII) identify any Taxpayer Assistance Order which was 
     not honored by the Internal Revenue Service in a timely 
     manner, as specified under section 7811(b),
       ``(VIII) contain recommendations for such administrative 
     and legislative action as may be appropriate to resolve 
     problems encountered by taxpayers,
       ``(IX) describe the extent to which regional problem 
     resolution officers participate in the selection and 
     evaluation of local problem resolution officers, and
       ``(X) include such other information as the Taxpayer 
     Advocate may deem advisable.

[[Page 1698]]

       ``(iii) Report to be submitted directly.--Each report 
     required under this subparagraph shall be provided directly 
     to the Committees referred to in clauses (i) and (ii) without 
     any prior review or comment from the Commissioner, the 
     Secretary of the Treasury, any other officer or employee of 
     the Department of the Treasury, or the Office of Management 
     and Budget.
       ``(3) Responsibilities of commissioner.--The Commissioner 
     of Internal Revenue shall establish procedures requiring a 
     formal response to all recommendations submitted to the 
     Commissioner by the Taxpayer Advocate within 3 months after 
     submission to the Commissioner.''
       (b) Conforming Amendments.--
       (1) Section 7811 (relating to Taxpayer Assistance Orders) 
     is amended--
       (A) by striking ``the Office of Ombudsman'' in subsection 
     (a) and inserting ``the Office of the Taxpayer Advocate'', 
     and
       (B) by striking ``Ombudsman'' each place it appears 
     (including in the headings of subsections (e) and (f)) and 
     inserting ``Taxpayer Advocate''.
       (2) The heading for section 7802 is amended to read as 
     follows:

     ``SEC. 7802. COMMISSIONER OF INTERNAL REVENUE; ASSISTANT 
                   COMMISSIONERS; TAXPAYER ADVOCATE.''

       (3) The table of sections for subchapter A of chapter 80 is 
     amended by striking the item relating to section 7802 and 
     inserting the following new item:

``Sec. 7802. Commissioner of Internal Revenue; Assistant Commissioners; 
              Taxpayer Advocate.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 13302. EXPANSION OF AUTHORITY TO ISSUE TAXPAYER 
                   ASSISTANCE ORDERS.

       (a) Terms of Orders.--Subsection (b) of section 7811 
     (relating to terms of Taxpayer Assistance Orders) is 
     amended--
       (1) by inserting ``within a specified time period'' after 
     ``the Secretary'', and
       (2) by inserting ``take any action as permitted by law,'' 
     after ``cease any action,''.
       (b) Limitation on Authority To Modify or Rescind.--Section 
     7811(c) (relating to authority to modify or rescind) is 
     amended to read as follows:
       ``(c) Authority To Modify or Rescind.--Any Taxpayer 
     Assistance Order issued by the Taxpayer Advocate under this 
     section may be modified or rescinded--
       ``(1) only by the Taxpayer Advocate, the Commissioner of 
     Internal Revenue, the Deputy Commissioner of Internal 
     Revenue, or a regional problem resolution officer, and
       ``(2) only if a written explanation of the reasons for the 
     modification or rescission is provided to the Taxpayer 
     Advocate.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

       PART II--MODIFICATIONS TO INSTALLMENT AGREEMENT PROVISIONS

     SEC. 13306. NOTIFICATION OF REASONS FOR TERMINATION OF 
                   INSTALLMENT AGREEMENTS.

       (a) Terminations.--Subsection (b) of section 6159 (relating 
     to extent to which agreements remain in effect) is amended by 
     adding at the end the following new paragraph:
       ``(5) Notice requirements.--The Secretary may not take any 
     action under paragraph (2), (3), or (4) unless--
       ``(A) a notice of such action is provided to the taxpayer 
     not later than the day 30 days before the date of such 
     action, and
       ``(B) such notice includes an explanation why the Secretary 
     intends to take such action.
     The preceding sentence shall not apply in any case in which 
     the Secretary believes that collection of any tax to which an 
     agreement under this section relates is in jeopardy.''
       (b) Conforming Amendment.--Paragraph (3) of section 6159(b) 
     is amended to read as follows:
       ``(3) Subsequent change in financial conditions.--If the 
     Secretary makes a determination that the financial condition 
     of a taxpayer with whom the Secretary has entered into an 
     agreement under subsection (a) has significantly changed, the 
     Secretary may alter, modify, or terminate such agreement.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date 6 months after the date of the 
     enactment of this Act.

     SEC. 13307. ADMINISTRATIVE REVIEW OF TERMINATION OF 
                   INSTALLMENT AGREEMENT.

       (a) General Rule.--Section 6159 (relating to agreements for 
     payment of tax liability in installments) is amended by 
     adding at the end the following new subsection:
       ``(c) Administrative Review.--The Secretary shall establish 
     procedures for an independent administrative review of 
     terminations of installment agreements under this section for 
     taxpayers who request such a review.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on January 1, 1996.

             PART III--ABATEMENT OF INTEREST AND PENALTIES

     SEC. 13311. EXPANSION OF AUTHORITY TO ABATE INTEREST.

       (a) General Rule.--Paragraph (1) of section 6404(e) 
     (relating to abatement of interest in certain cases) is 
     amended--
       (1) by inserting ``unreasonable'' before ``error'' each 
     place it appears in subparagraphs (A) and (B), and
       (2) by striking ``in performing a ministerial act'' each 
     place it appears and inserting ``in performing a ministerial 
     or managerial act''.
       (b) Clerical Amendment.--The subsection heading for 
     subsection (e) of section 6404 is amended--
       (1) by striking ``Assessments'' and inserting 
     ``Abatement'', and
       (2) by inserting ``Unreasonable'' before ``Errors''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to interest accruing with respect to deficiencies 
     or payments for taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 13312. REVIEW OF IRS FAILURE TO ABATE INTEREST.

       (a) In General.--Section 6404 is amended by adding at the 
     end the following new subsection:
       ``(g) Review of Denial of Request for Abatement of 
     Interest.--The Tax Court shall have jurisdiction over any 
     action brought by a taxpayer who meets the requirements 
     referred to in section 7430(c)(4)(A)(iii) to determine 
     whether the Secretary's failure to abate interest under this 
     section was an abuse of discretion if such action is brought 
     within 6 months after the date of the Secretary's final 
     determination not to abate such interest.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to requests for abatement after the date of the 
     enactment of this Act.

     SEC. 13313. EXTENSION OF INTEREST-FREE PERIOD FOR PAYMENT OF 
                   TAX AFTER NOTICE AND DEMAND.

       (a) General Rule.--Paragraph (3) of section 6601(e) 
     (relating to payments made within 10 days after notice and 
     demand) is amended to read as follows:
       ``(3) Payments made within specified period after notice 
     and demand.--If notice and demand is made for payment of any 
     amount and if such amount is paid within 21 calendar days (10 
     business days if the amount for which such notice and demand 
     is made equals or exceeds $100,000) after the date of such 
     notice and demand, interest under this section on the amount 
     so paid shall not be imposed for the period after the date of 
     such notice and demand.''
       (b) Conforming Amendments.--
       (1) Subparagraph (A) of section 6601(e)(2) is amended by 
     striking ``10 days from the date of notice and demand 
     therefor'' and inserting ``21 calendar days from the date of 
     notice and demand therefor (10 business days if the amount 
     for which such notice and demand is made equals or exceeds 
     $100,000)''.
       (2) Paragraph (3) of section 6651(a) is amended by striking 
     ``10 days of the date of the notice and demand therefor'' and 
     inserting ``21 calendar days from the date of notice and 
     demand therefor (10 business days if the amount for which 
     such notice and demand is made equals or exceeds $100,000)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply in the case of any notice and demand given after 
     June 30, 1996.

                         PART IV--JOINT RETURNS

     SEC. 13316. STUDIES OF JOINT RETURN-RELATED ISSUES.

       The Secretary of the Treasury or his delegate and the 
     Comptroller General of the United States shall each conduct 
     separate studies of--
       (1) the effects of changing the liability for tax on a 
     joint return from being joint and several to being 
     proportionate to the tax attributable to each spouse,
       (2) the effects of providing that, if a divorce decree 
     allocates liability for tax on a joint return filed before 
     the divorce, the Secretary may collect such liability only in 
     accordance with the decree,
       (3) whether those provisions of the Internal Revenue Code 
     of 1986 intended to provide relief to innocent spouses 
     provide meaningful relief in all cases where such relief is 
     appropriate, and
       (4) the effect of providing that community income (as 
     defined in section 66(d) of such Code) which, in accordance 
     with the rules contained in section 879(a) of such Code, 
     would be treated as the income of one spouse is exempt from a 
     levy for failure to pay any tax imposed by subtitle A by the 
     other spouse for a taxable year ending before their marriage.
     The reports of such studies shall be submitted to the 
     Committee on Ways and Means of the House of Representatives 
     and the Committee on Finance of the Senate within 6 months 
     after the date of the enactment of this Act.

     SEC. 13317. JOINT RETURN MAY BE MADE AFTER SEPARATE RETURNS 
                   WITHOUT FULL PAYMENT OF TAX.

       (a) General Rule.--Paragraph (2) of section 6013(b) 
     (relating to limitations on filing of joint return after 
     filing separate returns) is amended by striking subparagraph 
     (A) and redesignating the following subparagraphs 
     accordingly.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 13318. DISCLOSURE OF COLLECTION ACTIVITIES.

       Subsection (e) of section 6103 (relating to disclosure to 
     persons having material interest) is amended by adding at the 
     end the following new paragraph:
       ``(8) Disclosure of collection activities with respect to 
     joint return.--If any deficiency of tax with respect to a 
     joint return

[[Page 1699]]

     is assessed and the individuals filing such return are no 
     longer married or no longer reside in the same household, 
     upon request in writing by either of such individuals, the 
     Secretary shall disclose in writing to the individual making 
     the request whether the Secretary has attempted to collect 
     such deficiency from such other individual, the general 
     nature of such collection activities, and the amount 
     collected.''

                     PART V--COLLECTION ACTIVITIES

     SEC. 13321. MODIFICATIONS TO LIEN AND LEVY PROVISIONS.

       (a) Withdrawal of Certain Notices.--Section 6323 (relating 
     to validity and priority against certain persons) is amended 
     by adding at the end the following new subsection:
       ``(j) Withdrawal of Notice in Certain Circumstances.--
       ``(1) In general.--The Secretary may withdraw a notice of a 
     lien filed under this section and this chapter shall be 
     applied as if the withdrawn notice had not been filed, if the 
     Secretary determines that--
       ``(A) the filing of such notice was premature or otherwise 
     not in accordance with administrative procedures of the 
     Secretary,
       ``(B) the taxpayer has entered into an agreement under 
     section 6159 to satisfy the tax liability for which the lien 
     was imposed by means of installment payments, unless such 
     agreement provides otherwise,
       ``(C) the withdrawal of such notice will facilitate the 
     collection of the tax liability, or
       ``(D) with the consent of the taxpayer or the Taxpayer 
     Advocate, the withdrawal of such notice would be in the best 
     interests of the taxpayer (as determined by the Taxpayer 
     Advocate) and the United States.
     Any such withdrawal shall be made by filing notice at the 
     same office as the withdrawn notice. A copy of such notice of 
     withdrawal shall be provided to the taxpayer.
       ``(2) Notice to credit agencies, etc.--Upon written request 
     by the taxpayer with respect to whom a notice of a lien was 
     withdrawn under paragraph (1), the Secretary shall promptly 
     make reasonable efforts to notify credit reporting agencies, 
     and any financial institution or creditor whose name and 
     address is specified in such request, of the withdrawal of 
     such notice. Any such request shall be in such form as the 
     Secretary may prescribe.''
       (b) Return of Levied Property in Certain Cases.--Section 
     0655 (relating to authority to release levy and return 
     property) is amended by adding at the end the following new 
     subsection:
       ``(d) Return of Property in Certain Cases.--If--
       ``(1) any property has been levied upon, and
       ``(2) the Secretary determines that--
       ``(A) the levy on such property was premature or otherwise 
     not in accordance with administrative procedures of the 
     Secretary,
       ``(B) the taxpayer has entered into an agreement under 
     section 6159 to satisfy the tax liability for which the levy 
     was imposed by means of installment payments, unless such 
     agreement provides otherwise,
       ``(C) the return of such property will facilitate the 
     collection of the tax liability, or
       ``(D) with the consent of the taxpayer or the Taxpayer 
     Advocate, the return of such property would be in the best 
     interests of the taxpayer (as determined by the Taxpayer 
     Advocate) and the United States,
     the provisions of subsection (b) shall apply in the same 
     manner as if such property had been wrongly levied upon, 
     except that no interest shall be allowed under subsection 
     (c).''
       (c) Modifications in Certain Levy Exemption Amounts.--
       (1) Fuel, etc.--Paragraph (2) of section 6334(a) (relating 
     to fuel, provisions, furniture, and personal effects exempt 
     from levy) is amended--
       (A) by striking ``If the taxpayer is the head of a family, 
     so'' and inserting ``So'',
       (B) by striking ``his household'' and inserting ``the 
     taxpayer's household'', and
       (C) by striking ``$1,650 ($1,550 in the case of levies 
     issued during 1989)'' and inserting ``$2,500''.
       (2) Inflation adjustment.--Section 6334 (relating to 
     property exempt from levy) is amended by adding at the end 
     the following new subsection:
       ``(f) Inflation Adjustment.--
       ``(1) In general.--In the case of any calendar year 
     beginning after 1996, each dollar amount referred to in 
     paragraphs (2) and (3) of subsection (a) shall be increased 
     by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year, by substituting 
     `calendar year 1995' for `calendar year 1992' in subparagraph 
     (B) thereof.
       ``(2) Rounding.--If any dollar amount after being increased 
     under paragraph (1) is not a multiple of $10, such dollar 
     amount shall be rounded to the nearest multiple of $10.''
       (3) Technical amendment.--Paragraph (3) of section 6334(a) 
     is amended by striking ``($1,050 in the case of levies issued 
     during 1989)''.
       (d) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall take effect on the date 
     of the enactment of this Act.
       (2) Exempt amounts.--The amendments made by subsection (c) 
     shall take effect with respect to levies issued after 
     December 31, 1995.

     SEC. 13322. OFFERS-IN-COMPROMISE.

       (a) Review Requirements.--Subsection (b) of section 7122 
     (relating to records) is amended by striking ``$500.'' and 
     inserting ``$100,000. However, such compromise shall be 
     subject to continuing quality review by the Secretary.''
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

                      PART VI--INFORMATION RETURNS

     SEC. 13326. CIVIL DAMAGES FOR FRAUDULENT FILING OF 
                   INFORMATION RETURNS.

       (a) General Rule.--Subchapter B of chapter 76 (relating to 
     proceedings by taxpayers and third parties) is amended by 
     redesignating section 7434 as section 7435 and by inserting 
     after section 7433 the following new section:

     ``SEC. 7434. CIVIL DAMAGES FOR FRAUDULENT FILING OF 
                   INFORMATION RETURNS.

       ``(a) In General.--If any person willfully files a 
     fraudulent information return with respect to payments 
     purported to be made to any other person, such other person 
     may bring a civil action for damages against the person so 
     filing such return.
       ``(b) Damages.--In any action brought under subsection (a), 
     upon a finding of liability on the part of the defendant, the 
     defendant shall be liable to the plaintiff in an amount equal 
     to the greater of $5,000 or the sum of--
       ``(1) any actual damages sustained by the plaintiff as a 
     proximate result of the filing of the fraudulent information 
     return (including any costs attributable to resolving 
     deficiencies asserted as a result of such filing),
       ``(2) the costs of the action, and
       ``(3) in the court's discretion, reasonable attorneys fees.
       ``(c) Period for Bringing Action.--Notwithstanding any 
     other provision of law, an action to enforce the liability 
     created under this section may be brought without regard to 
     the amount in controversy and may be brought only within the 
     later of--
       ``(1) 6 years after the date of the filing of the 
     fraudulent information return, or
       ``(2) 1 year after the date such fraudulent information 
     return would have been discovered by exercise of reasonable 
     care.
       ``(d) Copy of Complaint Filed With IRS.--Any person 
     bringing an action under subsection (a) shall provide a copy 
     of the complaint to the Internal Revenue Service upon the 
     filing of such complaint with the court.
       ``(e) Finding of Court To Include Correct Amount of 
     Payment.--The decision of the court awarding damages in an 
     action brought under subsection (a) shall include a finding 
     of the correct amount which should have been reported in the 
     information return.
       ``(f) Information Return.--For purposes of this section, 
     the term `information return' means any statement described 
     in section 6724(d)(1)(A).''
       (b) Clerical Amendment.--The table of sections for 
     subchapter B of chapter 76 is amended by striking the item 
     relating to section 7434 and inserting the following:

``Sec. 7434. Civil damages for fraudulent filing of information 
              returns.
``Sec. 7435. Cross references.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to fraudulent information returns filed after the 
     date of the enactment of this Act.

     SEC. 13327. REQUIREMENT TO CONDUCT REASONABLE INVESTIGATIONS 
                   OF INFORMATION RETURNS.

       (a) General Rule.--Section 6201 (relating to assessment 
     authority) is amended by redesignating subsection (d) as 
     subsection (e) and by inserting after subsection (c) the 
     following new subsection:
       ``(d) Required Reasonable Verification of Information 
     Returns.--In any court proceeding, if a taxpayer asserts a 
     reasonable dispute with respect to any item of income 
     reported on an information return filed with the Secretary 
     under subpart B or C of part III of subchapter A of chapter 
     61 by a third party and the taxpayer has fully cooperated 
     with the Secretary (including providing, within a reasonable 
     period of time, access to and inspection of all witnesses, 
     information, and documents within the control of the taxpayer 
     as reasonably requested by the Secretary), the Secretary 
     shall have the burden of producing reasonable and probative 
     information concerning such deficiency in addition to such 
     information return.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

              PART VII--AWARDING OF COSTS AND CERTAIN FEES

     SEC. 13331. UNITED STATES MUST ESTABLISH THAT ITS POSITION IN 
                   PROCEEDING WAS SUBSTANTIALLY JUSTIFIED.

       (a) General Rule.--Subparagraph (A) of section 7430(c)(4) 
     (defining prevailing party) is amended by striking clause (i) 
     and by redesignating clauses (ii) and (iii) as clauses (i) 
     and (ii), respectively.
       (b) Burden of Proof on United States.--Paragraph (4) of 
     section 7430(c) is amended by redesignating subparagraph (B) 
     as subparagraph (C) and by inserting after subparagraph (A) 
     the following new subparagraph:
       ``(B) Exception if united states establishes that its 
     position was substantially justified.--
       ``(i) General rule.--A party shall not be treated as the 
     prevailing party in a proceeding to which subsection (a) 
     applies if the United States establishes that the position of 
     the United States in the proceeding was substantially 
     justified.
       ``(ii) Presumption of no justification if internal revenue 
     service didn't follow certain published guidance.--For 
     purposes of clause (i), the position of the United

[[Page 1700]]

     States shall be presumed not to be substantially justified if 
     the Internal Revenue Service did not follow its applicable 
     published guidance in the administrative proceeding. Such 
     presumption may be rebutted.
       ``(iii) Applicable published guidance.--For purposes of 
     clause (ii), the term `applicable published guidance' means--

       ``(I) regulations, revenue rulings, revenue procedures, 
     information releases, notices, and announcements, and
       ``(II) any of the following which are issued to the 
     taxpayer: private letter rulings, technical advice memoranda, 
     and determination letters.''

       (c) Conforming Amendments.--
       (1) Subparagraph (B) of section 7430(c)(2) is amended by 
     striking ``paragraph (4)(B)'' and inserting ``paragraph 
     (4)(C)''.
       (2) Subparagraph (C) of section 7430(c)(4), as redesignated 
     by subsection (b), is amended by striking ``subparagraph 
     (A)'' and inserting ``this paragraph''.
       (3) Sections 6404(g) and 6656(c)(1), as amended by this 
     title, are each amended by striking ``section 
     7430(c)(4)(A)(iii)'' and inserting ``section 
     7430(c)(4)(A)(ii)''.

     SEC. 13332. INCREASED LIMIT ON ATTORNEY FEES.

       Paragraph (1) of section 7430(c) (defining reasonable 
     litigation costs) is amended--
       (1) by striking ``$75'' in clause (iii) of subparagraph (B) 
     and inserting ``$110'',
       (2) by striking ``an increase in the cost of living or'' in 
     clause (iii) of subparagraph (B), and
       (3) by adding after clause (iii) the following:
     ``In the case of any calendar year beginning after 1996, the 
     dollar amount referred to in clause (iii) shall be increased 
     by an amount equal to such dollar amount multiplied by the 
     cost-of-living adjustment determined under section 1(f)(3) 
     for such calendar year, by substituting `calendar year 1995' 
     for `calendar year 1992' in subparagraph (B) thereof. If any 
     dollar amount after being increased under the preceding 
     sentence is not a multiple of $10, such dollar amount shall 
     be rounded to the nearest multiple of $10.''

     SEC. 13333. FAILURE TO AGREE TO EXTENSION NOT TAKEN INTO 
                   ACCOUNT.

       Paragraph (1) of section 7430(b) (relating to requirement 
     that administrative remedies be exhausted) is amended by 
     adding at the end the following new sentence: ``Any failure 
     to agree to an extension of the time for the assessment of 
     any tax shall not be taken into account for purposes of 
     determining whether the prevailing party meets the 
     requirements of the preceding sentence.''

     SEC. 13334. AWARD OF LITIGATION COSTS PERMITTED IN 
                   DECLARATORY JUDGMENT PROCEEDINGS.

       Subsection (b) of section 7430 is amended by striking 
     paragraph (3) and by redesignating paragraph (4) as paragraph 
     (3).

     SEC. 13335. EFFECTIVE DATE.

       The amendments made by this part shall apply in the case of 
     proceedings commenced after the date of the enactment of this 
     Act.

 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.

       (a) General Rule.--Subsection (b) of section 7433 (relating 
     to damages) is amended by striking ``$100,000'' and inserting 
     ``$1,000,000''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to actions by officers or employees of the 
     Internal Revenue Service after the date of the enactment of 
     this Act.

     SEC. 13337. COURT DISCRETION TO REDUCE AWARD FOR LITIGATION 
                   COSTS FOR FAILURE TO EXHAUST ADMINISTRATIVE 
                   REMEDIES.

       (a) General Rule.--Paragraph (1) of section 7433(d) 
     (relating to civil damages for certain unauthorized 
     collection actions) is amended to read as follows:
       ``(1) Award for damages may be reduced if administrative 
     remedies not exhausted.--The amount of damages awarded under 
     subsection (b) may be reduced if the court determines that 
     the plaintiff has not exhausted the administrative remedies 
     available to such plaintiff within the Internal Revenue 
     Service.''
       (b) Effective Date.--The amendment made by this section 
     shall apply in the case of proceedings commenced after the 
     date of the enactment of this Act.

 PART IX--MODIFICATIONS TO PENALTY FOR FAILURE TO COLLECT AND PAY OVER 
                                  TAX

     SEC. 13341. PRELIMINARY NOTICE REQUIREMENT.

       (a) In General.--Section 6672 (relating to failure to 
     collect and pay over tax, or attempt to evade or defeat tax) 
     is amended by redesignating subsection (b) as subsection (c) 
     and by inserting after subsection (a) the following new 
     subsection:
       ``(b) Preliminary Notice Requirement.--
       ``(1) In general.--No penalty shall be imposed under 
     subsection (a) unless the Secretary notifies the taxpayer in 
     writing by mail to an address as determined under section 
     6212(b) that the taxpayer shall be subject to an assessment 
     of such penalty.
       ``(2) Timing of notice.--The mailing of the notice 
     described in paragraph (1) shall precede any notice and 
     demand of any penalty under subsection (a) by at least 60 
     days.
       ``(3) Statute of limitations.--If a notice described in 
     paragraph (1) with respect to any penalty is mailed before 
     the expiration of the period provided by section 6501 for the 
     assessment of such penalty (determined without regard to this 
     paragraph), the period provided by such section for the 
     assessment of such penalty shall not expire before the later 
     of--
       ``(A) the date 90 days after the date on which such notice 
     was mailed, or
       ``(B) if there is a timely protest of the proposed 
     assessment, the date 30 days after the Secretary makes a 
     final administrative determination with respect to such 
     protest.
       ``(4) Exception for jeopardy.--This subsection shall not 
     apply if the Secretary finds that the collection of the 
     penalty is in jeopardy.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to proposed assessments made after June 30, 1996.

     SEC. 13342. DISCLOSURE OF CERTAIN INFORMATION WHERE MORE THAN 
                   1 PERSON LIABLE FOR PENALTY FOR FAILURE TO 
                   COLLECT AND PAY OVER TAX.

       (a) In General.--Subsection (e) of section 6103 (relating 
     to disclosure to persons having material interest), as 
     amended by section 13318, is amended by adding at the end the 
     following new paragraph:
       ``(9) Disclosure of certain information where more than 1 
     person subject to penalty under section 6672.--If the 
     Secretary determines that a person is liable for a penalty 
     under section 6672(a) with respect to any failure, upon 
     request in writing of such person, the Secretary shall 
     disclose in writing to such person--
       ``(A) the name of any other person whom the Secretary has 
     determined to be liable for such penalty with respect to such 
     failure, and
       ``(B) whether the Secretary has attempted to collect such 
     penalty from such other person, the general nature of such 
     collection activities, and the amount collected.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

     SEC. 13343. RIGHT OF CONTRIBUTION WHERE MORE THAN 1 PERSON 
                   LIABLE FOR PENALTY FOR FAILURE TO COLLECT AND 
                   PAY OVER TAX.

       (a) In General.--Section 6672 (relating to failure to 
     collect and pay over tax, or attempt to evade or defeat tax) 
     is amended by adding at the end the following new subsection:
       ``(d) Right of Contribution Where More Than 1 Person Liable 
     for Penalty.--If more than 1 person is liable for the penalty 
     under subsection (a) with respect to any tax, each person who 
     paid such penalty shall be entitled to recover from other 
     persons who are liable for such penalty an amount equal to 
     the excess of the amount paid by such person over such 
     person's proportionate share of the penalty. Any claim for 
     such a recovery may be made only in a proceeding which is 
     separate from, and is not joined with--
       ``(1) an action for collection of such penalty brought by 
     the United States, or
       ``(2) a proceeding in which the United States files a 
     counterclaim or third-party complaint for the collection of 
     such penalty.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to penalties assessed after the date of the 
     enactment of this Act.

     SEC. 13344. VOLUNTEER BOARD MEMBERS OF TAX-EXEMPT 
                   ORGANIZATIONS EXEMPT FROM PENALTY FOR FAILURE 
                   TO COLLECT AND PAY OVER TAX.

       (a) In General.--Section 6672 is amended by adding at the 
     end the following new subsection:
       ``(e) Exception for Voluntary Board Members of Tax-Exempt 
     Organizations.--No penalty shall be imposed by subsection (a) 
     on any unpaid, volunteer member of any board of trustees or 
     directors of an organization exempt from tax under subtitle A 
     if such member--
       ``(1) is solely serving in an honorary capacity,
       ``(2) does not participate in the day-to-day or financial 
     operations of the organization, and
       ``(3) does not have actual knowledge of the failure on 
     which such penalty is imposed.
     The preceding sentence shall not apply if it results in no 
     person being liable for the penalty imposed by subsection 
     (a).''
       (b) Public Information Requirements.--
       (1) In general.--The Secretary of the Treasury or the 
     Secretary's delegate (hereafter in this subsection referred 
     to as the ``Secretary'') shall take such actions as may be 
     appropriate to ensure that employees are aware of their 
     responsibilities under the Federal tax depository system, the 
     circumstances under which employees may be liable for the 
     penalty imposed by section 6672 of the Internal Revenue Code 
     of 1986, and the responsibility to promptly report to the 
     Internal Revenue Service any failure referred to in 
     subsection (a) of such section 6672. Such actions shall 
     include--
       (A) printing of a warning on deposit coupon booklets and 
     the appropriate tax returns that certain employees may be 
     liable for the penalty imposed by such section 6672, and
       (B) the development of a special information packet.
       (2) Development of explanatory materials.--The Secretary 
     shall develop materials explaining the circumstances under 
     which board members of tax-exempt organizations (including 
     voluntary and honorary members) may be subject to penalty 
     under section 6672 of such Code. Such materials shall be made 
     available to tax-exempt organizations.
       (3) IRS instructions.--The Secretary shall clarify the 
     instructions to Internal Revenue

[[Page 1701]]

      Service employees on the application of the penalty under 
     section 6672 of such Code with regard to voluntary members of 
     boards of trustees or directors of tax- exempt organizations.

          PART X--MODIFICATIONS OF RULES RELATING TO SUMMONSES

     SEC. 13346. ENROLLED AGENTS INCLUDED AS THIRD-PARTY 
                   RECORDKEEPERS.

       (a) In General.--Paragraph (3) of section 7609(a) (relating 
     to third-party recordkeeper defined) is amended by striking 
     ``and'' at the end of subparagraph (G), by striking the 
     period at the end of subparagraph (H) and inserting ``; 
     and'', and by adding at the end the following the 
     subparagraph:
       ``(I) any enrolled agent.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to summonses issued after the date of the 
     enactment of this Act.

     SEC. 13347. SAFEGUARDS RELATING TO DESIGNATED SUMMONSES.

       (a) Standard of Review.--Subparagraph (A) of section 
     6503(j)(2) (defining designated summons) is amended by 
     redesignating clauses (i) and (ii) as clauses (ii) and (iii), 
     respectively, and by inserting before clause (ii) (as so 
     redesignated) the following new clause:
       ``(i) the issuance of such summons is preceded by a review 
     of such issuance by the regional counsel of the Office of 
     Chief Counsel for the region in which the examination of the 
     corporation is being conducted,''.
       (b) Limitation on Persons to Whom Designated Summons May Be 
     Issued.--Paragraph (1) of section 6503(j) is amended by 
     striking ``with respect to any return of tax by a 
     corporation'' and inserting ``to a corporation (or to any 
     other person to whom the corporation has transferred records) 
     with respect to any return of tax by such corporation for a 
     taxable year (or other period) for which such corporation is 
     being examined under the coordinated examination program (or 
     any successor program) of the Internal Revenue Service''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to summonses issued after the date of the 
     enactment of this Act.

     SEC. 13348. ANNUAL REPORT TO CONGRESS CONCERNING DESIGNATED 
                   SUMMONSES.

       Not later than December 31 of each calendar year after 
     1995, the Secretary of the Treasury or his delegate shall 
     report to the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate on 
     the number of designated summonses (as defined in section 
     6503(j) of the Internal Revenue Code of 1986) which were 
     issued during the preceding 12 months.

  PART XI--RELIEF FROM RETROACTIVE APPLICATION OF TREASURY DEPARTMENT 
                              REGULATIONS

     SEC. 13351. RELIEF FROM RETROACTIVE APPLICATION OF TREASURY 
                   DEPARTMENT REGULATIONS.

       (a) In General.--Subsection (b) of section 7805 (relating 
     to rules and regulations) is amended to read as follows:
       ``(b) Retroactivity of Regulations.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, no temporary, proposed, or final regulation 
     relating to the internal revenue laws shall apply to any 
     taxable period ending before the earliest of the following 
     dates:
       ``(A) The date on which such regulation is filed with the 
     Federal Register.
       ``(B) In the case of any final regulation, the date on 
     which any proposed or temporary regulation to which such 
     final regulation relates was filed with the Federal Register.
       ``(C) The date on which any notice substantially describing 
     the expected contents of any temporary, proposed, or final 
     regulation is issued to the public.
       ``(2) Exception for promptly issued regulations.--Paragraph 
     (1) shall not apply to regulations filed or issued within 12 
     months of the date of the enactment of the statutory 
     provision to which the regulation relates.
       ``(3) Prevention of abuse.--The Secretary may provide that 
     any regulation may take effect or apply retroactively to 
     prevent abuse.
       ``(4) Correction of procedural defects.--The Secretary may 
     provide that any regulation may apply retroactively to 
     correct a procedural defect in the issuance of any prior 
     regulation.
       ``(5) Internal regulations.--The limitation of paragraph 
     (1) shall not apply to any regulation relating to internal 
     Treasury Department policies, practices, or procedures.
       ``(6) Congressional authorization.--The limitation of 
     paragraph (1) may be superseded by a legislative grant from 
     Congress authorizing the Secretary to prescribe the effective 
     date with respect to any regulation.
       ``(7) Election to apply retroactively.--Paragraph (1) shall 
     not apply to any regulation which the taxpayer elects to 
     apply before the dates specified in paragraph (1) but only if 
     such election applies to all regulations which were issued 
     with such regulation under the statutory provision to which 
     such regulation relates.
       ``(8) Application to rulings.--The Secretary may prescribe 
     the extent, if any, to which any ruling (including any 
     judicial decision or any administrative determination other 
     than by regulation) relating to the internal revenue laws 
     shall be applied without retroactive effect.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply with respect to regulations which relate to 
     statutory provisions enacted on or after the date of the 
     enactment of this Act.

                   PART XII--MISCELLANEOUS PROVISIONS

     SEC. 13356. REPORT ON PILOT PROGRAM FOR APPEAL OF ENFORCEMENT 
                   ACTIONS.

       Not later than March 1, 1996, the Secretary of the Treasury 
     or his delegate shall submit to the Committee on Ways and 
     Means of the House of Representatives and the Committee on 
     Finance of the Senate a report on the pilot program for 
     appeals of enforcement actions (including lien, levy, and 
     seizure actions) to the Appeals Division of the Internal 
     Revenue Service, together with such recommendations as he may 
     deem advisable.

     SEC. 13357. PHONE NUMBER OF PERSON PROVIDING PAYEE STATEMENTS 
                   REQUIRED TO BE SHOWN ON SUCH STATEMENT.

       (a) General Rule.--The following provisions are each 
     amended by striking ``name and address'' and inserting 
     ``name, address, and phone number of the information 
     contact'':
       (1) Section 6041(d)(1).
       (2) Section 6041A(e)(1).
       (3) Section 6042(c)(1).
       (4) Section 6044(e)(1).
       (5) Section 6045(b)(1).
       (6) Section 6049(c)(1)(A).
       (7) Section 6050B(b)(1).
       (8) Section 6050H(d)(1).
       (9) Section 6050I(e)(1).
       (10) Section 6050J(e).
       (11) Section 6050K(b)(1).
       (12) Section 6050N(b)(1).
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to statements required to be furnished after 
     December 31, 1996 (determined without regard to any 
     extension).

     SEC. 13358. REQUIRED NOTICE OF CERTAIN PAYMENTS.

       If any payment is received by the Secretary of the Treasury 
     or his delegate from any taxpayer and the Secretary cannot 
     associate such payment with such taxpayer, the Secretary 
     shall make reasonable efforts to notify the taxpayer of such 
     inability within 60 days after the receipt of such payment.

     SEC. 13359. UNAUTHORIZED ENTICEMENT OF INFORMATION 
                   DISCLOSURE.

       (a) In General.--Subchapter B of chapter 76 (relating to 
     proceedings by taxpayers and third parties), as amended by 
     section 13316(a), is amended by redesignating section 7435 as 
     section 7436 and by inserting after section 7434 the 
     following new section:

     ``SEC. 7435. CIVIL DAMAGES FOR UNAUTHORIZED ENTICEMENT OF 
                   INFORMATION DISCLOSURE.

       ``(a) In General.--If any officer or employee of the United 
     States intentionally compromises the determination or 
     collection of any tax due from an attorney, certified public 
     accountant, or enrolled agent representing a taxpayer in 
     exchange for information conveyed by the taxpayer to the 
     attorney, certified public accountant, or enrolled agent for 
     purposes of obtaining advice concerning the taxpayer's tax 
     liability, such taxpayer may bring a civil action for damages 
     against the United States in a district court of the United 
     States. Such civil action shall be the exclusive remedy for 
     recovering damages resulting from such actions.
       ``(b) Damages.--In any action brought under subsection (a), 
     upon a finding of liability on the part of the defendant, the 
     defendant shall be liable to the plaintiff in an amount equal 
     to the lesser of $500,000 or the sum of--
       ``(1) actual, direct economic damages sustained by the 
     plaintiff as a proximate result of the information 
     disclosure, and
       ``(2) the costs of the action.
     Damages shall not include the taxpayer's liability for any 
     civil or criminal penalties, or other losses attributable to 
     incarceration or the imposition of other criminal sanctions.
       ``(c) Payment Authority.--Claims pursuant to this section 
     shall be payable out of funds appropriated under section 1304 
     of title 31, United States Code.
       ``(d) Period for Bringing Action.--Notwithstanding any 
     other provision of law, an action to enforce liability 
     created under this section may be brought without regard to 
     the amount in controversy and may be brought only within 2 
     years after the date the actions creating such liability 
     would have been discovered by exercise of reasonable care.
       ``(e) Mandatory Stay.--Upon a certification by the 
     Commissioner or the Commissioner's delegate that there is an 
     ongoing investigation or prosecution of the taxpayer, the 
     district court before which an action under this section is 
     pending, shall stay all proceedings with respect to such 
     action pending the conclusion of the investigation or 
     prosecution.
       ``(f) Crime-Fraud Exception.--Subsection (a) shall not 
     apply to information conveyed to an attorney, certified 
     public accountant, or enrolled agent for the purpose of 
     perpetrating a fraud or crime.''
       (b) Clerical Amendment.--The table of sections for 
     subchapter B of chapter 76, as amended by section 13316(b), 
     is amended by striking the item relating to section 7435 and 
     by adding at the end the following new items:

``Sec. 7435. Civil damages for unauthorized enticement of information 
              disclosure.
``Sec. 7436. Cross references.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to actions after the date of the enactment of 
     this Act.

[[Page 1702]]

     SEC. 13360. ANNUAL REMINDERS TO TAXPAYERS WITH OUTSTANDING 
                   DELINQUENT ACCOUNTS.

       (a) In General.--Chapter 77 (relating to miscellaneous 
     provisions) is amended by adding at the end the following new 
     section:

     ``SEC. 7524. ANNUAL NOTICE OF TAX DELINQUENCY.

       ``Not less often than annually, the Secretary shall send a 
     written notice to each taxpayer who has a tax delinquent 
     account of the amount of the tax delinquency as of the date 
     of the notice.''
       (b) Clerical Amendment.--The table of sections for chapter 
     77 is amended by adding at the end the following new item:

``Sec. 7524. Annual notice of tax delinquency.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to calendar years after 1995.

     SEC. 13361. 5-YEAR EXTENSION OF AUTHORITY FOR UNDERCOVER 
                   OPERATIONS.

       (a) In General.--Paragraph (3) of section 7601(c) of the 
     Anti-Drug Abuse Act of 1988 is amended by striking all that 
     follows ``this Act'' and inserting a period.
       (b) Restoration of Authority for 5 Years.--Subsection (c) 
     of section 7608 is amended by adding at the end the following 
     new paragraph:
       ``(6) Application of section.--The provisions of this 
     subsection--
       ``(A) shall apply after November 17, 1988, and before 
     January 1, 1990, and
       ``(B) shall apply after the date of the enactment of this 
     paragraph and before January 1, 2001.
     All amounts expended pursuant to this subsection during the 
     period described in subparagraph (B) shall be recovered to 
     the extent possible, and deposited in the Treasury of the 
     United States as miscellaneous receipts, before January 1, 
     2001.''
       (c) Enhanced Oversight.--
       (1) Additional information required in reports to 
     congress.--Subparagraph (B) of section 7608(c)(4) is 
     amended--
       (A) by striking ``preceding the period'' in clause (ii),
       (B) by striking ``and'' at the end of clause (ii), and
       (C) by striking clause (iii) and inserting the following:
       ``(iii) the number, by programs, of undercover 
     investigative operations closed in the 1-year period for 
     which such report is submitted, and
       ``(iv) the following information with respect to each 
     undercover investigative operation pending as of the end of 
     the 1-year period for which such report is submitted or 
     closed during such 1-year period--

       ``(I) the date the operation began and the date of the 
     certification referred to in the last sentence of paragraph 
     (1),
       ``(II) the total expenditures under the operation and the 
     amount and use of the proceeds from the operation,
       ``(III) a detailed description of the operation including 
     the potential violation being investigated and whether the 
     operation is being conducted under grand jury auspices, and
       ``(IV) the results of the operation including the results 
     of criminal proceedings.''

       (2) Audits required without regard to amounts involved.--
     Subparagraph (C) of section 7608(c)(5) is amended to read as 
     follows:
       ``(C) Undercover investigative operation.--The term 
     `undercover investigative operation' means any undercover 
     investigative operation of the Service; except that, for 
     purposes of subparagraphs (A) and (C) of paragraph (4), such 
     term only includes an operation which is exempt from section 
     3302 or 9102 of title 31, United States Code.''
       (3) Effective date.--The amendments made by this subsection 
     shall take effect on the date of the enactment of this Act.

     SEC. 13362. DISCLOSURE OF FORM 8300 INFORMATION ON CASH 
                   TRANSACTIONS.

       (a) In General.--Subsection (l) of section 6103 (relating 
     to disclosure of returns and return information for purposes 
     other than tax administration) is amended by adding at the 
     end the following new paragraph:
       ``(15) Disclosure of returns filed under section 6050i.--
     The Secretary may, upon written request, disclose to officers 
     and employees of--
       ``(A) any Federal agency,
       ``(B) any agency of a State or local government, or
       ``(C) any agency of the government of a foreign country,
     information contained on returns filed under section 6050I. 
     Any such disclosure shall be made on the same basis, and 
     subject to the same conditions, as apply to disclosures of 
     information on reports filed under section 5313 of title 31, 
     United States Code; except that no disclosure under this 
     paragraph shall be made for purposes of the administration of 
     any tax law.''
       (b) Conforming Amendments.--
       (1) Subsection (i) of section 6103 is amended by striking 
     paragraph (8).
       (2) Subparagraph (A) of section 6103(p)(3) is amended--
       (A) by striking ``(7)(A)(ii), or (8)'' and inserting ``or 
     (7)(A)(ii)'', and
       (B) by striking ``or (14)'' and inserting ``(14), or 
     (15)''.
       (3) The material preceding subparagraph (A) of section 
     6103(p)(4) is amended--
       (A) by striking ``(5), or (8)'' and inserting ``or (5)'',
       (B) by striking ``(i)(3)(B)(i), or (8)'' and inserting 
     ``(i)(3)(B)(i),'', and
       (C) by striking ``or (12)'' and inserting ``(12), or 
     (15)''.
       (4) Clause (ii) of section 6103(p)(4)(F) is amended--
       (A) by striking ``(5), or (8)'' and inserting ``or (5)'', 
     and
       (B) by striking ``or (14)'' and inserting ``(14), or 
     (15)''.
       (5) Paragraph (2) of section 7213(a) is amended by striking 
     ``or (12)'' and inserting ``(12), or (15)''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 13363. DISCLOSURE OF RETURNS AND RETURN INFORMATION TO 
                   DESIGNEE OF TAXPAYER.

       Subsection (c) of section 6103 (relating to disclosure of 
     returns and return information to designee of taxpayer) is 
     amended by striking ``written request for or consent to such 
     disclosure'' and inserting ``request for or consent to such 
     disclosure''.

     SEC. 13364. STUDY OF NETTING OF INTEREST ON OVERPAYMENTS AND 
                   LIABILITIES.

       (a) In General.--The Secretary of the Treasury or his 
     delegate shall--
       (1) conduct a study of the manner in which the Internal 
     Revenue Service has implemented the netting of interest on 
     overpayments and underpayments and of the policy and 
     administrative implications of global netting, and
       (2) before submitting the report of such study, hold a 
     public hearing to receive comments on the matters included in 
     such study.
       (b) Report.--The report of such study shall be submitted 
     not later than 6 months after the date of the enactment of 
     this Act to the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate.

     SEC. 13365. CREDIT FOR EXPENSES OF CERTAIN TCMP AUDITS.

       (a) In General.--Subchapter B of chapter 65 is amended by 
     adding at the end the following new section:

     ``SEC. 6428. CREDIT FOR EXPENSES OF 1994 TCMP AUDITS.

       ``(a) Allowance of Credit.--In the case of an individual, 
     there shall be allowed as a credit against the tax imposed by 
     subtitle A an amount equal to the qualified TCMP expenses 
     paid or incurred by the taxpayer during the taxable year.
       ``(b) Limitation.--The amount of the credit allowed by 
     subsection (a) shall not exceed $3,000 with respect to an 
     audit.
       ``(c) Qualified TCMP Expenses.--For purposes of this 
     section, the term `qualified TCMP expenses' means amounts 
     which would (but for subsection (d)) be allowed as a 
     deduction under section 162 or 212(3) in connection with an 
     audit under the Taxpayer Compliance Measurement Program of 
     the taxpayer's return of tax imposed by chapter 1 for any 
     taxable year beginning during 1994. Such term shall not 
     include any expense in connection with an audit of an estate, 
     trust, partnership, or S corporation.
       ``(d) Denial of Double Benefit.--No deduction shall be 
     allowed under chapter 1 for any amount for which a credit is 
     allowed under this section.
       ``(e) Credit Treated as Subpart C Credit.--For purposes of 
     this title, the credit allowed under subsection (a) shall be 
     treated as a credit allowed under subpart C of part IV of 
     subchapter A of chapter 1.''
       (b) Technical Amendments.--
       (1) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 6428 of such Code''.
       (2) The table of sections for such subchapter B is amended 
     by adding at the end the following new item:

``Sec. 6428. Credit for expenses of 1994 TCMP audits.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to amounts paid or incurred after December 31, 
     1994, in taxable years ending after such date.

     SEC. 13366. EXPENSES OF DETECTION OF UNDERPAYMENTS AND FRAUD, 
                   ETC.

       (a) In General.--Section 7623 (relating to expenses of 
     deduction and punishment of frauds) is amended to read as 
     follows:

     ``SEC. 7623. EXPENSES OF DETECTION OF UNDERPAYMENTS AND 
                   FRAUD, ETC.

       ``The Secretary, under regulations prescribed by the 
     Secretary, is authorized to pay such sums as he deem 
     necessary for--
       ``(1) detecting underpayments of tax, and
       ``(2) detecting and bringing to trial and punishment 
     persons guilty of violating the internal revenue laws or 
     conniving at the same,
     in cases where such expenses are not otherwise provided for 
     by law. Any amount payable under the preceding sentence shall 
     be paid from the proceeds of amounts (other than interest) 
     collected by reason of the information provided, and any 
     amount so collected shall be available for such payments.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter B of chapter 78 is amended by striking the item 
     relating to section 7623 and inserting the following new 
     item:

``Sec. 7623. Expenses of detection of underpayments and fraud, etc.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date which is 6 months after the 
     enactment of this Act.

[[Page 1703]]

       (d) Report.--The Secretary of the Treasury or his delegate 
     shall submit an annual report to the Committee on Ways and 
     Means of the House of Representatives and the Committee on 
     Finance of the Senate on the payments under section 7623 of 
     the Internal Revenue Code of 1986 during the year and on the 
     amounts collected for which such payments were made.
              Subtitle D--Additional Technical Corrections

     SEC. 13401. REPORTING OF REAL ESTATE TRANSACTIONS.

       (a) In General.--Paragraph (3) of section 6045(e) (relating 
     to prohibition of separate charge for filing return) is 
     amended by adding at the end the following new sentence: 
     ``Nothing in this paragraph shall be construed to prohibit 
     the real estate reporting person from taking into account its 
     cost of complying with such requirement in establishing its 
     charge (other than a separate charge for complying with such 
     requirement) to any customer for performing services in the 
     case of a real estate transaction.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in section 1015(e)(2)(A) of 
     the Technical and Miscellaneous Revenue Act of 1988.

     SEC. 13402. CLARIFICATION OF DENIAL OF DEDUCTION FOR STOCK 
                   REDEMPTION EXPENSES.

       (a) In General.--Paragraph (1) of section 162(k) is amended 
     by striking ``the redemption of its stock'' and inserting 
     ``the reacquisition of its stock or of the stock of any 
     related person (as defined in section 465(b)(3)(C))''.
       (b) Certain Deductions Permitted.--Subparagraph (A) of 
     section 162(k)(2) is amended by striking ``or'' at the end of 
     clause (i), by redesignating clause (ii) as clause (iii), and 
     by inserting after clause (i) the following new clause:
       ``(ii) deduction for amounts which are properly allocable 
     to indebtedness and amortized over the term of such 
     indebtedness, or''.
       (c) Clerical Amendment.--The subsection heading for 
     subsection (k) of section 162 is amended by striking 
     ``Redemption'' and inserting ``Reacquisition''.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to amounts paid 
     or incurred after September 13, 1995, in taxable years ending 
     after such date.
       (2) Subsection (b).--The amendment made by subsection (b) 
     shall take effect as if included in the amendment made by 
     section 613 of the Tax Reform Act of 1986.

     SEC. 13403. CLARIFICATION OF DEPRECIATION CLASS FOR CERTAIN 
                   ENERGY PROPERTY.

       (a) In General.--Subparagraph (B) of section 168(e)(3) 
     (relating to 5-year property) is amended by adding at the end 
     the following flush sentence:
     ``Nothing in any provision of law shall be construed to treat 
     property as not being described in clause (vi)(I) (or the 
     corresponding provisions of prior law) by reason of being 
     public utility property (within the meaning of section 
     48(a)(3)).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the amendments made by 
     section 11813 of the Revenue Reconciliation Act of 1990.

     SEC. 13404. CLERICAL AMENDMENT TO SECTION 404.

       (a) In General.--Paragraph (1) of section 404(j) is amended 
     by striking ``(10)'' and inserting ``(9)''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect as if included in the amendments made by 
     section 713(d)(4)(A) of the Deficit Reduction Act of 1984.

     SEC. 13405. TREATMENT OF CERTAIN VETERANS' REEMPLOYMENT 
                   RIGHTS.

       (a) In General.--Section 414 is amended by adding at the 
     end the following new subsection:
       ``(u) Special Rules Relating to Veterans' Reemployment 
     Rights.--
       ``(1) Treatment of certain contributions made pursuant to 
     veterans' reemployment rights.--If any contribution is made 
     by an employer or an employee under an individual account 
     plan with respect to an employee, or by an employee to a 
     defined benefit pension plan that provides for employee 
     contributions, and such contribution is required by reason of 
     such employee's rights under chapter 43 of title 38, United 
     States Code, resulting from qualified military service, 
     then--
       ``(A) such contribution shall not be subject to any 
     otherwise applicable limitation contained in section 402(g), 
     402(h), 403(b), 404(a), 404(h), 408, 415, or 457, and shall 
     not be taken into account in applying such limitations to 
     other contributions or benefits under such plan or any other 
     plan, with respect to the year in which the contribution is 
     made,
       ``(B) such contribution shall be subject to the limitations 
     referred to in subparagraph (A) with respect to the year to 
     which the contribution relates (in accordance with rules 
     prescribed by the Secretary), and
       ``(C) such plan shall not be treated as failing to meet the 
     requirements of section 401(a)(4), 401(a)(26), 401(k)(3), 
     401(m), 403(b)(12), 408(k)(3), 408(k)(6), 410(b), or 416 by 
     reason of the making of such contribution.
     For purposes of the preceding sentence, any elective deferral 
     or employee contribution made under paragraph (2) shall be 
     treated as required by reason of the employee's rights under 
     such chapter.
       ``(2) Reemployment rights with respect to elective 
     deferrals.--
       ``(A) In general.--For purposes of this subchapter and 
     subchapter E, if an employee is entitled to the benefits of 
     chapter 43 of title 38, United States Code, with respect to 
     any plan which provides for elective deferrals, the employer 
     sponsoring the plan shall be treated as meeting the 
     requirements of such chapter 43 with respect to such elective 
     deferrals only if such employer--
       ``(i) permits such employee to make additional elective 
     deferrals under such plan (in the amount determined under 
     subparagraph (B) or such lesser amount as is elected by the 
     employee) during the period which begins on the date of the 
     reemployment of such employee with such employer and has the 
     same length as the lesser of--

       ``(I) the product of 3 and the period of qualified military 
     service which resulted in such rights, and
       ``(II) 5 years, and

       ``(ii) makes a matching contribution with respect to any 
     additional elective deferral made pursuant to clause (i) 
     which would have been required had such deferral actually 
     been made during the period of such qualified military 
     service.
       ``(B) Amount of makeup required.--The amount determined 
     under this subparagraph with respect to any plan is the 
     maximum amount of the elective deferrals that the individual 
     would have been permitted to make under the plan in 
     accordance with the limitations referred to in paragraph 
     (1)(A) during his period of qualified military service if he 
     had continued to be employed by the employer during such 
     period and received compensation as determined under 
     paragraph (7). Proper adjustment shall be made to the amount 
     determined under the preceding sentence for any elective 
     deferrals actually made during the period of such qualified 
     military service.
       ``(C) Elective deferral.--For purposes of this paragraph, 
     the term `elective deferral' has the meaning given such term 
     by section 402(g)(3); except that such term shall include any 
     deferral of compensation under an eligible deferred 
     compensation plan (as defined in section 457(b)).
       ``(D) After-tax employee contributions.--References in 
     subparagraphs (A) and (B) to elective deferrals shall be 
     treated as including references to other employee 
     contributions.
       ``(3) Certain retroactive adjustments not required.--For 
     purposes of this subchapter and subchapter E, no provision of 
     chapter 43 of title 38, United States Code, shall be 
     construed as requiring--
       ``(A) any crediting of earnings to an employee with respect 
     to any contribution before such contribution is actually 
     made, or
       ``(B) any allocation of any forfeiture with respect to the 
     period of qualified military service.
       ``(4) Loan repayment suspensions permitted.--If any plan 
     suspends the obligation to repay any loan made to an employee 
     from such plan for any part of any period during which such 
     employee is performing qualified military service, such 
     suspension shall not be taken into account for purposes of 
     section 72(p), 401(a), or 4975(d)(1).
       ``(5) Qualified military service.--For purposes of this 
     subsection, the term `qualified military service' means any 
     service in the uniformed services (as defined in chapter 43 
     of title 38, United States Code) by any individual if such 
     individual is entitled to reemployment rights under such 
     chapter with respect to such service.
       ``(6) Individual account plan.--For purposes of this 
     subsection, the term `individual account plan' means any 
     defined contribution plan, any tax-sheltered annuity plan 
     under section 403(b), and any eligible deferred compensation 
     plan (as defined in section 457(b)).
       ``(7) Compensation.--For purposes of section 415(c)(3), an 
     employee who is in qualified military service shall be 
     treated as receiving compensation from the employer during 
     such period of qualified military service equal to--
       ``(A) the compensation the employee would have received 
     during such period if the employee were not in qualified 
     military service, determined based on the rate of pay the 
     employee would have received from the employer but for 
     absence during the period of qualified military service, or
       ``(B) if the compensation of the employee was not based on 
     a fixed rate, the employee's average compensation from the 
     employer during the 12-month period immediately preceding the 
     qualified military service (or, if shorter, the period of 
     employment immediately preceding the qualified military 
     service).
       ``(8) Requirements for qualified retirement plan.--For 
     purposes of this subchapter and subchapter E, an employer 
     sponsoring a plan shall be treated as meeting the 
     requirements of chapter 43 of title 38, United States Code, 
     only if each of the following requirements is met:
       ``(A) An individual reemployed under such chapter is 
     treated with respect to such plan as not having incurred a 
     break in service with the employer maintaining the plan by 
     reason of such individual's period of qualified military 
     service.
       ``(B) Each period of qualified military service served by 
     an individual is, upon reemployment under such chapter, 
     deemed with respect to such plan to constitute service with 
     the employer maintaining the plan for the purpose of 
     determining the nonforfeitability of the individual's accrued 
     benefits under such plan and for the purpose of determining 
     the accrual of benefits under such plan.
       ``(C) An individual reemployed under such chapter is 
     entitled to accrued benefits that

[[Page 1704]]

      are contingent on the making of, or derived from, employee 
     contributions or elective deferrals only to the extent the 
     individual makes payment to the plan with respect to such 
     contributions or deferrals. No such payment may exceed the 
     amount the individual would have been permitted or required 
     to contribute had the individual remained continuously 
     employed by the employer throughout the period of qualified 
     military service. Any payment to such plan shall be made 
     during the period beginning with the date of reemployment and 
     whose duration is 3 times the period of the qualified 
     military service (but not greater than 5 years).
       ``(9) References.--For purposes of this section, any 
     reference to chapter 43 of title 38, United States Code, 
     shall be treated as a reference to such chapter as in effect 
     on December 12, 1994 (without regard to any subsequent 
     amendment).''
       (b) Effective Date.--The amendments made by this section 
     shall be effective as of December 12, 1994.
                  Subtitle E--Tax Information Sharing

     SEC. 13501. DISCLOSURE OF RETURN INFORMATION FOR 
                   ADMINISTRATION OF CERTAIN VETERANS PROGRAMS.

       (a) General Rule.--Subparagraph (D) of section 6103(l)(7) 
     (relating to disclosure of return information to Federal, 
     State, and local agencies administering certain programs) is 
     amended by striking ``Clause (viii) shall not apply after 
     September 30, 1998.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act.
                     Subtitle F--Revenue Increases

               PART I--PROVISIONS RELATING TO BUSINESSES

     SEC. 13601. TAX TREATMENT OF CERTAIN EXTRAORDINARY DIVIDENDS.

       (a) Treatment of Extraordinary Dividends in Excess of 
     Basis.--Paragraph (2) of section 1059(a) (relating to 
     corporate shareholder's basis in stock reduced by nontaxed 
     portion of extraordinary dividends) is amended to read as 
     follows:
       ``(2) Amounts in excess of basis.--If the nontaxed portion 
     of such dividends exceeds such basis, such excess shall be 
     treated as gain from the sale or exchange of such stock for 
     the taxable year in which the extraordinary dividend is 
     received.''
       (b) Treatment of Redemptions Where Options Involved.--
     Paragraph (1) of section 1059(e) (relating to treatment of 
     partial liquidations and non-pro rata redemptions) is amended 
     to read as follows:
       ``(1) Treatment of partial liquidations and certain 
     redemptions.--Except as otherwise provided in regulations--
       ``(A) Redemptions.--In the case of any redemption of 
     stock--
       ``(i) which is part of a partial liquidation (within the 
     meaning of section 302(e)) of the redeeming corporation,
       ``(ii) which is not pro rata as to all shareholders, or
       ``(iii) which would not have been treated (in whole or in 
     part) as a dividend if any options had not been taken into 
     account under section 318(a)(4),
     any amount treated as a dividend with respect to such 
     redemption shall be treated as an extraordinary dividend to 
     which paragraphs (1) and (2) of subsection (a) apply without 
     regard to the period the taxpayer held such stock. In the 
     case of a redemption described in clause (iii), only the 
     basis in the stock redeemed shall be taken into account under 
     subsection (a).
       ``(B) Reorganizations, etc.--An exchange described in 
     section 356(a)(1) which is treated as a dividend under 
     section 356(a)(2) shall be treated as a redemption of stock 
     for purposes of applying subparagraph (A).''
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to distributions after May 3, 1995.
       (2) Transition rule.--The amendments made by this section 
     shall not apply to any distribution made pursuant to the 
     terms of--
       (A) a written binding contract in effect on May 3, 1995, 
     and at all times thereafter before such distribution, or
       (B) a tender offer outstanding on May 3, 1995.
       (3) Certain dividends not pursuant to certain 
     redemptions.--In determining whether the amendment made by 
     subsection (a) applies to any extraordinary dividend other 
     than a dividend treated as an extraordinary dividend under 
     section 1059(e)(1) of the Internal Revenue Code of 1986 (as 
     amended by this Act), paragraphs (1) and (2) shall be applied 
     by substituting ``September 13, 1995'' for ``May 3, 1995''.

     SEC. 13602. REGISTRATION OF CONFIDENTIAL CORPORATE TAX 
                   SHELTERS.

       (a) In General.--Section 6111 (relating to registration of 
     tax shelters) is amended by redesignating subsections (d) and 
     (e) as subsections (e) and (f), respectively, and by 
     inserting after subsection (c) the following new subsection:
       ``(d) Certain Confidential Arrangements Treated as Tax 
     Shelters.--
       ``(1) In general.--For purposes of this section, the term 
     `tax shelter' includes any entity, plan, arrangement, or 
     transaction--
       ``(A) a significant purpose of which is the avoidance or 
     evasion of Federal income tax for a participant which is a 
     corporation,
       ``(B) which is offered to any potential participant under 
     conditions of confidentiality, and
       ``(C) for which the tax shelter organizers may receive fees 
     in excess of $100,000 in the aggregate.
       ``(2) Conditions of confidentiality.--For purposes of 
     paragraph (1)(C), an offer is under conditions of 
     confidentiality if--
       ``(A) the potential participant to whom the offer is made 
     (or any other person acting on behalf of such participant) 
     has an understanding or agreement with or for the benefit of 
     any promoter of the tax shelter that such participant (or 
     other person) will limit disclosure of the tax shelter or any 
     significant tax features of the tax shelter, or
       ``(B) any promoter of the tax shelter--
       ``(i) claims, knows, or has reason to know,
       ``(ii) knows or has reason to know that any other person 
     (other than the potential participant) claims, or
       ``(iii) causes another person to claim,
     that the tax shelter (or any aspect thereof) is proprietary 
     to any person other than the potential participant or is 
     otherwise protected from disclosure to or use by others.
     For purposes of this subsection, the term `promoter' means 
     any person who participates in the organization, management, 
     or sale of the tax shelter.
       ``(3) Persons other than organizer required to register in 
     certain cases.--
       ``(A) In general.--If--
       ``(i) the requirements of subsection (a) are not met with 
     respect to any tax shelter (as defined in paragraph (1)) by 
     any tax shelter organizer, and
       ``(ii) no tax shelter organizer is a United States person,
     then each United States person who discussed participation in 
     such shelter shall register such shelter under subsection 
     (a).
       ``(B) Exception.--Subparagraph (A) shall not apply to a 
     United States person who discussed participation in a tax 
     shelter if--
       ``(i) such person notified the promoter in writing (not 
     later than the close of the day on which such discussions 
     began) that such person would not participate in such 
     shelter, and
       ``(ii) such person does not participate in such shelter.
       ``(4) Offer to participate treated as offer for sale.--For 
     purposes of subsections (a) and (b), an offer to participate 
     in a tax shelter (as defined in paragraph (1)) shall be 
     treated as an offer for sale.''
       (b) Penalty.--Subsection (a) of section 6707 (relating to 
     failure to furnish information regarding tax shelters) is 
     amended by adding at the end the following new paragraph:
       ``(3) Confidential arrangements.--
       ``(A) In general.--In the case of a tax shelter (as defined 
     in section 6111(d)), the penalty imposed under paragraph (1) 
     shall be an amount equal to the greater of--
       ``(i) 50 percent of the fees paid to any promoter of the 
     tax shelter with respect to offerings made before the date 
     such shelter is registered under section 6111, or
       ``(ii) $10,000.
     Clause (i) shall be applied by substituting `75 percent' for 
     `50 percent' in the case of an intentional failure or act 
     described in paragraph (1).
       ``(B) Special rule for participants required to register 
     shelter.--In the case of a person required to register such a 
     tax shelter by reason of section 6111(d)(3)--
       ``(i) such person shall be required to pay the penalty 
     under paragraph (1) only if such person actually participated 
     in such shelter,
       ``(ii) the amount of such penalty shall be determined by 
     taking into account under subparagraph (A)(i) only the fees 
     paid by such person, and
       ``(iii) such penalty shall be in addition to the penalty 
     imposed on any other person for failing to register such 
     shelter.''
       (c) Conforming Amendments.--
       (1) Paragraph (2) of section 6707(a) is amended by striking 
     ``The penalty'' and inserting ``Except as provided in 
     paragraph (3), the penalty''.
       (2) Subparagraph (A) of section 6707(a)(1) is amended by 
     striking ``paragraph (2)'' and inserting ``paragraph (2) or 
     (3), as the case may be''.
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to any tax shelter (as defined in section 6111(d) of 
     the Internal Revenue Code of 1986, as amended by this 
     section) interests in which are offered to potential 
     participants after the date of the enactment of this Act.
       (2) Due date for registration.--The due date for 
     registering any tax shelter required to be registered by 
     reason of the amendments made by this section shall be not 
     earlier than the close of a reasonable period after the 
     Secretary of the Treasury prescribes guidance with respect to 
     meeting such requirements.

     SEC. 13603. DENIAL OF DEDUCTION FOR INTEREST ON LOANS WITH 
                   RESPECT TO COMPANY-OWNED INSURANCE.

       (a) In General.--Paragraph (4) of section 264(a) is 
     amended--
       (1) by inserting ``or endowment or annuity contract'' after 
     ``life insurance policies'', and
       (2) by striking all that follows ``carried on by the 
     taxpayer'' and inserting a period.
       (b) Phase-in of Disallowance.--Section 264 is amended by 
     adding at the end the following new subsection:
       ``(d) Phase-in of Disallowance Under Subsection (a)(4).--In 
     the case of calendar years after 1995 and before 2000--
       ``(1) In general.--The amount of interest paid or accrued 
     during any period in any such calendar year with respect to 
     qualified indebtedness which is disallowed by reason of the 
     amendment made by section 13603(a) of the Revenue 
     Reconciliation Act of 1995 (determined without regard to this 
     subsection) shall not exceed the applicable per

[[Page 1705]]

     centage of such interest which is so disallowed.
       ``(2) Qualified indebtedness.--For purposes of paragraph 
     (1), the term `qualified indebtedness' means indebtedness 
     incurred before September 18, 1995, with respect to a life 
     insurance policy covering only the life of the individual who 
     was insured under such policy on such date. Any increase on 
     or after such date in the amount of such indebtedness shall 
     be treated as indebtedness incurred after such date.
       ``(3) Applicable percentage.--For purposes of paragraph 
     (1), the applicable percentage shall be determined in 
     accordance with the following table:

                                               ``In the  The applicable
                                                      in percentage is:
    1996..................................................20 percent   
    1997..................................................40 percent   
    1998..................................................60 percent   
    1999................................................80 percent.''  
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to interest paid or accrued after December 31, 1995.
       (2) Exception.--The amendments made by this section shall 
     not apply to contracts purchased on or before June 20, 1986.
       (d) 4-Year Spread of Income Inclusion on Surrender, Etc. of 
     Contracts.--
       (1) In general.--In the case of indebtedness with respect 
     to any life insurance policy described in paragraph (4) of 
     section 264(a) of the Internal Revenue Code of 1986, if--
       (A) the interest paid or accrued after December 31, 1995, 
     on such indebtedness is not allowed as a deduction under 
     chapter 1 of such Code by reason of such paragraph (4) (as 
     amended by this section), and
       (B) the entire amount of interest paid or accrued on or 
     before such date on such indebtedness was allowed as a 
     deduction under such chapter 1,
     then (in lieu of any other inclusion in gross income) the 
     qualified amount with respect to such policy shall be 
     includible in gross income ratably over the 4 taxable years 
     beginning with the taxable year such amount would (but for 
     this paragraph) be includible.
       (2) Qualified amount.--For purposes of paragraph (1), the 
     term ``qualified amount'' means, with respect to any policy, 
     the amount received under such policy--
       (A) on the complete surrender, redemption, or maturity of 
     such policy during 1996, or
       (B) in full discharge during 1996 of the obligation under 
     the policy which is in the nature of a refund of the 
     consideration paid for the policy,
     but only to the extent such amount is includible in gross 
     income for the taxable year in which the event described in 
     subparagraph (A) or (B) occurs.
       (3) Special rule.--A contract shall not be treated as 
     failing to meet the requirement of section 264(c)(1) of the 
     Internal Revenue Code of 1986 solely by reason of an 
     occurrence described in subparagraph (A) or (B) of paragraph 
     (2) of this subsection.

     SEC. 13604. TERMINATION OF SUSPENSE ACCOUNTS FOR FAMILY 
                   CORPORATIONS REQUIRED TO USE ACCRUAL METHOD OF 
                   ACCOUNTING.

       (a) In General.--Subsection (i) of section 447 (relating to 
     method of accounting for corporations engaged in farming) is 
     amended by adding at the end the following new paragraph:
       ``(7) Termination.--
       ``(A) In general.--No suspense account may be established 
     under this subsection by any corporation required by this 
     section to change its method of accounting for any taxable 
     year ending after September 13, 1995.
       ``(B) 20-year phaseout of existing suspense accounts.--Each 
     suspense account under this subsection shall be reduced (but 
     not below zero) for each of the first 20 taxable years 
     beginning after September 13, 1995, by an amount equal to the 
     applicable portion of such account. Any reduction in a 
     suspense account under this paragraph shall be included in 
     gross income for the taxable year of the reduction. The 
     amount of the reduction required under this paragraph for any 
     taxable year shall be reduced (but not below zero) by the 
     amount of any reduction required for such taxable year under 
     any other provision of this subsection.
       ``(C) Applicable portion.--For purposes of subparagraph 
     (B), the term `applicable portion' means, for any taxable 
     year, the amount which would ratably reduce the amount in the 
     account (after taking into account prior reductions) to zero 
     over the period consisting of such taxable year and the 
     remaining taxable years in such first 20 taxable years.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years ending after September 13, 1995.

     SEC. 13605. TERMINATION OF PUERTO RICO AND POSSESSION TAX 
                   CREDIT.

       (a) In General.--Section 936 is amended by adding at the 
     end the following new subsection:
       ``(j) Termination.--
       ``(1) In general.--This section shall not apply to any 
     taxable year beginning after December 31, 1995.
       ``(2) Exception for existing claimants.--
       ``(A) In general.--Paragraph (1) shall be applied by 
     substituting `2005' for `1995' in the case of an existing 
     credit claimant.
       ``(B) Exception terminates if new line of business added.--
     If, after September 13, 1995, a corporation which would (but 
     for this subparagraph) be an existing credit claimant adds a 
     substantial new line of business, such corporation shall 
     cease to be treated as an existing credit claimant as of the 
     close of the taxable year ending before the date of such 
     addition.
       ``(C) Existing credit claimant.--For purposes of this 
     subsection, the term `existing credit claimant' means any 
     corporation which satisfied the conditions of both 
     subparagraph (A) and subparagraph (B) of subsection (a)(2) 
     for at least 1 base period year for which such corporation 
     elected the application of this section.
       ``(3) Limit on credit of existing claimants.--
       ``(A) In general.--In the case of an existing credit 
     claimant, the aggregate amount of income taken into account 
     under subsection (a)(1) for any taxable year beginning after 
     December 31, 1995 (hereinafter in this subsection referred to 
     as the `current year'), shall not exceed the adjusted base 
     period income of such claimant.
       ``(B) Coordination with subsection (a)(4).--The amount of 
     income described in subsection (a)(1)(A) which is taken into 
     account in applying subsection (a)(4) shall be such income as 
     reduced under this paragraph. In determining such reduction, 
     any reduction under subparagraph (A) in the amount which 
     would otherwise be taken into account under subsection (a)(1) 
     shall be allocated between the income described in 
     subparagraph (A) thereof and the income described in 
     subparagraph (B) thereof in proportion to the respective 
     amounts of such incomes.
       ``(4) Adjusted base period income.--For purposes of 
     paragraph (3)--
       ``(A) In general.--The term `adjusted base period income' 
     means the average of the inflation-adjusted possession 
     incomes of the corporation for each base period year.
       ``(B) Inflation-adjusted possession income.--For purposes 
     of subparagraph (A), the inflation-adjusted possession income 
     of any corporation for any base period year shall be an 
     amount equal to the possession income of such corporation for 
     such base period year multiplied by the inflation adjustment 
     percentage for such base period year.
       ``(C) Inflation adjustment percentage.--For purposes of 
     subparagraph (B), the inflation adjustment percentage for any 
     base period year means, with respect to the current year, the 
     percentage (if any) by which--
       ``(i) the CPI for last calendar year ending before the 
     beginning of the current year, exceeds
       ``(ii) the CPI for last calendar year ending before the 
     beginning of the base period year.
     For purposes of the preceding sentence, the CPI for any 
     calendar year is the CPI (as defined in section 1(f)(5)) for 
     such year under section 1(f)(4).
       ``(D) Increase in inflation adjustment percentage for 
     growth during base years.--The inflation adjustment 
     percentage (determined under subparagraph (C) without regard 
     to this subparagraph) for each of the 5 taxable years 
     referred to in paragraph (5)(A) shall be increased by--
       ``(i) 5 percentage points in the case of a taxable year 
     ending during the 1-year period ending on September 12, 1995;
       ``(ii) 10.25 percentage points in the case of a taxable 
     year ending during the 1-year period ending on September 12, 
     1994;
       ``(iii) 15.76 percentage points in the case of a taxable 
     year ending during the 1-year period ending on September 12, 
     1993;
       ``(iv) 21.55 percentage points in the case of a taxable 
     year ending during the 1-year period ending on September 12, 
     1992; and
       ``(v) 27.63 percentage points in the case of a taxable year 
     ending during the 1-year period ending on September 12, 1991.
       ``(5) Base period year.--For purposes of this subsection--
       ``(A) In general.--The term `base period year' means each 
     of 3 taxable years which are among the 5 most recent taxable 
     years of the corporation ending before September 13, 1995, 
     determined by disregarding--
       ``(i) one taxable year for which the corporation had the 
     largest inflation-adjusted possession income, and
       ``(ii) one taxable year for which the corporation had the 
     smallest inflation-adjusted possession income.
       ``(B) Corporations not having significant possession income 
     throughout 5-year period.--
       ``(i) In general.--If a corporation does not have 
     significant possession income for each of the most recent 5 
     taxable years ending before September 13, 1995, then, in lieu 
     of applying subparagraph (A), the term `base period year' 
     means only those taxable years (of such 5 taxable years) for 
     which the corporation has significant possession income; 
     except that, if such corporation has significant possession 
     income for 4 of such 5 taxable years, the rule of 
     subparagraph (A)(ii) shall apply.
       ``(ii) Special rule.--If there is no year (of such 5 
     taxable years) for which a corporation has significant 
     possession income--

       ``(I) the term `base period year' means the first taxable 
     year ending on or after September 13, 1995, but
       ``(II) the amount of possession income for such year which 
     is taken into account under paragraph (4) shall be the amount 
     which would be determined if such year were a short taxable 
     year ending on August 31, 1995.

       ``(iii) Significant possession income.--For purposes of 
     this subparagraph, the term `significant possession income' 
     means possession income which exceeds 2 percent of the 
     possession income of the taxpayer for the taxable year (of 
     the period of 6 taxable years ending with the first taxable 
     year ending on or after September 13, 1995) having the 
     greatest possession income.

[[Page 1706]]

       ``(C) Election to use one base period year.--
       ``(i) In general.--At the election of the taxpayer, the 
     term `base period year' means only the last taxable year of 
     the corporation ending in calendar year 1992.
       ``(ii) Election.--An election under this subparagraph by 
     any possession corporation may be made only for the 
     corporation's first taxable year beginning after December 31, 
     1995, for which it is a possession corporation. The rules of 
     subclauses (II) and (III) of subsection (a)(4)(B)(iii) shall 
     apply to the election under this subparagraph.
       ``(D) Acquisitions and dispositions.--Rules similar to the 
     rules of subparagraphs (A) and (B) of section 41(f)(3) shall 
     apply for purposes of this subsection.
       ``(6) Possession income.--For purposes of this subsection, 
     the term `possession income' means the sum of the income 
     referred to in subsection (a)(1)(A) and the income referred 
     to in subsection (a)(1)(B). In no event shall possession 
     income be treated as being less than zero.
       ``(7) Short years.--If the current year or a base period 
     year is a short taxable year, the application of this 
     subsection shall be made with such annualizations as the 
     Secretary shall prescribe.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 13606. DEPRECIATION UNDER INCOME FORECAST METHOD.

       (a) General Rule.--Section 167 (relating to depreciation) 
     is amended by redesignating subsection (g) as subsection (h) 
     and by inserting after subsection (f) the following new 
     subsection:
       ``(g) Depreciation Under Income Forecast Method.--
       ``(1) In general.--If the depreciation deduction allowable 
     under this section to any taxpayer with respect to any 
     property is determined under the income forecast method or 
     any similar method--
       ``(A) in determining the amount of the depreciation 
     deduction under such method, the estimated income from the 
     property shall include all estimated income from use of the 
     property,
       ``(B) the adjusted basis of the property shall only include 
     amounts with respect to which the requirements of section 
     461(h) are satisfied,
       ``(C) the depreciation deduction under such method for the 
     10th taxable year beginning after the taxable year in which 
     the property was placed in service shall be equal to the 
     adjusted basis of such property as of the beginning of such 
     10th taxable year, and
       ``(D) such taxpayer shall pay (or be entitled to receive) 
     interest computed under the look-back method of paragraph (2) 
     for any recomputation year.
       ``(2) Look-back method.--The interest computed under the 
     look-back method of this paragraph for any recomputation year 
     shall be determined by--
       ``(A) first determining the depreciation deductions under 
     this section with respect to such property which would have 
     been allowable for prior taxable years if the determination 
     of the amounts so allowable had been made on the basis of the 
     sum of the following (instead of the estimated income with 
     respect to such property)--
       ``(i) the actual income from such property for periods 
     before the close of the recomputation year, and
       ``(ii) an estimate of the future income with respect to 
     such property for periods after the recomputation year,
       ``(B) second, determining (solely for purposes of computing 
     such interest) the overpayment or underpayment of tax for 
     each such prior taxable year which would result solely from 
     the application of subparagraph (A), and
       ``(C) then using the adjusted overpayment rate (as defined 
     in section 460(b)(7)), compounded daily, on the overpayment 
     or underpayment determined under subparagraph (B).
     For purposes of the preceding sentence, any cost incurred 
     after the property is placed in service (which is not treated 
     as a separate property under paragraph (5)) shall be taken 
     into account by discounting (using the Federal mid-term rate 
     determined under section 1274(d) as of the time such cost is 
     incurred) such cost to its value as of the date the property 
     is placed in service. The taxpayer may elect with respect to 
     any property to have the preceding sentence not apply to such 
     property.
       ``(3) Exception from look-back method.--Paragraph (1)(D) 
     shall not apply with respect to any property which, when 
     placed in service by the taxpayer, had a basis of $100,000 or 
     less.
       ``(4) Recomputation year.--For purposes of this subsection, 
     except as provided in regulations, the term `recomputation 
     year' means, with respect to any property, the third and the 
     10th taxable years beginning after the taxable year in which 
     the property was placed in service, unless the actual income 
     from the property for such third or 10th taxable year (as the 
     case may be) and each prior taxable year is within 10 percent 
     of the estimated income from the property for each such year 
     which was taken into account under paragraph (1)(A).
       ``(5) Special rules.--
       ``(A) Certain costs treated as separate property.--For 
     purposes of this section, the following costs shall be 
     treated as separate properties:
       ``(i) Any costs incurred with respect to any property after 
     the 10th taxable year beginning after the taxable year in 
     which the property was placed in service.
       ``(ii) Any costs incurred after the property is placed in 
     service and before the close of such 10th taxable year if 
     such costs are significant and give rise to a significant 
     increase in the income from the property which was not 
     included in the estimated income from the property.
       ``(B) Syndication income from television series.--In the 
     case of property which is an episode in a television series, 
     estimated income from syndicating such series shall not be 
     required to be taken into account under this subsection 
     before the earlier of--
       ``(i) the 4th taxable year beginning after the date the 
     first episode in such series is placed in service, or
       ``(ii) the earliest taxable year in which the taxpayer had 
     a reasonable expectation that there would be a future 
     syndication of such series.
       ``(C) Collection of interest.--For purposes of subtitle F 
     (other than sections 6654 and 6655), any interest required to 
     be paid by the taxpayer under paragraph (1) for any 
     recomputation year shall be treated as an increase in the tax 
     imposed by this chapter for such year.
       ``(D) Determinations.--For purposes of this subsection, 
     determinations of the amount of income from any property 
     shall be determined in the same manner as for purposes of 
     applying the income forecast method; except that any income 
     from the disposition of such property shall be taken into 
     account.
       ``(E) Treatment of pass-thru entities.--Rules similar to 
     the rules of section 460(b)(4) shall apply for purposes of 
     this subsection.''
       (b) Effective Date.--
       (1) In general.--The amendment made by subsection (a) shall 
     apply to property placed in service after September 13, 1995.
       (2) Binding contracts.--The amendment made by subsection 
     (a) shall not apply to any property produced or acquired by 
     the taxpayer pursuant to a written contract which was binding 
     on September 13, 1995, and at all times thereafter before 
     such production or acquisition.

     SEC. 13607. TRANSFERS OF EXCESS PENSION ASSETS.

       (a) In General.--Section 420 (relating to transfers of 
     excess pension assets to retiree health accounts) is amended 
     by adding at the end the following new subsection:
       ``(f) Similar Rules To Apply to Other Transfers of Excess 
     Plan Assets.--
       ``(1) In general.--If there is a qualified unrestricted 
     transfer of any excess pension assets of a defined benefit 
     plan (other than a multiemployer plan) to an employer--
       ``(A) a trust which is part of such plan shall not be 
     treated as failing to meet the requirements of section 401(a) 
     solely by reason of such transfer (or any other action 
     authorized under this section), and
       ``(B) such transfer shall not be treated as a prohibited 
     transaction for purposes of section 4975.
     The gross income of the employer shall include the amount of 
     any qualified transfer made during the taxable year.
       ``(2) Qualified unrestricted transfer.--For purposes of 
     this section--
       ``(A) In general.--The term `qualified unrestricted 
     transfer' means a transfer--
       ``(i) of excess pension assets of a defined benefit plan to 
     the employer, and
       ``(ii) with respect to which the requirements of subsection 
     (c)(2)(A) are met (determined by treating such transfer as a 
     qualified transfer).
       ``(B) Coordination with transfers to retiree health 
     accounts.--Such term shall not include any qualified transfer 
     (as defined in subsection (b)).
       ``(C) Expiration.--No transfer in any taxable year 
     beginning after December 31, 2000, shall be treated as a 
     qualified unrestricted transfer.
       ``(3) Definition and special rule.--For purposes of this 
     subsection--
       ``(A) Excess pension assets.--The term `excess pension 
     assets' has the meaning given such term by subsection (e)(2); 
     except that the amount thereof shall be the lesser of--
       ``(i) the amount determined as of the most recent valuation 
     date of the plan preceding the transfer, or
       ``(ii) the amount determined as of January 1, 1995 (or, if 
     January 1, 1995, is not a valuation date, the most recent 
     prior valuation date).
       ``(B) Coordination with section 412.--In the case of a 
     qualified unrestricted transfer--
       ``(i) any assets transferred in a plan year on or before 
     the valuation date for such year (and any income allocable 
     thereto) shall, for purposes of section 412, be treated as 
     assets in the plan as of the valuation date for such year, 
     and
       ``(ii) the plan shall be treated as having a net experience 
     loss under section 412(b)(2)(B)(iv) in an amount equal to the 
     amount of such transfer and for which amortization charges 
     begin for the first plan year after the plan year in which 
     such transfer occurs, except that such section shall be 
     applied to such amount by substituting `10 plan years' for `5 
     plan years'.
       ``(C) Treatment of transfers.--Except for purposes of this 
     section, a qualified unrestricted transfer shall be treated 
     as a qualified transfer to a health benefits account.''
       (b) Reversion Tax.--Section 4980 (relating to tax on 
     reversion of qualified plan assets to employers) is amended 
     by adding at the end the following new subsection:
       ``(e) Special Rules for Qualified Unrestricted Transfers 
     Under Section 420.--In the case of a qualified unrestricted 
     transfer to which section 420(f) applies--

[[Page 1707]]

       ``(1) no tax shall be imposed by subsection (a) if such 
     transfer occurs before July 1, 1996,
       ``(2) subsection (a) shall be applied by substituting `6.5 
     percent' for `20 percent' if such transfer occurs after June 
     30, 1996, and
       ``(3) subsection (d) shall not apply.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1995.

                         PART II--LEGAL REFORMS

     SEC. 13611. REPEAL OF EXCLUSION FOR PUNITIVE DAMAGES AND FOR 
                   DAMAGES NOT ATTRIBUTABLE TO PHYSICAL INJURIES 
                   OR SICKNESS.

       (a) In General.--Paragraph (2) of section 104(a) (relating 
     to compensation for injuries or sickness) is amended to read 
     as follows:
       ``(2) the amount of any damages (other than punitive 
     damages) received (whether by suit or agreement and whether 
     as lump sums or as periodic payments) on account of personal 
     physical injuries or physical sickness;''.
       (b) Emotional Distress as Such Treated as Not Physical 
     Injury or Physical Sickness.--Section 104(a) is amended by 
     striking the last sentence and inserting the following new 
     sentence: ``For purposes of paragraph (2), emotional distress 
     shall not be treated as a physical injury or physical 
     sickness. The preceding sentence shall not apply to an amount 
     of damages not in excess of the amount paid for medical care 
     (described in subparagraph (A) or (B) of section 213(d)(1)) 
     attributable to emotional distress.''
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to amounts 
     received after December 31, 1995, in taxable years ending 
     after such date.
       (2) Exception.--The amendments made by this section shall 
     not apply to any amount received under a written binding 
     agreement, court decree, or mediation award in effect on (or 
     issued on or before) September 13, 1995.

     SEC. 13612. REPORTING OF CERTAIN PAYMENTS MADE TO ATTORNEYS.

       (a) In General.--Section 6045 (relating to returns of 
     brokers) is amended by adding at the end the following new 
     subsection:
       ``(f) Return Required In The Case of Payments to 
     Attorneys.--
       ``(1) In general.--Any person engaged in a trade or 
     business and making a payment (in the course of such trade or 
     business) to which this subsection applies shall file a 
     return under subsection (a) and a statement under subsection 
     (b) with respect to such payment.
       ``(2) Application of subsection.--
       ``(A) In general.--This subsection shall apply to any 
     payment to an attorney in connection with legal services 
     (whether or not such services are performed for the payor).
       ``(B) Exception.--This subsection shall not apply to the 
     portion of any payment which is required to be reported under 
     section 6041(a) (or would be so required but for the dollar 
     limitation contained therein) or section 6051.''
       (b) Reporting of Attorneys Fees Payable to Corporations.--
     The regulations providing an exception under section 6041 of 
     the Internal Revenue Code of 1986 for payments made to 
     corporations shall not apply to payments of attorneys fees.
       (c) Effective Date.--The amendment made by subsection (a), 
     and subsection (b), shall apply to payments made after 
     December 31, 1995.

 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.

       (a) In General.--Subsection (a) of section 877 is amended 
     to read as follows:
       ``(a) Treatment of Expatriates.--
       ``(1) In general.--Every nonresident alien individual who, 
     within the 10-year period immediately preceding the close of 
     the taxable year, lost United States citizenship, unless such 
     loss did not have for 1 of its principal purposes the 
     avoidance of taxes under this subtitle or subtitle B, shall 
     be taxable for such taxable year in the manner provided in 
     subsection (b) if the tax imposed pursuant to such subsection 
     exceeds the tax which, without regard to this section, is 
     imposed pursuant to section 871.
       ``(2) Certain individuals treated as having tax avoidance 
     purpose.--For purposes of paragraph (1), an individual shall 
     be treated as having a principal purpose to avoid such taxes 
     if--
       ``(A) the average annual net income tax (as defined in 
     section 38(c)(1)) of such individual for the period of 5 
     taxable years ending before the date of the loss of United 
     States citizenship is greater than $100,000, or
       ``(B) the net worth of the individual as of such date is 
     $500,000 or more.
     In the case of the loss of United States citizenship in any 
     calendar year after 1996, such $100,000 and $500,000 amounts 
     shall be increased by an amount equal to such dollar amount 
     multiplied by the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year by substituting `1994' 
     for `1992' in subparagraph (B) thereof. Any increase under 
     the preceding sentence shall be rounded to the nearest 
     multiple of $1,000.''
       (b) Exceptions.--
       (1) In general.--Section 877 is amended by striking 
     subsection (d), by redesignating subsection (c) as subsection 
     (d), and by inserting after subsection (b) the following new 
     subsection:
       ``(c) Tax Avoidance Not Presumed in Certain Cases.--
       ``(1) In general.--Subsection (a)(2) shall not apply to an 
     individual if--
       ``(A) such individual is described in a subparagraph of 
     paragraph (2) of this subsection, and
       ``(B) within the 1-year period beginning on the date of the 
     loss of United States citizenship, such individual submits a 
     ruling request for the Secretary's determination as to 
     whether such loss has for 1 of its principal purposes the 
     avoidance of taxes under this subtitle or subtitle B.
       ``(2) Individuals described.--
       ``(A) Dual citizenship, etc.--An individual is described in 
     this subparagraph if--
       ``(i) the individual became at birth a citizen of the 
     United States and a citizen of another country and continues 
     to be a citizen of such other country, or
       ``(ii) the individual becomes (not later than the close of 
     a reasonable period after loss of United States citizenship) 
     a citizen of the country in which--

       ``(I) such individual was born,
       ``(II) if such individual is married, such individual's 
     spouse was born, or
       ``(III) either of such individual's parents were born.

       ``(B) Long-term foreign residents.--An individual is 
     described in this subparagraph if, for each year in the 10-
     year period ending on the date of loss of United States 
     citizenship, the individual was present in the United States 
     for 30 days or less. The rule of section 7701(b)(3)(D)(ii) 
     shall apply for purposes of this subparagraph.
       ``(C) Renunciation upon reaching age of majority.--An 
     individual is described in this subparagraph if the 
     individual's loss of United States citizenship occurs before 
     such individual attains age 18\1/2\.
       ``(D) Individuals specified in regulations.--An individual 
     is described in this subparagraph if the individual is 
     described in a category of individuals prescribed by 
     regulation by the Secretary.''
       (2) Technical amendment.--Paragraph (1) of section 877(b) 
     of such Code is amended by striking ``subsection (c)'' and 
     inserting ``subsection (d)''.
       (c) Treatment of Property Disposed of in Nonrecognition 
     Transactions; Treatment of Distributions From Certain 
     Controlled Foreign Corporations.--Subsection (d) of section 
     877, as redesignated by subsection (b), is amended to read as 
     follows:
       ``(d) Special Rules for Source, Etc.--For purposes of 
     subsection (b)--
       ``(1) Source rules.--The following items of gross income 
     shall be treated as income from sources within the United 
     States:
       ``(A) Sale of property.--Gains on the sale or exchange of 
     property (other than stock or debt obligations) located in 
     the United States.
       ``(B) Stock or debt obligations.--Gains on the sale or 
     exchange of stock issued by a domestic corporation or debt 
     obligations of United States persons or of the United States, 
     a State or political subdivision thereof, or the District of 
     Columbia.
       ``(C) Income or gain derived from controlled foreign 
     corporation.--Any income or gain derived from stock in a 
     foreign corporation but only--
       ``(i) if the individual losing United States citizenship 
     owned (within the meaning of section 958(a)), or is 
     considered as owning (by applying the ownership rules of 
     section 958(b)), at any time during the 2-year period ending 
     on the date of the loss of United States citizenship, more 
     than 50 percent of--

       ``(I) the total combined voting power of all classes of 
     stock entitled to vote of such corporation, or
       ``(II) the total value of the stock of such corporation, 
     and

       ``(ii) to the extent such income or gain does not exceed 
     the earnings and profits attributable to such stock which 
     were earned or accumulated before the loss of citizenship and 
     during periods that the ownership requirements of clause (i) 
     are met.
       ``(2) Gain recognition on certain exchanges.--
       ``(A) In general.--In the case of any exchange of property 
     to which this paragraph applies, notwithstanding any other 
     provision of this title, such property shall be treated as 
     sold for its fair market value on the date of such exchange, 
     and any gain shall be recognized for the taxable year which 
     includes such date.
       ``(B) Exchanges to which paragraph applies.--This paragraph 
     shall apply to any exchange during the 10-year period 
     described in subsection (a) if--
       ``(i) gain would not (but for this paragraph) be recognized 
     on such exchange in whole or in part for purposes of this 
     subtitle,
       ``(ii) income derived from such property was from sources 
     within the United States (or, if no income was so derived, 
     would have been from such sources), and
       ``(iii) income derived from the property acquired in the 
     exchange would be from sources outside the United States.
       ``(C) Exception.--Subparagraph (A) shall not apply if the 
     individual enters into an agreement with the Secretary which 
     specifies that any income or gain derived from the property 
     acquired in the exchange (or any other property which has a 
     basis determined in whole or part by reference to such 
     property) during such 10-year period shall be treated as from 
     sources within the United States. If the property transferred 
     in the exchange is disposed of by the person acquiring such 
     property, such agreement shall terminate and any gain which 
     was not recognized by reason of such agreement shall be 
     recognized as of the date of such disposition.
       ``(D) Secretary may extend period.--To the extent provided 
     in regulations prescribed by the Secretary, subparagraph (B) 
     shall be

[[Page 1708]]

     applied by substituting the 15-year period beginning 5 years 
     before the loss of United States citizenship for the 10-year 
     period referred to therein.
       ``(E) Secretary may require recognition of gain in certain 
     cases.--To the extent provided in regulations prescribed by 
     the Secretary--
       ``(i) the removal of appreciated tangible personal property 
     from the United States, and
       ``(ii) any other occurrence which (without recognition of 
     gain) results in a change in the source of the income or gain 
     from property from sources within the United States to 
     sources outside the United States,
     shall be treated as an exchange to which this paragraph 
     applies.
       ``(3) Substantial diminishing of risks of ownership.--For 
     purposes of determining whether this section applies to any 
     gain on the sale or exchange of any property, the running of 
     the 10-year period described in subsection (a) shall be 
     suspended for any period during which the individual's risk 
     of loss with respect to the property is substantially 
     diminished by--
       ``(A) the holding of a put with respect to such property 
     (or similar property),
       ``(B) the holding by another person of a right to acquire 
     the property, or
       ``(C) a short sale or any other transaction.''
       (d) Credit for Foreign Taxes Imposed on United States 
     Source Income.--
       (1) Subsection (b) of section 877 is amended by adding at 
     the end the following new sentence: ``The tax imposed solely 
     by reason of this section shall be reduced (but not below 
     zero) by the amount of any income, war profits, and excess 
     profits taxes (within the meaning of section 903) paid to any 
     foreign country or possession of the United States on any 
     income of the taxpayer on which tax is imposed solely by 
     reason of this section.''
       (2) Subsection (a) of section 877, as amended by subsection 
     (a), is amended by inserting ``(after any reduction in such 
     tax under the last sentence of such subsection)'' after 
     ``such subsection''.
       (e) Comparable Estate and Gift Tax Treatment.--
       (1) Estate tax.--
       (A) In general.--Subsection (a) of section 2107 is amended 
     to read as follows:
       ``(a) Treatment of Expatriates.--
       ``(1) Rate of tax.--A tax computed in accordance with the 
     table contained in section 2001 is hereby imposed on the 
     transfer of the taxable estate, determined as provided in 
     section 2106, of every decedent nonresident not a citizen of 
     the United States if, within the 10-year period ending with 
     the date of death, such decedent lost United States 
     citizenship, unless such loss did not have for 1 of its 
     principal purposes the avoidance of taxes under this subtitle 
     or subtitle A.
       ``(2) Certain individuals treated as having tax avoidance 
     purpose.--
       ``(A) In general.--For purposes of paragraph (1), an 
     individual shall be treated as having a principal purpose to 
     avoid such taxes if such individual is so treated under 
     section 877(a)(2).
       ``(B) Exception.--Subparagraph (A) shall not apply to a 
     decedent meeting the requirements of section 877(c)(1).''
       (B) Credit for foreign death taxes.--Subsection (c) of 
     section 2107 is amended by redesignating paragraph (2) as 
     paragraph (3) and by inserting after paragraph (1) the 
     following new paragraph:
       ``(2) Credit for foreign death taxes.--
       ``(A) In general.--The tax imposed by subsection (a) shall 
     be credited with the amount of any estate, inheritance, 
     legacy, or succession taxes actually paid to any foreign 
     country in respect of any property which is included in the 
     gross estate solely by reason of subsection (b).
       ``(B) Limitation on credit.--The credit allowed by 
     subparagraph (A) for such taxes paid to a foreign country 
     shall not exceed the lesser of--
       ``(i) the amount which bears the same ratio to the amount 
     of such taxes actually paid to such foreign country in 
     respect of property included in the gross estate as the value 
     of the property included in the gross estate solely by reason 
     of subsection (b) bears to the value of all property 
     subjected to such taxes by such foreign country, or
       ``(ii) such property's proportionate share of the excess 
     of--

       ``(I) the tax imposed by subsection (a), over
       ``(II) the tax which would be imposed by section 2101 but 
     for this section.

       ``(C) Proportionate share.--For purposes of subparagraph 
     (B), a property's proportionate share is the percentage which 
     the value of the property which is included in the gross 
     estate solely by reason of subsection (b) bears to the total 
     value of the gross estate.''
       (C) Expansion of inclusion in gross estate of stock of 
     foreign corporations.--Paragraph (2) of section 2107(b) is 
     amended by striking ``more than 50 percent of'' and all that 
     follows and inserting ``more than 50 percent of--
       ``(A) the total combined voting power of all classes of 
     stock entitled to vote of such corporation, or
       ``(B) the total value of the stock of such corporation,''.
       (2) Gift tax.--
       (A) In general.--Paragraph (3) of section 2501(a) is 
     amended to read as follows:
       ``(3) Exception.--
       ``(A) Certain individuals.--Paragraph (2) shall not apply 
     in the case of a donor who, within the 10-year period ending 
     with the date of transfer, lost United States citizenship, 
     unless such loss did not have for 1 of its principal purposes 
     the avoidance of taxes under this subtitle or subtitle A.
       ``(B) Certain individuals treated as having tax avoidance 
     purpose.--For purposes of subparagraph (A), an individual 
     shall be treated as having a principal purpose to avoid such 
     taxes if such individual is so treated under section 
     877(a)(2).
       ``(C) Exception for certain individuals.--Subparagraph (B) 
     shall not apply to a decedent meeting the requirements of 
     section 877(c)(1).
       ``(D) Credit for foreign gift taxes.--The tax imposed by 
     this section solely by reason of this paragraph shall be 
     credited with the amount of any gift tax actually paid to any 
     foreign country in respect of any gift which is taxable under 
     this section solely by reason of this paragraph.''
       (f) Comparable Treatment of Lawful Permanent Residents Who 
     Cease To Be Taxed as Residents.--
       (1) In general.--Section 877 is amended by redesignating 
     subsection (e) as subsection (f) and by inserting after 
     subsection (d) the following new subsection:
       ``(e) Comparable Treatment of Lawful Permanent Residents 
     Who Cease To Be Taxed as Residents.--
       ``(1) In general.--Any long-term resident of the United 
     States who--
       ``(A) ceases to be a lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)), or
       ``(B) commences to be treated as a resident of a foreign 
     country under the provisions of a tax treaty between the 
     United States and the foreign country and who does not waive 
     the benefits of such treaty applicable to residents of the 
     foreign country,
     shall be treated for purposes of this section and sections 
     2107, 2501, and 6039F in the same manner as if such resident 
     were a citizen of the United States who lost United States 
     citizenship on the date of such cessation or commencement.
       ``(2) Long-term resident.--For purposes of this subsection, 
     the term `long-term resident' means any individual (other 
     than a citizen of the United States) who is a lawful 
     permanent resident of the United States in at least 8 taxable 
     years during the period of 15 taxable years ending with the 
     taxable year during which the event described in subparagraph 
     (A) or (B) of paragraph (1) occurs. For purposes of the 
     preceding sentence, an individual shall not be treated as a 
     lawful permanent resident for any taxable year if such 
     individual is treated as a resident of a foreign country for 
     the taxable year under the provisions of a tax treaty between 
     the United States and the foreign country and does not waive 
     the benefits of such treaty applicable to residents of the 
     foreign country.
       ``(3) Special rules.--
       ``(A) Exceptions not to apply.--Subsection (c) shall not 
     apply to an individual who is treated as provided in 
     paragraph (1).
       ``(B) Step-up in basis.--Solely for purposes of determining 
     any tax imposed by reason of this subsection, property which 
     was held by the long-term resident on the date the individual 
     first became a resident of the United States shall be treated 
     as having a basis on such date of not less than the fair 
     market value of such property on such date. The preceding 
     sentence shall not apply if the individual elects not to have 
     such sentence apply. Such an election, once made, shall be 
     irrevocable.
       ``(4) Authority to exempt individuals.--This subsection 
     shall not apply to an individual who is described in a 
     category of individuals prescribed by regulation by the 
     Secretary.
       ``(5) Regulations.--The Secretary shall prescribe such 
     regulations as may be appropriate to carry out this 
     subsection, including regulations providing for the 
     application of this subsection in cases where an alien 
     individual becomes a resident of the United States during the 
     10-year period after being treated as provided in paragraph 
     (1).''
       (2) Conforming amendments.--
       (A) Section 2107 is amended by striking subsection (d), by 
     redesignating subsection (e) as subsection (d), and by 
     inserting after subsection (d) (as so redesignated) the 
     following new subsection:
       ``(e) Cross Reference.--

  ``For comparable treatment of long-term lawful permanent residents 
who ceased to be taxed as residents, see section 877(e).''
       (B) Paragraph (3) of section 2501(a) (as amended by 
     subsection (e)) is amended by adding at the end the following 
     new subparagraph:
       ``(E) Cross reference.--

  ``For comparable treatment of long-term lawful permanent residents 
who ceased to be taxed as residents, see section 877(e).''
       (g) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to--
       (A) individuals losing United States citizenship (within 
     the meaning of section 877 of the Internal Revenue Code of 
     1986) on or after February 6, 1995, and
       (B) long-term residents of the United States with respect 
     to whom an event described in subparagraph (A) or (B) of 
     section 877(e)(1) of such Code occurs on or after June 13, 
     1995.
       (2) Special rule.--
       (A) In general.--In the case of an individual who performed 
     an act of expatriation specified in paragraph (1), (2), (3), 
     or (4) of section 349(a) of the Immigration and Nationality 
     Act (8 U.S.C. 1481(a)(1)-(4)) before

[[Page 1709]]

     February 6, 1995, but who did not, on or before such date, 
     furnish to the United States Department of State a signed 
     statement of voluntary relinquishment of United States 
     nationality confirming the performance of such act, the 
     amendments made by this section shall apply to such 
     individual except that--
       (i) the 10-year period described in section 877(a) of such 
     Code shall not expire before the end of the 10-year period 
     beginning on the date such statement is so furnished, and
       (ii) the 1-year period referred to in section 877(c) of 
     such Code, as amended by this section, shall not expire 
     before the date which is 1 year after the date of the 
     enactment of this Act.
       (B) Exception.--Subparagraph (A) shall not apply if the 
     individual establishes to the satisfaction of the Secretary 
     of the Treasury that such loss of United States citizenship 
     occurred before February 6, 1994.

     SEC. 13617. INFORMATION ON INDIVIDUALS LOSING UNITED STATES 
                   CITIZENSHIP.

       (a) In General.--Subpart A of part III of subchapter A of 
     chapter 61 is amended by inserting after section 6039E the 
     following new section:

     ``SEC. 6039F. INFORMATION ON INDIVIDUALS LOSING 
                   UNITED STATES CITIZENSHIP.

       ``(a) In General.--Notwithstanding any other provision of 
     law, any individual who loses United States citizenship 
     (within the meaning of section 877(a)) shall provide a 
     statement which includes the information described in 
     subsection (b). Such statement shall be--
       ``(1) provided not later than the earliest date of any act 
     referred to in subsection (c), and
       ``(2) provided to the person or court referred to in 
     subsection (c) with respect to such act.
       ``(b) Information To Be Provided.--Information required 
     under subsection (a) shall include--
       ``(1) the taxpayer's TIN,
       ``(2) the mailing address of such individual's principal 
     foreign residence,
       ``(3) the foreign country in which such individual is 
     residing,
       ``(4) the foreign country of which such individual is a 
     citizen,
       ``(5) in the case of an individual having a net worth of at 
     least the dollar amount applicable under section 
     877(a)(2)(B), information detailing the assets and 
     liabilities of such individual, and
       ``(6) such other information as the Secretary may 
     prescribe.
       ``(c) Acts Described.--For purposes of this section, the 
     acts referred to in this subsection are--
       ``(1) the individual's renunciation of his United States 
     nationality before a diplomatic or consular officer of the 
     United States pursuant to paragraph (5) of section 349(a) of 
     the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
       ``(2) the individual's furnishing to the United States 
     Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(3) the issuance by the United States Department of State 
     of a certificate of loss of nationality to the individual, or
       ``(4) the cancellation by a court of the United States of a 
     naturalized citizen's certificate of naturalization.
       ``(d) Penalty.--Any individual failing to provide a 
     statement required under subsection (a) shall be subject to a 
     penalty for each year (of the 10-year period beginning on the 
     date of loss of United States citizenship) during any portion 
     of which such failure continues in an amount equal to the 
     greater of--
       ``(1) 5 percent of the tax required to be paid under 
     section 877 for the taxable year ending during such year, or
       ``(2) $1,000,
     unless it is shown that such failure is due to reasonable 
     cause and not to willful neglect.
       ``(e) Information To Be Provided To Secretary.--
     Notwithstanding any other provision of law--
       ``(1) any Federal agency or court which collects (or is 
     required to collect) the statement under subsection (a) shall 
     provide to the Secretary--
       ``(A) a copy of any such statement, and
       ``(B) the name (and any other identifying information) of 
     any individual refusing to comply with the provisions of 
     subsection (a),
       ``(2) the Secretary of State shall provide to the Secretary 
     a copy of each certificate as to the loss of American 
     nationality under section 358 of the Immigration and 
     Nationality Act which is approved by the Secretary of State, 
     and
       ``(3) the Federal agency primarily responsible for 
     administering the immigration laws shall provide to the 
     Secretary the name of each lawful permanent resident of the 
     United States (within the meaning of section 7701(b)(6)) 
     whose status as such has been revoked or has been 
     administratively or judicially determined to have been 
     abandoned.
     Notwithstanding any other provision of law, not later than 30 
     days after the close of each calendar quarter, the Secretary 
     shall publish in the Federal Register the name of each 
     individual losing United States citizenship (within the 
     meaning of section 877(a)) with respect to whom the Secretary 
     receives information under the preceding sentence during such 
     quarter.
       ``(f) Reporting by Long-Term Lawful Permanent Residents Who 
     Cease To Be Taxed as Residents.--In lieu of applying the last 
     sentence of subsection (a), any individual who is required to 
     provide a statement under this section by reason of section 
     877(e)(1) shall provide such statement with the return of tax 
     imposed by chapter 1 for the taxable year during which the 
     event described in such section occurs.
       ``(g) Exemption.--The Secretary may by regulations exempt 
     any class of individuals from the requirements of this 
     section if he determines that applying this section to such 
     individuals is not necessary to carry out the purposes of 
     this section.''
       (b) Clerical Amendment.--The table of sections for such 
     subpart A is amended by inserting after the item relating to 
     section 6039E the following new item:

``Sec. 6039F. Information on individuals losing United States 
              citizenship.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) individuals losing United States citizenship (within 
     the meaning of section 877 of the Internal Revenue Code of 
     1986) after the date of the enactment of this Act, and
       (2) long-term residents of the United States with respect 
     to whom an event described in subparagraph (A) or (B) of 
     section 877(e)(1) of such Code occurs after such date.

     SEC. 13618. REPORT ON TAX COMPLIANCE BY UNITED STATES 
                   CITIZENS AND RESIDENTS LIVING ABROAD.

       Not later than 90 days after the date of the enactment of 
     this Act, the Secretary of the Treasury shall prepare and 
     submit to the Committee on Ways and Means of the House of 
     Representatives and the Committee on Finance of the Senate a 
     report--
       (1) describing the compliance with subtitle A of the 
     Internal Revenue Code of 1986 by citizens and lawful 
     permanent residents of the United States (within the meaning 
     of section 7701(b)(6) of such Code) residing outside the 
     United States, and
       (2) recommending measures to improve such compliance 
     (including improved coordination between executive branch 
     agencies).

             PART IV--REFORMS RELATING TO ENERGY PROVISIONS

     SEC. 13621. TERMINATION OF CREDIT FOR ELECTRICITY PRODUCED 
                   FROM CERTAIN RENEWABLE RESOURCES.

       (a) Facilities Must Be Placed in Service Before September 
     14, 1995.--Paragraph (3) of section 45(c) (defining qualified 
     facility) is amended by striking ``July 1, 1999'' and 
     inserting ``September 14, 1995''.
       (b) Effective Date.--
       (1) In general.--The amendment made by this section shall 
     apply to taxable years ending after September 13, 1995.
       (2) Binding contracts.--The amendment made by this section 
     shall not apply to any facility--
       (A) which is constructed or acquired by the taxpayer 
     pursuant to a written contract which was binding on September 
     13, 1995, and at all times thereafter before such 
     construction or acquisition, and
       (B) which is placed in service before September 14, 1996.

     SEC. 13622. EXCLUSION FOR ENERGY CONSERVATION SUBSIDIES 
                   LIMITED TO SUBSIDIES WITH RESPECT TO DWELLING 
                   UNITS.

       (a) In General.--Paragraph (1) of section 136(c) (defining 
     energy conservation measure) is amended by striking ``energy 
     demand--'' and all that follows and inserting ``energy demand 
     with respect to a dwelling unit.''
       (b) Conforming Amendments.--
       (1) Subsection (a) of section 136 is amended to read as 
     follows:
       ``(a) Exclusion.--Gross income shall not include the value 
     of any subsidy provided (directly or indirectly) by a public 
     utility to a customer for the purchase or installation of any 
     energy conservation measure.''
       (2) Paragraph (2) of section 136(c) is amended--
       (A) by striking subparagraph (A) and by redesignating 
     subparagraphs (B) and (C) as subparagraphs (A) and (B), 
     respectively, and
       (B) by striking ``and special rules'' in the paragraph 
     heading.
       (c) Effective Date.--The amendments made by this section 
     shall apply to amounts received after September 13, 1995, 
     unless received pursuant to a written binding contract in 
     effect on September 13, 1995, and at all times thereafter.

         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.

       (a) In General.--Subsection (b) of section 1033 is amended 
     to read as follows:
       ``(b) Basis of Property Acquired Through Involuntary 
     Conversion.--
       ``(1) Conversions described in subsection (a)(1).--If the 
     property was acquired as the result of a compulsory or 
     involuntary conversion described in subsection (a)(1), the 
     basis shall be the same as in the case of the property so 
     converted--
       ``(A) decreased in the amount of any money received by the 
     taxpayer which was not expended in accordance with the 
     provisions of law (applicable to the year in which such 
     conversion was made) determining the taxable status of the 
     gain or loss upon such conversion, and
       ``(B) increased in the amount of gain or decreased in the 
     amount of loss to the taxpayer recognized upon such 
     conversion under the

[[Page 1710]]

     law applicable to the year in which such conversion was made.
       ``(2) Conversions described in subsection (a)(2).--In the 
     case of property purchased by the taxpayer in a transaction 
     described in subsection (a)(2) which resulted in the 
     nonrecognition of any part of the gain realized as the result 
     of a compulsory or involuntary conversion, the basis shall be 
     the cost of such property decreased in the amount of the gain 
     not so recognized; and if the property purchased consists of 
     more than 1 piece of property, the basis determined under 
     this sentence shall be allocated to the purchased properties 
     in proportion to their respective costs.
       ``(3) Property held by corporation the stock of which is 
     replacement property.--
       ``(A) In general.--If the basis of stock in a corporation 
     is decreased under paragraph (2), an amount equal to such 
     decrease shall also be applied to reduce the basis of 
     property held by the corporation at the time the taxpayer 
     acquired control (as defined in subsection (a)(2)(E)) of such 
     corporation.
       ``(B) Limitation.--Subparagraph (A) shall not apply to the 
     extent that it would (but for this subparagraph) require a 
     reduction in the aggregate adjusted bases of the property of 
     the corporation below the taxpayer's adjusted basis of the 
     stock in the corporation (determined immediately after such 
     basis is decreased under paragraph (2)).
       ``(C) Allocation of basis reduction.--The decrease required 
     under subparagraph (A) shall be allocated--
       ``(i) first to property which is similar or related in 
     service or use to the converted property,
       ``(ii) second to depreciable property (as defined in 
     section 1017(b)(3)(B)) not described in clause (i), and
       ``(iii) then to other property.
       ``(D) Special rules.--
       ``(i) Reduction not to exceed adjusted basis of property.--
     No reduction in the basis of any property under this 
     paragraph shall exceed the adjusted basis of such property 
     (determined without regard to such reduction).
       ``(ii) Allocation of reduction among properties.--If more 
     than 1 property is described in a clause of subparagraph (C), 
     the reduction under this paragraph shall be allocated among 
     such property in proportion to the adjusted bases of such 
     property (determined without regard to such reduction).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to involuntary conversions occurring after 
     September 13, 1995.

     SEC. 13627. EXPANSION OF REQUIREMENT THAT INVOLUNTARILY 
                   CONVERTED PROPERTY BE REPLACED WITH PROPERTY 
                   ACQUIRED FROM AN UNRELATED PERSON.

       (a) In General.--Subsection (i) of section 1033 is amended 
     to read as follows:
       ``(i) Replacement Property Must Be Acquired From Unrelated 
     Person in Certain Cases.--
       ``(1) In general.--If the property which is involuntarily 
     converted is held by a taxpayer to which this subsection 
     applies, subsection (a) shall not apply if the replacement 
     property or stock is acquired from a related person. The 
     preceding sentence shall not apply to the extent that the 
     related person acquired the replacement property or stock 
     from an unrelated person during the period applicable under 
     subsection (a)(2)(B).
       ``(2) Taxpayers to which subsection applies.--This 
     subsection shall apply to--
       ``(A) a C corporation,
       ``(B) a partnership in which 1 or more C corporations own, 
     directly or indirectly (determined in accordance with section 
     707(b)(3)), more than 50 percent of the capital interest, or 
     profits interest, in such partnership at the time of the 
     involuntary conversion, and
       ``(C) any other taxpayer if, with respect to property which 
     is involuntarily converted during the taxable year, the 
     aggregate of the amount of realized gain on such property on 
     which there is realized gain exceeds $100,000.
     In the case of a partnership, subparagraph (C) shall apply 
     with respect to the partnership and with respect to each 
     partner. A similar rule shall apply in the case of an S 
     corporation and its shareholders.
       ``(3) Related person.--For purposes of this subsection, a 
     person is related to another person if the person bears a 
     relationship to the other person described in section 267(b) 
     or 707(b)(1).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to involuntary conversions occurring after 
     September 13, 1995.

     SEC. 13628. NO ROLLOVER OR EXCLUSION OF GAIN ON SALE OF 
                   PRINCIPAL RESIDENCE WHICH IS ATTRIBUTABLE TO 
                   DEPRECIATION DEDUCTIONS.

       (a) In General.--Subsection (d) of section 1034 (relating 
     to limitations) is amended by adding at the end the following 
     new paragraph:
       ``(3) Recognition of gain attributable to depreciation.--
     Subsection (a) shall not apply to so much of the gain from 
     the sale of any residence as does not exceed the portion of 
     the depreciation adjustments (as defined in section 
     1250(b)(3)) attributable to periods after December 31, 1995, 
     in respect of such residence.''
       (b) Comparable Treatment Under 1-Time Exclusion of Gain on 
     Sale of Principal Residence.--Subsection (d) of section 121 
     is amended by adding at the end the following new paragraph:
       ``(10) Recognition of gain attributable to depreciation.--
       ``(A) In general.--Subsection (a) shall not apply to so 
     much of the gain from the sale of any property as does not 
     exceed the portion of the depreciation adjustments (as 
     defined in section 1250(b)(3)) attributable to periods after 
     December 31, 1995, in respect of such property.
       ``(B) Coordination with paragraph (5).--If this section 
     does not apply to gain attributable to a portion of a 
     residence by reason of paragraph (5), subparagraph (A) shall 
     not apply to depreciation adjustments attributable to such 
     portion.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after December 31, 1995.

     SEC. 13629. NONRECOGNITION OF GAIN ON SALE OF PRINCIPAL 
                   RESIDENCE BY NONCITIZENS LIMITED TO NEW 
                   RESIDENCES LOCATED IN THE UNITED STATES.

       (a) In General.--Subsection (d) of section 1034 (relating 
     to limitations) (as amended by section 13628) is amended by 
     adding at the end the following new paragraph:
       ``(4) New residence must be located in united states in 
     certain cases.--
       ``(A) In general.--In the case of a sale of an old 
     residence by a taxpayer--
       ``(i) who is not a citizen of the United States at the time 
     of sale, and
       ``(ii) who is not a citizen or resident of the United 
     States on the date which is 2 years after the date of the 
     sale of such old residence,
     subsection (a) shall apply only if the new residence is 
     located in the United States or a possession of the United 
     States.
       ``(B) Property held jointly by husband and wife.--
     Subparagraph (A) shall not apply if--
       ``(i) the old residence is held by a husband and wife as 
     joint tenants, tenants by the entirety, or community 
     property,
       ``(ii) such husband and wife make a joint return for the 
     taxable year of the sale or exchange, and
       ``(iii) one spouse is a citizen of the United States at the 
     time of sale.''
       (b) Effective Date.--
       (1) In general.--The amendment made by this section shall 
     apply to sales of old residences after December 31, 1995.
       (2) Treatment of purchases of new residences.--The 
     amendment made by this section shall not apply to new 
     residences--
       (A) purchased before September 13, 1995, or
       (B) purchased on or after such date pursuant to a binding 
     contract in effect on such date and at all times thereafter 
     before such purchase.
       (3) Certain rules to apply.--For purposes of this 
     subsection, the rules of paragraphs (1), (2), and (3) of 
     section 1034(c) of the Internal Revenue Code of 1986 shall 
     apply.

             PART VI--REFORMS RELATING TO GAMING ACTIVITIES

     SEC. 13631. TREATMENT OF INDIAN GAMING ACTIVITIES UNDER 
                   UNRELATED BUSINESS INCOME TAX.

       (a) In General.--Paragraph (2) of section 511(a) (relating 
     to imposition of tax on unrelated business income of 
     charitable, etc., organizations) is amended by adding at the 
     end the following new subparagraph:
       ``(C) Gaming activities of indian tribes.--
       ``(i) In general.--The tax imposed by paragraph (1) shall 
     apply to any Indian tribal organization; except that, 
     notwithstanding any other provision of this part, in the case 
     of such an organization, the term `unrelated trade or 
     business' means only a trade or business of conducting any 
     class II or class III gaming activity (as defined in section 
     4 of the Indian Gaming Regulatory Act (25 U.S.C. 2701 et 
     seq.), as in effect on the date of the enactment of this 
     subparagraph), including a gaming activity described in 
     section 513(a)(1).
       ``(ii) Indian tribal organization.--For purposes of clause 
     (i), the term `Indian tribal organization' means any Indian 
     tribe and any organization which is immune or exempt from tax 
     under this subtitle solely by reason of being owned or 
     controlled by an Indian tribe.''
       (b) Treatment of Amounts Paid for Charitable Purposes, 
     Etc., By Reason of State or Federal Law.--Subsection (b) of 
     section 512 is amended by adding at the end the following new 
     paragraph:
       ``(17) In the case of an Indian tribal organization (as 
     defined in section 511(a)(3)), if, by reason of State or 
     Federal law or of a contract with the United States or with 
     any State or political subdivision thereof, such organization 
     is required to use any portion of the net proceeds of any 
     gaming activity for specified purposes, the deduction for so 
     using such proceeds shall be treated as allowed under section 
     170 for purposes of applying paragraph (10). The preceding 
     sentence shall not apply to such proceeds which are paid as 
     general revenues to the United States or to any State or 
     political subdivision thereof.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1996.
       (d) Study of Gambling Conducted by Tax-Exempt 
     Organizations.--The Secretary of the Treasury or his delegate 
     shall conduct a study on the nature and extent of gaming 
     activities conducted by organizations exempt from tax under 
     section 501(a) of the Internal Revenue Code of 1986, 
     including an examination of--
       (1) the types of gaming activities (including bingo, pull 
     tabs, and casino nights) engaged in by charities and other 
     nonprofit organizations and the frequency of such activities;

[[Page 1711]]

       (2) the dollar volume of such gaming activities;
       (3) the nature and extent of the involvement of for-profit 
     entities and private parties in the management or operation 
     of gaming activities of such organizations;
       (4) competition between taxable gaming activities and 
     gaming activities that are exempt from Federal income tax; 
     and
       (5) an analysis of the present law tax treatment of gaming 
     activities of tax-exempt organizations.
     The study may include any recommendations for change, 
     including examination of the South End decision and the 
     special exception for bingo games. The Secretary shall submit 
     the results of the study to the Committee on Ways and Means 
     of the House of Representatives and the Committee on Finance 
     of the Senate not later than July 1, 1996.

     SEC. 13632. REPEAL OF TARGETED EXEMPTION FROM TAX ON 
                   UNRELATED TRADE OR BUSINESS INCOME FROM 
                   GAMBLING IN CERTAIN STATES.

       (a) In General.--Section 311 of the Tax Reform Act of 1984 
     is hereby repealed.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to games of chance conducted after December 31, 
     1995, in taxable years ending after such date.

     SEC. 13633. EXTENSION OF WITHHOLDING TO CERTAIN GAMBLING 
                   WINNINGS.

       (a) Repeal of Exemption for Bingo and Keno.--Paragraph (5) 
     of section 3402(q) is amended to read as follows:
       ``(5) Exemption for slot machines.--The tax imposed under 
     paragraph (1) shall not apply to winnings from a slot 
     machine.''
       (b) Threshold Amount.--Paragraph (3) of section 3402(q) is 
     amended--
       (1) by striking ``(B) and (C)'' in subparagraph (A) and 
     inserting ``(B), (C), and (D)'', and
       (2) by adding at the end the following new subparagraph:
       ``(D) Bingo and keno.--Proceeds of more than $5,000 from a 
     wager placed in a bingo or keno game.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1996.

                        PART VII--OTHER REFORMS

     SEC. 13636. SUNSET OF LOW-INCOME HOUSING CREDIT.

       (a) Repeal of Reallocation of Unused Credits Among 
     States.--Subparagraph (D) of section 42(h)(3) is amended by 
     adding at the end the following new clause:
       ``(v) Termination.--No amount may be allocated under this 
     paragraph for any calendar year after 1995.''
       (b) Termination.--Section 42 is amended by adding at the 
     end the following new subsection:
       ``(o) Termination.--
       ``(1) In general.--Except as provided in paragraph (2)--
       ``(A) clause (i) of subsection (h)(3)(C) shall not apply to 
     any amount allocated after December 31, 1997, and
       ``(B) subsection (h)(4) shall not apply to any building 
     placed in service after such date.
       ``(2) Exception for bond-financed buildings in progress.--
     For purposes of paragraph (1)(B), a building shall be treated 
     as placed in service before January 1, 1998, if--
       ``(A) the bonds with respect to such building are issued 
     before such date,
       ``(B) the taxpayer's basis in the project (of which the 
     building is a part) as of December 31, 1997, is more than 10 
     percent of the taxpayer's reasonably expected basis in such 
     project as of December 31, 1999, and
       ``(C) such building is placed in service before January 1, 
     2000.''

     SEC. 13637. REPEAL OF CREDIT FOR CONTRIBUTIONS TO COMMUNITY 
                   DEVELOPMENT CORPORATIONS.

       (a) In General.--Section 13311 of the Revenue 
     Reconciliation Act of 1993 (relating to credit for 
     contributions to certain community development corporations) 
     is hereby repealed.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to contributions made after the date of the 
     enactment of this Act (other than contributions made pursuant 
     to a legally enforceable agreement which is effect on the 
     date of the enactment of this Act).

     SEC. 13638. REPEAL OF DIESEL FUEL TAX REBATE TO PURCHASERS OF 
                   DIESEL-POWERED AUTOMOBILES AND LIGHT TRUCKS.

       (a) In General.--Section 6427 is amended by striking 
     subsection (g).
       (b) Conforming Amendments.--
       (1) Paragraph (3) of section 34(a) is amended to read as 
     follows:
       ``(3) under section 6427 with respect to fuels used for 
     nontaxable purposes or resold during the taxable year 
     (determined without regard to section 6427(k)).''
       (2) Paragraphs (1) and (2)(A) of section 6427(i) are each 
     amended--
       (A) by striking ``(g),'', and
       (B) by striking ``(or a qualified diesel powered highway 
     vehicle purchased)'' each place it appears.
       (c) Effective Date.--The amendments made by this section 
     shall apply to vehicles purchased after December 31, 1995.

     SEC. 13639. APPLICATION OF FAILURE-TO-PAY PENALTY TO 
                   SUBSTITUTE RETURNS.

       (a) General Rule.--Section 6651 (relating to failure to 
     file tax return or to pay tax) is amended by adding at the 
     end the following new subsection:
       ``(g) Treatment of Returns Prepared by Secretary Under 
     Section 6020(b).--In the case of any return made by the 
     Secretary under section 6020(b)--
       ``(1) such return shall be disregarded for purposes of 
     determining the amount of the addition under paragraph (1) of 
     subsection (a), but
       ``(2) such return shall be treated as the return filed by 
     the taxpayer for purposes of determining the amount of the 
     addition under paragraphs (2) and (3) of subsection (a).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply in the case of any return the due date for which 
     (determined without regard to extensions) is after the date 
     of the enactment of this Act.

     SEC. 13640. REPEAL OF SPECIAL RULE FOR RENTAL USE OF VACATION 
                   HOMES, ETC., FOR LESS THAN 15 DAYS.

       (a) In General.--Section 280A (relating to disallowance of 
     certain expenses in connection with business use of home, 
     rental of vacation homes, etc.) is amended by striking 
     subsection (g).
       (b) No Basis Reduction Unless Depreciation Claimed.--
     Section 1016 is amended by redesignating subsection (e) as 
     subsection (f) and by inserting after subsection (d) the 
     following new subsection:
       ``(e) Special Rule Where Rental Use of Vacation Home, Etc., 
     for Less Than 15 Days.--If a dwelling unit is used during the 
     taxable year by the taxpayer as a residence and such dwelling 
     unit is actually rented for less than 15 days during the 
     taxable year, the reduction under subsection (a)(2) by reason 
     of such rental use in any taxable year beginning after 
     December 31, 1995, shall not exceed the depreciation 
     deduction allowed for such rental use.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 13641. ELECTION TO CEASE STATUS AS QUALIFIED SCHOLARSHIP 
                   FUNDING CORPORATION.

       (a) In General.--Subsection (d) of section 150 (relating to 
     definitions and special rules) is amended by adding at the 
     end thereof the following new paragraph:
       ``(3) Election to cease status as qualified scholarship 
     funding corporation.--
       ``(A) In general.--Any qualified scholarship funding bond, 
     and qualified student loan bond, outstanding on the date of 
     the issuer's election under this paragraph (and any bond (or 
     series of bonds) issued to refund such a bond) shall not fail 
     to be a tax-exempt bond solely because the issuer ceases to 
     be described in subparagraphs (A) and (B) of paragraph (2) if 
     the issuer meets the requirements of subparagraphs (B) and 
     (C) of this paragraph.
       ``(B) Assets and liabilities of issuer transferred to 
     taxable subsidiary.--The requirements of this subparagraph 
     are met by an issuer if--
       ``(i) all of the student loan notes of the issuer and other 
     assets pledged to secure the repayment of qualified 
     scholarship funding bond indebtedness of the issuer are 
     transferred to another corporation within a reasonable period 
     after the election is made under this paragraph;
       ``(ii) such transferee corporation assumes or otherwise 
     provides for the payment of all of the qualified scholarship 
     funding bond indebtedness of the issuer within a reasonable 
     period after the election is made under this paragraph;
       ``(iii) to the extent permitted by law, such transferee 
     corporation assumes all of the responsibilities, and succeeds 
     to all of the rights, of the issuer under the issuer's 
     agreements with the Secretary of Education in respect of 
     student loans;
       ``(iv) immediately after such transfer, the issuer, 
     together with any other issuer which has made an election 
     under this paragraph in respect of such transferee, hold all 
     of the senior stock in such transferee corporation; and
       ``(v) such transferee corporation is not exempt from tax 
     under this chapter.
       ``(C) Issuer to operate as independent organization 
     described in section 501(c)(3).--The requirements of this 
     subparagraph are met by an issuer if, within a reasonable 
     period after the transfer referred to in subparagraph (B)--
       ``(i) the issuer is described in section 501(c)(3) and 
     exempt from tax under section 501(a);
       ``(ii) the issuer no longer is described in subparagraphs 
     (A) and (B) of paragraph (2); and
       ``(iii) at least 80 percent of the members of the board of 
     directors of the issuer are independent members.
       ``(D) Senior stock.--For purposes of this paragraph, the 
     term `senior stock' means stock--
       ``(i) which participates pro rata and fully in the equity 
     value of the corporation with all other common stock of the 
     corporation but which has the right to payment of liquidation 
     proceeds prior to payment of liquidation proceeds in respect 
     of other common stock of the corporation;
       ``(ii) which has a fixed right upon liquidation and upon 
     redemption to an amount equal to the greater of--

       ``(I) the fair market value of such stock on the date of 
     liquidation or redemption (whichever is applicable); or
       ``(II) the fair market value of all assets transferred in 
     exchange for such stock and reduced by the amount of all 
     liabilities of the corporation which has made an election 
     under this paragraph assumed by the transferee corporation in 
     such transfer;

[[Page 1712]]

       ``(iii) the holder of which has the right to require the 
     transferee corporation to redeem on a date that is not later 
     than 10 years after the date on which an election under this 
     paragraph was made and pursuant to such election such stock 
     was issued; and
       ``(iv) in respect of which, during the time such stock is 
     outstanding, there is not outstanding any equity interest in 
     the corporation having any liquidation, redemption or 
     dividend rights in the corporation which are superior to 
     those of such stock.
       ``(E) Independent member.--The term `independent member' 
     means a member of the board of directors of the issuer who 
     (except for services as a member of such board) receives no 
     compensation directly or indirectly--
       ``(i) for services performed in connection with such 
     transferee corporation, or
       ``(ii) for services as a member of the board of directors 
     or as an officer of such transferee corporation.
     For purposes of clause (ii), the term `officer' includes any 
     individual having powers or responsibilities similar to those 
     of officers.
       ``(F) Coordination with certain private foundation taxes.--
     For purposes of sections 4942 (relating to the excise tax on 
     a failure to distribute income) and 4943 (relating to the 
     excise tax on excess business holdings), the transferee 
     corporation referred to in subparagraph (B) shall be treated 
     as a functionally related business (within the meaning of 
     section 4942(j)(4)) with respect to the issuer during the 
     period commencing with the date on which an election is made 
     under this paragraph and ending on the date that is the 
     earlier of--
       ``(i) the last day of the last taxable year for which more 
     than 50 percent of the gross income of such transferee 
     corporation is derived from, or more than 50 percent of the 
     assets (by value) of such transferee corporation consists of, 
     student loan notes incurred under the Higher Education Act of 
     1965; or
       ``(ii) the last day of the taxable year of the issuer 
     during which occurs the date which is 10 years after the date 
     on which the election under this paragraph is made.
       ``(G) Election.--An election under this paragraph may be 
     revoked only with the consent of the Secretary.''
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 13642. CERTAIN AMOUNTS DERIVED FROM FOREIGN CORPORATIONS 
                   TREATED AS UNRELATED BUSINESS TAXABLE INCOME.

       (a) General Rule.--Subsection (b) of section 512 (relating 
     to modifications) is amended by adding at the end thereof the 
     following new paragraph:
       ``(18) Treatment of certain amounts derived from foreign 
     corporations.--
       ``(A) In general.--Notwithstanding paragraph (1), any 
     amount included in gross income under section 951(a)(1)(A) 
     shall be included as an item of gross income derived from an 
     unrelated trade or business to the extent the amount so 
     included is attributable to insurance income (as defined in 
     section 953) which, if derived directly by the organization, 
     would be treated as gross income from an unrelated trade or 
     business. There shall be allowed all deductions directly 
     connected with amounts included in gross income under the 
     preceding sentence.
       ``(B) Exception.--Subparagraph (A) shall not apply to 
     income attributable to a policy of insurance or reinsurance 
     with respect to which the person (directly or indirectly) 
     insured is--
       ``(i) such organization,
       ``(ii) an affiliate of such organization which is exempt 
     from tax under section 501(a), or
       ``(iii) a director, officer, or employee of such 
     organization or affiliate but only if the insurance covers 
     solely risks associated with the performance of services for 
     the benefit of such organization or affiliate.
       ``(C) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations for the 
     application of this paragraph in the case of income paid 
     through 1 or more entities or between 2 or more chains of 
     entities.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to amounts included in gross income in any 
     taxable year beginning after December 31, 1995.

      PART VIII--EXCISE TAX ON AMOUNTS OF PRIVATE EXCESS BENEFITS

     SEC. 13646. EXCISE TAXES FOR FAILURE BY CERTAIN CHARITABLE 
                   ORGANIZATIONS TO MEET CERTAIN QUALIFICATION 
                   REQUIREMENTS.

       (a) In General.--Chapter 42 (relating to private 
     foundations and certain other tax-exempt organizations) is 
     amended by redesignating subchapter D as subchapter E and by 
     inserting after subchapter C the following new subchapter:
  ``Subchapter D--Failure By Certain Charitable Organizations To Meet 
                   Certain Qualification Requirements

``Sec. 4958. Taxes on excess benefit transactions.

     ``SEC. 4958. TAXES ON EXCESS BENEFIT TRANSACTIONS.

       ``(a) Initial Taxes.--
       ``(1) On the disqualified person.--There is hereby imposed 
     on each excess benefit transaction a tax equal to 25 percent 
     of the excess benefit. The tax imposed by this paragraph 
     shall be paid by any disqualified person referred to in 
     subsection (f)(1) with respect to such transaction.
       ``(2) On the management.--In any case in which a tax is 
     imposed by paragraph (1), there is hereby imposed on the 
     participation of any organization manager in the excess 
     benefit transaction, knowing that it is such a transaction, a 
     tax equal to 10 percent of the excess benefit, unless such 
     participation is not willful and is due to reasonable cause. 
     The tax imposed by this paragraph shall be paid by any 
     organization manager who participated in the excess benefit 
     transaction.
       ``(b) Additional Tax On the Disqualified Person.--In any 
     case in which an initial tax is imposed by subsection (a)(1) 
     on an excess benefit transaction and the excess benefit 
     involved in such transaction is not corrected within the 
     taxable period, there is hereby imposed a tax equal to 200 
     percent of the excess benefit involved. The tax imposed by 
     this subsection shall be paid by any disqualified person 
     referred to in subsection (f)(1) with respect to such 
     transaction.
       ``(c) Excess Benefit Transaction; Excess Benefit.--For 
     purposes of this section--
       ``(1) Excess benefit transaction.--
       ``(A) In general.--The term `excess benefit transaction' 
     means any transaction in which an economic benefit is 
     provided by an applicable tax-exempt organization directly or 
     indirectly to or for the use of any disqualified person if 
     the value of the economic benefit provided exceeds the value 
     of the consideration (including the performance of services) 
     received for providing such benefit. For purposes of the 
     preceding sentence, an economic benefit shall not be treated 
     as consideration for the performance of services unless such 
     organization clearly indicated its intent to so treat such 
     benefit.
       ``(B) Excess benefit.--The term `excess benefit' means the 
     excess referred to in subparagraph (A).
       ``(2) Authority to include certain other private 
     inurement.--To the extent provided in regulations prescribed 
     by the Secretary, the term `excess benefit transaction' 
     includes any transaction in which the amount of any economic 
     benefit provided to or for the use of a disqualified person 
     is determined in whole or in part by the revenues of 1 or 
     more activities of the organization but only if such 
     transaction results in inurement not permitted under 
     paragraph (3) or (4) of section 501(c), as the case may be. 
     In the case of any such transaction, the excess benefit shall 
     be the amount of the inurement not so permitted.
       ``(d) Special Rules.--For purposes of this section--
       ``(1) Joint and several liability.--If more than 1 person 
     is liable for any tax imposed by subsection (a) or subsection 
     (b), all such persons shall be jointly and severally liable 
     for such tax.
       ``(2) Limit for management.--With respect to any 1 excess 
     benefit transaction, the maximum amount of the tax imposed by 
     subsection (a)(2) shall not exceed $10,000.
       ``(e) Applicable Tax-Exempt Organization.--For purposes of 
     this subchapter, the term `applicable tax-exempt 
     organization' means any organization which (without regard to 
     any excess benefit) would be described in paragraph (3) or 
     (4) of section 501(c) and exempt from tax under section 
     501(a). Such term shall not include a private foundation (as 
     defined in section 509(a)).
       ``(f) Other Definitions.--For purposes of this section--
       ``(1) Disqualified person.--The term `disqualified person' 
     means, with respect to any transaction--
       ``(A) any person who was, at any time during the 5-year 
     period ending on the date of such transaction--
       ``(i) an organization manager, or
       ``(ii) an individual (other than an organization manager) 
     in a position to exercise substantial influence over the 
     affairs of the organization,
       ``(B) a member of the family of an individual described in 
     subparagraph (A), and
       ``(C) a 35-percent controlled entity.
       ``(2) Organization manager.--The term `organization 
     manager' means, with respect to any applicable tax-exempt 
     organization, any officer, director, or trustee of such 
     organization (or any individual having powers or 
     responsibilities similar to those of officers, directors, or 
     trustees of the organization).
       ``(3) 35-percent controlled entity.--
       ``(A) In general.--The term `35-percent controlled entity' 
     means--
       ``(i) a corporation in which persons described in 
     subparagraph (A) or (B) of paragraph (1) own more than 35 
     percent of the total combined voting power,
       ``(ii) a partnership in which such persons own more than 35 
     percent of the profits interest, and
       ``(iii) a trust or estate in which such persons own more 
     than 35 percent of the beneficial interest.
       ``(B) Constructive ownership rules.--Rules similar to the 
     rules of paragraphs (3) and (4) of section 4946(a) shall 
     apply for purposes of this paragraph.
       ``(4) Family members.--The members of an individual's 
     family shall be determined under section 4946(d); except that 
     such members also shall include the brothers and sisters 
     (whether by the whole or half blood) of the individual and 
     their spouses.
       ``(5) Taxable period.--The term `taxable period' means, 
     with respect to any excess benefit transaction, the period 
     beginning with the date on which the transaction occurs and 
     ending on the earliest of--
       ``(A) the date of mailing a notice of deficiency under 
     section 6212 with respect to the tax imposed by subsection 
     (a)(1), or
       ``(B) the date on which the tax imposed by subsection 
     (a)(1) is assessed.

[[Page 1713]]

       ``(6) Correction.--The terms `correction' and `correct' 
     mean, with respect to any excess benefit transaction, undoing 
     the excess benefit to the extent possible, and where fully 
     undoing the excess benefit is not possible, such additional 
     corrective action as is prescribed by the Secretary by 
     regulations.
       ``(g) Treatment of Previously Exempt Organizations.--
       ``(1) In general.--For purposes of this section, the status 
     of any organization as an applicable tax-exempt organization 
     shall be terminated only if--
       ``(A)(i) such organization notifies the Secretary (at such 
     time and in such manner as the Secretary may by regulations 
     prescribe) of its intent to accomplish such termination, or
       ``(ii) there is a final determination by the Secretary that 
     such status has terminated, and
       ``(B)(i) such organization pays the tax imposed by 
     paragraph (2) (or any portion not abated pursuant to 
     paragraph (3)), or
       ``(ii) the entire amount of such tax is abated pursuant to 
     paragraph (3).
       ``(2) Imposition of tax.--There is hereby imposed on each 
     organization referred to in paragraph (1) a tax equal to the 
     lesser of--
       ``(A) the amount which the organization substantiates by 
     adequate records or other corroborating evidence as the 
     aggregate tax benefit resulting from its exemption from tax 
     under section 501(a), or
       ``(B) the value of the net assets of such organization.
       ``(3) Abatement of tax.--The Secretary may abate the unpaid 
     portion of the assessment of any tax imposed by paragraph 
     (2), or any liability in respect thereof, if the applicable 
     tax-exempt organization distributes all of its net assets to 
     1 or more organizations each of which has been in existence, 
     and described in section 501(c)(3), for a continuous period 
     of at least 60 calendar months. If the distributing 
     organization is described in section 501(c)(4), the preceding 
     sentence shall be applied by treating the reference to 
     section 501(c)(3) as including a reference to section 
     501(c)(4).
       ``(4) Certain rules made applicable.--Rules similar to the 
     rules of subsections (d), (e), and (f) of section 507 shall 
     apply for purposes of this subsection.''
       (b) Application of Private Inurement Rule to Tax-Exempt 
     Organizations Described in Section 501(c)(4).--Paragraph (4) 
     of section 501(c) is amended by inserting ``(A)'' after 
     ``(4)'' and by adding at the end the following:
       ``(B) Subparagraph (A) shall not apply to an entity unless 
     no part of the net earnings of such entity inures to the 
     benefit of any private shareholder or individual.''
       (c) Technical and Conforming Amendments.--
       (1) Subsection (e) of section 4955 is amended--
       (A) by striking ``Section 4945'' in the heading and 
     inserting ``Sections 4945 and 4958'', and
       (B) by inserting before the period ``or an excess benefit 
     for purposes of section 4958''.
       (2) Subsections (a), (b), and (c) of section 4963 are each 
     amended by inserting ``4958,'' after ``4955,''.
       (3) Subsection (e) of section 6213 is amended by inserting 
     ``4958 (relating to private excess benefit),'' before 
     ``4971''.
       (4) Paragraphs (2) and (3) of section 7422(g) are each 
     amended by inserting ``4958,'' after ``4955,''.
       (5) Subsection (b) of section 7454 is amended by inserting 
     ``or whether an organization manager (as defined in section 
     4958(f)(2)) has `knowingly' participated in an excess benefit 
     transaction (as defined in section 4958(c)),'' after 
     ``section 4912(b),''.
       (6) The table of subchapters for chapter 42 is amended by 
     striking the last item and inserting the following:

``Subchapter D. Failure by certain charitable organizations to meet 
              certain qualification requirements.
``Subchapter E. Abatement of first and second tier taxes in certain 
              cases.''
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section (other 
     than subsection (b)) shall apply to excess benefit 
     transactions occurring on or after September 14, 1995.
       (2) Binding contracts for personal services.--The 
     amendments referred to in paragraph (1) shall not apply to 
     any transaction pursuant to any written contract for the 
     performance of personal services which was binding on 
     September 13, 1995, and at all times thereafter before such 
     transaction occurred.
       (3) Application of private inurement rule to tax-exempt 
     organizations described in section 501(c)(4).--
       (A) In general.--The amendment made by subsection (b) shall 
     apply to inurement occurring on or after September 14, 1995.
       (B) Binding contracts.--The amendment made by subsection 
     (b) shall not apply to any inurement occurring before January 
     1, 1997, pursuant to a written contract which was binding on 
     September 13, 1995, and at all times thereafter before such 
     inurement occurred.

     SEC. 13647. REPORTING OF CERTAIN EXCISE TAXES AND OTHER 
                   INFORMATION.

       (a) Reporting by Organizations Described in Section 
     501(c)(3).--Subsection (b) of section 6033 (relating to 
     certain organizations described in section 501(c)(3)) is 
     amended by striking ``and'' at the end of paragraph (9), by 
     redesignating paragraph (10) as paragraph (14), and by 
     inserting after paragraph (9) the following new paragraphs:
       ``(10) the respective amounts (if any) of the taxes paid by 
     the organization during the taxable year under the following 
     provisions:
       ``(A) section 4911 (relating to tax on excess expenditures 
     to influence legislation),
       ``(B) section 4912 (relating to tax on disqualifying 
     lobbying expenditures of certain organizations), and
       ``(C) section 4955 (relating to taxes on political 
     expenditures of section 501(c)(3) organizations),
       ``(11) the respective amounts (if any) of the taxes paid by 
     the organization or any disqualified person during the 
     taxable year under section 4958 (relating to taxes on private 
     excess benefit from certain charitable organizations),
       ``(12) such information as the Secretary may require with 
     respect to any excess benefit transaction (as defined in 
     section 4958),
       ``(13) the name of each disqualified person who receives an 
     economic benefit from an applicable tax-exempt organization 
     (as defined in section 4958(e)) and such other information as 
     the Secretary may prescribe with respect to such benefit, 
     and''.
       (b) Organizations Described in Section 501(c)(4).--Section 
     6033 is amended by redesignating subsection (f) as subsection 
     (g) and by inserting after subsection (e) the following new 
     subsection:
       ``(f) Certain Organizations Described in Section 
     501(c)(4).--Every organization described in section 501(c)(4) 
     which is subject to the requirements of subsection (a) shall 
     include on the return required under subsection (a) the 
     information referred to in paragraphs (10), (11), (12) and 
     (13) of subsection (b) with respect to such organization.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns for taxable years beginning after the 
     date of the enactment of this Act.

     SEC. 13648. EXEMPT ORGANIZATIONS REQUIRED TO PROVIDE COPY OF 
                   RETURN.

       (a) General Rule.--
       (1) Subparagraph (A) of section 6104(e)(1) (relating to 
     public inspection of annual returns) is amended to read as 
     follows:
       ``(A) In general.--During the 3-year period beginning on 
     the filing date--
       ``(i) a copy of the annual return filed under section 6033 
     (relating to returns by exempt organizations) by any 
     organization to which this paragraph applies shall be made 
     available by such organization for inspection during regular 
     business hours by any individual at the principal office of 
     such organization and, if such organization regularly 
     maintains 1 or more regional or district offices having 3 or 
     more employees, at each such regional or district office, and
       ``(ii) upon request of an individual made at such principal 
     office or such a regional or district office, a copy of such 
     annual return shall be provided to such individual without 
     charge other than a reasonable fee for any reproduction and 
     mailing costs.
     If the request under clause (ii) is made in person, such copy 
     shall be provided immediately and, if made other than in 
     person, shall be provided within 30 days.''
       (2) Clause (ii) of section 6104(e)(2)(A) is amended by 
     inserting before the period at the end thereof the following: 
     ``(and, upon request of an individual made at such principal 
     office or such a regional or district office, a copy of the 
     material required to be available for inspection under this 
     subparagraph shall be provided (in accordance with the last 
     sentence of paragraph (1)(A)) to such individual without 
     charge other than a reasonable fee for any reproduction and 
     mailing costs)''.
       (3) Subsection (e) of section 6104 is amended by adding at 
     the end the following new paragraph:
       ``(3) Limitation.--Paragraph (1)(A)(ii) (and the 
     corresponding provision of paragraph (2)) shall not apply to 
     any request if the Secretary determines, upon application by 
     an organization, that such request is part of a harassment 
     campaign and that compliance with such request is not in the 
     public interest.''
       (b) Advertisements Etc., Required To Disclose Availability 
     of Annual Return.--
       (1) Paragraph (1) of section 6104(e) is amended by adding 
     at the end thereof the following new subparagraph:
       ``(E) Advertisements etc., required to disclose 
     availability of annual return.--In the case of an 
     organization required by subparagraph (A) to provide a copy 
     of its annual return under section 6033 upon request to 
     individuals, each written advertisement or solicitation by 
     (or on behalf of) such organization shall contain an express 
     statement (in a conspicuous and easily recognizable format) 
     that such return shall be provided to individuals upon 
     request.''
       (2) Section 6716, as added by section 13649 of this title, 
     is amended--
       (A) by striking ``section 6116'' each place it appears and 
     inserting ``section 6116 or section 6104(e)(1)(E)'',
       (B) by striking ``$1,000'' in subsection (a) and inserting 
     ``$1,000 ($100 in the case of a failure to meet the 
     requirements of 6104(e)(1)(E))'', and
       (C) by inserting before the period at the end of the 
     section heading ``; failure of certain exempt organizations 
     to disclose availability of annual return''.
       (3) Subparagraph (C) of section 6652(c)(1) is amended by 
     striking ``(e)(1)'' and inserting ``(e)(1) (other than 
     subparagraph (E))'', by striking ``$10'' and inserting 
     ``$20'', and by striking ``$5,000'' and inserting 
     ``$10,000''.

[[Page 1714]]

       (4) Subparagraph (D) of section 6652(c)(1) is amended by 
     striking ``$10'' and inserting ``$20''.
       (5) The item relating to section 6716 in the table of 
     sections for part I of subchapter B of chapter 68 is amended 
     by inserting before the period ``; failure of certain exempt 
     organizations to disclose availability of annual return''.
       (c) Increase in Penalty for Willful Failure To Allow Public 
     Inspection of Certain Returns, Etc.--Section 6685 is amended 
     by striking ``$1,000'' and inserting ``$5,000''.
       (d) Copies of Returns of Exempt Organizations Available 
     From Secretary in Certain Cases.--Subsection (b) of section 
     6104 is amended to read as follows:
       ``(b) Inspection of Annual Information Returns.--
       ``(1) In general.--The information required to be furnished 
     by sections 6033, 6034, and 6058, together with the names and 
     addresses of such organizations and trusts, shall be made 
     available to the public at such times and in such places as 
     the Secretary may prescribe. Nothing in this subsection shall 
     authorize the Secretary to disclose the name or address of 
     any contributor to any organization or trust (other than a 
     private foundation, as defined in section 509(a)) which is 
     required to furnish such information.
       ``(2) Copies provided of returns filed under section 6033 
     and applications filed under section 508 in certain cases.--
     The Secretary shall provide copies of returns filed under 
     section 6033 and applications for exemption filed under 
     section 508 by any organization to which subsection (d) or 
     (e)(1) applies to any person who agrees (subject to such 
     conditions as the Secretary shall prescribe)--
       ``(A) to accept broad categories of such returns and 
     applications, and
       ``(B) to provide electronic access to the provided returns 
     and applications on an electronic network available to the 
     general public.
     Such copies shall be provided without charge if such person 
     agrees to provide such access without charge. Otherwise, the 
     Secretary may impose a reasonable fee for any reproduction 
     and mailing costs.
       ``(3) Returns and applications filed before 1996.--
     Paragraph (2) shall apply to returns and applications filed 
     before January 1, 1996, only to the extent provided by the 
     Secretary.''
       (e) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1996 (or, if later, the 90th 
     day after the date of the enactment of this Act).

     SEC. 13649. CERTAIN ORGANIZATIONS REQUIRED TO DISCLOSE 
                   NONEXEMPT STATUS.

       (a) General Rule.--Subchapter B of chapter 61 (relating to 
     miscellaneous provisions) is amended by redesignating section 
     6116 as section 6117 and by inserting after section 6115 the 
     following new section:

     ``SEC. 6116. CERTAIN ORGANIZATIONS REQUIRED TO DISCLOSE 
                   NONEXEMPT STATUS.

       ``(a) In General.--If--
       ``(1) in an advertisement or solicitation by (or on behalf 
     of) an organization, such organization is referred to as 
     being nonprofit, and
       ``(2) such organization is not exempt from tax under 
     subtitle A,
     such advertisement or solicitation shall contain an express 
     statement (in a conspicuous and easily recognizable format) 
     that such organization is not exempt from Federal income 
     taxes.
       ``(b) Cross Reference.--

  ``For penalties for violation of subsection (a), see section 6716.''
       (b) Penalty.--Part I of subchapter B of chapter 68 is 
     amended by adding at the end thereof the following new 
     section:

     ``SEC. 6716. FAILURE TO DISCLOSE NONEXEMPT STATUS.

       ``(a) Imposition of Penalty.--If there is a failure to meet 
     the requirements of section 6116 with respect to any 
     advertisement or solicitation by (or on behalf of) an 
     organization, such organization shall pay a penalty of $1,000 
     for each day on which such a failure occurred. The maximum 
     penalty imposed under this subsection on failures by any 
     organization during any calendar year shall not exceed 
     $10,000.
       ``(b) Reasonable Cause Exemption.--No penalty shall be 
     imposed under this section with respect to any failure if it 
     is shown that such failure is due to reasonable cause.
       ``(c) $10,000 Limitation Not To Apply Where Intentional 
     Disregard.--If any failure to which subsection (a) applies is 
     due to intentional disregard of the requirements of section 
     6116--
       ``(1) the penalty under subsection (a) for the day on which 
     failure occurred shall be the greater of--
       ``(A) $1,000, or
       ``(B) 50 percent of the aggregate cost of the 
     advertisements and solicitations which occurred on such day 
     and with respect to which there was such failure,
       ``(2) the $10,000 limitation of subsection (a) shall not 
     apply to any penalty under subsection (a) for the day on 
     which such failure occurred, and
       ``(3) such penalty shall not be taken into account in 
     applying such limitation to other penalties under subsection 
     (a).
       ``(d) Day on Which Failure Occurs.--For purposes of this 
     section, rules similar to the rules of section 6710(d) shall 
     apply in determining the day on which any failure occurs.''
       (c) Clerical Amendments.--
       (1) The table of sections for subchapter B of chapter 61 is 
     amended by striking the item relating to section 6116 and 
     inserting the following:

  ``Sec. 6116. Certain organizations required to disclose nonexempt 
              status.
  ``Sec. 6117. Cross reference.''
       (2) The table of sections of part I of subchapter B of 
     chapter 68 is amended by adding at the end thereof the 
     following new item:

  ``Sec. 6716. Failure to disclose nonexempt status.''
       (d) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1996 (or, if later, the 90th 
     day after the date of the enactment of this Act).

     SEC. 13650. INCREASE IN PENALTIES ON EXEMPT ORGANIZATIONS FOR 
                   FAILURE TO FILE COMPLETE AND TIMELY ANNUAL 
                   RETURNS.

       (a) In General.--Subparagraph (A) of section 6652(c)(1) 
     (relating to annual returns under section 6033) is amended by 
     striking ``$10'' and inserting ``$20'' and by striking 
     ``$5,000'' and inserting ``$10,000''.
       (b) Larger Penalty on Organizations Having Gross Receipts 
     in Excess of $1,000,000.--Subparagraph (A) of section 
     6652(c)(1) is amended by adding at the end the following new 
     sentence: ``In the case of an organization having gross 
     receipts exceeding $1,000,000 for any year, with respect to 
     the return required under section 6033 for such year, the 
     first sentence of this subparagraph shall be applied by 
     substituting `$100' for `$20' and, in lieu of applying the 
     second sentence of this subparagraph, the maximum penalty 
     under this subparagraph shall not exceed $50,000.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns for taxable years ending on or after 
     December 31, 1995.

     SEC. 13651. STUDIES.

       (a) In General.--The Secretary of the Treasury or his 
     delegate shall conduct a study of--
       (1) whether the statutory prohibition on private inurement, 
     and the provisions of section 4958 of the Internal Revenue 
     Code of 1986 (as added by this part), should apply to other 
     tax-exempt organizations,
       (2) whether State officials responsible for overseeing 
     charitable organizations should be provided with Federal tax 
     information in addition to the information available under 
     section 6103 of such Code for purposes of such oversight, and
       (3) whether the return required to be filed by section 6033 
     of such Code should be modified to assure the return's 
     utility to such Secretary and to the public and to reduce any 
     unnecessary reporting burdens.
       (b) Report.--Not later than January 1, 1997, the report of 
     such study shall be submitted to the Committee on Ways and 
     Means of the House of Representatives and the Committee on 
     Finance of the Senate.
           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.

       (a) Repeal of Credit for Individuals Without Children.--
     Subparagraph (A) of section 32(c)(1) (defining eligible 
     individual) is amended to read as follows:
       ``(A) In general.--The term `eligible individual' means any 
     individual who has a qualifying child for the taxable year.''
       (b) Modifications to Phaseout.--
       (1) Subsection (b) of section 32 is amended to read as 
     follows:
       ``(b) Percentages.--
       ``(1) In general.--The credit percentage and the phaseout 
     percentage shall be determined as follows:

 ``In the case of an eligible       The credit          The phaseout
       individual with:           percentage is:       percentage is:

1 qualifying child............  34................           18
2 or more qualifying children.  40................           23

       
       ``(2) Amounts.--The earned income amount and the phaseout 
     amount shall be determined as follows:

 ``In the case of an eligible    The earned income   The phaseout amount
       individual with:             amount is:               is:

1 qualifying child............  $6,340............         $11,630
2 or more qualifying children.  $8,910............       $11,630.''

       (2) Subsection (j) of section 32 is amended--
       (A) by striking ``subsection (b)(2)(A)'' and inserting 
     ``subsection (b)(2)'',
       (B) by striking ``1994'' and inserting ``1996'', and
       (C) by striking ``1993'' and inserting ``1995''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 13702. MODIFICATION OF ADJUSTED GROSS INCOME USED FOR 
                   PHASEOUT.

       (a) In General.--Subsections (a)(2)(B), (c)(1)(C), and 
     (f)(2)(B) of section 32 are each amended by striking 
     ``adjusted gross income'' each place it appears and inserting 
     ``modified adjusted gross income''.
       (b) Modified Adjusted Gross Income.--Subsection (c) of 
     section 32 is amended by adding at the end the following new 
     paragraph:

[[Page 1715]]

       ``(5) Modified adjusted gross income.--For purposes of this 
     section, the term `modified adjusted gross income' means 
     adjusted gross income increased by--
       ``(A) any amount received as a pension or annuity, and any 
     distribution or payment received from an individual 
     retirement plan, by the taxpayer during the taxable year to 
     the extent not otherwise included in gross income, and
       ``(B) the social security benefits (as defined in section 
     86(d)) received by the taxpayer during the taxable year to 
     the extent not included in gross income.
     Any amount which is not includible in gross income by reason 
     of paragraph (3), (4), or (5) of section 408(d) or section 
     402(c), 403(a)(4), 403(b)(8), or 457(e)(10) shall be treated 
     as not described in subparagraph (A).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 13703. EARNED INCOME TAX CREDIT DENIED TO INDIVIDUALS 
                   NOT AUTHORIZED TO BE EMPLOYED IN THE UNITED 
                   STATES.

       (a) In General.--Section 32(c)(1) (relating to individuals 
     eligible to claim the earned income tax credit) is amended by 
     adding at the end the following new subparagraph:
       ``(F) Identification number requirement.--The term 
     `eligible individual' does not include any individual who 
     does not include on the return of tax for the taxable year--
       ``(i) such individual's taxpayer identification number, and
       ``(ii) if the individual is married (within the meaning of 
     section 7703), the taxpayer identification number of such 
     individual's spouse.''
       (b) Special Identification Number.--Section 32 is amended 
     by adding at the end the following new subsection:
       ``(l) Identification Numbers.--Solely for purposes of 
     subsections (c)(1)(F) and (c)(3)(D), a taxpayer 
     identification number means a social security number issued 
     to an individual by the Social Security Administration (other 
     than a social security number issued pursuant to clause (II) 
     (or that portion of clause (III) that relates to clause (II)) 
     of section 205(c)(2)(B)(i) of the Social Security Act).''
       (c) Extension of Procedures Applicable to Mathematical or 
     Clerical Errors.--Section 6213(g)(2) (relating to the 
     definition of mathematical or clerical errors) is amended by 
     striking ``and' at the end of subparagraph (D), by striking 
     the period at the end of subparagraph (E) and inserting a 
     comma, and by inserting after subparagraph (E) the following 
     new subparagraphs:
       ``(F) an omission of a correct taxpayer identification 
     number required under section 32 (relating to the earned 
     income tax credit) to be included on a return, and
       ``(G) an entry on a return claiming the credit under 
     section 32 with respect to net earnings from self-employment 
     described in section 32(c)(2)(A) to the extent the tax 
     imposed by section 1401 (relating to self-employment tax) on 
     such net earnings has not been paid.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.
               Subtitle H--Increase in Public Debt Limit

     SEC. 13801. INCREASE IN PUBLIC DEBT LIMIT.

       Subsection (b) of section 3101 of title 31, United States 
     Code, is amended by striking the dollar amount contained 
     therein and inserting ``$5,500,000,000,000''.
            Subtitle I--Coal Industry Retiree Health Equity

     SEC. 13901. REPEAL OF REACHBACK PROVISIONS OF COAL INDUSTRY 
                   HEALTH BENEFIT SYSTEM.

       (a) Amendments Related to Definitions.--
       (1) Agreements.--
       (A) In general.--Paragraph (1) of section 9701(b) (relating 
     to agreements) is amended to read as follows:
       ``(1) Coal wage agreements.--
       ``(A) 1988 agreement.--The term `1988 agreement' means the 
     collective bargaining agreement between the settlors which 
     became effective on February 1, 1988.
       ``(B) Coal wage agreement.--The term `coal wage agreement' 
     means any predecessor to the 1988 agreement.''
       (B) Conforming amendment.--Section 9701(b) is amended by 
     striking paragraph (3).
       (2) Operators.--
       (A) Signatory operator.--Paragraph (1) of section 9701(c) 
     (relating to operators) is amended to read as follows:
       ``(1) Signatory operator.--The term `signatory operator' 
     means a 1988 agreement operator.''
       (B) 1988 agreement operator.--Paragraph (3) of section 
     9701(c) is amended to read as follows:
       ``(3) 1988 agreement operator.--The term `1988 agreement 
     operator' means--
       ``(A) an operator which was a signatory to the 1988 
     agreement, or
       ``(B) a person in business which, during the term of the 
     1988 agreement, was a signatory to an agreement (other than 
     the National Coal Mine Construction Agreement and the Coal 
     Haulers' Agreement) containing pension and health care 
     contribution and benefit provisions which are the same as 
     those contained in the 1988 agreement.
     Such term shall not include any operator who was assessed, 
     and did pay the full amount of, contractual withdrawal 
     liability to the 1950 UMWA Benefit Plan, the 1974 UMWA 
     Benefit Plan, or the Combined Fund.''
       (C) Last signatory operator.--Section 9701(c)(4) is amended 
     by inserting ``bituminous'' before ``coal'' each place it 
     appears.
       (b) Combined Benefit Fund.--Section 9702(b)(1) is amended 
     to read as follows:
       ``(b) Board of Trustees.--
       ``(1) In general.--For purposes of subsection (a), the 
     board of trustees for the Combined Fund shall be appointed as 
     follows:
       ``(A) two individuals who represent employers in the coal 
     mining industry shall be designated by the BCOA;
       ``(B) two individuals designated by the United Mine Workers 
     of America; and
       ``(C) three persons selected by the persons appointed under 
     subparagraphs (A) and (B).''
       (c) Assignment of Eligible Beneficiaries.--Subsection (a) 
     of section 9706 is amended by adding at the end the following 
     new flush sentence:
     ``For purposes of assessing premiums on or after October 1, 
     1995, under this chapter, the Commissioner of Social Security 
     shall, effective October 1, 1995, revoke all assignments 
     previously made (and shall make no further assignments and 
     shall terminate all unpaid liabilities for any pending 
     assignments) to all persons other than signatory operators 
     and shall deem each affected coal industry retiree who is an 
     eligible beneficiary to be an unassigned beneficiary under 
     section 9706. The preceding sentence shall not be construed 
     to prevent any transfer, or any treatment of a successor as 
     an assigned operator, under subsection (b)(2).''
       (d) 1992 UMWA Benefit Plan.--Section 9712(d) is amended--
       (1) by striking paragraph (3) and by redesignating 
     paragraphs (4), (5), and (6) as paragraphs (3), (4), and (5), 
     respectively, and
       (2) by striking ``or last signatory operator described in 
     paragraph (3),'' in paragraph (3) (as redesignated under 
     paragraph (1)).
       (e) Information Requirements.--
       (1) In general.--Subsection (h) of section 9704 is amended 
     by adding at the end the following new paragraph:
       ``(2) Information to contributors.--
       ``(A) In general.--The trustees of the Combined Fund shall, 
     within 30 days of a written request, make available to any 
     person required to make contributions to the Combined Fund, 
     or their agent--
       ``(i) all documents which reflect its financial and 
     operational status, including documents under which it is 
     operated, and
       ``(ii) all documents prepared at the request of the 
     trustees or staff of the Combined Fund which form the basis 
     for any of its actions or reports, including the eligibility 
     of participants in predecessor plans.
       ``(B) Fees.--The trustees may charge reasonable fees (not 
     in excess of actual expenses) for providing documents under 
     this paragraph.''
       (2) Conforming amendment.--Subsection (h) of section 9704 
     is amended by striking ``(h) Information.--The'' and 
     inserting the following:
       ``(h) Information.--
       ``(1) Information to secretary.--The''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after September 30, 1995.
       TITLE XIV--COMMITTEE ON WAYS AND MEANS--TAX SIMPLIFICATION

     SEC. 14001. SHORT TITLE; AMENDMENT TO 1986 CODE.

       (a) Short Title.--This title may be cited as the ``Tax 
     Simplification Act of 1995''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this title an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.
       (c) Table of Contents.--The table of contents for this 
     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.
Sec. 14116. Treatment of traveling expenses of certain Federal 
              employees engaged in criminal investigations.

[[Page 1716]]

                   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.
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).
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.
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.

[[Page 1717]]

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.
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.

                 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.
             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.

       (a) General Rule.--
       (1) Section 1034 (relating to rollover of gain on sale of 
     principal residence) is amended by striking subsection (d).
       (2) Paragraph (4) of section 1034(c) is amended to read as 
     follows:
       ``(4) If the taxpayer, during the period described in 
     subsection (a), purchases more than 1 residence which is used 
     by him as his principal residence at some time within 2 years 
     after the date of the sale of the old residence, only the 
     first of such residences so used by him after the date of 
     such sale shall constitute the new residence.''
       (3) Subsections (h)(1) and (k) of section 1034 are each 
     amended by striking ``(other than the 2 years referred to in 
     subsection (c)(4))''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to sales of old residences (within the meaning of 
     section 1034 of the Internal Revenue Code of 1986) after the 
     date of the enactment of this Act.

     SEC. 14102. SPECIAL RULES IN CASE OF DIVORCE.

       (a) In General.--Subsection (c) of section 1034 is amended 
     by adding at the end the following new paragraph:
       ``(5) If--
       ``(A) a residence is sold by an individual pursuant to a 
     divorce or marital separation, and
       ``(B) the taxpayer used such residence as his principal 
     residence at any time during the 2-year period ending on the 
     date of such sale,
     for purposes of this section, such residence shall be treated 
     as the taxpayer's principal residence at the time of such 
     sale.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to sales of old residences (within the meaning of 
     section 1034 of the Internal Revenue Code of 1986) after the 
     date of the enactment of this Act.

     SEC. 14103. ONE-TIME EXCLUSION OF GAIN FROM SALE OF PRINCIPAL 
                   RESIDENCE FOR CERTAIN SPOUSES.

       (a) In General.--Paragraph (2) of section 121(b) (relating 
     to one-time exclusion of gain from sale of principal 
     residence by individual who has attained age 55) is amended 
     by adding at the end the following new sentence: ``For 
     purposes of applying the preceding sentence to individuals 
     who are married to each other, an election by one individual 
     with respect to a sale or exchange occurring before the 
     marriage shall be disregarded for purposes of permitting an 
     election with respect to property owned and used by the other 
     individual as his principal residence throughout the 3-year 
     period ending on the date of the marriage.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply for purposes of determining whether an election 
     may be made under section 121 of the Internal Revenue Code of 
     1986 with respect to a sale or exchange occurring after 
     September 13, 1995.

                       PART II--OTHER PROVISIONS

     SEC. 14111. PAYMENT OF TAX BY COMMERCIALLY ACCEPTABLE MEANS.

       (a) General Rule.--Section 6311 is amended to read as 
     follows:

     ``SEC. 6311. PAYMENT OF TAX BY COMMERCIALLY ACCEPTABLE MEANS.

       ``(a) Authority To Receive.--It shall be lawful for the 
     Secretary to receive for internal revenue taxes (or in 
     payment for internal revenue stamps) any commercially 
     acceptable means that the Secretary deems appropriate to the 
     extent and under the conditions provided in regulations 
     prescribed by the Secretary.
       ``(b) Ultimate Liability.--If a check, money order, or 
     other method of payment, including payment by credit card, 
     debit card, or charge card so received is not duly paid, or 
     is paid and subsequently charged back to the Secretary, the 
     person by whom such check, or money order, or other method of 
     payment has been tendered shall remain liable for the payment 
     of the tax or for the stamps, and for all legal penalties and 
     additions, to the same extent as if such check, money order, 
     or other method of payment had not been tendered.
       ``(c) Liability of Banks and Others.--If any certified, 
     treasurer's, or cashier's check

[[Page 1718]]

     (or other guaranteed draft), or any money order, or any other 
     means of payment that has been guaranteed by a financial 
     institution (such as a credit card, debit card, or charge 
     card transaction which has been guaranteed expressly by a 
     financial institution) so received is not duly paid, the 
     United States shall, in addition to its right to exact 
     payment from the party originally indebted therefor, have a 
     lien for--
       ``(1) the amount of such check (or draft) upon all assets 
     of the financial institution on which drawn,
       ``(2) the amount of such money order upon all the assets of 
     the issuer thereof, or
       ``(3) the guaranteed amount of any other transaction upon 
     all the assets of the institution making such guarantee,
     and such amount shall be paid out of such assets in 
     preference to any other claims whatsoever against such 
     financial institution, issuer, or guaranteeing institution, 
     except the necessary costs and expenses of administration and 
     the reimbursement of the United States for the amount 
     expended in the redemption of the circulating notes of such 
     financial institution.
       ``(d) Payment by Other Means.--
       ``(1) Authority to prescribe regulations.--The Secretary 
     shall prescribe such regulations as the Secretary deems 
     necessary to receive payment by commercially acceptable 
     means, including regulations that--
       ``(A) specify which methods of payment by commercially 
     acceptable means will be acceptable,
       ``(B) specify when payment by such means will be considered 
     received,
       ``(C) identify types of nontax matters related to payment 
     by such means that are to be resolved by persons ultimately 
     liable for payment and financial intermediaries, without the 
     involvement of the Secretary, and
       ``(D) ensure that tax matters will be resolved by the 
     Secretary, without the involvement of financial 
     intermediaries.
       ``(2) Authority to enter into contracts.--Notwithstanding 
     section 3718(f) of title 31, United States Code, the 
     Secretary is authorized to enter into contracts to obtain 
     services related to receiving payment by other means where 
     cost beneficial to the Government. The Secretary may not pay 
     any fee or provide any other consideration under such 
     contracts.
       ``(3) Special provisions for use of credit cards.--If use 
     of credit cards is accepted as a method of payment of taxes 
     pursuant to subsection (a)--
       ``(A) a payment of internal revenue taxes (or a payment for 
     internal revenue stamps) by a person by use of a credit card 
     shall not be subject to section 161 of the Truth-in-Lending 
     Act (15 U.S.C. 1666), or to any similar provisions of State 
     law, if the error alleged by the person is an error relating 
     to the underlying tax liability, rather than an error 
     relating to the credit card account such as a computational 
     error or numerical transposition in the credit card 
     transaction or an issue as to whether the person authorized 
     payment by use of the credit card,
       ``(B) a payment of internal revenue taxes (or a payment for 
     internal revenue stamps) shall not be subject to section 170 
     of the Truth-in-Lending Act (15 U.S.C. 1666i), or to any 
     similar provisions of State law,
       ``(C) a payment of internal revenue taxes (or a payment for 
     internal revenue stamps) by a person by use of a debit card 
     shall not be subject to section 908 of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693f), or to any similar provisions 
     of State law, if the error alleged by the person is an error 
     relating to the underlying tax liability, rather than an 
     error relating to the debit card account such as a 
     computational error or numerical transposition in the debit 
     card transaction or an issue as to whether the person 
     authorized payment by use of the debit card,
       ``(D) the term `creditor' under section 103(f) of the 
     Truth-in-Lending Act (15 U.S.C. 1602(f)) shall not include 
     the Secretary with respect to credit card transactions in 
     payment of internal revenue taxes (or payment for internal 
     revenue stamps), and
       ``(E) notwithstanding any other provision of law to the 
     contrary, in the case of payment made by credit card or debit 
     card transaction of an amount owed to a person as the result 
     of the correction of an error under section 161 of the Truth-
     in-Lending Act (15 U.S.C. 1666) or section 908 of the 
     Electronic Fund Transfer Act (15 U.S.C. 1693f), the Secretary 
     is authorized to provide such amount to such person as a 
     credit to that person's credit card or debit card account 
     through the applicable credit card or debit card system.
       ``(e) Confidentiality of Information.--
       ``(1) In general.--Except as otherwise authorized by this 
     subsection, no person may use or disclose any information 
     relating to credit or debit card transactions obtained 
     pursuant to section 6103(k)(8) other than for purposes 
     directly related to the processing of such transactions, or 
     the billing or collection of amounts charged or debited 
     pursuant thereto.
       ``(2) Exceptions.--
       ``(A) Debit or credit card issuers or others acting on 
     behalf of such issuers may also use and disclose such 
     information for purposes directly related to servicing an 
     issuer's accounts.
       ``(B) Debit or credit card issuers or others directly 
     involved in the processing of credit or debit card 
     transactions or the billing or collection of amounts charged 
     or debited thereto may also use and disclose such information 
     for purposes directly related to--
       ``(i) statistical risk and profitability assessment;
       ``(ii) transferring receivables, accounts, or interest 
     therein;
       ``(iii) auditing the account information;
       ``(iv) complying with Federal, State, or local law; and
       ``(v) properly authorized civil, criminal, or regulatory 
     investigation by Federal, State, or local authorities.
       ``(3) Procedures.--Use and disclosure of information under 
     this paragraph shall be made only to the extent authorized by 
     written procedures promulgated by the Secretary.
       ``(4) Cross reference.--

  ``For provision providing for civil damages for violation of 
paragraph (1), see section 7431.''
       (b) Clerical Amendment.--The table of sections for 
     subchapter B of chapter 64 is amended by striking the item 
     relating to section 6311 and inserting the following:

``Sec. 6311. Payment of tax by commercially acceptable means.''
       (c) Amendments to Sections 6103 and 7431 With Respect to 
     Disclosure Authorization.--
       (1) Subsection (k) of section 6103 (relating to 
     confidentiality and disclosure of returns and return 
     information) is amended by adding at the end the following 
     new paragraph:
       ``(8) Disclosure of information to administer section 
     6311.--The Secretary may disclose returns or return 
     information to financial institutions and others to the 
     extent the Secretary deems necessary for the administration 
     of section 6311. Disclosures of information for purposes 
     other than to accept payments by checks or money orders shall 
     be made only to the extent authorized by written procedures 
     promulgated by the Secretary.''
       (2) Section 7431 (relating to civil damages for 
     unauthorized disclosure of returns and return information) is 
     amended by adding at the end the following new subsection:
       ``(g) Special Rule for Information Obtained Under Section 
     6103(k)(8).--For purposes of this section, any reference to 
     section 6103 shall be treated as including a reference to 
     section 6311(e).''
       (3) Section 6103(p)(3)(A) is amended by striking ``or (6)'' 
     and inserting ``(6), or (8)''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the day 9 months after the date of the 
     enactment of this Act.

     SEC. 14112. SIMPLIFIED FOREIGN TAX CREDIT LIMITATION FOR 
                   INDIVIDUALS.

       (a) General Rule.--Section 904 (relating to limitations on 
     foreign tax credit) is amended by redesignating subsection 
     (j) as subsection (k) and by inserting after subsection (i) 
     the following new subsection:
       ``(j) Simplified Limitation for Certain Individuals.--
       ``(1) In general.--In the case of an individual to whom 
     this subsection applies for any taxable year, the limitation 
     of subsection (a) shall be the lesser of--
       ``(A) 25 percent of such individual's gross income for the 
     taxable year from sources without the United States, or
       ``(B) the amount of the creditable foreign taxes paid or 
     accrued by the individual during the taxable year (determined 
     without regard to subsection (c)).
     No taxes paid or accrued by the individual during such 
     taxable year may be deemed paid or accrued in any other 
     taxable year under subsection (c).
       ``(2) Individuals to whom subsection applies.--This 
     subsection shall apply to an individual for any taxable year 
     if--
       ``(A) the entire amount of such individual's gross income 
     for the taxable year from sources without the United States 
     consists of qualified passive income,
       ``(B) the amount of the creditable foreign taxes paid or 
     accrued by the individual during the taxable year does not 
     exceed $200 ($400 in the case of a joint return), and
       ``(C) such individual elects to have this subsection apply 
     for the taxable year.
       ``(3) Definitions.--For purposes of this subsection--
       ``(A) Qualified passive income.--The term `qualified 
     passive income' means any item of gross income if--
       ``(i) such item of income is passive income (as defined in 
     subsection (d)(2)(A) without regard to clause (iii) thereof), 
     and
       ``(ii) such item of income is shown on a payee statement 
     furnished to the individual.
       ``(B) Creditable foreign taxes.--The term `creditable 
     foreign taxes' means any taxes for which a credit is 
     allowable under section 901; except that such term shall not 
     include any tax unless such tax is shown on a payee statement 
     furnished to such individual.
       ``(C) Payee statement.--The term `payee statement' has the 
     meaning given to such term by section 6724(d)(2).
       ``(D) Estates and trusts not eligible.--This subsection 
     shall not apply to any estate or trust.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14113. TREATMENT OF PERSONAL TRANSACTIONS BY INDIVIDUALS 
                   UNDER FOREIGN CURRENCY RULES.

       (a) General Rule.--Subsection (e) of section 988 (relating 
     to application to individuals) is amended to read as follows:
       ``(e) Application to Individuals.--
       ``(1) In general.--The preceding provisions of this section 
     shall not apply to any section 988 transaction entered into 
     by an individual which is a personal transaction.

[[Page 1719]]

       ``(2) Exclusion for certain personal transactions.--If--
       ``(A) nonfunctional currency is disposed of by an 
     individual in any transaction, and
       ``(B) such transaction is a personal transaction,
     no gain shall be recognized for purposes of this subtitle by 
     reason of changes in exchange rates after such currency was 
     acquired by such individual and before such disposition. The 
     preceding sentence shall not apply if the gain which would 
     otherwise be recognized exceeds $200.
       ``(3) Personal transactions.--For purposes of this 
     subsection, the term `personal transaction' means any 
     transaction entered into by an individual, except that such 
     term shall not include any transaction to the extent that 
     expenses properly allocable to such transaction meet the 
     requirements of section 162 or 212 (other than that part of 
     section 212 dealing with expenses incurred in connection with 
     taxes).''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14114. TREATMENT OF CERTAIN REIMBURSED EXPENSES OF RURAL 
                   MAIL CARRIERS.

       (a) In General.--Section 162 (relating to trade or business 
     expenses) is amended by redesignating subsection (o) as 
     subsection (p) and by inserting after subsection (n) the 
     following new subsection:
       ``(o) Treatment of Certain Reimbursed Expenses of Rural 
     Mail Carriers.--
       ``(1) General rule.--In the case of any employee of the 
     United States Postal Service who performs services involving 
     the collection and delivery of mail on a rural route and who 
     receives qualified reimbursements for the expenses incurred 
     by such employee for the use of a vehicle in performing such 
     services--
       ``(A) the amount allowable as a deduction under this 
     chapter for the use of a vehicle in performing such services 
     shall be equal to the amount of such qualified 
     reimbursements; and
       ``(B) such qualified reimbursements shall be treated as 
     paid under a reimbursement or other expense allowance 
     arrangement for purposes of section 62(a)(2)(A) (and section 
     62(c) shall not apply to such qualified reimbursements).
       ``(2) Definition of qualified reimbursements.--For purposes 
     of this subsection, the term `qualified reimbursements' means 
     the amounts paid by the United States Postal Service to 
     employees as an equipment maintenance allowance under the 
     1991 collective bargaining agreement between the United 
     States Postal Service and the National Rural Letter Carriers' 
     Association. Amounts paid as an equipment maintenance 
     allowance by such Postal Service under later collective 
     bargaining agreements that supersede the 1991 agreement shall 
     be considered qualified reimbursements if such amounts do not 
     exceed the amounts that would have been paid under the 1991 
     agreement, adjusted for changes in the Consumer Price Index 
     (as defined in section 1(f)(5)) since 1991.''
       (b) Technical Amendment.--Section 6008 of the Technical and 
     Miscellaneous Revenue Act of 1988 is hereby repealed.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14115. EXCLUSION OF COMBAT PAY FROM WITHHOLDING LIMITED 
                   TO AMOUNT EXCLUDABLE FROM GROSS INCOME.

       (a) In General.--Paragraph (1) of section 3401(a) (defining 
     wages) is amended by inserting before the semicolon the 
     following: ``to the extent remuneration for such service is 
     excludable from gross income under such section''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to remuneration paid after December 31, 1995.

     SEC. 14116. TREATMENT OF TRAVELING EXPENSES OF CERTAIN 
                   FEDERAL EMPLOYEES ENGAGED IN CRIMINAL 
                   INVESTIGATIONS.

       (a) In General.--Subsection (a) of section 162 is amended 
     by adding at the end the following new sentence: ``The 
     preceding sentence shall not apply to any Federal employee 
     during any period for which such employee is certified by the 
     Attorney General (or the designee thereof) as traveling on 
     behalf of the United States in temporary duty status to 
     investigate, or provide support services for the 
     investigation of, a Federal crime.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.
                   Subtitle B--Pension Simplification

                 PART I--SIMPLIFIED DISTRIBUTION RULES

     SEC. 14201. REPEAL OF 5-YEAR INCOME AVERAGING FOR LUMP-SUM 
                   DISTRIBUTIONS.

       (a) In General.--Subsection (d) of section 402 (relating to 
     taxability of beneficiary of employees' trust) is amended by 
     adding at the end the following new paragraph:
       ``(8) Termination.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     this subsection shall not apply to any taxable year beginning 
     after December 31, 1995.
       ``(B) Retention of certain transition rules.--Subparagraph 
     (A) shall not apply to any distribution for which the 
     taxpayer elects the benefits of section 1122 (h)(3) or (h)(5) 
     of the Tax Reform Act of 1986.''

     SEC. 14202. REPEAL OF $5,000 EXCLUSION OF EMPLOYEES' DEATH 
                   BENEFITS.

       (a) In General.--Subsection (b) of section 101 is hereby 
     repealed.
       (b) Conforming Amendments.--
       (1) Subsection (c) of section 101 is amended by striking 
     ``subsection (a) or (b)'' and inserting ``subsection (a)''.
       (2) Sections 406(e) and 407(e) are each amended by striking 
     paragraph (2) and by redesignating paragraph (3) as paragraph 
     (2).
       (3) Section 7701(a)(20) is amended by striking ``, for the 
     purposes of applying the provisions of section 101(b) with 
     respect to employees' death benefits''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14203. SIMPLIFIED METHOD FOR TAXING ANNUITY 
                   DISTRIBUTIONS UNDER CERTAIN EMPLOYER PLANS.

       (a) General Rule.--Subsection (d) of section 72 (relating 
     to annuities; certain proceeds of endowment and life 
     insurance contracts) is amended to read as follows:
       ``(d) Special Rules for Qualified Employer Retirement 
     Plans.--
       ``(1) Simplified method of taxing annuity payments.--
       ``(A) In general.--In the case of any amount received as an 
     annuity under a qualified employer retirement plan--
       ``(i) subsection (b) shall not apply, and
       ``(ii) the investment in the contract shall be recovered as 
     provided in this paragraph.
       ``(B) Method of recovering investment in contract.--
       ``(i) In general.--Gross income shall not include so much 
     of any monthly annuity payment under a qualified employer 
     retirement plan as does not exceed the amount obtained by 
     dividing--

       ``(I) the investment in the contract (as of the annuity 
     starting date), by
       ``(II) the number of anticipated payments determined under 
     the table contained in clause (iii) (or, in the case of a 
     contract to which subsection (c)(3)(B) applies, the number of 
     monthly annuity payments under such contract).

       ``(ii) Certain rules made applicable.--Rules similar to the 
     rules of paragraphs (2) and (3) of subsection (b) shall apply 
     for purposes of this paragraph.
       ``(iii) Number of anticipated payments.--

         ``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  
       ``(C) Adjustment for refund feature not applicable.--For 
     purposes of this paragraph, investment in the contract shall 
     be determined under subsection (c)(1) without regard to 
     subsection (c)(2).
       ``(D) Special rule where lump sum paid in connection with 
     commencement of annuity payments.--If, in connection with the 
     commencement of annuity payments under any qualified employer 
     retirement plan, the taxpayer receives a lump sum payment--
       ``(i) such payment shall be taxable under subsection (e) as 
     if received before the annuity starting date, and
       ``(ii) the investment in the contract for purposes of this 
     paragraph shall be determined as if such payment had been so 
     received.
       ``(E) Exception.--This paragraph shall not apply in any 
     case where the primary annuitant has attained age 75 on the 
     annuity starting date unless there are fewer than 5 years of 
     guaranteed payments under the annuity.
       ``(F) Adjustment where annuity payments not on monthly 
     basis.--In any case where the annuity payments are not made 
     on a monthly basis, appropriate adjustments in the 
     application of this paragraph shall be made to take into 
     account the period on the basis of which such payments are 
     made.
       ``(G) Qualified employer retirement plan.--For purposes of 
     this paragraph, the term `qualified employer retirement plan' 
     means any plan or contract described in paragraph (1), (2), 
     or (3) of section 4974(c).
       ``(2) Treatment of employee contributions under defined 
     contribution plans.--For purposes of this section, employee 
     contributions (and any income allocable thereto) under a 
     defined contribution plan may be treated as a separate 
     contract.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply in cases where the annuity starting date is after 
     December 31, 1995.

     SEC. 14204. REQUIRED DISTRIBUTIONS.

       (a) In General.--Section 401(a)(9)(C) (defining required 
     beginning date) is amended to read as follows:
       ``(C) Required beginning date.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `required beginning date' means 
     April 1 of the calendar year following the later of--

       ``(I) the calendar year in which the employee attains age 
     70\1/2\, or
       ``(II) the calendar year in which the employee retires.

       ``(ii) Exception.--Subclause (II) of clause (i) shall not 
     apply--

       ``(I) except as provided in section 409(d), in the case of 
     an employee who is a 5-percent owner (as defined in section 
     416) with respect

[[Page 1720]]

     to the plan year ending in the calendar year in which the 
     employee attains age 70\1/2\, or
       ``(II) for purposes of section 408 (a)(6) or (b)(3).

       ``(iii) Actuarial adjustment.--In the case of an employee 
     to whom clause (i)(II) applies who retires in a calendar year 
     after the calendar year in which the employee attains age 
     70\1/2\, the employee's accrued benefit shall be actuarially 
     increased to take into account the period after age 70\1/2\ 
     in which the employee was not receiving any benefits under 
     the plan.
       ``(iv) Exception for governmental and church plans.--
     Clauses (ii) and (iii) shall not apply in the case of a 
     governmental plan or church plan. For purposes of this 
     clause, the term `church plan' means a plan maintained by a 
     church for church employees, and the term `church' means any 
     church (as defined in section 3121(w)(3)(A)) or qualified 
     church-controlled organization (as defined in section 
     3121(w)(3)(B)).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to years beginning after December 31, 1995.

               PART II--INCREASED ACCESS TO PENSION PLANS

     SEC. 14211. MODIFICATIONS OF SIMPLIFIED EMPLOYEE PENSIONS.

       (a) Increase in Number of Allowable Participants for Salary 
     Reduction Arrangements.--Section 408(k)(6)(B) is amended by 
     striking ``25'' each place it appears in the text and heading 
     thereof and inserting ``100''.
       (b) Repeal of Participation Requirement.--
       (1) In general.--Section 408(k)(6)(A) is amended by 
     striking clause (ii) and by redesignating clauses (iii) and 
     (iv) as clauses (ii) and (iii), respectively.
       (2) Conforming amendments.--Clause (ii) of section 
     408(k)(6)(C) and clause (ii) of section 408(k)(6)(F) are each 
     amended by striking ``subparagraph (A)(iii)'' and inserting 
     ``subparagraph (A)(ii)''.
       (c) Alternative Test.--Clause (ii) of section 408(k)(6)(A), 
     as redesignated by subsection (b)(1), is amended by adding at 
     the end the following new flush sentence:
     ``The requirements of the preceding sentence are met if the 
     employer makes contributions to the simplified employee 
     pension meeting the requirements of sections 401(k)(11) (B) 
     or (C), 401(k)(11)(D), and 401(m)(10)(B).''
       (d) Year for Computing Nonhighly Compensated Employee 
     Percentage.--Clause (ii) of section 408(k)(6)(A), as 
     redesignated by subsection (b)(1), is amended--
       (1) by striking ``such year'' in subclause (I) and 
     inserting ``the preceding year'', and
       (2) by adding at the end the following new flush sentence:
     ``In the case of the first plan year for which an employer 
     makes contributions to a simplified employee pension, rules 
     similar to the rules of section 401(k)(3)(E) shall apply.''
       (e) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1995.

     SEC. 14212. STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT 
                   ORGANIZATIONS ELIGIBLE UNDER SECTION 401(K).

       (a) In General.--Subparagraph (B) of section 401(k)(4) is 
     amended to read as follows:
       ``(B) Eligibility of state and local governments and tax-
     exempt organizations.--Any--
       ``(i) State or local government or political subdivision 
     thereof, or any agency or instrumentality thereof, and
       ``(ii) any organization exempt from tax under this 
     subtitle,
     may include a qualified cash or deferred arrangement as part 
     of a plan maintained by it unless the entity maintains an 
     eligible deferred compensation plan (as defined in section 
     457(b)). This subparagraph shall not apply to a rural 
     cooperative plan.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to plan years beginning after December 31, 1996, 
     but shall not apply to any cash or deferred arrangement to 
     which clause (i) or (ii) of section 1116(f)(2)(B) of the Tax 
     Reform Act of 1986 applies.

                 PART III--NONDISCRIMINATION PROVISIONS

     SEC. 14221. DEFINITION OF HIGHLY COMPENSATED EMPLOYEES.

       (a) In General.--Paragraph (1) of section 414(q) (defining 
     highly compensated employee) is amended to read as follows:
       ``(1) In general.--The term `highly compensated employee' 
     means any employee who--
       ``(A) was a 5-percent owner at any time during the year or 
     the preceding year, or
       ``(B) had compensation for the preceding year from the 
     employer in excess of $80,000.
     The Secretary shall adjust the $80,000 amount under 
     subparagraph (B) at the same time and in the same manner as 
     under section 415(d), except that the base period in applying 
     such section for purposes of this paragraph shall be the 
     calendar quarter ending September 30, 1995.''
       (b) Conforming Amendments.--
       (1)(A) Subsection (q) of section 414 is amended by striking 
     paragraphs (2), (4), (5), (8), and (12) and by redesignating 
     paragraphs (3), (6), (7), (9), (10), and (11) as paragraphs 
     (2) through (7), respectively.
       (B) Section 129(d)(8)(B), 401(a)(5)(D)(ii), 408(k)(2)(C), 
     and 416(i)(1)(D) are each amended by striking ``section 
     414(q)(7)'' and inserting ``section 414(q)(4)''.
       (C) Sections 401(a)(17) and 404(l) are each amended by 
     striking ``section 414(q)(6)'' and inserting ``section 
     414(q)(3)''.
       (D) Section 416(i)(1)(A) is amended by striking ``section 
     414(q)(8)'' and inserting ``section 414(r)(9)''.
       (2)(A) Section 414(r) is amended by adding at the end the 
     following new paragraph:
       ``(9) Excluded employees.--For purposes of paragraph 
     (2)(A), the following employees shall be excluded:
       ``(A) Employees who have not completed 6 months of service.
       ``(B) Employees who normally work less than 17\1/2\ hours 
     per week.
       ``(C) Employees who normally work not more than 6 months 
     during any year.
       ``(D) Employees who have not attained the age of 21.
       ``(E) Except to the extent provided in regulations, 
     employees who are included in a unit of employees covered by 
     an agreement which the Secretary of Labor finds to be a 
     collective bargaining agreement between employee 
     representatives and the employer.
     Except as provided by the Secretary, the employer may elect 
     to apply subparagraph (A), (B), (C), or (D) by substituting a 
     shorter period of service, smaller number of hours or months, 
     or lower age for the period of service, number of hours or 
     months, or age (as the case may be) specified in such 
     subparagraph.''
       (B) Subparagraph (A) of section 414(r)(2) is amended by 
     striking ``subsection (q)(8)'' and inserting ``paragraph 
     (9)''.
       (3) Section 1114(c)(4) of the Tax Reform Act of 1986 is 
     amended by adding at the end the following new sentence: 
     ``Any reference in this paragraph to section 414(q) shall be 
     treated as a reference to such section as in effect before 
     the Tax Simplification Act of 1995''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1995.

     SEC. 14222. REPEAL OF FAMILY AGGREGATION RULES.

       (a) In General.--Paragraph (6) of section 414(q) is hereby 
     repealed.
       (b) Compensation Limit.--Subparagraph (A) of section 
     401(a)(17) is amended by striking the last sentence.
       (c) Deduction.--Subsection (l) of section 404 is amended by 
     striking the last sentence.
       (d) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1995.

     SEC. 14223. MODIFICATION OF ADDITIONAL PARTICIPATION 
                   REQUIREMENTS.

       (a) General Rule.--Section 401(a)(26)(A) (relating to 
     additional participation requirements) is amended to read as 
     follows:
       ``(A) In general.--In the case of a trust which is a part 
     of a defined benefit plan, such trust shall not constitute a 
     qualified trust under this subsection unless on each day of 
     the plan year such trust benefits at least the lesser of--
       ``(i) 50 employees of the employer, or
       ``(ii) the greater of--

       ``(I) 40 percent of all employees of the employer, or
       ``(II) 2 employees (or if there is only 1 employee, such 
     employee).''

       (b) Separate Line of Business Test.--Section 401(a)(26)(G) 
     (relating to separate line of business) is amended by 
     striking ``paragraph (7)'' and inserting ``paragraph (2)(A) 
     or (7)''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 1995.

     SEC. 14224. NONDISCRIMINATION RULES FOR QUALIFIED CASH OR 
                   DEFERRED ARRANGEMENTS AND MATCHING 
                   CONTRIBUTIONS.

       (a) Alternative Methods of Satisfying Section 401(k) 
     Nondiscrimination Tests.--Section 401(k) (relating to cash or 
     deferred arrangements) is amended by adding at the end the 
     following new paragraph:
       ``(11) Alternative methods of meeting nondiscrimination 
     requirements.--
       ``(A) In general.--A cash or deferred arrangement shall be 
     treated as meeting the requirements of paragraph (3)(A)(ii) 
     if such arrangement--
       ``(i) meets the contribution requirements of subparagraph 
     (B) or (C), and
       ``(ii) meets the notice requirements of subparagraph (D).
       ``(B) Matching contributions.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if, under the arrangement, the employer makes 
     matching contributions on behalf of each employee who is not 
     a highly compensated employee in an amount equal to--

       ``(I) 100 percent of the elective contributions of the 
     employee to the extent such elective contributions do not 
     exceed 3 percent of the employee's compensation, and

       ``(II) 50 percent of the elective contributions of the 
     employee to the extent that such elective contributions 
     exceed 3 percent but do not exceed 5 percent of the 
     employee's compensation.

       ``(ii) Rate for highly compensated employees.--The 
     requirements of this subparagraph are not met if, under the 
     arrangement, the matching contribution with respect to any 
     elective contribution of a highly compensated employee at any 
     level of compensation is greater than that with respect to an 
     employee who is not a highly compensated employee.
       ``(iii) Alternative plan designs.--If the matching 
     contribution with respect to any elective contribution at any 
     specific level of compensation is not equal to the percentage 
     required under clause (i), an arrangement shall not be 
     treated as failing to meet the requirements of clause (i) 
     if--

       ``(I) the level of an employer's matching contribution does 
     not increase as an employee's elective contributions 
     increase, and

[[Page 1721]]

       ``(II) the aggregate amount of matching contributions with 
     respect to elective contributions not in excess of such level 
     of compensation is at least equal to the amount of matching 
     contributions which would be made if matching contributions 
     were made on the basis of the percentages described in clause 
     (i).

       ``(C) Nonelective contributions.--The requirements of this 
     subparagraph are met if, under the arrangement, the employer 
     is required, without regard to whether the employee makes an 
     elective contribution or employee contribution, to make a 
     contribution to a defined contribution plan on behalf of each 
     employee who is not a highly compensated employee and who is 
     eligible to participate in the arrangement in an amount equal 
     to at least 3 percent of the employee's compensation.
       ``(D) Notice requirement.--An arrangement meets the 
     requirements of this paragraph if, under the arrangement, 
     each employee eligible to participate is, within a reasonable 
     period before any year, given written notice of the 
     employee's rights and obligations under the arrangement 
     which--
       ``(i) is sufficiently accurate and comprehensive to apprise 
     the employee of such rights and obligations, and
       ``(ii) is written in a manner calculated to be understood 
     by the average employee eligible to participate.
       ``(E) Other requirements.--
       ``(i) Withdrawal and vesting restrictions.--An arrangement 
     shall not be treated as meeting the requirements of 
     subparagraph (B) or (C) unless the requirements of 
     subparagraphs (B) and (C) of paragraph (2) are met with 
     respect to all employer contributions (including matching 
     contributions).
       ``(ii) Social security and similar contributions not taken 
     into account.--An arrangement shall not be treated as meeting 
     the requirements of subparagraph (B) or (C) unless such 
     requirements are met without regard to subsection (l), and, 
     for purposes of subsection (l), employer contributions under 
     subparagraph (B) or (C) shall not be taken into account.
       ``(F) Other plans.--An arrangement shall be treated as 
     meeting the requirements under subparagraph (A)(i) if any 
     other plan maintained by the employer meets such requirements 
     with respect to employees eligible under the arrangement.''
       (b) Alternative Methods of Satisfying Section 401(m) 
     Nondiscrimination Tests.--Section 401(m) (relating to 
     nondiscrimination test for matching contributions and 
     employee contributions) is amended by redesignating paragraph 
     (10) as paragraph (11) and by adding after paragraph (9) the 
     following new paragraph:
       ``(10) Alternative method of satisfying tests.--
       ``(A) In general.--A defined contribution plan shall be 
     treated as meeting the requirements of paragraph (2) with 
     respect to matching contributions if the plan--
       ``(i) meets the contribution requirements of subparagraph 
     (B) or (C) of subsection (k)(11),
       ``(ii) meets the notice requirements of subsection 
     (k)(11)(D), and
       ``(iii) meets the requirements of subparagraph (B).
       ``(B) Limitation on matching contributions.--The 
     requirements of this subparagraph are met if--
       ``(i) matching contributions on behalf of any employee may 
     not be made with respect to an employee's contributions or 
     elective deferrals in excess of 6 percent of the employee's 
     compensation,
       ``(ii) the level of an employer's matching contribution 
     does not increase as an employee's contributions or elective 
     deferrals increase, and
       ``(iii) the matching contribution with respect to any 
     highly compensated employee at a specific level of 
     compensation is not greater than that with respect to an 
     employee who is not a highly compensated employee.''
       (c) Year for Computing Nonhighly Compensated Employee 
     Percentage.--
       (1) Cash or deferred arrangements.--Clause (ii) of section 
     401(k)(3)(A) is amended--
       (A) by striking ``such year'' and inserting ``the plan 
     year'', and
       (B) by striking ``for such plan year'' and inserting ``the 
     preceding plan year''.
       (2) Matching and employee contributions.--Section 
     401(m)(2)(A) is amended--
       (A) by inserting ``for such plan year'' after ``highly 
     compensated employees'', and
       (B) by inserting ``for the preceding plan year'' after 
     ``eligible employees'' each place it appears in clause (i) 
     and clause (ii).
       (d) Special Rule for Determining Average Deferral 
     Percentage for First Plan Year, Etc.--
       (1) Paragraph (3) of section 401(k) is amended by adding at 
     the end the following new subparagraph:
       ``(E) For purposes of this paragraph, in the case of the 
     first plan year of any plan, the amount taken into account as 
     the actual deferral percentage of nonhighly compensated 
     employees for the preceding plan year shall be--
       ``(i) 3 percent, or
       ``(ii) if the employer makes an election under this 
     subclause, the actual deferral percentage of nonhighly 
     compensated employees determined for such first plan year.''
       (2) Paragraph (3) of section 401(m) is amended by adding at 
     the end the following: ``Rules similar to the rules of 
     subsection (k)(3)(E) shall apply for purposes of this 
     subsection.''
       (e) Distribution of Excess Contributions.--
       (1) Subparagraph (C) of section 401(k)(8) (relating to 
     arrangement not disqualified if excess contributions 
     distributed) is amended by striking ``on the basis of the 
     respective portions of the excess contributions attributable 
     to each of such employees'' and inserting ``on the basis of 
     the amount of contributions by, or on behalf of, each of such 
     employees''.
       (2) Subparagraph (C) of section 401(m)(6) (relating to 
     method of distributing excess aggregate contributions) is 
     amended by striking ``on the basis of the respective portions 
     of such amounts attributable to each of such employees'' and 
     inserting ``on the basis of the amount of contributions on 
     behalf of, or by, each such employee''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1995.

                 PART IV--MISCELLANEOUS SIMPLIFICATION

     SEC. 14231. TREATMENT OF LEASED EMPLOYEES.

       (a) General Rule.--Subparagraph (C) of section 414(n)(2) 
     (defining leased employee) is amended to read as follows:
       ``(C) such services are performed under significant 
     direction or control by the recipient.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to years beginning after December 31, 1995, but 
     shall not apply to any relationship determined under an 
     Internal Revenue Service ruling issued before the date of the 
     enactment of this Act pursuant to section 414(n)(2)(C) of the 
     Internal Revenue Code of 1986 (as in effect on the day before 
     such date) not to involve a leased employee.

     SEC. 14232. PLANS COVERING SELF-EMPLOYED INDIVIDUALS.

       (a) Aggregation Rules.--Section 401(d) (relating to 
     additional requirements for qualification of trusts and plans 
     benefiting owner-employees) is amended to read as follows:
       ``(d) Contribution Limit on Owner-Employees.--A trust 
     forming part of a pension or profit-sharing plan which 
     provides contributions or benefits for employees some or all 
     of whom are owner-employees shall constitute a qualified 
     trust under this section only if, in addition to meeting the 
     requirements of subsection (a), the plan provides that 
     contributions on behalf of any owner-employee may be made 
     only with respect to the earned income of such owner-employee 
     which is derived from the trade or business with respect to 
     which such plan is established.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1995.

     SEC. 14233. ELIMINATION OF SPECIAL VESTING RULE FOR 
                   MULTIEMPLOYER PLANS.

       (a) In General.--Paragraph (2) of section 411(a) (relating 
     to minimum vesting standards) is amended--
       (1) by striking ``subparagraph (A), (B), or (C)'' and 
     inserting ``subparagraph (A) or (B)''; and
       (2) by striking subparagraph (C).
       (b) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning on or after the earlier 
     of--
       (1) the later of--
       (A) January 1, 1996, or
       (B) the date on which the last of the collective bargaining 
     agreements pursuant to which the plan is maintained 
     terminates (determined without regard to any extension 
     thereof after the date of the enactment of this Act), or
       (2) January 1, 1998.
     Such amendments shall not apply to any individual who does 
     not have more than 1 hour of service under the plan on or 
     after the 1st day of the 1st plan year to which such 
     amendments apply.

     SEC. 14234. DISTRIBUTIONS UNDER RURAL COOPERATIVE PLANS.

       (a) Distributions After Certain Age.--Section 401(k)(7) is 
     amended by adding at the end the following new subparagraph:
       ``(C) Special rule for certain distributions.--A rural 
     cooperative plan which includes a qualified cash or deferred 
     arrangement shall not be treated as violating the 
     requirements of section 401(a) merely by reason of a 
     distribution to a participant after attainment of age 59\1/
     2\.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to distributions after December 31, 1995.

     SEC. 14235. TREATMENT OF GOVERNMENTAL PLANS UNDER SECTION 
                   415.

       (a) Definition of Compensation.--Subsection (k) of section 
     415 (regarding limitations on benefits and contributions 
     under qualified plans) is amended by adding immediately after 
     paragraph (2) the following new paragraph:
       ``(3) Definition of compensation for governmental plans.--
     For purposes of this section, in the case of a governmental 
     plan (as defined in section 414(d)), the term `compensation' 
     includes, in addition to the amounts described in subsection 
     (c)(3)--
       ``(A) any elective deferral (as defined in section 
     402(g)(3)), and
       ``(B) any amount which is contributed by the employer at 
     the election of the employee and which is not includible in 
     the gross income of an employee under section 125 or 457.''
       (b) Compensation Limit.--Subsection (b) of section 415 is 
     amended by adding immediately after paragraph (10) the 
     following new paragraph:
       ``(11) Special limitation rule for governmental plans.--In 
     the case of a govern

[[Page 1722]]

     mental plan (as defined in section 414(d)), subparagraph (B) 
     of paragraph (1) shall not apply.''
       (c) Treatment of Certain Excess Benefit Plans.--
       (1) In general.--Section 415 is amended by adding at the 
     end the following new subsection:
       ``(m) Treatment of Qualified Governmental Excess Benefit 
     Arrangements.--
       ``(1) Governmental plan not affected.--In determining 
     whether a governmental plan (as defined in section 414(d)) 
     meets the requirements of this section, benefits provided 
     under a qualified governmental excess benefit arrangement 
     shall not be taken into account. Income accruing to a 
     governmental plan (or to a trust that is maintained solely 
     for the purpose of providing benefits under a qualified 
     governmental excess benefit arrangement) in respect of a 
     qualified governmental excess benefit arrangement shall 
     constitute income derived from the exercise of an essential 
     governmental function upon which such governmental plan (or 
     trust) shall be exempt from tax under section 115.
       ``(2) Taxation of participant.--For purposes of this 
     chapter--
       ``(A) the taxable year or years for which amounts in 
     respect of a qualified governmental excess benefit 
     arrangement are includible in gross income by a participant, 
     and
       ``(B) the treatment of such amounts when so includible by 
     the participant,
     shall be determined as if such qualified governmental excess 
     benefit arrangement were treated as a plan for the deferral 
     of compensation which is maintained by a corporation not 
     exempt from tax under this chapter and which does not meet 
     the requirements for qualification under section 401.
       ``(3) Qualified governmental excess benefit arrangement.--
     For purposes of this subsection, the term `qualified 
     governmental excess benefit arrangement' means a portion of a 
     governmental plan if--
       ``(A) such portion is maintained solely for the purpose of 
     providing to participants in the plan that part of the 
     participant's annual benefit otherwise payable under the 
     terms of the plan that exceeds the limitations on benefits 
     imposed by this section,
       ``(B) under such portion no election is provided at any 
     time to the participant (directly or indirectly) to defer 
     compensation, and
       ``(C) benefits described in subparagraph (A) are not paid 
     from a trust forming a part of such governmental plan unless 
     such trust is maintained solely for the purpose of providing 
     such benefits.''
       (2) Coordination with section 457.--Subsection (e) of 
     section 457 is amended by adding at the end the following new 
     paragraph:
       ``(15) Treatment of qualified governmental excess benefit 
     arrangements.--Subsections (b)(2) and (c)(1) shall not apply 
     to any qualified governmental excess benefit arrangement (as 
     defined in section 415(m)(3)), and benefits provided under 
     such an arrangement shall not be taken into account in 
     determining whether any other plan is an eligible deferred 
     compensation plan.''
       (3) Conforming amendment.--Paragraph (2) of section 457(f) 
     is amended by striking ``and'' at the end of subparagraph 
     (C), by striking the period at the end of subparagraph (D) 
     and inserting ``, and'', and by inserting immediately 
     thereafter the following new subparagraph:
       ``(E) a qualified governmental excess benefit arrangement 
     described in section 415(m).''
       (d) Exemption for Survivor and Disability Benefits.--
     Paragraph (2) of section 415(b) is amended by adding at the 
     end the following new subparagraph:
       ``(I) Exemption for survivor and disability benefits 
     provided under governmental plans.--Subparagraph (B) of 
     paragraph (1), subparagraph (C) of this paragraph, and 
     paragraph (5) shall not apply to--
       ``(i) income received from a governmental plan (as defined 
     in section 414(d)) as a pension, annuity, or similar 
     allowance as the result of the recipient becoming disabled by 
     reason of personal injuries or sickness, or
       ``(ii) amounts received from a governmental plan by the 
     beneficiaries, survivors, or the estate of an employee as the 
     result of the death of the employee.''
       (e) Revocation of Grandfather Election.--
       (1) In general.--Subparagraph (C) of section 415(b)(10) is 
     amended by adding at the end the following new clause:
       ``(ii) Revocation of election.--An election under clause 
     (i) may be revoked not later than the last day of the third 
     plan year beginning after the date of the enactment of this 
     clause. The revocation shall apply to all plan years to which 
     the election applied and to all subsequent plan years. Any 
     amount paid by a plan in a taxable year ending after the 
     revocation shall be includible in income in such taxable year 
     under the rules of this chapter in effect for such taxable 
     year, except that, for purposes of applying the limitations 
     imposed by this section, any portion of such amount which is 
     attributable to any taxable year during which the election 
     was in effect shall be treated as received in such taxable 
     year.''
       (2) Conforming amendment.--Subparagraph (C) of section 
     415(b)(10) is amended by striking ``This'' and inserting:
       ``(i) In general.--This''.
       (f) Effective Date.--
       (1) In general.--The amendments made by subsections (a), 
     (b), (c), and (d) shall apply to taxable years beginning on 
     or after the date of the enactment of this Act. The amendment 
     made by subsection (e) shall apply with respect to election 
     revocations adopted after the date of the enactment of this 
     Act.
       (2) Treatment for years beginning before date of 
     enactment.--In the case of a governmental plan (as defined in 
     section 414(d) of the Internal Revenue Code of 1986), such 
     plan shall be treated as satisfying the requirements of 
     section 415 of such Code for all taxable years beginning 
     before the date of the enactment of this Act.

     SEC. 14236. UNIFORM RETIREMENT AGE.

       (a) Discrimination Testing.--Paragraph (5) of section 
     401(a) (relating to special rules relating to 
     nondiscrimination requirements) is amended by adding at the 
     end the following new subparagraph:
       ``(F) Social security retirement age.--For purposes of 
     testing for discrimination under paragraph (4)--
       ``(i) the social security retirement age (as defined in 
     section 415(b)(8)) shall be treated as a uniform retirement 
     age, and
       ``(ii) subsidized early retirement benefits and joint and 
     survivor annuities shall not be treated as being unavailable 
     to employees on the same terms merely because such benefits 
     or annuities are based in whole or in part on an employee's 
     social security retirement age (as so defined).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 1995.

     SEC. 14237. UNIFORM PENALTY PROVISIONS TO APPLY TO CERTAIN 
                   PENSION REPORTING REQUIREMENTS.

       (a) Penalties.--
       (1) Statements.--Paragraph (1) of section 6724(d) is 
     amended by striking ``and'' at the end of subparagraph (A), 
     by striking the period at the end of subparagraph (B) and 
     inserting ``, and'', and by inserting after subparagraph (B) 
     the following new subparagraph:
       ``(C) any statement of the amount of payments to another 
     person required to be made to the Secretary under--
       ``(i) section 408(i) (relating to reports with respect to 
     individual retirement accounts or annuities), or
       ``(ii) section 6047(d) (relating to reports by employers, 
     plan administrators, etc.).''
       (2) Reports.--Paragraph (2) of section 6724(d) is amended 
     by striking ``or'' at the end of subparagraph (S), by 
     striking the period at the end of subparagraph (T) and 
     inserting a comma, and by inserting after subparagraph (T) 
     the following new subparagraphs:
       ``(U) section 408(i) (relating to reports with respect to 
     individual retirement plans) to any person other than the 
     Secretary with respect to the amount of payments made to such 
     person, or
       ``(V) section 6047(d) (relating to reports by plan 
     administrators) to any person other than the Secretary with 
     respect to the amount of payments made to such person.''
       (b) Modification of Reportable Designated Distributions.--
       (1) Section 408.--Subsection (i) of section 408 (relating 
     to individual retirement account reports) is amended by 
     inserting ``aggregating $10 or more in any calendar year'' 
     after ``distributions''.
       (2) Section 6047.--Paragraph (1) of section 6047(d) 
     (relating to reports by employers, plan administrators, etc.) 
     is amended by adding at the end the following new sentence: 
     ``No return or report may be required under the preceding 
     sentence with respect to distributions to any person during 
     any year unless such distributions aggregate $10 or more.''
       (c) Qualifying Rollover Distributions.--Section 6652(i) is 
     amended--
       (1) by striking ``the $10'' and inserting ``$100'', and
       (2) by striking ``$5,000'' and inserting ``$50,000''.
       (d) Conforming Amendments.--
       (1) Paragraph (1) of section 6047(f) is amended 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.''
       (2) Subsection (e) of section 6652 is amended by adding at 
     the end the following new sentence: ``This subsection shall 
     not apply to any return or statement which is an information 
     return described in section 6724(d)(1)(C)(ii) or a payee 
     statement described in section 6724(d)(2)(U).''
       (3) Subsection (a) of section 6693 is amended by adding at 
     the end the following new sentence: ``This subsection shall 
     not apply to any report which is an information return 
     described in section 6724(d)(1)(C)(i) or a payee statement 
     described in section 6724(d)(2)(T).''
       (e) Effective Date.--The amendments made by this section 
     shall apply to returns, reports, and other statements the due 
     date for which (determined without regard to extensions) is 
     after December 31, 1995.

     SEC. 14238. CONTRIBUTIONS ON BEHALF OF DISABLED EMPLOYEES.

       (a) All Disabled Participants Receiving Contributions.--
     Section 415(c)(3)(C) is amended by adding at the end the 
     following: ``If a defined contribution plan provides for the 
     continuation of contributions on behalf of all participants 
     described in clause (i) for a fixed or determinable period, 
     this subparagraph shall be applied without regard to clauses 
     (ii) and (iii).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 1995.

[[Page 1723]]

     SEC. 14239. TREATMENT OF DEFERRED COMPENSATION PLANS OF STATE 
                   AND LOCAL GOVERNMENTS AND TAX-EXEMPT 
                   ORGANIZATIONS.

       (a) Special Rules for Plan Distributions.--Paragraph (9) of 
     section 457(e) (relating to other definitions and special 
     rules) is amended to read as follows:
       ``(9) Benefits not treated as made available by reason of 
     certain elections, etc.--
       ``(A) Total amount payable is $3,500 or less.--The total 
     amount payable to a participant under the plan shall not be 
     treated as made available merely because the participant may 
     elect to receive such amount (or the plan may distribute such 
     amount without the participant's consent) if--
       ``(i) such amount does not exceed $3,500, and
       ``(ii) such amount may be distributed only if--

       ``(I) no amount has been deferred under the plan with 
     respect to such participant during the 2-year period ending 
     on the date of the distribution, and
       ``(II) there has been no prior distribution under the plan 
     to such participant to which this subparagraph applied.

     A plan shall not be treated as failing to meet the 
     distribution requirements of subsection (d) by reason of a 
     distribution to which this subparagraph applies.
       ``(B) Election to defer commencement of distributions.--The 
     total amount payable to a participant under the plan shall 
     not be treated as made available merely because the 
     participant may elect to defer commencement of distributions 
     under the plan if--
       ``(i) such election is made after amounts may be available 
     under the plan in accordance with subsection (d)(1)(A) and 
     before commencement of such distributions, and
       ``(ii) the participant may make only 1 such election.''
       (b) Cost-of-Living Adjustment of Maximum Deferral Amount.--
     Subsection (e) of section 457 is amended by adding at the end 
     the following new paragraph:
       ``(14) Cost-of-living adjustment of maximum deferral 
     amount.--The Secretary shall adjust the $7,500 amount 
     specified in subsections (b)(2) and (c)(1) at the same time 
     and in the same manner as under section 415(d) (determined 
     without regard to paragraph (4)), except that the base period 
     in applying such section for purposes of this paragraph shall 
     be the calendar quarter ending September 30, 1994.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14240. TRUST REQUIREMENT FOR DEFERRED COMPENSATION PLANS 
                   OF STATE AND LOCAL GOVERNMENTS.

       (a) In General.--Section 457 is amended by adding at the 
     end the following new subsection:
       ``(g) Governmental Plans Must Maintain Set Asides for 
     Exclusive Benefit of Participants.--
       ``(1) In general.--A plan maintained by an eligible 
     employer described in subsection (e)(1)(A) shall not be 
     treated as an eligible deferred compensation plan unless all 
     assets and income of the plan described in subsection (b)(6) 
     are held in trust for the exclusive benefit of participants 
     and their beneficiaries.
       ``(2) Taxability of trusts and participants.--For purposes 
     of this title--
       ``(A) a trust described in paragraph (1) shall be treated 
     as an organization exempt from taxation under section 501(a), 
     and
       ``(B) notwithstanding any other provision of this title, 
     amounts in the trust shall be includible in the gross income 
     of participants and beneficiaries only to the extent, and at 
     the time, provided in this section.
       ``(3) Custodial accounts and contracts.--For purposes of 
     this subsection, custodial accounts and contracts described 
     in section 401(f) shall be treated as trusts under rules 
     similar to the rules under section 401(f).''
       (b) Conforming Amendment.--Paragraph (6) of section 457(b) 
     is amended by inserting ``except as provided in subsection 
     (g),'' before ``which provides that''.
       (c) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to assets and 
     income described in section 457(b)(6) of the Internal Revenue 
     Code of 1986 held by a plan on and after the date of the 
     enactment of this Act.
       (2) Transition rule.--In the case of assets and income 
     described in paragraph (1) held by a plan before the 90th day 
     after the date of the enactment of this Act, a trust need not 
     be established by reason of the amendments made by this 
     section before such 90th day.

     SEC. 14241. TRANSITION RULE FOR COMPUTING MAXIMUM BENEFITS 
                   UNDER SECTION 415 LIMITATIONS.

       (a) In General.--Subparagraph (A) of section 767(d)(3) of 
     the Uruguay Round Agreements Act is amended to read as 
     follows:
       ``(A) Exception.--A plan that was adopted and in effect 
     before December 8, 1994, shall not be required to apply the 
     amendments made by subsection (b) with respect to benefits 
     accrued before the earlier of--
       ``(i) the later of the date a plan amendment applying such 
     amendment is adopted or made effective, or
       ``(ii) the first day of the first limitation year beginning 
     after December 31, 1999.
     Determinations under section 415(b)(2)(E) of the Internal 
     Revenue Code of 1986 shall be made with respect to such 
     benefits on the basis of such section as in effect on 
     December 7, 1994, and the provisions of the plan as in effect 
     on December 7, 1994, but only if such provisions of the plan 
     meet the requirements of such section (as so in effect).''
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the provisions of section 
     767 of the Uruguay Round Agreements Act.
       (c) Transitional Rule.--In the case of a plan that was 
     adopted and in effect before December 8, 1994, if--
       (1) a plan amendment was adopted or made effective on or 
     before the date of the enactment of this Act applying the 
     amendments made by section 767(b) of the Uruguay Round 
     Agreements Act, and
       (2) within 1 year after the date of the enactment of this 
     Act, a plan amendment is adopted which repeals the amendment 
     referred to in paragraph (1),
     the amendment referred to in paragraph (1) shall not be taken 
     into account in applying section 767(d)(3)(A) of the Uruguay 
     Round Agreements Act, as amended by subsection (a).

     SEC. 14242. MULTIPLE SALARY REDUCTION AGREEMENTS PERMITTED 
                   UNDER SECTION 403(B).

       (a) General Rule.--For purposes of section 403(b) of the 
     Internal Revenue Code of 1986, the frequency that an employee 
     is permitted to enter into a salary reduction agreement, the 
     salary to which such an agreement may apply, and the ability 
     to revoke such an agreement shall be determined under the 
     rules applicable to cash or deferred elections under section 
     401(k) of such Code.
       (b) Effective Date.--Subsection (a) shall apply to taxable 
     years beginning after December 31, 1995.

     SEC. 14243. WAIVER OF MINIMUM PERIOD FOR JOINT AND SURVIVOR 
                   ANNUITY EXPLANATION BEFORE ANNUITY STARTING 
                   DATE.

       (a) General Rule.--For purposes of section 417(a)(3)(A) of 
     the Internal Revenue Code of 1986 (relating to plan to 
     provide written explanations), the minimum period prescribed 
     by the Secretary of the Treasury between the date that the 
     explanation referred to in such section is provided and the 
     annuity starting date shall not apply if waived by the 
     participant and, if applicable, the participant's spouse.
       (b) Effective Date.--Subsection (a) shall apply to plan 
     years beginning after December 31, 1995.

     SEC. 14244. REPEAL OF LIMITATION IN CASE OF DEFINED BENEFIT 
                   PLAN AND DEFINED CONTRIBUTION PLAN FOR SAME 
                   EMPLOYEE.

       (a) In General.--Section 415(e) is repealed.
       (b) Conforming Amendments.--
       (1) Subparagraph (B) of section 415(b)(5) is amended by 
     striking ``and subsection (e)''.
       (2) Paragraph (1) of section 415(f) is amended by striking 
     ``subsections (b), (c), and (e)'' and inserting ``subsections 
     (b) and (c)''.
       (3) Subsection (g) of section 415 is amended by striking 
     ``subsections (e) and (f)'' in the last sentence and 
     inserting ``subsection (f)''.
       (4) Clause (i) of section 415(k)(2)(A) is amended to read 
     as follows:
       ``(i) any contribution made directly by an employee under 
     such an arrangement shall not be treated as an annual 
     addition for purposes of subsection (c), and''.
       (5) Clause (ii) of section 415(k)(2)(A) is amended by 
     striking ``subsections (c) and (e)'' and inserting 
     ``subsection (c)''.
       (6) Section 416 is amended by striking subsection (h).
       (c) Effective Date.--The amendments made by this section 
     shall apply to limitation years beginning after December 31, 
     1996.

     SEC. 14245. DATE FOR ADOPTION OF PLAN AMENDMENTS.

       If any amendment made by this title requires an amendment 
     to any plan, such plan amendment shall not be required to be 
     made before the first day of the first plan year beginning on 
     or after January 1, 1997, if--
       (1) during the period after such amendment takes effect and 
     before such first plan year, the plan is operated in 
     accordance with the requirements of such amendment, and
       (2) such plan amendment applies retroactively to such 
     period.
              Subtitle C--Treatment of Large Partnerships

                       PART I--GENERAL PROVISIONS

     SEC. 14301. SIMPLIFIED FLOW-THROUGH FOR LARGE PARTNERSHIPS.

       (a) General Rule.--Subchapter K (relating to partners and 
     partnerships) is amended by adding at the end the following 
     new part:

            ``PART IV--SPECIAL RULES FOR LARGE 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.

     ``SEC. 771. APPLICATION OF SUBCHAPTER TO LARGE PARTNERSHIPS.

       ``The preceding provisions of this subchapter to the extent 
     inconsistent with the provisions of this part shall not apply 
     to a large partnership and its partners.

     ``SEC. 772. SIMPLIFIED FLOW-THROUGH.

       ``(a) General Rule.--In determining the income tax of a 
     partner of a large partnership, such partner shall take into 
     account separately such partner's distributive share of the 
     partnership's--
       ``(1) taxable income or loss from passive loss limitation 
     activities,
       ``(2) taxable income or loss from other activities,

[[Page 1724]]

       ``(3) net capital gain (or net capital loss)--
       ``(A) to the extent allocable to passive loss limitation 
     activities, and
       ``(B) to the extent allocable to other activities,
       ``(4) tax-exempt interest,
       ``(5) applicable net AMT adjustment separately computed 
     for--
       ``(A) passive loss limitation activities, and
       ``(B) other activities,
       ``(6) general credits,
       ``(7) low-income housing credit determined under section 
     42,
       ``(8) rehabilitation credit determined under section 47,
       ``(9) foreign income taxes,
       ``(10) the credit allowable under section 29, and
       ``(11) other items to the extent that the Secretary 
     determines that the separate treatment of such items is 
     appropriate.
       ``(b) Separate Computations.--In determining the amounts 
     required under subsection (a) to be separately taken into 
     account by any partner, this section and section 773 shall be 
     applied separately with respect to such partner by taking 
     into account such partner's distributive share of the items 
     of income, gain, loss, deduction, or credit of the 
     partnership.
       ``(c) Treatment at Partner Level.--
       ``(1) In general.--Except as provided in this subsection, 
     rules similar to the rules of section 702(b) shall apply to 
     any partner's distributive share of the amounts referred to 
     in subsection (a).
       ``(2) Income or loss from passive loss limitation 
     activities.--For purposes of this chapter, any partner's 
     distributive share of any income or loss described in 
     subsection (a)(1) shall be treated as an item of income or 
     loss (as the case may be) from the conduct of a trade or 
     business which is a single passive activity (as defined in 
     section 469). A similar rule shall apply to a partner's 
     distributive share of amounts referred to in paragraphs 
     (3)(A) and (5)(A) of subsection (a).
       ``(3) Income or loss from other activities.--
       ``(A) In general.--For purposes of this chapter, any 
     partner's distributive share of any income or loss described 
     in subsection (a)(2) shall be treated as an item of income or 
     expense (as the case may be) with respect to property held 
     for investment.
       ``(B) Deductions for loss not subject to section 67.--The 
     deduction under section 212 for any loss described in 
     subparagraph (A) shall not be treated as a miscellaneous 
     itemized deduction for purposes of section 67.
       ``(4) Treatment of net capital gain or loss.--For purposes 
     of this chapter, any partner's distributive share of any gain 
     or loss described in subsection (a)(3) shall be treated as a 
     long-term capital gain or loss, as the case may be.
       ``(5) Minimum tax treatment.--In determining the 
     alternative minimum taxable income of any partner, such 
     partner's distributive share of any applicable net AMT 
     adjustment shall be taken into account in lieu of making the 
     separate adjustments provided in sections 56, 57, and 58 with 
     respect to the items of the partnership. Except as provided 
     in regulations, the applicable net AMT adjustment shall be 
     treated, for purposes of section 53, as an adjustment or item 
     of tax preference not specified in section 53(d)(1)(B)(ii).
       ``(6) General credits.--A partner's distributive share of 
     the amount referred to in paragraph (6) of subsection (a) 
     shall be taken into account as a current year business 
     credit.
       ``(d) Operating Rules.--For purposes of this section--
       ``(1) Passive loss limitation activity.--The term `passive 
     loss limitation activity' means--
       ``(A) any activity which involves the conduct of a trade or 
     business, and
       ``(B) any rental activity.
     For purposes of the preceding sentence, the term `trade or 
     business' includes any activity treated as a trade or 
     business under paragraph (5) or (6) of section 469(c).
       ``(2) Tax-exempt interest.--The term `tax-exempt interest' 
     means interest excludable from gross income under section 
     103.
       ``(3) Applicable net amt adjustment.--
       ``(A) In general.--The applicable net AMT adjustment is--
       ``(i) with respect to taxpayers other than corporations, 
     the net adjustment determined by using the adjustments 
     applicable to individuals, and
       ``(ii) with respect to corporations, the net adjustment 
     determined by using the adjustments applicable to 
     corporations.
       ``(B) Net adjustment.--The term `net adjustment' means the 
     net adjustment in the items attributable to passive loss 
     activities or other activities (as the case may be) which 
     would result if such items were determined with the 
     adjustments of sections 56, 57, and 58.
       ``(4) Treatment of certain separately stated items.--
       ``(A) Exclusion for certain purposes.--In determining the 
     amounts referred to in paragraphs (1) and (2) of subsection 
     (a), any net capital gain or net capital loss (as the case 
     may be), and any item referred to in subsection (a)(11), 
     shall be excluded.
       ``(B) Allocation rules.--The net capital gain shall be 
     treated--
       ``(i) as allocable to passive loss limitation activities to 
     the extent the net capital gain does not exceed the net 
     capital gain determined by only taking into account gains and 
     losses from sales and exchanges of property used in 
     connection with such activities, and
       ``(ii) as allocable to other activities to the extent such 
     gain exceeds the amount allocated under clause (i).
     A similar rule shall apply for purposes of allocating any net 
     capital loss.
       ``(C) Net capital loss.--The term `net capital loss' means 
     the excess of the losses from sales or exchanges of capital 
     assets over the gains from sales or exchange of capital 
     assets.
       ``(5) General credits.--The term `general credits' means 
     any credit other than the low-income housing credit, the 
     rehabilitation credit, the foreign tax credit, and the credit 
     allowable under section 29.
       ``(6) Foreign income taxes.--The term `foreign income 
     taxes' means taxes described in section 901 which are paid or 
     accrued to foreign countries and to possessions of the United 
     States.
       ``(e) Special Rule for Unrelated Business Tax.--In the case 
     of a partner which is an organization subject to tax under 
     section 511, such partner's distributive share of any items 
     shall be taken into account separately to the extent 
     necessary to comply with the provisions of section 512(c)(1).
       ``(f) Special Rules for Applying Passive Loss 
     Limitations.--If any person holds an interest in a large 
     partnership other than as a limited partner--
       ``(1) paragraph (2) of subsection (c) shall not apply to 
     such partner, and
       ``(2) such partner's distributive share of the partnership 
     items allocable to passive loss limitation activities shall 
     be taken into account separately to the extent necessary to 
     comply with the provisions of section 469.
     The preceding sentence shall not apply to any items allocable 
     to an interest held as a limited partner.

     ``SEC. 773. COMPUTATIONS AT PARTNERSHIP LEVEL.

       ``(a) General Rule.--
       ``(1) Taxable income.--The taxable income of a large 
     partnership shall be computed in the same manner as in the 
     case of an individual except that--
       ``(A) the items described in section 772(a) shall be 
     separately stated, and
       ``(B) the modifications of subsection (b) shall apply.
       ``(2) Elections.--All elections affecting the computation 
     of the taxable income of a large partnership or the 
     computation of any credit of a large partnership shall be 
     made by the partnership; except that the election under 
     section 901, and any election under section 108, shall be 
     made by each partner separately.
       ``(3) Limitations, etc.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     all limitations and other provisions affecting the 
     computation of the taxable income of a large partnership or 
     the computation of any credit of a large partnership shall be 
     applied at the partnership level (and not at the partner 
     level).
       ``(B) Certain limitations applied at partner level.--The 
     following provisions shall be applied at the partner level 
     (and not at the partnership level):
       ``(i) Section 68 (relating to overall limitation on 
     itemized deductions).
       ``(ii) Sections 49 and 465 (relating to at risk 
     limitations).
       ``(iii) Section 469 (relating to limitation on passive 
     activity losses and credits).
       ``(iv) Any other provision specified in regulations.
       ``(4) Coordination with other provisions.--Paragraphs (2) 
     and (3) shall apply notwithstanding any other provision of 
     this chapter other than this part.
       ``(b) Modifications to Determination of Taxable Income.--In 
     determining the taxable income of a large partnership--
       ``(1) Certain deductions not allowed.--The following 
     deductions shall not be allowed:
       ``(A) The deduction for personal exemptions provided in 
     section 151.
       ``(B) The net operating loss deduction provided in section 
     172.
       ``(C) The additional itemized deductions for individuals 
     provided in part VII of subchapter B (other than section 212 
     thereof).
       ``(2) Charitable deductions.--In determining the amount 
     allowable under section 170, the limitation of section 
     170(b)(2) shall apply.
       ``(3) Coordination with section 67.--In lieu of applying 
     section 67, 70 percent of the amount of the miscellaneous 
     itemized deductions shall be disallowed.
       ``(c) Special Rules for Income From Discharge of 
     Indebtedness.--If a large partnership has income from the 
     discharge of any indebtedness--
       ``(1) such income shall be excluded in determining the 
     amounts referred to in section 772(a), and
       ``(2) in determining the income tax of any partner of such 
     partnership--
       ``(A) such income shall be treated as an item required to 
     be separately taken into account under section 772(a), and
       ``(B) the provisions of section 108 shall be applied 
     without regard to this part.

     ``SEC. 774. OTHER MODIFICATIONS.

       ``(a) Treatment of Certain Optional Adjustments, Etc.--In 
     the case of a large partnership--
       ``(1) computations under section 773 shall be made without 
     regard to any adjustment under section 743(b) or 108(b), but
       ``(2) a partner's distributive share of any amount referred 
     to in section 772(a) shall be appropriately adjusted to take 
     into account any adjustment under section 743(b) or 108(b) 
     with respect to such partner.
       ``(b) Credit Recapture Determined at Partnership Level.--
       ``(1) In general.--In the case of a large partnership--

[[Page 1725]]

       ``(A) any credit recapture shall be taken into account by 
     the partnership, and
       ``(B) the amount of such recapture shall be determined as 
     if the credit with respect to which the recapture is made had 
     been fully utilized to reduce tax.
       ``(2) Method of taking recapture into account.--A large 
     partnership shall take into account a credit recapture by 
     reducing the amount of the appropriate current year credit to 
     the extent thereof, and if such recapture exceeds the amount 
     of such current year credit, the partnership shall be liable 
     to pay such excess.
       ``(3) Dispositions not to trigger recapture.--No credit 
     recapture shall be required by reason of any transfer of an 
     interest in a large partnership.
       ``(4) Credit recapture.--For purposes of this subsection, 
     the term `credit recapture' means any increase in tax under 
     section 42(j) or 50(a).
       ``(c) Partnership Not Terminated by Reason of Change in 
     Ownership.--Subparagraph (B) of section 708(b)(1) shall not 
     apply to a large partnership.
       ``(d) Partnership Entitled to Certain Credits.--The 
     following shall be allowed to a large partnership and shall 
     not be taken into account by the partners of such 
     partnership:
       ``(1) The credit provided by section 34.
       ``(2) Any credit or refund under section 852(b)(3)(D).
       ``(e) Treatment of REMIC Residuals.--For purposes of 
     applying section 860E(e)(6) to any large partnership--
       ``(1) all interests in such partnership shall be treated as 
     held by disqualified organizations,
       ``(2) in lieu of applying subparagraph (C) of section 
     860E(e)(6), the amount subject to tax under section 
     860E(e)(6) shall be excluded from the gross income of such 
     partnership, and
       ``(3) subparagraph (D) of section 860E(e)(6) shall not 
     apply.
       ``(f) Special Rules for Applying Certain Installment Sale 
     Rules.--In the case of a large partnership--
       ``(1) the provisions of sections 453(l)(3) and 453A shall 
     be applied at the partnership level, and
       ``(2) in determining the amount of interest payable under 
     such sections, such partnership shall be treated as subject 
     to tax under this chapter at the highest rate of tax in 
     effect under section 1 or 11.

     ``SEC. 775. LARGE PARTNERSHIP DEFINED.

       ``(a) General Rule.--For purposes of this part--
       ``(1) In general.--Except as otherwise provided in this 
     section or section 776, the term `large partnership' means, 
     with respect to any partnership taxable year, any partnership 
     if the number of persons who were partners in such 
     partnership in any preceding partnership taxable year 
     beginning after December 31, 1995, equaled or exceeded 250. 
     To the extent provided in regulations, a partnership shall 
     cease to be treated as a large partnership for any 
     partnership taxable year if in such taxable year fewer than 
     100 persons were partners in such partnership.
       ``(2) Election for partnerships with at least 100 
     partners.--If a partnership makes an election under this 
     paragraph, paragraph (1) shall be applied by substituting 
     `100' for `250'. Such an election shall apply to the taxable 
     year for which made and all subsequent taxable years unless 
     revoked with the consent of the Secretary.
       ``(b) Special Rules for Certain Service Partnerships.--
       ``(1) Certain partners not counted.--For purposes of this 
     section, the term `partner' does not include any individual 
     performing substantial services in connection with the 
     activities of the partnership and holding an interest in such 
     partnership, or an individual who formerly performed 
     substantial services in connection with such activities and 
     who held an interest in such partnership at the time the 
     individual performed such services.
       ``(2) Exclusion.--For purposes of this part, the term 
     `large partnership' does not include any partnership if 
     substantially all the partners of such partnership--
       ``(A) are individuals performing substantial services in 
     connection with the activities of such partnership or are 
     personal service corporations (as defined in section 269A(b)) 
     the owner-employees (as defined in section 269A(b)) of which 
     perform such substantial services,
       ``(B) are retired partners who had performed such 
     substantial services, or
       ``(C) are spouses of partners who are performing (or had 
     previously performed) such substantial services.
       ``(3) Special rule for lower tier partnerships.--For 
     purposes of this subsection, the activities of a partnership 
     shall include the activities of any other partnership in 
     which the partnership owns directly an interest in the 
     capital and profits of at least 80 percent.
       ``(c) Exclusion of Commodity Pools.--For purposes of this 
     part, the term `large partnership' does not include any 
     partnership the principal activity of which is the buying and 
     selling of commodities (not described in section 1221(1)), or 
     options, futures, or forwards with respect to such 
     commodities.
       ``(d) Secretary May Rely on Treatment on Return.--If, on 
     the partnership return of any partnership, such partnership 
     is treated as a large partnership, such treatment shall be 
     binding on such partnership and all partners of such 
     partnership but not on the Secretary.

     ``SEC. 776. SPECIAL RULES FOR PARTNERSHIPS HOLDING OIL AND 
                   GAS PROPERTIES.

       ``(a) Exception for Partnerships Holding Significant Oil 
     and Gas Properties.--
       ``(1) In general.--For purposes of this part, the term 
     `large partnership' shall not include any partnership if the 
     average percentage of assets (by value) held by such 
     partnership during the taxable year which are oil or gas 
     properties is at least 25 percent. For purposes of the 
     preceding sentence, any interest held by a partnership in 
     another partnership shall be disregarded, except that the 
     partnership shall be treated as holding its proportionate 
     share of the assets of such other partnership.
       ``(2) Election to waive exception.--Any partnership may 
     elect to have paragraph (1) not apply. Such an election shall 
     apply to the partnership taxable year for which made and all 
     subsequent partnership taxable years unless revoked with the 
     consent of the Secretary.
       ``(b) Special Rules Where Part Applies.--
       ``(1) Computation of percentage depletion.--In the case of 
     a large partnership, except as provided in paragraph (2)--
       ``(A) the allowance for depletion under section 611 with 
     respect to any partnership oil or gas property shall be 
     computed at the partnership level without regard to any 
     provision of section 613A requiring such allowance to be 
     computed separately by each partner,
       ``(B) such allowance shall be determined without regard to 
     the provisions of section 613A(c) limiting the amount of 
     production for which percentage depletion is allowable and 
     without regard to paragraph (1) of section 613A(d), and
       ``(C) paragraph (3) of section 705(a) shall not apply.
       ``(2) Treatment of certain partners.--
       ``(A) In general.--In the case of a disqualified person, 
     the treatment under this chapter of such person's 
     distributive share of any item of income, gain, loss, 
     deduction, or credit attributable to any partnership oil or 
     gas property shall be determined without regard to this part. 
     Such person's distributive share of any such items shall be 
     excluded for purposes of making determinations under sections 
     772 and 773.
       ``(B) Disqualified person.--For purposes of subparagraph 
     (A), the term `disqualified person' means, with respect to 
     any partnership taxable year--
       ``(i) any person referred to in paragraph (2) or (4) of 
     section 613A(d) for such person's taxable year in which such 
     partnership taxable year ends, and
       ``(ii) any other person if such person's average daily 
     production of domestic crude oil and natural gas for such 
     person's taxable year in which such partnership taxable year 
     ends exceeds 500 barrels.
       ``(C) Average daily production.--For purposes of 
     subparagraph (B), a person's average daily production of 
     domestic crude oil and natural gas for any taxable year shall 
     be computed as provided in section 613A(c)(2)--
       ``(i) by taking into account all production of domestic 
     crude oil and natural gas (including such person's 
     proportionate share of any production of a partnership),
       ``(ii) by treating 6,000 cubic feet of natural gas as a 
     barrel of crude oil, and
       ``(iii) by treating as 1 person all persons treated as 1 
     taxpayer under section 613A(c)(8) or among whom allocations 
     are required under such section.

     ``SEC. 777. REGULATIONS.

       ``The Secretary shall prescribe such regulations as may be 
     appropriate to carry out the purposes of this part.''
       (b) Clerical Amendment.--The table of parts for subchapter 
     K of chapter 1 is amended by adding at the end the following 
     new item:

``Part IV. Special rules for large partnerships.''

     SEC. 14302. SIMPLIFIED AUDIT PROCEDURES FOR LARGE 
                   PARTNERSHIPS.

       (a) General Rule.--Chapter 63 is amended by adding at the 
     end the following new subchapter:

            ``Subchapter D--Treatment of Large Partnerships

``Part I. Treatment of partnership items and adjustments.
``Part II. Partnership level adjustments.
``Part III. Definitions and special rules.

        ``PART I--TREATMENT OF PARTNERSHIP ITEMS 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.

     ``SEC. 6240. APPLICATION OF SUBCHAPTER.

       ``(a) General Rule.--This subchapter shall only apply to 
     large partnerships and partners in such partnerships.
       ``(b) Coordination With Other Partnership Audit 
     Procedures.--
       ``(1) In general.--Subchapter C of this chapter shall not 
     apply to any large partnership other than in its capacity as 
     a partner in another partnership which is not a large 
     partnership.
       ``(2) Treatment where partner in other partnership.--If a 
     large partnership is a partner in another partnership which 
     is not a large partnership--
       ``(A) subchapter C of this chapter shall apply to items of 
     such large partnership which are partnership items with 
     respect to such other partnership, but
       ``(B) any adjustment under such subchapter C shall be taken 
     into account in the manner provided by section 6242.

[[Page 1726]]

     ``SEC. 6241. PARTNER'S RETURN MUST BE CONSISTENT WITH 
                   PARTNERSHIP RETURN.

       ``(a) General Rule.--A partner of any large partnership 
     shall, on the partner's return, treat each partnership item 
     attributable to such partnership in a manner which is 
     consistent with the treatment of such partnership item on the 
     partnership return.
       ``(b) Underpayment Due to Inconsistent Treatment Assessed 
     as Math Error.--Any underpayment of tax by a partner by 
     reason of failing to comply with the requirements of 
     subsection (a) shall be assessed and collected in the same 
     manner as if such underpayment were on account of a 
     mathematical or clerical error appearing on the partner's 
     return. Paragraph (2) of section 6213(b) shall not apply to 
     any assessment of an underpayment referred to in the 
     preceding sentence.
       ``(c) Adjustments Not To Affect Prior Year of Partners.--
       ``(1) In general.--Except as provided in paragraph (2), 
     subsections (a) and (b) shall apply without regard to any 
     adjustment to the partnership item under part II.
       ``(2) Certain changes in distributive share taken into 
     account by partner.--
       ``(A) In general.--To the extent that any adjustment under 
     part II involves a change under section 704 in a partner's 
     distributive share of the amount of any partnership item 
     shown on the partnership return, such adjustment shall be 
     taken into account in applying this title to such partner for 
     the partner's taxable year for which such item was required 
     to be taken into account.
       ``(B) Coordination with deficiency procedures.--
       ``(i) In general.--Subchapter B shall not apply to the 
     assessment or collection of any underpayment of tax 
     attributable to an adjustment referred to in subparagraph 
     (A).
       ``(ii) Adjustment not precluded.--Notwithstanding any other 
     law or rule of law, nothing in subchapter B (or in any 
     proceeding under subchapter B) shall preclude the assessment 
     or collection of any underpayment of tax (or the allowance of 
     any credit or refund of any overpayment of tax) attributable 
     to an adjustment referred to in subparagraph (A) and such 
     assessment or collection or allowance (or any notice thereof) 
     shall not preclude any notice, proceeding, or determination 
     under subchapter B.
       ``(C) Period of limitations.--The period for--
       ``(i) assessing any underpayment of tax, or
       ``(ii) filing a claim for credit or refund of any 
     overpayment of tax,
     attributable to an adjustment referred to in subparagraph (A) 
     shall not expire before the close of the period prescribed by 
     section 6248 for making adjustments with respect to the 
     partnership taxable year involved.
       ``(D) Tiered structures.--If the partner referred to in 
     subparagraph (A) is another partnership or an S corporation, 
     the rules of this paragraph shall also apply to persons 
     holding interests in such partnership or S corporation (as 
     the case may be); except that, if such partner is a large 
     partnership, the adjustment referred to in subparagraph (A) 
     shall be taken into account in the manner provided by section 
     6242.
       ``(d) Addition to Tax for Failure To Comply 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.

     ``SEC. 6242. PROCEDURES FOR TAKING PARTNERSHIP ADJUSTMENTS 
                   INTO ACCOUNT.

       ``(a) Adjustments Flow Through to Partners for Year in 
     Which Adjustment Takes Effect.--
       ``(1) In general.--If any partnership adjustment with 
     respect to any partnership item takes effect (within the 
     meaning of subsection (d)(2)) during any partnership taxable 
     year and if an election under paragraph (2) does not apply to 
     such adjustment, such adjustment shall be taken into account 
     in determining the amount of such item for the partnership 
     taxable year in which such adjustment takes effect. In 
     applying this title to any person who is (directly or 
     indirectly) a partner in such partnership during such 
     partnership taxable year, such adjustment shall be treated as 
     an item actually arising during such taxable year.
       ``(2) Partnership liable in certain cases.--If--
       ``(A) a partnership elects under this paragraph to not take 
     an adjustment into account under paragraph (1),
       ``(B) a partnership does not make such an election but in 
     filing its return for any partnership taxable year fails to 
     take fully into account any partnership adjustment as 
     required under paragraph (1), or
       ``(C) any partnership adjustment involves a reduction in a 
     credit which exceeds the amount of such credit determined for 
     the partnership taxable year in which the adjustment takes 
     effect,
     the partnership shall pay to the Secretary an amount 
     determined by applying the rules of subsection (b)(4) to the 
     adjustments not so taken into account and any excess referred 
     to in subparagraph (C). A partnership may make an election 
     under subparagraph (A) only if such partnership meets such 
     requirements as the Secretary may prescribe to assure payment 
     of such amount.
       ``(3) Offsetting adjustments taken into account.--If a 
     partnership adjustment requires another adjustment in a 
     taxable year after the adjusted year and before the 
     partnership taxable year in which such partnership adjustment 
     takes effect, such other adjustment shall be taken into 
     account under this subsection for the partnership taxable 
     year in which such partnership adjustment takes effect.
       ``(4) Coordination with part ii.--Amounts taken into 
     account under this subsection for any partnership taxable 
     year shall continue to be treated as adjustments for the 
     adjusted year for purposes of determining whether such 
     amounts may be readjusted under part II.
       ``(b) Partnership Liable for Interest and Penalties.--
       ``(1) In general.--If a partnership adjustment takes effect 
     during any partnership taxable year and such adjustment 
     results in an imputed underpayment for the adjusted year, the 
     partnership--
       ``(A) shall pay to the Secretary interest computed under 
     paragraph (2), and
       ``(B) shall be liable for any penalty, addition to tax, or 
     additional amount as provided in paragraph (3).
       ``(2) Determination of amount of interest.--The interest 
     computed under this paragraph with respect to any partnership 
     adjustment is the interest which would be determined under 
     chapter 67--
       ``(A) on the imputed underpayment determined under 
     paragraph (4) with respect to such adjustment,
       ``(B) for the period beginning on the day after the return 
     due date for the adjusted year and ending on the return due 
     date for the partnership taxable year in which such 
     adjustment takes effect (or, if earlier, in the case of any 
     adjustment to which subsection (a)(2) applies, the date on 
     which the payment under subsection (a)(2) is made).
     Proper adjustments in the amount determined under the 
     preceding sentence shall be made for adjustments required for 
     partnership taxable years after the adjusted year and before 
     the year in which the partnership adjustment takes effect by 
     reason of such partnership adjustment.
       ``(3) Penalties.--A partnership shall be liable for any 
     penalty, addition to tax, or additional amount for which it 
     would have been liable if such partnership had been an 
     individual subject to tax under chapter 1 for the adjusted 
     year and the imputed underpayment determined under paragraph 
     (4) were an actual underpayment (or understatement) for such 
     year.
       ``(4) Imputed underpayment.--For purposes of this 
     subsection, the imputed underpayment determined under this 
     paragraph with respect to any partnership adjustment is the 
     underpayment (if any) which would result--
       ``(A) by netting all adjustments to items of income, gain, 
     loss, or deduction and by treating any net increase in income 
     as an underpayment equal to the amount of such net increase 
     multiplied by the highest rate of tax in effect under section 
     1 or 11 for the adjusted year, and
       ``(B) by taking adjustments to credits into account as 
     increases or decreases (whichever is appropriate) in the 
     amount of tax.
     For purposes of the preceding sentence, any net decrease in a 
     loss shall be treated as an increase in income and a similar 
     rule shall apply to a net increase in a loss.
       ``(c) Administrative Provisions.--
       ``(1) In general.--Any payment required by subsection 
     (a)(2) or (b)(1)(A)--
       ``(A) shall be assessed and collected in the same manner as 
     if it were a tax imposed by subtitle C, and
       ``(B) shall be paid on or before the return due date for 
     the partnership taxable year in which the partnership 
     adjustment takes effect.
       ``(2) Interest.--For purposes of determining interest, any 
     payment required by subsection (a)(2) or (b)(1)(A) shall be 
     treated as an underpayment of tax.
       ``(3) Penalties.--
       ``(A) In general.--In the case of any failure by any 
     partnership to pay on the date prescribed therefor any amount 
     required by subsection (a)(2) or (b)(1)(A), there is hereby 
     imposed on such partnership a penalty of 10 percent of the 
     underpayment. For purposes of the preceding sentence, the 
     term `underpayment' means the excess of any payment required 
     under this section over the amount (if any) paid on or before 
     the date prescribed therefor.
       ``(B) Accuracy-related and fraud penalties made 
     applicable.--For purposes of part II of subchapter A of 
     chapter 68, any payment required by subsection (a)(2) shall 
     be treated as an underpayment of tax.
       ``(d) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Partnership adjustment.--The term `partnership 
     adjustment' means any adjustment in the amount of any 
     partnership item of a large partnership.
       ``(2) When adjustment takes effect.--A partnership 
     adjustment takes effect--
       ``(A) in the case of an adjustment pursuant to the decision 
     of a court in a proceeding brought under part II, when such 
     decision becomes final,
       ``(B) in the case of an adjustment pursuant to any 
     administrative adjustment request under section 6251, when 
     such adjustment is allowed by the Secretary, or
       ``(C) in any other case, when such adjustment is made.
       ``(3) Adjusted year.--The term `adjusted year' means the 
     partnership taxable year to which the item being adjusted 
     relates.
       ``(4) Return due date.--The term `return due date' means, 
     with respect to any taxable year, the date prescribed for 
     filing the partnership return for such taxable year 
     (determined without regard to extensions).
       ``(5) Adjustments involving changes in character.--Under 
     regulations, appropriate adjustments in the application of 
     this sec

[[Page 1727]]

     tion shall be made for purposes of taking into account 
     partnership adjustments which involve a change in the 
     character of any item of income, gain, loss, or deduction.
       ``(e) Payments Nondeductible.--No deduction shall be 
     allowed under subtitle A for any payment required to be made 
     by a large partnership under this section.

                ``PART II--PARTNERSHIP LEVEL ADJUSTMENTS

``Subpart A. Adjustments by Secretary.
``Subpart B. Claims for adjustments by partnership.

                 ``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.

     ``SEC. 6245. SECRETARIAL AUTHORITY.

       ``(a) General Rule.--The Secretary is authorized and 
     directed to make adjustments at the partnership level in any 
     partnership item to the extent necessary to have such item be 
     treated in the manner required.
       ``(b) Notice of Partnership Adjustment.--
       ``(1) In general.--If the Secretary determines that a 
     partnership adjustment is required, the Secretary is 
     authorized to send notice of such adjustment to the 
     partnership by certified mail or registered mail. Such notice 
     shall be sufficient if mailed to the partnership at its last 
     known address even if the partnership has terminated its 
     existence.
       ``(2) Further notices restricted.--If the Secretary mails a 
     notice of a partnership adjustment to any partnership for any 
     partnership taxable year and the partnership files a petition 
     under section 6247 with respect to such notice, in the 
     absence of a showing of fraud, malfeasance, or 
     misrepresentation of a material fact, the Secretary shall not 
     mail another such notice to such partnership with respect to 
     such taxable year.
       ``(3) Authority to rescind notice with partnership 
     consent.--The Secretary may, with the consent of the 
     partnership, rescind any notice of a partnership adjustment 
     mailed to such partnership. Any notice so rescinded shall not 
     be treated as a notice of a partnership adjustment, for 
     purposes of this section, section 6246, and section 6247, and 
     the taxpayer shall have no right to bring a proceeding under 
     section 6247 with respect to such notice. Nothing in this 
     subsection shall affect any suspension of the running of any 
     period of limitations during any period during which the 
     rescinded notice was outstanding.

     ``SEC. 6246. RESTRICTIONS ON PARTNERSHIP ADJUSTMENTS.

       ``(a) General Rule.--Except as otherwise provided in this 
     chapter, no adjustment to any partnership item may be made 
     (and no levy or proceeding in any court for the collection of 
     any amount resulting from such adjustment may be made, begun 
     or prosecuted) before--
       ``(1) the close of the 90th day after the day on which a 
     notice of a partnership adjustment was mailed to the 
     partnership, and
       ``(2) if a petition is filed under section 6247 with 
     respect to such notice, the decision of the court has become 
     final.
       ``(b) Premature Action May Be Enjoined.--Notwithstanding 
     section 7421(a), any action which violates subsection (a) may 
     be enjoined in the proper court, including the Tax Court. The 
     Tax Court shall have no jurisdiction to enjoin any action 
     under this subsection unless a timely petition has been filed 
     under section 6247 and then only in respect of the 
     adjustments that are the subject of such petition.
       ``(c) Exceptions to Restrictions on Adjustments.--
       ``(1) Adjustments arising out of math or clerical errors.--
       ``(A) In general.--If the partnership is notified that, on 
     account of a mathematical or clerical error appearing on the 
     partnership return, an adjustment to a partnership item is 
     required, rules similar to the rules of paragraphs (1) and 
     (2) of section 6213(b) shall apply to such adjustment.
       ``(B) Special rule.--If a large partnership is a partner in 
     another large partnership, any adjustment on account of such 
     partnership's failure to comply with the requirements of 
     section 6241(a) with respect to its interest in such other 
     partnership shall be treated as an adjustment referred to in 
     subparagraph (A), except that paragraph (2) of section 
     6213(b) shall not apply to such adjustment.
       ``(2) Partnership may waive restrictions.--The partnership 
     shall at any time (whether or not a notice of partnership 
     adjustment has been issued) have the right, by a signed 
     notice in writing filed with the Secretary, to waive the 
     restrictions provided in subsection (a) on the making of any 
     partnership adjustment.
       ``(d) Limit Where No Proceeding Begun.--If no proceeding 
     under section 6247 is begun with respect to any notice of a 
     partnership adjustment during the 90-day period described in 
     subsection (a), the amount for which the partnership is 
     liable under section 6242 (and any increase in any partner's 
     liability for tax under chapter 1 by reason of any adjustment 
     under section 6242(a)) shall not exceed the amount determined 
     in accordance with such notice.

     ``SEC. 6247. JUDICIAL REVIEW OF PARTNERSHIP ADJUSTMENT.

       ``(a) General Rule.--Within 90 days after the date on which 
     a notice of a partnership adjustment is mailed to the 
     partnership with respect to any partnership taxable year, the 
     partnership may file a petition for a readjustment of the 
     partnership items for such taxable year with--
       ``(1) the Tax Court,
       ``(2) the district court of the United States for the 
     district in which the partnership's principal place of 
     business is located, or
       ``(3) the Claims Court.
       ``(b) Jurisdictional Requirement for Bringing Action in 
     District Court or Claims Court.--
       ``(1) In general.--A readjustment petition under this 
     section may be filed in a district court of the United States 
     or the Claims Court only if the partnership filing the 
     petition deposits with the Secretary, on or before the date 
     the petition is filed, the amount for which the partnership 
     would be liable under section 6242(b) (as of the date of the 
     filing of the petition) if the partnership items were 
     adjusted as provided by the notice of partnership adjustment. 
     The court may by order provide that the jurisdictional 
     requirements of this paragraph are satisfied where there has 
     been a good faith attempt to satisfy such requirement and any 
     shortfall of the amount required to be deposited is timely 
     corrected.
       ``(2) Interest payable.--Any amount deposited under 
     paragraph (1), while deposited, shall not be treated as a 
     payment of tax for purposes of this title (other than chapter 
     67).
       ``(c) Scope of Judicial Review.--A court with which a 
     petition is filed in accordance with this section shall have 
     jurisdiction to determine all partnership items of the 
     partnership for the partnership taxable year to which the 
     notice of partnership adjustment relates and the proper 
     allocation of such items among the partners (and the 
     applicability of any penalty, addition to tax, or additional 
     amount for which the partnership may be liable under section 
     6242(b)).
       ``(d) Determination of Court Reviewable.--Any determination 
     by a court under this section shall have the force and effect 
     of a decision of the Tax Court or a final judgment or decree 
     of the district court or the Claims Court, as the case may 
     be, and shall be reviewable as such. The date of any such 
     determination shall be treated as being the date of the 
     court's order entering the decision.
       ``(e) Effect of Decision Dismissing Action.--If an action 
     brought under this section is dismissed other than by reason 
     of a rescission under section 6245(b)(3), the decision of the 
     court dismissing the action shall be considered as its 
     decision that the notice of partnership adjustment is 
     correct, and an appropriate order shall be entered in the 
     records of the court.

     ``SEC. 6248. PERIOD OF LIMITATIONS FOR MAKING ADJUSTMENTS.

       ``(a) General Rule.--Except as otherwise provided in this 
     section, no adjustment under this subpart to any partnership 
     item for any partnership taxable year may be made after the 
     date which is 3 years after the later of--
       ``(1) the date on which the partnership return for such 
     taxable year was filed, or
       ``(2) the last day for filing such return for such year 
     (determined without regard to extensions).
       ``(b) Extension by Agreement.--The period described in 
     subsection (a) (including an extension period under this 
     subsection) may be extended by an agreement entered into by 
     the Secretary and the partnership before the expiration of 
     such period.
       ``(c) Special Rule in Case of Fraud, Etc.--
       ``(1) False return.--In the case of a false or fraudulent 
     partnership return with intent to evade tax, the adjustment 
     may be made at any time.
       ``(2) Substantial omission of income.--If any partnership 
     omits from gross income an amount properly includible therein 
     which is in excess of 25 percent of the amount of gross 
     income stated in its return, subsection (a) shall be applied 
     by substituting `6 years' for `3 years'.
       ``(3) No return.--In the case of a failure by a partnership 
     to file a return for any taxable year, the adjustment may be 
     made at any time.
       ``(4) Return filed by secretary.--For purposes of this 
     section, a return executed by the Secretary under subsection 
     (b) of section 6020 on behalf of the partnership shall not be 
     treated as a return of the partnership.
       ``(d) Suspension When Secretary Mails Notice of 
     Adjustment.--If notice of a partnership adjustment with 
     respect to any taxable year is mailed to the partnership, the 
     running of the period specified in subsection (a) (as 
     modified by the other provisions of this section) shall be 
     suspended--
       ``(1) for the period during which an action may be brought 
     under section 6247 (and, if a petition is filed under section 
     6247 with respect to such notice, until the decision of the 
     court becomes final), and
       ``(2) for 1 year thereafter.

           ``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.

     ``SEC. 6251. ADMINISTRATIVE ADJUSTMENT REQUESTS.

       ``(a) General Rule.--A partnership may file a request for 
     an administrative adjustment of partnership items for any 
     partnership taxable year at any time which is--
       ``(1) within 3 years after the later of--
       ``(A) the date on which the partnership return for such 
     year is filed, or

[[Page 1728]]

       ``(B) the last day for filing the partnership return for 
     such year (determined without regard to extensions), and
       ``(2) before the mailing to the partnership of a notice of 
     a partnership adjustment with respect to such taxable year.
       ``(b) Secretarial Action.--If a partnership files an 
     administrative adjustment request under subsection (a), the 
     Secretary may allow any part of the requested adjustments.
       ``(c) Special Rule in Case of Extension Under Section 
     6248.--If the period described in section 6248(a) is extended 
     pursuant to an agreement under section 6248(b), the period 
     prescribed by subsection (a)(1) shall not expire before the 
     date 6 months after the expiration of the extension under 
     section 6248(b).

     ``SEC. 6252. JUDICIAL REVIEW WHERE ADMINISTRATIVE ADJUSTMENT 
                   REQUEST IS NOT ALLOWED IN FULL.

       ``(a) In General.--If any part of an administrative 
     adjustment request filed under section 6251 is not allowed by 
     the Secretary, the partnership may file a petition for an 
     adjustment with respect to the partnership items to which 
     such part of the request relates with--
       ``(1) the Tax Court,
       ``(2) the district court of the United States for the 
     district in which the principal place of business of the 
     partnership is located, or
       ``(3) the Claims Court.
       ``(b) Period for Filing Petition.--A petition may be filed 
     under subsection (a) with respect to partnership items for a 
     partnership taxable year only--
       ``(1) after the expiration of 6 months from the date of 
     filing of the request under section 6251, and
       ``(2) before the date which is 2 years after the date of 
     such request.
     The 2-year period set forth in paragraph (2) shall be 
     extended for such period as may be agreed upon in writing by 
     the partnership and the Secretary.
       ``(c) Coordination With Subpart A.--
       ``(1) Notice of partnership adjustment before filing of 
     petition.--No petition may be filed under this section after 
     the Secretary mails to the partnership a notice of a 
     partnership adjustment for the partnership taxable year to 
     which the request under section 6251 relates.
       ``(2) Notice of partnership adjustment after filing but 
     before hearing of petition.--If the Secretary mails to the 
     partnership a notice of a partnership adjustment for the 
     partnership taxable year to which the request under section 
     6251 relates after the filing of a petition under this 
     subsection but before the hearing of such petition, such 
     petition shall be treated as an action brought under section 
     6247 with respect to such notice, except that subsection (b) 
     of section 6247 shall not apply.
       ``(3) Notice must be before expiration of statute of 
     limitations.--A notice of a partnership adjustment for the 
     partnership taxable year shall be taken into account under 
     paragraphs (1) and (2) only if such notice is mailed before 
     the expiration of the period prescribed by section 6248 for 
     making adjustments to partnership items for such taxable 
     year.
       ``(d) Scope of Judicial Review.--Except in the case 
     described in paragraph (2) of subsection (c), a court with 
     which a petition is filed in accordance with this section 
     shall have jurisdiction to determine only those partnership 
     items to which the part of the request under section 6251 not 
     allowed by the Secretary relates and those items with respect 
     to which the Secretary asserts adjustments as offsets to the 
     adjustments requested by the partnership.
       ``(e) Determination of Court Reviewable.--Any determination 
     by a court under this subsection shall have the force and 
     effect of a decision of the Tax Court or a final judgment or 
     decree of the district court or the Claims Court, as the case 
     may be, and shall be reviewable as such. The date of any such 
     determination shall be treated as being the date of the 
     court's order entering the decision.

               ``PART III--DEFINITIONS AND SPECIAL RULES

``Sec. 6255. Definitions and special rules.

     ``SEC. 6255. DEFINITIONS AND SPECIAL RULES.

       ``(a) Definitions.--For purposes of this subchapter--
       ``(1) Large partnership.--The term `large partnership' has 
     the meaning given to such term by section 775 without regard 
     to section 776(a).
       ``(2) Partnership item.--The term `partnership item' has 
     the meaning given to such term by section 6231(a)(3).
       ``(b) Partners Bound by Actions of Partnership, Etc.--
       ``(1) Designation of partner.--Each large partnership shall 
     designate (in the manner prescribed by the Secretary) a 
     partner (or other person) who shall have the sole authority 
     to act on behalf of such partnership under this subchapter. 
     In any case in which such a designation is not in effect, the 
     Secretary may select any partner as the partner with such 
     authority.
       ``(2) Binding effect.--A large partnership and all partners 
     of such partnership shall be bound--
       ``(A) by actions taken under this subchapter by the 
     partnership, and
       ``(B) by any decision in a proceeding brought under this 
     subchapter.
       ``(c) Partnerships Having Principal Place of Business 
     Outside the United States.--For purposes of sections 6247 and 
     6252, a principal place of business located outside the 
     United States shall be treated as located in the District of 
     Columbia.
       ``(d) Treatment Where Partnership Ceases To Exist.--If a 
     partnership ceases to exist before a partnership adjustment 
     under this subchapter takes effect, such adjustment shall be 
     taken into account by the former partners of such partnership 
     under regulations prescribed by the Secretary.
       ``(e) Date Decision Becomes Final.--For purposes of this 
     subchapter, the principles of section 7481(a) shall be 
     applied in determining the date on which a decision of a 
     district court or the Claims Court becomes final.
       ``(f) Partnerships in Cases Under Title 11 of the United 
     States Code.--The running of any period of limitations 
     provided in this subchapter on making a partnership 
     adjustment (or provided by section 6501 or 6502 on the 
     assessment or collection of any amount required to be paid 
     under section 6242) shall, in a case under title 11 of the 
     United States Code, be suspended during the period during 
     which the Secretary is prohibited by reason of such case from 
     making the adjustment (or assessment or collection) and--
       ``(1) for adjustment or assessment, 60 days thereafter, and
       ``(2) for collection, 6 months thereafter.
       ``(g) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the provisions 
     of this subchapter, including regulations--
       ``(1) to prevent abuse through manipulation of the 
     provisions of this subchapter, and
       ``(2) providing that this subchapter shall not apply to any 
     case described in section 6231(c)(1) (or the regulations 
     prescribed thereunder) where the application of this 
     subchapter to such a case would interfere with the effective 
     and efficient enforcement of this title.
     In any case to which this subchapter does not apply by reason 
     of paragraph (2), rules similar to the rules of sections 
     6229(f) and 6255(f) shall apply.''
       (b) Clerical Amendment.--The table of subchapters for 
     chapter 63 is amended by adding at the end the following new 
     item:

           ``Subchapter D. Treatment of large partnerships.''

     SEC. 14303. DUE DATE FOR FURNISHING INFORMATION TO PARTNERS 
                   OF LARGE PARTNERSHIPS.

       (a) General Rule.--Subsection (b) of section 6031 (relating 
     to copies to partners) is amended by adding at the end the 
     following new sentence: ``In the case of a large partnership 
     (as defined in sections 775 and 776(a)), such information 
     shall be furnished on or before the first March 15 following 
     the close of such taxable year.''
       (b) Treatment as Information Return.--Section 6724 is 
     amended by adding at the end the following new subsection:
       ``(e) Special Rule for Certain Partnership Returns.--If any 
     partnership return under section 6031(a) is required under 
     section 6011(e) to be filed on magnetic media or in other 
     machine-readable form, for purposes of this part, each 
     schedule required to be included with such return with 
     respect to each partner shall be treated as a separate 
     information return.''

     SEC. 14304. RETURNS MAY BE REQUIRED ON MAGNETIC MEDIA.

       Paragraph (2) of section 6011(e) (relating to returns on 
     magnetic media) is amended by adding at the end the following 
     new sentence:
     ``Notwithstanding the preceding sentence, the Secretary shall 
     require partnerships having more than 100 partners to file 
     returns on magnetic media.''

     SEC. 14305. TREATMENT OF PARTNERSHIP ITEMS OF INDIVIDUAL 
                   RETIREMENT ACCOUNTS.

       Subsection (b) of section 6012 is amended by adding at the 
     end the following new paragraph:
       ``(6) IRA share of partnership income.--In the case of a 
     trust which is exempt from taxation under section 408(e), for 
     purposes of this section, the trust's distributive share of 
     items of gross income and gain of any partnership to which 
     subchapter C or D of chapter 63 applies shall be treated as 
     equal to the trust's distributive share of the taxable income 
     of such partnership.''

     SEC. 14306. EFFECTIVE DATE.

       The amendments made by this part shall apply to partnership 
     taxable years beginning after December 31, 1995.

     PART II--PROVISIONS RELATED TO CERTAIN PARTNERSHIP PROCEEDINGS

     SEC. 14311. TREATMENT OF PARTNERSHIP ITEMS IN DEFICIENCY 
                   PROCEEDINGS.

       (a) In General.--Subchapter C of chapter 63 is amended by 
     adding at the end the following new section:

     ``SEC. 6234. DECLARATORY JUDGMENT RELATING TO TREATMENT OF 
                   ITEMS OTHER THAN PARTNERSHIP ITEMS WITH RESPECT 
                   TO AN OVERSHELTERED RETURN.

       ``(a) General Rule.--If--
       ``(1) a taxpayer files an oversheltered return for a 
     taxable year,
       ``(2) the Secretary makes a determination with respect to 
     the treatment of items (other than partnership items) of such 
     taxpayer for such taxable year, and
       ``(3) the adjustments resulting from such determination do 
     not give rise to a deficiency (as defined in section 6211) 
     but would give rise to a deficiency if there were no net loss 
     from partnership items,
     the Secretary is authorized to send a notice of adjustment 
     reflecting such determination to the taxpayer by certified or 
     registered mail.
       ``(b) Oversheltered Return.--For purposes of this section, 
     the term `oversheltered return' means an income tax return 
     which--

[[Page 1729]]

       ``(1) shows no taxable income for the taxable year, and
       ``(2) shows a net loss from partnership items.
       ``(c) Judicial Review in the Tax Court.--Within 90 days, or 
     150 days if the notice is addressed to a person outside the 
     United States, after the day on which the notice of 
     adjustment authorized in subsection (a) is mailed to the 
     taxpayer, the taxpayer may file a petition with the Tax Court 
     for redetermination of the adjustments. Upon the filing of 
     such a petition, the Tax Court shall have jurisdiction to 
     make a declaration with respect to all items (other than 
     partnership items and affected items which require partner 
     level determinations as described in section 
     6230(a)(2)(A)(i)) for the taxable year to which the notice of 
     adjustment relates, in accordance with the principles of 
     section 6214(a). Any such declaration shall have the force 
     and effect of a decision of the Tax Court and shall be 
     reviewable as such.
       ``(d) Failure To File Petition.--
       ``(1) In general.--Except as provided in paragraph (2), if 
     the taxpayer does not file a petition with the Tax Court 
     within the time prescribed in subsection (c), the 
     determination of the Secretary set forth in the notice of 
     adjustment that was mailed to the taxpayer shall be deemed to 
     be correct.
       ``(2) Exception.--Paragraph (1) shall not apply after the 
     date that the taxpayer--
       ``(A) files a petition with the Tax Court within the time 
     prescribed in subsection (c) with respect to a subsequent 
     notice of adjustment relating to the same taxable year, or
       ``(B) files a claim for refund of an overpayment of tax 
     under section 6511 for the taxable year involved.
     If a claim for refund is filed by the taxpayer, then solely 
     for purposes of determining (for the taxable year involved) 
     the amount of any computational adjustment in connection with 
     a partnership proceeding under this subchapter (other than 
     under this section) or the amount of any deficiency 
     attributable to affected items in a proceeding under section 
     6230(a)(2), the items that are the subject of the notice of 
     adjustment shall be presumed to have been correctly reported 
     on the taxpayer's return during the pendency of the refund 
     claim (and, if within the time prescribed by section 6532 the 
     taxpayer commences a civil action for refund under section 
     7422, until the decision in the refund action becomes final).
       ``(e) Limitations Period.--
       ``(1) In general.--Any notice to a taxpayer under 
     subsection (a) shall be mailed before the expiration of the 
     period prescribed by section 6501 (relating to the period of 
     limitations on assessment).
       ``(2) Suspension when secretary mails notice of 
     adjustment.--If the Secretary mails a notice of adjustment to 
     the taxpayer for a taxable year, the period of limitations on 
     the making of assessments shall be suspended for the period 
     during which the Secretary is prohibited from making the 
     assessment (and, in any event, if a proceeding in respect of 
     the notice of adjustment is placed on the docket of the Tax 
     Court, until the decision of the Tax Court becomes final), 
     and for 60 days thereafter.
       ``(3) Restrictions on assessment.--Except as otherwise 
     provided in section 6851, 6852, or 6861, no assessment of a 
     deficiency with respect to any tax imposed by subtitle A 
     attributable to any item (other than a partnership item or 
     any item affected by a partnership item) shall be made--
       ``(A) until the expiration of the applicable 90-day or 150-
     day period set forth in subsection (c) for filing a petition 
     with the Tax Court, or
       ``(B) if a petition has been filed with the Tax Court, 
     until the decision of the Tax Court has become final.
       ``(f) Further Notices of Adjustment Restricted.--If the 
     Secretary mails a notice of adjustment to the taxpayer for a 
     taxable year and the taxpayer files a petition with the Tax 
     Court within the time prescribed in subsection (c), the 
     Secretary may not mail another such notice to the taxpayer 
     with respect to the same taxable year in the absence of a 
     showing of fraud, malfeasance, or misrepresentation of a 
     material fact.
       ``(g) Coordination With Other Proceedings Under This 
     Subchapter.--
       ``(1) In general.--The treatment of any item that has been 
     determined pursuant to subsection (c) or (d) shall be taken 
     into account in determining the amount of any computational 
     adjustment that is made in connection with a partnership 
     proceeding under this subchapter (other than under this 
     section), or the amount of any deficiency attributable to 
     affected items in a proceeding under section 6230(a)(2), for 
     the taxable year involved. Notwithstanding any other law or 
     rule of law pertaining to the period of limitations on the 
     making of assessments, for purposes of the preceding 
     sentence, any adjustment made in accordance with this section 
     shall be taken into account regardless of whether any 
     assessment has been made with respect to such adjustment.
       ``(2) Special rule in case of computational adjustment.--In 
     the case of a computational adjustment that is made in 
     connection with a partnership proceeding under this 
     subchapter (other than under this section), the provisions of 
     paragraph (1) shall apply only if the computational 
     adjustment is made within the period prescribed by section 
     6229 for assessing any tax under subtitle A which is 
     attributable to any partnership item or affected item for the 
     taxable year involved.
       ``(3) Conversion to deficiency proceeding.--If--
       ``(A) after the notice referred to in subsection (a) is 
     mailed to a taxpayer for a taxable year but before the 
     expiration of the period for filing a petition with the Tax 
     Court under subsection (c) (or, if a petition is filed with 
     the Tax Court, before the Tax Court makes a declaration for 
     that taxable year), the treatment of any partnership item for 
     the taxable year is finally determined, or any such item 
     ceases to be a partnership item pursuant to section 6231(b), 
     and
       ``(B) as a result of that final determination or cessation, 
     a deficiency can be determined with respect to the items that 
     are the subject of the notice of adjustment,
     the notice of adjustment shall be treated as a notice of 
     deficiency under section 6212 and any petition filed in 
     respect of the notice shall be treated as an action brought 
     under section 6213.
       ``(4) Finally determined.--For purposes of this subsection, 
     the treatment of partnership items shall be treated as 
     finally determined if--
       ``(A) the Secretary enters into a settlement agreement 
     (within the meaning of section 6224) with the taxpayer 
     regarding such items,
       ``(B) a notice of final partnership administrative 
     adjustment has been issued and--
       ``(i) no petition has been filed under section 6226 and the 
     time for doing so has expired, or
       ``(ii) a petition has been filed under section 6226 and the 
     decision of the court has become final, or
       ``(C) the period within which any tax attributable to such 
     items may be assessed against the taxpayer has expired.
       ``(h) Special Rules if Secretary Incorrectly Determines 
     Applicable Procedure.--
       ``(1) Special rule if secretary erroneously mails notice of 
     adjustment.--If the Secretary erroneously determines that 
     subchapter B does not apply to a taxable year of a taxpayer 
     and consistent with that determination timely mails a notice 
     of adjustment to the taxpayer pursuant to subsection (a) of 
     this section, the notice of adjustment shall be treated as a 
     notice of deficiency under section 6212 and any petition that 
     is filed in respect of the notice shall be treated as an 
     action brought under section 6213.
       ``(2) Special rule if secretary erroneously mails notice of 
     deficiency.--If the Secretary erroneously determines that 
     subchapter B applies to a taxable year of a taxpayer and 
     consistent with that determination timely mails a notice of 
     deficiency to the taxpayer pursuant to section 6212, the 
     notice of deficiency shall be treated as a notice of 
     adjustment under subsection (a) and any petition that is 
     filed in respect of the notice shall be treated as an action 
     brought under subsection (c).''
       (b) Treatment of Partnership Items in Deficiency 
     Proceedings.--Section 6211 (defining deficiency) is amended 
     by adding at the end the following new subsection:
       ``(c) Coordination With Subchapter C.--In determining the 
     amount of any deficiency for purposes of this subchapter, 
     adjustments to partnership items shall be made only as 
     provided in subchapter C.''
       (c) Clerical Amendment.--The table of sections for 
     subchapter C of chapter 63 is amended by adding at 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.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to partnership taxable years ending after the 
     date of the enactment of this Act.

     SEC. 14312. PARTNERSHIP RETURN TO BE DETERMINATIVE OF AUDIT 
                   PROCEDURES TO BE FOLLOWED.

       (a) In General.--Section 6231 (relating to definitions and 
     special rules) is amended by adding at the end the following 
     new subsection:
       ``(g) Partnership Return To Be Determinative of Whether 
     Subchapter Applies.--
       ``(1) Determination that subchapter applies.--If, on the 
     basis of a partnership return for a taxable year, the 
     Secretary reasonably determines that this subchapter applies 
     to such partnership for such year but such determination is 
     erroneous, then the provisions of this subchapter are hereby 
     extended to such partnership (and its items) for such taxable 
     year and to partners of such partnership.
       ``(2) Determination that subchapter does not apply.--If, on 
     the basis of a partnership return for a taxable year, the 
     Secretary reasonably determines that this subchapter does not 
     apply to such partnership for such year but such 
     determination is erroneous, then the provisions of this 
     subchapter shall not apply to such partnership (and its 
     items) for such taxable year or to partners of such 
     partnership.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to partnership taxable years ending after the 
     date of the enactment of this Act.

     SEC. 14313. PROVISIONS RELATING TO STATUTE OF LIMITATIONS.

       (a) Suspension of Statute Where Untimely Petition Filed.--
     Paragraph (1) of section 6229(d) (relating to suspension 
     where Secretary makes administrative adjustment) is amended 
     by striking all that follows ``sec

[[Page 1730]]

     tion 6226'' and inserting the following: ``(and, if a 
     petition is filed under section 6226 with respect to such 
     administrative adjustment, until the decision of the court 
     becomes final), and''.
       (b) Suspension of Statute During Bankruptcy Proceeding.--
     Section 6229 is amended by adding at the end the following 
     new subsection:
       ``(h) Suspension During Pendency of Bankruptcy 
     Proceeding.--If a petition is filed naming a partner as a 
     debtor in a bankruptcy proceeding under title 11 of the 
     United States Code, the running of the period of limitations 
     provided in this section with respect to such partner shall 
     be suspended--
       ``(1) for the period during which the Secretary is 
     prohibited by reason of such bankruptcy proceeding from 
     making an assessment, and
       ``(2) for 60 days thereafter.''
       (c) Tax Matters Partner in Bankruptcy.--Section 6229(b) is 
     amended by redesignating paragraph (2) as paragraph (3) and 
     by inserting after paragraph (1) the following new paragraph:
       ``(2) Special rule with respect to debtors in title 11 
     cases.--Notwithstanding any other law or rule of law, if an 
     agreement is entered into under paragraph (1)(B) and the 
     agreement is signed by a person who would be the tax matters 
     partner but for the fact that, at the time that the agreement 
     is executed, the person is a debtor in a bankruptcy 
     proceeding under title 11 of the United States Code, such 
     agreement shall be binding on all partners in the partnership 
     unless the Secretary has been notified of the bankruptcy 
     proceeding in accordance with regulations prescribed by the 
     Secretary.''
       (d) Effective Dates.--
       (1) Subsections (a) and (b).--The amendments made by 
     subsections (a) and (b) shall apply to partnership taxable 
     years with respect to which the period under section 6229 of 
     the Internal Revenue Code of 1986 for assessing tax has not 
     expired on or before the date of the enactment of this Act.
       (2) Subsection (c).--The amendment made by subsection (c) 
     shall apply to agreements entered into after the date of the 
     enactment of this Act.

     SEC. 14314. EXPANSION OF SMALL PARTNERSHIP EXCEPTION.

       (a) In General.--Clause (i) of section 6231(a)(1)(B) 
     (relating to exception for small partnerships) is amended to 
     read as follows:
       ``(i) In general.--The term `partnership' shall not include 
     any partnership having 10 or fewer partners each of whom is 
     an individual (other than a nonresident alien), a C 
     corporation, or an estate of a deceased partner. For purposes 
     of the preceding sentence, a husband and wife (and their 
     estates) shall be treated as 1 partner.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to partnership taxable years ending after the 
     date of the enactment of this Act.

     SEC. 14315. EXCLUSION OF PARTIAL SETTLEMENTS FROM 1-YEAR 
                   LIMITATION ON ASSESSMENT.

       (a) In General.--Subsection (f) of section 6229 (relating 
     to items becoming nonpartnership items) is amended--
       (1) by striking ``(f) Items Becoming Nonpartnership 
     Items.--If'' and inserting the following:
       ``(f) Special Rules.--
       ``(1) Items becoming nonpartnership items.--If'',
       (2) by moving the text of such subsection 2 ems to the 
     right, and
       (3) by adding at the end the following new paragraph:
       ``(2) Special rule for partial settlement agreements.--If a 
     partner enters into a settlement agreement with the Secretary 
     with respect to the treatment of some of the partnership 
     items in dispute for a partnership taxable year but other 
     partnership items for such year remain in dispute, the period 
     of limitations for assessing any tax attributable to the 
     settled items shall be determined as if such agreement had 
     not been entered into.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to settlements entered into after the date of the 
     enactment of this Act.

     SEC. 14316. EXTENSION OF TIME FOR FILING A REQUEST FOR 
                   ADMINISTRATIVE ADJUSTMENT.

       (a) In General.--Section 6227 (relating to administrative 
     adjustment requests) is amended by redesignating subsections 
     (b) and (c) as subsections (c) and (d), respectively, and by 
     inserting after subsection (a) the following new subsection:
       ``(b) Special Rule in Case of Extension of Period of 
     Limitations Under Section 6229.--The period prescribed by 
     subsection (a)(1) for filing of a request for an 
     administrative adjustment shall be extended--
       ``(1) for the period within which an assessment may be made 
     pursuant to an agreement (or any extension thereof) under 
     section 6229(b), and
       ``(2) for 6 months thereafter.''
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the amendments made by 
     section 402 of the Tax Equity and Fiscal Responsibility Act 
     of 1982.

     SEC. 14317. AVAILABILITY OF INNOCENT SPOUSE RELIEF IN CONTEXT 
                   OF PARTNERSHIP PROCEEDINGS.

       (a) In General.--Subsection (a) of section 6230 is amended 
     by adding at the end the following new paragraph:
       ``(3) Special rule in case of assertion by partner's spouse 
     of innocent spouse relief.--
       ``(A) Notwithstanding section 6404(b), if the spouse of a 
     partner asserts that section 6013(e) applies with respect to 
     a liability that is attributable to any adjustment to a 
     partnership item, then such spouse may file with the 
     Secretary within 60 days after the notice of computational 
     adjustment is mailed to the spouse a request for abatement of 
     the assessment specified in such notice. Upon receipt of such 
     request, the Secretary shall abate the assessment. Any 
     reassessment of the tax with respect to which an abatement is 
     made under this subparagraph shall be subject to the 
     deficiency procedures prescribed by subchapter B. The period 
     for making any such reassessment shall not expire before the 
     expiration of 60 days after the date of such abatement.
       ``(B) If the spouse files a petition with the Tax Court 
     pursuant to section 6213 with respect to the request for 
     abatement described in subparagraph (A), the Tax Court shall 
     only have jurisdiction pursuant to this section to determine 
     whether the requirements of section 6013(e) have been 
     satisfied. For purposes of such determination, the treatment 
     of partnership items under the settlement, the final 
     partnership administrative adjustment, or the decision of the 
     court (whichever is appropriate) that gave rise to the 
     liability in question shall be conclusive.
       ``(C) Rules similar to the rules contained in subparagraphs 
     (B) and (C) of paragraph (2) shall apply for purposes of this 
     paragraph.''
       (b) Claims for Refund.--Subsection (c) of section 6230 is 
     amended by adding at the end the following new paragraph:
       ``(5) Rules for seeking innocent spouse relief.--
       ``(A) In general.--The spouse of a partner may file a claim 
     for refund on the ground that the Secretary failed to relieve 
     the spouse under section 6013(e) from a liability that is 
     attributable to an adjustment to a partnership item.
       ``(B) Time for filing claim.--Any claim under subparagraph 
     (A) shall be filed within 6 months after the day on which the 
     Secretary mails to the spouse the notice of computational 
     adjustment referred to in subsection (a)(3)(A).
       ``(C) Suit if claim not allowed.--If the claim under 
     subparagraph (B) is not allowed, the spouse may bring suit 
     with respect to the claim within the period specified in 
     paragraph (3).
       ``(D) Prior determinations are binding.--For purposes of 
     any claim or suit under this paragraph, the treatment of 
     partnership items under the settlement, the final partnership 
     administrative adjustment, or the decision of the court 
     (whichever is appropriate) that gave rise to the liability in 
     question shall be conclusive.''
       (c) Technical Amendments.--
       (1) Paragraph (1) of section 6230(a) is amended by striking 
     ``paragraph (2)'' and inserting ``paragraph (2) or (3)''.
       (2) Subsection (a) of section 6503 is amended by striking 
     ``section 6230(a)(2)(A)'' and inserting ``paragraph (2)(A) or 
     (3) of section 6230(a)''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect as if included in the amendments made by 
     section 402 of the Tax Equity and Fiscal Responsibility Act 
     of 1982.

     SEC. 14318. DETERMINATION OF PENALTIES AT PARTNERSHIP LEVEL.

       (a) In General.--Section 6221 (relating to tax treatment 
     determined at partnership level) is amended by striking 
     ``item'' and inserting ``item (and the applicability of any 
     penalty, addition to tax, or additional amount which relates 
     to an adjustment to a partnership item)''.
       (b) Conforming Amendments.--
       (1) Subsection (f) of section 6226 is amended--
       (A) by striking ``relates and'' and inserting ``relates,'', 
     and
       (B) by inserting before the period ``, and the 
     applicability of any penalty, addition to tax, or additional 
     amount which relates to an adjustment to a partnership 
     item''.
       (2) Clause (i) of section 6230(a)(2)(A) is amended to read 
     as follows:
       ``(i) affected items which require partner level 
     determinations (other than penalties, additions to tax, and 
     additional amounts that relate to adjustments to partnership 
     items), or''.
       (3)(A) Subparagraph (A) of section 6230(a)(3), as added by 
     section 14317, is amended by inserting ``(including any 
     liability for any penalty, addition to tax, or additional 
     amount relating to such adjustment)'' after ``partnership 
     item''.
       (B) Subparagraph (B) of such section is amended by 
     inserting ``(and the applicability of any penalties, 
     additions to tax, or additional amounts)'' after 
     ``partnership items''.
       (C) Subparagraph (A) of section 6230(c)(5), as added by 
     section 14317, is amended by inserting before the period 
     ``(including any liability for any penalties, additions to 
     tax, or additional amounts relating to such adjustment)''.
       (D) Subparagraph (D) of section 6230(c)(5), as added by 
     section 14317, is amended by inserting ``(and the 
     applicability of any penalties, additions to tax, or 
     additional amounts)'' after ``partnership items''.
       (4) Paragraph (1) of section 6230(c) is amended by striking 
     ``or'' at the end of subparagraph (A), by striking the period 
     at the end of subparagraph (B) and inserting ``, or'', and by 
     adding at the end the following new subparagraph:
       ``(C) the Secretary erroneously imposed any penalty, 
     addition to tax, or additional

[[Page 1731]]

     amount which relates to an adjustment to a partnership 
     item.''
       (5) So much of subparagraph (A) of section 6230(c)(2) as 
     precedes ``shall be filed'' is amended to read as follows:
       ``(A) Under paragraph (1) (a) or (c).--Any claim under 
     subparagraph (A) or (C) of paragraph (1)''.
       (6) Paragraph (4) of section 6230(c) is amended by adding 
     at the end the following: ``In addition, the determination 
     under the final partnership administrative adjustment or 
     under the decision of the court (whichever is appropriate) 
     concerning the applicability of any penalty, addition to tax, 
     or additional amount which relates to an adjustment to a 
     partnership item shall also be conclusive. Notwithstanding 
     the preceding sentence, the partner shall be allowed to 
     assert any partner level defenses that may apply or to 
     challenge the amount of the computational adjustment.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to partnership taxable years ending after the 
     date of the enactment of this Act.

     SEC. 14319. PROVISIONS RELATING TO COURT JURISDICTION, ETC.

       (a) Tax Court Jurisdiction To Enjoin Premature Assessments 
     of Deficiencies Attributable to Partnership Items.--
     Subsection (b) of section 6225 is amended by striking ``the 
     proper court.'' and inserting ``the proper court, including 
     the Tax Court. The Tax Court shall have no jurisdiction to 
     enjoin any action or proceeding under this subsection unless 
     a timely petition for a readjustment of the partnership items 
     for the taxable year has been filed and then only in respect 
     of the adjustments that are the subject of such petition.''
       (b) Jurisdiction To Consider Statute of Limitations With 
     Respect to Partners.--Paragraph (1) of section 6226(d) is 
     amended by adding at the end the following new sentence:
     ``Notwithstanding subparagraph (B), any person treated under 
     subsection (c) as a party to an action shall be permitted to 
     participate in such action (or file a readjustment petition 
     under subsection (b) or paragraph (2) of this subsection) 
     solely for the purpose of asserting that the period of 
     limitations for assessing any tax attributable to partnership 
     items has expired with respect to such person, and the court 
     having jurisdiction of such action shall have jurisdiction to 
     consider such assertion.''
       (c) Tax Court Jurisdiction To Determine Overpayments 
     Attributable to Affected Items.--
       (1) Paragraph (6) of section 6230(d) is amended by striking 
     ``(or an affected item)''.
       (2) Paragraph (3) of section 6512(b) is amended by adding 
     at the end the following new sentence:
     ``In the case of a credit or refund relating to an affected 
     item (within the meaning of section 6231(a)(5)), the 
     preceding sentence shall be applied by substituting the 
     periods under sections 6229 and 6230(d) for the periods under 
     section 6511(b)(2), (c), and (d).''
       (d) Venue on Appeal.--
       (1) Paragraph (1) of section 7482(b) is amended by striking 
     ``or'' at the end of subparagraph (D), by striking the period 
     at the end of subparagraph (E) and inserting ``, or'', and by 
     inserting after subparagraph (E) the following new 
     subparagraph:
       ``(F) in the case of a petition under section 6234(c)--
       ``(i) the legal residence of the petitioner if the 
     petitioner is not a corporation, and
       ``(ii) the place or office applicable under subparagraph 
     (B) if the petitioner is a corporation.''
       (2) The last sentence of section 7482(b)(1) is amended by 
     striking ``or 6228(a)'' and inserting ``, 6228(a), or 
     6234(c)''.
       (e) Other Provisions.--
       (1) Subsection (c) of section 7459 is amended by striking 
     ``or section 6228(a)'' and inserting ``, 6228(a), or 
     6234(c)''.
       (2) Subsection (o) of section 6501 is amended by adding at 
     the end the following new paragraph:
       ``(3) For declaratory judgment relating to treatment of 
     items other than partnership items with respect to an 
     oversheltered return, see section 6234.''
       (f) Effective Date.--The amendments made by this section 
     shall apply to partnership taxable years ending after the 
     date of the enactment of this Act.

     SEC. 14320. TREATMENT OF PREMATURE PETITIONS FILED BY NOTICE 
                   PARTNERS OR 5-PERCENT GROUPS.

       (a) In General.--Subsection (b) of section 6226 (relating 
     to judicial review of final partnership administrative 
     adjustments) is amended by redesignating paragraph (5) as 
     paragraph (6) and by inserting after paragraph (4) the 
     following new paragraph:
       ``(5) Treatment of premature petitions.--If--
       ``(A) a petition for a readjustment of partnership items 
     for the taxable year involved is filed by a notice partner 
     (or a 5-percent group) during the 90-day period described in 
     subsection (a), and
       ``(B) no action is brought under paragraph (1) during the 
     60-day period described therein with respect to such taxable 
     year which is not dismissed,
     such petition shall be treated for purposes of paragraph (1) 
     as filed on the last day of such 60-day period.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to petitions filed after the date of the 
     enactment of this Act.

     SEC. 14321. BONDS IN CASE OF APPEALS FROM CERTAIN PROCEEDING.

       (a) In General.--Subsection (b) of section 7485 (relating 
     to bonds to stay assessment of collection) is amended--
       (1) by inserting ``penalties,'' after ``any interest,'', 
     and
       (2) by striking ``aggregate of such deficiencies'' and 
     inserting ``aggregate liability of the parties to the 
     action''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect as if included in the amendments made by 
     section 402 of the Tax Equity and Fiscal Responsibility Act 
     of 1982.

     SEC. 14322. SUSPENSION OF INTEREST WHERE DELAY IN 
                   COMPUTATIONAL ADJUSTMENT RESULTING FROM CERTAIN 
                   SETTLEMENTS.

       (a) In General.--Subsection (c) of section 6601 (relating 
     to interest on underpayment, nonpayment, or extension of time 
     for payment, of tax) is amended by adding at the end the 
     following new sentence: ``In the case of a settlement under 
     section 6224(c) which results in the conversion of 
     partnership items to nonpartnership items pursuant to section 
     6231(b)(1)(C), the preceding sentence shall apply to a 
     computational adjustment resulting from such settlement in 
     the same manner as if such adjustment were a deficiency and 
     such settlement were a waiver referred to in the preceding 
     sentence.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to adjustments with respect to partnership 
     taxable years beginning after the date of the enactment of 
     this Act.

     SEC. 14323. SPECIAL RULES FOR ADMINISTRATIVE ADJUSTMENT 
                   REQUESTS WITH RESPECT TO BAD DEBTS OR WORTHLESS 
                   SECURITIES.

       (a) General Rule.--Section 6227 (relating to administrative 
     adjustment requests) is amended by adding at the end the 
     following new subsection:
       ``(e) Requests With Respect to Bad Debts or Worthless 
     Securities.--In the case of that portion of any request for 
     an administrative adjustment which relates to the 
     deductibility by the partnership under section 166 of a debt 
     as a debt which became worthless, or under section 165(g) of 
     a loss from worthlessness of a security, the period 
     prescribed in subsection (a)(1) shall be 7 years from the 
     last day for filing the partnership return for the year with 
     respect to which such request is made (determined without 
     regard to extensions).''
       (b) Effective Date.--
       (1) In general.--The amendment made by subsection (a) shall 
     take effect as if included in the amendments made by section 
     402 of the Tax Equity and Fiscal Responsibility Act of 1982.
       (2) Treatment of requests filed before date of enactment.--
     In the case of that portion of any request (filed before the 
     date of the enactment of this Act) for an administrative 
     adjustment which relates to the deductibility of a debt as a 
     debt which became worthless or the deductibility of a loss 
     from the worthlessness of a security--
       (A) paragraph (2) of section 6227(a) of the Internal 
     Revenue Code of 1986 shall not apply,
       (B) the period for filing a petition under section 6228 of 
     the Internal Revenue Code of 1986 with respect to such 
     request shall not expire before the date 6 months after the 
     date of the enactment of this Act, and
       (C) such a petition may be filed without regard to whether 
     there was a notice of the beginning of an administrative 
     proceeding or a final partnership administrative adjustment.
                     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.

       Section 1296 is amended by adding at the end the following 
     new subsection:
       ``(e) Exception for United States Shareholders of 
     Controlled Foreign Corporations.--
       ``(1) In general.--For purposes of this part, a corporation 
     shall not be treated with respect to a shareholder as a 
     passive foreign investment company during the qualified 
     portion of such shareholder's holding period with respect to 
     stock in such corporation.
       ``(2) Qualified portion.--For purposes of this subsection, 
     the term `qualified portion' means the portion of the 
     shareholder's holding period--
       ``(A) which is after December 31, 1995, and
       ``(B) during which the shareholder is a United States 
     shareholder (as defined in section 951(b)) of the corporation 
     and the corporation is a controlled foreign corporation.
       ``(3) New holding period if qualified portion ends.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     if the qualified portion of a shareholder's holding period 
     with respect to any stock ends after December 31, 1995, 
     solely for purposes of this part, the shareholder's holding 
     period with respect to such stock shall be treated as 
     beginning as of the first day following such period.
       ``(B) Exception.--Subparagraph (A) shall not apply if such 
     stock was, with respect to such shareholder, stock in a 
     passive foreign investment company at any time before the 
     qualified portion of the shareholder's holding period with 
     respect to such stock and no election under section 
     1298(b)(1) is made.''

     SEC. 14402. ELECTION OF MARK TO MARKET FOR MARKETABLE STOCK 
                   IN PASSIVE FOREIGN INVESTMENT COMPANY.

       (a) In General.--Part VI of subchapter P of chapter 1 is 
     amended by redesignating subpart C as subpart D, by 
     redesignating sec

[[Page 1732]]

     tions 1296 and 1297 as sections 1297 and 1298, respectively, 
     and by inserting after subpart B the following new subpart:

      ``Subpart C--Election of Mark to Market For Marketable Stock

``Sec. 1296. Election of mark to market for marketable stock.

     ``SEC. 1296. ELECTION OF MARK TO MARKET FOR MARKETABLE STOCK.

       ``(a) General Rule.--In the case of marketable stock in a 
     passive foreign investment company which is owned (or treated 
     under subsection (g) as owned) by a United States person at 
     the close of any taxable year of such person, at the election 
     of such person--
       ``(1) If the fair market value of such stock as of the 
     close of such taxable year exceeds its adjusted basis, such 
     United States person shall include in gross income for such 
     taxable year an amount equal to the amount of such excess.
       ``(2) If the adjusted basis of such stock exceeds the fair 
     market value of such stock as of the close of such taxable 
     year, such United States person shall be allowed a deduction 
     for such taxable year equal to the lesser of--
       ``(A) the amount of such excess, or
       ``(B) the unreversed inclusions with respect to such stock.
       ``(b) Basis Adjustments.--
       ``(1) In general.--The adjusted basis of stock in a passive 
     foreign investment company--
       ``(A) shall be increased by the amount included in the 
     gross income of the United States person under subsection 
     (a)(1) with respect to such stock, and
       ``(B) shall be decreased by the amount allowed as a 
     deduction to the United States person under subsection (a)(2) 
     with respect to such stock.
       ``(2) Special rule for stock constructively owned.--In the 
     case of stock in a passive foreign investment company which 
     the United States person is treated as owning under 
     subsection (g)--
       ``(A) the adjustments under paragraph (1) shall apply to 
     such stock in the hands of the person actually holding such 
     stock but only for purposes of determining the subsequent 
     treatment under this chapter of the United States person with 
     respect to such stock, and
       ``(B) similar adjustments shall be made to the adjusted 
     basis of the property by reason of which the United States 
     person is treated as owning such stock.
       ``(c) Character and Source Rules.--
       ``(1) Ordinary treatment.--
       ``(A) Gain.--Any amount included in gross income under 
     subsection (a)(1), and any gain on the sale or other 
     disposition of marketable stock in a passive foreign 
     investment company (with respect to which an election under 
     this section is in effect), shall be treated as ordinary 
     income.
       ``(B) Loss.--Any--
       ``(i) amount allowed as a deduction under subsection 
     (a)(2), and
       ``(ii) loss on the sale or other disposition of marketable 
     stock in a passive foreign investment company (with respect 
     to which an election under this section is in effect) to the 
     extent that the amount of such loss does not exceed the 
     unreversed inclusions with respect to such stock,
     shall be treated as an ordinary loss. The amount so treated 
     shall be treated as a deduction allowable in computing 
     adjusted gross income.
       ``(2) Source.--The source of any amount included in gross 
     income under subsection (a)(1) (or allowed as a deduction 
     under subsection (a)(2)) shall be determined in the same 
     manner as if such amount were gain or loss (as the case may 
     be) from the sale of stock in the passive foreign investment 
     company.
       ``(d) Unreversed Inclusions.--For purposes of this section, 
     the term `unreversed inclusions' means, with respect to any 
     stock in a passive foreign investment company, the excess (if 
     any) of--
       ``(1) the amount included in gross income of the taxpayer 
     under subsection (a)(1) with respect to such stock for prior 
     taxable years, over
       ``(2) the amount allowed as a deduction under subsection 
     (a)(2) with respect to such stock for prior taxable years.
     The amount referred to in paragraph (1) shall include any 
     amount which would have been included in gross income under 
     subsection (a)(1) with respect to such stock for any prior 
     taxable year but for section 1291.
       ``(e) Marketable Stock.--For purposes of this section--
       ``(1) In general.--The term `marketable stock' means--
       ``(A) any stock which is regularly traded on--
       ``(i) a national securities exchange which is registered 
     with the Securities and Exchange Commission or the national 
     market system established pursuant to section 11A of the 
     Securities and Exchange Act of 1934, or
       ``(ii) any exchange or other market which the Secretary 
     determines has rules adequate to carry out the purposes of 
     this part,
       ``(B) to the extent provided in regulations, stock in any 
     foreign corporation which is comparable to a regulated 
     investment company and which offers for sale or has 
     outstanding any stock of which it is the issuer and which is 
     redeemable at its net asset value, and
       ``(C) to the extent provided in regulations, any option on 
     stock described in subparagraph (A) or (B).
       ``(2) Special rule for regulated investment companies.--In 
     the case of any regulated investment company which is 
     offering for sale or has outstanding any stock of which it is 
     the issuer and which is redeemable at its net asset value, 
     all stock in a passive foreign investment company which it 
     owns directly or indirectly shall be treated as marketable 
     stock for purposes of this section. Except as provided in 
     regulations, similar treatment as marketable stock shall 
     apply in the case of any other regulated investment company 
     which publishes net asset valuations at least annually.
       ``(f) Treatment of Controlled Foreign Corporations Which 
     are Shareholders in Passive Foreign Investment Companies.--In 
     the case of a foreign corporation which is a controlled 
     foreign corporation and which owns (or is treated under 
     subsection (g) as owning) stock in a passive foreign 
     investment company--
       ``(1) this section (other than subsection (c)(2)) shall 
     apply to such foreign corporation in the same manner as if 
     such corporation were a United States person, and
       ``(2) for purposes of subpart F of part III of subchapter 
     N--
       ``(A) any amount included in gross income under subsection 
     (a)(1) shall be treated as foreign personal holding company 
     income described in section 954(c)(1)(A), and
       ``(B) any amount allowed as a deduction under subsection 
     (a)(2) shall be treated as a deduction allocable to foreign 
     personal holding company income so described.
       ``(g) Stock Owned Through Certain Foreign Entities.--Except 
     as provided in regulations--
       ``(1) In general.--For purposes of this section, stock 
     owned, directly or indirectly, by or for a foreign 
     partnership or foreign trust or foreign estate shall be 
     considered as being owned proportionately by its partners or 
     beneficiaries. Stock considered to be owned by a person by 
     reason of the application of the preceding sentence shall, 
     for purposes of applying such sentence, be treated as 
     actually owned by such person.
       ``(2) Treatment of certain dispositions.--In any case in 
     which a United States person is treated as owning stock in a 
     passive foreign investment company by reason of paragraph 
     (1)--
       ``(A) any disposition by the United States person or by any 
     other person which results in the United States person being 
     treated as no longer owning such stock, and
       ``(B) any disposition by the person owning such stock,
     shall be treated as a disposition by the United States person 
     of the stock in the passive foreign investment company.
       ``(h) Coordination With Section 851(b).--For purposes of 
     paragraphs (2) and (3) of section 851(b), any amount included 
     in gross income under subsection (a) shall be treated as a 
     dividend.
       ``(i) Stock Acquired From a Decedent.--In the case of stock 
     of a passive foreign investment company which is acquired by 
     bequest, devise, or inheritance (or by the decedent's estate) 
     and with respect to which an election under this section was 
     in effect as of the date of the decedent's death, 
     notwithstanding section 1014, the basis of such stock in the 
     hands of the person so acquiring it shall be the adjusted 
     basis of such stock in the hands of the decedent immediately 
     before his death (or, if lesser, the basis which would have 
     been determined under section 1014 without regard to this 
     subsection).
       ``(j) Coordination With Section 1291 For First Year of 
     Election.--
       ``(1) Taxpayers other than regulated investment 
     companies.--
       ``(A) In general.--If the taxpayer elects the application 
     of this section with respect to any marketable stock in a 
     corporation after the beginning of the taxpayer's holding 
     period in such stock, and if the requirements of subparagraph 
     (B) are not satisfied, section 1291 shall apply to--
       ``(i) any distributions with respect to, or disposition of, 
     such stock in the first taxable year of the taxpayer for 
     which such election is made, and
       ``(ii) any amount which, but for section 1291, would have 
     been included in gross income under subsection (a) with 
     respect to such stock for such taxable year in the same 
     manner as if such amount were gain on the disposition of such 
     stock.
       ``(B) Requirements.--The requirements of this subparagraph 
     are met if, with respect to each of such corporation's 
     taxable years for which such corporation was a passive 
     foreign investment company and which begin after December 31, 
     1986, and included any portion of the taxpayer's holding 
     period in such stock, such corporation was treated as a 
     qualified electing fund under this part with respect to the 
     taxpayer.
       ``(2) Special rules for regulated investment companies.--
       ``(A) In general.--If a regulated investment company elects 
     the application of this section with respect to any 
     marketable stock in a corporation after the beginning of the 
     taxpayer's holding period in such stock, then, with respect 
     to such company's first taxable year for which such company 
     elects the application of this section with respect to such 
     stock--
       ``(i) section 1291 shall not apply to such stock with 
     respect to any distribution or disposition during, or amount 
     included in gross income under this section for, such first 
     taxable year, but
       ``(ii) such regulated investment company's tax under this 
     chapter for such first taxable year shall be increased by the 
     aggregate amount of interest which would have been determined 
     under section 1291(c)(3) if section

[[Page 1733]]

     1291 were applied without regard to this subparagraph.
     Clause (ii) shall not apply if for the preceding taxable year 
     the company elected to mark to market the stock held by such 
     company as of the last day of such preceding taxable year.
       ``(B) Disallowance of deduction.--No deduction shall be 
     allowed to any regulated investment company for the increase 
     in tax under subparagraph (A)(ii).
       ``(k) Election.--This section shall apply to marketable 
     stock in a passive foreign investment company which is held 
     by a United States person only if such person elects to apply 
     this section with respect to such stock. Such an election 
     shall apply to the taxable year for which made and all 
     subsequent taxable years unless--
       ``(1) such stock ceases to be marketable stock, or
       ``(2) the Secretary consents to the revocation of such 
     election.
       ``(l) Transition Rule for Individuals Becoming Subject to 
     United States Tax.--If any individual becomes a United States 
     person in a taxable year beginning after December 31, 1995, 
     solely for purposes of this section, the adjusted basis 
     (before adjustments under subsection (b)) of any marketable 
     stock in a passive foreign investment company owned by such 
     individual on the first day of such taxable year shall be 
     treated as being the greater of its fair market value on such 
     first day or its adjusted basis on such first day.''
       (b) Coordination With Interest Charge, Etc.--
       (1) Paragraph (1) of section 1291(d) is amended by adding 
     at the end the following new flush sentence:
     ``Except as provided in section 1296(j), this section also 
     shall not apply if an election under section 1296(k) is in 
     effect for the taxpayer's taxable year.''
       (2) The subsection heading for subsection (d) of section 
     1291 is amended by striking ``Subpart B'' and inserting 
     ``Subparts B and C''.
       (3) Subparagraph (A) of section 1291(a)(3) is amended to 
     read as follows:
       ``(A) Holding period.--The taxpayer's holding period shall 
     be determined under section 1223; except that--
       ``(i) for purposes of applying this section to an excess 
     distribution, such holding period shall be treated as ending 
     on the date of such distribution, and
       ``(ii) if section 1296 applied to such stock with respect 
     to the taxpayer for any prior taxable year, such holding 
     period shall be treated as beginning on the first day of the 
     first taxable year beginning after the last taxable year for 
     which section 1296 so applied.''
       (c) Conforming Amendments.--
       (1) Sections 532(b)(4) and 542(c)(10) are each amended by 
     striking ``section 1296'' and inserting ``section 1297''.
       (2) Subsection (f) of section 551 is amended by striking 
     ``section 1297(b)(5)'' and inserting ``section 1298(b)(5)''
       (3) Subsections (a)(1) and (d) of section 1293 are each 
     amended by striking ``section 1297(a)'' and inserting 
     ``section 1298(a)''.
       (4) Paragraph (3) of section 1297(b), as redesignated by 
     subsection (a), is hereby repealed.
       (5) The table of sections for subpart D of part VI of 
     subchapter P of chapter 1, as redesignated by subsection (a), 
     is amended to read as follows:

``Sec. 1297. Passive foreign investment company.
``Sec. 1298. Special rules.''
       (6) The table of subparts for part VI of subchapter P of 
     chapter 1 is amended by striking the last item and inserting 
     the following new items:

``Subpart C. Election of mark to market for marketable stock.
``Subpart D. General provisions.''
       (d) Clarification of Gain Recognition Election.--The last 
     sentence of section 1298(b)(1), as so redesignated, is 
     amended by inserting ``(determined without regard to the 
     preceding sentence)'' after ``investment company''.

     SEC. 14403. MODIFICATIONS TO DEFINITION OF PASSIVE INCOME.

       (a) Exception for Same Country Income Not To Apply.--
     Paragraph (1) of section 1297(b) (defining passive income), 
     as redesignated by section 14402, is amended by inserting 
     before the period ``without regard to paragraph (3) 
     thereof''.
       (b) Passive Income Not To Include FSC Income.--Paragraph 
     (2) of section 1297(b), as so redesignated, is amended by 
     striking ``or'' at the end of subparagraph (B), by striking 
     the period at the end of subparagraph (C) and inserting ``, 
     or'', and by inserting after subparagraph (C) the following 
     new subparagraph:
       ``(D) any foreign trade income of a FSC.''

     SEC. 14404. EFFECTIVE DATE.

       The amendments made by this part shall apply to--
       (1) taxable years of United States persons beginning after 
     December 31, 1995, and
       (2) taxable years of foreign corporations ending with or 
     within such taxable years of United States persons.

         PART II--TREATMENT OF CONTROLLED FOREIGN CORPORATIONS

     SEC. 14411. GAIN ON CERTAIN STOCK SALES BY CONTROLLED FOREIGN 
                   CORPORATIONS TREATED AS DIVIDENDS.

       (a) General Rule.--Section 964 (relating to miscellaneous 
     provisions) is amended by adding at the end the following new 
     subsection:
       ``(e) Gain on Certain Stock Sales by Controlled Foreign 
     Corporations Treated as Dividends.--
       ``(1) In general.--If a controlled foreign corporation 
     sells or exchanges stock in any other foreign corporation, 
     gain recognized on such sale or exchange shall be included in 
     the gross income of such controlled foreign corporation as a 
     dividend to the same extent that it would have been so 
     included under section 1248(a) if such controlled foreign 
     corporation were a United States person. For purposes of 
     determining the amount which would have been so includible, 
     the determination of whether such other foreign corporation 
     was a controlled foreign corporation shall be made without 
     regard to the preceding sentence.
       ``(2) Same country exception not applicable.--Clause (i) of 
     section 954(c)(3)(A) shall not apply to any amount treated as 
     a dividend by reason of paragraph (1).
       ``(3) Clarification of deemed sales.--For purposes of this 
     subsection, a controlled foreign corporation shall be treated 
     as having sold or exchanged any stock if, under any provision 
     of this subtitle, such controlled foreign corporation is 
     treated as having gain from the sale or exchange of such 
     stock.''
       (b) Amendment of Section 904(d).--Clause (i) of section 
     904(d)(2)(E) is amended by striking ``and except as provided 
     in regulations, the taxpayer was a United States shareholder 
     in such corporation''.
       (c) Effective Dates.--
       (1) The amendment made by subsection (a) shall apply to 
     gain recognized on transactions occurring after the date of 
     the enactment of this Act.
       (2) The amendment made by subsection (b) shall apply to 
     distributions after the date of the enactment of this Act.

     SEC. 14412. MISCELLANEOUS MODIFICATIONS TO 
                   SUBPART F.

       (a) Section 1248 Gain Taken Into Account in Determining Pro 
     Rata Share.--
       (1) In general.--Paragraph (2) of section 951(a) (defining 
     pro rata share of subpart F income) is amended by adding at 
     the end the following new sentence: ``For purposes of 
     subparagraph (B), any gain included in the gross income of 
     any person as a dividend under section 1248 shall be treated 
     as a distribution received by such person with respect to the 
     stock involved.''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to dispositions after the date of the enactment 
     of this Act.
       (b) Basis Adjustments in Stock Held by Foreign 
     Corporation.--
       (1) In general.--Section 961 (relating to adjustments to 
     basis of stock in controlled foreign corporations and of 
     other property) is amended by adding at the end the following 
     new subsection:
       ``(c) Basis Adjustments in Stock Held by Foreign 
     Corporation.--Under regulations prescribed by the Secretary, 
     if a United States shareholder is treated under section 
     958(a)(2) as owning any stock in a controlled foreign 
     corporation which is actually owned by another controlled 
     foreign corporation, adjustments similar to the adjustments 
     provided by subsections (a) and (b) shall be made to the 
     basis of such stock in the hands of such other controlled 
     foreign corporation, but only for the purposes of determining 
     the amount included under section 951 in the gross income of 
     such United States shareholder (or any other United States 
     shareholder who acquires from any person any portion of the 
     interest of such United States shareholder by reason of which 
     such shareholder was treated as owning such stock, but only 
     to the extent of such portion, and subject to such proof of 
     identity of such interest as the Secretary may prescribe by 
     regulations).''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply for purposes of determining inclusions for 
     taxable years of United States shareholders beginning after 
     December 31, 1995.
       (c) Determination of Previously Taxed Income in Section 304 
     Distributions, Etc.--
       (1) In general.--Section 959 (relating to exclusion from 
     gross income of previously taxed earnings and profits) is 
     amended by adding at the end the following new subsection:
       ``(g) Adjustments for Certain Transactions.--If by reason 
     of--
       ``(1) a transaction to which section 304 applies,
       ``(2) the structure of a United States shareholder's 
     holdings in controlled foreign corporations, or
       ``(3) other circumstances,
     there would be a multiple inclusion of any item in income (or 
     an inclusion or exclusion without an appropriate basis 
     adjustment) by reason of this subpart, the Secretary may 
     prescribe regulations providing such modifications in the 
     application of this subpart as may be necessary to eliminate 
     such multiple inclusion or provide such basis adjustment, as 
     the case may be.''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall take effect on the date of the enactment of this Act.
       (d) Clarification of Treatment of Branch Tax Exemptions or 
     Reductions.--
       (1) In general.--Subsection (b) of section 952 is amended 
     by adding at the end the following new sentence: ``For 
     purposes of this subsection, any exemption (or reduction) 
     with respect to the tax imposed by section 884 shall not be 
     taken into account.''.

[[Page 1734]]

       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to taxable years beginning after December 31, 
     1986.

     SEC. 14413. INDIRECT FOREIGN TAX CREDIT ALLOWED FOR CERTAIN 
                   LOWER TIER COMPANIES.

       (a) Section 902 Credit.--
       (1) In general.--Subsection (b) of section 902 (relating to 
     deemed taxes increased in case of certain 2nd and 3rd tier 
     foreign corporations) is amended to read as follows:
       ``(b) Deemed Taxes Increased in Case of Certain Lower Tier 
     Corporations.--
       ``(1) In general.--If--
       ``(A) any foreign corporation is a member of a qualified 
     group, and
       ``(B) such foreign corporation owns 10 percent or more of 
     the voting stock of another member of such group from which 
     it receives dividends in any taxable year,
     such foreign corporation shall be deemed to have paid the 
     same proportion of such other member's post-1986 foreign 
     income taxes as would be determined under subsection (a) if 
     such foreign corporation were a domestic corporation.
       ``(2) Qualified group.--For purposes of paragraph (1), the 
     term `qualified group' means--
       ``(A) the foreign corporation described in subsection (a), 
     and
       ``(B) any other foreign corporation if--
       ``(i) the domestic corporation owns at least 5 percent of 
     the voting stock of such other foreign corporation indirectly 
     through a chain of foreign corporations connected through 
     stock ownership of at least 10 percent of their voting stock,
       ``(ii) the foreign corporation described in subsection (a) 
     is the first tier corporation in such chain, and
       ``(iii) such other corporation is not below the sixth tier 
     in such chain.
     The term `qualified group' shall not include any foreign 
     corporation below the third tier in the chain referred to in 
     clause (i) unless such foreign corporation is a controlled 
     foreign corporation (as defined in section 957) and the 
     domestic corporation is a United States shareholder (as 
     defined in section 951(b)) in such foreign corporation. 
     Paragraph (1) shall apply to those taxes paid by a member of 
     the qualified group below the third tier only with respect to 
     periods during which it was a controlled foreign 
     corporation.''
       (2) Conforming amendments.--
       (A) Subparagraph (B) of section 902(c)(3) is amended by 
     adding ``or'' at the end of clause (i) and by striking 
     clauses (ii) and (iii) and inserting the following new 
     clause:
       ``(ii) the requirements of subsection (b)(2) are met with 
     respect to such foreign corporation.''
       (B) Subparagraph (B) of section 902(c)(4) is amended by 
     striking ``3rd foreign corporation'' and inserting ``sixth 
     tier foreign corporation''.
       (C) The heading for paragraph (3) of section 902(c) is 
     amended by striking ``where domestic corporation acquires 10 
     percent of foreign corporation'' and inserting ``where 
     foreign corporation first qualifies''.
       (D) Paragraph (3) of section 902(c) is amended by striking 
     ``ownership'' each place it appears.
       (b) Section 960 Credit.--Paragraph (1) of section 960(a) 
     (relating to special rules for foreign tax credits) is 
     amended to read as follows:
       ``(1) Deemed paid credit.--For purposes of subpart A of 
     this part, if there is included under section 951(a) in the 
     gross income of a domestic corporation any amount 
     attributable to earnings and profits of a foreign corporation 
     which is a member of a qualified group (as defined in section 
     902(b)) with respect to the domestic corporation, then, 
     except to the extent provided in regulations, section 902 
     shall be applied as if the amount so included were a dividend 
     paid by such foreign corporation (determined by applying 
     section 902(c) in accordance with section 904(d)(3)(B)).''
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxes of foreign corporations for taxable years of 
     such corporations beginning after the date of enactment of 
     this Act.
       (2) Special rule.--In the case of any chain of foreign 
     corporations described in clauses (i) and (ii) of section 
     902(b)(2)(B) of the Internal Revenue Code of 1986 (as amended 
     by this section), no liquidation, reorganization, or similar 
     transaction in a taxable year beginning after the date of the 
     enactment of this Act shall have the effect of permitting 
     taxes to be taken into account under section 902 of the 
     Internal Revenue Code of 1986 which could not have been taken 
     into account under such section but for such transaction.

     SEC. 14414. REPEAL OF INCLUSION OF CERTAIN EARNINGS INVESTED 
                   IN EXCESS PASSIVE ASSETS.

       (a) In General.--
       (1) Repeal of inclusion.--Paragraph (1) of section 951(a) 
     (relating to amounts included in gross income of United 
     States shareholders) is amended by striking subparagraph (C), 
     by striking ``; and'' at the end of subparagraph (B) and 
     inserting a period, and by adding ``and'' at the end of 
     subparagraph (A).
       (2) Repeal of inclusion amount.--Section 956A (relating to 
     earnings invested in excess passive assets) is repealed.
       (b) Conforming Amendments.--
       (1) Subparagraph (G) of section 904(d)(3) is amended by 
     striking ``subparagraph (B) or (C) of section 951(a)(1)'' and 
     inserting ``section 951(a)(1)(B)''.
       (2) Paragraph (1) of section 956(b) is amended to read as 
     follows:
       ``(1) Applicable earnings.--For purposes of this section, 
     the term `applicable earnings' means, with respect to any 
     controlled foreign corporation, the sum of--
       ``(A) the amount (not including a deficit) referred to in 
     section 316(a)(1), and
       ``(B) the amount referred to in section 316(a)(2),
     but reduced by distributions made during the taxable year.''
       (3) Paragraph (3) of section 956(b) is amended to read as 
     follows:
       ``(3) Special rule where corporation ceases to be 
     controlled foreign corporation.--If any foreign corporation 
     ceases to be a controlled foreign corporation during any 
     taxable year--
       ``(A) the determination of any United States shareholder's 
     pro rata share shall be made on the basis of stock owned 
     (within the meaning of section 958(a)) by such shareholder on 
     the last day during the taxable year on which the foreign 
     corporation is a controlled foreign corporation,
       ``(B) the average referred to in subsection (a)(1)(A) for 
     such taxable year shall be determined by only taking into 
     account quarters ending on or before such last day, and
       ``(C) in determining applicable earnings, the amount taken 
     into account by reason of being described in paragraph (2) of 
     section 316(a) shall be the portion of the amount so 
     described which is allocable (on a pro rata basis) to the 
     part of such year during which the corporation is a 
     controlled foreign corporation.''
       (4) Subsection (a) of section 959 (relating to exclusion 
     from gross income of previously taxed earnings and profits) 
     is amended by adding ``or'' at the end of paragraph (1), by 
     striking ``or'' at the end of paragraph (2), and by striking 
     paragraph (3).
       (5) Subsection (a) of section 959 is amended by striking 
     ``paragraphs (2) and (3)'' in the last sentence and inserting 
     ``paragraph (2)''.
       (6) Subsection (c) of section 959 is amended by adding at 
     the end the following flush sentence:
     ``References in this subsection to section 951(a)(1)(C) and 
     subsection (a)(3) shall be treated as references to such 
     provisions as in effect on the day before the date of the 
     enactment of the Tax Simplification Act of 1995.''
       (7) Paragraph (1) of section 959(f) is amended to read as 
     follows:
       ``(1) In general.--For purposes of this section, amounts 
     that would be included under subparagraph (B) of section 
     951(a)(1) (determined without regard to this section) shall 
     be treated as attributable first to earnings described in 
     subsection (c)(2), and then to earnings described in 
     subsection (c)(3).''
       (8) Paragraph (2) of section 959(f) is amended by striking 
     ``subparagraphs (B) and (C) of section 951(a)(1)'' and 
     inserting ``section 951(a)(1)(B)''.
       (9) Subsection (b) of section 989 is amended by striking 
     ``subparagraph (B) or (C) of section 951(a)(1)'' and 
     inserting ``section 951(a)(1)(B)''.
       (10) Paragraph (9) of section 1298(b), as redesignated by 
     section 14402, is amended by striking ``subparagraph (B) or 
     (C) of section 951(a)(1)'' and inserting ``section 
     951(a)(1)(B)''.
       (11) Subsections (d)(3)(B) and (e)(2)(B)(ii) of section 
     1298, as redesignated by section 14402, are each amended by 
     striking ``or section 956A''.
       (c) Clerical Amendment.--The table of sections for subpart 
     F of part III of subchapter N of chapter 1 is amended by 
     striking the item relating to section 956A.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years of foreign corporations 
     beginning after September 30, 1995, and to taxable years of 
     United States shareholders within which or with which such 
     taxable years of foreign corporations end.

                       PART III--OTHER PROVISIONS

     SEC. 14421. EXCHANGE RATE USED IN TRANSLATING FOREIGN TAXES.

       (a) Accrued Taxes Translated by Using Average Rate for Year 
     to Which Taxes Relate.--
       (1) In general.--Subsection (a) of section 986 (relating to 
     translation of foreign taxes) is amended to read as follows:
       ``(a) Foreign Income Taxes.--
       ``(1) Translation of accrued taxes.--
       ``(A) In general.--For purposes of determining the amount 
     of the foreign tax credit, in the case of a taxpayer who 
     takes foreign income taxes into account when accrued, the 
     amount of any foreign income taxes (and any adjustment 
     thereto) shall be translated into dollars by using the 
     average exchange rate for the taxable year to which such 
     taxes relate.
       ``(B) Exception for taxes not paid within following 2 
     years.--
       ``(i) Subparagraph (A) shall not apply to any foreign 
     income taxes paid after the date 2 years after the close of 
     the taxable year to which such taxes relate.
       ``(ii) Subparagraph (A) shall not apply to taxes paid 
     before the beginning of the taxable year to which such taxes 
     relate.
       ``(C) Exception for inflationary currencies.--Subparagraph 
     (A) shall not apply to any foreign income taxes the liability 
     for which is denominated in any currency determined to be an 
     inflationary currency under regulations prescribed by the 
     Secretary.
       ``(D) Cross reference.--

  ``For adjustments where tax is not paid within 2 years, see section 
905(c).

[[Page 1735]]

       ``(2) Translation of taxes to which paragraph (1) does not 
     apply.--For purposes of determining the amount of the foreign 
     tax credit, in the case of any foreign income taxes to which 
     subparagraph (A) of paragraph (1) does not apply--
       ``(A) such taxes shall be translated into dollars using the 
     exchange rates as of the time such taxes were paid to the 
     foreign country or possession of the United States, and
       ``(B) any adjustment to the amount of such taxes shall be 
     translated into dollars using--
       ``(i) except as provided in clause (ii), the exchange rate 
     as of the time when such adjustment is paid to the foreign 
     country or possession, or
       ``(ii) in the case of any refund or credit of foreign 
     income taxes, using the exchange rate as of the time of the 
     original payment of such foreign income taxes.
       ``(3) Foreign income taxes.--For purposes of this 
     subsection, the term `foreign income taxes' means any income, 
     war profits, or excess profits taxes paid or accrued to any 
     foreign country or to any possession of the United States.''
       (2) Adjustment when not paid within 2 years after year to 
     which taxes relate.--Subsection (c) of section 905 is amended 
     to read as follows:
       ``(c) Adjustments to Accrued Taxes.--
       ``(1) In general.--If--
       ``(A) accrued taxes when paid differ from the amounts 
     claimed as credits by the taxpayer,
       ``(B) accrued taxes are not paid before the date 2 years 
     after the close of the taxable year to which such taxes 
     relate, or
       ``(C) any tax paid is refunded in whole or in part,
     the taxpayer shall notify the Secretary, who shall 
     redetermine the amount of the tax for the year or years 
     affected.
       ``(2) Special rule for taxes not paid within 2 years.--In 
     making the redetermination under paragraph (1), no credit 
     shall be allowed for accrued taxes not paid before the date 
     referred to in subparagraph (B) of paragraph (1). Any such 
     taxes if subsequently paid shall be taken into account for 
     the taxable year in which paid and no redetermination under 
     this section shall be made on account of such payment.
       ``(3) Adjustments.--The amount of tax due on any 
     redetermination under paragraph (1) (if any) shall be paid by 
     the taxpayer on notice and demand by the Secretary, and the 
     amount of tax overpaid (if any) shall be credited or refunded 
     to the taxpayer in accordance with subchapter B of chapter 66 
     (section 6511 et seq.).
       ``(4) Bond requirements.--In the case of any tax accrued 
     but not paid, the Secretary, as a condition precedent to the 
     allowance of the credit provided in this subpart, may require 
     the taxpayer to give a bond, with sureties satisfactory to 
     and approved by the Secretary, in such sum as the Secretary 
     may require, conditioned on the payment by the taxpayer of 
     any amount of tax found due on any such redetermination. Any 
     such bond shall contain such further conditions as the 
     Secretary may require.
       ``(5) Other special rules.--In any redetermination under 
     paragraph (1) by the Secretary of the amount of tax due from 
     the taxpayer for the year or years affected by a refund, the 
     amount of the taxes refunded for which credit has been 
     allowed under this section shall be reduced by the amount of 
     any tax described in section 901 imposed by the foreign 
     country or possession of the United States with respect to 
     such refund; but no credit under this subpart, or deduction 
     under section 164, shall be allowed for any taxable year with 
     respect to any such tax imposed on the refund. No interest 
     shall be assessed or collected on any amount of tax due on 
     any redetermination by the Secretary, resulting from a refund 
     to the taxpayer, for any period before the receipt of such 
     refund, except to the extent interest was paid by the foreign 
     country or possession of the United States on such refund for 
     such period.''
       (b) Authority To Use Average Rates.--
       (1) In general.--Subsection (a) of section 986 (as amended 
     by subsection (a)) is amended by redesignating paragraph (3) 
     as paragraph (4) and inserting after paragraph (2) the 
     following new paragraph:
       ``(3) Authority to permit use of average rates.--To the 
     extent prescribed in regulations, the average exchange rate 
     for the period (specified in such regulations) during which 
     the taxes or adjustment is paid may be used instead of the 
     exchange rate as of the time of such payment.''
       (2) Determination of average rates.--Subsection (c) of 
     section 989 is amended by striking ``and'' at the end of 
     paragraph (4), by striking the period at the end of paragraph 
     (5) and inserting ``, and'', and by adding at the end the 
     following new paragraph:
       ``(6) setting forth procedures for determining the average 
     exchange rate for any period.''
       (3) Conforming amendments.--Subsection (b) of section 989 
     is amended by striking ``weighted'' each place it appears.
       (c) Effective Dates.--
       (1) In general.--The amendments made by subsections (a)(1) 
     and (b) shall apply to taxes paid or accrued in taxable years 
     beginning after December 31, 1995.
       (2) Subsection (a)(2).--The amendment made by subsection 
     (a)(2) shall apply to taxes which relate to taxable years 
     beginning after December 31, 1995.

     SEC. 14422. ELECTION TO USE SIMPLIFIED SECTION 904 LIMITATION 
                   FOR ALTERNATIVE MINIMUM TAX.

       (a) General Rule.--Subsection (a) of section 59 (relating 
     to alternative minimum tax foreign tax credit) is amended by 
     adding at the end the following new paragraph:
       ``(3) Election to use simplified section 904 limitation.--
       ``(A) In general.--In determining the alternative minimum 
     tax foreign tax credit for any taxable year to which an 
     election under this paragraph applies--
       ``(i) subparagraph (B) of paragraph (1) shall not apply, 
     and
       ``(ii) the limitation of section 904 shall be based on the 
     proportion which--

       ``(I) the taxpayer's taxable income (as determined for 
     purposes of the regular tax) from sources without the United 
     States (but not in excess of the taxpayer's entire 
     alternative minimum taxable income), bears to

       ``(II) the taxpayer's entire alternative minimum taxable 
     income for the taxable year.

       ``(B) Election.--
       ``(i) In general.--An election under this paragraph may be 
     made only for the taxpayer's first taxable year which begins 
     after December 31, 1995, and for which the taxpayer claims an 
     alternative minimum tax foreign tax credit.
       ``(ii) Election revocable only with consent.--An election 
     under this paragraph, once made, shall apply to the taxable 
     year for which made and all subsequent taxable years unless 
     revoked with the consent of the Secretary.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14423. MODIFICATION OF SECTION 1491.

       (a) General Rule.--So much of chapter 5 (relating to tax on 
     transfers to avoid income tax) as precedes section 1492 is 
     amended to read as follows:

        ``CHAPTER 5--TREATMENT OF TRANSFERS TO AVOID INCOME TAX

``Sec. 1491. Recognition of gain.
``Sec. 1492. Exceptions.

     ``SEC. 1491. RECOGNITION OF GAIN.

       ``In the case of any transfer of property by a United 
     States person to a foreign corporation as paid-in surplus or 
     as a contribution to capital, to a foreign estate or trust, 
     or to a foreign partnership, for purposes of this subtitle 
     (other than for purposes of section 679), such transfer shall 
     be treated as a sale or exchange for an amount equal to the 
     fair market value of the property transferred, and the 
     transferor shall recognize as gain the excess of--
       ``(1) the fair market value of the property so transferred, 
     over
       ``(2) the adjusted basis (for purposes of determining gain) 
     of such property in the hands of the transferor.''
       (b) Conforming Amendments.--
       (1) Section 1057 is hereby repealed.
       (2) Section 1492 is amended to read as follows:

     ``SEC. 1492. EXCEPTIONS.

       ``The provisions of section 1491 shall not apply--
       ``(1) If the transferee is an organization exempt from 
     income tax under part I of subchapter F of chapter 1 (other 
     than an organization described in section 401(a)),
       ``(2) To a transfer described in section 367, or
       ``(3) To any other transfer, to the extent provided in 
     regulations in accordance with principles similar to the 
     principles of section 367 or otherwise consistent with the 
     purpose of section 1491.''
       (3) Section 1494 is hereby repealed.
       (4) Paragraph (8) of section 6501(c) is amended by 
     inserting ``or on any transfer by reason of section 1491'' 
     after ``section 367''.
       (5) Subsection (a) of section 6038B is amended by striking 
     ``or'' at the end of paragraph (1), by adding ``or'' at the 
     end of paragraph (2), and by inserting after paragraph (2) 
     the following new paragraph:
       ``(3) makes any transfer described in section 1491,''.
       (6) The table of sections for part IV of subchapter O of 
     chapter 1 is amended by striking the item relating to section 
     1057.
       (7) The table of chapters for subtitle A is amended by 
     striking ``Tax on'' in the item relating to chapter 5 and 
     inserting ``Treatment of''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers after December 31, 1995.

     SEC. 14424. MODIFICATION OF SECTION 367(B).

       (a) General Rule.--Paragraph (1) of section 367(b) is 
     amended to read as follows:
       ``(1) In general.--In the case of any transaction described 
     in section 332, 351, 354, 355, 356, or 361 in which the 
     status of a foreign corporation as a corporation is a general 
     condition for nonrecognition by 1 or more of the parties to 
     the transaction, income shall be required to be recognized to 
     the extent provided in regulations prescribed by the 
     Secretary which are necessary or appropriate to prevent the 
     avoidance of Federal income taxes. This subsection shall not 
     apply to a transaction in which the foreign corporation is 
     not treated as a corporation under subsection (a)(1).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to transfers after December 31, 1995.

     SEC. 14425. INCREASE IN FILING THRESHOLDS FOR RETURNS AS TO 
                   ORGANIZATION OF FOREIGN CORPORATIONS AND 
                   ACQUISITIONS OF STOCK IN SUCH CORPORATIONS.

       (a) In General.--Subsection (a) of section 6046 (relating 
     to returns as to organization or reorganization of foreign 
     corporations and as to acquisitions of their stock) is 
     amended to read as follows:
       ``(a) Requirement of return.--

[[Page 1736]]

       ``(1) In general.--A return complying with the requirements 
     of subsection (b) shall be made by--
       ``(A) each United States citizen or resident who becomes an 
     officer or director of a foreign corporation if a United 
     States person (as defined in section 7701(a)(30)) meets the 
     stock ownership requirements of paragraph (2) with respect to 
     such corporation,
       ``(B) each United States person--
       ``(i) who acquires stock which, when added to any stock 
     owned on the date of such acquisition, meets the stock 
     ownership requirements of paragraph (2) with respect to a 
     foreign corporation, or
       ``(ii) who acquires stock which, without regard to stock 
     owned on the date of such acquisition, meets the stock 
     ownership requirements of paragraph (2) with respect to a 
     foreign corporation,
       ``(C) each person (not described in subparagraph (B)) who 
     is treated as a United States shareholder under section 
     953(c) with respect to a foreign corporation, and
       ``(D) each person who becomes a United States person while 
     meeting the stock ownership requirements of paragraph (2) 
     with respect to stock of a foreign corporation.
     In the case of a foreign corporation with respect to which 
     any person is treated as a United States shareholder under 
     section 953(c), subparagraph (A) shall be treated as 
     including a reference to each United States person who is an 
     officer or director of such corporation.
       ``(2) Stock ownership requirements.--A person meets the 
     stock ownership requirements of this paragraph with respect 
     to any corporation if such person owns 10 percent or more 
     of--
       ``(A) the total combined voting power of all classes of 
     stock of such corporation entitled to vote, or
       ``(B) the total value of the stock of such corporation.''
       (b) Effective Date.--The amendment made by this section 
     shall take effect on January 1, 1996.

     SEC. 14426. APPLICATION OF UNIFORM CAPITALIZATION RULES TO 
                   FOREIGN PERSONS.

       (a) In General.--Section 263A(c) (relating to exceptions) 
     is amended by adding at the end the following new paragraph:
       ``(7) Foreign persons.--This section shall apply to any 
     taxpayer who is not a United States person only for purposes 
     of--
       ``(A) tax liability with respect to income which is 
     effectively connected with the conduct of a trade or business 
     in the United States, and
       ``(B) tax liability of a United States shareholder (as 
     defined in section 951(b)) with respect to amounts includible 
     in gross income under section 951(a).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1995. Section 481 of the Internal Revenue Code of 1986 shall 
     not apply to any change in a method of accounting by reason 
     of such amendment.

     SEC. 14427. CERTAIN PRIZES AND AWARDS.

       (a) In General.--Section 863 (relating to special rules for 
     determining source) is amended by adding at the end the 
     following new subsection:
       ``(f) Certain Prizes and Awards Associated With Amateur 
     Sports Competitions.--
       ``(1) In general.--A prize or award received by a 
     nonresident alien by reason of participating in an amateur 
     sports competition in the United States shall not be treated 
     as derived from sources within the United States if such 
     alien performs no services for such prize or award.
       ``(2) Amateur sports competition.--For purposes of 
     paragraph (1), the term `amateur sports competition' means 
     any competition in which the only prizes awarded by the 
     sponsors of the competition are of nominal value.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to prizes and awards granted after the date of 
     the enactment of this Act.

     SEC. 14428. TREATMENT FOR ESTATE TAX PURPOSES OF SHORT-TERM 
                   OBLIGATIONS HELD BY NONRESIDENT ALIENS.

       (a) In General.--Subsection (b) of section 2105 is amended 
     by striking ``and'' at the end of paragraph (2), by striking 
     the period at the end of paragraph (3) and inserting ``, 
     and'', and by inserting after paragraph (3) the following new 
     paragraph:
       ``(4) obligations which would be original issue discount 
     obligations as defined in section 871(g)(1) but for 
     subparagraph (B)(i) thereof, if any interest thereon (were 
     such interest received by the decedent at the time of his 
     death) would not be effectively connected with the conduct of 
     a trade or business within the United States.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to estates of decedents dying after the date of 
     the enactment of this Act.
                Subtitle E--Other Income Tax Provisions

             PART I--PROVISIONS RELATING TO S CORPORATIONS

     SEC. 14501. S CORPORATIONS PERMITTED TO HAVE 75 SHAREHOLDERS.

       Subparagraph (A) of section 1361(b)(1) (defining small 
     business corporation) is amended by striking ``35 
     shareholders'' and inserting ``75 shareholders''.

     SEC. 14502. ELECTING SMALL BUSINESS TRUSTS.

       (a) General Rule.--Subparagraph (A) of section 1361(c)(2) 
     (relating to certain trusts permitted as shareholders) is 
     amended by inserting after clause (iv) the following new 
     clause:
       ``(v) An electing small business trust.''
       (b) Current Beneficiaries Treated as Shareholders.--
     Subparagraph (B) of section 1361(c)(2) is amended by adding 
     at the end the following new clause:
       ``(v) In the case of a trust described in clause (v) of 
     subparagraph (A), each potential current beneficiary of such 
     trust shall be treated as a shareholder; except that, if for 
     any period there is no potential current beneficiary of such 
     trust, such trust shall be treated as the shareholder during 
     such period.''
       (c) Electing Small Business Trust Defined.--Section 1361 
     (defining S corporation) is amended by adding at the end the 
     following new subsection:
       ``(e) Electing Small Business Trust Defined.--
       ``(1) Electing small business trust.--For purposes of this 
     section--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `electing small business trust' means any trust if--
       ``(i) such trust does not have as a beneficiary any person 
     other than (I) an individual, (II) an estate, or (III) an 
     organization described in paragraph (2), (3), (4), or (5) of 
     section 170(c) which holds a contingent interest and is not a 
     potential current beneficiary,
       ``(ii) no interest in such trust was acquired by purchase, 
     and
       ``(iii) an election under this subsection applies to such 
     trust.
       ``(B) Certain trusts not eligible.--The term `electing 
     small business trust' shall not include--
       ``(i) any qualified subchapter S trust (as defined in 
     subsection (d)(3)) if an election under subsection (d)(2) 
     applies to any corporation the stock of which is held by such 
     trust, and
       ``(ii) any trust exempt from tax under this subtitle.
       ``(C) Purchase.--For purposes of subparagraph (A), the term 
     `purchase' means any acquisition if the basis of the property 
     acquired is determined under section 1012.
       ``(2) Potential current beneficiary.--For purposes of this 
     section, the term `potential current beneficiary' means, with 
     respect to any period, any person who at any time during such 
     period is entitled to, or at the discretion of any person may 
     receive, a distribution from the principal or income of the 
     trust. If a trust disposes of all of the stock which it holds 
     in an S corporation, then, with respect to such corporation, 
     the term `potential current beneficiary' does not include any 
     person who first met the requirements of the preceding 
     sentence during the 60-day period ending on the date of such 
     disposition.
       ``(3) Election.--An election under this subsection shall be 
     made by the trustee. Any such election shall apply to the 
     taxable year of the trust for which made and all subsequent 
     taxable years of such trust unless revoked with the consent 
     of the Secretary.
       ``(4) Cross reference.--

  ``For special treatment of electing small business trusts, see 
section 641(d).''
       (d) Taxation of Electing Small Business Trusts.--Section 
     641 (relating to imposition of tax on trusts) is amended by 
     adding at the end the following new subsection:
       ``(d) Special Rules for Taxation of Electing Small Business 
     Trusts.--
       ``(1) In general.--For purposes of this chapter--
       ``(A) the portion of any electing small business trust 
     which consists of stock in 1 or more S corporations shall be 
     treated as a separate trust, and
       ``(B) the amount of the tax imposed by this chapter on such 
     separate trust shall be determined with the modifications of 
     paragraph (2).
       ``(2) Modifications.--For purposes of paragraph (1), the 
     modifications of this paragraph are the following:
       ``(A) Except as provided in section 1(h), the amount of the 
     tax imposed by section 1(e) shall be determined by using the 
     highest rate of tax set forth in section 1(e).
       ``(B) The exemption amount under section 55(d) shall be 
     zero.
       ``(C) The only items of income, loss, deduction, or credit 
     to be taken into account are the following:
       ``(i) The items required to be taken into account under 
     section 1366.
       ``(ii) Any gain or loss from the disposition of stock in an 
     S corporation.
       ``(iii) To the extent provided in regulations, State or 
     local income taxes or administrative expenses to the extent 
     allocable to items described in clauses (i) and (ii).
     No deduction or credit shall be allowed for any amount not 
     described in this paragraph, and no item described in this 
     paragraph shall be apportioned to any beneficiary.
       ``(D) No amount shall be allowed under paragraph (1) or (2) 
     of section 1211(b).
       ``(3) Treatment of remainder of trust and distributions.--
     For purposes of determining--
       ``(A) the amount of the tax imposed by this chapter on the 
     portion of any electing small business trust not treated as a 
     separate trust under paragraph (1), and
       ``(B) the distributable net income of the entire trust,
     the items referred to in paragraph (2)(C) shall be excluded. 
     Except as provided in the preceding sentence, this subsection 
     shall not affect the taxation of any distribution from the 
     trust.
       ``(4) Treatment of unused deductions where termination of 
     separate trust.--If a portion of an electing small business 
     trust

[[Page 1737]]

     ceases to be treated as a separate trust under paragraph (1), 
     any carryover or excess deduction of the separate trust which 
     is referred to in section 642(h) shall be taken into account 
     by the entire trust.
       ``(5) Electing small business trust.--For purposes of this 
     subsection, the term `electing small business trust' has the 
     meaning given such term by section 1361(e)(1).''
       (e) Technical Amendment.--Paragraph (1) of section 1366(a) 
     is amended by inserting ``, or of a trust or estate which 
     terminates,'' after ``who dies''.

     SEC. 14503. EXPANSION OF POST-DEATH QUALIFICATION FOR CERTAIN 
                   TRUSTS.

       Subparagraph (A) of section 1361(c)(2) (relating to certain 
     trusts permitted as shareholders) is amended--
       (1) by striking ``60-day period'' each place it appears in 
     clauses (ii) and (iii) and inserting ``2-year period'', and
       (2) by striking the last sentence in clause (ii).

     SEC. 14504. FINANCIAL INSTITUTIONS PERMITTED TO HOLD SAFE 
                   HARBOR DEBT.

       Clause (iii) of section 1361(c)(5)(B) (defining straight 
     debt) is amended by striking ``or a trust described in 
     paragraph (2)'' and inserting ``a trust described in 
     paragraph (2), or a person which is actively and regularly 
     engaged in the business of lending money.''

     SEC. 14505. RULES RELATING TO INADVERTENT TERMINATIONS AND 
                   INVALID ELECTIONS.

       (a) General Rule.--Subsection (f) of section 1362 (relating 
     to inadvertent terminations) is amended to read as follows:
       ``(f) Inadvertent Invalid Elections or Terminations.--If--
       ``(1) an election under subsection (a) by any corporation--
       ``(A) was not effective for the taxable year for which made 
     (determined without regard to subsection (b)(2)) by reason of 
     a failure to meet the requirements of section 1361(b) or to 
     obtain shareholder consents, or
       ``(B) was terminated under paragraph (2) of subsection (d),
       ``(2) the Secretary determines that the circumstances 
     resulting in such ineffectiveness or termination were 
     inadvertent,
       ``(3) no later than a reasonable period of time after 
     discovery of the circumstances resulting in such 
     ineffectiveness or termination, steps were taken--
       ``(A) so that the corporation is a small business 
     corporation, or
       ``(B) to acquire the required shareholder consents, and
       ``(4) the corporation, and each person who was a 
     shareholder in the corporation at any time during the period 
     specified pursuant to this subsection, agrees to make such 
     adjustments (consistent with the treatment of the corporation 
     as an S corporation) as may be required by the Secretary with 
     respect to such period,
     then, notwithstanding the circumstances resulting in such 
     ineffectiveness or termination, such corporation shall be 
     treated as an S corporation during the period specified by 
     the Secretary.''
       (b) Late Elections.--Subsection (b) of section 1362 is 
     amended by adding at the end the following new paragraph:
       ``(5) Authority to treat late elections as timely.--If--
       ``(A) an election under subsection (a) is made for any 
     taxable year (determined without regard to paragraph (3)) 
     after the date prescribed by this subsection for making such 
     election for such taxable year, and
       ``(B) the Secretary determines that there was reasonable 
     cause for the failure to timely make such election,
     the Secretary may treat such election as timely made for such 
     taxable year (and paragraph (3) shall not apply).''
       (c) Effective Date.--The amendments made by subsection (a) 
     and (b) shall apply with respect to elections for taxable 
     years beginning after December 31, 1982.

     SEC. 14506. AGREEMENT TO TERMINATE YEAR.

       Paragraph (2) of section 1377(a) (relating to pro rata 
     share) is amended to read as follows:
       ``(2) Election to terminate year.--
       ``(A) In general.--Under regulations prescribed by the 
     Secretary, if any shareholder terminates the shareholder's 
     interest in the corporation during the taxable year and all 
     affected shareholders and the corporation agree to the 
     application of this paragraph, paragraph (1) shall be applied 
     to the affected shareholders as if the taxable year consisted 
     of 2 taxable years the first of which ends on the date of the 
     termination.
       ``(B) Affected shareholders.--For purposes of subparagraph 
     (A), the term `affected shareholders' means the shareholder 
     whose interest is terminated and all shareholders to whom 
     such shareholder has transferred shares during the taxable 
     year. If such shareholder has transferred shares to the 
     corporation, the term `affected shareholders' shall include 
     all persons who are shareholders during the taxable year.''

     SEC. 14507. EXPANSION OF POST-TERMINATION TRANSITION PERIOD.

       (a) In General.--Paragraph (1) of section 1377(b) (relating 
     to post-termination transition period) is amended by striking 
     ``and'' at the end of subparagraph (A), by redesignating 
     subparagraph (B) as subparagraph (C), and by inserting after 
     subparagraph (A) the following new subparagraph:
       ``(B) the 120-day period beginning on the date of any 
     determination pursuant to an audit of the taxpayer which 
     follows the termination of the corporation's election and 
     which adjusts a subchapter S item of income, loss, or 
     deduction of the corporation arising during the S period (as 
     defined in section 1368(e)(2)), and''.
       (b) Determination Defined.--Paragraph (2) of section 
     1377(b) is amended by striking subparagraphs (A) and (B), by 
     redesignating subparagraph (C) as subparagraph (B), and by 
     inserting before subparagraph (B) (as so redesignated) the 
     following new subparagraph:
       ``(A) a determination as defined in section 1313(a), or''.
       (c) Repeal of Special Audit Provisions for Subchapter S 
     Items.--
       (1) General rule.--Subchapter D of chapter 63 (relating to 
     tax treatment of subchapter S items) is hereby repealed.
       (2) Consistent treatment required.--Section 6037 (relating 
     to return of S corporation) is amended by adding at the end 
     the following new subsection:
       ``(c) Shareholder's Return Must Be Consistent With 
     Corporate Return or Secretary Notified of Inconsistency.--
       ``(1) In general.--A shareholder of an S corporation shall, 
     on such shareholder's return, treat a subchapter S item in a 
     manner which is consistent with the treatment of such item on 
     the corporate return.
       ``(2) Notification of inconsistent treatment.--
       ``(A) In general.--In the case of any subchapter S item, 
     if--
       ``(i)(I) the corporation has filed a return but the 
     shareholder's treatment on his return is (or may be) 
     inconsistent with the treatment of the item on the corporate 
     return, or
       ``(II) the corporation has not filed a return, and
       ``(ii) the shareholder files with the Secretary a statement 
     identifying the inconsistency,
     paragraph (1) shall not apply to such item.
       ``(B) Shareholder receiving incorrect information.--A 
     shareholder shall be treated as having complied with clause 
     (ii) of subparagraph (A) with respect to a subchapter S item 
     if the shareholder--
       ``(i) demonstrates to the satisfaction of the Secretary 
     that the treatment of the subchapter S item on the 
     shareholder's return is consistent with the treatment of the 
     item on the schedule furnished to the shareholder by the 
     corporation, and
       ``(ii) elects to have this paragraph apply with respect to 
     that item.
       ``(3) Effect of failure to notify.--In any case--
       ``(A) described in subparagraph (A)(i)(I) of paragraph (2), 
     and
       ``(B) in which the shareholder does not comply with 
     subparagraph (A)(ii) of paragraph (2),
     any adjustment required to make the treatment of the items by 
     such shareholder consistent with the treatment of the items 
     on the corporate return shall be treated as arising out of 
     mathematical or clerical errors and assessed according to 
     section 6213(b)(1). Paragraph (2) of section 6213(b) shall 
     not apply to any assessment referred to in the preceding 
     sentence.
       ``(4) Subchapter s item.--For purposes of this subsection, 
     the term `subchapter S item' means any item of an S 
     corporation to the extent that regulations prescribed by the 
     Secretary provide that, for purposes of this subtitle, such 
     item is more appropriately determined at the corporation 
     level than at the shareholder level.
       ``(5) Addition to tax for failure to comply 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.''
       (3) Conforming amendments.--
       (A) Section 1366 is amended by striking subsection (g).
       (B) Subsection (b) of section 6233 is amended to read as 
     follows:
       ``(b) Similar Rules in Certain Cases.--If a partnership 
     return is filed for any taxable year but it is determined 
     that there is no entity for such taxable year, to the extent 
     provided in regulations, rules similar to the rules of 
     subsection (a) shall apply.''
       (C) The table of subchapters for chapter 63 is amended by 
     striking the item relating to subchapter D.

     SEC. 14508. S CORPORATIONS PERMITTED TO HOLD SUBSIDIARIES.

       (a) In General.--Paragraph (2) of section 1361(b) (defining 
     ineligible corporation) is amended by striking subparagraph 
     (A) and by redesignating subparagraphs (B), (C), (D), and (E) 
     as subparagraphs (A), (B), (C), and (D), respectively.
       (b) Treatment of Certain Wholly Owned S Corporation 
     Subsidiaries.--Section 1361(b) (defining small business 
     corporation) is amended by adding at the end the following 
     new paragraph:
       ``(3) Treatment of certain wholly owned subsidiaries.--
       ``(A) In general.--For purposes of this title--
       ``(i) a corporation which is a qualified subchapter S 
     subsidiary shall not be treated as a separate corporation, 
     and
       ``(ii) all assets, liabilities, and items of income, 
     deduction, and credit of a qualified subchapter S subsidiary 
     shall be treated as assets, liabilities, and such items (as 
     the case may be) of the S corporation.
       ``(B) Qualified subchapter s subsidiary.--For purposes of 
     this paragraph, the term `qualified subchapter S subsidiary' 
     means any domestic corporation which is not an ineligible 
     corporation (as defined in paragraph (2)), if--
       ``(i) 100 percent of the stock of such corporation is held 
     by the S corporation, and

[[Page 1738]]

       ``(ii) the S corporation elects to treat such corporation 
     as a qualified subchapter S subsidiary.
       ``(C) Treatment of terminations of qualified subchapter s 
     subsidiary status.--For purposes of this title, if any 
     corporation which was a qualified subchapter S subsidiary 
     ceases to meet the requirements of subparagraph (B), such 
     corporation shall be treated as a new corporation acquiring 
     all of its assets (and assuming all of its liabilities) 
     immediately before such cessation from the S corporation in 
     exchange for its stock.''
       (c) Certain Dividends Not Treated as Passive Investment 
     Income.--Paragraph (3) of section 1362(d) is amended by 
     adding at the end the following new subparagraph:
       ``(F) Treatment of certain dividends.--If an S corporation 
     holds stock in a C corporation meeting the requirements of 
     section 1504(a)(2), the term `passive investment income' 
     shall not include dividends from such C corporation to the 
     extent such dividends are attributable to the earnings and 
     profits of such C corporation derived from the active conduct 
     of a trade or business.''
       (d) Conforming Amendments.--
       (1) Subsection (c) of section 1361 is amended by striking 
     paragraph (6).
       (2) Subsection (b) of section 1504 (defining includible 
     corporation) is amended by adding at the end the following 
     new paragraph:
       ``(8) An S corporation.''

     SEC. 14509. TREATMENT OF DISTRIBUTIONS DURING LOSS YEARS.

       (a) Adjustments for Distributions Taken Into Account Before 
     Losses.--
       (1) Subparagraph (A) of section 1366(d)(1) (relating to 
     losses and deductions cannot exceed shareholder's basis in 
     stock and debt) is amended by striking ``paragraph (1)'' and 
     inserting ``paragraphs (1) and (2)(A)''.
       (2) Subsection (d) of section 1368 (relating to certain 
     adjustments taken into account) is amended by adding at the 
     end the following new sentence:
     ``In the case of any distribution made during any taxable 
     year, the adjusted basis of the stock shall be determined 
     with regard to the adjustments provided in paragraph (1) of 
     section 1367(a) for the taxable year.''
       (b) Accumulated Adjustments Account.--Paragraph (1) of 
     section 1368(e) (relating to accumulated adjustments account) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(C) Net loss for year disregarded.--
       ``(i) In general.--In applying this section to 
     distributions made during any taxable year, the amount in the 
     accumulated adjustments account as of the close of such 
     taxable year shall be determined without regard to any net 
     negative adjustment for such taxable year.
       ``(ii) Net negative adjustment.--For purposes of clause 
     (i), the term `net negative adjustment' means, with respect 
     to any taxable year, the excess (if any) of--
       ``(I) the reductions in the account for the taxable year 
     (other than for distributions), over
       ``(II) the increases in such account for such taxable 
     year.''
       (c) Conforming Amendments.--Subparagraph (A) of section 
     1368(e)(1) is amended--
       (1) by striking ``as provided in subparagraph (B)'' and 
     inserting ``as otherwise provided in this paragraph'', and
       (2) by striking ``section 1367(b)(2)(A)'' and inserting 
     ``section 1367(a)(2)''.

     SEC. 14510. TREATMENT OF S CORPORATIONS UNDER SUBCHAPTER C.

       Subsection (a) of section 1371 (relating to application of 
     subchapter C rules) is amended to read as follows:
       ``(a) Application of Subchapter C Rules.--Except as 
     otherwise provided in this title, and except to the extent 
     inconsistent with this subchapter, subchapter C shall apply 
     to an S corporation and its shareholders.''

     SEC. 14511. ELIMINATION OF CERTAIN EARNINGS AND PROFITS.

       (a) In General.--If--
       (1) a corporation was an electing small business 
     corporation under subchapter S of chapter 1 of the Internal 
     Revenue Code of 1986 for any taxable year beginning before 
     January 1, 1983, and
       (2) such corporation is an S corporation under subchapter S 
     of chapter 1 of such Code for its first taxable year 
     beginning after December 31, 1995,
     the amount of such corporation's accumulated earnings and 
     profits (as of the beginning of such first taxable year) 
     shall be reduced by an amount equal to the portion (if any) 
     of such accumulated earnings and profits which were 
     accumulated in any taxable year beginning before January 1, 
     1983, for which such corporation was an electing small 
     business corporation under such subchapter S.
       (b) Conforming Amendments.--
       (1) Paragraph (3) of section 1362(d) is amended--
       (A) by striking ``Subchapter C'' in the paragraph heading 
     and inserting ``Accumulated'',
       (B) by striking ``subchapter C'' in subparagraph (A)(i)(I) 
     and inserting ``accumulated'', and
       (C) by striking subparagraph (B) and redesignating the 
     following subparagraphs accordingly.
       (2)(A) Subsection (a) of section 1375 is amended by 
     striking ``subchapter C'' in paragraph (1) and inserting 
     ``accumulated''.
       (B) Paragraph (3) of section 1375(b) is amended to read as 
     follows:
       ``(3) Passive investment income, etc.--The terms `passive 
     investment income' and `gross receipts' have the same 
     respective meanings as when used in paragraph (3) of section 
     1362(d).''
       (C) The section heading for section 1375 is amended by 
     striking ``subchapter c'' and inserting ``accumulated''.
       (D) The table of sections for part III of subchapter S of 
     chapter 1 is amended by striking ``subchapter C'' in the item 
     relating to section 1375 and inserting ``accumulated''.
       (3) Clause (i) of section 1042(c)(4)(A) is amended by 
     striking ``section 1362(d)(3)(D)'' and inserting ``section 
     1362(d)(3)(C)''.

     SEC. 14512. CARRYOVER OF DISALLOWED LOSSES AND DEDUCTIONS 
                   UNDER AT-RISK RULES ALLOWED.

       Paragraph (3) of section 1366(d) (relating to carryover of 
     disallowed losses and deductions to post-termination 
     transition period) is amended by adding at the end the 
     following new subparagraph:
       ``(D) At-risk limitations.--To the extent that any increase 
     in adjusted basis described in subparagraph (B) would have 
     increased the shareholder's amount at risk under section 465 
     if such increase had occurred on the day preceding the 
     commencement of the post-termination transition period, rules 
     similar to the rules described in subparagraphs (A) through 
     (C) shall apply to any losses disallowed by reason of section 
     465(a).''

     SEC. 14513. ADJUSTMENTS TO BASIS OF INHERITED S STOCK TO 
                   REFLECT CERTAIN ITEMS OF INCOME.

       (a) In General.--Subsection (b) of section 1367 (relating 
     to adjustments to basis of stock of shareholders, etc.) is 
     amended by adding at the end the following new paragraph:
       ``(4) Adjustments in case of inherited stock.--
       ``(A) In general.--If any person acquires stock in an S 
     corporation by reason of the death of a decedent or by 
     bequest, devise, or inheritance, section 691 shall be applied 
     with respect to any item of income of the S corporation in 
     the same manner as if the decedent had held directly his pro 
     rata share of such item.
       ``(B) Adjustments to basis.--The basis determined under 
     section 1014 of any stock in an S corporation shall be 
     reduced by the portion of the value of the stock which is 
     attributable to items constituting income in respect of the 
     decedent.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply in the case of decedents dying after the date of 
     the enactment of this Act.

     SEC. 14514. S CORPORATIONS ELIGIBLE FOR RULES APPLICABLE TO 
                   REAL PROPERTY SUBDIVIDED FOR SALE BY 
                   NONCORPORATE TAXPAYERS.

       (a) In General.--Subsection (a) of section 1237 (relating 
     to real property subdivided for sale) is amended by striking 
     ``other than a corporation'' in the material preceding 
     paragraph (1) and inserting ``other than a C corporation''.
       (b) Conforming Amendment.--Subparagraph (A) of section 
     1237(a)(2) is amended by inserting ``an S corporation which 
     included the taxpayer as a shareholder,'' after ``controlled 
     by the taxpayer,''.

     SEC. 14515. EFFECTIVE DATE.

       (a) In General.--Except as otherwise provided in this part, 
     the amendments made by this part shall apply to taxable years 
     beginning after December 31, 1995.
       (b) Treatment of Certain Elections Under Prior Law.--For 
     purposes of section 1362(g) of the Internal Revenue Code of 
     1986 (relating to election after termination), any 
     termination under section 1362(d) of such Code in a taxable 
     year beginning before January 1, 1996, shall not be taken 
     into account.

     PART II--PROVISIONS RELATING TO REGULATED INVESTMENT COMPANIES

     SEC. 14521. REPEAL OF 30-PERCENT GROSS INCOME LIMITATION.

       (a) General Rule.--Subsection (b) of section 851 (relating 
     to limitations) is amended by striking paragraph (3), by 
     adding ``and'' at the end of paragraph (2), and by 
     redesignating paragraph (4) as paragraph (3).
       (b) Technical Amendments.--
       (1) The material following paragraph (3) of section 851(b) 
     (as redesignated by subsection (a)) is amended--
       (A) by striking out ``paragraphs (2) and (3)'' and 
     inserting ``paragraph (2)'', and
       (B) by striking out the last sentence thereof.
       (2) Subsection (c) of section 851 is amended by striking 
     ``subsection (b)(4)'' each place it appears (including the 
     heading) and inserting ``subsection (b)(3)''.
       (3) Subsection (d) of section 851 is amended by striking 
     ``subsections (b)(4)'' and inserting ``subsections (b)(3)''.
       (4) Paragraph (1) of section 851(e) is amended by striking 
     ``subsection (b)(4)'' and inserting ``subsection (b)(3)''.
       (5) Paragraph (4) of section 851(e) is amended by striking 
     ``subsections (b)(4)'' and inserting ``subsections (b)(3)''.
       (6) Section 851 is amended by striking subsection (g) and 
     redesignating subsection (h) as subsection (g).
       (7) Subsection (g) of section 851 (as redesignated by 
     paragraph (6)) is amended by striking paragraph (3).
       (8) Section 817(h)(2) is amended--
       (A) by striking ``851(b)(4)'' in subparagraph (A) and 
     inserting ``851(b)(3)'', and
       (B) by striking ``851(b)(4)(A)(i)'' in subparagraph (B) and 
     inserting ``851(b)(3)(A)(i)''.
       (9) Section 1092(f)(2) is amended by striking ``Except for 
     purposes of section 851(b)(3), the'' and inserting ``The''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable

[[Page 1739]]

     years ending after the date of the enactment of this Act.

     PART III--PROVISIONS RELATING TO REAL ESTATE INVESTMENT TRUSTS

     SEC. 14531. CLARIFICATION OF LIMITATION ON MAXIMUM NUMBER OF 
                   SHAREHOLDERS.

       (a) Rules Relating to Determination of Ownership.--
       (1) Failure to issue shareholder demand letter not to 
     disqualify reit.--Section 857(a) (relating to requirements 
     applicable to real estate investment trusts) is amended by 
     striking paragraph (2) and by redesignating paragraph (3) as 
     paragraph (2).
       (2) Shareholder demand letter requirement; penalty.--
     Section 857 (relating to taxation of real estate investment 
     trusts and their beneficiaries) is amended by redesignating 
     subsection (f) as subsection (g) and by inserting after 
     subsection (e) the following new subsection:
       ``(f) Real Estate Investment Trusts To Ascertain 
     Ownership.--
       ``(1) In general.--Each real estate investment trust shall 
     each taxable year comply with regulations prescribed by the 
     Secretary for the purposes of ascertaining the actual 
     ownership of the outstanding shares, or certificates of 
     beneficial interest, of such trust.
       ``(2) Failure to comply.--
       ``(A) In general.--If a real estate investment trust fails 
     to comply with the requirements of paragraph (1) for a 
     taxable year, such trust shall pay (on notice and demand by 
     the Secretary and in the same manner as tax) a penalty of 
     $25,000.
       ``(B) Intentional disregard.--If any failure under 
     paragraph (1) is due to intentional disregard of the 
     requirement under paragraph (1), the penalty under 
     subparagraph (A) shall be $50,000.
       ``(C) Failure to comply after notice.--The Secretary may 
     require a real estate investment trust to take such actions 
     as the Secretary determines appropriate to ascertain actual 
     ownership if the trust fails to meet the requirements of 
     paragraph (1). If the trust fails to take such actions, the 
     trust shall pay (on notice and demand by the Secretary and in 
     the same manner as tax) an additional penalty equal to the 
     penalty determined under subparagraph (A) or (B), whichever 
     is applicable.
       ``(D) Reasonable cause.--No penalty shall be imposed under 
     this paragraph with respect to any failure if it is shown 
     that such failure is due to reasonable cause and not to 
     willful neglect.''
       (b) Compliance With Closely Held Prohibition.--
       (1) In general.--Section 856 (defining real estate 
     investment trust) is amended by adding at the end the 
     following new subsection:
       ``(k) Requirement That Entity Not Be Closely Held Treated 
     as Met in Certain Cases.--A corporation, trust, or 
     association--
       ``(1) which for a taxable year meets the requirements of 
     section 857(f)(1), and
       ``(2) which does not know, or exercising reasonable 
     diligence would not have known, whether the entity failed to 
     meet the requirement of subsection (a)(6),
     shall be treated as having met the requirement of subsection 
     (a)(6) for the taxable year.''
       (2) Conforming amendment.--Paragraph (6) of section 856(a) 
     is amended by inserting ``subject to the provisions of 
     subsection (k),'' before ``which is not''.

     SEC. 14532. DE MINIMIS RULE FOR TENANT SERVICES INCOME.

       (a) In General.--Paragraph (2) of section 856(d) (defining 
     rents from real property) is amended by striking subparagraph 
     (C) and the last sentence and inserting:
       ``(C) any impermissible tenant service income (as defined 
     in paragraph (7)).''
       (b) Impermissible Tenant Service Income.--Section 856(d) is 
     amended by adding at the end the following new paragraph:
       ``(7) Impermissible tenant service income.--For purposes of 
     paragraph (2)(C)--
       ``(A) In general.--The term `impermissible tenant service 
     income' means, with respect to any real or personal property, 
     any amount received or accrued directly or indirectly by the 
     real estate investment trust for--
       ``(i) services furnished or rendered by the trust to the 
     tenants of such property, or
       ``(ii) managing or operating such property.
       ``(B) Disqualification of all amounts where more than de 
     minimis amount.--If the amount described in subparagraph (A) 
     with respect to a property for any taxable year exceeds 1 
     percent of all amounts received or accrued during such 
     taxable year directly or indirectly by the real estate 
     investment trust with respect to such property, the 
     impermissible tenant service income of the trust with respect 
     to the property shall include all such amounts.
       ``(C) Exceptions.--For purposes of subparagraph (A)--
       ``(i) services furnished or rendered, or management or 
     operation provided, through an independent contractor from 
     whom the trust itself does not derive or receive any income 
     shall not be treated as furnished, rendered, or provided by 
     the trust, and
       ``(ii) there shall not be taken into account any amount 
     which would be excluded from unrelated business taxable 
     income under section 512(b)(3) if received by an organization 
     described in section 511(a)(2).
       ``(D) Amount attributable to impermissible services.--For 
     purposes of subparagraph (A), the amount treated as received 
     for any service (or management or operation) shall not be 
     less than 150 percent of the direct cost of the trust in 
     furnishing or rendering the service (or providing the 
     management or operation).
       ``(E) Coordination with limitations.--For purposes of 
     paragraphs (2) and (3) of subsection (c), amounts described 
     in subparagraph (A) shall be included in the gross income of 
     the corporation, trust, or association.''

     SEC. 14533. ATTRIBUTION RULES APPLICABLE TO TENANT OWNERSHIP.

       Section 856(d)(5) (relating to constructive ownership of 
     stock) is amended by adding at the end the following: ``For 
     purposes of paragraph (2)(B), section 318(a)(3)(A) shall be 
     applied under the preceding sentence in the case of a 
     partnership by taking into account only partners who own 
     (directly or indirectly) 25 percent or more of the capital 
     interest, or the profits interest, in the partnership.''

     SEC. 14534. CREDIT FOR TAX PAID BY REIT ON RETAINED CAPITAL 
                   GAINS.

       (a) General Rule.--Paragraph (3) of section 857(b) 
     (relating to capital gains) is amended by redesignating 
     subparagraph (D) as subparagraph (E) and by inserting after 
     subparagraph (C) the following new subparagraph:
       ``(D) Treatment by shareholders of undistributed capital 
     gains.--
       ``(i) Every shareholder of a real estate investment trust 
     at the close of the trust's taxable year shall include, in 
     computing his long-term capital gains in his return for his 
     taxable year in which the last day of the trust's taxable 
     year falls, such amount as the trust shall designate in 
     respect of such shares in a written notice mailed to its 
     shareholders at any time prior to the expiration of 60 days 
     after the close of its taxable year (or mailed to its 
     shareholders or holders of beneficial interests with its 
     annual report for the taxable year), but the amount so 
     includible by any shareholder shall not exceed that part of 
     the amount subjected to tax in subparagraph (A)(ii) which he 
     would have received if all of such amount had been 
     distributed as capital gain dividends by the trust to the 
     holders of such shares at the close of its taxable year.
       ``(ii) For purposes of this title, every such shareholder 
     shall be deemed to have paid, for his taxable year under 
     clause (i), the tax imposed by subparagraph (A)(ii) on the 
     amounts required by this subparagraph to be included in 
     respect of such shares in computing his long-term capital 
     gains for that year; and such shareholders shall be allowed 
     credit or refund as the case may be, for the tax so deemed to 
     have been paid by him.
       ``(iii) The adjusted basis of such shares in the hands of 
     the holder shall be increased with respect to the amounts 
     required by this subparagraph to be included in computing his 
     long-term capital gains, by the difference between the amount 
     of such includible gains and the tax deemed paid by such 
     shareholder in respect of such shares under clause (ii).
       ``(iv) In the event of such designation, the tax imposed by 
     subparagraph (A)(ii) shall be paid by the real estate 
     investment trust within 30 days after the close of its 
     taxable year.
       ``(v) The earnings and profits of such real estate 
     investment trust, and the earnings and profits of any such 
     shareholder which is a corporation, shall be appropriately 
     adjusted in accordance with regulations prescribed by the 
     Secretary.
       ``(vi) As used in this subparagraph, the terms `shares' and 
     `shareholders' shall include beneficial interests and holders 
     of beneficial interests, respectively.''
       (b) Conforming Amendments.--
       (1) Clause (i) of section 857(b)(7)(A) is amended by 
     striking ``subparagraph (B)'' and inserting ``subparagraph 
     (B) or (D)''.
       (2) Clause (iii) of section 852(b)(3)(D) is amended by 
     striking ``by 65 percent'' and all that follows and inserting 
     ``by the difference between the amount of such includible 
     gains and the tax deemed paid by such shareholder in respect 
     of such shares under clause (ii).''

     SEC. 14535. REPEAL OF 30-PERCENT GROSS INCOME REQUIREMENT.

       (a) General Rule.--Subsection (c) of section 856 (relating 
     to limitations) is amended--
       (1) by adding ``and'' at the end of paragraph (3),
       (2) by striking paragraphs (4) and (8), and
       (3) by redesignating paragraphs (5), (6), and (7) as 
     paragraphs (4), (5), and (6), respectively.
       (b) Conforming Amendments.--
       (1) Subparagraph (G) of section 856(c)(5), as redesignated 
     by subsection (a), is amended by striking ``and such 
     agreement shall be treated as a security for purposes of 
     paragraph (4)(A)''.
       (2) Paragraph (5) of section 857(b) is amended by striking 
     ``section 856(c)(7)'' and inserting ``section 856(c)(6)''.
       (3) Subparagraph (C) of section 857(b)(6) is amended by 
     striking ``section 856(c)(6)(B)'' and inserting ``section 
     856(c)(5)(B)''.

     SEC. 14536. MODIFICATION OF EARNINGS AND PROFITS RULES FOR 
                   DETERMINING WHETHER REIT HAS EARNINGS AND 
                   PROFITS FROM NON-REIT YEAR.

       Subsection (d) of section 857 is amended by adding at the 
     end the following new paragraph:
       ``(3) Distributions to meet requirements of subsection 
     (a)(2)(B).--Any distribution which is made in order to comply 
     with the requirements of subsection (a)(2)(B)--
       ``(A) shall be treated for purposes of this subsection and 
     subsection (a)(2)(B) as made from the earliest accumulated 
     earnings and profits (other than earnings and profits to 
     which subsection (a)(2)(A) applies) rather than the most 
     recently accumulated earnings and profits, and

[[Page 1740]]

       ``(B) to the extent treated under subparagraph (A) as made 
     from accumulated earnings and profits, shall not be treated 
     as a distribution for purposes of subsection (b)(2)(B).''

     SEC. 14537. TREATMENT OF FORECLOSURE PROPERTY.

       (a) Grace Periods.--
       (1) Initial period.--Paragraph (2) of section 856(e) 
     (relating to special rules for foreclosure property) is 
     amended by striking ``on the date which is 2 years after the 
     date the trust acquired such property'' and inserting ``as of 
     the close of the 3d taxable year following the taxable year 
     in which the trust acquired such property''.
       (2) Extension.--Paragraph (3) of section 856(e) is 
     amended--
       (A) by striking ``or more extensions'' and inserting 
     ``extension'', and
       (B) by striking the last sentence and inserting: ``Any such 
     extension shall not extend the grace period beyond the close 
     of the 3d taxable year following the last taxable year in the 
     period under paragraph (2).''
       (b) Revocation of Election.--Paragraph (5) of section 
     856(e) is amended by striking the last sentence and 
     inserting: ``A real estate investment trust may revoke any 
     such election for a taxable year by filing the revocation (in 
     the manner provided by the Secretary) on or before the due 
     date (including any extension of time) for filing its return 
     of tax under this chapter for the taxable year. If a trust 
     revokes an election for any property, no election may be made 
     by the trust under this paragraph with respect to the 
     property for any subsequent taxable year.''
       (c) Certain Activities Not To Disqualify Property.--
     Paragraph (4) of section 856(e) is amended by adding at the 
     end the following new flush sentence:
     ``For purposes of subparagraph (C), property shall not be 
     treated as used in a trade or business by reason of any 
     activities of the real estate investment trust with respect 
     to such property to the extent that such activities would not 
     result in amounts received or accrued, directly or 
     indirectly, with respect to such property being treated as 
     other than rents from real property.''

     SEC. 14538. PAYMENTS UNDER HEDGING INSTRUMENTS.

       Section 856(c)(5)(G) (relating to treatment of certain 
     interest rate agreements), as redesignated by section 14535, 
     is amended to read as follows:
       ``(G) Treatment of certain hedging instruments.--Except to 
     the extent provided by regulations, any--
       ``(i) payment to a real estate investment trust under an 
     interest rate swap or cap agreement, option, futures 
     contract, forward rate agreement, or any similar financial 
     instrument, entered into by the trust in a transaction to 
     reduce the interest rate risks with respect to any 
     indebtedness incurred or to be incurred by the trust to 
     acquire or carry real estate assets, and
       ``(ii) gain from the sale or other disposition of any such 
     investment,
     shall be treated as income qualifying under paragraph (2).''

     SEC. 14539. EXCESS NONCASH INCOME.

       Section 857(e)(2) (relating to determination of amount of 
     excess noncash income) is amended--
       (1) by striking subparagraph (B),
       (2) by striking the period at the end of subparagraph (C) 
     and inserting a comma,
       (3) by redesignating subparagraph (C) (as amended by 
     paragraph (2)) as subparagraph (B), and
       (4) by adding at the end the following new subparagraphs:
       ``(C) the amount (if any) by which--
       ``(i) the amounts includible in gross income with respect 
     to instruments to which section 860E(a) or 1272 applies, 
     exceed
       ``(ii) the amount of money and the fair market value of 
     other property received during the taxable year under such 
     instruments, and
       ``(D) amounts includible in income by reason of 
     cancellation of indebtedness.''

     SEC. 14540. PROHIBITED TRANSACTION SAFE HARBOR.

       Clause (iii) of section 857(b)(6)(C) (relating to certain 
     sales not to constitute prohibited transactions) is amended 
     by striking ``(other than foreclosure property)'' in 
     subclauses (I) and (II) and inserting ``(other than sales of 
     foreclosure property or sales to which section 1033 
     applies)''.

     SEC. 14541. SHARED APPRECIATION MORTGAGES.

       (a) Bankruptcy Safe Harbor.--Section 856(j) (relating to 
     treatment of shared appreciation mortgages) is amended by 
     redesignating paragraph (4) as paragraph (5) and by inserting 
     after paragraph (3) the following new paragraph:
       ``(4) Coordination with 4-year holding period.--
       ``(A) In general.--For purposes of section 857(b)(6)(C), if 
     a real estate investment trust is treated as having sold 
     secured property under paragraph (3)(A), the trust shall be 
     treated as having held such property for at least 4 years 
     if--
       ``(i) the secured property is sold or otherwise disposed of 
     pursuant to a case under title 11 of the United States Code,
       ``(ii) the seller is under the jurisdiction of the court in 
     such case, and
       ``(iii) the disposition is required by the court or is 
     pursuant to a plan approved by the court.
       ``(B) Exception.--Subparagraph (A) shall not apply if--
       ``(i) the secured property was acquired by the trust with 
     the intent to evict or foreclose, or
       ``(ii) the trust knew or had reason to know that default on 
     the obligation described in paragraph (5)(A) would occur.''
       (b) Clarification of Definition of Shared Appreciation 
     Provision.--Clause (ii) of section 856(j)(5)(A) is amended by 
     inserting before the period ``or appreciation in value as of 
     any specified date''.

     SEC. 14542. WHOLLY OWNED SUBSIDIARIES.

       Section 856(i)(2) (defining qualified REIT subsidiary) is 
     amended by striking ``at all times during the period such 
     corporation was in existence''.

     SEC. 14543. EFFECTIVE DATE.

       The amendments made by this part shall apply to taxable 
     years beginning after the date of the enactment of this Act.

                     PART IV--ACCOUNTING PROVISIONS

     SEC. 14551. MODIFICATIONS TO LOOK-BACK METHOD FOR LONG-TERM 
                   CONTRACTS.

       (a) Look-Back Method Not To Apply in Certain Cases.--
     Subsection (b) of section 460 (relating to percentage of 
     completion method) is amended by adding at the end the 
     following new paragraph:
       ``(6) Election to have look-back method not apply in de 
     minimis cases.--
       ``(A) Amounts taken into account after completion of 
     contract.--Paragraph (1)(B) shall not apply with respect to 
     any taxable year (beginning after the taxable year in which 
     the contract is completed) if--
       ``(i) the cumulative taxable income (or loss) under the 
     contract as of the close of such taxable year, is within
       ``(ii) 10 percent of the cumulative look-back taxable 
     income (or loss) under the contract as of the close of the 
     most recent taxable year to which paragraph (1)(B) applied 
     (or would have applied but for subparagraph (B)).
       ``(B) De minimis discrepancies.--Paragraph (1)(B) shall not 
     apply in any case to which it would otherwise apply if--
       ``(i) the cumulative taxable income (or loss) under the 
     contract as of the close of each prior contract year, is 
     within
       ``(ii) 10 percent of the cumulative look-back income (or 
     loss) under the contract as of the close of such prior 
     contract year.
       ``(C) Definitions.--For purposes of this paragraph--
       ``(i) Contract year.--The term `contract year' means any 
     taxable year for which income is taken into account under the 
     contract.
       ``(ii) Look-back income or loss.--The look-back income (or 
     loss) is the amount which would be the taxable income (or 
     loss) under the contract if the allocation method set forth 
     in paragraph (2)(A) were used in determining taxable income.
       ``(iii) Discounting not applicable.--The amounts taken into 
     account after the completion of the contract shall be 
     determined without regard to any discounting under the 2nd 
     sentence of paragraph (2).
       ``(D) Contracts to which paragraph applies.--This paragraph 
     shall only apply if the taxpayer makes an election under this 
     subparagraph. Unless revoked with the consent of the 
     Secretary, such an election shall apply to all long-term 
     contracts completed during the taxable year for which 
     election is made or during any subsequent taxable year.''
       (b) Modification of Interest Rate.--
       (1) In general.--Subparagraph (C) of section 460(b)(2) is 
     amended by striking ``the overpayment rate established by 
     section 6621'' and inserting ``the adjusted overpayment rate 
     (as defined in paragraph (7))''.
       (2) Adjusted overpayment rate.--Subsection (b) of section 
     460 is amended by adding at the end the following new 
     paragraph:
       ``(7) Adjusted overpayment rate.--
       ``(A) In general.--The adjusted overpayment rate for any 
     interest accrual period is the overpayment rate in effect 
     under section 6621 for the calendar quarter in which such 
     interest accrual period begins.
       ``(B) Interest accrual period.--For purposes of 
     subparagraph (A), the term `interest accrual period' means 
     the period--
       ``(i) beginning on the day after the return due date for 
     any taxable year of the taxpayer, and
       ``(ii) ending on the return due date for the following 
     taxable year.
     For purposes of the preceding sentence, the term `return due 
     date' means the date prescribed for filing the return of the 
     tax imposed by this chapter (determined without regard to 
     extensions).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to contracts completed in taxable years ending 
     after the date of the enactment of this Act.

     SEC. 14552. APPLICATION OF MARK TO MARKET ACCOUNTING METHOD 
                   TO TRADERS IN SECURITIES.

       (a) In General.--Section 475 (relating to mark to market 
     accounting method for dealers in securities) is amended by 
     redesignating subsection (e) as subsection (f) and by 
     inserting after subsection (d) the following new subsection:
       ``(e) Authority To Extend Method to Traders in 
     Securities.--
       ``(1) In general.--A trader in securities may elect to have 
     the provisions of this section (other than subsection (d)(3)) 
     apply to securities held by the trader. Such election may be 
     made only with the consent of the Secretary.
       ``(2) Trader in securities.--For purposes of this 
     subsection, the term `trader in securities' means a taxpayer 
     who is regularly engaged in trading securities.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending on and after December 31, 
     1995.

[[Page 1741]]

     SEC. 14553. MODIFICATION OF RULING AMOUNTS FOR NUCLEAR 
                   DECOMMISSIONING COSTS.

       (a) In General.--Section 468A(d) (relating to ruling 
     amount) is amended by adding at the end the following new 
     paragraph:
       ``(4) Nonsubstantial modifications.--A taxpayer may modify 
     a schedule of ruling amounts under paragraph (1) without a 
     review under paragraph (3) if such modification does not 
     substantially modify the ruling amount. The taxpayer shall 
     notify the Secretary of any such modification.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to modifications after the date of the enactment 
     of this Act.

     SEC. 14554. ELECTION OF ALTERNATIVE TAXABLE YEARS BY 
                   PARTNERSHIPS AND S CORPORATIONS.

       (a) Repeal of Limitation on What Taxable Year May Be 
     Elected.--
       (1) In general.--Section 444(b) (relating to limitations on 
     taxable years which may be elected) is amended by adding at 
     the end the following new paragraph:
       ``(5) Limitations not to apply to certain partnerships and 
     s corporations.--
       ``(A) In general.--In the case of a partnership or an S 
     corporation, this subsection shall not apply to an election 
     under subsection (a) for a taxable year beginning after 
     December 31, 1996.
       ``(B) Special rule for existing elections.--
       ``(i) In general.--If a partnership or S corporation has an 
     election in effect for its last taxable year beginning before 
     January 1, 1997, the partnership or S corporation may elect 
     to have this paragraph apply beginning with any taxable year 
     beginning after December 31, 1996. Such an election may be 
     made without the consent of the Secretary and shall not be 
     treated as a termination of an election for purposes of 
     subsection (d).
       ``(ii) Treatment of required payments.--A partnership or S 
     corporation making an election under clause (i) may elect to 
     have its net required payment balance (within the meaning of 
     section 7519(e)(4))--

       ``(I) credited against its first estimated tax payment 
     under section 6654A for its first full taxable year for which 
     such section applies, or
       ``(II) refunded to it at the time provided in section 
     7519(c)(3).''

       (2) Effect of election.--Paragraph (1) of section 444(c) 
     (relating to effect of election) is amended to read as 
     follows:
       ``(1) in the case of a partnership or S corporation, such 
     entity shall--
       ``(A) make the payments required by section 7519, or
       ``(B) if subsection (b)(5) applies to the election, make 
     the estimated tax payments described in section 6654A, and''.
       (b) Estimated Tax for Partnerships and S Corporations 
     Making Taxable Year Elections.--Part I of subchapter A of 
     chapter 68 (relating to additions to tax and additional 
     amounts) is amended by inserting after section 6654 the 
     following new section:

     ``SEC. 6654A. FAILURE BY ELECTING PARTNERSHIP OR S 
                   CORPORATION TO PAY ESTIMATED TAX.

       ``(a) Penalty.--Except as otherwise provided in this 
     section, in the case of a partnership or S corporation with 
     respect to which an election to which section 444(b)(5) 
     applies is in effect (hereafter referred to as `the entity'), 
     there is hereby imposed a penalty for each quarter for which 
     there is an underpayment in an amount determined by 
     applying--
       ``(1) the underpayment rate established under section 6621,
       ``(2) to the amount of the underpayment,
       ``(3) for the period of the underpayment.
       ``(b) Amount of Underpayment; Period of Underpayment.--For 
     purposes of subsection (a)--
       ``(1) Amount.--The amount of the underpayment shall be the 
     excess of--
       ``(A) the required installment, over
       ``(B) the amount (if any) of the installment paid on or 
     before the due date for the installment.
       ``(2) Period of underpayment.--The period of the 
     underpayment shall run from the due date for the installment 
     to the earlier of--
       ``(A) the first April 15 more than 3 months after the close 
     of the taxable year, or
       ``(B) with respect to any portion of the underpayment, the 
     date on which such portion is paid.
       ``(3) Order of crediting payments.--For purposes of 
     paragraph (2)(B), a payment of estimated tax shall be 
     credited against unpaid required installments in the order in 
     which the installments are required to be paid.
       ``(c) Required Installments.--For purposes of this 
     section--
       ``(1) Number and dates.--An entity shall make 4 required 
     installments which shall be due on the 15th day of the 3d, 
     5th, 8th, and 12th months of the taxable year.
       ``(2) No required payments where entity's liability is less 
     than $5,000.--An entity shall not be required to make 
     estimated payments under this section for any taxable year 
     for which (but for this paragraph) its aggregate liability 
     under this section would be less than $5,000.
       ``(3) Amount.--The amount of each required installment 
     shall be 25 percent of the product of--
       ``(A) the entity's applicable income determined under its 
     applicable method for the quarter for which the installment 
     is being made, and
       ``(B) the applicable rate.
       ``(4) Applicable rate.--
       ``(A) In general.--The term `applicable rate' means 34 
     percent (39.6 percent in the case of an entity described in 
     subparagraph (B)).
       ``(B) High average income entity.--
       ``(i) In general.--An entity is described in this 
     subparagraph if--

       ``(I) the average applicable income of 2-percent owners of 
     the entity for its base year is $250,000 or more, or
       ``(II) in the case of a partnership, its applicable income 
     for the base year is $10,000,000 or more.

     An entity shall not be treated as so described if it has no 
     base year.
       ``(ii) 2-percent owner.--The term `2-percent owner' means--

       ``(I) in the case of a partnership, any person who owns (or 
     is considered as owning within the meaning of section 318) on 
     any day during the base year more than 2 percent of the 
     capital interests of the partnerships, and
       ``(II) in the case of an S corporation, a 2-percent 
     shareholder (as defined in section 1372(b)).

       ``(5) Adjustments under annualized income method.--An 
     entity using the annualized income method shall adjust its 
     required installment for any quarter to reflect any change in 
     its required installment for any prior quarter in the taxable 
     year which would have been required if the annualized 
     applicable income for the current quarter had been used for 
     the prior quarter.
       ``(d) Applicable Method.--For purposes of this section--
       ``(1) In general.--An entity shall determine its applicable 
     income on the basis of the 100-percent method.
       ``(2) Exceptions.--
       ``(A) Elections.--An entity may determine its applicable 
     income--
       ``(i) for all quarters in a taxable year on the basis of 
     the 110-percent method if it elects such method on or before 
     the due date for the first quarterly installment, or
       ``(ii) for any quarter in a taxable year on the basis of 
     the annualized income method if it elects such method on or 
     before the due date for the quarterly installment for such 
     quarter.
     An election under clause (ii) shall apply for the quarter for 
     which made and all subsequent quarters during the taxable 
     year.
       ``(B) Large increase in income.--If an entity's applicable 
     income for the taxable year exceeds its applicable income for 
     the base year by more than $750,000, the entity may not use 
     the 110-percent method for the taxable year.
       ``(3) Methods.--
       ``(A) 100-percent method.--Under the 100-percent method, an 
     entity's applicable income shall be its applicable income for 
     the taxable year.
       ``(B) 110-percent method.--Under the 110-percent method, an 
     entity's applicable income shall be 110 percent of its 
     applicable income for the base year.
       ``(C) Annualized income method.--Under the annualized 
     income method, the entity's applicable income for purposes of 
     determining the required installment for any quarter shall be 
     an amount equal to the product of--
       ``(i) its applicable income for the period consisting of 
     the months in the taxable year ending before the due date for 
     the quarter, and
       ``(ii) a percentage equal to 12 divided by the number of 
     such months.
       ``(e) Applicable Income.--
       ``(1) In general.--For purposes of this section, the 
     applicable income for any taxable year shall be the net 
     amount (not less than zero) determined--
       ``(A) by taking into account the entity's items in the 
     manner and with the exceptions provided in section 703(a) or 
     1363(b), as the case may be, and
       ``(B) by making the further adjustments provided in 
     paragraphs (2), (3), (4), and (5) of this subsection.
       ``(2) Certain deductions allowed.--In determining 
     applicable income, the following amounts shall be allowed as 
     deductions:
       ``(A) The deduction allowable under section 170 for 
     charitable contributions of the entity.
       ``(B) The deduction allowable under section 901 for taxes 
     described in section 901(c) paid or accrued to foreign 
     countries or possessions of the United States.
       ``(3) Certain limitations disregarded.--For purposes of 
     paragraphs (1) and (2), any limitation on the amount of any 
     item which may be taken into account for purposes of 
     computing the taxable income of a partner or shareholder 
     shall be disregarded.
       ``(4) Guaranteed payments to partners not deducted.--In 
     determining applicable income, a guaranteed payment to a 
     partner shall not be treated as an item of deduction.
       ``(5) Disproportionate applicable payments during deferral 
     period.--
       ``(A) Deduction not allowed.--In determining applicable 
     income, no deduction shall be allowed for disproportionate 
     deferral period applicable payments.
       ``(B) Disproportionate deferral period applicable 
     payments.--For purposes of subparagraph (A), the term 
     `disproportionate deferral period applicable payments' means 
     the excess (if any) of--
       ``(i) the product of the deferral ratio and the aggregate 
     applicable payments made to owners during the entity's entire 
     taxable year, over
       ``(ii) the aggregate applicable payments made to owners 
     during the deferral period.
       ``(C) Definitions.--For purposes of this paragraph--

[[Page 1742]]

       ``(i) the term `applicable payments' has the meaning given 
     to such term by section 7519(d)(3), except that in the case 
     of an S corporation only payments to 2-percent shareholders 
     (as defined in section 1372(b)) shall be taken into account,
       ``(ii) the term `deferral period' means the months in the 
     period beginning with the first day of the entity's taxable 
     year and ending on December 31, and
       ``(iii) the term `deferral ratio' means the ratio which the 
     number of months in the deferral period bears to the total 
     number of months in the taxable year.
       ``(6) Special rule where c corporation for base year.--In 
     applying the 110-percent method, if an S corporation was a C 
     corporation for the base year, the S corporation's applicable 
     income shall be the taxable income of the C corporation for 
     the base year.
       ``(f) Coordination Between Entity and Owners.--
       ``(1) Treatment of payments of required installments.--
       ``(A) In general.--For purposes of this title, an owner in 
     an entity shall be treated as having paid, for the owner's 
     first taxable year ending with or after the close of the 
     entity's taxable year, an amount of tax imposed by section 1 
     equal to the owner's allocable share of the entity's payments 
     of required installments under this section (determined 
     without regard to excess payments described in subparagraph 
     (C)(ii)(II) or amounts the entity is treated as paying under 
     paragraph (2)).
       ``(B) Coordination with owner's estimated tax.--For 
     purposes of section 6654, an individual shall be treated as 
     having paid on the due date for the estimated tax installment 
     for each quarter of the individual's taxable year described 
     in subparagraph (A)--
       ``(i) except as provided in clause (ii), 25 percent of the 
     tax deemed paid under subparagraph (A), or
       ``(ii) if the annualized income method was used by the 
     entity for any quarter of the entity's taxable year described 
     in subparagraph (A), an amount for the corresponding quarter 
     in the individuals's taxable year equal to the portion of 
     such tax attributable to the individual's allocable share of 
     the entity's applicable income for the entity's quarter.
     In no event shall the aggregate estimated tax payments 
     treated as paid under this subparagraph exceed the amount of 
     tax determined under subparagraph (A).
       ``(C) Amounts determined on basis of return.--
       ``(i) In general.--The determination of the amount of tax 
     payments under subparagraph (A) shall be made on the basis of 
     amounts shown on the entity's return for the taxable year.
       ``(ii) Reconciliation of differences.--If, as of the first 
     April 15 more than 3 months after the close of the entity's 
     taxable year, the aggregate amounts paid as required 
     installments under this section are less or more than the 
     aggregate amounts described in clause (i) shown on the 
     entity's return of tax for the taxable year, then--

       ``(I) subject to paragraph (2), there is hereby imposed on 
     the entity under chapter 1 an additional tax equal to the 
     amount of the shortfall, the due date for which is such April 
     15, or
       ``(II) the entity shall be treated as having made a payment 
     of tax under chapter 1 on such April 15 in an amount equal to 
     the excess.

       ``(2) Treatment of payments by owners.--For purposes of 
     subsection (b)(2)(B) and paragraph (1)(C), an entity shall be 
     treated as paying any portion of an underpayment attributable 
     to an owner's allocable share of applicable income at the 
     time the tax imposed by chapter 1 on the owner with respect 
     to such income is paid.
       ``(3) Allocable share.--For purposes of this subsection--
       ``(A) In general.--An owner's allocable share of an item 
     for a taxable year shall be an amount which bears the same 
     ratio to the amount of such item as the owner's applicable 
     income for the taxable year bears to the sum of the 
     applicable incomes of all owners. For purposes of this 
     subparagraph, applicable income of an owner shall be 
     determined in the same manner as subsection (e).
       ``(B) Application other than on taxable year basis.--If--
       ``(i) the entity elects the annualized income method for 
     any quarter, subparagraph (A) shall be applied on a quarter-
     by-quarter basis, or
       ``(ii) there is an interim closing of the books of an 
     entity under this title, subparagraph (A) shall be applied 
     separately for the periods before and after the closing.
       ``(g) Special Rules for Short Year Created by Election.--
       ``(1) Additional required installment.--If, by reason of an 
     election under this section, an entity has a taxable year of 
     less than 12 months, the entity shall make a required 
     installment under this section for such taxable year--
       ``(A) which shall be in an amount equal to the applicable 
     rate multiplied by the lesser of--
       ``(i) the entity's applicable income for such taxable year 
     as determined under subsection (e), or
       ``(ii) 110 percent of the entity's applicable income for 
     the base year (as so determined but ratably reduced to 
     reflect the period of such taxable year), and
       ``(B) the due date for which shall be the last day for 
     which an election under this section could be made for the 
     taxable year.
       ``(2) Treatment of losses.--Any net operating loss arising 
     in the taxable year described in paragraph (1) shall be 
     treated as arising one-third in such taxable year and each of 
     the 2 following taxable years. This paragraph shall not apply 
     to an entity not in existence before such taxable year unless 
     more than one-half of the equity interests in the entity are 
     held by persons who owned another entity carrying on the same 
     business before such taxable year.
       ``(h) Other Definitions and Special Rules.--For purpose of 
     this section--
       ``(1) Base year.--The term `base year' means the most 
     recent preceding taxable year containing 12 months.
       ``(2) Equity interest.--The term `equity interest' means--
       ``(A) in the case of a partnership, the capital interests, 
     and
       ``(B) in the case of an S corporation, the shares of stock 
     in the corporation (whether voting or nonvoting).
       ``(3) Owner.--The term `owner' means a partner in a 
     partnership or a shareholder in an S corporation, whichever 
     is applicable.
       ``(4) Common control.--
       ``(A) In general.--For purposes of subsections (c)(2), 
     (c)(4)(B), and (d)(2)(B), entities under common control shall 
     be treated as 1 entity.
       ``(B) Common control.--Entities shall be treated as under 
     common control under subparagraph (A) if they are treated as 
     a single employee under subsection (a) or (b) of section 52.
       ``(5) Waiver.--No penalty shall be imposed under subsection 
     (a) with respect to any underpayment to the extent the 
     Secretary determines that by reason of casualty, disaster, or 
     other unusual circumstances the imposition of the penalty 
     would be against equity and good conscience.''
       (c) Modification of Elections.--
       (1) Time for making.--Paragraph (1) of section 444(d) is 
     amended by adding at the end the following new sentence: 
     ``Such election may be made at any time on or before the 15th 
     day of the 3d month of the first taxable year of 12 months 
     under the election.''
       (2) Terminations.--Paragraph (2) of section 444(d) is 
     amended by striking subparagraph (B) and inserting:
       ``(B) Terminations.--
       ``(i) Revocation.--An election under subsection (a) may be 
     terminated by revocation but only if owners of more than one-
     half of the equity interests in the entity on the date of the 
     revocation consent to it.
       ``(ii) Entity terminations.--In the case of a partnership 
     or S corporation, an election under subsection (a) terminates 
     when the partnership terminates under section 708(b)(1) or 
     the corporation ceases to be an S corporation.
       ``(C) Subsequent elections.--If an election under 
     subsection (a) has been terminated, no such election may be 
     made with respect to such entity or any successor entity for 
     any taxable year before its 5th taxable year beginning after 
     the 1st taxable year for which the termination was effective, 
     unless the Secretary consents to the election.''
       (d) Conforming Amendments.--
       (1) Section 6665(b) is amended--
       (A) by inserting ``6654A,'' after ``6654,'', and
       (B) by striking ``6654 or'' and inserting ``6654, 6654A, 
     or''.
       (2) The table of sections for part I of subchapter A of 
     chapter 68 is amended by inserting after the item relating to 
     section 6654 the following new item:

``Sec. 6654A. Failure by electing partnership or S corporation to pay 
              estimated tax.''
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 14555. SPECIAL RULE FOR CROP INSURANCE PROCEEDS AND 
                   DISASTER PAYMENTS.

       (a) In General.--Section 451(d) of the Internal Revenue 
     Code of 1986 (relating to special rule for crop insurance 
     proceeds and disaster payments) is amended to read as 
     follows:
       ``(d) Special Rule for Crop Insurance Proceeds and Disaster 
     Payments.--
       ``(1) General rule.--In the case of any payment described 
     in paragraph (2), a taxpayer reporting on the cash receipts 
     and disbursements method of accounting--
       ``(A) may elect to treat any such payment received in the 
     taxable year of destruction or damage of crops as having been 
     received in the following taxable year if the taxpayer 
     establishes that, under the taxpayer's practice, income from 
     such crops involved would have been reported in a following 
     taxable year, or
       ``(B) may elect to treat any such payment received in a 
     taxable year following the taxable year of the destruction or 
     damage of crops as having been received in the taxable year 
     of destruction or damage, if the taxpayer establishes that, 
     under the taxpayer's practice, income from such crops 
     involved would have been reported in the taxable year of 
     destruction or damage.
       ``(2) Payments described.--For purposes of this subsection, 
     a payment is described in this paragraph if such payment--
       ``(A) is insurance proceeds received on account of 
     destruction or damage to crops, or
       ``(B) is disaster assistance received under any Federal law 
     as a result of--
       ``(i) destruction or damage to crops caused by drought, 
     flood, or other natural disaster, or
       ``(ii) inability to plant crops because of such a 
     disaster.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     applies to payments received after December 31, 1995, as a 
     result of destruction or damage occurring after such date.

[[Page 1743]]

                   PART V--TAX-EXEMPT BOND PROVISIONS

     SEC. 14561. REPEAL OF $100,000 LIMITATION ON UNSPENT PROCEEDS 
                   UNDER 1-YEAR EXCEPTION FROM REBATE.

       Subclause (I) of section 148(f)(4)(B)(ii) (relating to 
     additional period for certain bonds) is amended by striking 
     ``the lesser of 5 percent of the proceeds of the issue or 
     $100,000'' and inserting ``5 percent of the proceeds of the 
     issue''.

     SEC. 14562. EXCEPTION FROM REBATE FOR EARNINGS ON BONA FIDE 
                   DEBT SERVICE FUND UNDER CONSTRUCTION BOND 
                   RULES.

       Subparagraph (C) of section 148(f)(4) is amended by adding 
     at the end the following new clause:
       ``(xvii) Treatment of bona fide debt service funds.--If the 
     spending requirements of clause (ii) are met with respect to 
     the available construction proceeds of a construction issue, 
     then paragraph (2) shall not apply to earnings on a bona fide 
     debt service fund for such issue.''

     SEC. 14563. REPEAL OF DEBT SERVICE-BASED LIMITATION ON 
                   INVESTMENT IN CERTAIN NONPURPOSE INVESTMENTS.

       Subsection (d) of section 148 (relating to special rules 
     for reasonably required reserve or replacement fund) is 
     amended by striking paragraph (3).

     SEC. 14564. REPEAL OF EXPIRED PROVISIONS.

       (a) Paragraph (2) of section 148(c) is amended by striking 
     subparagraph (B) and by redesignating subparagraphs (C), (D), 
     and (E) as subparagraphs (B), (C), and (D), respectively.
       (b) Paragraph (4) of section 148(f) is amended by striking 
     subparagraph (E).

     SEC. 14565. EFFECTIVE DATES.

       The amendments made by this part shall apply to bonds 
     issued after the date of the enactment of this Act.

                     PART VI--INSURANCE PROVISIONS

     SEC. 14571. TREATMENT OF CERTAIN INSURANCE CONTRACTS ON 
                   RETIRED LIVES.

       (a) General Rule.--
       (1) Paragraph (2) of section 817(d) (defining variable 
     contract) is amended by striking ``or'' at the end of 
     subparagraph (A), by striking ``and'' at the end of 
     subparagraph (B) and inserting ``or'', and by inserting after 
     subparagraph (B) the following new subparagraph:
       ``(C) provides for funding of insurance on retired lives as 
     described in section 807(c)(6), and''.
       (2) Paragraph (3) of section 817(d) is amended by striking 
     ``or'' at the end of subparagraph (A), by striking the period 
     at the end of subparagraph (B) and inserting ``, or'', and by 
     inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) in the case of funds held under a contract described 
     in paragraph (2)(C), the amounts paid in, or the amounts paid 
     out, reflect the investment return and the market value of 
     the segregated asset account.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14572. TREATMENT OF MODIFIED GUARANTEED CONTRACTS.

       (a) General Rule.--Subpart E of part I of subchapter L of 
     chapter 1 (relating to definitions and special rules) is 
     amended by inserting after section 817 the following new 
     section:

     ``SEC. 817A. SPECIAL RULES FOR MODIFIED GUARANTEED CONTRACTS.

       ``(a) Computation of Reserves.--In the case of a modified 
     guaranteed contract, clause (ii) of section 807(e)(1)(A) 
     shall not apply.
       ``(b) Segregated Assets Under Modified Guaranteed Contracts 
     Marked to Market.--
       ``(1) In general.--In the case of any life insurance 
     company, for purposes of this subtitle--
       ``(A) Any gain or loss with respect to a segregated asset 
     shall be treated as ordinary income or loss, as the case may 
     be.
       ``(B) If any segregated asset is held by such company as of 
     the close of any taxable year--
       ``(i) such company shall recognize gain or loss as if such 
     asset were sold for its fair market value on the last 
     business day of such taxable year, and
       ``(ii) any such gain or loss shall be taken into account 
     for such taxable year.
     Proper adjustment shall be made in the amount of any gain or 
     loss subsequently realized for gain or loss taken into 
     account under the preceding sentence. The Secretary may 
     provide by regulations for the application of this 
     subparagraph at times other than the times provided in this 
     subparagraph.
       ``(2) Segregated asset.--For purposes of paragraph (1), the 
     term `segregated asset' means any asset held as part of a 
     segregated account referred to in subsection (d)(1) under a 
     modified guaranteed contract.
       ``(c) Special Rule in Computing Life Insurance Reserves.--
     For purposes of applying section 816(b)(1)(A) to any modified 
     guaranteed contract, an assumed rate of interest shall 
     include a rate of interest determined, from time to time, 
     with reference to a market rate of interest.
       ``(d) Modified Guaranteed Contract Defined.--For purposes 
     of this section, the term `modified guaranteed contract' 
     means a contract not described in section 817--
       ``(1) all or part of the amounts received under which are 
     allocated to an account which, pursuant to State law or 
     regulation, is segregated from the general asset accounts of 
     the company and is valued from time to time with reference to 
     market values,
       ``(2) which--
       ``(A) provides for the payment of annuities,
       ``(B) is a life insurance contract, or
       ``(C) is a pension plan contract which is not a life, 
     accident, or health, property, casualty, or liability 
     contract,
       ``(3) for which reserves are valued at market for annual 
     statement purposes, and
       ``(4) which provides for a net surrender value or a 
     policyholder's fund (as defined in section 807(e)(1)).
     If only a portion of a contract is not described in section 
     817, such portion shall be treated for purposes of this 
     section as a separate contract.
       ``(e) Regulations.--The Secretary may prescribe 
     regulations--
       ``(1) to provide for the treatment of market value 
     adjustments under sections 72, 7702, 7702A, and 807(e)(1)(B),
       ``(2) to determine the interest rates applicable under 
     sections 807(c)(3), 807(d)(2)(B), and 812 with respect to a 
     modified guaranteed contract annually, in a manner 
     appropriate for modified guaranteed contracts and, to the 
     extent appropriate for such a contract, to modify or waive 
     the applicability of section 811(d),
       ``(3) to provide rules to limit ordinary gain or loss 
     treatment to assets constituting reserves for modified 
     guaranteed contracts (and not other assets) of the company,
       ``(4) to provide appropriate treatment of transfers of 
     assets to and from the segregated account, and
       ``(5) as may be necessary or appropriate to carry out the 
     purposes of this section.''
       (b) Clerical Amendment.--The table of sections for subpart 
     E of part I of subchapter L of chapter 1 is amended by 
     inserting after the item relating to section 817 the 
     following new item:

``Sec. 817A. Special rules for modified guaranteed contracts.''
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to taxable years beginning after December 31, 1995.
       (2) Treatment of net adjustments.--In the case of any 
     taxpayer required by the amendments made by this section to 
     change its calculation of reserves to take into account 
     market value adjustments and to mark segregated assets to 
     market for any taxable year--
       (A) such changes shall be treated as a change in method of 
     accounting initiated by the taxpayer,
       (B) such changes shall be treated as made with the consent 
     of the Secretary, and
       (C) the adjustments required by reason of section 481 of 
     the Internal Revenue Code of 1986 shall be taken into account 
     as ordinary income or loss by the taxpayer for the taxpayer's 
     first taxable year beginning after December 31, 1995.

     SEC. 14573. MINIMUM TAX TREATMENT OF CERTAIN PROPERTY AND 
                   CASUALTY INSURANCE COMPANIES.

       (a) In General.--Clause (i) of section 56(g)(4)(B) 
     (relating to inclusion of items included for purposes of 
     computing earnings and profits) is amended by adding at the 
     end the following new sentence: ``In the case of any 
     insurance company taxable under section 831(b), this clause 
     shall not apply to any amount not described in section 
     834(b).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1995.

                       PART VII--OTHER PROVISIONS

     SEC. 14581. CLOSING OF PARTNERSHIP TAXABLE YEAR WITH RESPECT 
                   TO DECEASED PARTNER, ETC.

       (a) General Rule.--Subparagraph (A) of section 706(c)(2) 
     (relating to disposition of entire interest) is amended to 
     read as follows:
       ``(A) Disposition of entire interest.--The taxable year of 
     a partnership shall close with respect to a partner whose 
     entire interest in the partnership terminates (whether by 
     reason of death, liquidation, or otherwise).''
       (b) Clerical Amendment.--The paragraph heading for 
     paragraph (2) of section 706(c) is amended to read as 
     follows:
       ``(2) Treatment of dispositions.--''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to partnership taxable years beginning after 
     December 31, 1995.

     SEC. 14582. CREDIT FOR SOCIAL SECURITY TAXES PAID WITH 
                   RESPECT TO EMPLOYEE CASH TIPS.

       (a) Reporting Requirement Not Considered.--Subparagraph (A) 
     of section 45B(b)(1) (relating to excess employer social 
     security tax) is amended by inserting ``(without regard to 
     whether such tips are reported under section 6053)'' after 
     ``section 3121(q)''.
       (b) Taxes Paid.--Subsection (d) of section 13443 of the 
     Revenue Reconciliation Act of 1993 is amended by inserting 
     ``, with respect to services performed before, on, or after 
     such date'' after ``1993''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the amendments made by, 
     and the provisions of, section 13443 of the Revenue 
     Reconciliation Act of 1993.

     SEC. 14583. DUE DATE FOR FIRST QUARTER ESTIMATED TAX PAYMENTS 
                   BY PRIVATE FOUNDATIONS.

       (a) In General.--Paragraph (3) of section 6655(g) is 
     amended by inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D) In the case of any private foundation, subsection 
     (c)(2) shall be applied by substituting `May 15' for `April 
     15 ' ''.

[[Page 1744]]

       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 14584. TREATMENT OF DUES PAID TO AGRICULTURAL OR 
                   HORTICULTURAL ORGANIZATIONS.

       (a) General Rule.--Section 512 (defining unrelated business 
     taxable income) is amended by adding at the end thereof the 
     following new subsection:
       ``(d) Treatment of Dues of Agricultural or Horticultural 
     Organizations.--
       ``(1) In general.--If--
       ``(A) an agricultural or horticultural organization 
     described in section 501(c)(5) requires annual dues to be 
     paid in order to be a member of such organization, and
       ``(B) the amount of such required annual dues does not 
     exceed $100,
     in no event shall any portion of such dues be treated as 
     derived by such organization from an unrelated trade or 
     business by reason of any benefits or privileges to which 
     members of such organization are entitled.
       ``(2) Indexation of $100 amount.--In the case of any 
     taxable year beginning in a calendar year after 1995, the 
     $100 amount in paragraph (1) shall be increased by an amount 
     equal to--
       ``(A) $100, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `calendar year 1994' for 
     `calendar year 1992' in subparagraph (B) thereof.
       ``(3) Dues.--For purposes of this subsection, the term 
     `dues' includes any payment required to be made in order to 
     be recognized by the organization as a member of the 
     organization.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1994.
                     Subtitle F--Estates and Trusts

                     PART I--INCOME TAX PROVISIONS

     SEC. 14601. CERTAIN REVOCABLE TRUSTS TREATED AS PART OF 
                   ESTATE.

       (a) In General.--Subpart A of part I of subchapter J 
     (relating to estates, trusts, beneficiaries, and decedents) 
     is amended by adding at the end the following new section:

     ``SEC. 646. CERTAIN REVOCABLE TRUSTS TREATED AS PART OF 
                   ESTATE.

       ``(a) General Rule.--For purposes of this subtitle, if both 
     the executor of an estate and the trustee of a qualified 
     revocable trust elect the treatment provided in this section, 
     such trust shall be treated and taxed as part of such estate 
     (and not as a separate trust) for all taxable years of the 
     estate ending after the date of the decedent's death and 
     before the applicable date.
       ``(b) Definitions.--For purposes of subsection (a)--
       ``(1) Qualified revocable trust.--The term `qualified 
     revocable trust' means any trust all of which was treated 
     under section 676 as owned by the decedent of the estate 
     referred to in subsection (a).
       ``(2) Applicable date.--The term `applicable date' means--
       ``(A) if no return of tax imposed by chapter 11 is required 
     to be filed, the date which is 2 years after the date of the 
     decedent's death, and
       ``(B) if such a return is required to be filed, the date 
     which is 6 months after the date of the final determination 
     of the liability for tax imposed by chapter 11.
       ``(c) Election.--The election under subsection (a) shall be 
     made not later than the time prescribed for filing the return 
     of tax imposed by this chapter for the first taxable year of 
     the estate (determined with regard to extensions) and, once 
     made, shall be irrevocable.''
       (b) Comparable Treatment Under Generation-Skipping Tax.--
     Paragraph (1) of section 2652(b) is amended by adding at the 
     end the following new sentence: ``Such term shall not include 
     any trust during any period the trust is treated as part of 
     an estate under section 646.''
       (c) Clerical Amendment.--The table of sections for such 
     subpart A is amended by adding at the end the following new 
     item:

``Sec. 646. Certain revocable trusts treated as part of estate.''
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to estates of decedents dying after 
     the date of the enactment of this Act.

     SEC. 14602. DISTRIBUTIONS DURING FIRST 65 DAYS OF TAXABLE 
                   YEAR OF ESTATE.

       (a) In General.--Subsection (b) of section 663 (relating to 
     distributions in first 65 days of taxable year) is amended by 
     inserting ``an estate or'' before ``a trust'' each place it 
     appears.
       (b) Conforming Amendment.--Paragraph (2) of section 663(b) 
     is amended by striking ``the fiduciary of such trust'' and 
     inserting ``the executor of such estate or the fiduciary of 
     such trust (as the case may be)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 14603. SEPARATE SHARE RULES AVAILABLE TO 
                   ESTATES.

       (a) In General.--Subsection (c) of section 663 (relating to 
     separate shares treated as separate trusts) is amended--
       (1) by inserting before the last sentence the following new 
     sentence: ``Rules similar to the rules of the preceding 
     provisions of this subsection shall apply to treat 
     substantially separate and independent shares of different 
     beneficiaries in an estate having more than 1 beneficiary as 
     separate estates.'', and
       (2) by inserting ``or estates'' after ``trusts'' in the 
     last sentence.
       (b) Conforming Amendment.--The subsection heading of 
     section 663(c) is amended by inserting ``Estates or'' before 
     ``Trusts''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after the date of 
     the enactment of this Act.

     SEC. 14604. EXECUTOR OF ESTATE AND BENEFICIARIES TREATED AS 
                   RELATED PERSONS FOR DISALLOWANCE OF LOSSES, 
                   ETC.

       (a) Disallowance of Losses.--Subsection (b) of section 267 
     (relating to losses, expenses, and interest with respect to 
     transactions between related taxpayers) is amended by 
     striking ``or'' at the end of paragraph (11), by striking the 
     period at the end of paragraph (12) and inserting ``; or'', 
     and by adding at the end the following new paragraph:
       ``(13) Except in the case of a sale or exchange in 
     satisfaction of a pecuniary bequest, an executor of an estate 
     and a beneficiary of such estate.''
       (b) Ordinary Income From Gain From Sale of Depreciable 
     Property.--Subsection (b) of section 1239 is amended by 
     striking the period at the end of paragraph (2) and inserting 
     ``, and'' and by adding at the end the following new 
     paragraph:
       ``(3) except in the case of a sale or exchange in 
     satisfaction of a pecuniary bequest, an executor of an estate 
     and a beneficiary of such estate.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 14605. LIMITATION ON TAXABLE YEAR OF ESTATES.

       (a) In General.--Section 645 (relating to taxable year of 
     trusts) is amended to read as follows:

     ``SEC. 645. TAXABLE YEAR OF ESTATES AND TRUSTS.

       ``(a) Estates.--For purposes of this subtitle, the taxable 
     year of an estate shall be a year ending on October 31, 
     November 30, or December 31.
       ``(b) Trusts.--
       ``(1) In general.--For purposes of this subtitle, the 
     taxable year of any trust shall be the calendar year.
       ``(2) Exception for trusts exempt from tax and charitable 
     trusts.--Paragraph (1) shall not apply to a trust exempt from 
     taxation under section 501(a) or to a trust described in 
     section 4947(a)(1).''
       (b) Clerical Amendment.--The table of sections for subpart 
     A of part I of subchapter J of chapter 1 is amended by 
     striking the item relating to section 645 and inserting the 
     following new item:

``Sec. 645. Taxable year of estates and trusts.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying after the date of 
     the enactment of this Act.

     SEC. 14606. REPEAL OF CERTAIN THROWBACK RULES APPLICABLE TO 
                   DOMESTIC TRUSTS.

       (a) Accumulation Distributions.--
       (1) In general.--Section 665 is amended by adding at the 
     end the following new subsection:
       ``(f) Accumulation Distributions After 1995.--For purposes 
     of this subpart, in the case of a trust other than a foreign 
     trust, any distribution in any taxable year beginning after 
     December 31, 1995, shall be computed without regard to any 
     undistributed net income.''
       (2) Conforming amendment.--Subsection (b) of section 665 is 
     amended by inserting ``except as provided in subsection 
     (f),'' after ``subpart,''
       (b) Property Transferred to Trusts.--Subsection (e) of 
     section 644 is amended by striking ``or'' at the end of 
     paragraph (3), by striking the period at the end of paragraph 
     (4) and inserting ``, or '', and by adding at the end the 
     following new paragraph:
       ``(5) in the case of a trust other than a foreign trust, 
     any sale or exchange of property after December 31, 1995.''
       (c) Effective Dates.--
       (1) Accumulation distribution.--The amendments made by 
     subsection (a) shall apply to distributions in taxable years 
     beginning after December 31, 1995.
       (2) Transferred property.--The amendments made by 
     subsection (b) shall apply to sales or exchanges after 
     December 31, 1995.

     SEC. 14607. TREATMENT OF FUNERAL TRUSTS.

       (a) In General.--Subpart F of part I of subchapter J of 
     chapter 1 is amended by adding at the end the following new 
     section:

     ``SEC. 684. TREATMENT OF FUNERAL TRUSTS.

       ``(a) In General.--In the case of a qualified funeral 
     trust--
       ``(1) subparts B, C, D, and E shall not apply, and
       ``(2) no deduction shall be allowed by section 642(b).
       ``(b) Qualified Funeral Trust.--For purposes of this 
     subsection, the term `qualified funeral trust' means any 
     trust (other than a foreign trust) if--
       ``(1) the trust arises as a result of a contract with a 
     person engaged in the trade or business of providing funeral 
     or burial services or property necessary to provide such 
     services,
       ``(2) the sole purpose of the trust is to hold, invest, and 
     reinvest funds in the trust and to use such funds solely to 
     make payments for such services or property for the benefit 
     of the beneficiaries of the trust,
       ``(3) the only beneficiaries of such trust are individuals 
     who have entered into contracts

[[Page 1745]]

     described in paragraph (1) to have such services or property 
     provided at their death,
       ``(4) the only contributions to the trust are contributions 
     by or for the benefit of such beneficiaries,
       ``(5) the trustee elects the application of this 
     subsection, and
       ``(6) the trust would (but for the election described in 
     paragraph (5)) be treated as owned by the beneficiaries under 
     subpart E.
       ``(c) Dollar Limitation on Contributions.--
       ``(1) In general.--The term `qualified funeral trust' shall 
     not include any trust which accepts contributions by or for 
     the benefit of an individual in excess of $5,000.
       ``(2) Related trusts.--For purposes of paragraph (1), all 
     trusts having trustees which are related persons shall be 
     treated as 1 trust. For purposes of the preceding sentence, 
     persons are related if--
       ``(A) the relationship between such persons would result in 
     the disallowance of losses under section 267 or 707(b),
       ``(B) such persons are treated as a single employer under 
     subsection (a) or (b) of section 52, or
       ``(C) the Secretary determines that treating such persons 
     as related is necessary to prevent avoidance of the purposes 
     of this section.
       ``(3) Inflation adjustment.--In the case of any contract 
     referred to in subsection (b)(1) which is entered into during 
     any calendar year after 1996, the dollar amount referred to 
     paragraph (1) shall be increased by an amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for such calendar year, by substituting 
     `calendar year 1995' for `calendar year 1992' in subparagraph 
     (B) thereof.
     If any dollar amount after being increased under the 
     preceding sentence is not a multiple of $100, such dollar 
     amount shall be rounded to the nearest multiple of $100.
       ``(d) Application of Rate Schedule.--Section 1(e) shall be 
     applied to each qualified funeral trust by treating each 
     beneficiary's interest in each such trust as a separate 
     trust.
       ``(e) Treatment of Amounts Refunded to Beneficiary on 
     Cancellation.--No gain or loss shall be recognized to a 
     beneficiary described in subsection (b)(3) of any qualified 
     funeral trust by reason of any payment from such trust to 
     such beneficiary by reason of cancellation of a contract 
     referred to in subsection (b)(1). If any payment referred to 
     in the preceding sentence consists of property other than 
     money, the basis of such property in the hands of such 
     beneficiary shall be the same as the trust's basis in such 
     property immediately before the payment.
       ``(f) Simplified Reporting.--The Secretary may prescribe 
     rules for simplified reporting of all trusts having a single 
     trustee.''
       (b) Clerical Amendment.--The table of sections for subpart 
     F of part I of subchapter J of chapter 1 is amended by adding 
     at the end the following new item:

``Sec. 684. Treatment of funeral trusts.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

                PART II--ESTATE AND GIFT TAX PROVISIONS

     SEC. 14611. CLARIFICATION OF WAIVER OF CERTAIN RIGHTS OF 
                   RECOVERY.

       (a) Amendment to Section 2207A.--Paragraph (2) of section 
     2207A(a) (relating to right of recovery in the case of 
     certain marital deduction property) is amended to read as 
     follows:
       ``(2) Decedent may otherwise direct.--Paragraph (1) shall 
     not apply with respect to any property to the extent that the 
     decedent in his will (or a revocable trust) specifically 
     indicates an intent to waive any right of recovery under this 
     subchapter with respect to such property.''
       (b) Amendment to Section 2207B.--Paragraph (2) of section 
     2207B(a) (relating to right of recovery where decedent 
     retained interest) is amended to read as follows:
       ``(2) Decedent may otherwise direct.--Paragraph (1) shall 
     not apply with respect to any property to the extent that the 
     decedent in his will (or a revocable trust) specifically 
     indicates an intent to waive any right of recovery under this 
     subchapter with respect to such property.''
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to the estates of decedents dying 
     after the date of the enactment of this Act.

     SEC. 14612. ADJUSTMENTS FOR GIFTS WITHIN 3 YEARS OF 
                   DECEDENT'S DEATH.

       (a) General Rule.--Section 2035 is amended to read as 
     follows:

     ``SEC. 2035. ADJUSTMENTS FOR CERTAIN GIFTS MADE WITHIN 3 
                   YEARS OF DECEDENT'S DEATH.

       ``(a) Inclusion of Certain Property in Gross Estate.--If--
       ``(1) the decedent made a transfer (by trust or otherwise) 
     of an interest in any property, or relinquished a power with 
     respect to any property, during the 3-year period ending on 
     the date of the decedent's death, and
       ``(2) the value of such property (or an interest therein) 
     would have been included in the decedent's gross estate under 
     section 2036, 2037, 2038, or 2042 if such transferred 
     interest or relinquished power had been retained by the 
     decedent on the date of his death,
     the value of the gross estate shall include the value of any 
     property (or interest therein) which would have been so 
     included.
       ``(b) Inclusion of Gift Tax on Gifts Made During 3 Years 
     Before Decedent's Death.--The amount of the gross estate 
     (determined without regard to this subsection) shall be 
     increased by the amount of any tax paid under chapter 12 by 
     the decedent or his estate on any gift made by the decedent 
     or his spouse during the 3-year period ending on the date of 
     the decedent's death.
       ``(c) Other Rules Relating to Transfers Within 3 Years of 
     Death.--
       ``(1) In general.--For purposes of--
       ``(A) section 303(b) (relating to distributions in 
     redemption of stock to pay death taxes),
       ``(B) section 2032A (relating to special valuation of 
     certain farms, etc., real property), and
       ``(C) subchapter C of chapter 64 (relating to lien for 
     taxes),
     the value of the gross estate shall include the value of all 
     property to the extent of any interest therein of which the 
     decedent has at any time made a transfer, by trust or 
     otherwise, during the 3-year period ending on the date of the 
     decedent's death.
       ``(2) Coordination with section 6166.--An estate shall be 
     treated as meeting the 35 percent of adjusted gross estate 
     requirement of section 6166(a)(1) only if the estate meets 
     such requirement both with and without the application of 
     paragraph (1).
       ``(3) Marital and small transfers.--Paragraph (1) shall not 
     apply to any transfer (other than a transfer with respect to 
     a life insurance policy) made during a calendar year to any 
     donee if the decedent was not required by section 6019 (other 
     than by reason of section 6019(2)) to file any gift tax 
     return for such year with respect to transfers to such donee.
       ``(d) Exception.--Subsection (a) shall not apply to any 
     bona fide sale for an adequate and full consideration in 
     money or money's worth.
       ``(e) Treatment of Certain Transfers From Revocable 
     Trusts.--For purposes of this section and section 2038, any 
     transfer from any portion of a trust during any period that 
     such portion was treated under section 676 as owned by the 
     decedent shall be treated as a transfer made directly by the 
     decedent.''
       (b) Clerical Amendment.--The table of sections for part III 
     of subchapter A of chapter 11 is amended by striking 
     ``gifts'' in the item relating to section 2035 and inserting 
     ``certain gifts''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to the estates of decedents dying after the date 
     of the enactment of this Act.

     SEC. 14613. CLARIFICATION OF QUALIFIED TERMINABLE INTEREST 
                   RULES.

       (a) General Rule.--
       (1) Estate tax.--Subparagraph (B) of section 2056(b)(7) 
     (defining qualified terminable interest property) is amended 
     by adding at the end the following new clause:
       ``(vi) Treatment of certain income distributions.--An 
     income interest shall not fail to qualify as a qualified 
     income interest for life solely because income for the period 
     after the last distribution date and on or before the date of 
     the surviving spouse's death is not required to be 
     distributed to the surviving spouse or to the estate of the 
     surviving spouse.''
       (2) Gift tax.--Paragraph (3) of section 2523(f) is amended 
     by striking ``and (iv)'' and inserting ``(iv), and (vi)''.
       (b) Clarification of Subsequent Inclusions.--Section 2044 
     is amended by adding at the end the following new subsection:
       ``(d) Clarification of Inclusion of Certain Income.--The 
     amount included in the gross estate under subsection (a) 
     shall include the amount of any income from the property to 
     which this section applies for the period after the last 
     distribution date and on or before the date of the decedent's 
     death if such income is not otherwise included in the 
     decedent's gross estate.''
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to the estates of decedents dying, and 
     gifts made, after the date of the enactment of this Act.
       (2) Application of section 2044 to transfers before date of 
     enactment.--In the case of the estate of any decedent dying 
     after the date of the enactment of this Act, if there was a 
     transfer of property on or before such date--
       (A) such property shall not be included in the gross estate 
     of the decedent under section 2044 of the Internal Revenue 
     Code of 1986 if no prior marital deduction was allowed with 
     respect to such a transfer of such property to the decedent, 
     but
       (B) such property shall be so included if such a deduction 
     was allowed.

     SEC. 14614. TRANSITIONAL RULE UNDER SECTION 2056A.

       (a) General Rule.--In the case of any trust created under 
     an instrument executed before the date of the enactment of 
     the Revenue Reconciliation Act of 1990, such trust shall be 
     treated as meeting the requirements of paragraph (1) of 
     section 2056A(a) of the Internal Revenue Code of 1986 if the 
     trust instrument requires that all trustees of the trust be 
     individual citizens of the United States or domestic 
     corporations.
       (b) Effective Date.--The provisions of subsection (a) shall 
     take effect as if included in the provisions of section 
     11702(g) of the Revenue Reconciliation Act of 1990.

     SEC. 14615. OPPORTUNITY TO CORRECT CERTAIN FAILURES UNDER 
                   SECTION 2032A.

       (a) General Rule.--Paragraph (3) of section 2032A(d) 
     (relating to modification of election and agreement to be 
     permitted) is amended to read as follows:

[[Page 1746]]

       ``(3) Modification of election and agreement to be 
     permitted.--The Secretary shall prescribe procedures which 
     provide that in any case in which the executor makes an 
     election under paragraph (1) (and submits the agreement 
     referred to in paragraph (2)) within the time prescribed 
     therefor, but--
       ``(A) the notice of election, as filed, does not contain 
     all required information, or
       ``(B) signatures of 1 or more persons required to enter 
     into the agreement described in paragraph (2) are not 
     included on the agreement as filed, or the agreement does not 
     contain all required information,
     the executor will have a reasonable period of time (not 
     exceeding 90 days) after notification of such failures to 
     provide such information or signatures.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to the estates of decedents dying after the date 
     of the enactment of this Act.

     SEC. 14616. UNIFIED CREDIT OF DECEDENT INCREASED BY UNIFIED 
                   CREDIT OF SPOUSE USED ON SPLIT GIFT INCLUDED IN 
                   DECEDENT'S GROSS 
                   ESTATE.

       (a) In General.--Section 2010 (relating to unified credit 
     against estate tax) is amended by adding at the end the 
     following new subsection:
       ``(d) Treatment of Unified Credit Used By Spouse on Split-
     Gift Included in Decedent's Gross Estate.--If--
       ``(1) the decedent was the donor of any gift one-half of 
     which was considered under section 2513 as made by the 
     decedent's spouse, and
       ``(2) the amount of such gift is includible in the gross 
     estate of the decedent by reason of section 2035, 2036, 2037, 
     or 2038,
     the amount of the credit allowable by subsection (a) to the 
     estate of the decedent shall be increased by the amount of 
     the unified credit allowed against the tax imposed by section 
     2501 on the amount of such gift considered under section 2513 
     as made by such spouse.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to gifts made after the date of the enactment of 
     this Act.

     SEC. 14617. REFORMATION OF DEFECTIVE BEQUESTS, ETC., TO 
                   SPOUSE OF DECEDENT.

       (a) In General.--Subsection (b) of section 2056 (relating 
     to bequests, etc., to surviving spouse) is amended by adding 
     at the end the following new paragraph:
       ``(11) Reformations permitted.--
       ``(A) In general.--In the case of any interest in property 
     with respect to which a deduction would be allowable under 
     subsection (a) but for a provision of this subsection, if--
       ``(i) the surviving spouse is entitled to all of the income 
     from the property for life,
       ``(ii) no person other than such spouse is entitled to any 
     distribution of such property during such spouse's life, and
       ``(iii) there is a change of a governing instrument (by 
     reformation, amendment, construction, or otherwise) as of the 
     applicable date which results in the satisfaction of the 
     requirements of such provision as of the date of the 
     decedent's death,
     the determination of whether such deduction is allowable 
     shall be made as of the applicable date.
       ``(B) Special rule where timely commencement of 
     reformation.--Clauses (i) and (ii) of subparagraph (A) shall 
     not apply to any interest if, not later than the date 
     described in subparagraph (C)(i), a judicial proceeding is 
     commenced to change such interest into an interest which 
     satisfies the requirements of the provision by reason of 
     which (but for this paragraph) a deduction would not be 
     allowable under subsection (a) for such interest.
       ``(C) Applicable date.--For purposes of subparagraph (A), 
     the term `applicable date' means--
       ``(i) the last date (including extensions) for filing the 
     return of tax imposed by this chapter, or
       ``(ii) if a judicial proceeding is commenced to comply with 
     such provision, the time when the changes pursuant to such 
     proceeding are made.
       ``(D) Special rule.--If the change referred to in 
     subparagraph (A)(iii) is to qualify the passage of the 
     interest under paragraph (7), subparagraph (A) shall apply 
     only if the election under subparagraph (B) thereof is made.
       ``(E) Statute of limitations.--If a judicial proceeding 
     described in subparagraph (C)(ii) is commenced with respect 
     to any interest, the period for assessing any deficiency of 
     tax attributable to such interest shall not expire before the 
     date 1 year after the date on which the Secretary is notified 
     that such provision has been complied with or that such 
     proceeding has been terminated.''
       (b) Comparable Rule for Gift Tax.--Section 2523 (relating 
     to gift to spouse) is amended by adding at the end the 
     following new subsection:
       ``(j) Reformations permitted.--Rules similar to the rules 
     of section 2056(b)(11) shall apply for purposes of this 
     section.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to estates of decedents dying, and gifts made, 
     after the date of the enactment of this Act.

     SEC. 14618. GIFTS MAY NOT BE REVALUED FOR ESTATE TAX PURPOSES 
                   AFTER EXPIRATION OF STATUTE OF LIMITATIONS.

       (a) In General.--Section 2001 (relating to imposition and 
     rate of estate tax) is amended by adding at the end the 
     following new subsection:
       ``(f) Valuation of Gifts.--If--
       ``(1) the time has expired within which a tax may be 
     assessed under chapter 12 (or under corresponding provisions 
     of prior laws) on the transfer of property by gift made 
     during a preceding calendar period (as defined in section 
     2502(b)), and
       ``(2) the value of such gift is shown on the return for 
     such preceding calendar period or is disclosed in such 
     return, or in a statement attached to the return, in a manner 
     adequate to apprise the Secretary of the nature of such gift,
     the value of such gift shall, for purposes of computing the 
     tax under this chapter, be the value of such gift as finally 
     determined for purposes of chapter 12.''
       (b) Modification of Application of Statute of 
     Limitations.--Paragraph (9) of section 6501(c) is amended to 
     read as follows:
       ``(9) Gift tax on certain gifts not shown on return.--If 
     any gift of property the value of which (or any increase in 
     taxable gifts required under section 2701(d)) is required to 
     be shown on a return of tax imposed by chapter 12 (without 
     regard to section 2503(b)), and is not shown on such return, 
     any tax imposed by chapter 12 on such gift may be assessed, 
     or a proceeding in court for the collection of such tax may 
     be begun without assessment, at any time. The preceding 
     sentence shall not apply to any item which is disclosed in 
     such return, or in a statement attached to the return, in a 
     manner adequate to apprise the Secretary of the nature of 
     such item. The value of any item which is so disclosed may 
     not be redetermined by the Secretary after the expiration of 
     the period under subsection (a).''
       (c) Declaratory Judgment Procedure for Determining Value of 
     Gift.--
       (1) In general.--Part IV of subchapter C of chapter 76 is 
     amended by inserting after section 7476 the following new 
     section:

     ``SEC. 7477. DECLARATORY JUDGMENTS RELATING TO VALUE OF 
                   CERTAIN GIFTS.

       ``(a) Creation of Remedy.--In a case of an actual 
     controversy involving a determination by the Secretary of the 
     value of any gift shown on the return of tax imposed by 
     chapter 12 or disclosed on such return or in any statement 
     attached to such return, upon the filing of an appropriate 
     pleading, the Tax Court may make a declaration of the value 
     of such gift. Any such declaration shall have the force and 
     effect of a decision of the Tax Court and shall be reviewable 
     as such.
       ``(b) Limitations.--
       ``(1) Petitioner.--A pleading may be filed under this 
     section only by the donor.
       ``(2) Exhaustion of administrative remedies.--The court 
     shall not issue a declaratory judgment or decree under this 
     section in any proceeding unless it determines that the 
     petitioner has exhausted all available administrative 
     remedies within the Internal Revenue Service.
       ``(3) Time for bringing action.--If the Secretary sends by 
     certified or registered mail notice of his determination as 
     described in subsection (a) to the petitioner, no proceeding 
     may be initiated under this section unless the pleading is 
     filed before the 91st day after the date of such mailing.''
       (2) Clerical amendment.--The table of sections for such 
     part IV is amended by inserting after the item relating to 
     section 7476 the following new item:

``Sec. 7477. Declaratory judgments relating to value of certain 
              gifts.''
       (d) Conforming Amendment.--Subsection (c) of section 2504 
     is amended by striking ``, and if a tax under this chapter or 
     under corresponding provisions of prior laws has been 
     assessed or paid for such preceding calendar period''.
       (e) Effective Dates.--
       (1) In general.--The amendments made by subsections (a) and 
     (c) shall apply to gifts made after the date of the enactment 
     of this Act.
       (2) Subsection (b).--The amendment made by subsection (b) 
     shall apply to gifts made in calendar years ending after the 
     date of the enactment of this Act.

     SEC. 14619. CLARIFICATIONS RELATING TO DISCLAIMERS.

       (a) Partial Transfer-Type Disclaimers Permitted.--Paragraph 
     (3) of section 2518(c) (relating to certain transfers treated 
     as disclaimers) is amended by inserting ``(or an undivided 
     portion of such interest)'' after ``entire interest in the 
     property''.
       (b) Retention of Interest by Decedent's Spouse Permitted in 
     Transfer-Type Disclaimers.--Paragraph (3) of section 2518(c) 
     is amended by adding at the end the following new flush 
     sentence:
     ``For purposes of the preceding sentence, a written transfer 
     by the spouse of the decedent of property to a trust shall 
     not fail to be treated as a transfer of such spouse's 
     interest in such property by reason of such spouse having an 
     interest in such trust.''
       (c) Disclaimers Are Effective For Income Tax Purposes.--
     Subsection (a) of section 2518 is amended by inserting ``and 
     subtitle A'' after ``this subtitle'' each place it appears.
       (d) Effective Date.--The amendments made by this section 
     shall apply to transfers creating an interest in the person 
     disclaiming, and disclaimers, made after the date of the 
     enactment of this Act.

     SEC. 14620. CLARIFICATION OF TREATMENT OF SURVIVOR ANNUITIES 
                   UNDER QUALIFIED TERMINABLE INTEREST RULES.

       (a) In General.--Subparagraph (C) of section 2056(b)(7) is 
     amended by inserting ``(or, in the case of an interest in an 
     annuity aris

[[Page 1747]]

     ing under the community property laws of a State, included in 
     the gross estate of the decedent under section 2033)'' after 
     ``section 2039''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to estates of decedents dying after the date of 
     the enactment of this Act.

     SEC. 14621. TREATMENT UNDER QUALIFIED DOMESTIC TRUST RULES OF 
                   FORMS OF OWNERSHIP WHICH ARE NOT TRUSTS.

       (a) In General.--Subsection (c) of section 2056A (defining 
     qualified domestic trust) is amended by adding at the end the 
     following new paragraph:
       ``(3) Trust.--To the extent provided in regulations 
     prescribed by the Secretary, the term `trust' includes other 
     arrangements which have substantially the same effect as a 
     trust.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to estates of decedents dying after the date of 
     the enactment of this Act.

     SEC. 14622. AUTHORITY TO WAIVE REQUIREMENT OF UNITED STATES 
                   TRUSTEE FOR QUALIFIED DOMESTIC TRUSTS.

       (a) In General.--Subparagraph (A) of section 2056A(a)(1) is 
     amended by inserting ``except as provided in regulations 
     prescribed by the Secretary,'' before ``requires''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to estates of decedents dying after the date of 
     the enactment of this Act.

              PART III--GENERATION-SKIPPING TAX PROVISIONS

     SEC. 14631. SEVERING OF TRUSTS HOLDING PROPERTY HAVING AN 
                   INCLUSION RATIO OF GREATER THAN ZERO.

       (a) In General.--Subsection (a) of section 2642 (relating 
     to inclusion ratio) is amended by adding at the end the 
     following new paragraph:
       ``(3) Severing of trusts holding property having an 
     inclusion ratio of greater than zero.--
       ``(A) In general.--If a trust holding property having an 
     inclusion ratio of greater than zero is severed in a 
     qualified severance, at the election of the trustee of such 
     trust, the trusts resulting from such severance shall be 
     treated as separate trusts for purposes of this chapter.
       ``(B) Qualified severance.--For purposes of subparagraph 
     (A), the term `qualified severance' means the creation of 2 
     trusts from a single trust if each property held by the 
     single trust was divided between the 2 created trusts such 
     that one trust received an interest in each such property 
     equal to the applicable fraction of the single trust. Such 
     term includes any other severance permitted under regulations 
     prescribed by the Secretary.
       ``(C) Election.--The election under this paragraph shall be 
     made at the time prescribed by the Secretary. Such an 
     election, once made, shall be irrevocable.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to severances after the date of the enactment of 
     this Act.

     SEC. 14632. CLARIFICATION OF WHO IS TRANSFEROR WHERE 
                   SUBSEQUENT GIFT BY REASON OF POWER OF 
                   APPOINTMENT.

       (a) In General.--Paragraph (1) of section 2652(a) (defining 
     transferor) is amended by adding at the end the following new 
     sentence: ``A transferor described in subparagraph (A) shall 
     not be treated as the transferor of any property if another 
     individual is treated as the transferor of such property 
     under subparagraph (B) by reason of the exercise, release, or 
     lapse of a general power of appointment with respect to such 
     property.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to the exercise, release, or lapse of a general 
     power of appointment after the date of the enactment of this 
     Act.

     SEC. 14633. TAXABLE TERMINATION NOT TO INCLUDE DIRECT SKIPS.

       (a) In General.--Paragraph (1) of section 2612(a) (defining 
     taxable termination) is amended by adding at the end the 
     following new flush sentence:
     ``Such term shall not include a direct skip.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to generation-skipping transfers (as defined in 
     section 2611 of the Internal Revenue Code of 1986) after the 
     date of the enactment of this Act.

     SEC. 14634. EXPANSION OF EXCEPTION FROM GENERATION-SKIPPING 
                   TRANSFER TAX FOR TRANSFERS TO INDIVIDUALS WITH 
                   DECEASED PARENTS.

       (a) In General.--Section 2651 (relating to generation 
     assignment) is amended by redesignating subsection (e) as 
     subsection (f), and by inserting after subsection (d) the 
     following new subsection:
       ``(e) Special Rule for Persons With a Deceased Parent.--
       ``(1) In general.--For purposes of determining whether any 
     transfer is a generation-skipping transfer, if--
       ``(A) an individual is a descendant of a parent of the 
     transferor (or the transferor's spouse or former spouse), and
       ``(B) such individual's parent who is a lineal descendant 
     of the parent of the transferor (or the transferor's spouse 
     or former spouse) is dead at the time the transfer (from 
     which an interest of such individual is established or 
     derived) is subject to a tax imposed by chapter 11 or 12 upon 
     the transferor (and if there shall be more than 1 such time, 
     then at the earliest such time),
     such individual shall be treated as if such individual were a 
     member of the generation which is 1 generation below the 
     lower of the transferor's generation or the generation 
     assignment of the youngest living ancestor of such individual 
     who is also a descendant of the parent of the transferor (or 
     the transferor's spouse or former spouse), and the generation 
     assignment of any descendant of such individual shall be 
     adjusted accordingly.
       ``(2) Limited application of subsection to collateral 
     heirs.--This subsection shall not apply with respect to a 
     transfer to any individual who is not a lineal descendant of 
     the transferor (or the transferor's spouse or former spouse) 
     if, at the time of the transfer, such transferor has any 
     living lineal descendant.''
       (b) Conforming Amendments.--
       (1) Section 2612(c) (defining direct skip) is amended by 
     striking paragraph (2) and by redesignating paragraph (3) as 
     paragraph (2).
       (2) Section 2612(c)(2) (as so redesignated) is amended by 
     striking ``section 2651(e)(2)'' and inserting ``section 
     2651(f)(2)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to terminations, distributions, and transfers 
     occurring after the date of the enactment of this Act.
                 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.

       (a) In General.--Paragraph (1) of section 5008(c) (relating 
     to distilled spirits returned to bonded premises) is amended 
     by striking ``withdrawn from bonded premises on payment or 
     determination of tax'' and inserting ``on which tax has been 
     determined or paid''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14702. AUTHORITY TO CANCEL OR CREDIT EXPORT BONDS 
                   WITHOUT SUBMISSION OF RECORDS.

       (a) In General.--Subsection (c) of section 5175 (relating 
     to export bonds) is amended by striking ``on the submission 
     of'' and all that follows and inserting ``if there is such 
     proof of exportation as the Secretary may by regulations 
     require.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14703. REPEAL OF REQUIRED MAINTENANCE OF RECORDS ON 
                   PREMISES OF DISTILLED SPIRITS PLANT.

       (a) In General.--Subsection (c) of section 5207 (relating 
     to records and reports) is amended by striking ``shall be 
     kept on the premises where the operations covered by the 
     record are carried on and''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14704. FERMENTED MATERIAL FROM ANY BREWERY MAY BE 
                   RECEIVED AT A DISTILLED SPIRITS PLANT.

       (a) In General.--Paragraph (2) of section 5222(b) (relating 
     to production, receipt, removal, and use of distilling 
     materials) is amended to read as follows:
       ``(2) beer conveyed without payment of tax from brewery 
     premises, beer which has been lawfully removed from brewery 
     premises upon determination of tax, or''.
       (b) Clarification of Authority To Permit Removal of Beer 
     Without Payment of Tax for Use as Distilling Material.--
     Section 5053 (relating to exemptions) is amended by 
     redesignating subsection (f) as subsection (i) and by 
     inserting after subsection (e) the following new subsection:
       ``(f) Removal for Use as Distilling Material.--Subject to 
     such regulations as the Secretary may prescribe, beer may be 
     removed from a brewery without payment of tax to any 
     distilled spirits plant for use as distilling material.''
       (c) Clarification of Refund and Credit of Tax.--Section 
     5056 (relating to refund and credit of tax, or relief from 
     liability) is amended--
       (1) by redesignating subsection (c) as subsection (d) and 
     by inserting after subsection (b) the following new 
     subsection:
       ``(c) Beer Received at a Distilled Spirits Plant.--Any tax 
     paid by any brewer on beer produced in the United States may 
     be refunded or credited to the brewer, without interest, or 
     if the tax has not been paid, the brewer may be relieved of 
     liability therefor, under regulations as the Secretary may 
     prescribe, if such beer is received on the bonded premises of 
     a distilled spirits plant pursuant to the provisions of 
     section 5222(b)(2), for use in the production of distilled 
     spirits.'', and
       (2) by striking ``or rendering unmerchantable'' in 
     subsection (d) (as so redesignated) and inserting ``rendering 
     unmerchantable, or receipt on the bonded premises of a 
     distilled spirits plant''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14705. REPEAL OF REQUIREMENT FOR WHOLESALE DEALERS IN 
                   LIQUORS TO POST SIGN.

       (a) In General.--Section 5115 (relating to sign required on 
     premises) is hereby repealed.
       (b) Conforming Amendments.--

[[Page 1748]]

       (1) Subsection (a) of section 5681 is amended by striking 
     ``, and every wholesale dealer in liquors,'' and by striking 
     ``section 5115(a) or''.
       (2) Subsection (c) of section 5681 is amended--
       (A) by striking ``or wholesale liquor establishment, on 
     which no sign required by section 5115(a) or'' and inserting 
     ``on which no sign required by'', and
       (B) by striking ``or wholesale liquor establishment, or 
     who'' and inserting ``or who''.
       (3) The table of sections for subpart D of part II of 
     subchapter A of chapter 51 is amended by striking the item 
     relating to section 5115.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 14706. REFUND OF TAX ON WINE RETURNED TO BOND NOT 
                   LIMITED TO UNMERCHANTABLE WINE.

       (a) In General.--Subsection (a) of section 5044 (relating 
     to refund of tax on unmerchantable wine) is amended by 
     striking ``as unmerchantable''.
       (b) Conforming Amendments.--
       (1) Section 5361 is amended by striking ``unmerchantable''.
       (2) The section heading for section 5044 is amended by 
     striking ``unmerchantable''.
       (3) The item relating to section 5044 in the table of 
     sections for subpart C of part I of subchapter A of chapter 
     51 is amended by striking ``unmerchantable''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14707. USE OF ADDITIONAL AMELIORATING MATERIAL IN 
                   CERTAIN WINES.

       (a) In General.--Subparagraph (D) of section 5384(b)(2) 
     (relating to ameliorated fruit and berry wines) is amended by 
     striking ``loganberries, currants, or gooseberries,'' and 
     inserting ``any fruit or berry with a natural fixed acid of 
     20 parts per thousand or more (before any correction of such 
     fruit or berry)''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14708. DOMESTICALLY PRODUCED BEER MAY BE WITHDRAWN FREE 
                   OF TAX FOR USE OF FOREIGN EMBASSIES, LEGATIONS, 
                   ETC.

       (a) In General.--Section 5053 (relating to exemptions) is 
     amended by inserting after subsection (f) the following new 
     subsection:
       ``(g) Removals for Use of Foreign Embassies, Legations, 
     Etc.--
       ``(1) In general.--Subject to such regulations as the 
     Secretary may prescribe--
       ``(A) beer may be withdrawn from the brewery without 
     payment of tax for transfer to any customs bonded warehouse 
     for entry pending withdrawal therefrom as provided in 
     subparagraph (B), and
       ``(B) beer entered into any customs bonded warehouse under 
     subparagraph (A) may be withdrawn for consumption in the 
     United States by, and for the official and family use of, 
     such foreign governments, organizations, and individuals as 
     are entitled to withdraw imported beer from such warehouses 
     free of tax.
     Beer transferred to any customs bonded warehouse under 
     subparagraph (A) shall be entered, stored, and accounted for 
     in such warehouse under such regulations and bonds as the 
     Secretary may prescribe, and may be withdrawn therefrom by 
     such governments, organizations, and individuals free of tax 
     under the same conditions and procedures as imported beer.
       ``(2) Other rules to apply.--Rules similar to the rules of 
     paragraphs (2) and (3) of section 5362(e) of such section 
     shall apply for purposes of this subsection.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14709. BEER MAY BE WITHDRAWN FREE OF TAX FOR 
                   DESTRUCTION.

       (a) In General.--Section 5053 is amended by inserting after 
     subsection (g) the following new subsection:
       ``(h) Removals for Destruction.--Subject to such 
     regulations as the Secretary may prescribe, beer may be 
     removed from the brewery without payment of tax for 
     destruction.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14710. AUTHORITY TO ALLOW DRAWBACK ON EXPORTED BEER 
                   WITHOUT SUBMISSION OF RECORDS.

       (a) In General.--The first sentence of section 5055 
     (relating to drawback of tax on beer) is amended by striking 
     ``found to have been paid'' and all that follows and 
     inserting ``paid on such beer if there is such proof of 
     exportation as the Secretary may by regulations require.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

     SEC. 14711. TRANSFER TO BREWERY OF BEER IMPORTED IN BULK 
                   WITHOUT PAYMENT OF TAX.

       (a) In General.--Part II of subchapter G of chapter 51 is 
     amended by adding at the end the following new section:

     ``SEC. 5418. BEER IMPORTED IN BULK.

       ``Beer imported or brought into the United States in bulk 
     containers may, under such regulations as the Secretary may 
     prescribe, be withdrawn from customs custody and transferred 
     in such bulk containers to the premises of a brewery without 
     payment of the internal revenue tax imposed on such beer. The 
     proprietor of a brewery to which such beer is transferred 
     shall become liable for the tax on the beer withdrawn from 
     customs custody under this section upon release of the beer 
     from customs custody, and the importer, or the person 
     bringing such beer into the United States, shall thereupon be 
     relieved of the liability for such tax.''
       (b) Clerical Amendment.--The table of sections for such 
     part II is amended by adding at the end the following new 
     item:

``Sec. 5418. Beer imported in bulk.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect at the beginning of the first calendar 
     quarter beginning more than 180 days after the date of the 
     enactment of this Act.

          PART II--CONSOLIDATION OF TAXES ON AVIATION GASOLINE

     SEC. 14721. CONSOLIDATION OF TAXES ON AVIATION GASOLINE.

       (a) In General.--Subparagraph (A) of section 4081(a)(2) 
     (relating to imposition of tax on gasoline and diesel fuel) 
     is amended by redesignating clause (ii) as clause (iii) and 
     by striking clause (i) and inserting the following:
       ``(i) in the case of gasoline other than aviation gasoline, 
     18.3 cents per gallon,
       ``(ii) in the case of aviation gasoline, 19.3 cents per 
     gallon, and''.
       (b) Termination.--Subsection (d) of section 4081 is amended 
     by redesignating paragraph (2) as paragraph (3) and by 
     inserting after paragraph (1) the following new paragraph:
       ``(2) Aviation gasoline.--On and after January 1, 1996, the 
     rate specified in subsection (a)(2)(A)(ii) shall be 4.3 cents 
     per gallon.''
       (c) Repeal of Retail Level Tax.--
       (1) Subsection (c) of section 4041 is amended by striking 
     paragraphs (2) and (3) and by redesignating paragraphs (4) 
     and (5) as paragraphs (2) and (3), respectively.
       (2) Paragraph (3) of section 4041(c), as redesignated by 
     paragraph (1), is amended by striking ``paragraphs (1) and 
     (2)'' and inserting ``paragraph (1)''.
       (d) Conforming Amendments.--
       (1) Paragraph (1) of section 4041(k) is amended by adding 
     ``and'' at the end of subparagraph (A), by striking ``, and'' 
     at the end of subparagraph (B) and inserting a period, and by 
     striking subparagraph (C).
       (2) Paragraph (1) of section 4081(d) is amended by striking 
     ``each rate of tax specified in subsection (a)(2)(A)'' and 
     inserting ``the rates of tax specified in clauses (i) and 
     (iii) of subsection (a)(2)(A)''.
       (3) Sections 6421(f)(2)(A) and 9502(f)(1)(A) are each 
     amended by striking ``section 4041(c)(4)'' and inserting 
     ``section 4041(c)(2)''.
       (4) Paragraph (2) of section 9502(b) is amended by striking 
     ``14 cents'' and inserting ``15 cents''.
       (e) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1996.
       (f) Floor Stocks Tax.--
       (1) Imposition of tax.--In the case of aviation gasoline on 
     which tax was imposed under section 4081 of the Internal 
     Revenue Code of 1986 before January 1, 1996, and which is 
     held on such date by any person, there is hereby imposed a 
     floor stocks tax of 1 cent per gallon of such gasoline.
       (2) Liability for tax and method of payment.--
       (A) Liability for tax.--A person holding aviation gasoline 
     on January 1, 1996, to which the tax imposed by paragraph (1) 
     applies shall be liable for such tax.
       (B) Method of payment.--The tax imposed by paragraph (1) 
     shall be paid in such manner as the Secretary shall 
     prescribe.
       (C) Time for payment.--The tax imposed by paragraph (1) 
     shall be paid on or before June 30, 1996.
       (3) Definitions.--For purposes of this subsection:
       (A) Held by a person.--Gasoline shall be considered as 
     ``held by a person'' if title thereto has passed to such 
     person (whether or not delivery to the person has been made).
       (B) Secretary.--The term ``Secretary'' means the Secretary 
     of the Treasury or his delegate.
       (4) Exception for exempt uses.--The tax imposed by 
     paragraph (1) shall not apply to gasoline held by any person 
     exclusively for any use to the extent a credit or refund of 
     the tax imposed by section 4081 of such Code is allowable for 
     such use.
       (5) Exception for fuel held in aircraft tank.--No tax shall 
     be imposed by paragraph (1) on aviation gasoline held in the 
     tank of an aircraft.
       (6) Exception for certain amounts of fuel.--
       (A) In general.--No tax shall be imposed by paragraph (1) 
     on aviation gasoline held on January 1, 1996, by any person 
     if the aggregate amount of aviation gasoline held by such 
     person on such date does not exceed 6,000 gallons. The 
     preceding sentence shall apply only if such person submits to 
     the Secretary (at the time and in the manner required by the 
     Secretary) such information as the Secretary shall require 
     for purposes of this paragraph.
       (B) Exempt fuel.--For purposes of subparagraph (A), there 
     shall not be taken into account fuel held by any person which 
     is exempt from the tax imposed by paragraph (1) by reason of 
     paragraph (4) or (5).

[[Page 1749]]

       (C) Controlled groups.--
       (i) Corporations.--In the case of a controlled group, the 
     6,000 gallon amount in subparagraph (A) shall be apportioned 
     among the component members of such group in such manner as 
     the Secretary shall by regulations prescribe. For purposes of 
     the preceding sentence, the term ``controlled group'' has the 
     meaning given to such term by subsection (a) of section 1563 
     of such Code; except that for such purposes the phrase ``more 
     than 50 percent'' shall be substituted for the phrase ``at 
     least 80 percent'' each place it appears in such subsection.
       (ii) Nonincorporated persons under common control.--Under 
     regulations prescribed by the Secretary, principles similar 
     to the principles of clause (i) shall apply to a group under 
     common control where 1 or more of the members is not a 
     corporation.
       (7) Other laws applicable.--All provisions of law, 
     including penalties, applicable with respect to the taxes 
     imposed by section 4081 of such Code shall, insofar as 
     applicable and not inconsistent with the provisions of this 
     subsection, apply with respect to the floor stock taxes 
     imposed by paragraph (1) to the same extent as if such taxes 
     were imposed by such section 4081.

                 PART III--OTHER EXCISE TAX PROVISIONS

     SEC. 14731. AUTHORITY TO GRANT EXEMPTIONS FROM REGISTRATION 
                   REQUIREMENTS.

       (a) In General.--The first sentence of section 4222 
     (relating to registration) is amended to read as follows: 
     ``Except as provided in subsection (b), section 4221 shall 
     not apply with respect to the sale of any article by or to 
     any person who is required by the Secretary to be registered 
     under this section and who is not so registered.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to sales after the 180th day after the date of 
     the enactment of this Act.

     SEC. 14732. CERTAIN COMBINATIONS NOT TREATED AS MANUFACTURE 
                   UNDER RETAIL SALES TAX ON HEAVY TRUCKS.

       (a) In General.--Paragraph (2) of section 4052(c) (relating 
     to certain combinations not treated as manufacture) is 
     amended by striking ``or wood or metal floor'' and inserting 
     ``wood or metal floor, or a power take-off and dump body''.
       (b) Removal of Fifth Wheel.--Paragraph (1) of section 
     4052(c) is amended by inserting before the period ``or the 
     removal of any coupling device (including any fifth wheel)''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 14733. EXEMPTION FROM DIESEL FUEL DYEING REQUIREMENTS 
                   WITH RESPECT TO CERTAIN STATES.

       (a) In General.--Section 4082 (relating to exemptions for 
     diesel fuel) is amended by redesignating subsections (c) and 
     (d) as subsections (d) and (e), respectively, and by 
     inserting after subsection (b) the following new subsection:
       ``(c) Exception to Dyeing Requirements.--Paragraph (2) of 
     subsection (a) shall not apply with respect to any diesel 
     fuel--
       ``(1) removed, entered, or sold in a State for ultimate 
     sale or use in an area of such State which is exempted from 
     the fuel dyeing requirements under subsection (i) of section 
     211 of the Clean Air Act (as in effect on the date of the 
     enactment of this subsection) by the Administrator of the 
     Environmental Protection Agency under paragraph (4) of such 
     subsection, and
       ``(2) the use of which is certified pursuant to regulations 
     issued by the Secretary.''
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the first day of the first calendar 
     quarter beginning after the date of the enactment of this 
     Act.

     SEC. 14734. REPEAL OF EXPIRED PROVISIONS.

       (a) Piggy-Back Trailers.--Section 4051 is amended by 
     striking subsection (d) and by redesignating subsection (e) 
     as subsection (d).
       (b) Deep Seabed Mining.--
       (1) Subchapter F of chapter 36 (relating to tax on removal 
     of hard mineral resources from deep seabed) is hereby 
     repealed.
       (2) The table of subchapters for chapter 36 is amended by 
     striking the item relating to subchapter F.
                 Subtitle H--Administrative Provisions

                       PART I--GENERAL PROVISIONS

     SEC. 14801. REPEAL OF AUTHORITY TO DISCLOSE WHETHER 
                   PROSPECTIVE JUROR HAS BEEN AUDITED.

       (a) In General.--Subsection (h) of section 6103 (relating 
     to disclosure to certain Federal officers and employees for 
     purposes of tax administration, etc.) is amended by striking 
     paragraph (5) and by redesignating paragraph (6) as paragraph 
     (5).
       (b) Conforming Amendment.--Paragraph (4) of section 6103(p) 
     is amended by striking ``(h)(6)'' each place it appears and 
     inserting ``(h)(5)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to judicial proceedings pending on, or commenced 
     after, the date of the enactment of this Act.

     SEC. 14802. CLARIFICATION OF STATUTE OF LIMITATIONS.

       (a) In General.--Subsection (a) of section 6501 (relating 
     to limitations on assessment and collection) is amended by 
     adding at the end the following new sentence: ``For purposes 
     of this chapter, the term `return' means the return required 
     to be filed by the taxpayer (and does not include a return of 
     any person from whom the taxpayer has received an item of 
     income, gain, loss, deduction, or credit).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 14803. CERTAIN NOTICES DISREGARDED UNDER PROVISION 
                   INCREASING INTEREST RATE ON LARGE CORPORATE 
                   UNDERPAYMENTS.

       (a) General Rule.--Subparagraph (B) of section 6621(c)(2) 
     (defining applicable date) is amended by adding at the end 
     the following new clause:
       ``(iii) Exception for letters or notices involving small 
     amounts.--For purposes of this paragraph, any letter or 
     notice shall be disregarded if the amount of the deficiency 
     or proposed deficiency (or the assessment or proposed 
     assessment) set forth in such letter or notice is not greater 
     than $100,000 (determined by not taking into account any 
     interest, penalties, or additions to tax).''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply for purposes of determining interest for periods 
     after December 31, 1995.

     SEC. 14804. CLARIFICATION OF AUTHORITY TO WITHHOLD PUERTO 
                   RICO INCOME TAXES FROM SALARIES OF FEDERAL 
                   EMPLOYEES.

       (a) In General.--Subsection (c) of section 5517 of title 5, 
     United States Code, is amended by striking ``or territory or 
     possession'' and inserting ``, territory, possession, or 
     commonwealth''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of the enactment of this Act.

                     PART II--TAX COURT PROCEDURES

     SEC. 14811. OVERPAYMENT DETERMINATIONS OF TAX COURT.

       (a) Appeal of Order.--Paragraph (2) of section 6512(b) 
     (relating to jurisdiction to enforce) is amended by adding at 
     the end the following new sentence: ``An order of the Tax 
     Court disposing of a motion under this paragraph shall be 
     reviewable in the same manner as a decision of the Tax Court, 
     but only with respect to the matters determined in such 
     order.''
       (b) Denial of Jurisdiction Regarding Certain Credits and 
     Reductions.--Subsection (b) of section 6512 (relating to 
     overpayment determined by Tax Court) is amended by adding at 
     the end the following new paragraph:
       ``(4) Denial of jurisdiction regarding certain credits and 
     reductions.--The Tax Court shall have no jurisdiction under 
     this subsection to restrain or review any credit or reduction 
     made by the Secretary under section 6402.''
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 14812. AWARDING OF ADMINISTRATIVE COSTS.

       (a) Right To Appeal Tax Court Decision.--Subsection (f) of 
     section 7430 (relating to right of appeal) is amended by 
     adding at the end the following new paragraph:
       ``(3) Appeal of tax court decision.--An order of the Tax 
     Court disposing of a petition under paragraph (2) shall be 
     reviewable in the same manner as a decision of the Tax Court, 
     but only with respect to the matters determined in such 
     order.''
       (b) Period for Applying to IRS for Costs.--Subsection (b) 
     of section 7430 (relating to limitations) is amended by 
     adding at the end the following new paragraph:
       ``(5) Period for applying to irs for administrative 
     costs.--An award may be made under subsection (a) by the 
     Internal Revenue Service for reasonable administrative costs 
     only if the prevailing party files an application with the 
     Internal Revenue Service for such costs before the 91st day 
     after the date on which the final decision of the Internal 
     Revenue Service as to the determination of the tax, interest, 
     or penalty is mailed to such party.''
       (c) Period for Petitioning of Tax Court for Review of 
     Denial of Costs.--Paragraph (2) of section 7430(f) (relating 
     to right of appeal) is amended--
       (1) by striking ``appeal to'' and inserting ``the filing of 
     a petition for review with'', and
       (2) by adding at the end the following new sentence: ``If 
     the Secretary sends by certified or registered mail a notice 
     of such decision to the petitioner, no proceeding in the Tax 
     Court may be initiated under this paragraph unless such 
     petition is filed before the 91st day after the date of such 
     mailing.''
       (d) Effective Date.--The amendments made by this section 
     shall apply to civil actions or proceedings commenced after 
     the date of the enactment of this Act.

     SEC. 14813. REDETERMINATION OF INTEREST PURSUANT TO MOTION.

       (a) In General.--Paragraph (3) of section 7481(c) (relating 
     to jurisdiction over interest determinations) is amended by 
     striking ``petition'' and inserting ``motion''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 14814. APPLICATION OF NET WORTH REQUIREMENT FOR AWARDS 
                   OF LITIGATION COSTS.

       (a) In General.--Paragraph (4) of section 7430(c) (defining 
     prevailing party) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Special rules for applying net worth requirement.--In 
     applying the requirements of section 2412(d)(2)(B) of title 
     28, United States Code, for purposes of subparagraph (A)(iii) 
     of this paragraph--

[[Page 1750]]

       ``(i) the net worth limitation in clause (i) of such 
     section shall apply to--

       ``(I) an estate but shall be determined as of the date of 
     the decedent's death, and
       ``(II) a trust but shall be determined as of the last day 
     of the taxable year involved in the proceeding, and

       ``(ii) individuals filing a joint return shall be treated 
     as 1 individual for purposes of clause (i) of such section, 
     except in the case of a spouse relieved of liability under 
     section 6013(e).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to proceedings commenced after the date of the 
     enactment of this Act.

         PART III--AUTHORITY FOR CERTAIN COOPERATIVE AGREEMENTS

     SEC. 14821. COOPERATIVE AGREEMENTS WITH STATE TAX 
                   AUTHORITIES.

       (a) General Rule.--Chapter 77 (relating to miscellaneous 
     provisions) is amended by adding at the end the following new 
     section:

     ``SEC. 7524. COOPERATIVE AGREEMENTS WITH STATE TAX 
                   AUTHORITIES.

       ``(a) Authorization of Agreements.--The Secretary is hereby 
     authorized to enter into cooperative agreements with State 
     tax authorities for purposes of enhancing joint tax 
     administration. Such agreements may provide for--
       ``(1) joint filing of Federal and State income tax returns,
       ``(2) single processing of such returns,
       ``(3) joint collection of taxes (other than Federal income 
     taxes), and
       ``(4) such other provisions as may enhance joint tax 
     administration.
       ``(b) Services on Reimbursable Basis.--Any agreement under 
     subsection (a) may require reimbursement for services 
     provided by either party to the agreement.
       ``(c) Availability of Funds.--Any funds appropriated for 
     purposes of the administration of this title shall be 
     available for purposes of carrying out the Secretary's 
     responsibility under an agreement entered into under 
     subsection (a). Any reimbursement received pursuant to such 
     an agreement shall be credited to the amount so appropriated.
       ``(d) State Tax Authority.--For purposes of this section, 
     the term `State tax authority' means agency, body, or 
     commission referred to in section 6103(d)(1).''
       (b) Clerical Amendment.--The table of sections for chapter 
     77 is amended by adding at the end the following new item:

``Sec. 7524. Cooperative agreements with State tax authorities.''
      TITLE XV--PRESERVING, PROTECTING, AND STRENGTHENING MEDICARE
       H.R. 2425 as passed the House of Representatives is hereby 
     enacted into law.
           TITLE XVI--TRANSFORMATION OF THE MEDICAID PROGRAM

     SEC. 16000. SHORT TITLE.

       This title may be cited as the ``Medicaid Transformation 
     Act of 1995''.

     SEC. 16001. TRANSFORMATION OF MEDICAID PROGRAM.

       The Social Security Act is amended by adding at the end the 
     following new title:

 ``TITLE XXI--MEDIGRANT PROGRAM FOR LOW-INCOME INDIVIDUALS AND FAMILIES

                      ``table of contents of title

``Sec. 2100. Purpose; State MediGrant plans.

     ``Part A--Objectives, Goals, and Performance Under State Plans

``Sec. 2101. Description of strategic objectives and performance goals.
``Sec. 2102. Annual reports.
``Sec. 2103. Periodic, independent evaluations.
``Sec. 2104. Description of process for MediGrant plan development.
``Sec. 2105. Consultation in MediGrant plan development.
``Sec. 2106. MediGrant Task Force.

            ``Part B--Eligibility, Benefits, and Set-asides

``Sec. 2111. General description of eligibility and benefits.
``Sec. 2112. Set-asides of funds for population groups.
``Sec. 2113. Premiums and cost-sharing.
``Sec. 2114. Description of process for developing capitation payment 
              rates.
``Sec. 2115. 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.

     ``SEC. 2100. PURPOSE; STATE MEDIGRANT PLANS.

       ``(a) Purpose.--The purpose of this title is to provide 
     block grants to States to enable them to provide medical 
     assistance to low-income individuals and families in a more 
     effective, efficient, and responsive manner.
       ``(b) State Plan Required.--A State is not eligible for 
     payment under section 2122 of this title unless the State has 
     submitted to the Secretary under part E a plan (in this title 
     referred to as a `MediGrant plan') that--
       ``(1) sets forth how the State intends to use the funds 
     provided under this title to provide medical assistance to 
     needy individuals and families consistent with the provisions 
     of this title, and
       ``(2) is approved under such part.
       ``(c) Continued Approval.--An approved MediGrant plan shall 
     continue in effect unless and until--
       ``(1) the State amends the plan under section 2152,
       ``(2) the State terminates participation under this title 
     under section 2153, or
       ``(3) the Secretary finds substantial noncompliance of the 
     plan with the requirements of this title under section 2154.
       ``(d) State Entitlement.--This title constitutes budget 
     authority in advance of appropriations Acts, and represents 
     the obligation of the Federal Government to provide for the 
     payment to States of amounts provided under part C.

     ``Part A--Objectives, Goals, and Performance Under State Plans

     ``SEC. 2101. DESCRIPTION OF STRATEGIC OBJECTIVES AND 
                   PERFORMANCE GOALS.

       ``(a) Description.--A MediGrant plan shall include a 
     description of the strategic objectives and performance goals 
     the State has established for providing health care services 
     to low-income populations under this title, including a 
     general description of the manner in which the plan is 
     designed to meet these objectives and goals.
       ``(b) Certain Objectives and Goals Required.--A MediGrant 
     plan shall include strategic objectives and performance goals 
     relating to rates of childhood immunizations and reductions 
     in infant mortality and morbidity.
       ``(c) Considerations.--In specifying these objectives and 
     goals the State may consider factors such as the following:
       ``(1) The State's priorities with respect to such areas as 
     providing assistance to low-income populations.
       ``(2) The State's priorities with respect to the general 
     public health and the health status of individuals eligible 
     for assistance under the MediGrant plan.
       ``(3) The State's financial resources, the particular 
     economic conditions in the State, and relative adequacy of 
     the health care infrastructure in different regions of the 
     State.
       ``(d) Performance Measures.--To the extent practicable--
       ``(1) one or more performance goals shall be established by 
     the State for each strategic objective identified in the 
     MediGrant plan; and
       ``(2) the MediGrant plan shall describe, how program 
     performance will be--
       ``(A) measured through objective, independently verifiable 
     means, and
       ``(B) compared against performance goals, in order to 
     determine the State's performance under this title.
       ``(e) Period Covered.--
       ``(1) Strategic objectives.--The strategic objectives shall 
     cover a period of not less than 5 years and shall be updated 
     and revised at least every 3 years.
       ``(2) Performance goals.--The performance goals shall be 
     established for dates that are not more than 3 years apart.

     ``SEC. 2102. ANNUAL REPORTS.

       ``(a) In General.--In the case of a State with a MediGrant 
     plan that is in effect for part or all of a fiscal year, no 
     later than March 31 following such fiscal year (or March 31, 
     1998, in the case of fiscal year 1996) the State shall 
     prepare and submit to the Secretary and the Congress a report 
     on program activities and performance under this title for 
     such fiscal year.
       ``(b) Contents.--Each annual report under this section for 
     a fiscal year shall include the following:
       ``(1) Expenditure and beneficiary summary.--
       ``(A) Initial summary.--For the report for fiscal year 1997 
     (and, if applicable, fiscal year 1996), a summary of all 
     expenditures under the MediGrant plan during the fiscal year 
     (and during any portions of fiscal year 1996 during which the 
     MediGrant plan was in effect under this title) as follows:
       ``(i) Aggregate medical assistance expenditures, 
     disaggregated to the extent required to determine compliance 
     with the set-aside requirements of subsections (a) through 
     (c)

[[Page 1751]]

     section 2112 and to compute the case mix index under section 
     2121(d)(3).
       ``(ii) For each general category of eligible individuals 
     (specified in subsection (c)(1), aggregate medical assistance 
     expenditures and the total and average number of eligible 
     individuals under the MediGrant plan.
       ``(iii) By each general category of eligible individuals, 
     total expenditures for each of the categories of health care 
     items and services (specified in subsection (c)(2)) which are 
     covered under the MediGrant plan and provided on a fee-for-
     service basis.
       ``(iv) By each general category of eligible individuals, 
     total expenditures for payments to capitated health care 
     organizations (as defined in section 2114(c)(1)).
       ``(v) Total administrative expenditures.
       ``(B) Subsequent summaries.--For reports for each 
     succeeding fiscal year, a summary of--
       ``(i) all expenditures under the MediGrant plan consistent 
     with the reporting format specified by the MediGrant Task 
     Force under section 2106(d)(1), and
       ``(ii) the total and average number of eligible individuals 
     under the MediGrant plan for each general category of 
     eligible individuals.
       ``(2) Utilization summary.--
       ``(A) Initial summary.--For the report for fiscal year 1997 
     (and, if applicable, fiscal year 1996), summary statistics on 
     the utilization of health care services under the MediGrant 
     plan during the year (and during any portions of fiscal year 
     1996 during which the MediGrant plan was in effect under this 
     title) as follows:
       ``(i) For each general category of eligible individuals and 
     for each of the categories of health care items and services 
     which are covered under the MediGrant plan and provided on a 
     fee-for-service basis, the number and percentage of persons 
     who received such a type of service or item during the period 
     covered by the report.
       ``(ii) Summary of health care utilization data reported to 
     the State by capitated health care organizations.
       ``(B) Subsequent summaries.--For reports for each 
     succeeding fiscal year, summary statistics on the utilization 
     of health care services under the MediGrant plan consistent 
     with the reporting format specified by the MediGrant Task 
     Force under section 2106(d)(1).
       ``(3) Achievement of performance goals.--With respect to 
     each performance goal established under section 2101 and 
     applicable to the year involved--
       ``(A) a brief description of the goal;
       ``(B) data on the actual performance with respect to the 
     goal;
       ``(C) a review of the extent to which the goal was 
     achieved, based on such data; and
       ``(D) where a performance goal has not been met--
       ``(i) why the goal was not met, and
       ``(ii) actions to be taken in response to such performance 
     (including adjustments in performance goals or program 
     activities for subsequent years).
       ``(4) Program evaluations.--A summary of the findings of 
     evaluations under section 2103 completed during the fiscal 
     year covered by the report.
       ``(5) Fraud and abuse and quality control activities.--A 
     general description of the State's activities under part D to 
     detect and deter fraud and abuse and to assure quality of 
     services provided under the program.
       ``(6) Plan administration.--
       ``(A) A description of the administrative roles and 
     responsibilities of entities in the State responsible for 
     administration of this title.
       ``(B) Organizational charts for each entity in the State 
     primarily responsible for activities under this title.
       ``(C) A brief description of each interstate compact (if 
     any) the State has entered into with other States with 
     respect to activities under this title.
       ``(D) General citations to the State statutes and 
     administrative rules governing the State's activities under 
     this title.
       ``(7) Inpatient hospital payments.--With respect to 
     inpatient hospital services provided under the MediGrant plan 
     on a fee-for-service basis, a description of the average 
     amount paid per discharge in the fiscal year compared either 
     to the average charge for such services or to the State's 
     estimate of the average amount paid per discharge by 
     commercial health insurers in the State.
       ``(c) Definitions.--In this section:
       ``(1) Each of the following is a general category of 
     eligible individuals:
       ``(A) Children.
       ``(B) Blind or disabled adults under 65 years of age.
       ``(C) Persons 65 years of age or older.
       ``(D) Other adults.
       ``(2) The health care items and services described in each 
     subparagraph of section 2171(a)(1) shall be considered a 
     separate category of health care items and services.

     ``SEC. 2103. PERIODIC, INDEPENDENT EVALUATIONS.

       ``(a) In General.--During fiscal year 1998 and every third 
     fiscal year thereafter, each State shall provide for an 
     evaluation of the operation of its MediGrant plan under this 
     title.
       ``(b) Independent.--Each such evaluation with respect to an 
     activity under the MediGrant plan shall be conducted by an 
     entity that is neither responsible under State law for the 
     submission of the State plan (or part thereof) nor 
     responsible for administering (or supervising the 
     administration of) the activity. If consistent with the 
     previous sentence, such an entity may be a college or 
     university, a State agency, a legislative branch agency in a 
     State, or an independent contractor.
       ``(c) Research Design.--Each such evaluation shall be 
     conducted in accordance with a research design that is based 
     on generally accepted models of survey design and sampling 
     and statistical analysis.

     ``SEC. 2104. DESCRIPTION OF PROCESS FOR MEDIGRANT PLAN 
                   DEVELOPMENT.

       ``Each MediGrant plan shall include a description of the 
     process under which the plan shall be developed and 
     implemented in the State (consistent with section 2105).

     ``SEC. 2105. CONSULTATION IN MEDIGRANT PLAN DEVELOPMENT.

       ``(a) Public Notice Process.--
       ``(1) In general.--Before submitting a MediGrant plan or a 
     plan amendment described in paragraph (3) to the Secretary 
     under part E, a State shall provide--
       ``(A) public notice respecting the submittal of the 
     proposed plan or amendment, including a general description 
     of the plan or amendment;
       ``(B) a means for the public to inspect or obtain a copy 
     (at reasonable charge) of the proposed plan or amendment; and
       ``(C) an opportunity for submittal and consideration of 
     public comments on the proposed plan or amendment.
     The previous sentence shall not apply to a revision of a 
     MediGrant plan (or revision of an amendment to a plan) made 
     by a State under section 2154(c)(1) or to a plan amendment 
     withdrawal described in section 2152(c)(4).
       ``(2) Contents of notice.--A notice under paragraph (1)(A) 
     for a proposed plan or amendment shall include a description 
     of--
       ``(A) the general purpose of the proposed plan or amendment 
     (including applicable effective dates),
       ``(B) where the public may inspect the proposed plan or 
     amendment,
       ``(C) how the public may obtain a copy of the proposed plan 
     or amendment and the applicable charge (if any) for the copy, 
     and
       ``(D) how the public may submit comments on the proposed 
     plan or amendment, including any deadlines applicable to 
     consideration of such comments.
       ``(3) Amendments described.--An amendment to a MediGrant 
     plan described in this paragraph is an amendment which makes 
     a material and substantial change in eligibility under the 
     MediGrant plan or the benefits provided under the plan.
       ``(4) Publication.--Notices under this subsection may be 
     published (as selected by the State) in one or more daily 
     newspapers of general circulation in the State or in any 
     publication used by the State to publish State statutes or 
     rules.
       ``(5) Comparable process.--A separate notice, or notices, 
     shall not be required under this subsection for a State if 
     notice of the MediGrant plan or an amendment to the plan will 
     be provided under a process specified in State law that is 
     substantially equivalent to the notice process specified in 
     this subsection.
       ``(b) Advisory Committee.--
       ``(1) In general.--Each State with a MediGrant plan shall 
     establish and maintain an advisory committee.
       ``(2) Consultation.--The State shall periodically consult 
     with the advisory committee in the development, revision, and 
     monitoring the performance of the MediGrant plan, including--
       ``(A) the development of strategic objectives and 
     performance goals under section 2101,
       ``(B) the annual report under section 2102, and
       ``(C) the research design under section 2103(c).
       ``(3) Geographic diversity.--The composition of the 
     advisory committee shall be chosen in a manner that assures 
     some representation on the advisory committee of the 
     different general geographic regions of the State. Nothing in 
     the previous sentence shall be construed as requiring 
     proportional representation of geographic areas in a State.
       ``(4) Construction.--Nothing in this title shall be 
     construed as preventing a State from establishing more than 
     one advisory committee, including specialized advisory 
     committees that represent the interests of specific 
     population groups, provider groups, or geographic areas.

     ``SEC. 2106. MEDIGRANT TASK FORCE.

       ``(a) In General.--The Secretary shall provide for the 
     establishment of a MediGrant Task Force (in this section 
     referred to as the `Task Force').
       ``(b) Composition.--The Task Force shall consist of 6 
     members appointed by the chair of the National Governors 
     Association and 6 members appointed by the vice chair of the 
     National Governors Association.
       ``(c) Advisory Group for Task Force.--The Secretary shall 
     provide for the establishment of an advisory group to assist 
     the Task Force in carrying out its duties under this section, 
     consisting of one representative appointed by each of the 
     following associations:
       ``(1) National Committee for Quality Assurance.
       ``(2) Joint Commission for the Accreditation of Healthcare 
     Organizations.
       ``(3) Group Health Association of America.
       ``(4) American Managed Care and Review Association.
       ``(5) Association of State and Territorial Health Officers.
       ``(6) American Medical Association.
       ``(7) American Hospital Association.
       ``(8) American Dental Association.
       ``(9) American College of Gerontology.

[[Page 1752]]

       ``(10) American Health Care Association.
       ``(11) An association identified by the Secretary as 
     representing the interests of disabled individuals.
       ``(12) An association identified by the Secretary as 
     representing the interests of children.
       ``(13) An association identified by the Secretary as 
     representing the interests of the elderly.
       ``(14) An association identified by the Secretary as 
     representing the interests of mentally ill individuals.
     Any reference in this subsection to a particular group shall 
     be deemed a reference to any successor to such group.
       ``(d) Duties.--
       ``(1) Format for expenditure and utilization summaries.--
     The Task Force shall specify, by not later than December 31, 
     1996, the format of expenditure summaries and utilization 
     summaries required under section 2102. Such format may 
     provide for the reporting of different information from that 
     required under section 2102(a), but shall include the 
     reporting of at least the information described in section 
     2102(b)(1)(A)(i).
       ``(2) Models and suggestions.--The Task Force shall study 
     and report to Congress and the States, by not later than 
     April 1, 1997, recommendations on the following:
       ``(A) Recommended models for strategic objectives and 
     performance goals for consideration by States in the 
     development of such objectives and goals under section 2102, 
     including alternative models for each of the objectives and 
     goals described in section 2101(b).
       ``(B) For each suggested model for a strategic objective or 
     performance goal suggested methodologies for States to 
     consider in measuring and verifying the objective or goal.
       ``(C) An assessment of the potential usefulness to States 
     of quality assurance safeguards, utilization data sets, and 
     accreditation programs that are used or under development in 
     the private sector.
       ``(D) Recommended designs and evaluation methodologies for 
     consideration by States in providing for independent 
     evaluations under section 2103.
       ``(3) Construction.--Nothing in this subsection shall be 
     construed as requiring a State to adopt any of the strategic 
     objectives or performance goals suggested under paragraph 
     (2).
       ``(e) Administrative Assistance.--Administrative support 
     for the Task Force shall be provided by the Agency for Health 
     Care Policy and Research (or, in the absence of such Agency, 
     the Secretary).

            ``Part B--Eligibility, Benefits, and Set-asides

     ``SEC. 2111. GENERAL DESCRIPTION OF ELIGIBILITY AND BENEFITS.

       ``(a) In General.--Each MediGrant plan shall include a 
     description (consistent with this title) of the following:
       ``(1) Eligible population.--The population eligible for 
     medical assistance under the plan, including--
       ``(A) any limitations on categories of such individuals;
       ``(B) any limitations as to the duration of eligibility;
       ``(C) any eligibility standards relating to age, income 
     (including any standards relating to spenddowns), residency, 
     resources, disability status, immigration status, or 
     employment status of individuals;
       ``(D) methods of establishing (and continuing) eligibility 
     and enrollment (including the methodology for computing 
     family income);
       ``(E) the eligibility standards in the plan that protect 
     the income and resources of a married individual who is 
     living in the community and whose spouse is residing in an 
     institution in order to prevent the impoverishment of the 
     community spouse; and
       ``(F) any other standards relating to eligibility for 
     medical assistance under the plan.
       ``(2) Scope of assistance.--The amount, duration, and scope 
     of health care services and items covered under the plan, 
     including differences among different eligible population 
     groups.
       ``(3) Delivery method.--The State's approach to delivery of 
     medical assistance, including a general description of--
       ``(A) the use (or intended use) of vouchers, fee-for-
     service, or managed care arrangements (such as capitated 
     health care plans, case management, and case coordination), 
     and
       ``(B) utilization control systems.
       ``(4) Fee-for-service benefits.--To the extent that medical 
     assistance is furnished on a fee-for-service basis--
       ``(A) how the State determines the qualifications of health 
     care providers eligible to provide such assistance, and
       ``(B) how the State determines rates of reimbursement for 
     providing such assistance.
       ``(5) Cost-sharing.--Beneficiary cost-sharing (if any), 
     including variations in such cost-sharing by population group 
     or type of service and financial responsibilities of parents 
     of recipients under 21 years of age and the spouses of 
     recipients.
       ``(6) Utilization incentives.--Incentives or requirements 
     (if any) to encourage the appropriate utilization of 
     services.
       ``(7) Treatment of health centers.--
       ``(A) In general.--In the case of a State in which one or 
     more health centers is located, the MediGrant plan shall 
     include a description of--
       ``(i) what provision (if any) has been made for payment for 
     items and services furnished by health centers, and
       ``(ii) the manner in which medical assistance for low-
     income eligible individuals who received health care services 
     at health centers on or before the date of the enactment of 
     this title may be provided, as determined by the State in 
     consultation with the health centers in the State.
       ``(B) Health center defined.--For purposes of subparagraph 
     (A), the term `health center' means an entity that--
       ``(i) is receiving a grant under section 329, 330, 340, or 
     340A of the Public Health Service Act; or
       ``(ii) based on the recommendation of the Health Resources 
     and Services Administration within the Public Health Service, 
     was determined by the Secretary to meet the requirements to 
     receive such a grant.
       ``(8) Support for certain hospitals.--
       ``(A) In general.--With respect to hospitals described in 
     subparagraph (B) located in the State, the MediGrant plan 
     shall includes a description--
       ``(i) of the extent to which provisions have been made for 
     expenditures for items and services furnished by such 
     hospitals and covered under the plan, and
       ``(ii) for individuals who (I) are enrolled for benefits 
     for covered services under the MediGrant plan and (II) were 
     previously receiving benefits for such services under the 
     medicaid program by or through such hospitals, where or how 
     they will receive benefits for such services under the 
     MediGrant plan if the MediGrant plan does not permit such 
     individuals to obtain benefits for those services by or 
     through such hospitals.
       ``(B) Hospitals described.--For purposes of subparagraph 
     (A), a hospital described in this subparagraph is a 
     subsection (d) hospital (as defined in section 1886(d)(1)(B)) 
     that is described in clauses (i) and (ii) of section 
     340B(a)(4)(L) of the Public Health Service Act.
       ``(b) Immunizations for Children.--The MediGrant plan shall 
     provide medical assistance for immunizations for children 
     eligible for any medical assistance under the MediGrant plan, 
     in accordance with a schedule for immunizations established 
     by the Health Department of the State in consultation with 
     the individuals and entities in the State responsible for the 
     administration of the plan.
       ``(c) Equal Payment Rates for Rural Providers.--A State 
     with a MediGrant plan shall establish payment rates for all 
     services of rural providers that are comparable to the 
     payment rates established for like services of such type of 
     providers not in rural areas; except that a State may provide 
     for incentive payments to attract and retain providers to 
     medically underserved areas.
       ``(d) Preexisting Condition Exclusions.--Notwithstanding 
     any other provision of this title--
       ``(1) a MediGrant plan may not deny or exclude coverage of 
     any item or service for an eligible individual for benefits 
     under the MediGrant plan for such item or service on the 
     basis of a preexisting condition; and
       ``(2) if a State contracts or makes other arrangements 
     (through the eligible individual or through another entity) 
     with a capitated health care organization, insurer, or other 
     entity, for the provision of items or services to eligible 
     individuals under the MediGrant plan and the State permits 
     such organization, insurer, or other entity to exclude 
     coverage of a covered item or service on the basis of a 
     preexisting condition, the State shall provide, through its 
     MediGrant plan, for such coverage (through direct payment or 
     otherwise) for any such covered item or service denied or 
     excluded on the basis of a preexisting condition.
       ``(e) Family Responsibility.--A MediGrant plan may not 
     require an adult child of moderate means (as determined by 
     the Secretary) to contribute to the cost of covered nursing 
     facility services and other long-term care services for the 
     child's parent under the plan.

     ``SEC. 2112. SET-ASIDES OF FUNDS FOR POPULATION GROUPS.

       ``(a) For Targeted Low-Income Families.--
       ``(1) In general.--Subject to subsection (e), a MediGrant 
     plan shall provide that the amount of funds expended under 
     the plan for medical assistance for targeted low-income 
     families (as defined in paragraph (3)) for a fiscal year 
     shall be not less than the minimum low-income-family 
     percentage specified in paragraph (2) of the total funds 
     expended under the plan for all medical assistance for the 
     fiscal year.
       ``(2) Minimum low-income-family percentage.--The minimum 
     low-income-family percentage specified in this paragraph for 
     a State is equal to 85 percent of the average percentage of 
     the expenditures under title XIX for medical assistance in 
     the State during Federal fiscal years 1992 through 1994 which 
     were attributable to expenditures for medical assistance for 
     mandated benefits (as defined in subsection (h)) furnished to 
     individuals--
       ``(A) who (at the time of furnishing the assistance) were 
     under 65 years of age,
       ``(B) whose coverage (at such time) under a State plan 
     under title XIX was required under Federal law, and
       ``(C) whose eligibility for such coverage (at such time) 
     was not on a basis directly related to disability status 
     (including being blind).
       ``(3) Targeted low-income family defined.--In this 
     subsection, the term `targeted low-income family' means a 
     family (which may be an individual)--
       ``(A) which includes a child or a pregnant woman, and

[[Page 1753]]

       ``(B) the income of which does not exceed 185 percent of 
     the poverty line applicable to a family of the size involved.
       ``(b) For Low-Income Elderly.--
       ``(1) Set-asides.--Subject to subsection (e)--
       ``(A) General set-aside.--A MediGrant plan shall provide 
     that the amount of funds expended under the plan for medical 
     assistance for eligible low-income individuals 65 years of 
     age or older for a fiscal year shall be not less than the 
     minimum low-income-elderly percentage specified in paragraph 
     (2)(A) of the total funds expended under the plan for all 
     medical assistance for the fiscal year.
       ``(B) Set-aside for medicare premium assistance.--A 
     MediGrant plan shall provide that the amount of funds 
     expended under the plan for medical assistance for medicare 
     cost-sharing described in section 2171(c)(1) for a fiscal 
     year shall be not less than the minimum medicare premium 
     assistance percentage specified in paragraph (2)(B) of the 
     total funds expended under the plan for all medical 
     assistance for the fiscal year. The MediGrant plan shall 
     provide priority for such making such assistance available 
     for targeted low-income elderly individuals (as defined in 
     paragraph (3)).
       ``(2) Minimum percentages.--
       ``(A) For general set-aside.--The minimum low-income-
     elderly percentage specified in this subparagraph for a State 
     is equal to 85 percent of the average percentage of the 
     expenditures under title XIX for medical assistance in the 
     State during Federal fiscal years 1992 through 1994 which was 
     attributable to expenditures for medical assistance for 
     mandated benefits furnished to individuals--
       ``(i) whose eligibility for such assistance was based on 
     their being 65 years of age or older; and
       ``(ii)(I) whose coverage (at such time) under a State plan 
     under title XIX was required under Federal law, or (II) who 
     (at such time) were residents of a nursing facility.
       ``(B) For set-aside for medicare premium assistance.--The 
     minimum medicare premium assistance percentage specified in 
     this subparagraph for a State is equal to 90 percent of the 
     average percentage of the expenditures under title XIX for 
     medical assistance in the State during Federal fiscal years 
     1993 through 1995 which was attributable to expenditures for 
     medical assistance for medicare premiums described in section 
     1905(p)(3)(A) for individuals whose coverage (at such time) 
     for such assistance for such premiums under a State plan 
     under title XIX was required under Federal law.
       ``(3) Targeted low-income elderly individual defined.--In 
     this subsection, the term `targeted low-income elderly 
     individual' means an individual who is 65 years of age or 
     older and whose income does not exceed 100 percent of the 
     poverty line applicable to a family of the size involved.
       ``(c) For Low-Income Disabled Persons.--
       ``(1) In general.--Subject to subsection (e), a MediGrant 
     plan shall provide that the percentage of funds expended 
     under the plan for medical assistance for eligible low-income 
     individuals who are under 65 years of age and are eligible 
     for such assistance on the basis of a disability (including 
     being blind) for a fiscal year is not less than the minimum 
     low-income-disabled percentage specified in paragraph (2) of 
     the total funds expended under the plan for medical 
     assistance for the fiscal year.
       ``(2) Minimum low-income-disabled percentage.--The minimum 
     low-income-disabled percentage specified in this paragraph 
     for a State is equal to 85 percent of the average percentage 
     of the expenditures under title XIX for medical assistance in 
     the State during Federal fiscal years 1992 through 1994 which 
     was attributable to expenditures for medical assistance for 
     mandated benefits furnished to individuals--
       ``(A) whose coverage (at such time) under a State plan 
     under title XIX was required under Federal law, and
       ``(B) whose coverage (at such time) was on a basis directly 
     related to disability status (including being blind).
       ``(d) Use of Residual Funds.--
       ``(1) In general.--Subject to limitations on payment under 
     section 2123, any funds not required to be expended under the 
     set-asides under the previous subsections may be expended 
     under the MediGrant plan for any of the following:
       ``(A) Additional medical assistance.--Medical assistance 
     for eligible low-income individuals (as defined in section 
     2171(b)), in addition to any medical assistance made 
     available under a previous subsection.
       ``(B) Medically-related services.--Payment for medically-
     related services (as defined in paragraph (2)).
       ``(C) Administration.--Payment for the administration of 
     the MediGrant plan.
       ``(2) Medically-related services defined.--In this title, 
     the term `medically-related services' means services 
     reasonably related to, or in direct support of, the State's 
     attainment of one or more of the strategic objectives and 
     performance goals established under section 2101, but does 
     not include items and services included on the list under 
     section 2171(a)(1) (relating to the definition of medical 
     assistance).
       ``(e) Exceptions to Minimum Set-Asides.--
       ``(1) Alternative minimum set-asides.--
       ``(A) In general.--A State may provide in its MediGrant 
     plan (through an amendment to the plan) for a lower dollar 
     amount of expenditures than the minimum amounts specified in 
     any (or all) of paragraphs (2) of subsections (a), (b), and 
     (c) if State determines (and certifies to the Secretary) 
     that--
       ``(i) the health care needs of the low-income populations 
     described in paragraph (1) of the respective subsection who 
     are eligible for medical assistance under the plan during the 
     previous fiscal year (or medicare premium assistance needs 
     described in subsection (b)(1)(B)) can be reasonably met 
     without the expenditure of the amounts otherwise required to 
     be expended, and
       ``(ii) the performance goals established under section 2101 
     relating to the respective population can reasonably be met 
     with such lower amount of funds expended.
       ``(B) Period of application.--The determination and 
     certification under subparagraph (A) shall be made for such 
     period as a State may request, but may not be made for a 
     period of more than 3 consecutive Federal fiscal years 
     (beginning with the first fiscal year for which the lower 
     amount is sought). A new determination and certification must 
     be made under such paragraph for any subsequent period.
       ``(C) No exception permitted before fiscal year 1998.--This 
     paragraph may not apply with respect to a State for a fiscal 
     year before fiscal year 1998.
       ``(2) Independent certification of compliance with goals.--
       ``(A) In general.--For purposes of section 2151(c), a 
     MediGrant plan shall not be considered to be in substantial 
     violation of the requirements of this section if the amount 
     of actual State expenditures specified in any (or all) of 
     paragraphs (1) of subsections (a), (b), and (c) is lower than 
     the minimum amounts specified in any (or all) of paragraphs 
     (2) of subsections (a), (b), and (c) if an independent 
     actuary determines and certifies to the State that the 
     MediGrant plan is reasonably designed to result in a level of 
     expenditures which is consistent with the requirements of 
     such subsections.
       ``(B) Limit on variation.--Subparagraph (A) shall not apply 
     in the case of a MediGrant plan for which the actual State 
     expenditures described in any (or all) of paragraphs (1) of 
     subsections (a), (b), and (c) are less than 95 percent of the 
     expenditures which would be made if the amount of State 
     expenditures specified in any (or all) of such paragraphs was 
     equal to the applicable minimum amount specified in any (or 
     all) of paragraphs (2) of subsections (a), (b), and (c).
       ``(3) Treatment of states with no optional benefits.--In 
     the case of a State for which all expenditures under title 
     XIX for medical assistance in the State during Federal fiscal 
     years 1992 through 1994 were expenditures for medical 
     assistance for mandated benefits, `75 percent' shall be 
     substituted for `85 percent' each place it appears in 
     paragraphs (2) of subsections (a), (b), and (c).
       ``(f) Computations.--
       ``(1) Minimum percentages.--States shall calculate the 
     minimum percentages under subsections (a)(2), (b)(2), and 
     (c)(2) in a reasonable manner consistent with reports 
     submitted to the Secretary for the fiscal years involved.
       ``(2) Exclusion of payments for certain aliens.--For 
     purposes of this section, medical assistance attributable to 
     the exception provided under section 1903(v)(2) shall not be 
     considered to be expenditures for medical assistance.
       ``(g) Benefits Included for Purposes of Computing Set-
     Asides.--In this section, the term `mandated benefits'--
       ``(1) means medical assistance for items and services 
     described in section 1905(a) to the extent such assistance 
     with respect to such items and services was required to be 
     provided under title XIX,
       ``(2) includes medical assistance for medicare cost-sharing 
     only to the extent such assistance was required to be 
     provided under section 1902(a)(10)(E), and
       ``(3) does not include medical assistance attributable to 
     disproportionate share payment adjustments described in 
     section 1923.

     ``SEC. 2113. PREMIUMS AND COST-SHARING.

       ``(a) In General.--Subject to subsection (b), if any 
     charges are imposed under the MediGrant plan for cost-sharing 
     (as defined in subsection (d)), such cost-sharing shall be 
     pursuant to a public cost-sharing schedule.
       ``(b) Limitation on Premium and Certain Cost-Sharing for 
     Low-Income Families Including Children or Pregnant Women.--
       ``(1) In general.--In the case of a family described in 
     paragraph (2)--
       ``(A) the plan shall not impose any premium, and
       ``(B) the plan shall not (except as provided in subsection 
     (c)(1)) impose any cost-sharing with respect to primary and 
     preventive care services (as defined by the State) covered 
     under the MediGrant plan for children or pregnant women 
     unless such cost-sharing is nominal in nature.
       ``(2) Family described.--A family described in this 
     paragraph is a family (which may be an individual) which--
       ``(A) includes a child or a pregnant woman,
       ``(B) is made eligible for medical assistance under the 
     MediGrant plan, and
       ``(C) the income of which does not exceed 100 percent of 
     the poverty line applicable to a family of the size involved.
       ``(c) Certain Cost-Sharing Permitted.--Nothing in this 
     section shall be construed as preventing a MediGrant plan 
     (consistent with subsection (b))--
       ``(1) from imposing cost-sharing to discourage the 
     inappropriate use of emergency medical services (delivered 
     through a hospital emergency room, a medical transportation 
     provider, or otherwise);
       ``(2) from imposing premiums and cost-sharing 
     differentially in order to encourage

[[Page 1754]]

     the use of primary and preventive care and discourage 
     unnecessary or less economical care;
       ``(3) from scaling cost-sharing in a manner that reflects 
     economic factors, employment status, and family size;
       ``(4) from scaling cost-sharing based on the availability 
     to the individual or family of other health insurance 
     coverage; or
       ``(5) from scaling cost-sharing based on participation in 
     employment training program, drug or alcohol abuse treatment, 
     counseling programs, or other programs promoting personal 
     responsibility.
       ``(d) Cost-Sharing Defined.--In this section, the term 
     `cost-sharing' includes copayments, deductibles, coinsurance, 
     and other charges for the provision of health care services.

     ``SEC. 2114. DESCRIPTION OF PROCESS FOR DEVELOPING CAPITATION 
                   PAYMENT RATES.

       ``(a) In General.--If a State contracts (or intends to 
     contract) with a capitated health care organization (as 
     defined in subsection (c)(1)) under which the State makes a 
     capitation payment (as defined in subsection (c)(2)) to the 
     organization for providing or arranging for the provision of 
     medical assistance under the MediGrant plan for a group of 
     services (including at least inpatient hospital services and 
     physicians' services), the plan shall include a description 
     of the following:
       ``(1) Use of actuarial science.--The extent and manner in 
     which the State uses actuarial science--
       ``(A) to analyze and project health care expenditures and 
     utilization for individuals enrolled (or to be enrolled) in 
     such an organization under the MediGrant plan, and
       ``(B) to develop capitation payment rates, including a 
     brief description of the general methodologies used by 
     actuaries.
       ``(2) Qualifications of organizations.--The general 
     qualifications (including any accreditation, State licensure 
     or certification, or provider network standards) required by 
     the State for participation of capitated health care 
     organizations under the MediGrant plan.
       ``(3) Dissemination process.--The process used by the State 
     under subsection (b) and otherwise to disseminate, before 
     entering into contracts with capitated health care 
     organizations, actuarial information to such organizations on 
     the historical fee-for-service costs (or, if not available, 
     other recent financial data associated with providing covered 
     services) and utilization associated with individuals 
     described in paragraph (1)(A).
       ``(b) Public Notice and Comment.--Under the MediGrant plan 
     the State shall provide a process for providing, before the 
     beginning of each contract year--
       ``(1) public notice of--
       ``(A) the amounts of the capitation payments (if any) made 
     under the plan for the contract year preceding the public 
     notice, and
       ``(B)(i) the information described under subsection (a)(1) 
     with respect to capitation payments for the contract year 
     involved or (ii) the amounts of the capitation payments the 
     State expects to make for the contract year involved,
     unless such information is designated as proprietary and not 
     subject to public disclosure under State law; and
       ``(2) an opportunity for receiving public comment on the 
     amounts and information for which notice is provided under 
     paragraph (1).
       ``(c) Definitions.--In this title:
       ``(1) Capitated health care organization.--The term 
     `capitated health care organization' means a health 
     maintenance organization or any other entity (including a 
     health insuring organization, managed care organization, 
     prepaid health plan, integrated service network, or similar 
     entity) which under State law is permitted to accept 
     capitation payments for providing (or arranging for the 
     provision of) a group of items and services including at 
     least inpatient hospital services and physicians' services.
       ``(2) Capitation payment.--The term `capitation payment' 
     means, with respect to payment, payment on a prepaid 
     capitation basis or any other risk basis to an entity for the 
     entity's provision (or arranging for the provision) of a 
     group of items and services (including at least inpatient 
     hospital services and physicians' services).

     ``SEC. 2115. PREVENTING SPOUSAL IMPOVERISHMENT.

       ``(a) Special Treatment for Institutionalized Spouses.--
       ``(1) Supersedes other provisions.--In determining the 
     eligibility for medical assistance of an institutionalized 
     spouse (as defined in subsection (h)(1)), the provisions of 
     this section supersede any other provision of this title 
     which is inconsistent with them.
       ``(2) Does not affect certain determinations.--Except as 
     this section specifically provides, this section does not 
     apply to--
       ``(A) the determination of what constitutes income or 
     resources, or
       ``(B) the methodology and standards for determining and 
     evaluating income and resources.
       ``(3) No application in commonwealths and territories.--
     This section shall only apply to a State that is one of the 
     50 States or the District of Columbia.
       ``(b) Rules for Treatment of Income.--
       ``(1) Separate treatment of income.--During any month in 
     which an institutionalized spouse is in the institution, 
     except as provided in paragraph (2), no income of the 
     community spouse shall be deemed available to the 
     institutionalized spouse.
       ``(2) Attribution of income.--In determining the income of 
     an institutionalized spouse or community spouse for purposes 
     of the post-eligibility income determination described in 
     subsection (d), except as otherwise provided in this section 
     and regardless of any State laws relating to community 
     property or the division of marital property, the following 
     rules apply:
       ``(A) Non-trust property.--Subject to subparagraphs (C) and 
     (D), in the case of income not from a trust, unless the 
     instrument providing the income otherwise specifically 
     provides--
       ``(i) if payment of income is made solely in the name of 
     the institutionalized spouse or the community spouse, the 
     income shall be considered available only to that respective 
     spouse;
       ``(ii) if payment of income is made in the names of the 
     institutionalized spouse and the community spouse, one-half 
     of the income shall be considered available to each of them; 
     and
       ``(iii) if payment of income is made in the names of the 
     institutionalized spouse or the community spouse, or both, 
     and to another person or persons, the income shall be 
     considered available to each spouse in proportion to the 
     spouse's interest (or, if payment is made with respect to 
     both spouses and no such interest is specified, one-half of 
     the joint interest shall be considered available to each 
     spouse).
       ``(B) Trust property.--In the case of a trust--
       ``(i) except as provided in clause (ii), income shall be 
     attributed in accordance with the provisions of this title, 
     and
       ``(ii) income shall be considered available to each spouse 
     as provided in the trust, or, in the absence of a specific 
     provision in the trust--

       ``(I) if payment of income is made solely to the 
     institutionalized spouse or the community spouse, the income 
     shall be considered available only to that respective spouse;
       ``(II) if payment of income is made to both the 
     institutionalized spouse and the community spouse, one-half 
     of the income shall be considered available to each of them; 
     and
       ``(III) if payment of income is made to the 
     institutionalized spouse or the community spouse, or both, 
     and to another person or persons, the income shall be 
     considered available to each spouse in proportion to the 
     spouse's interest (or, if payment is made with respect to 
     both spouses and no such interest is specified, one-half of 
     the joint interest shall be considered available to each 
     spouse).

       ``(C) Property with no instrument.--In the case of income 
     not from a trust in which there is no instrument establishing 
     ownership, subject to subparagraph (D), one-half of the 
     income shall be considered to be available to the 
     institutionalized spouse and one-half to the community 
     spouse.
       ``(D) Rebutting ownership.--The rules of subparagraphs (A) 
     and (C) are superseded to the extent that an 
     institutionalized spouse can establish, by a preponderance of 
     the evidence, that the ownership interests in income are 
     other than as provided under such subparagraphs.
       ``(c) Rules for Treatment of Resources.--
       ``(1) Computation of spousal share at time of 
     institutionalization.--
       ``(A) Total joint resources.--There shall be computed (as 
     of the beginning of the first continuous period of 
     institutionalization of the institutionalized spouse)--
       ``(i) the total value of the resources to the extent either 
     the institutionalized spouse or the community spouse has an 
     ownership interest, and
       ``(ii) a spousal share which is equal to \1/2\ of such 
     total value.
       ``(B) Assessment.--At the request of an institutionalized 
     spouse or community spouse, at the beginning of the first 
     continuous period of institutionalization of the 
     institutionalized spouse and upon the receipt of relevant 
     documentation of resources, the State shall promptly assess 
     and document the total value described in subparagraph (A)(i) 
     and shall provide a copy of such assessment and documentation 
     to each spouse and shall retain a copy of the assessment for 
     use under this section. If the request is not part of an 
     application for medical assistance under this title, the 
     State may, at its option as a condition of providing the 
     assessment, require payment of a fee not exceeding the 
     reasonable expenses of providing and documenting the 
     assessment. At the time of providing the copy of the 
     assessment, the State shall include a notice indicating that 
     the spouse will have a right to a fair hearing under 
     subsection (e)(2).
       ``(2) Attribution of resources at time of initial 
     eligibility determination.--In determining the resources of 
     an institutionalized spouse at the time of application for 
     medical assistance under this title, regardless of any State 
     laws relating to community property or the division of 
     marital property--
       ``(A) except as provided in subparagraph (B), all the 
     resources held by either the institutionalized spouse, 
     community spouse, or both, shall be considered to be 
     available to the institutionalized spouse, and
       ``(B) resources shall be considered to be available to an 
     institutionalized spouse, but only to the extent that the 
     amount of such resources exceeds the amount computed under 
     subsection (f)(2)(A) (as of the time of application for 
     medical assistance).
       ``(3) Assignment of support rights.--The institutionalized 
     spouse shall not be ineligible by reason of resources 
     determined

[[Page 1755]]

     under paragraph (2) to be available for the cost of care 
     where--
       ``(A) the institutionalized spouse has assigned to the 
     State any rights to support from the community spouse;
       ``(B) the institutionalized spouse lacks the ability to 
     execute an assignment due to physical or mental impairment 
     but the State has the right to bring a support proceeding 
     against a community spouse without such assignment; or
       ``(C) the State determines that denial of eligibility would 
     work an undue hardship.
       ``(4) Separate treatment of resources after eligibility for 
     medical assistance established.--During the continuous period 
     in which an institutionalized spouse is in an institution and 
     after the month in which an institutionalized spouse is 
     determined to be eligible for medical assistance under this 
     title, no resources of the community spouse shall be deemed 
     available to the institutionalized spouse.
       ``(5) Resources defined.--In this section, the term 
     `resources' does not include--
       ``(A) resources excluded under subsection (a) or (d) of 
     section 1613, and
       ``(B) resources that would be excluded under section 
     1613(a)(2)(A) but for the limitation on total value described 
     in such section.
       ``(d) Protecting Income for Community Spouse.--
       ``(1) Allowances to be offset from income of 
     institutionalized spouse.--After an institutionalized spouse 
     is determined or redetermined to be eligible for medical 
     assistance, in determining the amount of the spouse's income 
     that is to be applied monthly to payment for the costs of 
     care in the institution, there shall be deducted from the 
     spouse's monthly income the following amounts in the 
     following order:
       ``(A) A personal needs allowance (described in paragraph 
     (6)(A)), in an amount not less than the amount specified in 
     paragraph (6)(C).
       ``(B) A community spouse monthly income allowance (as 
     defined in paragraph (2)), but only to the extent income of 
     the institutionalized spouse is made available to (or for the 
     benefit of) the community spouse.
       ``(C) A family allowance, for each family member, equal to 
     at least \1/3\ of the amount by which the amount described in 
     paragraph (3)(A)(i) exceeds the amount of the monthly income 
     of that family member.
       ``(D) Amounts for incurred expenses for medical or remedial 
     care for the institutionalized spouse (as provided under 
     paragraph (7)).
     In subparagraph (C), the term `family member' only includes 
     minor or dependent children, dependent parents, or dependent 
     siblings of the institutionalized or community spouse who are 
     residing with the community spouse.
       ``(2) Community spouse monthly income allowance defined.--
     In this section (except as provided in paragraph (5)), the 
     `community spouse monthly income allowance' for a community 
     spouse is an amount by which--
       ``(A) except as provided in subsection (e), the minimum 
     monthly maintenance needs allowance (established under and in 
     accordance with paragraph (3)) for the spouse, exceeds
       ``(B) the amount of monthly income otherwise available to 
     the community spouse (determined without regard to such an 
     allowance).
       ``(3) Establishment of minimum monthly maintenance needs 
     allowance.--
       ``(A) In general.--Each State shall establish a minimum 
     monthly maintenance needs allowance for each community spouse 
     which, subject to subparagraph (B), is equal to or exceeds--
       ``(i) 150 percent of \1/12\ of the income official poverty 
     line (defined by the Office of Management and Budget and 
     revised annually in accordance with section 673(2)) for a 
     family unit of 2 members; plus
       ``(ii) an excess shelter allowance (as defined in paragraph 
     (4)).
     A revision of the official poverty line referred to in clause 
     (i) shall apply to medical assistance furnished during and 
     after the second calendar quarter that begins after the date 
     of publication of the revision.
       ``(B) Cap on minimum monthly maintenance needs allowance.--
     The minimum monthly maintenance needs allowance established 
     under subparagraph (A) may not exceed $1,500 (subject to 
     adjustment under subsections (e) and (g)).
       ``(4) Excess shelter allowance defined.--In paragraph 
     (3)(A)(ii), the term `excess shelter allowance' means, for a 
     community spouse, the amount by which the sum of--
       ``(A) the spouse's expenses for rent or mortgage payment 
     (including principal and interest), taxes and insurance and, 
     in the case of a condominium or cooperative, required 
     maintenance charge, for the community spouse's principal 
     residence, and
       ``(B) the standard utility allowance (used by the State 
     under section 5(e) of the Food Stamp Act of 1977) or, if the 
     State does not use such an allowance, the spouse's actual 
     utility expenses,
     exceeds 30 percent of the amount described in paragraph 
     (3)(A)(i), except that, in the case of a condominium or 
     cooperative, for which a maintenance charge is included under 
     subparagraph (A), any allowance under subparagraph (B) shall 
     be reduced to the extent the maintenance charge includes 
     utility expenses.
       ``(5) Court ordered support.--If a court has entered an 
     order against an institutionalized spouse for monthly income 
     for the support of the community spouse, the community spouse 
     monthly income allowance for the spouse shall be not less 
     than the amount of the monthly income so ordered.
       ``(6) Personal needs allowance.--
       ``(A) In general.--The State MediGrant plan must provide 
     that, in the case of an institutionalized individual or 
     couple described in subparagraph (B), in determining the 
     amount of the individual's or couple's income to be applied 
     monthly to payment for the cost of care in an institution, 
     there shall be deducted from the monthly income (in addition 
     to other allowances otherwise provided under the plan) a 
     monthly personal needs allowance--
       ``(i) which is reasonable in amount for clothing and other 
     personal needs of the individual (or couple) while in an 
     institution, and
       ``(ii) which is not less (and may be greater) than the 
     minimum monthly personal needs allowance described in 
     subparagraph (C).
       ``(B) Institutionalized individual or couple defined.--In 
     this paragraph, the term `institutionalized individual or 
     couple' means an individual or married couple--
       ``(i) who is an inpatient (or who are inpatients) in a 
     medical institution or nursing facility for which payments 
     are made under this title throughout a month, and
       ``(ii) who is or are determined to be eligible for medical 
     assistance under the State MediGrant plan.
       ``(C) Minimum allowance.--The minimum monthly personal 
     needs allowance described in this subparagraph is $40 for an 
     institutionalized individual and $80 for an institutionalized 
     couple (if both are aged, blind, or disabled, and their 
     incomes are considered available to each other in determining 
     eligibility).
       ``(7) Treatment of incurred expenses.--With respect to the 
     post-eligibility treatment of income under this section, 
     there shall be taken into account amounts for incurred 
     expenses for medical or remedial care that are not subject to 
     payment by a third party, including--
       ``(A) medicare and other health insurance premiums, 
     deductibles, or coinsurance, and
       ``(B) necessary medical or remedial care recognized under 
     State law but not covered under the State MediGrant plan 
     under this title, subject to reasonable limits the State may 
     establish on the amount of these expenses.
       ``(e) Notice and Hearing.--
       ``(1) Notice.--Upon--
       ``(A) a determination of eligibility for medical assistance 
     of an institutionalized spouse, or
       ``(B) a request by either the institutionalized spouse, or 
     the community spouse, or a representative acting on behalf of 
     either spouse,
     each State shall notify both spouses (in the case described 
     in subparagraph (A)) or the spouse making the request (in the 
     case described in subparagraph (B)) of the amount of the 
     community spouse monthly income allowance (described in 
     subsection (d)(1)(B)), of the amount of any family allowances 
     (described in subsection (d)(1)(C)), of the method for 
     computing the amount of the community spouse resources 
     allowance permitted under subsection (f), and of the spouse's 
     right to a hearing under the MediGrant plan respecting 
     ownership or availability of income or resources, and the 
     determination of the community spouse monthly income or 
     resource allowance.
       ``(2) Results of hearing.--
       ``(A) Revision of minimum monthly maintenance needs 
     allowance.--If either such spouse establishes in a hearing 
     under this subsection that the community spouse needs income, 
     above the level otherwise provided by the minimum monthly 
     maintenance needs allowance, due to exceptional circumstances 
     resulting in significant financial duress, there shall be 
     substituted, for the minimum monthly maintenance needs 
     allowance in subsection (d)(2)(A), an amount adequate to 
     provide such additional income as is necessary.
       ``(B) Revision of community spouse resource allowance.--If 
     either such spouse establishes in such a hearing that the 
     community spouse resource allowance (in relation to the 
     amount of income generated by such an allowance) is 
     inadequate to raise the community spouse's income to the 
     minimum monthly maintenance needs allowance, there shall be 
     substituted, for the community spouse resource allowance 
     under subsection (f)(2), an amount adequate to provide such a 
     minimum monthly maintenance needs allowance.
       ``(f) Permitting Transfer of Resources to Community 
     Spouse.--
       ``(1) In general.--An institutionalized spouse may, without 
     regard to any other provision of the MediGrant plan to 
     contrary, transfer an amount equal to the community spouse 
     resource allowance (as defined in paragraph (2)), but only to 
     the extent the resources of the institutionalized spouse are 
     transferred to (or for the sole benefit of) the community 
     spouse. The transfer under the preceding sentence shall be 
     made as soon as practicable after the date of the initial 
     determination of eligibility, taking into account such time 
     as may be necessary to obtain a court order under paragraph 
     (3).
       ``(2) Community spouse resource allowance defined.--In 
     paragraph (1), the `community spouse resource allowance' for 
     a community spouse is an amount (if any) by which--
       ``(A) the greatest of--
       ``(i) $12,000 (subject to adjustment under subsection (g)), 
     or, if greater (but not to exceed the amount specified in 
     clause (ii)(II)) an amount specified under the State plan,

[[Page 1756]]

       ``(ii) the lesser of (I) the spousal share computed under 
     subsection (c)(1), or (II) $60,000 (subject to adjustment 
     under subsection (g)),
       ``(iii) the amount established under subsection (e)(2); or
       ``(iv) the amount transferred under a court order under 
     paragraph (3);
     exceeds
       ``(B) the amount of the resources otherwise available to 
     the community spouse (determined without regard to such an 
     allowance).
       ``(g) Indexing Dollar Amounts.--For services furnished 
     during a calendar year after 1989, the dollar amounts 
     specified in subsections (d)(3)(C), (f)(2)(A)(i), and 
     (f)(2)(A)(ii)(II) shall be increased by the same percentage 
     as the percentage increase in the consumer price index for 
     all urban consumers (all items; U.S. city average) between 
     September 1988 and the September before the calendar year 
     involved.
       ``(h) Definitions.--In this section:
       ``(1) The term `institutionalized spouse' means an 
     individual--
       ``(A)(i) who is in a medical institution or nursing 
     facility, or
       ``(ii) at the option of the State (I) who would be eligible 
     under the MediGrant plan under this title if they were in a 
     medical institution, (II) with respect to whom there has been 
     a determination that but for the provision of home or 
     community-based services they would require the level of care 
     provided in a hospital, nursing facility or intermediate care 
     facility for the mentally retarded the cost of which could be 
     reimbursed under the plan, and (III) who will receive home or 
     community-based services pursuant the plan, and
       ``(B) is married to a spouse who is not in a medical 
     institution or nursing facility;
     but does not include any such individual who is not likely to 
     meet the requirements of subparagraph (A) for at least 30 
     consecutive days.
       ``(2) The term `community spouse' means the spouse of an 
     institutionalized spouse.

     ``SEC. 2116. CONSTRUCTION.

       ``(a) No Federal Entitlement.--Nothing in this title 
     (including section 2112) shall be construed as creating an 
     entitlement under Federal law in any individual or category 
     of individuals for medical assistance under a MediGrant plan.
       ``(b) State Flexibility in Benefits, Provider Payments, 
     Geographical Coverage Area, and Selection of Providers.--
     Nothing in this title (other than section 2111(b)) shall be 
     construed as requiring a State--
       ``(1) to provide medical assistance for any particular 
     items or services;
       ``(2) subject to section 2111(c), to provide for any 
     payments with respect to any specific health care providers 
     or any level of payments for any services;
       ``(3) to provide for the same medical assistance in all 
     geographical areas or political subdivisions of the State;
       ``(4) to provide that the medical assistance made available 
     to any individual eligible for medical assistance must not be 
     less in amount, duration, or scope than the medical 
     assistance made available to any other such individual; or
       ``(5) to provide that any individual eligible for medical 
     assistance with respect to an item or service may choose to 
     obtain such assistance from any institution, agency, or 
     person qualified to provide the item or service.
       ``(c) State Flexibility With Respect to Managed Care.--
     Nothing in this title shall be construed--
       ``(1) to limit a State's ability to contract with, on a 
     capitated basis or otherwise, health care plans or individual 
     health care providers for the provision or arrangement of 
     medical assistance;
       ``(2) to limit a State's ability to contract with health 
     care plans or other entities for case management services or 
     for coordination of medical assistance; or
       ``(3) to restrict a State from establishing capitation 
     rates on the basis of competition among health care plans or 
     negotiations between the State and one or more health care 
     plans.

     ``SEC. 2117. LIMITATIONS ON CAUSES OF ACTION.

       ``(a) In General.--Notwithstanding any other provision of 
     this Act (including section 1130A), no person (including an 
     applicant, beneficiary, provider, or health plan) shall have 
     a cause of action under Federal law against a State in 
     relation to a State's compliance (or failure to comply) with 
     the provisions of this title or of a MediGrant plan.
       ``(b) No Effect on State Law.--Nothing in subsection (a) 
     may be construed as affecting any actions brought under State 
     law.

                      ``Part C--Payments to States

     ``SEC. 2121. ALLOTMENT OF FUNDS AMONG STATES.

       ``(a) Allotments.--
       ``(1) Computation.--The Secretary shall provide for the 
     computation of State obligation and outlay allotments in 
     accordance with this section for each fiscal year beginning 
     with fiscal year 1996.
       ``(2) Limitation on obligations.--
       ``(A) In general.--Subject to subparagraph (B), the 
     Secretary shall not enter into obligations with any State 
     under this title for a fiscal year in excess of the 
     obligation allotment for that State for the fiscal year under 
     paragraph (4). The sum of such obligation allotments for all 
     States in any fiscal year (excluding amounts carried over 
     under subparagraph (B) and excluding changes in allotments 
     effected under paragraph (4)(D)) shall not exceed the 
     aggregate limit on new obligation authority specified in 
     paragraph (3) for that fiscal year.
       ``(B) Adjustments.--
       ``(i) Carryover of allotment permitted.--If the amount of 
     obligations entered into under this part with a State for 
     quarters in a fiscal year is less than the amount of the 
     obligation allotment under this section to the State for the 
     fiscal year, the amount of the difference shall be added to 
     the amount of the State obligation allotment otherwise 
     provided under this section for the succeeding fiscal year.
       ``(ii) Reduction for post-enactment new obligations under 
     title xix in fiscal year 1996.--The amount of the obligation 
     allotment otherwise provided under this section for fiscal 
     year 1996 for a State shall be reduced by the amount of the 
     obligations entered into with respect to the State under 
     section 1903(a) after the date of the enactment of this Act.
       ``(3) Aggregate limit on new obligation authority.--
       ``(A) In general.--For purposes of this subsection, subject 
     to subparagraph (C), the `aggregate limit on new obligation 
     authority', for a fiscal year, is the pool amount under 
     subsection (b) for the fiscal year, divided by the payout 
     adjustment factor (described in subparagraph (B)) for the 
     fiscal year.
       ``(B) Payout adjustment factor.--For purposes of this 
     subsection, the `payout adjustment factor'--
       ``(i) for fiscal year 1996 is .950,
       ``(ii) for fiscal year 1997 is .986, and
       ``(iii) for a subsequent fiscal year is .998.
       ``(C) Transitional adjustment for pre-enactment-obligation 
     outlays.--In order to account for pre-enactment-obligation 
     outlays described in paragraph (4)(C)(iv), in determining the 
     aggregate limit on new obligation authority under 
     subparagraph (A) for fiscal year 1996, the pool amount for 
     such fiscal year is equal to--
       ``(i) the pool amount for such year, reduced by
       ``(ii) $24.624 billion.
       ``(4) Obligation allotments.--
       ``(A) General rule for 50 states and the district of 
     columbia.--Except as provided in this paragraph, the 
     `obligation allotment' for any of the 50 States or the 
     District of Columbia for a fiscal year (beginning with fiscal 
     year 1997) is an amount that bears the same ratio to the 
     outlay allotment under subsection (c)(2) for such State or 
     District (not taking into account any adjustment due to an 
     election under paragraph (4)) for the fiscal year as the 
     ratio of--
       ``(i) the aggregate limit on new obligation authority (less 
     the total of the obligation allotments under subparagraph 
     (B)) for the fiscal year, to
       ``(ii) the pool amount (less the sum of the outlay 
     allotments for the territories) for such fiscal year.
       ``(B) Territories.--The obligation allotment for each of 
     the Commonwealths and territories for a fiscal year is the 
     outlay allotment for such Commonwealth or territory (as 
     determined under subsection (c)(5)) for the fiscal year 
     divided by the payout adjustment factor for the fiscal year 
     (as defined in paragraph (3)(B)).
       ``(C) Transitional rule for fiscal year 1996.--
       ``(i) In general.--The obligation amount for fiscal year 
     1996 for any State (including the District, a Commonwealth, 
     or territory) is determined according to the formula: A=(B-
     C)/D, where--

       ``(I) `A' is the obligation amount for such State;
       ``(II) `B' is the outlay allotment of such State for fiscal 
     year 1996, as determined under subsection (c);
       ``(III) `C' is the amount of the pre-enactment-obligation 
     outlays (as established for such State under clause (ii)); 
     and
       ``(IV) `D' is the payout adjustment factor for such fiscal 
     year (as defined in paragraph (3)(B)).

       ``(ii) Pre-enactment-obligation outlay amounts.--Within 30 
     days after the date of the enactment of this title, the 
     Secretary shall estimate (based on the best data available) 
     and publish in the Federal Register the amount of the pre-
     enactment-obligation outlays (as defined in clause (iv)) for 
     each State (including the District, Commonwealths, and 
     territories). The total of such amounts shall equal the 
     dollar amount specified in paragraph (3)(C)(ii).
       ``(iii) Agreement.--The submission of a MediGrant plan by a 
     State under this title is deemed to constitute the State's 
     acceptance of the obligation allotment limitations under this 
     subsection (including the formula for computing the amount of 
     such obligation allotment).
       ``(iv) Pre-enactment-obligation outlays defined.--In this 
     subsection, the term `pre-enactment-obligation outlays' 
     means, for a State, the outlays of the Federal Government 
     that result from obligations that have been incurred under 
     title XIX with respect to the State before the date of the 
     enactment of this title, but for which payments to States 
     have not been made as of such date of enactment.
       ``(D) Adjustment to reflect adoption of alternative growth 
     formula.--Any State that has elected an alternative growth 
     formula under subsection (c)(4) which increases or decreases 
     the dollar amount of an outlay allotment for a fiscal year is 
     deemed to have increased or decreased, respectively, its 
     obligation amount for such fiscal year by the amount of such 
     increase or decrease.
       ``(b) Pool of Available Funds.--
       ``(1) In general.--For purposes of this section, the `pool 
     amount' under this subsection for--
       ``(A) fiscal year 1996 is $95,662,990,500;
       ``(B) fiscal year 1997 is $102,748,012,797;

[[Page 1757]]

       ``(C) fiscal year 1998 is $107,268,354,400;
       ``(D) fiscal year 1999 is $111,826,877,512;
       ``(E) fiscal year 2000 is $116,472,575,350;
       ``(F) fiscal year 2001 is $121,311,325,403;
       ``(G) fiscal year 2002 is $126,351,055,338; and
       ``(H) each subsequent fiscal year is the pool amount under 
     this paragraph for the previous fiscal year increased by the 
     lesser of 4.1546 percent or the annual percentage increase in 
     the consumer price index for all urban consumers (U.S. city 
     average) for the 12-month period ending in June before the 
     beginning of that subsequent fiscal year.
       ``(2) National medigrant growth percentage.--For purposes 
     of this section for a fiscal year (beginning with fiscal year 
     1997), the `national MediGrant growth percentage' is the 
     percentage by which--
       ``(A) the pool amount under paragraph (1) for the fiscal 
     year, exceeds
       ``(B) such pool amount for the previous fiscal year.
       ``(c) State Outlay Allotments.--
       ``(1) Fiscal year 1996.--
       ``(A) In general.--For each of the 50 States and the 
     District of Columbia, the amount of the State outlay 
     allotment under this subsection for fiscal year 1996 is, 
     subject to paragraph (4), equal to--
       ``(i) the total amount of Federal expenditures made to the 
     State under title XIX for the 4 quarters in fiscal year 1994, 
     increased by
       ``(ii) the percentage by which (I) $95,529,490,500 (which 
     represents the total amount of outlay allotments for such 
     States and District for fiscal year 1996), exceeds (II) 
     $83,213,431,458 (which represents Federal medicaid 
     expenditures for such States and District for fiscal year 
     1994).
       ``(B) Computation of expenditures.--The amount of Federal 
     expenditures described in subparagraph (A)(i) shall be 
     computed, using data reported on the HCFA Form 64 as of 
     September 1, 1995, based on--
       ``(i) the amount reported on line 11, or
       ``(ii) on the amount reported on line 6 multiplied by the 
     ratio of (I) the sum of the amounts so reported on line 11 of 
     such Form for fiscal year 1994 for the 50 States and the 
     District of Columbia, to (II) the sum of the amounts so 
     reported on line 6 of such Form for fiscal year 1994 for such 
     States and District,
     whichever is greater.
       ``(C) Limitation on adjustment.--The amount computed under 
     subparagraph (B) shall not be subject to adjustment (based on 
     any subsequent disallowances or otherwise).
       ``(2) Computation of state outlay allotments.--
       ``(A) In general.--Subject to the succeeding provisions of 
     this subsection, the amount of the State outlay allotment 
     under this subsection for one of the 50 States and the 
     District of Columbia for a fiscal year (beginning with fiscal 
     year 1997) is equal to the product of--
       ``(i) the needs-based amount determined under subparagraph 
     (B) for the State for the fiscal year, and
       ``(ii) the scalar factor described in subparagraph (C) for 
     the fiscal year.
       ``(B) Needs-based amount.--The needs-based amount under 
     this subparagraph for a State for a fiscal year is equal to 
     the product of--
       ``(i) the State's aggregate expenditure need for the fiscal 
     year (as determined under subsection (d)), and
       ``(ii) the State's old Federal medical assistance 
     percentage (as defined in section 2122(d)) for the previous 
     fiscal year (or, in the case of fiscal year 1997, the Federal 
     medical assistance percentage determined under section 
     1905(b) for fiscal year 1996).
       ``(C) Scalar factor.--The scalar factor under this 
     subparagraph for a fiscal year is such proportion so that, 
     when it is applied under subparagraph (A)(ii) for the fiscal 
     year (taking into account the floors and ceilings under 
     paragraph (3)), the total of the outlay allotments under this 
     subsection for all the 50 States and the District of Columbia 
     for the fiscal year (not taking into account any increase in 
     an outlay allotment for a fiscal year attributable to the 
     election of an alternative growth formula under paragraph 
     (4)) is equal to the amount by which (i) the pool amount for 
     the fiscal year (as determined under subsection (b)), exceeds 
     (ii) the sum of the outlay allotments provided under 
     paragraph (5) for the Commonwealths and territories for the 
     fiscal year.
       ``(3) Floors and ceilings.--
       ``(A) Floors.--In no case shall the amount of the State 
     outlay allotment under paragraph (2) for a fiscal year be 
     less than the following:
       ``(i) Floor based on previous year's outlay allotment.--
     Subject to clause (ii)--

       ``(I) Fiscal year 1997.--For fiscal year 1997, 103.5 
     percent of the amount of the State outlay allotment under 
     this subsection for fiscal year 1996.
       ``(II) Fiscal year 1998.--For fiscal year 1998, 103 percent 
     of the amount of the State outlay allotment under this 
     subsection for fiscal year 1997.
       ``(III) Fiscal year 1999.--For fiscal year 1999, 102.5 
     percent of the amount of the State outlay allotment under 
     this subsection for fiscal year 1998.
       ``(IV) Subsequent fiscal years.--For a fiscal year after 
     1999, 102 percent of the amount of the State outlay allotment 
     under this subsection for the previous fiscal year.

       ``(ii) Floor based on outlay allotment growth rate in first 
     year.--Beginning with fiscal year 1998, in the case of a 
     State for which the outlay allotment under this subsection 
     for fiscal year 1997 exceeded its outlay allotment under this 
     subsection for the previous fiscal year by--

       ``(I) more than 120 percent of the national MediGrant 
     growth percentage for fiscal year 1997, 104 percent of the 
     amount of the State outlay allotment under this subsection 
     for the previous fiscal year; or
       ``(II) less than 120 percent (but more than 75 percent) of 
     the national MediGrant growth percentage for fiscal year 
     1997, 103 percent of the amount of the State outlay allotment 
     under this subsection for the previous fiscal year.

       ``(B) Ceilings.--
       ``(i) In general.--In no case shall the amount of the State 
     outlay allotment under paragraph (2) for a fiscal year be 
     greater than the product of--

       ``(I) the State outlay allotment under this subsection for 
     the State for the preceding fiscal year, and
       ``(II) the factor specified in clause (ii) (or, if 
     applicable, in clause (iii)) for the fiscal year.

       ``(ii) Factor described.--The factor described in this 
     clause for--

       ``(I) fiscal year 1997 is 1.09, and
       ``(II) each subsequent fiscal year is 1.0533.

       ``(iii) Special rule.--For a fiscal year after fiscal year 
     1997, in the case of a State (among the 50 States and the 
     District of Columbia) that is one of the 10 States with the 
     lowest Federal MediGrant spending per resident-in-poverty 
     rates (as determined under clause (iv)) for the fiscal year, 
     the factor that shall be applied under clause (i)(II) shall 
     be the following:

       ``(I) For each of fiscal years 1998 and 1999, 1.06.
       ``(II) For fiscal year 2000, 1.060657.
       ``(III) For fiscal year 2001, 1.061488.
       ``(IV) For any subsequent fiscal year, 1.062319.

       ``(iv) Determination of federal medigrant spending per 
     resident-in-poverty rate.--For purposes of clause (iii), the 
     `Federal MediGrant spending per resident-in-poverty rate' for 
     a State for a fiscal year is equal to--

       ``(I) the State's outlay allotment under this subsection 
     for the previous fiscal year (determined without regard to 
     paragraph (4)), divided by
       ``(II) the average annual number of residents of the State 
     in poverty (as defined in subsection (d)(2)) with respect to 
     the fiscal year.

       ``(4) Election of alternative growth formula.--
       ``(A) Election.--In order to reduce variations in increases 
     in outlay allotments over time, any of the 50 States or the 
     District of Columbia may elect (by notice provided to the 
     Secretary by not later than April 1, 1996) to adopt an 
     alternative growth rate formula under this paragraph for the 
     determination of the State's outlay allotment in fiscal year 
     1996 and for the increase in the amount of such allotment in 
     subsequent fiscal years.
       ``(B) Formula.--The alternative growth formula under this 
     paragraph may be any formula under which a portion of the 
     State outlay allotment for fiscal year 1996 under paragraph 
     (1) is deferred and applied to increase the amount of its 
     outlay allotment for one or more subsequent fiscal years, so 
     long as the total amount of such increases for all such 
     subsequent fiscal years does not exceed the amount of the 
     outlay allotment deferred from fiscal year 1996.
       ``(5) Commonwealths and territories.--The outlay allotment 
     for each of the Commonwealths and territories for a fiscal 
     year is the maximum amount that could have been certified 
     under section 1108(c) with respect to the Commonwealth or 
     territory for the fiscal year with respect to title XIX, if 
     the national MediGrant growth percentage (as determined under 
     subsection (b)(2)) for the fiscal year had been substituted 
     (beginning with fiscal year 1997) for the percentage increase 
     referred to in section 1108(c)(1)(B).
       ``(d) State Aggregate Expenditure Need Determined.--
       ``(1) In general.--For purposes of subsection (c), the 
     `State aggregate expenditure need' for a State for a fiscal 
     year is equal to the product of the following 4 factors:
       ``(A) Residents in poverty.--The average annual number of 
     residents in poverty of the State with respect to the fiscal 
     year (as determined under paragraph (2)).
       ``(B) Case mix index.--The average of the case mix indexes 
     for the State (as determined under paragraph (3)) for the 3 
     most recent fiscal years for which data are available, but in 
     no case less than .9 or greater than 1.15.
       ``(C) Input cost index.--The average of the input cost 
     indexes for the State (as determined under paragraph (4)) for 
     the 3 most recent fiscal years for which data are available.
       ``(D) National average spending per resident in poverty.--
     The national average spending per resident in poverty (as 
     determined under paragraph (5)).
       ``(2) Residents in poverty.--In this section--
       ``(A) In general.--The term `average annual number of 
     residents in poverty' means, with respect to a State and a 
     fiscal year, the average annual number of residents in 
     poverty (as defined in subparagraph (B)) in the State (based 
     on data made generally available by the Bureau of the Census 
     from the Current Population Survey) for the most recent 3-
     calendar-year period (ending before the fiscal year) for 
     which such data are available.
       ``(B) Resident in poverty defined.--The term `resident in 
     poverty' means an individual whose family income does not 
     exceed the poverty threshold (as such terms are defined by 
     the Office of Management and Budg

[[Page 1758]]

     et and are generally interpreted and applied by the Bureau of 
     the Census for the year involved).
       ``(3) Case mix index.--
       ``(A) In general.--In this subsection, the `case mix index' 
     for a State for a fiscal year is equal to--
       ``(i) the sum of--

       ``(I) the projected per recipient expenditures with respect 
     to elderly individuals in the State for the fiscal year 
     (determined under subparagraph (B)),
       ``(II) the projected per recipient expenditures with 
     respect to the blind and disabled individuals in the State 
     for the fiscal year (determined under subparagraph (C)), and
       ``(III) the projected per recipient expenditures with 
     respect to other individuals in the State (determined under 
     subparagraph (D));

     divided by--
       ``(ii) the national average spending per recipient 
     determined under subparagraph (E) for the fiscal year 
     involved.
       ``(B) Projected per recipient expenditures for the 
     elderly.--For purposes of subparagraph (A)(I)(i), the 
     `projected per recipient expenditures with respect to elderly 
     individuals' in a State for a fiscal year is equal to the 
     product of--
       ``(i) the national average per recipient expenditures under 
     this title in the 50 States and the District of Columbia for 
     the most recent fiscal year for which data are available for 
     individuals who are 65 years of age or older, and
       ``(ii) the proportion, of all individuals who received 
     medical assistance under this title in the State in the most 
     recent fiscal year referred to in clause (i), that were 
     individuals described in such clause.
       ``(C) Projected per recipient expenditures for the blind 
     and disabled.--For purposes of subparagraph (A)(i)(II), the 
     `projected per recipient expenditures with respect to blind 
     and disabled individuals' in a State for a fiscal year is 
     equal to the product of--
       ``(i) the national average per recipient expenditures under 
     this title in the 50 States and the District of Columbia for 
     the most recent fiscal year for which data are available for 
     individuals who are eligible for medical assistance because 
     they are blind or disabled and under 65 years of age, and
       ``(ii) the proportion, of all individuals who received 
     medical assistance under this title in the State in the most 
     recent fiscal year referred to in clause (i), that were 
     individuals described in such clause.
       ``(D) Projected per recipient expenditures for other 
     individuals.--For purposes of subparagraph (A)(i)(III), the 
     `projected per recipient expenditures with respect to other 
     individuals' in a State for a fiscal year is equal to the 
     product of--
       ``(i) the national average per recipient expenditures under 
     this title in the 50 States and the District of Columbia for 
     the most recent fiscal year for which data are available for 
     individuals who are not described in subparagraph (B)(i) or 
     (C)(i), and
       ``(ii) the proportion, of all individuals who received 
     medical assistance under this title in the State in the most 
     recent fiscal year referred to in clause (i), that were 
     individuals described in such clause.
       ``(E) National average spending per recipient.--For 
     purposes of this paragraph, the `national average 
     expenditures per recipient' for a fiscal year is equal to the 
     sum of--
       ``(i) the product of (I) the national average described in 
     subparagraph (B)(i), and (II) the proportion, of all 
     individuals who received medical assistance under this title 
     in any of the 50 States or the District of Columbia in the 
     fiscal year referred to in such subparagraph, who are 
     described in such subparagraph;
       ``(ii) the product of (I) the national average described in 
     subparagraph (C)(i), and (II) the proportion, of all 
     individuals who received medical assistance under this title 
     in any of the 50 States or the District of Columbia in the 
     fiscal year referred to in such subparagraph, who are 
     described in such subparagraph; and
       ``(iii) the product of (I) the national average described 
     in subparagraph (D)(i), and (II) the proportion, of all 
     individuals who received medical assistance under this title 
     in any of the 50 States or the District of Columbia in the 
     fiscal year referred to in such subparagraph, who are 
     described in such subparagraph.
       ``(F) Determination of national averages and proportions.--
       ``(i) In general.--The national averages per recipient and 
     the proportions referred to in clauses (i) and (ii), 
     respectively, of subparagraphs (B), (C), and (D) and 
     subparagraph (E) shall be determined by the Secretary using 
     the most recent data available.
       ``(ii) Use of medicaid data.--If for a fiscal year there is 
     inadequate data to compute such averages and proportions 
     based on expenditures and numbers of individuals receiving 
     medical assistance under this title, the Secretary may 
     compute such averages based on expenditures and numbers of 
     such individuals under title XIX for the most recent fiscal 
     year for which data are available and, for this purpose--

       ``(I) any reference in subparagraph (B)(i) to `individuals 
     65 years of age or older' is deemed a reference to 
     `individuals whose eligibility for medical assistance is 
     based on being 65 years of age or older',
       ``(II) the reference in subparagraph (C)(i) to `and under 
     65 years of age' shall be considered to be deleted, and
       ``(III) individuals whose basis for eligibility for medical 
     assistance was reported as unknown shall not be counted as 
     individuals under subparagraph (D)(i).

       ``(4) Input cost index.--
       ``(A) In general.--In this section, the `input cost index' 
     for a State for a fiscal year is the sum of--
       ``(i) 0.15, and
       ``(ii) 0.85 multiplied by the ratio of (I) the annual 
     average wages for hospital employees in the State for the 
     fiscal year (as determined under subparagraph (B)), to (II) 
     the annual average wages for hospital employees in the 50 
     States and the District of Columbia for such year (as 
     determined under such subparagraph).
       ``(B) Determination of annual average wages of hospital 
     employees.--The Secretary shall provide for the determination 
     of annual average wages for hospital employees in a State 
     and, collectively, in the 50 States and the District of 
     Columbia for a fiscal year based on the area wage index 
     applicable to hospitals under 1886(d)(2)(E) (or, if such 
     index no longer exists, a comparable index of hospital wages) 
     for discharges occurring during the fiscal year involved.
       ``(5) National average spending per resident in poverty.--
     For purposes of this subsection, the `national average 
     spending per resident in poverty'--
       ``(A) for fiscal year 1997 is equal to--
       ``(i) the sum (for each of the 50 States and the District 
     of Columbia) of the total of the Federal and State 
     expenditures under title XIX for calendar quarters in fiscal 
     year 1994, increased by the percentage specified in 
     subsection (c)(1)(A)(ii), divided by
       ``(ii) the sum of the number of residents in poverty (as 
     defined in paragraph (2)(A)) for all of the 50 States and the 
     District of Columbia for fiscal year 1994;
       ``(B) for a succeeding fiscal year is equal to the national 
     average spending per resident in poverty under this paragraph 
     for the preceding fiscal year increased by the national 
     MediGrant growth percentage (as defined in subsection (b)(2)) 
     for the fiscal year involved.
       ``(e) Publication of Obligation and Outlay Allotments.--
       ``(1) Notice of preliminary allotments.--Not later than 
     April 1 before the beginning of each fiscal year (beginning 
     with fiscal year 1997), the Secretary shall initially 
     compute, after consultation with the Comptroller General, and 
     publish in the Federal Register notice of the proposed 
     obligation and outlay allotments for each State under this 
     section (not taking into account subsection (a)(2)(B)) for 
     the fiscal year. The Secretary shall include in the notice a 
     description of the methodology and data used in deriving such 
     allotments for the year.
       ``(2) Review by gao.--The Comptroller General shall submit 
     to Congress by not later than May 15 of each such fiscal 
     year, a report analyzing such allotments and the extent to 
     which they comply with the precise requirements of this 
     section.
       ``(3) Notice of final allotments.--Not later than July 1 
     before the beginning of each such fiscal year, the Secretary, 
     taking into consideration the analysis contained in the 
     report of the Comptroller General under paragraph (2), shall 
     compute and publish in the Federal Register notice of the 
     final allotments under this section (both taking into account 
     and not taking into account subsection (a)(2)(B)) for the 
     fiscal year. The Secretary shall include in the notice a 
     description of any changes in such allotments from the 
     initial allotments published under paragraph (1) for the 
     fiscal year and the reasons for such changes. Once published 
     under this paragraph, the Secretary is not authorized to 
     change such allotments.
       ``(4) GAO report on final allotments.--The Comptroller 
     General shall submit to Congress by not later than August 1 
     of each such fiscal year, a report analyzing the final 
     allotments under paragraph (3) and the extent to which they 
     comply with the precise requirements of this section.
       ``(f) Supplemental Allotment for Emergency Health Care 
     Services to Certain Aliens.--
       ``(1) In general.--Notwithstanding the previous provisions 
     of this section, the amount of the State outlay allotment for 
     a fiscal year for each supplemental allotment eligible State 
     shall be increased by the amount of the supplemental outlay 
     allotment provided under paragraph (2) for the State for that 
     year. The amount of such increased allotment may only be used 
     for the purpose of providing medical assistance for care and 
     services for aliens described in paragraph (1) of section 
     2123(e) and for which the exception described in paragraph 
     (2) of such section applies. Section 2122(f)(3) shall apply 
     to such assistance in the same manner as it applies to 
     medical assistance described in such section.
       ``(2) Supplemental outlay allotment.--
       ``(A) In general.--For purposes of paragraph (1), the 
     amount of the supplemental outlay allotment for a 
     supplemental allotment eligible State for a fiscal year is 
     equal to the supplemental allotment ratio (as defined in 
     subparagraph (C)) multiplied by the supplemental pool amount 
     (specified in subparagraph (D)) for the fiscal year.
       ``(B) Supplemental allotment eligible state.--In this 
     subsection, the term `supplemental allotment eligible State' 
     means one of the 12 States with the highest number of 
     undocumented aliens of all the States.
       ``(C) Supplemental allotment ratio.--In this paragraph, the 
     `supplemental allotment ratio' for a State is the ratio of--
       ``(i) the number of undocumented aliens for the State, to
       ``(ii) the sum of such numbers for all supplemental 
     allotment eligible States.

[[Page 1759]]

       ``(D) Supplemental pool amount.--In this paragraph, the 
     `supplemental pool amount'--
       ``(i) for each of fiscal years 1996 through 2002, is an 
     amount so that, if the amount were increased for each such 
     fiscal year beginning with fiscal year 1996 by the national 
     MediGrant growth percentage for the year involved, the total 
     of such amounts for all such fiscal years would be $3 
     billion; and
       ``(ii) for a subsequent year is the supplemental pool 
     amount for the previous fiscal year increased by the national 
     MediGrant growth percentage for such subsequent year.
       ``(E) Determination of number.--The number of undocumented 
     aliens in a State under this paragraph shall be determined 
     based on estimates of the resident illegal alien population 
     residing in each State prepared by the Statistics Division of 
     the Immigration and Naturalization Service as of October 1992 
     (or as of such later date if such date is at least 1 year 
     before the beginning of the fiscal year involved).
       ``(3) Treatment for obligation purposes.--For purposes of 
     computing obligation allotments under subsection (a)--
       ``(A) the amount of the supplemental pool amount for a 
     fiscal year shall be added to the pool amount under 
     subsection (b) for that fiscal year, and
       ``(B) the amount supplemental allotment to a State provided 
     under paragraph (1) shall be added to the outlay allotment of 
     the State for that fiscal year.
       ``(4) Sequence of obligations.--For purposes of carrying 
     out this title, payments to a supplemental allotment eligible 
     State under section 2122 that are attributable to 
     expenditures for medical assistance described in the second 
     sentence of paragraph (1) shall first be counted toward the 
     supplemental outlay allotment provided under this subsection, 
     rather than toward the outlay allotment otherwise provided 
     under this section.
       ``(g) Special Adjustments for Fiscal Year 1996.--
     Notwithstanding the previous provisions of this section--
       ``(1) the State outlay allotment for Oregon for fiscal year 
     1996 is increased by $155,682,700, and
       ``(2) the State outlay allotment for Tennessee for fiscal 
     year 1996 is increased by $195,468,000.
     The increases provided under this subsection shall not apply 
     to or affect the computation of State outlay allotments of 
     any other States and shall not apply for any fiscal year 
     other than fiscal year 1996.

     ``SEC. 2122. PAYMENTS TO STATES.

       ``(a) Amount of Payment.--From the allotment of a State 
     under section 2121 for a fiscal year, subject to the 
     succeeding provisions of this title, the Secretary shall pay 
     to each State which has a MediGrant plan approved under part 
     E, for each quarter in the fiscal year--
       ``(1) an amount equal to the applicable Federal medical 
     assistance percentage (as defined in subsection (c)) of the 
     total amount expended during such quarter as medical 
     assistance under the plan; plus
       ``(2) an amount equal to the applicable Federal medical 
     assistance percentage of the total amount expended during 
     such quarter for medically-related services (as defined in 
     section 2112(e)(2)); plus
       ``(3) subject to section 2123(c)--
       ``(A) an amount equal to 90 percent of the amounts expended 
     during such quarter for the design, development, and 
     installation of information systems and for providing 
     incentives to promote the enforcement of medical support 
     orders, plus
       ``(B) an amount equal to 75 percent of the amounts expended 
     during such quarter for medical personnel, administrative 
     support of medical personnel, operation and maintenance of 
     information systems, modification of information systems, 
     quality assurance activities, utilization review, medical and 
     peer review, anti-fraud activities, independent evaluations, 
     coordination of benefits, and meeting reporting requirements 
     under this title, plus
       ``(C) an amount equal to 50 percent of so much of the 
     remainder of the amounts expended during such quarter as are 
     expended by the State in the administration of the State 
     plan.
       ``(b) Payment Process.--
       ``(1) Quarterly estimates.--Prior to the beginning of each 
     quarter, the Secretary shall estimate the amount to which a 
     State will be entitled under subsection (a) for such quarter, 
     such estimates to be based on (A) a report filed by the State 
     containing its estimate of the total sum to be expended in 
     such quarter in accordance with the provisions of such 
     subsections, and stating the amount appropriated or made 
     available by the State and its political subdivisions for 
     such expenditures in such quarter, and if such amount is less 
     than the State's proportionate share of the total sum of such 
     estimated expenditures, the source or sources from which the 
     difference is expected to be derived, and (B) such other 
     investigation as the Secretary may find necessary.
       ``(2) Payment.--
       ``(A) In general.--The Secretary shall then pay to the 
     State, in such installments as the Secretary may determine 
     and in accordance with section 6503(a) of title 31, United 
     States Code, the amount so estimated, reduced or increased to 
     the extent of any overpayment or underpayment which the 
     Secretary determines was made under this section (or section 
     1903) to such State for any prior quarter and with respect to 
     which adjustment has not already been made under this 
     subsection (or under section 1903(d)).
       ``(B) Treatment as overpayments.--Expenditures for which 
     payments were made to the State under subsection (a) shall be 
     treated as an overpayment to the extent that the State or 
     local agency administering such plan has been reimbursed for 
     such expenditures by a third party pursuant to the provisions 
     of its plan in compliance with section 2135.
       ``(C) Recovery of overpayments.--For purposes of this 
     subsection, when an overpayment is discovered, which was made 
     by a State to a person or other entity, the State shall have 
     a period of 60 days in which to recover or attempt to recover 
     such overpayment before adjustment is made in the Federal 
     payment to such State on account of such overpayment. Except 
     as otherwise provided in subparagraph (D), the adjustment in 
     the Federal payment shall be made at the end of the 60 days, 
     whether or not recovery was made.
       ``(D) No adjustment for uncollectables.--In any case where 
     the State is unable to recover a debt which represents an 
     overpayment (or any portion thereof) made to a person or 
     other entity on account of such debt having been discharged 
     in bankruptcy or otherwise being uncollectable, no adjustment 
     shall be made in the Federal payment to such State on account 
     of such overpayment (or portion thereof).
       ``(3) Federal share of recoveries.--The pro rata share to 
     which the United States is equitably entitled, as determined 
     by the Secretary, of the net amount recovered during any 
     quarter by the State or any political subdivision thereof 
     with respect to medical assistance furnished under the State 
     plan shall be considered an overpayment to be adjusted under 
     this subsection.
       ``(4) Timing of obligation of funds.--Upon the making of 
     any estimate by the Secretary under this subsection, any 
     appropriations available for payments under this section 
     shall be deemed obligated.
       ``(5) Disallowances.--In any case in which the Secretary 
     estimates that there has been an overpayment under this 
     section to a State on the basis of a claim by such State that 
     has been disallowed by the Secretary under section 1116(d), 
     and such State disputes such disallowance, the amount of the 
     Federal payment in controversy shall, at the option of the 
     State, be retained by such State or recovered by the 
     Secretary pending a final determination with respect to such 
     payment amount. If such final determination is to the effect 
     that any amount was properly disallowed, and the State chose 
     to retain payment of the amount in controversy, the Secretary 
     shall offset, from any subsequent payments made to such State 
     under this title, an amount equal to the proper amount of the 
     disallowance plus interest on such amount disallowed for the 
     period beginning on the date such amount was disallowed and 
     ending on the date of such final determination at a rate 
     (determined by the Secretary) based on the average of the 
     bond equivalent of the weekly 90-day treasury bill auction 
     rates during such period.
       ``(c) Applicable Federal Medical Assistance Percentage 
     Defined.--In this section, except as provided in subsection 
     (f), the term `applicable Federal medical assistance 
     percentage' means, with respect to one of the 50 States or 
     the District of Columbia, at the State's or District's 
     option--
       ``(1) the old Federal medical assistance percentage (as 
     determined in subsection (d)), or
       ``(2) the new Federal medical assistance percentage (as 
     determined under subsection (e)) or, if less, the old Federal 
     medical assistance percentage plus 10 percentage points.
       ``(d) Old Federal Medical Assistance Percentage.--
       ``(1) In general.--Except as provided in paragraph (2) and 
     subsection (f), the term `old Federal medical assistance 
     percentage' for any State is 100 percent less the State 
     percentage; and the State percentage is that percentage which 
     bears the same ratio to 45 percent as the square of the per 
     capita income of such State bears to the square of the per 
     capita income of the continental United States (including 
     Alaska) and Hawaii.
       ``(2) Limitation on range.--In no case shall the old 
     Federal medical assistance percentage be less than 50 percent 
     or more than 83 percent.
       ``(3) Promulgation.--The old Federal medical assistance 
     percentage for any State shall be determined and promulgated 
     in accordance with the provisions of section 1101(a)(8)(B).
       ``(e) New Federal Medical Assistance Percentage Defined.--
       ``(1) In general.--
       ``(A) Term defined.--Except as provided in paragraph (3) 
     and subsection (f), the term `new Federal medical assistance 
     percentage' means, for each of the 50 States and the District 
     of Columbia, 100 percent reduced by the product 0.39 and the 
     ratio of--
       ``(i)(I) for each of the 50 States, the total taxable 
     resources (TTR) ratio of the State specified in subparagraph 
     (B), or
       ``(II) for the District of Columbia, the per capita income 
     ratio specified in subparagraph (C),
     to--
       ``(ii) the aggregate expenditure need ratio of the State or 
     District, as described in subparagraph (D).
       ``(B) Total taxable resources (ttr) ratio.--For purposes of 
     subparagraph (A)(i)(I), the total taxable resources (TTR) 
     ratio for each of the 50 States is--
       ``(i) an amount equal to the most recent 3-year average of 
     the total taxable resources (TTR) of the State, as determined 
     by the Secretary of the Treasury, divided by

[[Page 1760]]

       ``(ii) an amount equal to the sum of the 3-year averages 
     determined under clause (i) for each of the 50 States.
       ``(C) Per capita income ratio.--For purposes of 
     subparagraph (A)(i)(II), the per capita income ratio of the 
     District of Columbia is--
       ``(i) an amount equal to the most recent 3-year average of 
     the total personal income of the District of Columbia, as 
     determined in accordance with the provisions of section 
     1101(a)(8)(B), divided by
       ``(ii) an amount equal to the total personal income of the 
     continental United States (including Alaska) and Hawaii, as 
     determined under section 1101(a)(8)(B).
       ``(D) Aggregate expenditure need ratio.--For purposes of 
     subparagraph (A), with respect to each of the 50 States and 
     the District of Columbia for a fiscal year, the aggregate 
     expenditure need ratio is--
       ``(i) the State aggregate expenditure need (as defined in 
     section 2121(d)) for the State for the fiscal year, divided 
     by
       ``(ii) the such of such State aggregate expenditure needs 
     for the 50 States and the District of Columbia for the fiscal 
     year.
       ``(2) Limitation on range.--Except as provided in 
     subsection (f), the new Federal medical assistance percentage 
     shall in no case be less than 40 percent or greater than 83 
     percent.
       ``(3) Promulgation.--The new Federal medical assistance 
     percentage for any State shall be promulgated in a timely 
     manner consistent with the promulgation of the old Federal 
     medical assistance percentage under section 1101(a)(8)(B).
       ``(f) Special Rules.--For purposes of this title--
       ``(1) Commonwealths and territories.--In the case of Puerto 
     Rico, the Virgin Islands, Guam, the Northern Mariana Islands, 
     and American Samoa, the old and new Federal medical 
     assistance percentages are 50 percent.
       ``(2) Indian health service facilities.--
       ``(A) In general.--The old and new Federal medical 
     assistance percentages shall be 100 percent with respect to 
     the amounts expended as medical assistance for services which 
     are received through a facility described in subparagraph (B) 
     of an Indian tribe or tribal organization or through an 
     Indian Health Service facility whether operated by the Indian 
     Health Service or by an Indian tribe or tribal organization 
     (as defined in section 4 of the Indian Health Care 
     Improvement Act).
       ``(B) Facility described.--For purposes of subparagraph 
     (A), a facility described in this subparagraph is a facility 
     of an Indian tribe if--
       ``(i) the facility is located in a State which, as of the 
     date of the enactment of this title, was not operating its 
     State plan under title XIX pursuant to a Statewide waiver 
     approved under section 1115,
       ``(ii) the facility is not an Indian Health Service 
     facility,
       ``(iii) the tribe owns at least 2 such facilities, and
       ``(iv) the tribe has at least 50,000 members (as of the 
     date of the enactment of this title).
       ``(3) No state matching required for certain 
     expenditures.--In applying subsection (a)(1) with respect to 
     medical assistance provided to unlawful aliens pursuant to 
     the exception specified in section 2123(e)(2), payment shall 
     be made for the amount of such assistance without regard to 
     any need for a State match.

     ``SEC. 2123. LIMITATION ON USE OF FUNDS; DISALLOWANCE.

       ``(a) In General.--Funds provided to a State under this 
     title shall only be used to carry out the purposes of this 
     title.
       ``(b) Disallowances for Excluded Providers.--
       ``(1) In general.--Payment shall not be made to a State 
     under this part for expenditures for items and services 
     furnished--
       ``(A) by a provider who was excluded from participation 
     under title V, XVIII, or XX or under this title pursuant to 
     section 1128, 1128A, 1156, or 1842(j)(2), or
       ``(B) under the medical direction or on the prescription of 
     a physician who was so excluded, if the provider of the 
     services knew or had reason to know of the exclusion.
       ``(2) Exception for emergency services.--Paragraph (1) 
     shall not apply to emergency items or services, not including 
     hospital emergency room services.
       ``(c) Limitations.--
       ``(1) In general.--No Federal financial assistance is 
     available for expenditures under the MediGrant plan for--
       ``(A) medically-related services for a quarter to the 
     extent such expenditures exceed 5 percent of the total 
     expenditures under the plan for the quarter; or
       ``(B) total administrative expenses (other than expenses 
     described in paragraph (2) during the first 8 quarters in 
     which the plan is in effect under this title) for quarters in 
     a fiscal year to the extent such expenditures exceed the sum 
     of $20,000,000 plus 10 percent of the total expenditures 
     under the plan for the year.
       ``(2) Administrative expenses not subject to limitation.--
     The administrative expenses referred to in this paragraph are 
     expenditures under the MediGrant plan for the following 
     activities:
       ``(A) Quality assurance.
       ``(B) The development and operation of the certification 
     program for nursing facilities and intermediate care 
     facilities for the mentally retarded under section 
     2137(a)(2).
       ``(C) Utilization review activities, including medical 
     activities and activities of peer review organizations.
       ``(D) Inspection and oversight of providers and capitated 
     health care organizations.
       ``(E) Anti-fraud activities.
       ``(F) Independent evaluations.
       ``(G) Activities required to meet reporting requirements 
     under this title.
       ``(d) Treatment of Third Party Liability.--No payment shall 
     be made to a State under this part for expenditures for 
     medical assistance provided for an individual under its 
     MediGrant plan to the extent that a private insurer (as 
     defined by the Secretary by regulation and including a group 
     health plan (as defined in section 607(1) of the Employee 
     Retirement Income Security Act of 1974), a service benefit 
     plan, and a health maintenance organization) would have been 
     obligated to provide such assistance but for a provision of 
     its insurance contract which has the effect of limiting or 
     excluding such obligation because the individual is eligible 
     for or is provided medical assistance under the plan.
       ``(e) Limitation on Payments to Emergency Services for 
     Nonlawful Aliens.--
       ``(1) In general.--Notwithstanding the preceding provisions 
     of this section, except as provided in paragraph (2), no 
     payment may be made to a State under this part for medical 
     assistance furnished to an alien who is not lawfully admitted 
     for permanent residence or otherwise permanently residing in 
     the United States under color of law.
       ``(2) Exception for emergency services.--Payment may be 
     made under this section for care and services that are 
     furnished to an alien described in paragraph (1) only if--
       ``(A) such care and services are necessary for the 
     treatment of an emergency medical condition of the alien,
       ``(B) such alien otherwise meets the eligibility 
     requirements for medical assistance under the MediGrant plan 
     (other than a requirement of the receipt of aid or assistance 
     under title IV, supplemental security income benefits under 
     title XVI, or a State supplementary payment), and
       ``(C) such care and services are not related to an organ 
     transplant procedure.
       ``(3) Emergency medical condition defined.--For purposes of 
     this subsection, the term `emergency medical condition' means 
     a medical condition (including emergency labor and delivery) 
     manifesting itself by acute symptoms of sufficient severity 
     (including severe pain) such that the absence of immediate 
     medical attention could reasonably be expected to result in--
       ``(A) placing the patient's health in serious jeopardy,
       ``(B) serious impairment to bodily functions, or
       ``(C) serious dysfunction of any bodily organ or part.
       ``(f) Limitation on Payment for Certain Outpatient 
     Prescription Drugs.--
       ``(1) In general.--No payment may be made to a State under 
     this part for medical assistance for covered outpatient drugs 
     (as defined in section 2175(i)(2)) of a manufacturer provided 
     under the MediGrant plan unless the manufacturer (as defined 
     in section 2175(i)(4)) of the drug--
       ``(A) has entered into a MediGrant master rebate agreement 
     with the Secretary under section 2175; and
       ``(B) is complying with the provisions of section 8126 of 
     title 38, United States Code, including the requirement of 
     entering into a master agreement with the Secretary of 
     Veterans Affairs under such section.
       ``(2) Construction.--Nothing in this subsection shall be 
     construed as requiring a State to participate in the 
     MediGrant master rebate agreement under section 2175.
       ``(3) Effect of subsequent amendments.--For purposes of 
     paragraph (1)(B), in determining whether a manufacturer is in 
     compliance with the requirements of section 8126 of title 38, 
     United States Code--
       ``(A) the Secretary shall not take into account any 
     amendments to such section that are enacted after the 
     enactment of title VI of the Veterans Health Care Act of 
     1992; and
       ``(B) a manufacturer is deemed to meet such requirements if 
     the manufacturer establishes to the satisfaction of the 
     Secretary that the manufacturer would comply (and has offered 
     to comply) with the provisions of section 8126 of title 38, 
     United States Code (as in effect immediately after the 
     enactment of the Veterans Health Care Act of 1992) and would 
     have entered into an agreement under such section (as such 
     section was in effect at such time), but for a legislative 
     change in such section after the date of the enactment of the 
     Veterans Health Care Act of 1992.
       ``(g) Limitation on Payment for Abortions.--
       ``(1) In general.--Payment shall not be made to a State 
     under this part for any amount expended under the MediGrant 
     plan to pay for any abortion or to assist in the purchase, in 
     whole or in part, of health benefit coverage that includes 
     coverage of abortion.
       ``(2) Exception.--Paragraph (1) shall not apply to an 
     abortion--
       ``(A) if the pregnancy is the result of an act of rape or 
     incest, or
       ``(B) in the case where a woman suffers from a physical 
     disorder, illness, or injury that would, as certified by a 
     physician, place the woman in danger of death unless an 
     abortion is performed.
       ``(h) Limitation on Payment for Assisting Deaths.--Payment 
     shall not be made to a State under this part for amounts 
     expended under the MediGrant plan to pay for, or to assist in 
     the purchase, in whole or in part, of health benefit coverage 
     that includes pay

[[Page 1761]]

     ment for any drug, biological product, or service which was 
     furnished for the purpose of causing, or assisting in 
     causing, the death, suicide, euthanasia, or mercy killing of 
     a person.

                ``Part D--Program Integrity and Quality

     ``SEC. 2131. USE OF AUDITS TO ACHIEVE FISCAL INTEGRITY.

       ``(a) Financial Audits of Program.--
       ``(1) In general.--Each MediGrant plan shall provide for an 
     annual audit of the State's expenditures from amounts 
     received under this title, in compliance with chapter 75 of 
     title 31, United States Code.
       ``(2) Verification audits.--If, after consultation with the 
     State and the Comptroller General and after a fair hearing, 
     the Secretary determines that a State's audit under paragraph 
     (1) was performed in substantial violation of chapter 75 of 
     title 31, United States Code, the Secretary may--
       ``(A) require that the State provide for a verification 
     audit in compliance with such chapter, or
       ``(B) conduct such a verification audit.
       ``(3) Availability of audit reports.--Within 30 days after 
     completion of each audit or verification audit under this 
     subsection, the State shall--
       ``(A) provide the Secretary with a copy of the audit 
     report, including the State's response to any recommendations 
     of the auditor, and
       ``(B) make the audit report available for public inspection 
     in the same manner as proposed MediGrant plan amendments are 
     made available under section 2105.
       ``(b) Fiscal Controls.--
       ``(1) In general.--With respect to the accounting and 
     expenditure of funds under this title, each State shall adopt 
     and maintain such fiscal controls, accounting procedures, and 
     data processing safeguards as the State deems reasonably 
     necessary to assure the fiscal integrity of the State's 
     activities under this title.
       ``(2) Consistency with generally accepted accounting 
     principles.--Such controls and procedures shall be generally 
     consistent with generally accepted accounting principles as 
     recognized by the Governmental Accounting Standards Board or 
     the Comptroller General.
       ``(c) Audits of Providers.--Each MediGrant plan shall 
     provide that the records of any entity providing items or 
     services for which payment may be made under the plan may be 
     audited as necessary to ensure that proper payments are made 
     under the plan.

     ``SEC. 2132. FRAUD PREVENTION PROGRAM.

       ``(a) Establishment.--Each MediGrant plan shall provide for 
     the establishment and maintenance of an effective program for 
     the detection and prevention of fraud and abuse by 
     beneficiaries, providers, and others in connection with the 
     operation of the program.
       ``(b) Program Requirements.--The program established 
     pursuant to subsection (a) shall include at least the 
     following requirements:
       ``(1) Disclosure of information.--Any disclosing entity (as 
     defined in section 1124(a)) receiving payments under the 
     MediGrant plan shall comply with the requirements of section 
     1124.
       ``(2) Supply of information.--An entity (other than an 
     individual practitioner or a group of practitioners) that 
     furnishes, or arranges for the furnishing of, an item or 
     service under the MediGrant plan shall supply upon request 
     specifically addressed to the entity by the Secretary or the 
     State agency the information described in section 1128(b)(9).
       ``(3) Exclusion.--
       ``(A) In general.--The MediGrant plan shall exclude any 
     specified individual or entity from participation in the plan 
     for the period specified by the Secretary when required by 
     the Secretary to do so pursuant to section 1128 or section 
     1128A, and provide that no payment may be made under the plan 
     with respect to any item or service furnished by such 
     individual or entity during such period.
       ``(B) Authority.--In addition to any other authority, a 
     State may exclude any individual or entity for purposes of 
     participating under the MediGrant plan for any reason for 
     which the Secretary could exclude the individual or entity 
     from participation in a program under title XVIII or under 
     section 1128, 1128A, or 1866(b)(2).
       ``(4) Notice.--The MediGrant plan shall provide that 
     whenever a provider of services or any other person is 
     terminated, suspended, or otherwise sanctioned or prohibited 
     from participating under the plan, the State agency 
     responsible for administering the plan shall promptly notify 
     the Secretary and, in the case of a physician, the State 
     medical licensing board of such action.
       ``(5) Access to information.--The MediGrant plan shall 
     provide that the State will provide information and access to 
     certain information respecting sanctions taken against health 
     care practitioners and providers by State licensing 
     authorities in accordance with section 2133.

     ``SEC. 2133. INFORMATION CONCERNING SANCTIONS TAKEN BY STATE 
                   LICENSING AUTHORITIES AGAINST HEALTH CARE 
                   PRACTITIONERS AND PROVIDERS.

       ``(a) Information Reporting Requirement.--The requirement 
     referred to in section 2132(b)(5) is that the State must 
     provide for the following:
       ``(1) Information reporting system.--The State must have in 
     effect a system of reporting the following information with 
     respect to formal proceedings (as defined by the Secretary in 
     regulations) concluded against a health care practitioner or 
     entity by any authority of the State (or of a political 
     subdivision thereof) responsible for the licensing of health 
     care practitioners (or any peer review organization or 
     private accreditation entity reviewing the services provided 
     by health care practitioners) or entities:
       ``(A) Any adverse action taken by such licensing authority 
     as a result of the proceeding, including any revocation or 
     suspension of a license (and the length of any such 
     suspension), reprimand, censure, or probation.
       ``(B) Any dismissal or closure of the proceedings by reason 
     of the practitioner or entity surrendering the license or 
     leaving the State or jurisdiction.
       ``(C) Any other loss of the license of the practitioner or 
     entity, whether by operation of law, voluntary surrender, or 
     otherwise.
       ``(D) Any negative action or finding by such authority, 
     organization, or entity regarding the practitioner or entity.
       ``(2) Access to documents.--The State must provide the 
     Secretary (or an entity designated by the Secretary) with 
     access to such documents of the authority described in 
     paragraph (1) as may be necessary for the Secretary to 
     determine the facts and circumstances concerning the actions 
     and determinations described in such paragraph for the 
     purpose of carrying out this Act.
       ``(b) Form of Information.--The information described in 
     subsection (a)(1) shall be provided to the Secretary (or to 
     an appropriate private or public agency, under suitable 
     arrangements made by the Secretary with respect to receipt, 
     storage, protection of confidentiality, and dissemination of 
     information) in such a form and manner as the Secretary 
     determines to be appropriate in order to provide for 
     activities of the Secretary under this Act and in order to 
     provide, directly or through suitable arrangements made by 
     the Secretary, information--
       ``(1) to agencies administering Federal health care 
     programs, including private entities administering such 
     programs under contract,
       ``(2) to licensing authorities described in subsection 
     (a)(1),
       ``(3) to State agencies administering or supervising the 
     administration of State health care programs (as defined in 
     section 1128(h)),
       ``(4) to utilization and quality control peer review 
     organizations described in part B of title XI and to 
     appropriate entities with contracts under section 
     1154(a)(4)(C) with respect to eligible organizations reviewed 
     under the contracts,
       ``(5) to State MediGrant fraud control units (as defined in 
     section 2134),
       ``(6) to hospitals and other health care entities (as 
     defined in section 431 of the Health Care Quality Improvement 
     Act of 1986), with respect to physicians or other licensed 
     health care practitioners that have entered (or may be 
     entering) into an employment or affiliation relationship 
     with, or have applied for clinical privileges or appointments 
     to the medical staff of, such hospitals or other health care 
     entities (and such information shall be deemed to be 
     disclosed pursuant to section 427 of, and be subject to the 
     provisions of, that Act),
       ``(7) to the Attorney General and such other law 
     enforcement officials as the Secretary deems appropriate, and
       ``(8) upon request, to the Comptroller General,
     in order for such authorities to determine the fitness of 
     individuals to provide health care services, to protect the 
     health and safety of individuals receiving health care 
     through such programs, and to protect the fiscal integrity of 
     such programs.
       ``(c) Confidentiality of Information Provided.--The 
     Secretary shall provide for suitable safeguards for the 
     confidentiality of the information furnished under subsection 
     (a). Nothing in this subsection shall prevent the disclosure 
     of such information by a party which is otherwise authorized, 
     under applicable State law, to make such disclosure.
       ``(d) Appropriate Coordination.--The Secretary shall 
     provide for the maximum appropriate coordination in the 
     implementation of subsection (a) of this section and section 
     422 of the Health Care Quality Improvement Act of 1986.

     ``SEC. 2134. STATE MEDIGRANT FRAUD CONTROL UNITS.

       ``(a) In General.--Each MediGrant plan shall provide for a 
     State MediGrant fraud control unit described in subsection 
     (b) that effectively carries out the functions and 
     requirements described in such subsection, unless the State 
     demonstrates to the satisfaction of the Secretary that the 
     effective operation of such a unit in the State would not be 
     cost-effective because minimal fraud exists in connection 
     with the provision of covered services to eligible 
     individuals under the plan, and that beneficiaries under the 
     plan will be protected from abuse and neglect in connection 
     with the provision of medical assistance under the plan 
     without the existence of such a unit.
       ``(b) Units Described.--For purposes of this subsection, 
     the term `State MediGrant fraud control unit' means a single 
     identifiable entity of the State government which meets the 
     following requirements:
       ``(1) Organization.--The entity--
       ``(A) is a unit of the office of the State Attorney General 
     or of another department of State government which possesses 
     statewide authority to prosecute individuals for criminal 
     violations;
       ``(B) is in a State the constitution of which does not 
     provide for the criminal prosecution

[[Page 1762]]

     of individuals by a statewide authority and has formal 
     procedures that--
       ``(i) assure its referral of suspected criminal violations 
     relating to the program under this title to the appropriate 
     authority or authorities in the State for prosecution, and
       ``(ii) assure its assistance of, and coordination with, 
     such authority or authorities in such prosecutions; or
       ``(C) has a formal working relationship with the office of 
     the State Attorney General and has formal procedures 
     (including procedures for its referral of suspected criminal 
     violations to such office) which provide effective 
     coordination of activities between the entity and such office 
     with respect to the detection, investigation, and prosecution 
     of suspected criminal violations relating to the program 
     under this title.
       ``(2) Independence.--The entity is separate and distinct 
     from any State agency that has principal responsibilities for 
     administering or supervising the administration of the 
     MediGrant plan.
       ``(3) Function.--The entity's function is conducting a 
     statewide program for the investigation and prosecution of 
     violations of all applicable State laws regarding any and all 
     aspects of fraud in connection with any aspect of the 
     provision of medical assistance and the activities of 
     providers of such assistance under the MediGrant plan.
       ``(4) Review of complaints.--The entity has procedures for 
     reviewing complaints of the abuse and neglect of patients of 
     health care facilities which receive payments under the 
     MediGrant plan under this title, and, where appropriate, for 
     acting upon such complaints under the criminal laws of the 
     State or for referring them to other State agencies for 
     action.
       ``(5) Overpayments.--The entity provides for the 
     collection, or referral for collection to a single State 
     agency, of overpayments that are made under the MediGrant 
     plan to health care providers and that are discovered by the 
     entity in carrying out its activities.
       ``(6) Personnel.--The entity employs such auditors, 
     attorneys, investigators, and other necessary personnel and 
     is organized in such a manner as is necessary to promote the 
     effective and efficient conduct of the entity's activities.

     ``SEC. 2135. RECOVERIES FROM THIRD PARTIES AND OTHERS.

       ``(a) Third Party Liability.--Each MediGrant plan shall 
     provide for reasonable steps--
       ``(1) to ascertain the legal liability of third parties to 
     pay for care and services available under the plan, including 
     the collection of sufficient information to enable States to 
     pursue claims against third parties; and
       ``(2) to seek reimbursement for medical assistance provided 
     to the extent legal liability is establish where the amount 
     expected to be recovered exceeds the costs of the recovery.
       ``(b) Beneficiary Protection.--
       ``(1) In general.--Each MediGrant plan shall provide that 
     in the case of a person furnishing services under the plan 
     for which a third party may be liable for payment--
       ``(A) the person may not seek to collect from the 
     individual (or financially responsible relative) payment of 
     an amount for the service more than could be collected under 
     the plan in the absence of such third party liability, and
       ``(B) may not refuse to furnish services to such an 
     individual because of a third party's potential liability for 
     payment for the service.
       ``(2) Penalty.--A MediGrant plan may provide for a 
     reduction of any payment amount otherwise due with respect to 
     a person who furnishes services under the plan in an amount 
     equal to up to three times the amount of any payment sought 
     to be collected by that person in violation of paragraph 
     (1)(A).
       ``(c) General Liability.--The State shall prohibit any 
     health insurer (including a group health plan as defined in 
     section 607 of the Employee Retirement Income Security Act of 
     1974, a service benefit plan, or a health maintenance 
     organization), in enrolling an individual or in making any 
     payments for benefits to the individual or on the 
     individual's behalf, from taking into account that the 
     individual is eligible for or is provided medical assistance 
     under a MediGrant plan for any State.
       ``(d) Acquisition of Rights of Beneficiaries.--To the 
     extent that payment has been made under a MediGrant plan in 
     any case where a third party has a legal liability to make 
     payment for such assistance, the State shall have in effect 
     laws under which, to the extent that payment has been made 
     under the plan for health care items or services furnished to 
     an individual, the State is considered to have acquired the 
     rights of such individual to payment by any other party for 
     such health care items or services.
       ``(e) Assignment of Medical Support Rights.--The MediGrant 
     plan shall provide for mandatory assignment of rights of 
     payment for medical support and other medical care owed to 
     recipients in accordance with section 2136.
       ``(f) Required Laws Relating to Medical Child Support.--
       ``(1) In general.--Each State with a MediGrant plan shall 
     have in effect the following laws:
       ``(A) A law that prohibits an insurer from denying 
     enrollment of a child under the health coverage of the 
     child's parent on the ground that--
       ``(i) the child was born out of wedlock,
       ``(ii) the child is not claimed as a dependent on the 
     parent's Federal income tax return, or
       ``(iii) the child does not reside with the parent or in the 
     insurer's service area.
       ``(B) In any case in which a parent is required by a court 
     or administrative order to provide health coverage for a 
     child and the parent is eligible for family health coverage 
     through an insurer, a law that requires such insurer--
       ``(i) to permit such parent to enroll under such family 
     coverage any such child who is otherwise eligible for such 
     coverage (without regard to any enrollment season 
     restrictions);
       ``(ii) if such a parent is enrolled but fails to make 
     application to obtain coverage of such child, to enroll such 
     child under such family coverage upon application by the 
     child's other parent or by the State agency administering the 
     program under this title or part D of title IV; and
       ``(iii) not to disenroll (or eliminate coverage of) such a 
     child unless the insurer is provided satisfactory written 
     evidence that--

       ``(I) such court or administrative order is no longer in 
     effect, or
       ``(II) the child is or will be enrolled in comparable 
     health coverage through another insurer which will take 
     effect not later than the effective date of such 
     disenrollment.

       ``(C) In any case in which a parent is required by a court 
     or administrative order to provide health coverage for a 
     child and the parent is eligible for family health coverage 
     through an employer doing business in the State, a law that 
     requires such employer--
       ``(i) to permit such parent to enroll under such family 
     coverage any such child who is otherwise eligible for such 
     coverage (without regard to any enrollment season 
     restrictions);
       ``(ii) if such a parent is enrolled but fails to make 
     application to obtain coverage of such child, to enroll such 
     child under such family coverage upon application by the 
     child's other parent or by the State agency administering the 
     program under this title or part D of title IV; and
       ``(iii) not to disenroll (or eliminate coverage of) any 
     such child unless--

       ``(I) the employer is provided satisfactory written 
     evidence that such court or administrative order is no longer 
     in effect, or the child is or will be enrolled in comparable 
     health coverage which will take effect not later than the 
     effective date of such disenrollment, or
       ``(II) the employer has eliminated family health coverage 
     for all of its employees; and

       ``(iv) to withhold from such employee's compensation the 
     employee's share (if any) of premiums for health coverage 
     (except that the amount so withheld may not exceed the 
     maximum amount permitted to be withheld under section 303(b) 
     of the Consumer Credit Protection Act), and to pay such share 
     of premiums to the insurer, except that the Secretary may 
     provide by regulation for appropriate circumstances under 
     which an employer may withhold less than such employee's 
     share of such premiums.
       ``(D) A law that prohibits an insurer from imposing 
     requirements on a State agency, which has been assigned the 
     rights of an individual eligible for medical assistance under 
     this title and covered for health benefits from the insurer, 
     that are different from requirements applicable to an agent 
     or assignee of any other individual so covered.
       ``(E) A law that requires an insurer, in any case in which 
     a child has health coverage through the insurer of a 
     noncustodial parent--
       ``(i) to provide such information to the custodial parent 
     as may be necessary for the child to obtain benefits through 
     such coverage;
       ``(ii) to permit the custodial parent (or provider, with 
     the custodial parent's approval) to submit claims for covered 
     services without the approval of the noncustodial parent; and
       ``(iii) to make payment on claims submitted in accordance 
     with clause (ii) directly to such custodial parent, the 
     provider, or the State agency.
       ``(F) A law that permits the State agency under this title 
     to garnish the wages, salary, or other employment income of, 
     and requires withholding amounts from State tax refunds to, 
     any person who--
       ``(i) is required by court or administrative order to 
     provide coverage of the costs of health services to a child 
     who is eligible for medical assistance under this title,
       ``(ii) has received payment from a third party for the 
     costs of such services to such child, but
       ``(iii) has not used such payments to reimburse, as 
     appropriate, either the other parent or guardian of such 
     child or the provider of such services,
     to the extent necessary to reimburse the State agency for 
     expenditures for such costs under its plan under this title, 
     but any claims for current or past-due child support shall 
     take priority over any such claims for the costs of such 
     services.
       ``(2) Definition.--For purposes of this subsection, the 
     term `insurer' includes a group health plan, as defined in 
     section 607(1) of the Employee Retirement Income Security Act 
     of 1974, a health maintenance organization, and an entity 
     offering a service benefit plan.
       ``(g) Estate Recoveries and Liens Permitted.--A State may 
     take such actions as it considers appropriate to adjust or 
     recover from the individual or the individual's estate any 
     amounts paid as medical assistance to or on behalf of the 
     individual under the MediGrant plan, including through the 
     imposition of liens against the property or estate of the 
     individual.

[[Page 1763]]

     ``SEC. 2136. ASSIGNMENT OF RIGHTS OF PAYMENT.

       ``(a) In General.--For the purpose of assisting in the 
     collection of medical support payments and other payments for 
     medical care owed to recipients of medical assistance under 
     the MediGrant plan, each MediGrant plan shall--
       ``(1) provide that, as a condition of eligibility for 
     medical assistance under the plan to an individual who has 
     the legal capacity to execute an assignment for himself, the 
     individual is required--
       ``(A) to assign the State any rights, of the individual or 
     of any other person who is eligible for medical assistance 
     under the plan and on whose behalf the individual has the 
     legal authority to execute an assignment of such rights, to 
     support (specified as support for the purpose of medical care 
     by a court or administrative order) and to payment for 
     medical care from any third party,
       ``(B) to cooperate with the State (i) in establishing the 
     paternity of such person (referred to in subparagraph (A)) if 
     the person is a child born out of wedlock, and (ii) in 
     obtaining support and payments (described in subparagraph 
     (A)) for himself and for such person, unless (in either case) 
     the individual is a pregnant woman or the individual is found 
     to have good cause for refusing to cooperate as determined by 
     the State, and
       ``(C) to cooperate with the State in identifying, and 
     providing information to assist the State in pursuing, any 
     third party who may be liable to pay for care and services 
     available under the plan, unless such individual has good 
     cause for refusing to cooperate as determined by the State; 
     and
       ``(2) provide for entering into cooperative arrangements 
     (including financial arrangements), with any appropriate 
     agency of any State (including, with respect to the 
     enforcement and collection of rights of payment for medical 
     care by or through a parent, with a State's agency 
     established or designated under section 454(3)) and with 
     appropriate courts and law enforcement officials, to assist 
     the agency or agencies administering the plan with respect 
     to--
       ``(A) the enforcement and collection of rights to support 
     or payment assigned under this section, and
       ``(B) any other matters of common concern.
       ``(b) Use of Amounts Collected.--Such part of any amount 
     collected by the State under an assignment made under the 
     provisions of this section shall be retained by the State as 
     is necessary to reimburse it for medical assistance payments 
     made on behalf of an individual with respect to whom such 
     assignment was executed (with appropriate reimbursement of 
     the Federal Government to the extent of its participation in 
     the financing of such medical assistance), and the remainder 
     of such amount collected shall be paid to such individual.

     ``SEC. 2137. QUALITY ASSURANCE STANDARDS FOR NURSING 
                   FACILITIES.

       ``(a) Standards for and Certification of Certain 
     Facilities.--
       ``(1) Standards for facilities.--
       ``(A) In general.--Each MediGrant plan shall provide for 
     the establishment and maintenance of standards consistent 
     with the contents described in subparagraph (B) for nursing 
     facilities which furnish services under the plan. Such 
     standards shall provide that nursing facilities must care for 
     residents in such a manner and in such an environment as will 
     promote maintenance or enhancement of the quality of life of 
     each resident.
       ``(B) Contents of standards.--The standards established for 
     facilities under this paragraph shall contain provisions 
     relating to the following items:
       ``(i) The treatment of resident medical records.
       ``(ii) Policies, procedures, and bylaws for operation.
       ``(iii) Quality assurance systems.
       ``(iv) Resident assessment procedures, including care 
     planning and outcome evaluation.
       ``(v) The assurance of a safe and adequate physical plant 
     for the facility.
       ``(vi) Qualifications for staff sufficient to provide 
     adequate care, as defined by the State.
       ``(vii) Utilization review.
       ``(viii) The protection and enforcement of resident rights 
     described in paragraph (2)(A).
       ``(C) Process for establishment.--The standards established 
     by the State for facilities under this paragraph shall be 
     promulgated either through the State's legislative, 
     regulatory, or other process, and may only take effect after 
     the State has provided the public with notice and an 
     opportunity for comment.
       ``(2) Residents' rights.--
       ``(A) In general.--The resident rights described in this 
     paragraph are the rights of residents to the following:
       ``(i) To exercise the individual's rights as a resident of 
     the facility and as a citizen or resident of the United 
     States.
       ``(ii) To receive notice of rights and services.
       ``(iii) To be protected against the misuse of resident 
     funds.
       ``(iv) To be provided privacy and confidentiality.
       ``(v) To voice grievances.
       ``(vi) To examine the results of State certification 
     program inspections.
       ``(vii) To refuse to perform services for the facility.
       ``(viii) To be provided privacy in communications and to 
     receive mail.
       ``(ix) To have the facility provide immediate access to any 
     resident by any representative of the certification program, 
     the resident's individual physician, the State long term care 
     ombudsman, and any person the resident has designated as a 
     visitor.
       ``(x) To retain and use personal property.
       ``(xi) To be free from abuse, including verbal, sexual, 
     physical and mental abuse, corporal punishment, and 
     involuntary seclusion and not to have any physical or 
     chemical restraints imposed for purposes of discipline or 
     convenience unless required to treat the resident's medical 
     symptoms.
       ``(xii) To be provided with prior written notice of a 
     pending transfer or discharge.
       ``(xiii) To organize and participate in resident groups in 
     the facility and to have family members meet in the facility 
     with the families of other residents in the facility.
       ``(xiv) To participate in social, religious, and community 
     activities that do not interfere with the rights of other 
     residents in the facility.
       ``(xv) To choose a personal attending physician, to be 
     fully informed in advance about care and treatment, and 
     (except with respect to a resident adjudged incompetent) to 
     participate in planning care and treatment or changes in care 
     and treatment.
       ``(xvi) To not have psycho- pharmacologic drugs 
     administered except under the orders of a physician and as 
     part of a plan designed to eliminate or modify the symptoms 
     for which the drugs are prescribed.
       ``(B) Rights of incompetent residents.--In the case of a 
     resident adjudged incompetent under the laws of a State, the 
     rights of the resident under the MediGrant plan shall devolve 
     upon, and, to the extent judged necessary by a court of 
     competent jurisdiction, be exercised by, the person appointed 
     under State law to act on the resident's behalf.
       ``(3) Certification program.--
       ``(A) In general.--Each MediGrant plan shall provide for 
     the establishment and operation of a program consistent with 
     the requirements of subparagraph (B) for the certification of 
     nursing facilities which meet the standards established under 
     paragraph (1) and the decertification of facilities which 
     fail to meet such standards.
       ``(B) Requirements for program.--In addition to any other 
     requirements the State may impose, in establishing and 
     operating the certification program under subparagraph (A), 
     the State shall ensure the following:
       ``(i) The State shall ensure public access (as defined by 
     the State) to the certification program's evaluations of 
     participating facilities, including compliance records and 
     enforcement actions and other reports by the State regarding 
     the ownership, compliance histories, and services provided by 
     certified facilities.
       ``(ii) Not less often than every 4 years, the State shall 
     audit its expenditures under the program, through an entity 
     designated by the State which is not affiliated with the 
     program, as designated by the State.
       ``(b) Intermediate Sanction Authority.--
       ``(1) Authority.--In addition to any other authority under 
     State law, where a State determines that a nursing facility 
     which is certified for participation under the MediGrant plan 
     no longer substantially meets the requirements for such a 
     facility under this title and further determines that the 
     facility's deficiencies--
       ``(A) immediately jeopardize the health and safety of its 
     residents, the State shall at least provide for the 
     termination of the facility's certification for participation 
     under the plan, or
       ``(B) do not immediately jeopardize the health and safety 
     of its residents, the State may, in lieu of providing for 
     terminating the facility's certification for participation 
     under the plan, provide lesser sanctions including one that 
     provides that no payment will be made under the plan with 
     respect to any individual admitted to such facility after a 
     date specified by the State.
       ``(2) Notice.--The State shall not make such a decision 
     with respect to a facility until the facility has had a 
     reasonable opportunity, following the initial determination 
     that it no longer substantially meets the requirements for 
     such a facility under the plan, to correct its deficiencies, 
     and, following this period, has been given reasonable notice 
     and opportunity for a hearing.
       ``(3) Effectiveness.--The State's decision to deny payment 
     may be made effective only after such notice to the public 
     and to the facility as may be provided for by the State, and 
     its effectiveness shall terminate (A) when the State finds 
     that the facility is in substantial compliance (or is making 
     good faith efforts to achieve substantial compliance) with 
     the requirements for such a facility under this title, or (B) 
     in the case described in paragraph (1)(B), with the end of 
     the eleventh month following the month such decision is made 
     effective, whichever occurs first. If a facility to which 
     clause (B) of the previous sentence applies still fails to 
     substantially meet the provisions of the respective section 
     on the date specified in such clause, the State shall 
     terminate such facility's certification for participation 
     under the MediGrant plan effective with the first day of the 
     first month following the month specified in such clause.

     ``SEC. 2138. OTHER PROVISIONS PROMOTING PROGRAM INTEGRITY.

       ``(a) Public Access to Survey Results.--Each MediGrant plan 
     shall provide that upon completion of a survey of any health 
     care facility or organization by a State agency to carry out 
     the plan, the agency shall make

[[Page 1764]]

     public in readily available form and place the pertinent 
     findings of the survey relating to the compliance of the 
     facility or organization with requirements of law.
       ``(b) Record Keeping.--Each MediGrant plan shall provide 
     for agreements with persons or institutions providing 
     services under the plan under which the person or institution 
     agrees--
       ``(1) to keep such records (including ledgers, books, and 
     original evidence of costs) as are necessary to fully 
     disclose the extent of the services provided to individuals 
     receiving assistance under the plan; and
       ``(2) to furnish the State agency with such information 
     regarding any payments claimed by such person or institution 
     for providing services under the plan, as the State agency 
     may from time to time request.

        ``Part E--Establishment and Amendment of MediGrant Plans

     ``SEC. 2151. SUBMITTAL AND APPROVAL OF MEDIGRANT PLANS.

       ``(a) Submittal.--As a condition of receiving funding under 
     part C, each State shall submit to the Secretary a MediGrant 
     plan that meets the applicable requirements of this title.
       ``(b) Approval.--Except as the Secretary may provide under 
     section 2154, a MediGrant plan submitted under subsection 
     (a)--
       ``(1) shall be approved for purposes of this title, and
       ``(2) shall be effective beginning with a calendar quarter 
     that is specified in the plan, but in no case earlier than 
     the first calendar quarter that begins at least 60 days after 
     the date the plan is submitted.
       ``(c) Approval of Legislature for Submittal.--In the case 
     of a State which has a State allotment under section 
     2121(c)(1) for fiscal year 1996 of more than $10 billion, the 
     State may not submit a MediGrant plan under this section 
     unless the State legislature, by law, has specifically 
     authorized such submittal.

     ``SEC. 2152. SUBMITTAL AND APPROVAL OF PLAN AMENDMENTS.

       ``(a) Submittal of Amendments.--A State may amend, in whole 
     or in part, its MediGrant plan at any time through 
     transmittal of a plan amendment under this section.
       ``(b) Approval.--Except as the Secretary may provide under 
     section 2154, an amendment to a MediGrant plan submitted 
     under subsection (a)--
       ``(1) shall be approved for purposes of this title, and
       ``(2) shall be effective as provided in subsection (c).
       ``(c) Effective Dates for Amendments.--
       ``(1) In general.--Subject to the succeeding provisions of 
     this subsection, an amendment to MediGrant plan shall take 
     effect on one or more effective dates specified in the 
     amendment.
       ``(2) Amendments relating to eligibility or benefits.--
     Except as provided in paragraph (4)--
       ``(A) Notice requirement.--Any plan amendment that 
     eliminates or restricts eligibility or benefits under the 
     plan may not take effect unless the State certifies that it 
     has provided prior or contemporaneous public notice of the 
     change, in a form and manner provided under applicable State 
     law.
       ``(B) Timely transmittal.--Any plan amendment that 
     eliminates or restricts eligibility or benefits under the 
     plan shall not be effective for longer than a 60 day period 
     unless the amendment has been transmitted to the Secretary 
     before the end of such period.
       ``(3) Other amendments.--Subject to paragraph (4), any plan 
     amendment that is not described in paragraph (2) becomes 
     effective in a State fiscal year may not remain in effect 
     after the end of such fiscal year (or, if later, the end of 
     the 90-day period on which it becomes effective) unless the 
     amendment has been transmitted to the Secretary.
       ``(4) Exception.--The requirements of paragraphs (2) and 
     (3) shall not apply to a plan amendment that is submitted on 
     a timely basis pursuant to a court order or an order of the 
     Secretary.

     ``SEC. 2153. PROCESS FOR STATE WITHDRAWAL FROM PROGRAM.

       ``(a) In General.--A State may rescind its MediGrant plan 
     and discontinue participation in the program under this title 
     at any time after providing--
       ``(1) the public with 90 days prior notice in a publication 
     in one or more daily newspapers of general circulation in the 
     State or in any publication used by the State to publish 
     State statutes or rules, and
       ``(2) the Secretary with 90 days prior written notice.
       ``(b) Effective Date.--Such discontinuation shall not apply 
     to payments under part C for expenditures made for items and 
     services furnished under the MediGrant plan before the 
     effective date of the discontinuation.
       ``(c) Proration of Allotments.--In the case of any 
     withdrawal under this section other than at the end of a 
     Federal fiscal year, notwithstanding any provision of section 
     2121 to the contrary, the Secretary shall provide for such 
     appropriate proration of the application of allotments under 
     section 2121 as is appropriate.

     ``SEC. 2154. SANCTIONS FOR SUBSTANTIAL NONCOMPLIANCE.

       ``(a) Prompt Review of Plan Submittals.--The Secretary 
     shall promptly review MediGrant plans and plan amendments 
     submitted under this part to determine if they substantially 
     comply with the requirements of this title.
       ``(b) Determinations of Substantial Noncompliance.--
       ``(1) At time of plan or amendment submittal.--
       ``(A) In general.--If the Secretary, during the 30-day 
     period beginning on the date of submittal of a MediGrant plan 
     or plan amendment--
       ``(i) determines that the plan or amendment substantially 
     violates (within the meaning of subsection (c)) a requirement 
     of this title, and
       ``(ii) provides written notice of such determination to the 
     State,
     the Secretary shall issue an order specifying that the plan 
     or amendment, insofar as it is in substantial violation of 
     such a requirement, shall not be effective, except as 
     provided in subsection (c), beginning at the end of a period 
     of not less than 30 days, or 120 days in the case of the 
     initial submission of the MediGrant plan) specified in the 
     order beginning on the date of the notice of the 
     determination.
       ``(B) Extension of time periods.--The time periods 
     specified in subparagraph (A) may be extended by written 
     agreement of the Secretary and the State involved.
       ``(2) Violations in administration of plan.--
       ``(A) In general.--If the Secretary determines, after 
     reasonable notice and opportunity for a hearing for the 
     State, that in the administration of a MediGrant plan there 
     is a substantial violation of a requirement of this title, 
     the Secretary shall provide the State with written notice of 
     the determination and with an order to remedy such violation. 
     Such an order shall become effective prospectively, as 
     specified in the order, after the date of receipt of such 
     written notice. Such an order may include the withholding of 
     funds, consistent with subsection (f), for parts of the 
     MediGrant plan affected by such violation, until the 
     Secretary is satisfied that the violation has been corrected.
       ``(B) Effectiveness.--If the Secretary issues an order 
     under paragraph (1), the order shall become effective, except 
     as provided in subsection (c), beginning at the end of a 
     period (of not less than 30 days) specified in the order 
     beginning on the date of the notice of the determination to 
     the State.
       ``(C) Timeliness of determinations relating to report-based 
     compliance.--The Secretary shall make determinations under 
     this paragraph respecting violations relating to information 
     contained in an annual report under section 2102, an 
     independent evaluation under section 2103, or an audit report 
     under section 2131 not later than 30 days after the date of 
     transmittal of the report or evaluation to the Secretary.
       ``(3) Consultation with state.--Before making a 
     determination adverse to a State under this section, the 
     Secretary shall (within any time periods provided under this 
     section)--
       ``(A) reasonably consult with the State involved,
       ``(B) offer the State a reasonable opportunity to clarify 
     the submission and submit further information to substantiate 
     compliance with the requirements of this title, and
       ``(C) reasonably consider any such clarifications and 
     information submitted.
       ``(4) Justification of any inconsistencies in 
     determinations.--If the Secretary makes a determination under 
     this section that is, in whole or in part, inconsistent with 
     any previous determination issued by the Secretary under this 
     title, the Secretary shall include in the determination a 
     detailed explanation and justification for any such 
     difference.
       ``(5) Substantial violation defined.--For purposes of this 
     title, a MediGrant plan (or amendment to such a plan) or the 
     administration of the MediGrant plan is considered to 
     `substantially violate' a requirement of this title if a 
     provision of the plan or amendment (or an omission from the 
     plan or amendment) or the administration of the plan--
       ``(A) is material and substantial in nature and effect, and
       ``(B) is inconsistent with an express requirement of this 
     title.
     A failure to meet a strategic objective or performance goal 
     (as described in section 2101) shall not be considered to 
     substantially violate a requirement of this title.
       ``(c) State Response to Orders.--
       ``(1) State response by revising plan.--
       ``(A) In general.--Insofar as an order under subsection 
     (b)(1) relates to a substantial violation by a MediGrant plan 
     or plan amendment, a State may respond (before the date the 
     order becomes effective) to such an order by submitting a 
     written revision of the plan or plan amendment to 
     substantially comply with the requirements of this part.
       ``(B) Review of revision.--In the case of submission of 
     such a revision, the Secretary shall promptly review the 
     submission and shall withhold any action on the order during 
     the period of such review.
       ``(C) Secretarial response.--The revision shall be 
     considered to have corrected the deficiency (and the order 
     rescinded insofar as it relates to such deficiency) unless 
     the Secretary determines and notifies the State in writing, 
     within 15 days after the date the Secretary receives the 
     revision, that the plan or amendment, as proposed to be 
     revised, still substantially violates a requirement of this 
     title. In such case the State may respond by seeking 
     reconsideration or a hearing under paragraph (2).
       ``(D) Revision retroactive.--If the revision provides for 
     substantial compliance, the revision may be treated, at the 
     option of the State, as being effective either as of the ef

[[Page 1765]]

     fective date of the provision to which it relates or such 
     later date as the State and Secretary may agree.
       ``(2) State response by seeking reconsideration or an 
     administrative hearing.--A State may respond to an order 
     under subsection (b) by filing a request with the Secretary 
     for--
       ``(A) a reconsideration of the determination, pursuant to 
     subsection (d)(1), or
       ``(B) a review of the determination through an 
     administrative hearing, pursuant to subsection (d)(2).
     In such case, the order shall not take effect before the 
     completion of the reconsideration or hearing.
       ``(3) State response by corrective action plan.--
       ``(A) In general.--In the case of an order described in 
     subsection (b)(2) that relates to a substantial violation in 
     the administration of the MediGrant plan, a State may respond 
     to such an order by submitting a corrective action plan with 
     the Secretary to correct deficiencies in the administration 
     of the plan which are the subject of the order.
       ``(B) Review of corrective action plan.--In such case, the 
     Secretary shall withhold any action on the order for a period 
     (not to exceed 30 days) during which the Secretary reviews 
     the corrective action plan.
       ``(C) Secretarial response.--The corrective action plan 
     shall be considered to have corrected the deficiency (and the 
     order rescinded insofar as it relates to such deficiency) 
     unless the Secretary determines and notifies the State in 
     writing, within 15 days after the date the Secretary receives 
     the corrective action plan, that the State's administration 
     of the MediGrant plan, as proposed to be corrected in the 
     plan, will still substantially violate a requirement of this 
     title. In such case the State may respond by seeking 
     reconsideration or a hearing under paragraph (2).
       ``(4) State response by withdrawal of plan amendment; 
     failure to respond.--Insofar as an order relates to a 
     substantial violation in a plan amendment submitted, a State 
     may respond to such an order by withdrawing the plan 
     amendment and the MediGrant plan shall be treated as though 
     the amendment had not been made.
       ``(d) Administrative Review and Hearing.--
       ``(1) Reconsideration.--Within 30 days after the date of 
     receipt of a request under subsection (b)(2)(A), the 
     Secretary shall notify the State of the time and place at 
     which a hearing will be held for the purpose of reconsidering 
     the Secretary's determination. The hearing shall be held not 
     less than 20 days nor more than 60 days after the date notice 
     of the hearing is furnished to the State, unless the 
     Secretary and the State agree in writing to holding the 
     hearing at another time. The Secretary shall affirm, modify, 
     or reverse the original determination within 60 days of the 
     conclusion of the hearing.
       ``(2) Administrative hearing.--Within 30 days after the 
     date of receipt of a request under subsection (b)(2)(B), an 
     administrative law judge shall schedule a hearing for the 
     purpose of reviewing the Secretary's determination. The 
     hearing shall be held not less than 20 days nor more than 60 
     days after the date notice of the hearing is furnished to the 
     State, unless the Secretary and the State agree in writing to 
     holding the hearing at another time. The administrative law 
     judge shall affirm, modify, or reverse the determination 
     within 60 days of the conclusion of the hearing.
       ``(e) Judicial Review.--
       ``(1) In general.--A State which is dissatisfied with a 
     final determination made by the Secretary under subsection 
     (d)(1) or a final determination of an administrative law 
     judge under subsection (d)(2) may, within 60 days after it 
     has been notified of such determination, file with the United 
     States court of appeals for the circuit in which the State is 
     located a petition for review of such determination. A copy 
     of the petition shall be forthwith transmitted by the clerk 
     of the court to the Secretary and, in the case of a 
     determination under subsection (d)(2), to the administrative 
     law judge involved. The Secretary (or judge involved) 
     thereupon shall file in the court the record of the 
     proceedings on which the final determination was based, as 
     provided in section 2112 of title 28, United States Code.
       ``(2) Standard for review.--The findings of fact by the 
     Secretary or administrative law judge, if supported by 
     substantial evidence, shall be conclusive, but the court, for 
     good cause shown, may remand the case to the Secretary or 
     judge to take further evidence, and the Secretary or judge 
     may thereupon make new or modified findings of fact and may 
     modify a previous determination, and shall certify to the 
     court the transcript and record of the further proceedings. 
     Such new or modified findings of fact shall likewise be 
     conclusive if supported by substantial evidence.
       ``(3) Jurisdiction of appellate court.--The court shall 
     have jurisdiction to affirm the action of the Secretary or 
     judge or to set it aside, in whole or in part. The judgment 
     of the court shall be subject to review by the Supreme Court 
     of the United States upon certiorari or certification as 
     provided in section 1254 of title 28, United States Code.
       ``(f) Withholding of Funds.--
       ``(1) In general.--Any order under this section relating to 
     the withholding of funds shall be effective not earlier than 
     the effective date of the order and shall only relate to the 
     portions of a MediGrant plan or administration thereof which 
     substantially violate a requirement of this title. In the 
     case of a failure to meet a set-aside requirement under 
     section 2112, any withholding shall only apply to the extent 
     of such failure.
       ``(2) Suspension of withholding.--The Secretary may suspend 
     withholding of funds under paragraph (1) during the period 
     reconsideration or administrative and judicial review is 
     pending under subsection (d) or (e).
       ``(3) Restoration of funds.--Any funds withheld under this 
     subsection under an order shall be immediately restored to a 
     State--
       ``(A) to the extent and at the time the order is--
       ``(i) modified or withdrawn by the Secretary upon 
     reconsideration,
       ``(ii) modified or reversed by an administrative law judge, 
     or
       ``(iii) set aside (in whole or in part) by an appellate 
     court; or
       ``(B) when the Secretary determines that the deficiency 
     which was the basis for the order is corrected;
       ``(C) when the Secretary determines that violation which 
     was the basis for the order is resolved or the amendment 
     which was the basis for the order is withdrawn; or
       ``(D) at any time upon the initiative of the Secretary.

     ``SEC. 2155. SECRETARIAL AUTHORITY.

       ``(a) Negotiated Agreement and Dispute Resolution.--
       ``(1) Negotiations.--Nothing in this part shall be 
     construed as preventing the Secretary and a State from at any 
     time negotiating a satisfactory resolution to any dispute 
     concerning the approval of a MediGrant plan (or amendments to 
     a MediGrant plan) or the compliance of a MediGrant plan 
     (including its administration) with requirements of this 
     title.
       ``(2) Cooperation.--The Secretary shall act in a 
     cooperative manner with the States in carrying out this 
     title. In the event of a dispute between a State and the 
     Secretary, the Secretary shall, whenever practicable, engage 
     in informal dispute resolution activities in lieu of formal 
     enforcement or sanctions under section 2154.
       ``(b) Limitations on Delegation of Decision-making 
     Authority.--The Secretary may not delegate (other than to the 
     Administrator of the Health Care Financing Administration) 
     the authority to make determinations or reconsiderations 
     respecting the approval of MediGrant plans (or amendments to 
     such plans) or the compliance of a MediGrant plan (including 
     its administration) with requirements of this title. Such 
     Administrator may not further delegate such authority to any 
     individual, including any regional official of such 
     Administration.
       ``(c) Requiring Formal Rulemaking for Changes in 
     Secretarial Administration.--The Secretary shall carry out 
     the administration of the program under this title only 
     through a prospective formal rulemaking process, including 
     issuing notices of proposed rule making, publishing proposed 
     rules or modifications to rules in the Federal Register, and 
     soliciting public comment.

                      ``Part F--General Provisions

     ``SEC. 2171. DEFINITIONS.

       ``(a) Medical Assistance.--
       ``(1) In general.--For purposes of this title, except as 
     provided in paragraph (2), the term `medical assistance' 
     means payment of part or all the cost of any of the following 
     for eligible low-income individuals (as defined in subsection 
     (b)) as specified under the MediGrant plan:
       ``(A) Inpatient hospital services.
       ``(B) Outpatient hospital services.
       ``(C) Physician services.
       ``(D) Surgical services.
       ``(E) Clinic services and other ambulatory health care 
     services.
       ``(F) Nursing facility services.
       ``(G) Intermediate care facility services for the mentally 
     retarded.
       ``(H) Prescription drugs and biologicals.
       ``(I) Over-the-counter medications.
       ``(J) Laboratory and radiological services.
       ``(K) Family planning services and supplies.
       ``(L) Inpatient mental health services, including services 
     furnished in a State-operated mental hospital and including 
     residential or other 24-hour therapeutically planned 
     structured services in the case of a child.
       ``(M) Outpatient mental health services, including services 
     furnished in a State-operated mental hospital and including 
     community-based services in the case of a child.
       ``(N) Durable medical equipment and other medically-related 
     or remedial devices (such as prosthetic devices, implants, 
     eyeglasses, hearing aids, dental devices, and adaptive 
     devices).
       ``(O) Disposable medical supplies.
       ``(P) Home and community-based health care services and 
     related supportive services (such as home health nursing 
     services, home health aide services, personal care, 
     assistance with activities of daily living, chore services, 
     day care services, respite care services, and training for 
     family members).
       ``(Q) Community supported living arrangements.
       ``(R) Nursing care services (such as private duty nursing 
     care, nurse midwife services, respiratory care services, 
     pediatric nurse services, and advanced practice nurse 
     services) in a home, school, or other setting.
       ``(S) Dental services.
       ``(T) Inpatient substance abuse treatment services and 
     residential substance abuse treatment services.
       ``(U) Outpatient substance abuse treatment services.
       ``(V) Case management services.
       ``(W) Care coordination services.

[[Page 1766]]

       ``(X) Physical therapy, occupational therapy, and services 
     for individuals with speech, hearing, and language disorders.
       ``(Y) Hospice care.
       ``(Z) Any other medical, diagnostic, screening, preventive, 
     restorative, remedial, therapeutic, or rehabilitative 
     services (whether in a facility, home, school, or other 
     setting) if recognized by State law and if the service is--
       ``(i) prescribed by or furnished by a physician or other 
     licensed or registered practitioner within the scope of 
     practice as defined by State law,
       ``(ii) performed under the general supervision or at the 
     direction of a physician, or
       ``(iii) furnished by a health care facility that is 
     operated by a State or local government or is licensed under 
     State law and operating within the scope of the license.
       ``(AA) Premiums for private health care insurance coverage, 
     including private long-term care insurance coverage.
       ``(BB) Medical transportation.
       ``(CC) Medicare cost-sharing (as defined in subsection 
     (c)).
       ``(DD) Enabling services (such as transportation, 
     translation, and outreach services) designed to increase the 
     accessibility of primary and preventive health care services 
     for eligible low-income individuals.
       ``(EE) Any other health care services or items specified by 
     the Secretary.
       ``(2) Exclusion of certain payments.--Such term does not 
     include the payment with respect to care or services for--
       ``(A) any individual who is an inmate of a public 
     institution (except as a patient in a State psychiatric 
     hospital); and
       ``(B) any individual who is not an eligible low-income 
     individual.
       ``(b) Eligible Low-Income Individual.--The term `eligible 
     low-income individual' means an individual who has been 
     determined eligible by the State for medical assistance under 
     the MediGrant plan and whose family income (as determined 
     under the plan) does not exceed a percentage (specified in 
     the MediGrant plan and not to exceed 300 percent) of the 
     poverty line for a family of the size involved. In 
     determining the amount of income under the previous sentence, 
     a State may exclude costs incurred for medical care or other 
     types of remedial care recognized by the State.
       ``(c) Medicare Cost-Sharing.--For purposes of this title, 
     the term `medicare cost-sharing' means any of the following:
       ``(1)(A) Premiums under section 1839.
       ``(B) Premiums under section 1818 or 1818A.
       ``(2) Coinsurance under title XVIII (including coinsurance 
     described in section 1813).
       ``(3) Deductibles established under title XVIII (including 
     those described in section 1813 and section 1833(b)).
       ``(4) The difference between the amount that is paid under 
     section 1833(a) and the amount that would be paid under such 
     section if any reference to `80 percent' therein were deemed 
     a reference to `100 percent'.
       ``(5) Premiums for enrollment of an individual with an 
     eligible organization under section 1876 or with a 
     MedicarePlus organization under part C of title XVIII.
       ``(d) Additional Definitions.--For purposes of this title:
       ``(1) Child.--The term `child' means an individual under 19 
     years of age.
       ``(2) Poverty line defined.--The term `poverty line' means 
     the income official poverty line (as defined by the Office of 
     Management and Budget and revised annually in accordance with 
     section 673(2) of the Omnibus Budget Reconciliation Act of 
     1981).
       ``(3) Pregnant woman.--The term `pregnant woman' includes a 
     woman during the 60-day period beginning on the last day of 
     the pregnancy.

     ``SEC. 2172. TREATMENT OF TERRITORIES.

       ``Notwithstanding any other requirement of this title, the 
     Secretary may waive or modify any requirement of this title 
     with respect to the medical assistance program a State other 
     than the 50 States and the District of Columbia, other than a 
     waiver of--
       ``(1) the applicable Federal medical assistance percentage,
       ``(2) the limitation on total payments in a fiscal year to 
     the amount of the allotment under section 2121(c), or
       ``(3) the requirement that payment may be made for medical 
     assistance only with respect to amounts expended by the State 
     for care and services described in paragraph (1) of section 
     2171(a) and medically-related services (as defined in section 
     2112(e)(2)).

     ``SEC. 2173. DESCRIPTION OF TREATMENT OF INDIAN HEALTH 
                   SERVICE FACILITIES.

       ``In the case of a State in which one or more facilities of 
     the Indian Health Service are located, the MediGrant plan 
     shall include a description of--
       ``(1) what provision (if any) has been made for payment for 
     items and services furnished by such facilities, and
       ``(2) the manner in which medical assistance for low-income 
     eligible individuals who are Indians will be provided, as 
     determined by the State in consultation with the appropriate 
     Indian tribes and tribal organizations.

     ``SEC. 2174. APPLICATION OF CERTAIN GENERAL PROVISIONS.

       ``The following sections in part A of title XI shall apply 
     to States under this title in the same manner as they applied 
     to a State under title XIX:
       ``(1) Section 1101(a)(1) (relating to definition of State).
       ``(2) Section 1116 (relating to administrative and judicial 
     review), but only insofar as consistent with the provisions 
     of part C.
       ``(3) Section 1124 (relating to disclosure of ownership and 
     related information).
       ``(4) Section 1126 (relating to disclosure of information 
     about certain convicted individuals).
       ``(5) Section 1128B(d) (relating to criminal penalties for 
     certain additional charges).
       ``(6) Section 1132 (relating to periods within which claims 
     must be filed).

     ``SEC. 2175. MEDIGRANT MASTER DRUG REBATE AGREEMENTS.

       ``(a) Requirement for Manufacturer to Enter Into 
     Agreement.--
       ``(1) In general.--Pursuant to section 2123(f), in order 
     for payment to be made to a State under part C for medical 
     assistance for covered outpatient drugs of a manufacturer, 
     the manufacturer shall enter into and have in effect an 
     MediGrant master rebate agreement described in subsection (b) 
     with the Secretary on behalf of States electing to 
     participate in the agreement.
       ``(2) State participation in master agreement optional.--
     Nothing in this section shall be construed to--
       ``(A) require a State to participate in an MediGrant master 
     rebate agreement under this section; or
       ``(B) prohibit a State from entering into an agreement with 
     a manufacturer of covered outpatient drugs (under such terms 
     as the State and manufacturer may agree upon) regarding the 
     amount of payment for such drugs under the MediGrant plan.
       ``(3) Coverage of drugs not covered under rebate 
     agreements.--Nothing in this section shall be construed to 
     prohibit a State in its discretion from providing coverage 
     under its MediGrant plan of a covered outpatient drug for 
     which no rebate agreement is in effect under this section.
       ``(4) Effect on existing agreements.--If a State has a 
     rebate agreement in effect with a manufacturer on the date of 
     the enactment of this section which provides for a minimum 
     aggregate rebate equal to or greater than the minimum 
     aggregate rebate which would otherwise be paid under the 
     MediGrant master agreement under this section, at the option 
     of the State--
       ``(A) such agreement shall be considered to meet the 
     requirements of the MediGrant master rebate agreement; and
       ``(B) the State shall be considered to have elected to 
     participate in the MediGrant master rebate agreement.
       ``(b) Terms of Rebate Agreement.--
       ``(1) Periodic rebates.--The MediGrant master rebate 
     agreement under this section shall require the manufacturer 
     to provide, to the MediGrant plan of each State participating 
     in the agreement, a rebate for a rebate period in an amount 
     specified in subsection (c) for covered outpatient drugs of 
     the manufacturer dispensed after the effective date of the 
     agreement, for which payment was made under the plan for such 
     period. Such rebate shall be paid by the manufacturer not 
     later than 30 days after the date of receipt of the 
     information described in paragraph (2) for the period 
     involved.
       ``(2) State provision of information.--
       ``(A) State responsibility.--Each State participating in 
     the MediGrant master rebate agreement shall report to each 
     manufacturer not later than 60 days after the end of each 
     rebate period and in a form consistent with a standard 
     reporting format established by the Secretary, information on 
     the total number of units of each dosage form and strength 
     and package size of each covered outpatient drug, for which 
     payment was made under the MediGrant plan for the period, and 
     shall promptly transmit a copy of such report to the 
     Secretary.
       ``(B) Audits.--A manufacturer may audit the information 
     provided (or required to be provided) under subparagraph (A). 
     Adjustments to rebates shall be made to the extent that 
     information indicates that utilization was greater or less 
     than the amount previously specified.
       ``(3) Manufacturer provision of price information.--
       ``(A) In general.--Each manufacturer which is subject to 
     the MediGrant master rebate agreement under this section 
     shall report to the Secretary--
       ``(i) not later than 30 days after the last day of each 
     rebate period under the agreement (beginning on or after 
     January 1, 1991), on the average manufacturer price (as 
     defined in subsection (i)(1)) and, for single source drugs 
     and innovator multiple source drugs, the manufacturer's best 
     price (as defined in subsection (c)(1)(C)) for each covered 
     outpatient drug for the rebate period under the agreement, 
     and
       ``(ii) not later than 30 days after the date of entering 
     into an agreement under this section, on the average 
     manufacturer price (as defined in subsection (i)(1)) as of 
     October 1, 1990, for each of the manufacturer's covered 
     outpatient drugs.
       ``(B) Verification surveys of average manufacturer price.--
     The Secretary may survey wholesalers and manufacturers that 
     directly distribute their covered outpatient drugs, when 
     necessary, to verify manufacturer prices reported under 
     subparagraph (A). The Secretary may impose a civil monetary 
     penalty in an amount not to exceed $10,000 on a wholesaler, 
     manufacturer, or direct seller, if the wholesaler, 
     manufacturer, or direct seller of a covered outpatient drug 
     refuses a request for information by the Secretary in 
     connection with a survey under this subparagraph. The 
     provisions of section 1128A (other than subsections (a) (with 
     respect to amounts of penalties or additional assessments) 
     and (b)) shall apply to a civil money penalty under this 
     subparagraph in the same manner as such provisions apply to

[[Page 1767]]

     a penalty or proceeding under section 1128A(a).
       ``(C) Penalties.--
       ``(i) Failure to provide timely information.--In the case 
     of a manufacturer which is subject to the MediGrant master 
     rebate agreement that fails to provide information required 
     under subparagraph (A) on a timely basis, the amount of the 
     penalty shall be $10,000 for each day in which such 
     information has not been provided and such amount shall be 
     paid to the Treasury. If such information is not reported 
     within 90 days of the deadline imposed, the agreement shall 
     be suspended for services furnished after the end of such 90-
     day period and until the date such information is reported 
     (but in no case shall such suspension be for a period of less 
     than 30 days).
       ``(ii) False information.--Any manufacturer which is 
     subject to the MediGrant master rebate agreement, or a 
     wholesaler or direct seller, that knowingly provides false 
     information under subparagraph (A) or (B) is subject to a 
     civil money penalty in an amount not to exceed $100,000 for 
     each item of false information. Any such civil money penalty 
     shall be in addition to other penalties as may be prescribed 
     by law. The provisions of section 1128A (other than 
     subsections (a) and (b)) shall apply to a civil money penalty 
     under this subparagraph in the same manner as such provisions 
     apply to a penalty or proceeding under section 1128A(a).
       ``(D) Confidentiality of information.--Notwithstanding any 
     other provision of law, information disclosed by 
     manufacturers or wholesalers under this paragraph or under an 
     agreement with the Secretary of Veterans Affairs described in 
     section 2123(f) is confidential and shall not be disclosed by 
     the Secretary or the Secretary of Veterans Affairs or a State 
     agency (or contractor therewith) in a form which discloses 
     the identity of a specific manufacturer or wholesaler or the 
     prices charged for drugs by such manufacturer or wholesaler, 
     except--
       ``(i) as the Secretary determines to be necessary to carry 
     out this section,
       ``(ii) to permit the Comptroller General to review the 
     information provided, and
       ``(iii) to permit the Director of the Congressional Budget 
     Office to review the information provided.
       ``(4) Length of agreement.--
       ``(A) In general.--The MediGrant master rebate agreement 
     under this section shall be effective for an initial period 
     of not less than 1 year and shall be automatically renewed 
     for a period of not less than one year unless terminated 
     under subparagraph (B).
       ``(B) Termination.--
       ``(i) By the secretary.--The Secretary may provide for 
     termination of the MediGrant master rebate agreement with 
     respect to a manufacturer for violation of the requirements 
     of the agreement or other good cause shown. Such termination 
     shall not be effective earlier than 60 days after the date of 
     notice of such termination. The Secretary shall provide, upon 
     request, a manufacturer with a hearing concerning such a 
     termination, but such hearing shall not delay the effective 
     date of the termination. Failure of a State to provide any 
     advance notice of such a termination as required by 
     regulation shall not affect the State's right to terminate 
     coverage of the drugs affected by such termination as of the 
     effective date of such termination.
       ``(ii) By a manufacturer.--A manufacturer may terminate its 
     participation in the MediGrant master rebate agreement under 
     this section for any reason. Any such termination shall not 
     be effective until the calendar quarter beginning at least 60 
     days after the date the manufacturer provides notice to the 
     Secretary.
       ``(iii) Effectiveness of termination.--Any termination 
     under this subparagraph shall not affect rebates due under 
     the agreement before the effective date of its termination.
       ``(iv) Notice to states.--In the case of a termination 
     under this subparagraph, the Secretary shall provide notice 
     of such termination to the States within not less than 30 
     days before the effective date of such termination.
       ``(v) Application to terminations of other agreements.--The 
     provisions of this subparagraph shall apply to the 
     terminations of master agreements described in section 
     8126(a) of title 38, United States Code.
       ``(C) Delay before reentry.--In the case of any rebate 
     agreement with a manufacturer under this section which is 
     terminated, another such agreement with the manufacturer (or 
     a successor manufacturer) may not be entered into until a 
     period of 1 calendar quarter has elapsed since the date of 
     the termination, unless the Secretary finds good cause for an 
     earlier reinstatement of such an agreement.
       ``(c) Determination of Amount of Rebate.--
       ``(1) Basic rebate for single source drugs and innovator 
     multiple source drugs.--
       ``(A) In general.--Except as provided in paragraph (2), the 
     amount of the rebate specified in this subsection with 
     respect to a State participating in the MediGrant master 
     rebate agreement for a rebate period (as defined in 
     subsection (i)(8)) with respect to each dosage form and 
     strength of a single source drug or an innovator multiple 
     source drug shall be equal to the product of--
       ``(i) the total number of units of each dosage form and 
     strength paid for under the State plan in the rebate period 
     (as reported by the State); and
       ``(ii) the greater of--

       ``(I) the difference between the average manufacturer price 
     and the best price (as defined in subparagraph (C)) for the 
     dosage form and strength of the drug, or
       ``(II) the minimum rebate percentage (specified in 
     subparagraph (B)) of such average manufacturer price,

     for the rebate period.
       ``(B) Minimum rebate percentage.--For purposes of 
     subparagraph (A)(ii)(II), the `minimum rebate percentage' is 
     15.1 percent.
       ``(C) Best price defined.--For purposes of this section--
       ``(i) In general.--The term `best price' means, with 
     respect to a single source drug or innovator multiple source 
     drug of a manufacturer, the lowest price available from the 
     manufacturer during the rebate period to any wholesaler, 
     retailer, provider, health maintenance organization, 
     nonprofit entity, or governmental entity within the United 
     States, excluding--

       ``(I) any prices charged on or after October 1, 1992, to 
     the Indian Health Service, the Department of Veterans 
     Affairs, a State home receiving funds under section 1741 of 
     title 38, United States Code, the Department of Defense, the 
     Public Health Service, or a covered entity described in 
     section 340B(a)(4) of the Public Health Service Act;
       ``(II) any prices charged under the Federal Supply Schedule 
     of the General Services Administration;
       ``(III) any prices used under a State pharmaceutical 
     assistance program; and
       ``(IV) any depot prices and single award contract prices, 
     as defined by the Secretary, of any agency of the Federal 
     Government.

       ``(ii) Special rules.--The term `best price'--

       ``(I) shall be inclusive of cash discounts, free goods that 
     are contingent on any purchase requirement, volume discounts, 
     and rebates (other than rebates under this section);
       ``(II) shall be determined without regard to special 
     packaging, labeling, or identifiers on the dosage form or 
     product or package;
       ``(III) shall not take into account prices that are merely 
     nominal in amount; and
       ``(IV) shall exclude rebates paid under this section or any 
     other rebates paid to a State participating in the MediGrant 
     master rebate agreement.

       ``(2) Additional rebate for single source and innovator 
     multiple source drugs.--
       ``(A) In general.--The amount of the rebate specified in 
     this subsection with respect to a State participating in the 
     MediGrant master rebate agreement for a rebate period, with 
     respect to each dosage form and strength of a single source 
     drug or an innovator multiple source drug, shall be increased 
     by an amount equal to the product of--
       ``(i) the total number of units of such dosage form and 
     strength dispensed after December 31, 1990, for which payment 
     was made under the MediGrant plan for the rebate period; and
       ``(ii) the amount (if any) by which--

       ``(I) the average manufacturer price for the dosage form 
     and strength of the drug for the period, exceeds
       ``(II) the average manufacturer price for such dosage form 
     and strength for the calendar quarter beginning July 1, 1990 
     (without regard to whether or not the drug has been sold or 
     transferred to an entity, including a division or subsidiary 
     of the manufacturer, after the first day of such quarter), 
     increased by the percentage by which the consumer price index 
     for all urban consumers (United States city average) for the 
     month before the month in which the rebate period begins 
     exceeds such index for September 1990.

       ``(B) Treatment of subsequently approved drugs.--In the 
     case of a covered outpatient drug approved by the Food and 
     Drug Administration after October 1, 1990, clause (ii)(II) of 
     subparagraph (A) shall be applied by substituting `the first 
     full calendar quarter after the day on which the drug was 
     first marketed' for `the calendar quarter beginning July 1, 
     1990' and `the month prior to the first month of the first 
     full calendar quarter after the day on which the drug was 
     first marketed' for `September 1990'.
       ``(3) Rebate for other drugs.--
       ``(A) In general.--The amount of the rebate paid to a State 
     participating in the MediGrant master rebate agreement for a 
     rebate period with respect to each dosage form and strength 
     of covered outpatient drugs (other than single source drugs 
     and innovator multiple source drugs) shall be equal to the 
     product of--
       ``(i) the applicable percentage (as described in 
     subparagraph (B)) of the average manufacturer price for the 
     dosage form and strength for the rebate period, and
       ``(ii) the total number of units of such dosage form and 
     strength dispensed after December 31, 1990, for which payment 
     was made under the MediGrant plan for the rebate period.
       ``(B) Applicable percentage defined.--For purposes of 
     subparagraph (A)(i), the `applicable percentage' is 11 
     percent.
       ``(4) Limitation on amount of rebate to amounts paid for 
     certain drugs.--Upon request of a manufacturer of a covered 
     outpatient drug for which a majority of the estimated number 
     of units of such dosage form and strength that are subject to 
     rebates under this section were dispensed to inpatients of 
     nursing facilities (including drugs which are exempt from the 
     requirements of the MediGrant master rebate agreement under 
     this section under subsection (h)(1)(B)), the Secretary shall 
     limit the amount of the rebate under this subsection

[[Page 1768]]

     with respect to a dosage form and strength of the drug for a 
     rebate period to the amount paid under the MediGrant plan 
     with respect to such dosage form and strength of the drug in 
     the rebate period (without consideration of any dispensing 
     fees paid).
       ``(d) Limitations on Coverage of Drugs by States 
     Participating in Master Agreement.--
       ``(1) Permissible restrictions.--A State participating in 
     the MediGrant master rebate agreement under this section 
     may--
       ``(A) subject to prior authorization under its MediGrant 
     plan any covered outpatient drug so long as any such prior 
     authorization program complies with the requirements of 
     paragraph (5); and
       ``(B) exclude or otherwise restrict coverage under its plan 
     of a covered outpatient drug if--
       ``(i) the prescribed use is not for a medically accepted 
     indication (as defined in subsection (i)(5));
       ``(ii) the drug is contained in the list referred to in 
     paragraph (2);
       ``(iii) the drug is subject to such restrictions pursuant 
     to the MediGrant master rebate agreement or any agreement 
     described in subsection (a)(4); or
       ``(iv) the State has excluded coverage of the drug from its 
     formulary established in accordance with paragraph (4).
       ``(2) List of drugs subject to restriction.--The following 
     drugs or classes of drugs, or their medical uses, may be 
     excluded from coverage or otherwise restricted by a State 
     participating in the MediGrant master rebate agreement:
       ``(A) Agents when used for anorexia, weight loss, or weight 
     gain.
       ``(B) Agents when used to promote fertility.
       ``(C) Agents when used for cosmetic purposes or hair 
     growth.
       ``(D) Agents when used for the symptomatic relief of cough 
     and colds.
       ``(E) Agents when used to promote smoking cessation.
       ``(F) Prescription vitamins and mineral products, except 
     prenatal vitamins and fluoride preparations.
       ``(G) Nonprescription drugs.
       ``(H) Covered outpatient drugs which the manufacturer seeks 
     to require as a condition of sale that associated tests or 
     monitoring services be purchased exclusively from the 
     manufacturer or its designee.
       ``(I) Barbiturates.
       ``(J) Benzodiazepines.
       ``(3) Additions to drug listings.--The Secretary shall, by 
     regulation, periodically update the list of drugs or classes 
     of drugs described in paragraph (2), or their medical uses, 
     which the Secretary has determined to be subject to clinical 
     abuse or inappropriate use.
       ``(4) Requirements for formularies.--A State participating 
     in the MediGrant master rebate agreement may establish a 
     formulary if the formulary meets the following requirements:
       ``(A) The formulary is developed by a committee consisting 
     of physicians, pharmacists, and other appropriate individuals 
     appointed by the Governor of the State.
       ``(B) Except as provided in subparagraph (C), the formulary 
     includes the covered outpatient drugs of any manufacturer 
     which has entered into and complies with the agreement under 
     subsection (a) (other than any drug excluded from coverage or 
     otherwise restricted under paragraph (2)).
       ``(C) A covered outpatient drug may be excluded with 
     respect to the treatment of a specific disease or condition 
     for an identified population (if any) only if, based on the 
     drug's labeling (or, in the case of a drug the prescribed use 
     of which is not approved under the Federal Food, Drug, and 
     Cosmetic Act but is a medically accepted indication, based on 
     information from the appropriate compendia described in 
     subsection (i)(5)), the excluded drug does not have a 
     significant, clinically meaningful therapeutic advantage in 
     terms of safety, effectiveness, or clinical outcome of such 
     treatment for such population over other drugs included in 
     the formulary and there is a written explanation (available 
     to the public) of the basis for the exclusion.
       ``(D) The State plan permits coverage of a drug excluded 
     from the formulary (other than any drug excluded from 
     coverage or otherwise restricted under paragraph (2)) 
     pursuant to a prior authorization program that is consistent 
     with paragraph (5).
       ``(E) The formulary meets such other requirements as the 
     Secretary may impose in order to achieve program savings 
     consistent with protecting the health of program 
     beneficiaries.
     A prior authorization program established by a State under 
     paragraph (5) is not a formulary subject to the requirements 
     of this paragraph.
       ``(5) Requirements of prior authorization programs.--The 
     MediGrant plan of a State participating in the MediGrant 
     master rebate agreement may require, as a condition of 
     coverage or payment for a covered outpatient drug for which 
     Federal financial participation is available in accordance 
     with this section the approval of the drug before its 
     dispensing for any medically accepted indication (as defined 
     in subsection (i)(5)) only if the system providing for such 
     approval--
       ``(A) provides response by telephone or other 
     telecommunication device within 24 hours of a request for 
     prior authorization; and
       ``(B) except with respect to the drugs on the list referred 
     to in paragraph (2), provides for the dispensing of at least 
     a 72-hour supply of a covered outpatient prescription drug in 
     an emergency situation (as defined by the Secretary).
       ``(6) Other permissible restrictions.--A State 
     participating in the MediGrant master rebate agreement may 
     impose limitations, with respect to all such drugs in a 
     therapeutic class, on the minimum or maximum quantities per 
     prescription or on the number of refills, if such limitations 
     are necessary to discourage waste, and may address instances 
     of fraud or abuse by individuals in any manner authorized 
     under this Act.
       ``(e) Drug Use Review.--
       ``(1) In general.--A State participating in the MediGrant 
     master rebate agreement may provide for a drug use review 
     program to educate physicians and pharmacists to identify and 
     reduce the frequency of patterns of fraud, abuse, gross 
     overuse, or inappropriate or medically unnecessary care, 
     among physicians, pharmacists, and patients, or associated 
     with specific drugs or groups of drugs, as well as potential 
     and actual severe adverse reactions to drugs.
       ``(2) Application of state standards.--A State with a drug 
     use review program under this subsection shall establish and 
     operate the program under such standards as it may establish.
       ``(f) Electronic Claims Management.--In accordance with 
     chapter 35 of title 44, United States Code (relating to 
     coordination of Federal information policy), the Secretary 
     shall encourage each State to establish, as its principal 
     means of processing claims for covered outpatient drugs under 
     its MediGrant plan, a point-of-sale electronic claims 
     management system, for the purpose of performing on-line, 
     real time eligibility verifications, claims data capture, 
     adjudication of claims, and assisting pharmacists (and other 
     authorized persons) in applying for and receiving payment.
       ``(g) Annual Report.--
       ``(1) In general.--Not later than May 1 of each year, the 
     Secretary shall transmit to the Committee on Finance of the 
     Senate, the Committee on Commerce of the House of 
     Representatives, and the Committee on Aging of the Senate a 
     report on the operation of this section in the preceding 
     fiscal year.
       ``(2) Details.--Each report shall include information on--
       ``(A) ingredient costs paid under this title for single 
     source drugs, multiple source drugs, and nonprescription 
     covered outpatient drugs;
       ``(B) the total value of rebates received and number of 
     manufacturers providing such rebates;
       ``(C) the effect of inflation on the value of rebates 
     required under this section;
       ``(D) trends in prices paid under this title for covered 
     outpatient drugs; and
       ``(E) Federal and State administrative costs associated 
     with compliance with the provisions of this title.
       ``(h) Exemption for Capitated Health Care Organizations, 
     Hospitals, and Nursing Facilities.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     requirements of the MediGrant master rebate agreement under 
     this section shall not apply with respect to covered 
     outpatient drugs dispensed by or through--
       ``(A) a capitated health care organization (as defined in 
     section 2114(c)(1)); or
       ``(B) a hospital or nursing facility that dispenses covered 
     outpatient drugs using a drug formulary system and bills the 
     State no more than the hospital's purchasing costs for 
     covered outpatient drugs.
       ``(2) Construction in determining best price.--Nothing in 
     paragraph (1) shall be construed as excluding amounts paid by 
     the entities described in such paragraph for covered 
     outpatient drugs from the determination of the best price (as 
     defined in subsection (c)(1)(C)) for such drugs.
       ``(i) Definitions.--In the section--
       ``(1) Average manufacturer price.--The term `average 
     manufacturer price' means, with respect to a covered 
     outpatient drug of a manufacturer for a rebate period, the 
     average price paid to the manufacturer for the drug in the 
     United States by wholesalers for drugs distributed to the 
     retail pharmacy class of trade, after deducting customary 
     prompt pay discounts.
       ``(2) Covered outpatient drug.--Subject to the exceptions 
     in subparagraph (D), the term `covered outpatient drug' 
     means--
       ``(A) of those drugs which are treated as prescribed drugs 
     for purposes of section 2171(a)(1)(H), a drug which may be 
     dispensed only upon prescription (except as provided in 
     paragraph (7)), and--
       ``(i) which is approved as a prescription drug under 
     section 505 or 507 of the Federal Food, Drug, and Cosmetic 
     Act;
       ``(ii)(I) which was commercially used or sold in the United 
     States before the date of the enactment of the Drug 
     Amendments of 1962 or which is identical, similar, or related 
     (within the meaning of section 310.6(b)(1) of title 21 of the 
     Code of Federal Regulations) to such a drug, and (II) which 
     has not been the subject of a final determination by the 
     Secretary that it is a `new drug' (within the meaning of 
     section 201(p) of the Federal Food, Drug, and Cosmetic Act) 
     or an action brought by the Secretary under section 301, 
     302(a), or 304(a) of such Act to enforce section 502(f) or 
     505(a) of such Act; or
       ``(iii)(I) which is described in section 107(c)(3) of the 
     Drug Amendments of 1962 and for which the Secretary has 
     determined there is a compelling justification for its 
     medical need, or is identical, similar, or related (within 
     the meaning of section 310.6(b)(1) of title 21 of the Code of 
     Federal

[[Page 1769]]

     Regulations) to such a drug, and (II) for which the Secretary 
     has not issued a notice of an opportunity for a hearing under 
     section 505(e) of the Federal Food, Drug, and Cosmetic Act on 
     a proposed order of the Secretary to withdraw approval of an 
     application for such drug under such section because the 
     Secretary has determined that the drug is less than effective 
     for some or all conditions of use prescribed, recommended, or 
     suggested in its labeling;
       ``(B) a biological product, other than a vaccine which--
       ``(i) may only be dispensed upon prescription,
       ``(ii) is licensed under section 351 of the Public Health 
     Service Act, and
       ``(iii) is produced at an establishment licensed under such 
     section to produce such product;
       ``(C) insulin certified under section 506 of the Federal 
     Food, Drug, and Cosmetic Act; and
       ``(D) a drug which may be sold without a prescription 
     (commonly referred to as an `over-the-counter drug'), if the 
     drug is prescribed by a physician (or other person authorized 
     to prescribe under State law).
       ``(3) Limiting definition.--The term `covered outpatient 
     drug' does not include any drug, biological product, or 
     insulin provided as part of, or as incident to and in the 
     same setting as, any of the following (and for which payment 
     may be made under a MediGrant plan as part of payment for the 
     following and not as direct reimbursement for the drug):
       ``(A) Inpatient hospital services.
       ``(B) Hospice services.
       ``(C) Dental services, except that drugs for which the 
     MediGrant plan authorizes direct reimbursement to the 
     dispensing dentist are covered outpatient drugs.
       ``(D) Physicians' services.
       ``(E) Outpatient hospital services.
       ``(F) Nursing facility services and services provided by an 
     intermediate care facility for the mentally retarded.
       ``(G) Other laboratory and x-ray services.
       ``(H) Renal dialysis services.
     Such term also does not include any such drug or product for 
     which a National Drug Code number is not required by the Food 
     and Drug Administration or a drug or biological used for a 
     medical indication which is not a medically accepted 
     indication. Any drug, biological product, or insulin excluded 
     from the definition of such term as a result of this 
     paragraph shall be treated as a covered outpatient drug for 
     purposes of determining the best price (as defined in 
     subsection (c)(1)(C)) for such drug, biological product, or 
     insulin.
       ``(4) Manufacturer.--The term `manufacturer' means, with 
     respect to a covered outpatient drug, the entity holding 
     legal title to or possession of the National Drug Code number 
     for such drug.
       ``(5) Medically accepted indication.--The term `medically 
     accepted indication' means any use for a covered outpatient 
     drug which is approved under the Federal Food, Drug, and 
     Cosmetic Act, or the use of which is supported by one or more 
     citations included or approved for inclusion in any of the 
     following compendia:
       ``(A) American Hospital Formulary Service Drug Information.
       ``(B) United States Pharmacopeia-Drug Information.
       ``(C) American Medical Association Drug Evaluations.
       ``(D) The peer-reviewed medical literature.
       ``(6) Multiple source drug; innovator multiple source drug; 
     noninnovator multiple source drug; single source drug.--
       ``(A) Defined.--
       ``(i) Multiple source drug.--The term `multiple source 
     drug' means, with respect to a rebate period, a covered 
     outpatient drug (not including any drug described in 
     paragraph (2)(D)) for which there are 2 or more drug products 
     which--

       ``(I) are rated as therapeutically equivalent (under the 
     Food and Drug Administration's most recent publication of 
     `Approved Drug Products with Therapeutic Equivalence 
     Evaluations'),
       ``(II) except as provided in subparagraph (B), are 
     pharmaceutically equivalent and bioequivalent, as defined in 
     subparagraph (C) and as determined by the Food and Drug 
     Administration, and
       ``(III) are sold or marketed in the State during the 
     period.

       ``(ii) Innovator multiple source drug.--The term `innovator 
     multiple source drug' means a multiple source drug that was 
     originally marketed under an original new drug application or 
     product licensing application approved by the Food and Drug 
     Administration.
       ``(iii) Noninnovator multiple source drug.--The term 
     `noninnovator multiple source drug' means a multiple source 
     drug that is not an innovator multiple source drug.
       ``(iv) Single source drug.--The term `single source drug' 
     means a covered outpatient drug which is produced or 
     distributed under an original new drug application approved 
     by the Food and Drug Administration, including a drug product 
     marketed by any cross-licensed producers or distributors 
     operating under the new drug application or product licensing 
     application.
       ``(B) Exception.--Subparagraph (A)(i)(II) shall not apply 
     if the Food and Drug Administration changes by regulation the 
     requirement that, for purposes of the publication described 
     in subparagraph (A)(i)(I), in order for drug products to be 
     rated as therapeutically equivalent, they must be 
     pharmaceutically equivalent and bioequivalent, as defined in 
     subparagraph (C).
       ``(C) Definitions.--For purposes of this paragraph--
       ``(i) drug products are pharmaceutically equivalent if the 
     products contain identical amounts of the same active drug 
     ingredient in the same dosage form and meet compendial or 
     other applicable standards of strength, quality, purity, and 
     identity;
       ``(ii) drugs are bioequivalent if they do not present a 
     known or potential bioequivalence problem, or, if they do 
     present such a problem, they are shown to meet an appropriate 
     standard of bioequivalence; and
       ``(iii) a drug product is considered to be sold or marketed 
     in a State if it appears in a published national listing of 
     average wholesale prices selected by the Secretary, if the 
     listed product is generally available to the public through 
     retail pharmacies in that State.
       ``(7) Nonprescription drugs.--If the MediGrant plan of a 
     State participating in the MediGrant master rebate agreement 
     under this section includes coverage of prescribed drugs as 
     described in section 2171(a)(1)(H) and permits coverage of 
     drugs which may be sold without a prescription (commonly 
     referred to as `over-the-counter' drugs), if they are 
     prescribed by a physician (or other person authorized to 
     prescribe under State law), such a drug shall be regarded as 
     a covered outpatient drug for purposes of the State's 
     participation in the agreement.
       ``(8) Rebate period.--The term `rebate period' means, with 
     respect to an agreement under subsection (a), a calendar 
     quarter or other period specified by the Secretary with 
     respect to the payment of rebates under such agreement.''.

     SEC. 16002. TERMINATION OF CURRENT PROGRAM AND TRANSITION.

       (a) Termination of Current Program; Limitation on Medicaid 
     Payments in Fiscal Year 1996.--Title XIX of the Social 
     Security Act is amended--
       (1) by redesignating section 1931 as section 1932; and
       (2) by inserting after section 1930 the following new 
     section:

    ``termination of medicaid program; limitation on new obligation 
                               authority

       ``Sec. 1931. (a) Elimination of Individual Entitlement.--
     Effective on the date of the enactment of this section--
       ``(1) except as provided in subsection (b), the Federal 
     Government has no obligation to provide payment with respect 
     to items and services provided under this title, and
       ``(2) this title shall not be construed as providing for an 
     entitlement, under Federal law in relation to the Federal 
     Government, in an individual or person (including any 
     provider) at the time of provision or receipt of services.
       ``(b) Limitation on Obligation Authority.--Notwithstanding 
     any other provision of this title--
       ``(1) Post-enactment, pre-medigrant.--Subject to paragraph 
     (2), the Secretary is authorized to enter into obligations 
     with any State under this title for expenses incurred after 
     the date of the enactment of this Act and during fiscal year 
     1996, but not in excess of the obligation allotment for that 
     State for fiscal year 1996 under section 2121(b)(4).
       ``(2) None after medigrant.--The Secretary is not 
     authorized to enter into any obligation with any State under 
     this title for expenses incurred on or after the earlier of--
       ``(A) October 1, 1996; or
       ``(B) the first day of the first quarter on which the State 
     plan under title XXI is first effective.
       ``(3) Agreement.--A State's submission of claims for 
     payment under section 1903 after the date of the enactment of 
     this title with respect to which the limitation described in 
     paragraph (1) applies is deemed to constitute the State's 
     acceptance of the obligation limitation under such paragraph 
     (including the formula for computing the amount of such 
     obligation limitation).
       ``(c) Requirement for Timely Submittal of Claims.--No 
     payment shall be made to a State under this title with 
     respect to an obligation incurred before the date of the 
     enactment of this section, unless the State has submitted to 
     the Secretary, by not later than June 30, 1996, a claim for 
     Federal financial participation for expenses paid by the 
     State with respect to such obligations. Nothing in subsection 
     (a) or (b) shall be construed as affecting the obligation of 
     the Federal Government to pay claims described in the 
     previous sentence.''.
       (b) Medicaid Transition.--
       (1) Treatment of certain causes of action.--No cause of 
     action under title XIX of the Social Security Act which seeks 
     to require a State to establish or maintain minimum payment 
     rates under such title and which has not become final as of 
     the date of the enactment of this Act shall be brought or 
     continued.
       (2) Treatment of certain disallowances.--Notwithstanding 
     any provision of law, in the case where payment has been made 
     under section 1903(a) of the Social Security Act to a State 
     before October 1, 1995, and for which a disallowance has not 
     been taken as of such date (or, if so taken, has not been 
     completed by such date), the Secretary of Health and Human 
     Services shall discontinue the disallowance proceeding and, 
     if such disallowance has been taken as of the date of the 
     enactment of this Act, any payment reductions effected shall 
     be rescinded and the payments returned to the State.
       (3) Extension of moratorium.--Section 6408(a)(3) of the 
     Omnibus Budget Reconciliation Act of 1989, as amended by 
     section 13642

[[Page 1770]]

     of the Omnibus Budget Reconciliation Act of 1993, is amended 
     by striking ``December 31, 1995'' and inserting ``the first 
     day of the first quarter on which the MediGrant plan for the 
     State of Michigan is first effective under title XXI of such 
     Act''.
       (c) No Application of Prior Medicaid Judgments to MediGrant 
     Program.--No judicial or administrative decision rendered 
     regarding requirements imposed under title XIX of the Social 
     Security Act with respect to a State shall have any 
     application to the MediGrant plan of the State title XXI of 
     such Act. A State may, pursuant to the previous sentence, 
     seek the abrogation or modification of any such decision 
     after the date of termination of the State plan under title 
     XIX of such Act.
       (d) Termination of Program for Distribution of Pediatric 
     Vaccines
       (1) In general.--Subject to paragraph (2), section 1928 of 
     the Social Security Act (42 U.S.C. 1396s) is repealed, 
     effective on the date of the enactment of this Act.
       (2) Transition.--(A) Such repeal shall not affect the 
     distribution of vaccines purchased and delivered to the 
     States before the date of the enactment of this Act.
       (B) No vaccine may be purchased after such date by the 
     Federal Government or any State under any contract under 
     section 1928(d) of the Social Security Act.
       (e) Anti-Fraud Provisions.--
       (1) In general.--Section 1128(h)(1) of the Social Security 
     Act (42 U.S.C. 1320a-7(h)(1)) is amended by inserting ``or a 
     MediGrant plan under title XXI'' after ``title XIX''.
       (2) Continued role of inspector general.--The Inspector 
     General in the Department of Health and Human Services shall 
     have the same responsibilities and duties in relation to 
     fraud and abuse and related matters under the MediGrant 
     program under title XXI of the Social Security Act as such 
     Inspector General has had in relation to the medicaid program 
     under title XIX of such Act before the date of the enactment 
     of this Act.
       (f) Final Extension of Medicaid Waiver for Dayton Area 
     Health Plan.--Section 2 of Public Law 102-276, as amended by 
     section 13644 of the Omnibus Budget Reconciliation Act of 
     1993, is amended by striking ``December 31, 1995'' and 
     inserting ``the last day of the last calendar quarter in 
     which a State medicaid plan is in effect in Ohio under title 
     XIX of the Social Security Act''.
           TITLE XVII--ABOLISHMENT OF DEPARTMENT OF COMMERCE

     SEC. 17001. SHORT TITLE.

       This title may be cited as the ``Department of Commerce 
     Dismantling Act''.

     SEC. 17002. TABLE OF CONTENTS.

       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.
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.
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.
           Subtitle A--Abolishment of Department of Commerce

     SEC. 17101. ABOLISHMENT OF DEPARTMENT OF COMMERCE.

       (a) Abolishment of Department.--The Department of Commerce 
     is abolished effective on the abolishment date specified in 
     subsection (c).
       (b) Transfer of Department Functions to OMB.--Except as 
     otherwise provided in this title, all functions that 
     immediately before the abolishment date specified in 
     subsection (c) are authorized to be performed by the 
     Secretary of Commerce, any other officer or employee of the 
     Department acting in that capacity, or any agency or office 
     of the Department, are transferred to the Director of the 
     Office of Management and Budget effective on that abolishment 
     date.
       (c) Abolishment Date.--The abolishment date referred to in 
     subsections (a) and (b) is the earlier of--
       (1) the last day of the 6-month period beginning on the 
     date of the enactment of this Act; or
       (2) September 30, 1996.

     SEC. 17102. RESOLUTION AND TERMINATION OF DEPARTMENT 
                   FUNCTIONS.

       (a) Resolution of Functions.--During the period beginning 
     on the date of enactment of this Act and ending on the 
     functions termination date specified in subsection (c)--
       (1) the disposition and resolution of functions of the 
     Department of Commerce shall be completed in accordance with 
     this title; and
       (2) the Director shall resolve all functions that are 
     transferred to the Director under section 17101(b) and are 
     not otherwise continued under this title.
       (b) Termination of Functions.--All functions that are 
     transferred to the Director under section 17101(b) that are 
     not otherwise continued by this title shall terminate on the 
     functions termination date specified in subsection (c).
       (c) Functions Termination Date.--The functions termination 
     date referred to in

[[Page 1771]]

     subsections (a) and (b) is the last day of the 3-year period 
     beginning on the date of the enactment of this Act.

     SEC. 17103. RESPONSIBILITIES OF THE DIRECTOR OF THE OFFICE OF 
                   MANAGEMENT AND BUDGET.

       The Director of the Office of Management and Budget, acting 
     through the Administrator of the Office of Programs 
     Resolution, shall be responsible for the implementation of 
     this subtitle, including--
       (1) the administration and wind-up, during the wind-up 
     period, of all functions transferred to the Director under 
     section 17101(b);
       (2) the administration and wind-up, during the wind-up 
     period, of any outstanding obligations of the Federal 
     Government under any programs terminated by this title; and
       (3) taking such other actions as may be necessary to wind-
     up any outstanding affairs of the Department of Commerce 
     before the end of the wind-up period.

     SEC. 17104. OFFICE OF PROGRAMS RESOLUTION.

       (a) Establishment of Office.--There is established in the 
     Office of Management and Budget an office to be known as the 
     Office of Programs Resolution.
       (b) Administrator.--There shall be at the head of the 
     Office an Administrator who shall be appointed by the 
     President, by and with the advice and consent of the Senate. 
     The Administrator shall receive compensation at the rate 
     prescribed for level III of the Executive Schedule under 
     section 5314 of title 5, United States Code. The 
     Administrator shall serve as principal adviser to the 
     Director on Government organization and reorganization 
     matters, and shall report directly to the Director.
       (c) Functions.--The Administrator shall perform such 
     functions as are vested in the Administrator by this title or 
     delegated to the Administrator by the Director.
       (d) Authorities of the Administrator.--For purposes of 
     performing the functions of the Administrator under 
     subsection (c) and subject to the availability of 
     appropriations, the Administrator may--
       (1) enter into contracts;
       (2) employ experts and consultants in accordance with 
     section 3109 of title 5, United States Code, at rates for 
     individuals not to exceed the per diem rate equivalent to the 
     rate for level IV of the Executive Schedule; and
       (3) utilize, on a reimbursable basis, the services, 
     facilities, and personnel of other Federal agencies.
       (e) Auditor General.--
       (1) In general.--There shall be in the Office an Auditor 
     General, who shall be appointed by and report to the 
     Administrator.
       (2) Functions.--The Auditor General shall--
       (A) conduct audits and investigations with respect to 
     activities of the Office; and
       (B) submit to the Administrator and the Director reports on 
     the findings of those audits and investigations.
       (f) Reorganization.--The Administrator may allocate or 
     reallocate among the officers of the Office any function 
     vested in the Administrator or the Office, and may establish, 
     consolidate, alter, or discontinue in the Office any 
     organizational entities that were entities of the Department 
     of Commerce, as the Administrator considers necessary or 
     appropriate.
       (g) Annual Authorization Required.--No sums may be 
     appropriated for any fiscal year for the Office except as 
     specifically authorized for that fiscal year by law.

     SEC. 17105. PERSONNEL.

       Effective on the abolishment date specified in section 
     17101(c), there are transferred to the Office all individuals 
     who--
       (1) immediately before the abolishment date, were officers 
     or employees of the Department of Commerce; and
       (2) in their capacity as such an officer or employee, 
     performed functions that are transferred to the Director 
     under section 17101(b).

     SEC. 17106. PLANS AND REPORTS.

       (a) Initial Implementation Plan.--
       (1) In general.--Not later than 90 days after the date of 
     enactment of this Act, the Director shall submit a report, 
     through the President, to the Congress specifying those 
     actions taken and necessary to be taken--
       (A) to resolve those programs and functions terminated on 
     the date of enactment of this Act; and
       (B) to implement the additional transfers and other program 
     dispositions provided for in this title.
       (2) Contents.--The report shall include--
       (A) a description of the anticipated size and composition 
     of the Programs Resolution Office,
       (B) recommendations for additional legislation, if any, 
     needed to reflect or otherwise to implement the abolishments, 
     transfers, terminations, and other dispositions of programs 
     and functions under this title; and
       (C) a description of actions planned and taken to comply 
     with limitations imposed by this Act on future spending for 
     continued functions.
       (b) Annual Status Reports.--At the end of each of the 
     first, second, and third years following the date of 
     enactment of this Act, the Director shall submit a report, 
     through the President, to the Congress which--
       (1) specifies the status and progress of actions taken to 
     implement this title and to wind-up the affairs of the 
     Department of Commerce by the functions termination date 
     specified in section 17102(c);
       (2) includes a summary of reports submitted to the Director 
     under section 17104(e)(2)(B) during the period covered by the 
     report by the Auditor General of the Office;
       (3) includes any recommendations the Director may have for 
     additional legislation; and
       (4) describes actions taken to comply with limitations 
     imposed by this Act on future spending for continued 
     functions.
       (c) GAO Reports.--Not later than 60 days after issuance of 
     each report under subsections (a) and (b), the Comptroller 
     General of the United States shall submit to the Congress a 
     report which--
       (1) evaluates the report under that subsection; and
       (2) includes any recommendations the Comptroller General 
     considers appropriate.

     SEC. 17107. GAO AUDIT AND ACCESS TO RECORDS.

       (a) Audit of Persons Performing Functions Pursuant to This 
     Act.--All agencies, corporations, organizations, and other 
     persons of any description which under the authority of the 
     United States perform any function or activity pursuant to 
     this title shall be subject to audit by the Comptroller 
     General of the United States with respect to such function or 
     activity.
       (b) Audit of Persons Providing Certain Goods or Services.--
     All persons and organizations which, by contract, grant, or 
     otherwise, provide goods or services to, or receive financial 
     assistance from, any agency or other person performing 
     functions or activities under or referred to by this title 
     shall be subject to audit by the Comptroller General of the 
     United States with respect to such provision of goods or 
     services or receipt of financial assistance.
       (c) Provisions Applicable to audits Under This Section.--
       (1) Nature and scope of audit.--The Comptroller General of 
     the United States shall determine the nature, scope, terms, 
     and conditions of audits conducted under this section.
       (2) Coordination with other provisions of law.--The 
     authority of the Comptroller General of the United States 
     under this section shall be in addition to any audit 
     authority available to the Comptroller General under other 
     provisions of this title or any other law.
       (3) Rights of access, examination, and copying.--The 
     Comptroller General of the United States, and any duly 
     authorized representative of the Comptroller General, shall 
     have access to, and the right to examine and copy, all 
     records and other recorded information in any form, and to 
     examine any property within the possession or control of any 
     agency or person which is subject to audit under this 
     section, which the Comptroller General considers relevant to 
     an audit conducted under this section.
       (4) Enforcement of right of access.--The right of access of 
     the Comptroller General of the United States to information 
     under this section shall be enforceable under section 716 of 
     title 31, United States Code.
       (5) Maintenance of confidential records.--Section 716(e) of 
     title 31, United States Code, shall apply to information 
     obtained by the Comptroller General under this section.

     SEC. 17108. CONFORMING AMENDMENTS.

       (a) Presidential Succession.--Section 19(d)(1) of title 3, 
     United States Code, is amended by striking ``Secretary of 
     Commerce,''.
       (b) Executive Departments.--Section 101 of title 5, United 
     States Code, is amended by striking the following item: ``The 
     Department of Commerce.''.
       (c) Secretary's Compensation.--Section 5312 of title 5, 
     United States Code, is amended by striking the following 
     item: ``Secretary of Commerce.''.
       (d) Compensation for Positions at Level III.--Section 5314 
     of title 5, United States Code, is amended--
       (1) by striking the following item:
       ``Under Secretary of Commerce, Under Secretary of Commerce 
     for Economic Affairs, Under Secretary of Commerce for Export 
     Administration and Under Secretary of Commerce for Travel and 
     Tourism.'';
       (2) by striking the following item:
       ``Under Secretary of Commerce for Oceans and Atmosphere, 
     the incumbent of which also serves as Administrator of the 
     National Oceanic and Atmospheric Administration.'';
       (3) by striking the following item:
       ``Under Secretary of Commerce for Technology.''; and
       (4) by adding at the end the following item:
       ``Administrator, Office of Programs Resolution''.
       (e) Compensation for Positions at Level IV.--Section 5315 
     of title 5, United States Code, is amended--
       (1) by striking the following item:
       ``Assistant Secretaries of Commerce (11).'';
       (2) by striking the following item:
       ``General Counsel of the Department of Commerce.'';
       (3) by striking the following item:
       ``Assistant Secretary of Commerce for Oceans and 
     Atmosphere, the incumbent of which also serves as Deputy 
     Administrator of the National Oceanic and Atmospheric 
     Administration.'';
       (4) by striking the following item:
       ``Director, National Institute of Standards and Technology, 
     Department of Commerce.'';
       (5) by striking the following item:
       ``Inspector General, Department of Commerce.'';
       (6) by striking the following item:
       ``Chief Financial Officer, Department of Commerce.''; and
       (7) in the item relating to the Bureau of the Census, by 
     striking ``, Department of Commerce''.

[[Page 1772]]

       (f) Compensation for Positions at Level V.--Section 5316 of 
     title 5, United States Code, is amended--
       (1) by striking the following item:
       ``Director, United States Travel Service, Department of 
     Commerce.''; and
       (2) by striking the following item:
       ``National Export Expansion Coordinator, Department of 
     Commerce.''.
       (g) Inspector General Act of 1978.--The Inspector General 
     Act of 1978 (5 U.S.C. App.) is amended--
       (1) in section 9(a)(1), by striking subparagraph (B);
       (2) in section 11(1), by striking ``Commerce,''; and
       (3) in section 11(2), by striking ``Commerce,''.
       (h) Effective Date.--The amendments made by this section 
     shall be effective on the abolishment date specified in 
     section 17101(c).

     SEC. 17109. PRIVATIZATION FRAMEWORK.

       (a) In General.--The Office of Management and Budget shall 
     privatize each function designated for privatization under 
     subtitle B within 18 months of the date the transfer of such 
     function to the Office. The Office shall pursue such forms of 
     privatization arrangements as the Office considers 
     appropriate to best serve the interests of the United States. 
     If the Office is unable to privatize a function within 18 
     months, the Office shall report its inability to the Congress 
     with its recommendations as to the appropriate disposition of 
     the function and its assets.
       (b) Role of the Federal Government.--No privatization 
     arrangement made under subsection (a) shall include any 
     future role for, or accountability to, the Federal Government 
     unless it is necessary to assure the continued accomplishment 
     of a specific Federal objective. The Federal role should be 
     the minimum necessary to accomplish Federal objectives.
       (c) Assets.--In privatizing a function, the Office of 
     Management and Budget shall take any action necessary to 
     preserve the value of the assets of a function during the 
     period the Office holds such assets and to continue the 
     performance of the function to the extent necessary to 
     preserve the value of the assets or to accomplish core 
     Federal objectives.

     SEC. 17110. PRIORITY PLACEMENT PROGRAMS FOR FEDERAL EMPLOYEES 
                   AFFECTED BY A REDUCTION IN FORCE ATTRIBUTABLE 
                   TO THIS TITLE.

       (a) In General.--Subchapter I of chapter 33 of title 5, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 3329b. Priority placement programs for employees 
       affected by a reduction in force attributable to the 
       Department of Commerce Dismantling Act

       ``(a)(1) For the purpose of this section, the term 
     `affected agency'--
       ``(A) except as provided in subparagraph (B), means an 
     Executive agency to which personnel are transferred in 
     connection with a transfer of function under the Department 
     of Commerce Dismantling Act, and
       ``(B) with respect to employees of the Department of 
     Commerce in general administration, the Inspector General's 
     office, or the General Council's office, or who provided 
     overhead support to other components of the Department on a 
     reimbursable basis, means all agencies to which functions of 
     those employees are transferred under the Department of 
     Commerce Dismantling Act.
       ``(2) This section applies with respect to any reduction in 
     force that--
       ``(A) occurs within 12 months after the date of the 
     enactment of this section; and
       ``(B) is due to--
       ``(i) the termination of any function of the Department of 
     Commerce or the Office of Programs Resolution, as the case 
     may be; or
       ``(ii) the agency's having excess personnel as a result of 
     a transfer of function described in paragraph (1), as 
     determined by--
       ``(I) the Administrator of the Office of Programs 
     Resolution, in the case of a function transferred to the 
     Office of Management and Budget; or
       ``(II) the head of the agency, in the case of any other 
     function.
       ``(b) As soon as practicable after the date of the 
     enactment of this section, each affected agency shall 
     establish an agencywide priority placement program to 
     facilitate employment placement for employees who--
       ``(1) are scheduled to be separated from service due to a 
     reduction in force described in subsection (a)(2); or
       ``(2) are separated from service due to such a reduction in 
     force.
       ``(c)(1) Each agencywide priority placement program shall 
     include provisions under which a vacant position shall not be 
     filled by the appointment or transfer of any individual from 
     outside of that agency if--
       ``(A) there is then available any individual described in 
     paragraph (2) who is qualified for the position; and
       ``(B) the position--
       ``(i) is at the same grade (or pay level) or not more than 
     1 grade (or pay level) below that of the position last held 
     by such individual before placement in the new position; and
       ``(ii) is within the same commuting area as the 
     individual's last-held position (as referred to in clause 
     (i)) or residence.
       ``(2) For purposes of an agencywide priority placement 
     program, an individual shall be considered to be described in 
     this paragraph if such individual's most recent performance 
     evaluation was at least fully successful (or the equivalent), 
     and such individual is either--
       ``(A) an employee of such agency who is scheduled to be 
     separated, as described in subsection (b)(1); or
       ``(B) an individual who became a former employee of such 
     agency as a result of a separation, as described in 
     subsection (b)(2).
       ``(d)(1) Nothing in this section shall affect any priority 
     placement program of the Department of Defense which is in 
     operation as of the date of the enactment of this section.
       ``(2) Nothing in this section shall impair placement 
     programs within agencies subject to reductions in force 
     resulting from causes other than the Department of Commerce 
     Dismantling Act.
       ``(e) An individual shall cease to be eligible to 
     participate in a program under this section on the earlier 
     of--
       ``(1) the conclusion of the 12-month period beginning on 
     the date on which that individual first became eligible to 
     participate under subsection (c)(2); or
       ``(2) the date on which the individual declines a bona fide 
     offer (or if the individual does not act on the offer, the 
     last day for accepting such offer) from the affected agency 
     of a position described in subsection (c)(1)(B).''.
       (b) Technical and Conforming Amendments.--(1) Title 5, 
     United States Code, is amended by redesignating the second 
     section which is designated as section 3329 as section 3329a.
       (2) The table of sections for chapter 33 of title 5, United 
     States Code, is amended by striking the item relating to the 
     second section which is designated as section 3329 and 
     inserting the following:

``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.''.

     SEC. 17111. FUNDING REDUCTIONS FOR TRANSFERRED FUNCTIONS.

       (a) Funding Reductions.--Except as provided in subsection 
     (b), for each fiscal year that begins on or after the date of 
     the enactment of this Act, the total amount obligated or 
     expended by the United States in performing functions 
     transferred under this title to the Director or to the Office 
     from the Department of Commerce, or any of its officers or 
     components, may not exceed 75 percent of the total amount 
     obligated or expended by the United States in performing such 
     functions for fiscal year 1995.
       (b) Exceptions.--Subsection (a) shall not apply to--
       (1) functions transferred to the Director under section 
     17203 (relating to the Bureau of the Census); or
       (2) obligations or expenditures incurred as a direct 
     consequence of the termination, transfer, or other 
     disposition of functions described in subsection (a) pursuant 
     to this title.
       (c) Rule of Construction.--This section shall take 
     precedence over any other provision of law unless such 
     provision explicitly refers to this section and makes an 
     exception to it.
       (d) Responsibilities of the Director.--The Director shall--
       (1) ensure compliance with the requirements of this 
     section; and
       (2) include in each report under sections 17106 (a) and (b) 
     a description of actions taken to comply with such 
     requirements.

     SEC. 17112. DEFINITIONS.

       For purposes of this subtitle, the following definitions 
     apply:
       (1) Administrator.--The term ``Administrator'' means the 
     Administrator of the Office of Programs Resolution.
       (2) Director.--The term ``Director'' means the Director of 
     the Office of Management and Budget.
       (3) Office.--The term ``Office'' means the Office of 
     Programs Resolution.
       (4) Wind-up period.--The term ``wind-up period'' means the 
     period beginning on the date of the enactment of this Act and 
     ending on the functions termination date specified in section 
     17102(c).
Subtitle B--Disposition of Various Programs, Functions, and Agencies of 
                         Department of Commerce

     SEC. 17201. ABOLISHMENT OF ECONOMIC DEVELOPMENT 
                   ADMINISTRATION AND TRANSFER OF FUNCTIONS.

       (a) In General.--The Public Works and Economic Development 
     Act of 1965 (40 U.S.C. 3131 et seq.) is amended by striking 
     all after the first section and inserting the following:

     ``SEC. 2. ADMINISTRATOR DEFINED.

       ``In this Act, the term `Administrator' means the 
     Administrator of the Small Business Administration.
                    ``TITLE I--STATEMENT OF PURPOSE

     ``SEC. 101. FINDINGS AND DECLARATION.

       ``(a) Findings.--Congress finds that--
       ``(1) the maintenance of the national economy at a high 
     level is vital to the best interests of the United States, 
     but that some of our regions, counties, and communities are 
     suffering substantial and persistent unemployment and 
     underemployment that cause hardship to many individuals and 
     their families, and waste invaluable human resources;
       ``(2) to overcome this problem the Federal Government, in 
     cooperation with the States, should help areas and regions of 
     substantial and persistent unemployment and underemployment 
     to take effective steps in planning and financing their 
     public works and economic development;
       ``(3) Federal financial assistance, including grants for 
     public works and development facilities to communities, 
     industries, enter

[[Page 1773]]

     prises, and individuals in areas needing development should 
     enable such areas to help themselves achieve lasting 
     improvement and enhance the domestic prosperity by the 
     establishment of stable and diversified local economies and 
     improved local conditions, if such assistance is preceded by 
     and consistent with sound, long-range economic planning; and
       ``(4) under the provisions of this Act, new employment 
     opportunities should be created by developing and expanding 
     new and existing public works and other facilities and 
     resources rather than by merely transferring jobs from one 
     area of the United States to another.
       ``(b) Declaration.--Congress declares that, in furtherance 
     of maintaining the national economy at a high level--
       ``(1) the assistance authorized by this Act should be made 
     available to both rural and urban areas;
       ``(2) such assistance should be made available for planning 
     for economic development prior to the actual occurrences of 
     economic distress in order to avoid such condition; and
       ``(3) such assistance should be used for long-term economic 
     rehabilitation in areas where long-term economic 
     deterioration has occurred or is taking place.
     ``TITLE II--GRANTS FOR PUBLIC WORKS AND DEVELOPMENT FACILITIES

     ``SEC. 201. DIRECT AND SUPPLEMENTARY GRANTS.

       ``(a) In General.--Upon the application of any eligible 
     recipient, the Administrator may--
       ``(1) make direct grants for the acquisition or development 
     of land and improvements for public works, public service, or 
     development facility usage, and the acquisition, design and 
     engineering, construction, rehabilitation, alteration, 
     expansion, or improvement of such facilities, including 
     related machinery and equipment, within an area described in 
     section 502(a), if the Administrator finds that--
       ``(A) the project for which financial assistance is sought 
     will directly or indirectly--
       ``(i) tend to improve the opportunities, in the area where 
     such project is or will be located, for the successful 
     establishment or expansion of industrial or commercial plants 
     or facilities;
       ``(ii) otherwise assist in the creation of additional long-
     term employment opportunities for such area; or
       ``(iii) primarily benefit the long-term unemployed and 
     members of low-income families;
       ``(B) the project for which a grant is requested will 
     fulfill a pressing need of the area, or part thereof, in 
     which it is, or will be, located; and
       ``(C) the area for which a project is to be undertaken has 
     an approved investment strategy as provided by section 503 
     and such project is consistent with such strategy;
       ``(2) make supplementary grants in order to enable the 
     States and other entities within areas described in section 
     502(a) to take maximum advantage of designated Federal grant-
     in-aid programs (as defined in subsection (c)(4)), direct 
     grants-in-aid authorized under this section, and Federal 
     grant-in-aid programs authorized by the Watershed Protection 
     and Flood Prevention Act (68 Stat. 666), and the 11 
     watersheds authorized by the Flood Control Act of December 
     22, 1944 (58 Stat. 887), for which they are eligible but for 
     which, because of their economic situation, they cannot 
     supply the required matching share.
       ``(b) Cost Sharing.--Subject to subsection (c), the amount 
     of any direct grant under this subsection for any project 
     shall not exceed 50 percent of the cost of such project.
       ``(c) Requirements Applicable to Supplementary Grants.--
       ``(1) Amount of supplementary grants.--
       ``(A) In general.--Except as provided by subparagraph (B), 
     the amount of any supplementary grant under this section for 
     any project shall not exceed the applicable percentage 
     established by regulations promulgated by the Administrator, 
     but in no event shall the non-Federal share of the aggregate 
     cost of any such project (including assumptions of debt) be 
     less than 20 percent of such cost.
       ``(B) Exception.--Notwithstanding subparagraph (A), in the 
     case of an Indian tribe, a State (or a political subdivision 
     of the State), or a community development corporation which 
     the Administrator determines has exhausted its effective 
     taxing and borrowing capacity, the Administrator shall reduce 
     the non-Federal share below the percentage specified in 
     subparagraph (A) or shall waive the non-Federal share in the 
     case of such a grant for a project in an area described in 
     section 502(a)(4).
       ``(2) Form of supplementary grants.--Supplementary grants 
     shall be made by the Administrator, in accordance with such 
     regulations as the Administrator may prescribe, by increasing 
     the amounts of direct grants authorized under this section or 
     by the payment of funds appropriated under this Act to the 
     heads of the departments, agencies, and instrumentalities of 
     the Federal Government responsible for the administration of 
     the applicable Federal programs.
       ``(3) Federal share limitations specified in other laws.--
     Notwithstanding any requirement as to the amount or sources 
     of non-Federal funds that may otherwise be applicable to the 
     Federal program involved, funds provided under this 
     subsection shall be used for the sole purpose of increasing 
     the Federal contribution to specific projects in areas 
     described in section 502(a) under such programs above the 
     fixed maximum portion of the cost of such project otherwise 
     authorized by the applicable law.
       ``(4) Designated federal grant-in-aid programs defined.--In 
     this subsection, the term `designated Federal grant-in-aid 
     programs' means such existing or future Federal grant-in-aid 
     programs assisting in the construction or equipping of 
     facilities as the Administrator may, in furtherance of the 
     purposes of this Act, designate as eligible for allocation of 
     funds under this section.
       ``(5) Consideration of relative need in determining 
     amount.--In determining the amount of any supplementary grant 
     available to any project under this section, the 
     Administrator shall take into consideration the relative 
     needs of the area and the nature of the projects to be 
     assisted.
       ``(d) Regulations.--The Administrator shall prescribe 
     rules, regulations, and procedures to carry out this section 
     which will assure that adequate consideration is given to the 
     relative needs of eligible areas. In prescribing such rules, 
     regulations, and procedures the Administrator shall consider 
     among other relevant factors--
       ``(1) the severity of the rates of unemployment in the 
     eligible areas and the duration of such unemployment; and
       ``(2) the income levels of families and the extent of 
     underemployment in eligible areas.
       ``(e) Review and Comment Upon Projects by Local 
     Governmental Authorities.--The Administrator shall prescribe 
     regulations which will assure that appropriate local 
     governmental authorities have been given a reasonable 
     opportunity to review and comment upon proposed projects 
     under this section.

     ``SEC. 202. CONSTRUCTION COST INCREASES.

       ``In any case where a grant (including a supplemental 
     grant) has been made by the Administrator under this title 
     for a project and after such grant has been made but before 
     completion of the project, the cost of such project based 
     upon the designs and specifications which were the basis of 
     the grant has been increased because of increases in costs, 
     the amount of such grant may be increased by an amount equal 
     to the percentage increase, as determined by the 
     Administrator, in such costs, but in no event shall the 
     percentage of the Federal share of such project exceed that 
     originally provided for in such grant.

     ``SEC. 203. USE OF FUNDS IN PROJECTS CONSTRUCTED UNDER 
                   PROJECTED COST.

       ``In any case where a grant (including a supplemental 
     grant) has been made by the Administrator under this title 
     for a project, and after such grant has been made but before 
     completion of the project, the cost of such project based 
     upon the designs and specifications which were the basis of 
     the grant has decreased because of decreases in costs, such 
     underrun funds may be used to improve the project either 
     directly or indirectly as determined by the Administrator.

     ``SEC. 204. CHANGED PROJECT CIRCUMSTANCES.

       ``In any case where a grant (including a supplemental 
     grant) has been made by the Administrator under this title 
     for a project, and after such grant has been made but before 
     completion of the project, the purpose or scope of such 
     project based upon the designs and specifications which were 
     the basis of the grant has changed, the Administrator may 
     approve the use of grant funds on such changed project if the 
     Administrator determines that such changed project meets the 
     requirements of this title and that such changes are 
     necessary to enhance economic development in the area.
  ``TITLE III--SPECIAL ECONOMIC DEVELOPMENT AND ADJUSTMENT ASSISTANCE

     ``SEC. 301. STATEMENT OF PURPOSE.

       ``The purpose of this title to provide special economic 
     development and adjustment assistance programs to help State 
     and local areas meet special needs arising from actual or 
     threatened severe unemployment arising from economic 
     dislocation (including unemployment arising from actions of 
     the Federal Government, from defense base closures and 
     realignments, and from compliance with environmental 
     requirements which remove economic activities from a 
     locality) and economic adjustment problems resulting from 
     severe changes in economic conditions (including long-term 
     economic deterioration), and to encourage cooperative 
     intergovernmental action to prevent or solve economic 
     adjustment problems. Nothing in this title is intended to 
     replace the efforts of the economic adjustment program of the 
     Department of Defense.

     ``SEC. 302. SPECIAL ECONOMIC DEVELOPMENT AND ADJUSTMENT 
                   ASSISTANCE.

       ``(a) In General.--The Administrator is authorized to make 
     grants directly to any eligible recipient in an area which 
     the Administrator determines, in accordance with criteria to 
     be established by the Administrator by regulation--
       ``(1) has experienced, or may reasonably be foreseen to be 
     about to experience, a special need to meet an expected rise 
     in unemployment, or other economic adjustment problems 
     (including those caused by any action or decision of the 
     Federal Government); or
       ``(2) has demonstrated long-term economic deterioration.
       ``(b) Purposes.--Amounts from grants under subsection (a) 
     shall be used by an eligible recipient to carry out or 
     develop an investment strategy which--
       ``(1) meets the requirements of section 503; and
       ``(2) is approved by the Administrator.
       ``(c) Types of Assistance.--In carrying out an investment 
     strategy using amounts

[[Page 1774]]

     from grants under subsection (a), an eligible recipient may 
     provide assistance for any of the following:
       ``(1) Public facilities.
       ``(2) Public services.
       ``(3) Business development.
       ``(4) Planning.
       ``(5) Research and technical assistance.
       ``(6) Administrative expenses.
       ``(7) Training.
       ``(8) Relocation of individuals and businesses.
       ``(9) Other assistance which demonstrably furthers the 
     economic adjustment objectives of this title.
       ``(d) Direct Expenditure or Redistribution by Recipient.--
     Amounts from grants under subsection (a) may be used in 
     direct expenditures by the eligible recipient or through 
     redistribution by the eligible recipient to public and 
     private entities in grants, loans, loan guarantees, payments 
     to reduce interest on loan guarantees, or other appropriate 
     assistance, but no grant shall be made by an eligible 
     recipient to a private profit-making entity.
       ``(e) Coordination.--The Administrator to the extent 
     practicable shall coordinate the activities relating to the 
     requirements for investment strategies and making grants and 
     loans under this title with other Federal programs, States, 
     economic development districts, and other appropriate 
     planning and development organizations.
       ``(f) Base Closings and Realignments.--
       ``(1) Location of projects.--In any case in which the 
     Administrator determines a need for assistance under 
     subsection (a) due to the closure or realignment of a 
     military installation, the Administrator may make such 
     assistance available for projects to be carried out on the 
     military installation and for projects to be carried out in 
     communities adversely affected by the closure or realignment.
       ``(2) Interest in property.--Notwithstanding any other 
     provision of law, the Administrator may provide to an 
     eligible recipient any assistance available under this Act 
     for a project to be carried out on a military installation 
     that is closed or scheduled for closure or realignment 
     without requiring that the eligible recipient have title to 
     the property or a leasehold interest in the property for any 
     specified term.

     ``SEC. 303. ANNUAL REPORTS BY RECIPIENT.

       ``Each eligible recipient which receives assistance under 
     this title from the Administrator shall annually during the 
     period such assistance continue to make a full and complete 
     report to the Administrator, in such manner as the 
     Administrator shall prescribe, and such report shall contain 
     an evaluation of the effectiveness of the economic assistance 
     provided under this title in meeting the need it was designed 
     to alleviate and the purposes of this title.

     ``SEC. 304. SALE OF FINANCIAL INSTRUMENTS IN REVOLVING LOAN 
                   FUNDS.

       ``Any loan, loan guarantee, equity, or other financial 
     instrument in the portfolio of a revolving loan fund, 
     including any financial instrument made available using 
     amounts from a grant made before the effective date specified 
     in section 802, may be sold, encumbered, or pledged at the 
     discretion of the grantee of the Fund, to a third party 
     provided that the net proceeds of the transaction--
       ``(1) shall be deposited into the Fund and may only be used 
     for activities which are consistent with the purposes of this 
     title; and
       ``(2) shall be subject to the financial management, 
     accounting, reporting, and auditing standards which were 
     originally applicable to the grant.

     ``SEC. 305. TREATMENT OF REVOLVING LOAN FUNDS.

       ``(a) In General.--Amounts from grants made under this 
     title which are used by an eligible recipient to establish a 
     revolving loan fund shall not be treated, except as provided 
     by subsection (b), as amounts derived from Federal funds for 
     the purposes of any Federal law after such amounts are loaned 
     from the fund to a borrower and repaid to the fund.
       ``(b) Exceptions.--Amounts described in subsection (a) 
     which are loaned from a revolving loan fund to a borrower and 
     repaid to the fund--
       ``(1) may only be used for activities which are consistent 
     with the purposes of this title; and
       ``(2) shall be subject to the financial management, 
     accounting, reporting, and auditing standards which were 
     originally applicable to the grant.
       ``(c) Regulations.--Not later than 30 days after the 
     effective date specified in section 802, the Administrator 
     shall issue regulations to carry out subsection (a).
       ``(d) Public Review and Comment.--Before issuing any final 
     guidelines or administrative manuals governing the operation 
     of revolving loan funds established using amounts from grants 
     under this title, the Administrator shall provide reasonable 
     opportunity for public review of and comment on such 
     guidelines and administrative manuals.
       ``(e) Applicability to Past Grants.--The requirements of 
     this section applicable to amounts from grants made under 
     this title shall also apply to amounts from grants made, 
     before the effective date specified in section 802, under 
     title I of this Act, as in effect on the day before such 
     effective date.
      ``TITLE IV--TECHNICAL ASSISTANCE, RESEARCH, AND INFORMATION

     ``SEC. 401. TECHNICAL ASSISTANCE.

       ``(a) In General.--In carrying out its duties under this 
     Act, the Administrator may provide technical assistance which 
     would be useful in alleviating or preventing conditions of 
     excessive unemployment or underemployment to areas which the 
     Administrator finds have substantial need for such 
     assistance. Such assistance shall include project planning 
     and feasibility studies, management and operational 
     assistance, establishment of business outreach centers, and 
     studies evaluating the needs of, and development 
     potentialities for, economic growth of such areas.
       ``(b) Procedures and Terms.--
       ``(1) Manner of providing assistance.--Assistance may be 
     provided by the Administrator through--
       ``(A) members of the Administrator's staff;
       ``(B) the payment of funds authorized for this section to 
     departments or agencies of the Federal Government;
       ``(C) the employment of private individuals, partnerships, 
     firms, corporations, or suitable institutions under contracts 
     entered into for such purposes; or
       ``(D) grants-in-aid to appropriate public or private 
     nonprofit State, area, district, or local organizations.
       ``(2) Repayment terms.--The Administrator, in the 
     Administrator's discretion, may require the repayment of 
     assistance provided under this subsection and prescribe the 
     terms and conditions of such repayment.
       ``(c) Grants Covering Administrative Expenses.--
       ``(1) In general.--The Administrator may make grants to 
     defray not to exceed 50 percent of the administrative 
     expenses of organizations which the Administrator determines 
     to be qualified to receive grants-in-aid under subsections 
     (a) and (b); except that in the case of a grant under this 
     subsection to an Indian tribe, the Administrator is 
     authorized to defray up to 100 percent of such expenses.
       ``(2) Determination of non-federal share.--In determining 
     the amount of the non-Federal share of such costs or 
     expenses, the Administrator shall give due consideration to 
     all contributions both in cash and in kind, fairly evaluated, 
     including contributions of space, equipment, and services.
       ``(3) Use of grants with planning grants.--Where 
     practicable, grants-in-aid authorized under this subsection 
     shall be used in conjunction with other available planning 
     grants to assure adequate and effective planning and 
     economical use of funds.
       ``(d) Availability of Technical Information; Federal 
     Procurement.--The Administrator shall aid areas described in 
     section 502(a) and other areas by furnishing to interested 
     individuals, communities, industries, and enterprises within 
     such areas any assistance, technical information, market 
     research, or other forms of assistance, information, or 
     advice which would be useful in alleviating or preventing 
     conditions of excessive unemployment or underemployment 
     within such areas. The Administrator may furnish the 
     procurement divisions of the various departments, agencies, 
     and other instrumentalities of the Federal Government with a 
     list containing the names and addresses of business firms 
     which are located in areas described in section 502(a) and 
     which are desirous of obtaining Government contracts for the 
     furnishing of supplies or services, and designating the 
     supplies and services such firms are engaged in providing.

     ``SEC. 402. ECONOMIC DEVELOPMENT PLANNING.

       ``(a) Direct Grants.--
       ``(1) In general.--The Administrator may make, upon 
     application of any State, or city, or other political 
     subdivision of a State, or sub-State planning and development 
     organization (including an area described in section 502(a) 
     or an economic development district), direct grants to such 
     State, city, or other political subdivision, or organization 
     to pay up to 50 percent of the cost for economic development 
     planning.
       ``(2) Planning projects specifically included.--The 
     planning for cities, other political subdivisions, and sub-
     State planning and development organizations (including areas 
     described in section 502(a) and economic development 
     districts) assisted under this section shall include 
     systematic efforts to reduce unemployment and increase 
     incomes.
       ``(3) Planning process.--The planning shall be a continuous 
     process involving public officials and private citizens in 
     analyzing local economies, defining development goals, 
     determining project opportunities, and formulating and 
     implementing a development program.
       ``(4) Coordination of assistance under section 401(c).--The 
     assistance available under this section may be provided in 
     addition to assistance available under section 401(c) but 
     shall not supplant such assistance.
       ``(b) Compliance With Review Procedure.--The planning 
     assistance authorized under this title shall be used in 
     conjunction with any other available Federal planning 
     assistance to assure adequate and effective planning and 
     economical use of funds.
            ``TITLE V--ELIGIBILITY AND INVESTMENT STRATEGIES

                         ``PART A--ELIGIBILITY

     ``SEC. 501. ELIGIBLE RECIPIENT DEFINED.

       ``In this Act, the term `eligible recipient' means an area 
     described in section 502(a), an economic development district 
     designated under section 510, an Indian tribe, a State, a 
     city or other political subdivision of a State, or a 
     consortium of such political subdivisions, or a public or 
     private nonprofit organi

[[Page 1775]]

     zation or association acting in cooperation with officials of 
     such political subdivisions.

     ``SEC. 502. AREA ELIGIBILITY.

       ``(a) Certification.--In order to be eligible for 
     assistance under title II, an applicant seeking assistance to 
     undertake a project in an area shall certify, as part of an 
     application for such assistance, that the area on the date of 
     submission of such application meets 1 or more of the 
     following criteria:
       ``(1) The area has a per capita income of 80 percent or 
     less of the national average.
       ``(2) The area has an unemployment rate 1 percent above the 
     national average percentage for the most recent 24-month 
     period for which statistics are available.
       ``(3) The area has experienced or is about to experience a 
     sudden economic dislocation resulting in job loss that is 
     significant both in terms of the number of jobs eliminated 
     and the effect upon the employment rate of the area.
       ``(4) The area is a community or neighborhood (defined 
     without regard to political or other subdivisions or 
     boundaries) which the Administrator determines has one or 
     more of the following conditions:
       ``(A) A large concentration of low-income persons.
       ``(B) Rural areas having substantial out-migration.
       ``(C) Substantial unemployment.
       ``(b) Documentation.--A certification made under subsection 
     (a) shall be supported by Federal data, when available, and 
     in other cases by data available through the State 
     government. Such documentation shall be accepted by the 
     Administrator unless it is determined to be inaccurate. The 
     most recent statistics available shall be used.
       ``(c) Prior Designations.--Any designation of a 
     redevelopment area made before the effective date specified 
     in section 802 shall not be effective after such effective 
     date.

     ``SEC. 503. INVESTMENT STRATEGY.

       ``The Administrator may provide assistance under titles II 
     and III to an applicant for a project only if the applicant 
     submits to the Administrator, as part of an application for 
     such assistance, and the Administrator approves an investment 
     strategy which--
       ``(1) identifies the economic development problems to be 
     addressed using such assistance;
       ``(2) identifies past, present, and projected future 
     economic development investments in the area receiving such 
     assistance and public and private participants and sources of 
     funding for such investments;
       ``(3) sets forth a strategy for addressing the economic 
     problems identified pursuant to paragraph (1) and describes 
     how the strategy will solve such problems;
       ``(4) provides a description of the project necessary to 
     implement the strategy, estimates of costs, and timetables; 
     and
       ``(5) provides a summary of public and private resources 
     expected to be available for the project.

     ``SEC. 504. APPROVAL OF PROJECTS.

       ``Only applications for grants or other assistance under 
     this Act for specific projects shall be approved which are 
     certified by the State representing such applicant and 
     determined by the Administrator--
       ``(1) to be included in a State investment strategy;
       ``(2) to have adequate assurance that the project will be 
     properly administered, operated, and maintained; and
       ``(3) to otherwise meet the requirements for assistance 
     under this Act.

                ``PART B--ECONOMIC DEVELOPMENT DISTRICTS

     ``SEC. 510. DESIGNATION OF ECONOMIC DEVELOPMENT DISTRICTS AND 
                   ECONOMIC DEVELOPMENT CENTERS.

       ``(a) In General.--In order that economic development 
     projects of broader geographic significance may be planned 
     and carried out, the Administrator may--
       ``(1) designate appropriate `economic development 
     districts' within the United States with the concurrence of 
     the States in which such districts will be wholly or 
     partially located, if--
       ``(A) the proposed district is of sufficient size or 
     population, and contains sufficient resources, to foster 
     economic development on a scale involving more than a single 
     area described in section 502(a);
       ``(B) the proposed district contains at least 1 area 
     described in section 502(a);
       ``(C) the proposed district contains 1 or more areas 
     described in section 502(a) or economic development centers 
     identified in an approved district investment strategy as 
     having sufficient size and potential to foster the economic 
     growth activities necessary to alleviate the distress of the 
     areas described in section 502(a) within the district; and
       ``(D) the proposed district has a district investment 
     strategy which includes adequate land use and transportation 
     planning and contains a specific program for district 
     cooperation, self-help, and public investment and is approved 
     by the State or States affected and by the Administrator;
       ``(2) designate as `economic development centers', in 
     accordance with such regulations as the Administrator shall 
     prescribe, such areas as the Administrator may deem 
     appropriate, if--
       ``(A) the proposed center has been identified and included 
     in an approved district investment strategy and recommended 
     by the State or States affected for such special designation;
       ``(B) the proposed center is geographically and 
     economically so related to the district that its economic 
     growth may reasonably be expected to contribute significantly 
     to the alleviation of distress in the areas described in 
     section 502(a) of the district; and
       ``(C) the proposed center does not have a population in 
     excess of 250,000 according to the most recent Federal 
     census.
       ``(3) provide financial assistance in accordance with the 
     criteria of this Act, except as may be herein otherwise 
     provided, for projects in economic development centers 
     designated under subsection (a)(2), if--
       ``(A) the project will further the objectives of the 
     investment strategy of the district in which it is to be 
     located;
       ``(B) the project will enhance the economic growth 
     potential of the district or result in additional long-term 
     employment opportunities commensurate with the amount of 
     Federal financial assistance requested; and
       ``(C) the amount of Federal financial assistance requested 
     is reasonably related to the size, population, and economic 
     needs of the district;
       ``(4) subject to the 50 percent non-Federal share required 
     for any project by section 201(c), increase the amount of 
     grant assistance authorized by section 201 for projects 
     within areas described in section 502(a), by an amount not to 
     exceed 10 percent of the aggregate cost of any such project, 
     in accordance with such regulations as the Administrator 
     shall prescribe if--
       ``(A) the area described in section 502(a) is situated 
     within a designated economic development district and is 
     actively participating in the economic development activities 
     of the district; and
       ``(B) the project is consistent with an approved investment 
     strategy.
       ``(b) Authorities.--In designating economic development 
     districts and approving district investment strategies under 
     subsection (a), the Administrator may, under regulations 
     prescribed by the Administrator--
       ``(1) invite the several States to draw up proposed 
     district boundaries and to identify potential economic 
     development centers;
       ``(2) cooperate with the several States--
       ``(A) in sponsoring and assisting district economic 
     planning and development groups; and
       ``(B) in assisting such district groups to formulate 
     district investment strategies; and
       ``(3) encourage participation by appropriate local 
     governmental authorities in such economic development 
     districts.
       ``(c) Termination or Modification of Designations.--The 
     Administrator shall by regulation prescribe standards for the 
     termination or modification of economic development districts 
     and economic development centers designated under the 
     authority of this section.
       ``(d) Definitions.--In this Act, the following definitions 
     apply:
       ``(1) Economic development district.--The term `economic 
     development district' refers to any area within the United 
     States composed of cooperating areas described in section 
     502(a) and, where appropriate, designated economic 
     development centers and neighboring counties or communities, 
     which has been designated by the Administrator as an economic 
     development district. Such term includes any economic 
     development district designated under section 403 of this 
     Act, as in effect on the day before the effective date 
     specified in section 802.
       ``(2) Economic development center.--The term `economic 
     development center' refers to any area within the United 
     States which has been identified as an economic development 
     center in an approved investment strategy and which has been 
     designated by the Administrator as eligible for financial 
     assistance under this Act in accordance with the provisions 
     of this section.
       ``(3) Local government.--The term `local government' means 
     any city, county, town, parish, village, or other general-
     purpose political subdivision of a State.
       ``(e) Parts of Economic Development Districts Not Within 
     Areas Described in Section 502(a).--The Administrator is 
     authorized to provide the financial assistance which is 
     available to an area described in section 502(a) under this 
     Act to those parts of an economic development district which 
     are not within an area described in section 502(a), when such 
     assistance will be of a substantial direct benefit to an area 
     described in section 502(a) within such district. Such 
     financial assistance shall be provided in the same manner and 
     to the same extent as is provided in this Act for an area 
     described in section 502(a); except that nothing in this 
     subsection shall be construed to permit such parts to receive 
     the increase in the amount of grant assistance authorized in 
     subsection (a)(4).
                       ``TITLE VI--ADMINISTRATION

     ``SEC. 601. APPOINTMENT OF ASSOCIATE ADMINISTRATOR; FULL TIME 
                   EQUIVALENT EMPLOYEES.

       ``(a) Appointment.--The Administrator shall carry out the 
     duties vested in the Administrator by this Act acting through 
     an Associate Administrator of the Small Business 
     Administration, who shall be appointed by the President by 
     and with the advice and consent of the Senate.
       ``(b) Pay.--The Associate Administrator shall be 
     compensated by the Federal Government at the rate prescribed 
     for level V of the Executive Schedule under section 5316 of 
     title 5, United States Code.
       ``(c) Full Time Equivalent Employees.--The Administrator 
     shall assign not to exceed 25 full time equivalent employees 
     of the Small Business Administration (excluding the Associate 
     Administrator) to assist the Administrator in the carrying 
     out the duties vested in the Administrator by this Act.

[[Page 1776]]

     ``SEC. 602. REGIONAL COOPERATIVE AGREEMENTS.

       ``(a) In General.--The Administrator shall make grants and 
     carry out such other functions under this Act as the 
     Administrator considers appropriate by entering into 
     cooperative agreements with 1 or more States on a regional 
     basis. Each State entering into such an agreement shall be 
     represented by the chief executive officer of the State.
       ``(b) Terms and Conditions.--A cooperative agreement 
     entered into under subsection (a) shall include such terms 
     and conditions as the Administrator determines are necessary 
     to carry out the provisions of this Act. Such terms and 
     conditions at a minimum shall provide that no decision 
     concerning regional policies or approval of project or grant 
     applications may be made without the consent of the 
     Administrator and a majority of the States participating in 
     the cooperative agreement.
       ``(c) Participation Not Required.--No State shall be 
     required to enter into a cooperative agreement under this 
     section or to participate in any program established by this 
     Act.

     ``SEC. 603. ADMINISTRATIVE EXPENSES.

       ``(a) Payment by States.--Fifty percent of the 
     administrative expenses incurred by States in participating 
     in a cooperative agreement entered into under section 602 
     shall be paid by such States and the remaining 50 percent of 
     such expenses shall be paid by the Federal Government.
       ``(b) Determination of State Share.--The share of the 
     administrative expenses to be paid by each State 
     participating in a cooperative agreement shall be determined 
     by a majority vote of such States. The Administrator may not 
     participate or vote in such determination.
       ``(c) Delinquent Payments.--No assistance authorized by 
     this Act shall be furnished to any State or to any political 
     subdivision or resident of a State, nor shall the State 
     participate or vote in any decision described in section 
     602(b), while such State is delinquent in the payment of such 
     State's share of the administrative expenses described in 
     subsection (a).

     ``SEC. 604. FEDERAL SHARE.

       ``Except as otherwise expressly provided by this Act, the 
     Federal share of the cost of any project funded with amounts 
     made available under this Act shall not exceed 50 percent of 
     such cost.

     ``SEC. 605. COOPERATION OF FEDERAL AGENCIES.

       ``Each Federal department and agency, in accordance with 
     applicable laws and within the limits of available funds, 
     shall cooperate with the Administrator in order to assist the 
     Administrator in carrying out the functions of the 
     Administrator.

     ``SEC. 606. CONSULTATION WITH OTHER PERSONS AND AGENCIES.

       ``(a) Consultation on Problems Relating to Employment.--The 
     Administrator is authorized from time to time to call 
     together and confer with any persons, including 
     representatives of labor, management, agriculture, and 
     government, who can assist in meeting the problems of area 
     and regional unemployment or underemployment.
       ``(b) Consultation on Administration of Act.--The 
     Administrator may make provisions for such consultation with 
     interested departments and agencies as the Administrator may 
     deem appropriate in the performance of the functions vested 
     in the Administrator by this Act.

     ``SEC. 607. ADMINISTRATION, OPERATION, AND MAINTENANCE.

       ``No Federal assistance shall be approved under this Act 
     unless the Administrator is satisfied that the project for 
     which Federal assistance is granted will be properly and 
     efficiently administered, operated, and maintained.
                       ``TITLE VII--MISCELLANEOUS

     ``SEC. 701. POWERS OF ADMINISTRATOR.

       ``(a) In General.--In performing the Administrator's duties 
     under this Act, the Administrator is authorized to--
       ``(1) adopt, alter, and use a seal, which shall be 
     judicially noticed;
       ``(2) subject to the civil-service and classification laws, 
     select, employ, appoint, and fix the compensation of such 
     personnel as may be necessary to carry out the provisions of 
     this Act;
       ``(3) hold such hearings, sit and act at such times and 
     places, and take such testimony, as the Administrator may 
     deem advisable;
       ``(4) request directly from any executive department, 
     bureau, agency, board, commission, office, independent 
     establishment, or instrumentality information, suggestions, 
     estimates, and statistics needed to carry out the purposes of 
     this Act; and each department, bureau, agency, board, 
     commission, office, establishment, or instrumentality is 
     authorized to furnish such information, suggestions, 
     estimates, and statistics directly to the Administrator;
       ``(5) under regulations prescribed by the Administrator, 
     assign or sell at public or private sale, or otherwise 
     dispose of for cash or credit, in the Administrator's 
     discretion and upon such terms and conditions and for such 
     consideration as the Administrator determines to be 
     reasonable, any evidence of debt, contract, claim, personal 
     property, or security assigned to or held by the 
     Administrator in connection with assistance extended under 
     this Act, and collect or compromise all obligations assigned 
     to or held by the Administrator in connection with such 
     assistance until such time as such obligations may be 
     referred to the Attorney General for suit or collection;
       ``(6) deal with, complete, renovate, improve, modernize, 
     insure, rent, or sell for cash or credit, upon such terms and 
     conditions and for such consideration as the Administrator 
     determines to be reasonable, any real or personal property 
     conveyed to, or otherwise acquired by the Administrator in 
     connection with assistance extended under this Act;
       ``(7) pursue to final collection, by way of compromise or 
     other administrative action, prior to reference to the 
     Attorney General, all claims against third parties assigned 
     to the Administrator in connection with assistance extended 
     this Act;
       ``(8) acquire, in any lawful manner and in accordance with 
     the requirements of the Federal Property and Administrative 
     Services Act of 1949, any property (real, personal, or mixed, 
     tangible or intangible), whenever necessary or appropriate to 
     the conduct of the activities authorized under this Act;
       ``(9) in addition to any powers, functions, privileges, and 
     immunities otherwise vested in the Administrator, take any 
     action, including the procurement of the services of 
     attorneys by contract, determined by the Administrator to be 
     necessary or desirable in making, purchasing, servicing, 
     compromising, modifying, liquidating, or otherwise 
     administratively dealing with assets held in connection with 
     financial assistance extended under this Act;
       ``(10) employ experts and consultants or organizations as 
     authorized by section 3109 of title 5, United States Code, 
     compensate individuals so employed at rates not in excess of 
     $100 per diem, including travel time, and allow them, while 
     away from their homes or regular places of business, travel 
     expenses (including per diem in lieu of subsistence) as 
     authorized by section 5703 of title 5, United States Code, 
     for persons in the Government service employed 
     intermittently, while so employed, except that contracts for 
     such employment may be renewed annually;
       ``(11) sue and be sued in any court of record of a State 
     having general jurisdiction or in any United States district 
     court, and jurisdiction is conferred upon such district court 
     to determine such controversies without regard to the amount 
     in controversy; but no attachment, injunction, garnishment, 
     or other similar process, mesne or final, shall be issued 
     against the Administrator or the Administrator's property;
       ``(12) make discretionary grants, pursuant to authorities 
     otherwise available to the Administrator under this Act and 
     without regard to the requirements of section 504, to 
     implement significant regional initiatives, to take advantage 
     of special development opportunities, or to respond to 
     emergency economic distress in a region from the funds 
     withheld from distribution by the Administrator; except that 
     the aggregate amount of such discretionary grants in any 
     fiscal year may not exceed 10 percent of the amounts 
     appropriated under title VIII for such fiscal year;
       ``(13) allow a State to use not to exceed 5 percent of the 
     total of amounts received by the State in a fiscal year in 
     grants under this Act for reasonable expenses incurred by the 
     State in administering such amounts; and
       ``(14) establish such rules, regulations, and procedures as 
     the Administrator considers appropriate in carrying out the 
     provisions of this Act.
       ``(b) Deficiency Judgments.--The authority under subsection 
     (a)(7) to pursue claims shall include the authority to obtain 
     deficiency judgments or otherwise in the case of mortgages 
     assigned to the Administrator.
       ``(c) Inapplicability of Certain Other Requirements.--
     Section 3709 of the Revised Statutes of the United States 
     shall not apply to any contract of hazard insurance or to any 
     purchase or contract for services or supplies on account of 
     property obtained by the Administrator as a result of 
     assistance extended under this Act if the premium for the 
     insurance or the amount of the insurance does not exceed 
     $1,000.
       ``(d) Powers of Conveyance and Execution.--The power to 
     convey and to execute, in the name of the Administrator, 
     deeds of conveyance, deeds of release, assignments and 
     satisfactions of mortgages, and any other written instrument 
     relating to real or personal property or any interest therein 
     acquired by the Administrator pursuant to the provisions of 
     this Act may be exercised by the Administrator, or by any 
     officer or agent appointed by the Administrator for such 
     purpose, without the execution of any express delegation of 
     power or power of attorney.

     ``SEC. 702. ESTABLISHMENT OF CLEARINGHOUSE.

       ``In carrying out the Administrator's duties under this 
     Act, the Administrator shall ensure that the Small Business 
     Administration--
       ``(1) serves as a central information clearinghouse on 
     matters relating to economic development, economic 
     adjustment, disaster recovery, and defense conversion 
     programs and activities of the Federal and State governments, 
     including political subdivisions of the States; and
       ``(2) helps potential and actual applicants for economic 
     development, economic adjustment, disaster recovery, and 
     defense conversion assistance under Federal, State, and local 
     laws in locating and applying for such assistance, including 
     financial and technical assistance.

     ``SEC. 703. PERFORMANCE MEASURES.

       ``The Administrator shall establish performance measures 
     for grants and other assistance provided under this Act. Such 
     performance measures shall be used to evaluate

[[Page 1777]]

     project proposals and conduct evaluations of projects 
     receiving such assistance.

     ``SEC. 704. MAINTENANCE OF STANDARDS.

       ``The Administrator shall continue to implement and enforce 
     the provisions of section 712 of this Act, as in effect on 
     the day before the effective date specified in section 802.

     ``SEC. 705. TRANSFER OF FUNCTIONS.

       ``The functions, powers, duties, and authorities and the 
     assets, funds, contracts, loans, liabilities, commitments, 
     authorizations, allocations, and records which are vested in 
     or authorized to be transferred to the Secretary of the 
     Treasury under section 29(b) of the Area Redevelopment Act, 
     and all functions, powers, duties, and authorities under 
     section 29(c) of such Act are hereby vested in the 
     Administrator.

     ``SEC. 706. DEFINITION OF STATE.

       ``In this Act, the terms `State', `States', and `United 
     States' include the several States, the District of Columbia, 
     Puerto Rico, the Virgin Islands, American Samoa, Guam, the 
     Marshall Islands, Micronesia, and the Northern Mariana 
     Islands.

     ``SEC. 707. ANNUAL REPORT TO CONGRESS.

       ``The Administrator shall transmit to Congress a 
     comprehensive and detailed annual report of the 
     Administrator's operations under this Act for each fiscal 
     year beginning with the fiscal year ending September 30, 
     1996. Such report shall be printed and shall be transmitted 
     to Congress not later than April 1 of the year following the 
     fiscal year with respect to which such report is made.

     ``SEC. 708. USE OF OTHER FACILITIES.

       ``(a) Delegation of Functions to Other Federal Departments 
     and Agencies.--The Administrator may delegate to the heads of 
     other departments and agencies of the Federal Government any 
     of the Administrator's functions, powers, and duties under 
     this Act as the Administrator may deem appropriate, and to 
     authorize the redelegation of such functions, powers, and 
     duties by the heads of such departments and agencies.
       ``(b) Department and Agency Execution of Delegated 
     Authority.--Departments and agencies of the Federal 
     Government shall exercise their powers, duties, and functions 
     in such manner as will assist in carrying out the objectives 
     of this Act.
       ``(c) Transfer Between Departments.--Funds authorized to be 
     appropriated under this Act may be transferred between 
     departments and agencies of the Government, if such funds are 
     used for the purposes for which they are specifically 
     authorized and appropriated.
       ``(d) Funds Transferred From Other Departments and 
     Agencies.--In order to carry out the objectives of this Act, 
     the Administrator may accept transfers of funds from other 
     departments and agencies of the Federal Government if the 
     funds are used for the purposes for which (and in accordance 
     with the terms under which) the funds are specifically 
     authorized and appropriated. Such transferred funds shall 
     remain available until expended, and may be transferred to 
     and merged with the appropriations under the heading 
     `salaries and expenses' by the Administrator to the extent 
     necessary to administer the program.

     ``SEC. 709. EMPLOYMENT OF EXPEDITERS AND ADMINISTRATIVE 
                   EMPLOYEES.

       ``No financial assistance shall be extended by the 
     Administrator under this Act to any business enterprise 
     unless the owners, partners, or officers of such business 
     enterprise--
       ``(1) certify to the Administrator the names of any 
     attorneys, agents, and other persons engaged by or on behalf 
     of such business enterprise for the purpose of expediting 
     applications made to the Administrator for assistance of any 
     sort, under this Act, and the fees paid or to be paid to any 
     such person; and
       ``(2) execute an agreement binding such business 
     enterprise, for a period of 2 years after such assistance is 
     rendered by the Administrator to such business enterprise, to 
     refrain from employing, tendering any office or employment 
     to, or retaining for professional services, any person who, 
     on the date such assistance or any part thereof was rendered, 
     or within the 1-year period ending on such date, shall have 
     served as an officer, attorney, agent, or employee, occupying 
     a position or engaging in activities which the Administrator 
     determines involves discretion with respect to the granting 
     of assistance under this Act.

     ``SEC. 710. MAINTENANCE OF RECORDS OF APPROVED APPLICATIONS 
                   FOR FINANCIAL ASSISTANCE; PUBLIC INSPECTION.

       ``(a) Maintenance of Record Required.--The Administrator 
     shall maintain as a permanent part of the records of the 
     Small Business Administration a list of applications approved 
     for financial assistance under this Act, which shall be kept 
     available for public inspection during the regular business 
     hours of the Small Business Administration.
       ``(b) Posting to List.--The following information shall be 
     posted in such list as soon as each application is approved:
       ``(1) The name of the applicant and, in the case of 
     corporate applications, the names of the officers and 
     directors thereof.
       ``(2) The amount and duration of the financial assistance 
     for which application is made.
       ``(3) The purposes for which the proceeds of the financial 
     assistance are to be used.

     ``SEC. 711. RECORDS AND AUDIT.

       ``(a) Recordkeeping and Disclosure Requirements.--Each 
     recipient of assistance under this Act shall keep such 
     records as the Administrator shall prescribe, including 
     records which fully disclose the amount and the disposition 
     by such recipient of the proceeds of such assistance, the 
     total cost of the project or undertaking in connection with 
     which such assistance is given or used, and the amount and 
     nature of that portion of the cost of the project or 
     undertaking supplied by other sources, and such other records 
     as will facilitate an effective audit.
       ``(b) Access to Books for Examination and Audit.--The 
     Administrator and the Comptroller General of the United 
     States, or any of their duly authorized representatives, 
     shall have access for the purpose of audit and examination to 
     any books, documents, papers, and records of the recipient 
     that are pertinent to assistance received under this Act.

     ``SEC. 712. PROHIBITION AGAINST A STATUTORY CONSTRUCTION 
                   WHICH MIGHT CAUSE DIMINUTION IN OTHER FEDERAL 
                   ASSISTANCE.

       ``All financial and technical assistance authorized under 
     this Act shall be in addition to any Federal assistance 
     previously authorized, and no provision of this Act shall be 
     construed as authorizing or permitting any reduction or 
     diminution in the proportional amount of Federal assistance 
     to which any State or other entity eligible under this Act 
     would otherwise be entitled under the provisions of any other 
     Act.

     ``SEC. 713. ACCEPTANCE OF APPLICANTS' CERTIFICATIONS.

       ``The Administrator may accept, when deemed appropriate, 
     the applicants' certifications to meet the requirements of 
     this Act.
                 ``TITLE VIII--FUNDING; EFFECTIVE DATE

     ``SEC. 801. AUTHORIZATION OF APPROPRIATIONS

       ``There is authorized to be appropriated to carry out this 
     Act $340,000,000 per fiscal year for each of fiscal years 
     1996, 1997, 1998, 1999, and 2000. Such sums shall remain 
     available until expended.

     ``SEC. 802. EFFECTIVE DATE.

       ``The effective date specified in this section is the 
     abolishment date specified in section 17101(c) of the 
     Department of Commerce Dismantling Act.''.
       (b) Conforming Amendments to Title 5.--Section 5316 of 
     title 5, United States Code, is amended--
       (1) by striking ``Associate Administrators of the Small 
     Business Administration (4)'' and inserting ``Associate 
     Administrators of the Small Business Administration (5)''; 
     and
       (2) by striking ``Administrator for Economic 
     Development.''.
       (c) GAO Study.--On or before December 30, 1996, the 
     Comptroller General shall submit to Congress a plan or plans 
     for consolidating economic development programs throughout 
     the Federal Government. The plan or plans shall focus on, but 
     not be limited to, consolidating programs included in the 
     Catalogue of Federal Domestic Assistance with similar 
     purposes and target populations. The plan or plans shall 
     detail how consolidation can lead to improved grant or 
     program management, improvements in achieving program goals, 
     and reduced costs.

     SEC. 17202. TECHNOLOGY ADMINISTRATION.

       (a) Technology Administration.--
       (1) General rule.--Except as otherwise provided in this 
     section, the Technology Administration is terminated.
       (2) Office of technology policy.--The Office of Technology 
     Policy is terminated.
       (b) National Institute of Standards and Technology.--
       (1) Redesignation.--The National Institute of Standards and 
     Technology is hereby redesignated as the National Bureau of 
     Standards, and all references to the National Institute of 
     Standards and Technology in Federal law or regulations are 
     deemed to be references to the National Bureau of Standards.
       (2) General rule.--The National Bureau of Standards (in 
     this subsection referred to as the ``Bureau'') is transferred 
     to the National Institute for Science and Technology, 
     established under section 17207.
       (3) Functions of director.--Except as otherwise provided in 
     this section or section 17208, upon the transfer under 
     paragraph (2), the Director of the Bureau shall perform all 
     functions relating to the Bureau that, immediately before the 
     effective date specified in section 17209(a), were functions 
     of the Secretary of Commerce or the Under Secretary of 
     Commerce for Technology.
       (c) National Technical Information Service.--
       (1) Privatization.--All functions of the National Technical 
     Information Service are transferred to the Director of Office 
     of Management and Budget for privatization in accordance with 
     section 17109 before the end of the 18-month period beginning 
     on the date of the enactment of this Act.
       (2) Transfer to national institute for science and 
     technology.--If an appropriate arrangement for the 
     privatization of functions of the National Technical 
     Information Service under paragraph (1) has not been made 
     before the end of the period described in that paragraph, the 
     National Technical Information Service shall be transferred 
     as of the end of such period to the National Institute for 
     Science and Technology established by section 17207.
       (3) Government corporation.--If an appropriate arrangement 
     for the privatization of functions of the National Technical 
     Information Service under paragraph (1) has not been made 
     before the end of the period described in that paragraph, the 
     Director of the Office of Management and Budget shall, within 
     6 months after the end of such period, submit to Congress a 
     proposal for legislation to establish the National Technical 
     Information Service as a wholly owned Government

[[Page 1778]]

     corporation. The proposal should provide for the corporation 
     to perform substantially the same functions that, as of the 
     date of enactment of this Act, are performed by the National 
     Technical Information Service.
       (4) Funding.--No funds are authorized to be appropriated 
     for the National Technical Information Service or any 
     successor corporation established pursuant to a proposal 
     under paragraph (3).
       (d) Amendments.--
       (1) National institute of standards and technology act.--
     The National Institute of Standards and Technology Act (15 
     U.S.C. 271 et seq.) is amended--
       (A) in section 2(b), by striking paragraph (1) and 
     redesignating paragraphs (2) through (11) as paragraphs (1) 
     through (10), respectively;
       (B) in section 2(d), by striking ``, including the programs 
     established under sections 25, 26, and 28 of this Act'';
       (C) in section 10, by striking ``Advanced'' in both the 
     section heading and subsection (a), and inserting in lieu 
     thereof ``Standards and''; and
       (D) by striking sections 24, 25, 26, and 28.
       (2) Stevenson-wydler technology innovation act of 1980.--
     The Stevenson-Wydler Technology Innovation Act of 1980 (15 
     U.S.C. 3701 et seq.) is amended--
       (A) in section 3, by striking paragraph (2) and 
     redesignating paragraphs (3) through (5) as paragraphs (2) 
     through (4), respectively;
       (B) in section 4, by striking paragraphs (1), (4), and (13) 
     and redesignating paragraphs (2), (3), (5), (6), (7), (8), 
     (9), (10), (11), and (12) as paragraphs (1) through (10), 
     respectively;
       (C) by striking sections 5, 6, 7, 8, 9, and 10;
       (D) in section 11--
       (i) by striking ``, the Federal Laboratory Consortium for 
     Technology Transfer,'' in subsection (c)(3);
       (ii) by striking ``and the Federal Laboratory Consortium 
     for Technology Transfer'' in subsection (d)(2);
       (iii) by striking ``, and refer such requests'' and all 
     that follows through ``available to the Service'' in 
     subsection (d)(3); and
       (iv) by striking subsection (e); and
       (E) in section 17--
       (i) by striking ``Subject to paragraph (2), separate'' in 
     subsection (c)(1) and inserting in lieu thereof ``Separate'';
       (ii) by striking paragraph (2) of subsection (c) and 
     redesignating paragraph (3) as paragraph (2);
       (iii) by striking ``funds to carry out'' in subsection (f), 
     and inserting in lieu thereof ``funds only to pay the salary 
     of the Director of the Office of Quality Programs, who shall 
     be responsible for carrying out''; and
       (iv) by adding at the end the following new subsection:
       ``(h) Voluntary and Uncompensated Services.--The Director 
     of the Office of Quality Programs may accept voluntary and 
     uncompensated services notwithstanding the provisions of 
     section 1342 of title 31, United States Code.''.
       (3) Miscellaneous amendments.--Section 3 of Public Law 94-
     168 (15 U.S.C. 205b) is amended--
       (A) by striking paragraph (2);
       (B) by redesignating paragraphs (3) and (4) as paragraphs 
     (2) and (3), respectively; and
       (C) in paragraph (3), as so redesignated by subparagraph 
     (B) of this paragraph, by striking ``in nonbusiness 
     activities''.

     SEC. 17203. REORGANIZATION OF THE BUREAU OF THE CENSUS.

       (a) Provisions Relating to Interim Period.--
       (1) Functions of the secretary of commerce.--During the 6-
     month period beginning on the abolishment date specified in 
     section 17101(c), the Director of the Office of Management 
     and Budget shall perform all functions that, immediately 
     before such effective date, were functions of the Secretary 
     of Commerce under title 13, United States Code.
       (2) Reorganization authority under section 17104(f) not to 
     apply.--Section 17104(f) shall not apply with respect to the 
     Bureau of the Census or any function to be performed by the 
     appropriate official pursuant to paragraph (1).
       (b) Transfer of Functions.--
       (1) In general.--Notwithstanding any provision of section 
     17209, effective as of the first day following the end of the 
     6-month period referred to in subsection (a)(1)--
       (A) the Bureau of the Census shall be transferred to the 
     Department of Labor; and
       (B) all functions that, immediately before such first day, 
     were functions of the Director of the Office of Management 
     and Budget by reason of subsection (a)(1) shall be 
     transferred to the Secretary of Labor.
       (2) Continuation of service of the director of the 
     census.--The individual serving as the Director of the Census 
     at the end of the 6-month period referred to in subsection 
     (a)(1) may continue serving in that capacity, after the end 
     of such period, until a successor has taken office.
       (c) Amendments.--Effective as of the first day following 
     the end of the 6-month period referred to in subsection 
     (a)(1)--
       (1) Transfer of the bureau of the census to the department 
     of labor.--(A) Section 2 of title 13, United States Code, is 
     amended by striking ``is continued as'' through the period 
     and inserting ``is an agency within, and under the 
     jurisdiction of, the Department of Labor.''.
       (B) Subsection (e) of section 12 of the Act of February 14, 
     1903 (15 U.S.C. 1511(e)) is repealed.
       (2) Definition of secretary.--Title 13, United States Code, 
     is amended in section 1(2) by striking ``Secretary of 
     Commerce'' and inserting ``Secretary of Labor''.
       (3) References to the department of commerce.--Title 13, 
     United States Code, is amended in sections 4, 9(a), 23(b), 
     24(e), 44, 103, 132, 211, 213(b)(2), 221, 222, 223, 224, 
     225(a), and 241 by striking ``Department of Commerce'' each 
     place it appears and inserting ``Department of Labor''.
       (4) References to the secretary of commerce.--(A) Section 
     304(a) of title 13, United States Code, is amended by 
     striking ``Secretary of Commerce'' and inserting ``Secretary 
     of Labor''.
       (B)(i) Section 401(a) of title 13, United States Code, is 
     amended by striking ``Secretary of Commerce'' and inserting 
     ``Secretary''.
       (ii) Section 8(e) of the Foreign Direct Investment and 
     International Financial Data Improvements Act of 1990 (22 
     U.S.C. 3144(e)) is amended by striking ``Secretary of 
     Commerce'' and inserting ``Secretary of Labor''.
       (iii) Section 401(a) of title 13, United States Code, is 
     amended by striking ``Department of Commerce'' and inserting 
     ``Federal Reserve System''.
       (5) Compensation for the position of director of the 
     census.--Section 5315 of title 5, United States Code, as 
     amended by section 17108(e)(7), is further amended by 
     striking ``Census.'' and inserting ``Census, Department of 
     Labor.''.
       (6) Confidentiality.--Section 9 of title 13, United States 
     Code, is amended by adding at the end the following:
       ``(c)(1) Nothing in subsection (a)(3) shall be considered 
     to permit the disclosure of any matter or information to an 
     officer or employee of the Department of Labor who is not 
     referred to in subchapter II if, immediately before the start 
     of the 6-month period referred to in section 17203(a)(1) of 
     the Department of Commerce Dismantling Act, such disclosure 
     (if then made by an officer or employee of the Department of 
     Commerce) would have been impermissible under this section 
     (as then in effect).
       ``(2) Paragraph (1) shall not apply with respect to any 
     disclosure made to the Secretary.''.
       (d) Sense of the Congress.--It is the sense of the Congress 
     that the Bureau of the Census should--
       (1) make appropriate use of any authority afforded to it by 
     the Census Address List Improvement Act of 1994 (Public Law 
     103-430; 108 Stat. 4393), and take measures to ensure the 
     timely implementation of such Act; and
       (2) streamline census questionnaires to promote savings in 
     the collection and tabulation of data.
       (e) Rule of Construction.--For purposes of subtitle E, the 
     reorganization of the Bureau of the Census pursuant to 
     subsections (b) and (c) shall be treated as if it involved a 
     transfer of functions.

     SEC. 17204. BUREAU OF ECONOMIC ANALYSIS.

       (a) In General.--(1) The functions of the Bureau of 
     Economic Analysis are transferred to the Secretary of Labor.
       (2) All functions which, immediately before such date, are 
     functions of the Secretary of Commerce with respect to the 
     Bureau of Economic Analysis are transferred to the Secretary 
     of Labor.
       (b) Consolidation With the Bureau of Labor Statistics.--The 
     Secretary of Labor shall consolidate the functions 
     transferred under subsection (a) with the Bureau of Labor 
     Statistics within the Department of Labor.
       (c) Reports.--Not later than 18 months after the date of 
     the enactment of this Act, the Secretary of Labor, after 
     consultation with the Director of the Office of Management 
     and Budget, shall submit to the Congress a written report 
     on--
       (1) the availability of any private sector resources that 
     may be capable of performing any or all of the functions of 
     the Bureau of Economic Analysis, and the feasibility of 
     having any such functions so performed; and
       (2) the feasibility of implementing a system under which 
     fees may be assessed by the Bureau of Economic Analysis in 
     order to defray the costs of any services performed by the 
     Bureau of Economic Analysis, when such services are performed 
     other than on behalf of the Federal Government or an agency 
     or instrumentality thereof.
       (d) Rule of Construction.--For purposes of subtitle E, the 
     reorganization of the Bureau of Economic Analysis under this 
     section shall be treated as if it involved a transfer of 
     functions.
       (e) Limitation on Annual Obligations and Expenditures for 
     Continued Functions.--
       (1) In general.--Except as provided in paragraph (2), for 
     each fiscal year that begins on or after the effective date 
     of this section, the total of amounts obligated or expended 
     by the United States each fiscal year for performance of 
     functions which immediately before the date of the enactment 
     of this Act were authorized to be performed by the Secretary 
     of Commerce with respect to the Bureau of Economic Analysis, 
     or by or an agency, officer, or employee of the Department of 
     Commerce with respect to that bureau, may not exceed 75 
     percent of the total of amounts obligated or expended by the 
     United States for performance of such functions for fiscal 
     year 1995.
       (2) Exception.--Paragraph (1) shall not apply to 
     obligations or expenditures incurred as a direct consequence 
     of the termination, transfer, or other disposition of 
     funtions pursuant to this section.
       (3) Rule of construction.--This subsection shall take 
     precedence over any other provision of law unless such 
     provision explicitly refers to this section and makes an 
     exception to it.

[[Page 1779]]

       (4) Responsibilities of the director of the office of 
     management and budget.--The Director of the Office of 
     Management and Budget shall--
       (A) ensure compliance with the requirements of this 
     subsection; and
       (B) include in each report under sections 17106(a) and (b) 
     a description of actions taken to comply with such 
     requirements.

     SEC. 17205. TERMINATED FUNCTIONS OF NTIA.

       (a) Repeals.--The following provisions of law are repealed:
       (1) Subpart A of part IV of title III of the Communications 
     Act of 1934 (47 U.S.C. 390 et seq.), relating to assistance 
     for public telecommunications facilities.
       (2) Subpart B of part IV of title III of the Communications 
     Act of 1934 (47 U.S.C. 394 et seq.), relating to the 
     Endowment for Children's Educational Television.
       (3) Subpart C of part IV of title III of the Communications 
     Act of 1934 (47 U.S.C. 395 et seq.), relating to 
     Telecommunications Demonstration grants.
       (b) Disposal of NTIA Laboratories.--
       (1) Privatization.--All laboratories of the National 
     Telecommunications and Information Administration are 
     transferred to the Director of the Office of Management and 
     Budget for privatization in accordance with section 17109.
       (2) Transfer of functions.--The functions of the National 
     Telecommunications and Information Administration concerning 
     research and analysis of the electromagnetic spectrum 
     described in section 5112(b) of the Omnibus Trade and 
     Competitiveness Act of 1988 (15 U.S.C. 1532) are transferred 
     to the Director of the National Bureau of Standards.
       (c) Transfer of National Telecommunications and Information 
     Administration Functions.--
       (1) Transfer to ustr.--Except as provided in subsection 
     (b)(2), the functions of the National Telecommunications and 
     Information Administration, and of the Secretary of Commerce 
     and the Assistant Secretary for Communications and 
     Information of the Department of Commerce with respect to the 
     National Telecommunications and Information Administration, 
     are transferred to the United States Trade Representative.
       (2) References.--References in any provision of law 
     (including the National Telecommunications and Information 
     Administration Organization Act) to the Secretary of Commerce 
     or the Assistant Secretary for Communications and Information 
     of the Department of Commerce--
       (A) with respect to a function vested pursuant to this 
     section in the United States Trade Representative shall be 
     deemed to refer to the United States Trade Representative; 
     and
       (B) with respect to a function vested pursuant to this 
     section in the Director of the National Bureau of Standards 
     shall be deemed to refer to the Director of the National 
     Bureau of Standards.
       (3) Termination of ntia.--Effective on the abolishment date 
     specified in section 17101(c), the National 
     Telecommunications and Information Administration is 
     abolished.

     SEC. 17206. NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION.

       (a) Termination of Miscellaneous Research Programs and 
     Accounts.--
       (1) In general.--No funds may be appropriated in any fiscal 
     year for the following programs and accounts of the National 
     Oceanic and Atmospheric Administration:
       (A) The National Undersea Research Program.
       (B) The Fleet Modernization Program.
       (C) The Charleston, South Carolina, Special Management 
     Plan.
       (D) Chesapeake Bay Observation Buoys (as of September 30, 
     1996).
       (E) Federal/State Weather Modification Grants.
       (F) The Southeast Storm Research Account.
       (G) The Southeast United States Caribbean Fisheries 
     Oceanographic Coordinated Investigations Program.
       (H) National Institute for Environmental Renewal.
       (I) The Lake Champlain Study.
       (J) The Maine Marine Research Center.
       (K) The South Carolina Cooperative Geodetic Survey Account.
       (L) Pacific Island Technical Assistance.
       (M) Sea Grant Oyster Disease Account.
       (N) Sea Grant Zebra Mussel Account.
       (O) VENTS program.
       (P) National Weather Service non-Federal, non-wildfire 
     Weather Service.
       (Q) National Weather Service Regional Climate Centers.
       (R) National Weather Service Samoa Weather Forecast Office 
     Repair and Upgrade Account.
       (S) Dissemination of Weather Charts (Marine Facsimile 
     Service).
       (T) The Climate and Global Change Account.
       (U) The Global Learning and Observations to Benefit the 
     Environment Program.
       (V) Great Lakes nearshore research.
       (W) Mussel watch.
       (2) Repeals.--The following provisions of law are repealed:
       (A) The Ocean Thermal Conversion Act of 1980 (42 U.S.C. 
     9101 et seq.).
       (B) Title IV of the Marine Protection, Research, and 
     Sanctuaries Act of 1972 (16 U.S.C. 1447 et seq.).
       (C) Title V of the Marine Protection, Research, and 
     Sanctuaries Act of 1972 (33 U.S.C. 2801 et seq.).
       (D) The Great Lakes Shoreline Mapping Act of 1987 (33 
     U.S.C. 883a note).
       (E) The Great Lakes Fish and Wildlife Tissue Bank Act (16 
     U.S.C. 943 et seq.).
       (F) The Nonindigenous Aquatic Nuisance Prevention and 
     Control Act of 1990 (16 U.S.C. 4701 et seq.), except for 
     those provisions affecting the Assistant Secretary of the 
     Army (civil works) and the Secretary of the department in 
     which the Coast Guard is operating.
       (G) Section 3 of the Sea Grant Program Improvement Act of 
     1976 (33 U.S.C. 1124a).
       (H) Section 208(c) of the National Sea Grant College 
     Program Act (33 U.S.C. 1127(c)).
       (I) Section 305 of the Coastal Zone Management Act of 1972 
     (16 U.S.C. 1454) is repealed effective October 1, 1998.
       (J) The NOAA Fleet Modernization Act (33 U.S.C. 891 et 
     seq.).
       (K) Public Law 85-342 (72 Stat. 35; 16 U.S.C. 778 et seq.), 
     relating to fish research and experimentation.
       (L) The first section of the Act of August 8, 1956 (70 
     Stat. 1126; 16 U.S.C. 760d), relating to grants for 
     commercial fishing education.
       (M) Public Law 86-359 (16 U.S.C. 760e et seq.), relating to 
     the study of migratory marine gamefish.
       (N) The Act of August 15, 1914 (Chapter 253; 38 Stat. 692; 
     16 U.S.C. 781 et seq.), prohibiting the taking of sponges in 
     the Gulf of Mexico and the Straits of Florida.
       (b) Aeronautical Mapping and Charting.--
       (1) In general.--The aeronautical mapping and charting 
     functions of the National Oceanic and Atmospheric 
     Administration are transferred to the Defense Mapping Agency.
       (2) Termination of certain functions.--The Defense Mapping 
     Agency shall terminate any functions transferred under 
     paragraph (1) that are performed by the private sector.
       (3) Functions requested by federal aviation 
     administration.--(A) Notwithstanding paragraph (2), the 
     Director of the Defense Mapping Agency shall carry out such 
     aeronautical charting functions as may be requested by the 
     Administrator of the Federal Aviation Administration.
       (B) In carrying out aeronautical mapping functions 
     requested by the Administrator under subparagraph (A), the 
     Director shall--
       (i) publish and distribute to the public and to the 
     Administrator any aeronautical charts requested by the 
     Administrator; and
       (ii) provide to the Administrator such other air traffic 
     control products and services as may be requested by the 
     Administrator,
     in such manner and including such information as the 
     Administrator determines is necessary for, or will promote, 
     the safe and efficient movement of aircraft in air commerce.
       (4) Continuing applicability.--The requirements of section 
     1307 of title 44, United States Code, shall continue to apply 
     with respect to all aeronautical products created or 
     published by the Director of the Defense Mapping Agency in 
     carrying out the functions transferred to the Director under 
     this paragraph; except that the prices for such products 
     shall be established jointly by the Director and the 
     Secretary of Transportation on an annual basis.
       (c) Transfer of Mapping, Charting, and Geodesy Functions to 
     the United States Geological Survey.--
       (1) In general.--Except as provided in subsection (b), 
     there are hereby transferred to the Director of the United 
     States Geological Survey the functions relating to mapping, 
     charting, and geodesy authorized under the Act of August 7, 
     1947 (61 Stat. 787; 33 U.S.C. 883a).
       (2) Termination of certain functions.--The Director of the 
     United States Geological Survey shall terminate any functions 
     transferred under paragraph (1) that are performed by the 
     private sector.
       (d) NESDIS.--There are transferred to the National 
     Institute for Science and Technology all functions and assets 
     of the National Oceanic and Atmospheric Administration that 
     on the date immediately before the effective date of this 
     section were authorized to be performed by the National 
     Environmental Satellite, Data, and Information System.
       (e) OAR.--There are transferred to the National Institute 
     for Science and Technology all functions and assets of the 
     National Oceanic and Atmospheric Administration (including 
     global programs) that on the date immediately before the 
     effective date of this section were authorized to be 
     performed by the Office of Oceanic and Atmospheric Research.
       (f) NWS.--
       (1) In general.--There are transferred to the National 
     Institute for Science and Technology all functions and assets 
     of the National Oceanic and Atmospheric Administration that 
     on the date immediately before the effective date of this 
     section were authorized to be performed by the National 
     Weather Service.
       (2) Duties.--To protect life and property and enhance the 
     national economy, the Administrator of Science and 
     Technology, through the National Weather Service, except as 
     outlined in paragraph (3), shall be responsible for the 
     following:
       (A) Forecasts. The Administrator of Science and Technology, 
     through the National Weather Service, shall serve as the sole 
     official source of severe weather warnings.
       (B) Issuance of storm warnings.
       (C) The collection, exchange, and distribution of 
     meteorological, hydrological, climatic, and oceanographic 
     data and information.
       (D) The preparation of hydro-meteorological guidance and 
     core forecast information.

[[Page 1780]]

       (3) Limitations on competition.--The National Weather 
     Service may not compete, or assist other entities to compete, 
     with the private sector to provide a service when that 
     service is currently provided or can be provided by a 
     commercial enterprise unless--
       (A) the Administrator of Science and Technology finds that 
     the private sector is unwilling or unable to provide the 
     service; or
       (B) the Administrator of Science and Technology finds that 
     the service provides vital weather warnings and forecasts for 
     the protection of lives and property of the general public.
       (4) Organic act amendments.--
       (A) Amendments.--The Act of 1890 is amended--
       (i) by striking section 3 (15 U.S.C. 313); and
       (ii) in section 9 (15 U.S.C. 317), by striking ``Department 
     of'' and all that follows thereafter and inserting ``National 
     Institute for Science and Technology.''.
       (B) Definition.--For purposes of this paragraph, the term 
     ``Act of 1890'' means the Act entitled ``An Act to increase 
     the efficiency and reduce the expenses of the Signal Corps of 
     the Army, and to transfer the Weather Bureau to the 
     Department of Agriculture'', approved October 1, 1890 (26 
     Stat. 653).
       (5) Repeal.--Sections 706 and 707 of the Weather Service 
     Modernization Act (15 U.S.C. 313 note) are repealed.
       (6) Conforming Amendments.--The Weather Service 
     Modernization Act (15 U.S.C. 313 note) is amended--
       (A) in section 702, by striking paragraph (3) and 
     redesignating paragraphs (4) through (10) as paragraphs (3) 
     through (9), respectively; and
       (B) in section 703--
       (i) by striking ``(a) National Implementation Plan.--'';
       (ii) by striking paragraph (3) and redesignating paragraphs 
     (4), (5), and (6) as paragraphs (3), (4), and (5), 
     respectively; and
       (iii) by striking subsections (b) and (c).
       (g) Termination of the National Oceanic and Atmospheric 
     Administration Corps of Commissioned Officers.--
       (1) Number of officers.--Notwithstanding section 8 of the 
     Act of June 3, 1948 (33 U.S.C. 853g), the total number of 
     commissioned officers on the active list of the National 
     Oceanic and Atmospheric Administration shall not exceed 358 
     for fiscal year 1996. No commissioned officers are authorized 
     for any fiscal year after fiscal year 1996.
       (2) Separation pay.--(A) Commissioned officers may be 
     separated from the active list of the National Oceanic and 
     Atmospheric Administration. Any officer so separated because 
     of paragraph (1) shall, subject to subparagraph (B) and the 
     availability of appropriations, be eligible for separation 
     pay under section 9 of the Act of June 3, 1948 (33 U.S.C. 
     853h) to the same extent as if such officer had been 
     separated under section 8 of such Act (33 U.S.C. 853g).
       (B) Any officer who, under paragraph (4), transfers to 
     another of the uniformed services or becomes employed in a 
     civil service position shall not be eligible for separation 
     pay under this paragraph.
       (C)(i) Any officer who receives separation pay under this 
     paragraph shall be required to repay the amount received if, 
     within 1 year after the date of the separation on which the 
     payment is based, such officer is reemployed in a civil 
     service position in the National Oceanic and Atmospheric 
     Administration, the duties of which position would formerly 
     have been performed by a commissioned officer, as determined 
     by the Administrator of the National Oceanic and Atmospheric 
     Administration.
       (ii) A repayment under this subparagraph shall be made in a 
     lump sum or in such installments as the Administrator may 
     specify.
       (D) In the case of any officer who makes a repayment under 
     subparagraph (C)--
       (i) the National Oceanic and Atmospheric Administration 
     shall pay into the Civil Service Retirement and Disability 
     Fund, on such officer's behalf, any deposit required under 
     section 8422(e)(1) of title 5, United States Code, with 
     respect to any prior service performed by that individual as 
     such an officer; and
       (ii) if the amount paid under clause (i) is less than the 
     amount of the repayment under subparagraph (C), the National 
     Oceanic and Atmospheric Administration shall pay into the 
     Government Securities Investment Fund (established under 
     section 8438(b)(1)(A) of title 5, United States Code), on 
     such individual's behalf, an amount equal to the difference.
     The provisions of paragraph (5)(C)(iv) shall apply with 
     respect to any contribution to the Thrift Savings Plan made 
     under clause (ii).
       (3) Priority placement program.--A priority placement 
     program similar to the programs described in section 3329b of 
     title 5, United States Code, as amended by section 17110, 
     shall be established by the National Oceanic and Atmospheric 
     Administration to assist commissioned officers who are 
     separated from the active list of the National Oceanic and 
     Atmospheric Administration because of paragraph (1).
       (4) Transfer.--(A) Subject to the approval of the Secretary 
     of Defense and under terms and conditions specified by the 
     Secretary, commissioned officers subject to paragraph (1) may 
     transfer to the Armed Forces under section 716 of title 10, 
     United States Code.
       (B) Subject to the approval of the Secretary of 
     Transportation and under terms and conditions specified by 
     the Secretary, commissioned officers subject to paragraph (1) 
     may transfer to the United States Coast Guard under section 
     716 of title 10, United States Code.
       (C) Subject to the approval of the Administrator of the 
     National Oceanic and Atmospheric Administration and under 
     terms and conditions specified by that Administrator, 
     commissioned officers subject to paragraph (1) may be 
     employed by the National Oceanic and Atmospheric 
     Administration as members of the civil service.
       (5) Retirement provisions.--(A) For commissioned officers 
     who transfer under paragraph (4)(A) to the Armed Forces, the 
     National Oceanic and Atmospheric Administration shall pay 
     into the Department of Defense Military Retirement Fund an 
     amount, to be calculated by the Secretary of Defense in 
     consultation with the Secretary of the Treasury, equal to the 
     actuarial present value of any retired or retainer pay they 
     will draw upon retirement, including full credit for service 
     in the NOAA Corps. Any payment under this subparagraph shall, 
     for purposes of paragraph (2) of section 17207(g), be 
     considered to be an expenditure described in such paragraph.
       (B) For commissioned officers who transfer under paragraph 
     (4)(B) to the United States Coast Guard, full credit for 
     service in the NOAA Corps shall be given for purposes of any 
     annuity or other similar benefit under the retirement system 
     for members of the United States Coast Guard, entitlement to 
     which is based on the separation of such officer.
       (C)(i) For a commissioned officer who becomes employed in a 
     civil service position pursuant to paragraph (4)(C) and 
     thereupon becomes subject to the Federal Employees' 
     Retirement System, the National Oceanic and Atmospheric 
     Administration shall pay, on such officer's behalf--
       (I) into the Civil Service Retirement and Disability Fund, 
     the amounts required under clause (ii); and
       (II) into the Government Securities Investment Fund, the 
     amount required under clause (iii).
       (ii)(I) The amount required under this subclause is the 
     amount of any deposit required under section 8422(e)(1) of 
     such title 5 with respect to any prior service performed by 
     the individual as a commissioned officer of the National 
     Oceanic and Atmospheric Administration.
       (II) To determine the amount required under this subclause, 
     first determine, for each year of service with respect to 
     which the deposit under subclause (I) relates, the product of 
     the normal-cost percentage for such year (as determined under 
     the last sentence of this subclause) multiplied by basic pay 
     received by the individual for any such service performed in 
     such year. Second, take the sum of the amounts determined for 
     the respective years under the first sentence. Finally, 
     subtract from such sum the amount of the deposit under 
     subclause (I). For purposes of the first sentence, the 
     normal-cost percentage for any year shall be as determined 
     for such year under the provisions of section 8423(a)(1) of 
     title 5, United States Code, except that, in the case of any 
     year before the first year for which any normal-cost 
     percentage was determined under such provisions, the normal-
     cost percentage for such first year shall be used.
       (iii) The amount required under this clause is the amount 
     by which the separation pay to which the officer would have 
     been entitled under the second sentence of paragraph (2)(A) 
     (assuming the conditions for receiving such separation pay 
     have been met) exceeds the amount of the deposit under clause 
     (ii)(I), if at all.
       (iv)(I) Any contribution made under this subparagraph to 
     the Thrift Savings Plan shall not be subject to any otherwise 
     applicable limitation on contributions contained in the 
     Internal Revenue Code of 1986, and shall not be taken into 
     account in applying any such limitation to other 
     contributions or benefits under the Thrift Savings Plan, with 
     respect to the year in which the contribution is made.
       (II) Such plan shall not be treated as failing to meet any 
     nondiscrimination requirement by reason of the making of such 
     contribution.
       (6) Repeals.--(A) The following provisions of law are 
     repealed:
       (i) The Coast and Geodetic Survey Commissioned Officers' 
     Act of 1948 (33 U.S.C. 853a-853o, 853p-853u).
       (ii) The Act of February 16, 1929 (Chapter 221, section 5; 
     45 Stat. 1187; 33 U.S.C. 852a).
       (iii) The Act of January 19, 1942 (Chapter 6; 56 Stat. 6).
       (iv) Section 9 of Public Law 87-649 (76 Stat. 495).
       (v) The Act of May 22, 1917 (Chapter 20, section 16; 40 
     Stat. 87; 33 U.S.C. 854 et seq.).
       (vi) The Act of December 3, 1942 (Chapter 670; 56 Stat. 
     1038.
       (vii) Sections 1 through 5 of Public Law 91-621 (84 Stat. 
     1863; 33 U.S.C. 857-1 et seq.).
       (viii) The Act of August 10, 1956 (Chapter 1041, section 3; 
     70A Stat. 619; 33 U.S.C. 857a).
       (ix) The Act of May 18, 1920 (Chapter 190, section 11; 41 
     Stat. 603; 33 U.S.C. 864).
       (x) The Act of July 22, 1947 (Chapter 286; 61 Stat. 400; 33 
     U.S.C. 873, 874).
       (xi) The Act of August 3, 1956 (Chapter 932; 70 Stat. 988; 
     33 U.S.C. 875, 876).
       (xii) All other Acts inconsistent with this subsection.
     No repeal under this subparagraph shall affect any annuity or 
     other similar benefit payable, under any provision of law so 
     repealed, based on the separation of any individual from the 
     NOAA Corps on or before September 30, 1996. Any authority 
     exercised by the Secretary of Commerce or his designee with 
     respect to any such benefits shall

[[Page 1781]]

     be exercised by the Administrator of the National Oceanic and 
     Atmospheric Administration, and any authorization of 
     appropriations relating to those benefits, which is in effect 
     as of September 30, 1996, shall be considered to have 
     remained in effect.
       (B) The effective date of the repeals under subparagraph 
     (A) shall be October 1, 1996.
       (7) Creditability of noaa service for purposes relating to 
     reductions in force.--A commissioned officer who is separated 
     from the active list of the National Oceanic and Atmospheric 
     Administration because of paragraph (1) shall, for purposes 
     of any subsequent reduction in force, receive credit for any 
     period of service performed as such an officer before 
     separation from such list to the same extent and in the same 
     manner as if it had been a period of active service in the 
     Armed Forces.
       (8) Abolition.--The Office of the National Oceanic and 
     Atmospheric Administration Corps of Operations and the 
     Commissioned Personnel Center are abolished effective 
     September 30, 1996.
       (h) NOAA Fleet.--
       (1) Service contracts.--Notwithstanding any other provision 
     of law and subject to the availability of appropriations, the 
     Administrator of the National Institute for Science and 
     Technology shall enter into contracts, including multiyear 
     contracts, subject to paragraph (3), for the use of vessels 
     to conduct oceanographic research and fisheries research, 
     monitoring, enforcement, and management, and to acquire other 
     data necessary to carry out the missions of the National 
     Oceanic and Atmospheric Administration. The Administrator of 
     the National Institute for Science and Technology shall enter 
     into these contracts unless--
       (A) the cost of the contract is more than the cost 
     (including the cost of vessel operation, maintenance, and all 
     personnel) to the National Oceanic and Atmospheric 
     Administration of obtaining those services on vessels of the 
     National Oceanic and Atmospheric Administration;
       (B) the contract is for more than 7 years; or
       (C) the data is acquired through a vessel agreement 
     pursuant to paragraph (4).
       (2) Vessels.--The Administrator of the National Institute 
     for Science and Technology may not enter into any contract 
     for the construction, lease-purchase, upgrade, or service 
     life extension of any vessel.
       (3) Multiyear contracts.--
       (A) In general.--Subject to subparagraphs (B) and (C), and 
     notwithstanding section 1341 of title 31, United States Code, 
     and section 11 of title 41, United States Code, the 
     Administrator of the National Institute for Science and 
     Technology may acquire data under multiyear contracts.
       (B) Required findings.--The Administrator of the National 
     Institute for Science and Technology may not enter into a 
     contract pursuant to this paragraph unless such Administrator 
     finds with respect to that contract that there is a 
     reasonable expectation that throughout the contemplated 
     contract period the Administrator will request from Congress 
     funding for the contract at the level required to avoid 
     contract termination.
       (C) Required provisions.--The Administrator of the National 
     Institute for Science and Technology may not enter into a 
     contract pursuant to this paragraph unless the contract 
     includes--
       (i) a provision under which the obligation of the United 
     States to make payments under the contract for any fiscal 
     year is subject to the availability of appropriations 
     provided in advance for those payments;
       (ii) a provision that specifies the term of effectiveness 
     of the contract; and
       (iii) appropriate provisions under which, in case of any 
     termination of the contract before the end of the term 
     specified pursuant to clause (ii), the United States shall 
     only be liable for the lesser of--

       (I) an amount specified in the contract for such a 
     termination; or
       (II) amounts that were appropriated before the date of the 
     termination for the performance of the contract or for 
     procurement of the type of acquisition covered by the 
     contract and are unobligated on the date of the termination.

       (4) Vessel agreements.--The Administrator of the National 
     Institute for Science and Technology shall use excess 
     capacity of University National Oceanographic Laboratory 
     System vessels where appropriate and may enter into memoranda 
     of agreement with the operators of these vessels to carry out 
     this requirement.
       (5) Transfer of excess vessels.--The Administrator of the 
     National Institute for Science and Technology shall transfer 
     any vessels that are excess to the needs of the National 
     Oceanic and Atmospheric Administration to the National 
     Defense Reserve Fleet. Notwithstanding any other provision of 
     law, these vessels may be scrapped in accordance with section 
     510(i) of the Merchant Marine Act, 1936 (46 App. U.S.C. 
     1160(i)).
       (i) National Marine Fisheries Service.--(1) There are 
     transferred to the National Institute for Science and 
     Technology all functions that on the day before the effective 
     date of this section were authorized by law to be performed 
     by the National Marine Fisheries Service.
       (2) Notwithstanding any other provision of law, the 
     National Marine Fisheries Service may not affect on-land 
     activities under the Endangered Species Act of 1973 for 
     salmon recovery in the State of Idaho (16 U.S.C. 1531 et 
     seq.).
       (j) National Ocean Service.--Except as otherwise provided 
     in this title, there are transferred to the National 
     Institute for Science and Technology all functions and assets 
     of the National Oceanic and Atmospheric Administration that 
     on the date immediately before the effective date of this 
     section were authorized to be performed by the National Ocean 
     Service (including the Coastal Ocean Program).
       (k) Transfer of Coastal Nonpoint Pollution Control 
     Functions.--There are transferred to the Administrator of the 
     Environmental Protection Agency the functions under section 
     6217 of the Omnibus Budget Reconciliation Act of 1990 (16 
     U.S.C. 1455b) that on the day before the effective date of 
     this section were vested in the Secretary of Commerce.

     SEC. 17207. NATIONAL INSTITUTE FOR SCIENCE AND TECHNOLOGY.

       (a) Establishment.--There is established as an independent 
     agency in the Executive Branch the National Institute for 
     Science and Technology (in this section referred to as the 
     ``Institute''). The Institute, and all functions and offices 
     transferred to it under this title, shall be administered 
     under the supervision and direction of an Administrator of 
     Science and Technology. The Administrator of Science and 
     Technology shall be appointed by the President, by and with 
     the advice and consent of the Senate, and shall receive basic 
     pay at the rate payable for level II of the Executive 
     Schedule under section 5313 of title 5, United States Code.
       (b) Principal Officers.--There shall be in the Institute, 
     on the transfer of functions and offices under this title--
       (1) an Administrator of the National Oceanic and 
     Atmospheric Administration, who shall be appointed by the 
     President, by and with the advice and consent of the Senate, 
     and who shall receive basic pay at the rate payable for level 
     III of the Executive Schedule under section 5314 of title 5, 
     United States Code; and
       (2) a Director of the National Bureau of Standards, who 
     shall be appointed by the President, by and with the advice 
     and consent of the Senate, and who shall receive basic pay at 
     the rate payable for level IV of the Executive Schedule under 
     section 5315 of title 5, United States Code.
       (c) Additional Officers.--There shall be in the Institute--
       (1) a Chief Financial Officer of the Institute, to be 
     appointed by the President, by and with the advice and 
     consent of the Senate;
       (2) a Chief of External Affairs, to be appointed by the 
     President, by and with the advice and consent of the Senate;
       (3) a General Counsel, to be appointed by the President, by 
     and with the advice and consent of the Senate; and
       (4) an Inspector General, to be appointed in accordance 
     with the Inspector General Act of 1978.
     Each Officer appointed under this subsection shall receive 
     basic pay at the rate payable for level IV of the Executive 
     Schedule under section 5315 of title 5, United States Code.
       (d) Transfer of Functions and Offices.--Except as otherwise 
     provided in this title, there are transferred to the 
     Institute--
       (1) the National Oceanic and Atmospheric Administration, 
     along with its functions and offices, as provided in section 
     17206;
       (2) the National Bureau of Standards, along with its 
     functions and offices, as provided in section 17202; and
       (3) the Office of Space Commerce, along with its functions 
     and offices.
       (e) Elimination of Positions.--The Administrator of Science 
     and Technology may eliminate positions that are no longer 
     necessary because of the termination of functions under this 
     section, section 17202, and section 17206.
       (f) Agency Terminations.--
       (1) Terminations.--On the date specified in section 
     17209(a), the following shall terminate:
       (A) The Office of the Deputy Administrator and Assistant 
     Secretary of the National Oceanic and Atmospheric 
     Administration.
       (B) The Office of the Deputy Under Secretary of the 
     National Oceanic and Atmospheric Administration.
       (C) The Office of the Chief Scientist of the National 
     Oceanic and Atmospheric Administration.
       (D) The position of Deputy Assistant Secretary for Oceans 
     and Atmosphere.
       (E) The position of Deputy Assistant Secretary for 
     International Affairs.
       (F) Any office of the National Oceanic and Atmospheric 
     Administration or the National Bureau of Standards whose 
     primary purpose is to perform high performance computing 
     communications, legislative, personnel, public relations, 
     budget, constituent, intergovernmental, international, policy 
     and strategic planning, sustainable development, 
     administrative, financial, educational, legal and 
     coordination functions. These functions shall, as necessary, 
     be performed only by officers described in subsection (c).
       (G) The position of Associate Director of the National 
     Institute of Standards and Technology.
       (2) Termination of executive schedule positions.--Each 
     position which was expressly authorized by law, or the 
     incumbent of which was authorized to receive compensation at 
     the rate prescribed for levels I through V of the Executive 
     Schedule under sections 5312 through 5315 of title 5, United 
     States Code, in an office terminated pursuant to this 
     section, section 17202, and section 17206 shall also 
     terminate.

[[Page 1782]]

       (g) Funding Reductions Resulting From Reorganization.--
       (1) Funding reductions.--For each fiscal year that begins 
     on or after the effective date of this section, the amount 
     obligated or expended by the United States in performing all 
     functions vested in the National Institute for Science and 
     Technology pursuant to this subtitle may not exceed 75 
     percent of the total of the amounts obligated or expended by 
     the United States in performing, during fiscal year 1995, all 
     functions vested in the National Oceanic and Atmospheric 
     Administration, the National Institute of Standards and 
     Technology, and the Office of Space Commerce, except for 
     those functions transferred under section 17206 to agencies 
     or departments other than the National Institute for Science 
     and Technology.
       (2) Exception.--Paragraph (1) shall not apply to 
     obligations or expenditures incurred as a direct consequence 
     of the termination, transfer, or other disposition of 
     functions described in paragraph (1) pursuant to this 
     subtitle.
       (3) Rule of construction.--This subsection shall take 
     precedence over any other provision of law unless such 
     provision explicitly refers to this section and makes an 
     exception to it.
       (4) Responsibilities of the director of the office of 
     management and budget.--The Director of the Office of 
     Management and Budget shall--
       (A) ensure compliance with the requirements of this 
     subsection; and
       (B) include in each report under section 17106 (a) and (b) 
     of this title a description of actions taken to comply with 
     such requirements.

     SEC. 17208. MISCELLANEOUS TERMINATIONS; MORATORIUM ON PROGRAM 
                   ACTIVITIES.

       (a) Terminations.--The following agencies and programs of 
     the Department of Commerce are terminated:
       (1) The Minority Business Development Administration.
       (2) The United States Travel and Tourism Administration.
       (3) The programs and activities of the National 
     Telecommunications and Information Administration referred to 
     in section 17205(a).
       (4) The Advanced Technology Program under section 28 of the 
     National Institute of Standards and Technology Act (15 U.S.C. 
     278n).
       (5) The Manufacturing Extension Programs under sections 25 
     and 26 of the National Institute of Standards and Technology 
     Act (15 U.S.C. 278k and 278l).
       (6) The National Institute of Standards and Technology 
     METRIC Program.
       (b) Moratorium on Program Activities.--The authority to 
     make grants, enter into contracts, provide assistance, incur 
     obligations, or provide commitments (including any 
     enlargement of existing obligations or commitments, except if 
     required by law) with respect to the agencies and programs 
     described in subsection (a) is terminated effective on the 
     date of the enactment of this title.

     SEC. 17209. EFFECTIVE DATE.

       (a) In General.--Except as provided in subsection (b), this 
     subtitle shall take effect on the abolishment date specified 
     in section 17101(c).
       (b) Provisions Effective on Date of Enactment.--The 
     following provisions of this subtitle shall take effect on 
     the date of the enactment of this Act:
       (1) Section 17201.
       (2) Section 17206(g), except as otherwise provided in that 
     section.
       (3) Section 17208(b).
       (4) This section.
        Subtitle C--Office of United States Trade Representative

                     CHAPTER 1--GENERAL PROVISIONS

     SEC. 17301. DEFINITIONS.

       For purposes of this subtitle--
       (1) the term ``Office'' means the Office of the United 
     States Trade Representative;
       (2) the term ``Federal agency'' has the meaning given to 
     the term ``agency'' by section 551(1) of title 5, United 
     States Code; and
       (3) the term ``USTR'' means the United States Trade 
     Representative as provided for under section 17311.

        CHAPTER 2--OFFICE OF UNITED STATES TRADE REPRESENTATIVE

                      Subchapter A--Establishment

     SEC. 17311. ESTABLISHMENT OF THE OFFICE.

       (a) In General.--The Office of the United States Trade 
     Representative is established as an independent establishment 
     in the executive branch of Government as defined under 
     section 104 of title 5, United States Code. The United States 
     Trade Representative shall be the head of the Office and 
     shall be appointed by the President, by and with the advice 
     and consent of the Senate.
       (b) Ambassador Status.--The USTR shall have the rank and 
     status of Ambassador and shall represent the United States in 
     all trade negotiations conducted by the Office.
       (c) Continued Service of Current USTR.--The individual 
     serving as United States Trade Representative on the date 
     immediately preceding the effective date of this subtitle may 
     continue to serve as USTR under subsection (a).
       (d) Successor to the Department of Commerce.--The Office 
     shall be the successor to the Department of Commerce for 
     purposes of protocol.

     SEC. 17312. FUNCTIONS OF THE USTR.

       (a) In General.--In addition to the functions transferred 
     to the USTR by this subtitle, such other functions as the 
     President may assign or delegate to the USTR, and such other 
     functions as the USTR may, after the effective date of this 
     subtitle, be required to carry out by law, the USTR shall--
       (1) serve as the principal advisor to the President on 
     international trade policy and advise the President on the 
     impact of other policies of the United States Government on 
     international trade;
       (2) exercise primary responsibility, with the advice of the 
     interagency organization established under section 242 of the 
     Trade Expansion Act of 1962, for developing and implementing 
     international trade policy, including commodity matters and, 
     to the extent related to international trade policy, direct 
     investment matters and, in exercising such responsibility, 
     advance and implement, as the primary mandate of the Office, 
     the goals of the United States to--
       (A) maintain United States leadership in international 
     trade liberalization and expansion efforts;
       (B) reinvigorate the ability of the United States economy 
     to compete in international markets and to respond flexibly 
     to changes in international competition; and
       (C) expand United States participation in international 
     trade through aggressive promotion and marketing of goods and 
     services that are products of the United States;
       (3) exercise lead responsibility for the conduct of 
     international trade negotiations, including negotiations 
     relating to commodity matters and, to the extent that such 
     negotiations are related to international trade, direct 
     investment negotiations;
       (4) exercise lead responsibility for the establishment of a 
     national export strategy, including policies designed to 
     implement such strategy;
       (5) with the advice of the interagency organization 
     established under section 242 of the Trade Expansion Act of 
     1962, issue policy guidance to other Federal agencies on 
     international trade, commodity, and direct investment 
     functions to the extent necessary to assure the coordination 
     of international trade policy;
       (6) seek and promote new opportunities for United States 
     products and services to compete in the world marketplace;
       (7) assist small businesses in developing export markets;
       (8) enforce the laws of the United States relating to 
     trade;
       (9) analyze economic trends and developments;
       (10) report directly to the Congress--
       (A) on the administration of, and matters pertaining to, 
     the trade agreements program under the Omnibus Trade and 
     Competitiveness Act of 1988, the Trade Act of 1974, the Trade 
     Expansion Act of 1962, section 350 of the Tariff Act of 1930, 
     and any other provision of law enacted after this Act; and
       (B) with respect to other important issues pertaining to 
     international trade;
       (11) keep each official adviser to the United States 
     delegations to international conferences, meetings, and 
     negotiation sessions relating to trade agreements who is 
     appointed from the Committee on Finance of the Senate or the 
     Committee on Ways and Means of the House of Representatives 
     under section 161 of the Trade Act of 1974 currently informed 
     on United States negotiating objectives with respect to trade 
     agreements, the status of negotiations in progress with 
     respect to such agreements, and the nature of any changes in 
     domestic law or the administration thereof which the USTR may 
     recommend to the Congress to carry out any trade agreement;
       (12) consult and cooperate with State and local governments 
     and other interested parties on international trade matters 
     of interest to such governments and parties, and to the 
     extent related to international trade matters, on investment 
     matters, and, when appropriate, hold informal public 
     hearings;
       (13) serve as the principal advisor to the President on 
     Government policies designed to contribute to enhancing the 
     ability of United States industry and services to compete in 
     international markets;
       (14) develop recommendations for national strategies and 
     specific policies intended to enhance the productivity and 
     international competitiveness of United States industries;
       (15) serve as the principal advisor to the President in 
     identifying and assessing the consequences of any Government 
     policies that adversely affect, or have the potential to 
     adversely affect, the international competitiveness of United 
     States industries and services;
       (16) promote cooperation between business, labor, and 
     Government to improve industrial performance and the ability 
     of United States industries to compete in international 
     markets and to facilitate consultation and communication 
     between the Government and the private sector about domestic 
     industrial performance and prospects and the performance and 
     prospects of foreign competitors; and
       (17) monitor and enforce foreign government compliance with 
     international trade agreements to protect United States 
     interests.
       (b) Interagency Organization.--The USTR shall be the 
     chairperson of the interagency organization established under 
     section 242 of the Trade Expansion Act of 1962.
       (c) National Security Council.--The USTR shall be a member 
     of the National Security Council.
       (d) Advisory Council.--The USTR shall be Deputy Chairman of 
     the National Advisory Council on International Monetary and 
     Financial Policies established under Executive Order 11269, 
     issued February 14, 1966.

[[Page 1783]]

       (e) Agriculture.--(1) The USTR shall consult with the 
     Secretary of Agriculture or the designee of the Secretary of 
     Agriculture on all matters that potentially involve 
     international trade in agricultural products.
       (2) If an international meeting for negotiation or 
     consultation includes discussion of international trade in 
     agricultural products, the USTR or the designee of the USTR 
     shall be Chairman of the United States delegation to such 
     meeting and the Secretary of Agriculture or the designee of 
     such Secretary shall be Vice Chairman. The provisions of this 
     paragraph shall not limit the authority of the USTR under 
     subsection (h) to assign to the Secretary of Agriculture 
     responsibility for the conduct of, or participation in, any 
     trade negotiation or meeting.
       (f) Trade Promotion.--The USTR shall be the chairperson of 
     the Trade Promotion Coordinating Committee.
       (g) National Economic Council.--The USTR shall be a member 
     of the National Economic Council established under Executive 
     Order No. 12835, issued January 25, 1993.
       (h) International Trade Negotiations.--Except where 
     expressly prohibited by law, the USTR, at the request or with 
     the concurrence of the head of any other Federal agency, may 
     assign the responsibility for conducting or participating in 
     any specific international trade negotiation or meeting to 
     the head of such agency whenever the USTR determines that the 
     subject matter of such international trade negotiation is 
     related to the functions carried out by such agency.

                         Subchapter B--Officers

     SEC. 17321. DEPUTY ADMINISTRATOR OF THE OFFICE.

       (a) Establishment.--There shall be in the Office the Deputy 
     Administrator of the Office of the United States Trade 
     Representative, who shall be appointed by the President, by 
     and with the advice and consent of the Senate.
       (b) Absence, Disability, or Vacancy of USTR.--The Deputy 
     Administrator of the Office of the United States Trade 
     Representative shall act for and exercise the functions of 
     the USTR during the absence or disability of the USTR or in 
     the event the office of the USTR becomes vacant. The Deputy 
     Administrator shall act for and exercise the functions of the 
     USTR until the absence or disability of the USTR no longer 
     exists or a successor to the USTR has been appointed by the 
     President and confirmed by the Senate.
       (c) Functions of Deputy Administrator.--The Deputy 
     Administrator of the Office of the United States Trade 
     Representative shall exercise all functions, under the 
     direction of the USTR, transferred to or established in the 
     Office, except those functions exercised by the Deputy United 
     States Trade Representatives, the Director General for Export 
     Promotion, the Inspector General, and the General Counsel of 
     the Office, as provided by this subtitle.

     SEC. 17322. DEPUTY UNITED STATES TRADE REPRESENTATIVES.

       (a) Establishment.--There shall be in the Office 2 Deputy 
     United States Trade Representatives, who shall be appointed 
     by the President, by and with the advice and consent of the 
     Senate. The Deputy United States Trade Representatives shall 
     exercise all functions under the direction of the USTR, and 
     shall include--
       (1) the Deputy United States Trade Representative for 
     Negotiations; and
       (2) the Deputy United States Trade Representative to the 
     World Trade Organization.
       (b) Functions of Deputy United States Trade 
     Representatives.--(1) The Deputy United States Trade 
     Representative for Negotiations shall exercise all functions 
     transferred under section 17331 and shall have the rank and 
     status of Ambassador.
       (2) The Deputy United States Trade Representative to the 
     World Trade Organization shall exercise all functions 
     relating to representation to the World Trade Organization 
     and shall have the rank and status of Ambassador.

     SEC. 17323. ASSISTANT ADMINISTRATORS.

       (a) Establishment.--There shall be in the Office 3 
     Assistant Administrators, who shall be appointed by the 
     President, by and with the advice and consent of the Senate. 
     The Assistant Administrators shall exercise all functions 
     under the direction of the Deputy Administrator of the Office 
     of the United States Trade Representative and include--
       (1) the Assistant Administrator for Export Administration;
       (2) the Assistant Administrator for Import Administration; 
     and
       (3) the Assistant Administrator for Trade and Policy 
     Analysis.
       (b) Functions of Assistant Administrators.--(1) The 
     Assistant Administrator for Export Administration shall 
     exercise all functions transferred under section 17332(1)(C).
       (2) The Assistant Administrator for Import Administration 
     shall exercise all functions transferred under section 
     17332(1)(D).
       (3) The Assistant Administrator for Trade and Policy 
     Analysis shall exercise all functions transferred under 
     section 17332(1)(B) and all functions transferred under 
     section 17332(2).

     SEC. 17324. DIRECTOR GENERAL FOR EXPORT PROMOTION.

       (a) Establishment.--There shall be a Director General for 
     Export Promotion, who shall be appointed by the President, by 
     and with the advice and consent of the Senate.
       (b) Functions.--The Director General for Export Promotion 
     shall exercise, under the direction of the USTR, all 
     functions transferred under sections 17332(1)(A) (relating to 
     functions of the United States and Foreign Commercial 
     Service) and 17333 and shall have the rank and status of 
     Ambassador.

     SEC. 17325. GENERAL COUNSEL.

       There shall be in the Office a General Counsel, who shall 
     be appointed by the President, by and with the advice and 
     consent of the Senate. The General Counsel shall provide 
     legal assistance to the USTR concerning the activities, 
     programs, and policies of the Office.

     SEC. 17326. INSPECTOR GENERAL.

       There shall be in the Office an Inspector General who shall 
     be appointed in accordance with the Inspector General Act of 
     1978, as amended by section 17371(b) of this Act.

     SEC. 17327. CHIEF FINANCIAL OFFICER.

       There shall be in the Office a Chief Financial Officer who 
     shall be appointed in accordance with section 901 of title 
     31, United States Code, as amended by section 17371(e) of 
     this Act. The Chief Financial Officer shall perform all 
     functions prescribed by the Deputy Administrator of the 
     Office of the United States Trade Representative, under the 
     direction of the Deputy Administrator.

                 Subchapter C--Transfers to the Office

     SEC. 17331. OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE.

       There are transferred to the USTR all functions of the 
     United States Trade Representative and the Office of the 
     United States Trade Representative in the Executive Office of 
     the President and all functions of any officer or employee of 
     such Office.

     SEC. 17332. TRANSFERS FROM THE DEPARTMENT OF COMMERCE.

       There are transferred to the USTR the following functions:
       (1) All functions of, and all functions performed under the 
     direction of, the following officers and employees of the 
     Department of Commerce:
       (A) The Under Secretary of Commerce for International 
     Trade, and the Director General of the United States and 
     Foreign Commercial Service, relating to all functions 
     exercised by the Service.
       (B) The Assistant Secretary of Commerce for International 
     Economic Policy and the Assistant Secretary of Commerce for 
     Trade Development.
       (C) The Under Secretary of Commerce for Export 
     Administration.
       (D) The Assistant Secretary of Commerce for Import 
     Administration.
       (2) All functions of the Secretary of Commerce relating to 
     the National Trade Data Bank.
       (3) All functions of the Secretary of Commerce under the 
     Tariff Act of 1930, the Uruguay Round Agreements Act, the 
     Trade Act of 1974, and other trade-related Acts for which 
     responsibility is not otherwise assigned under this subtitle.

     SEC. 17333. TRADE AND DEVELOPMENT AGENCY.

       There are transferred to the Director General for Export 
     Promotion all functions of the Director of the Trade and 
     Development Agency. There are transferred to the Office of 
     the Director General for Export Promotion all functions of 
     the Trade and Development Agency.

     SEC. 17334. EXPORT-IMPORT BANK.

       (a) In General.--(1) There are transferred to the USTR all 
     functions of the Secretary of Commerce relating to the 
     Export-Import Bank of the United States.
       (2) Section 3(c)(1) of the Export-Import Bank Act of 1945 
     (12 U.S.C. 635a(c)(1)) is amended to read as follows:
       ``(c)(1) There shall be a Board of Directors of the Bank 
     consisting of the United States Trade Representative (who 
     shall serve as Chairman), the President of the Export-Import 
     Bank of the United States (who shall serve as Vice Chairman), 
     the first Vice President, and 2 additional persons appointed 
     by the President of the United States, by and with the advice 
     and consent of the Senate.''.
       (b) Ex Officio Member of Export-Import Bank Board of 
     Directors.--The Director General for Export Promotion shall 
     serve as an ex officio nonvoting member of the Board of 
     Directors of the Export-Import Bank.
       (c) Amendments to Related Banking and Trade Acts.--Section 
     2301(h) of the Omnibus Trade and Competitiveness Act of 1988 
     (15 U.S.C. 4721(h)) is amended to read as follows:
       ``(h) Assistance to Export-Import Bank.--The Commercial 
     Service shall provide such services as the Director General 
     for Export Promotion of the Office of the United States Trade 
     Representative determines necessary to assist the Export-
     Import Bank of the United States to carry out the lending, 
     loan guarantee, insurance, and other activities of the 
     Bank.''.

     SEC. 17335. OVERSEAS PRIVATE INVESTMENT CORPORATION.

       (a) Board of Directors.--The second and third sentences of 
     section 233(b) of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2193(b)) are amended to read as follows: ``The United 
     States Trade Representative shall be the Chairman of the 
     Board. The Administrator of the Agency for International 
     Development (who shall serve as Vice Chairman) shall serve on 
     the Board.''.
       (b) Ex Officio Member of Overseas Private Investment 
     Corporation Board of Directors.--The Director General for 
     Export Promotion shall serve as an ex officio nonvoting 
     member of the Board of Directors of the Overseas Private 
     Investment Corporation.

     SEC. 17336. CONSOLIDATION OF EXPORT PROMOTION AND FINANCING 
                   ACTIVITIES.

       (a) Submission of Plan.--Within 180 days after the date of 
     the enactment of this Act,

[[Page 1784]]

     the President shall transmit to the Congress a comprehensive 
     plan to consolidate Federal nonagricultural export promotion 
     activities and export financing activities and to transfer 
     those functions to the Office. The plan shall provide for--
       (1) the elimination of the overlap and duplication among 
     all Federal nonagricultural export promotion activities and 
     export financing activities;
       (2) a unified budget for Federal nonagricultural export 
     promotion activities which eliminates funding for the areas 
     of overlap and duplication identified under paragraph (1); 
     and
       (3) a long-term agenda for developing better cooperation 
     between local, State and Federal programs and activities 
     designed to stimulate or assist United States businesses in 
     exporting nonagricultural goods or services that are products 
     of the United States, including sharing of facilities, costs, 
     and export market research data.
       (b) Plan Elements.--The plan under subsection (a) shall--
       (1) place all Federal nonagricultural export promotion 
     activities and export financing activities within the Office;
       (2) provide clear authority for the USTR to use the 
     expertise and assistance of other United States Government 
     agencies;
       (3) achieve an overall 25 percent reduction in the amount 
     of funding for all Federal nonagricultural export promotion 
     activities within 2 years after the enactment of this Act; 
     and
       (4) include any functions of the Department of Commerce not 
     transferred by this subtitle, or of other Federal departments 
     the transfer of which to the Office would be necessary to the 
     competitiveness of the United States in international trade.
       (c) Definition.--As used in this section, the term 
     ``Federal nonagricultural export promotion activities'' means 
     all programs or activities of any department or agency of the 
     Federal Government (including, but not limited to, 
     departments and agencies with representatives on the Trade 
     Promotion Coordinating Committee established under section 
     2312 of the Export Enhancement Act of 1988 (15 U.S.C. 4727)) 
     that are designed to stimulate or assist United States 
     businesses in exporting nonagricultural goods or services 
     that are products of the United States, including trade 
     missions.

     SEC. 17337. ADDITIONAL TRADE FUNCTIONS.

       (a) Termination of Authorizations of Appropriations.--
       (1) NAFTA secretariat.--Section 105(b) of the North 
     American Free Trade Agreement Implementation Act (19 U.S.C. 
     3315(b)) is amended by striking ``each fiscal year after 
     fiscal year 1993'' and inserting ``each of fiscal years 1994 
     and 1995''.
       (2) Border environment cooperation commission.--Section 
     533(a)(2) of the North American Free Trade Agreement 
     Implementation Act (19 U.S.C. 3473(a)(2)) is amended by 
     striking ``and each fiscal year thereafter'' and inserting 
     ``fiscal year 1995''.
       (b) Functions Related to Textile Agreements.--
       (1) Functions of cita.--(A) Subject to subparagraph (B), 
     those functions delegated to the Committee for the 
     Implementation of Textile Agreements established under 
     Executive Order 11651 (7 U.S.C. 1854 note) (hereafter in this 
     subsection referred to as ``CITA'') are transferred to the 
     USTR.
       (B) Those functions delegated to CITA that relate to the 
     assessment of the impact of textile imports on domestic 
     industry are transferred to the International Trade 
     Commission.
       (2) Abolition of cita.--CITA is abolished.

                Subchapter D--Administrative Provisions

     SEC. 17341. PERSONNEL PROVISIONS.

       (a) Appointments.--The USTR may appoint and fix the 
     compensation of such officers and employees, including 
     investigators, attorneys, and administrative law judges, as 
     may be necessary to carry out the functions of the USTR and 
     the Office. Except as otherwise provided by law, such 
     officers and employees shall be appointed in accordance with 
     the civil service laws and their compensation fixed in 
     accordance with title 5, United States Code.
       (b) Positions Above GS-15.--(1) At the request of the USTR, 
     the Director of the Office of Personnel Management shall, 
     under section 5108 of title 5, United States Code, provide 
     for the establishment in a grade level above GS-15 of the 
     General Service, and in the Senior Executive Service, of a 
     number of positions in the Office equal to the number of 
     positions in that grade level which were used primarily for 
     the performance of functions and offices transferred by this 
     subtitle and which were assigned and filled on the day before 
     the effective date of this subtitle.
       (2) Appointments to positions provided for under this 
     subsection may be made without regard to the provisions of 
     section 3324 of title 5, United States Code, if the 
     individual appointed in such position is an individual who is 
     transferred in connection with the transfer of functions and 
     offices under this subtitle and, on the day before the 
     effective date of this subtitle, holds a position and has 
     duties comparable to those of the position to which appointed 
     under this subsection.
       (3) The authority under this subsection with respect to any 
     position established at a grade level above GS-15 shall 
     terminate when the person first appointed to fill such 
     position ceases to hold such position.
       (4) For purposes of section 414(a)(3)(A) of the Civil 
     Service Reform Act of 1978, an individual appointed under 
     this subsection shall be deemed to occupy the same position 
     as the individual occupied on the day before the effective 
     date of this subtitle.
       (c) Experts and Consultants.--The USTR may obtain the 
     services of experts and consultants in accordance with 
     section 3109 of title 5, United States Code, and compensate 
     such experts and consultants for each day (including 
     traveltime) at rates not in excess of the maximum rate of pay 
     for a position above GS-15 of the General Schedule under 
     section 5332 of such title. The USTR may pay experts and 
     consultants who are serving away from their homes or regular 
     place of business travel expenses and per diem in lieu of 
     subsistence at rates authorized by sections 5702 and 5703 of 
     such title for persons in Government service employed 
     intermittently.
       (d) Voluntary Services.--(1)(A) The USTR is authorized to 
     accept voluntary and uncompensated services without regard to 
     the provisions of section 1342 of title 31, United States 
     Code, if such services will not be used to displace Federal 
     employees employed on a full-time, part-time, or seasonal 
     basis.
       (B) The USTR is authorized to accept volunteer service in 
     accordance with the provisions of section 3111 of title 5, 
     United States Code.
       (2) The USTR is authorized to provide for incidental 
     expenses, including but not limited to transportation, 
     lodging, and subsistence for individuals who provide 
     voluntary services under subparagraph (A) or (B) of paragraph 
     (1).
       (3) An individual who provides voluntary services under 
     paragraph (1)(A) shall not be considered a Federal employee 
     for any purpose other than for purposes of chapter 81 of 
     title 5, United States Code, relating to compensation for 
     work injuries, and chapter 171 of title 28, United States 
     Code, relating to tort claims.
       (e) Foreign Service Positions.--In order to assure United 
     States representation in trade matters at a level 
     commensurate with the level of representation maintained by 
     industrial nations which are major trade competitors of the 
     United States, the Secretary of State shall classify certain 
     positions at Foreign Service posts as commercial minister 
     positions and shall assign members of the Foreign Service 
     performing functions of the Office, with the concurrence of 
     the USTR, to such positions in nations which are major trade 
     competitors of the United States. The Secretary of State 
     shall obtain and use the recommendations of the USTR with 
     respect to the number of positions to be so classified under 
     this subsection.

     SEC. 17342. DELEGATION AND ASSIGNMENT.

       Except where otherwise expressly prohibited by law or 
     otherwise provided by this subtitle, the USTR may delegate 
     any of the functions transferred to the USTR by this subtitle 
     and any function transferred or granted to the USTR after the 
     effective date of this subtitle to such officers and 
     employees of the Office as the USTR may designate, and may 
     authorize successive redelegations of such functions as may 
     be necessary or appropriate. No delegation of functions by 
     the USTR under this section or under any other provision of 
     this subtitle shall relieve the USTR of responsibility for 
     the administration of such functions.

     SEC. 17343. SUCCESSION.

       (a) Order of Succession.--Subject to the authority of the 
     President, and except as provided in section 17321(b), the 
     USTR shall prescribe the order by which officers of the 
     Office who are appointed by the President, by and with the 
     advice and consent of the Senate, shall act for, and perform 
     the functions of, the USTR or any other officer of the Office 
     appointed by the President, by and with the advice and 
     consent of the Senate, during the absence or disability of 
     the USTR or such other officer, or in the event of a vacancy 
     in the office of the USTR or such other officer.
       (b) Continuation.--Notwithstanding any other provision of 
     law, and unless the President directs otherwise, an 
     individual acting for the USTR or another officer of the 
     Office pursuant to subsection (a) shall continue to serve in 
     that capacity until the absence or disability of the USTR or 
     such other officer no longer exists or a successor to the 
     USTR or such other officer has been appointed by the 
     President and confirmed by the Senate.

     SEC. 17344. REORGANIZATION.

       (a) In General.--Subject to subsection (b), the USTR is 
     authorized to allocate or reallocate functions among the 
     officers of the Office, and to establish, consolidate, alter, 
     or discontinue such organizational entities in the Office as 
     may be necessary or appropriate.
       (b) Exception.--The USTR may not exercise the authority 
     under subsection (a) to establish, consolidate, alter, or 
     discontinue any organizational entity in the Office or 
     allocate or reallocate any function of an officer or employee 
     of the Office that is inconsistent with any specific 
     provision of this subtitle.

     SEC. 17345. RULES.

       The USTR is authorized to prescribe, in accordance with the 
     provisions of chapters 5 and 6 of title 5, United States 
     Code, such rules and regulations as the USTR determines 
     necessary or appropriate to administer and manage the 
     functions of the USTR or the Office.

     SEC. 17346. FUNDS TRANSFER.

       The USTR may, when authorized in an appropriation Act in 
     any fiscal year, transfer

[[Page 1785]]

     funds from one appropriation to another within the Office, 
     except that no appropriation for any fiscal year shall be 
     either increased or decreased by more than 10 percent and no 
     such transfer shall result in increasing any such 
     appropriation above the amount authorized to be appropriated 
     therefor.

     SEC. 17347. CONTRACTS, GRANTS, AND COOPERATIVE AGREEMENTS.

       (a) In General.--Subject to the provisions of the Federal 
     Property and Administrative Services Act of 1949, the USTR 
     may make, enter into, and perform such contracts, leases, 
     cooperative agreements, grants, or other similar transactions 
     with public agencies, private organizations, and persons, and 
     make payments (in lump sum or installments, and by way of 
     advance or reimbursement, and, in the case of any grant, with 
     necessary adjustments on account of overpayments and 
     underpayments) as the USTR considers necessary or appropriate 
     to carry out the functions of the USTR or the Office.
       (b) Exception.--Notwithstanding any other provision of this 
     subtitle, the authority to enter into contracts or to make 
     payments under this subchapter shall be effective only to 
     such extent or in such amounts as are provided in advance in 
     appropriation Acts. This subsection does not apply with 
     respect to the authority granted under section 17349.

     SEC. 17348. USE OF FACILITIES.

       (a) Use by USTR.--With their consent, the USTR, with or 
     without reimbursement, may use the research, services, 
     equipment, and facilities of--
       (1) an individual,
       (2) any public or private nonprofit agency or organization, 
     including any agency or instrumentality of the United States 
     or of any State, the District of Columbia, the Commonwealth 
     of Puerto Rico, or any territory or possession of the United 
     States,
       (3) any political subdivision of any State, the District of 
     Columbia, the Commonwealth of Puerto Rico, or any territory 
     or possession of the United States, or
       (4) any foreign government,
     in carrying out any function of the USTR or the Office.
       (b) Use of USTR Facilities.--The USTR, under terms, at 
     rates, and for periods that the USTR considers to be in the 
     public interest, may permit the use by public and private 
     agencies, corporations, associations or other organizations, 
     or individuals, of any real property, or any facility, 
     structure or other improvement thereon, under the custody of 
     the USTR. The USTR may require permittees under this section 
     to maintain or recondition, at their own expense, the real 
     property, facilities, structures, and improvements used by 
     such permittees.

     SEC. 17349. GIFTS AND BEQUESTS.

       (a) In General.--The USTR is authorized to accept, hold, 
     administer, and utilize gifts and bequests of property, both 
     real and personal, for the purpose of aiding or facilitating 
     the work of the Office. Gifts and bequests of money and the 
     proceeds from sales of other property received as gifts or 
     bequests shall be deposited in the United States Treasury in 
     a separate fund and shall be disbursed on order of the USTR. 
     Property accepted pursuant to this subsection, and the 
     proceeds thereof, shall be used as nearly as possible in 
     accordance with the terms of the gift or bequest.
       (b) Tax Treatment.--For the purpose of Federal income, 
     estate, and gift taxes, and State taxes, property accepted 
     under subsection (a) shall be considered a gift or bequest to 
     or for the use of the United States.
       (c) Investment.--Upon the request of the USTR, the 
     Secretary of the Treasury may invest and reinvest in 
     securities of the United States or in securities guaranteed 
     as to principal and interest by the United States any moneys 
     contained in the fund provided for in subsection (a). Income 
     accruing from such securities, and from any other property 
     held by the USTR pursuant to subsection (a), shall be 
     deposited to the credit of the fund, and shall be disbursed 
     upon order of the USTR.

     SEC. 17350. WORKING CAPITAL FUND.

       (a) Establishment.--The USTR is authorized to establish for 
     the Office a working capital fund, to be available without 
     fiscal year limitation, for expenses necessary for the 
     maintenance and operation of such common administrative 
     services as the USTR shall find to be desirable in the 
     interest of economy and efficiency, including--
       (1) a central supply service for stationery and other 
     supplies and equipment for which adequate stocks may be 
     maintained to meet in whole or in part the requirements of 
     the Office and its components;
       (2) central messenger, mail, and telephone service and 
     other communications services;
       (3) office space and central services for document 
     reproduction and for graphics and visual aids;
       (4) a central library service; and
       (5) such other services as may be approved by the Director 
     of the Office of Management and Budget.
       (b) Operation of Fund.--The capital of the fund shall 
     consist of any appropriations made for the purpose of 
     providing working capital and the fair and reasonable value 
     of such stocks of supplies, equipment, and other assets and 
     inventories on order as the USTR may transfer to the fund, 
     less the related liabilities and unpaid obligations. The fund 
     shall be reimbursed in advance from available funds of 
     agencies and offices in the Office, or from other sources, 
     for supplies and services at rates which will approximate the 
     expense of operation, including the accrual of annual leave 
     and the depreciation of equipment. The fund shall also be 
     credited with receipts from sale or exchange of property and 
     receipts in payment for loss or damage to property owned by 
     the fund. There shall be covered into the United States 
     Treasury as miscellaneous receipts any surplus of the fund 
     (all assets, liabilities, and prior losses considered) above 
     the amounts transferred or appropriated to establish and 
     maintain the fund. There shall be transferred to the fund the 
     stocks of supplies, equipment, other assets, liabilities, and 
     unpaid obligations relating to those services which the USTR 
     determines will be performed.

     SEC. 17351. SERVICE CHARGES.

       (a) Authority.--Notwithstanding any other provision of law, 
     the USTR may establish reasonable fees and commissions with 
     respect to applications, documents, awards, loans, grants, 
     research data, services, and assistance administered by the 
     Office, and the USTR may change and abolish such fees and 
     commissions. Before establishing, changing, or abolishing any 
     schedule of fees or commissions under this section, the USTR 
     may submit such schedule to the Congress.
       (b) Deposits.--The USTR is authorized to require a deposit 
     before the USTR provides any item, information, service, or 
     assistance for which a fee or commission is required under 
     this section.
       (c) Deposit of Moneys.--Moneys received under this section 
     shall be deposited in the Treasury in a special account for 
     use by the USTR and are authorized to be appropriated and 
     made available until expended.
       (d) Factors in Establishing Fees and Commissions.--In 
     establishing reasonable fees or commissions under this 
     section, the USTR may take into account--
       (1) the actual costs which will be incurred in providing 
     the items, information, services, or assistance concerned;
       (2) the efficiency of the Government in providing such 
     items, information, services, or assistance;
       (3) the portion of the cost that will be incurred in 
     providing such items, information, services, or assistance 
     which may be attributed to benefits for the general public 
     rather than exclusively for the person to whom the items, 
     information, services, or assistance is provided;
       (4) any public service which occurs through the provision 
     of such items, information, services, or assistance; and
       (5) such other factors as the USTR considers appropriate.
       (e) Refunds of Excess Payments.--In any case in which the 
     USTR determines that any person has made a payment which is 
     not required under this section or has made a payment which 
     is in excess of the amount required under this section, the 
     USTR, upon application or otherwise, may cause a refund to be 
     made from applicable funds.

     SEC. 17352. SEAL OF OFFICE.

       The USTR shall cause a seal of office to be made for the 
     Office of such design as the USTR shall approve. Judicial 
     notice shall be taken of such seal.

                     Subchapter E--Related Agencies

     SEC. 17361. INTERAGENCY TRADE ORGANIZATION.

       Section 242(a)(3) of the Trade Expansion Act of 1962 (19 
     U.S.C. 1872(a)(3)) is amended to read as follows:
       ``(3)(A) The interagency organization established under 
     subsection (a) shall be composed of--
       ``(i) the United States Trade Representative, who shall be 
     the chairperson,
       ``(ii) the Secretary of Agriculture,
       ``(iii) the Secretary of the Treasury,
       ``(iv) the Secretary of Labor,
       ``(v) the Secretary of State, and
       ``(vi) the representatives of such other departments and 
     agencies as the United States Trade Representative shall 
     designate.
       ``(B) The United States Trade Representative may invite 
     representatives from other agencies, as appropriate, to 
     attend particular meetings if subject matters of specific 
     functional interest to such agencies are under consideration. 
     It shall meet at such times and with respect to such matters 
     as the President or the chairperson shall direct.''.

     SEC. 17362. NATIONAL SECURITY COUNCIL.

       The fourth paragraph of section 101(a) of the National 
     Security Act of 1947 (50 U.S.C. 402(a)) is amended--
       (1) by redesignating clauses (5), (6), and (7) as clauses 
     (6), (7), and (8), respectively; and
       (2) by inserting after clause (4) the following new clause:
       ``(5) the United States Trade Representative;''.

     SEC. 17363. INTERNATIONAL MONETARY FUND.

       Section 3 of the Bretton Woods Agreement Act is amended by 
     adding at the end the following new subsection:
       ``(e) The United States executive director of the Fund 
     shall consult with the United States Trade Representative 
     with respect to matters under consideration by the Fund which 
     relate to trade.''.

                  Subchapter F--Conforming Amendments

     SEC. 17371. AMENDMENTS TO GENERAL PROVISIONS.

       (a) Inspector General.--The Inspector General Act of 1978 
     is amended--
       (1) in subsection 9(a)(1) by inserting after subparagraph 
     (W) the following:
       ``(X) of the United States Trade Representative, all 
     functions of the Inspector General of the Department of 
     Commerce and the Office of the Inspector General of the 
     Department of Commerce relating to the functions transferred 
     to the United States Trade Representative by section 17332 of 
     the Depart

[[Page 1786]]

     ment of Commerce Dismantling Act; and''; and
       (2) in section 11--
       (A) in paragraph (1) by inserting ``the United States Trade 
     Representative;'' after ``the Attorney General;''; and
       (B) in paragraph (2) by inserting ``the Office of the 
     United States Trade Representative,'' after ``Treasury;''.
       (b) Amendment to the Trade Act of 1974.--(1) Chapter 4 of 
     title I of the Trade Act of 1974 is amended to read as 
     follows:

           ``CHAPTER 4--REPRESENTATION IN TRADE NEGOTIATIONS

     ``SEC. 141. FUNCTIONS OF THE UNITED STATES TRADE 
                   REPRESENTATIVE.

       ``The United States Trade Representative established under 
     section 17311 of the Department of Commerce Dismantling Act 
     shall--
       ``(1) be the chief representative of the United States for 
     each trade negotiation under this title or chapter 1 of title 
     III of this Act, or subtitle A of title I of the Omnibus 
     Trade and Competitiveness Act of 1988, or any other provision 
     of law enacted after the Department of Commerce Dismantling 
     Act;
       ``(2) report directly to the President and the Congress, 
     and be responsible to the President and the Congress for the 
     administration of trade agreements programs under this Act, 
     the Omnibus Trade and Competitiveness Act of 1988, the Trade 
     Expansion Act of 1962, section 350 of the Tariff Act of 1930, 
     and any other provision of law enacted after the Department 
     of Commerce Dismantling Act;
       ``(3) advise the President and the Congress with respect to 
     nontariff barriers to international trade, international 
     commodity agreements, and other matters which are related to 
     the trade agreements programs; and
       ``(4) be responsible for making reports to Congress with 
     respect to the matters set forth in paragraphs (1) and 
     (2).''.
       (2) The table of contents in the first section of the Trade 
     Act of 1974 is amended by striking the items relating to 
     chapter 4 and section 141 and inserting the following:

           ``Chapter 4--Representation in Trade Negotiations

``Sec. 141. Functions of the United States Trade Representative.''.
       (d) Foreign Service Personnel.--The Foreign Service Act of 
     1980 is amended by striking paragraph (3) of section 202(a) 
     (22 U.S.C. 3922(a)) and inserting the following:
       ``(3) The United States Trade Representative may utilize 
     the Foreign Service personnel system in accordance with this 
     Act--
       ``(A) with respect to the personnel performing functions--
       ``(i) which were transferred to the Department of Commerce 
     from the Department of State by Reorganization Plan No. 3 of 
     1979; and
       ``(ii) which were subsequently transferred to the United 
     States Trade Representative by section 17332 of the 
     Department of Commerce Dismantling Act; and
       ``(B) with respect to other personnel of the Office of 
     United States Trade Representative to the extent the 
     President determines to be necessary in order to enable the 
     Office of the United States Trade Representative to carry out 
     functions which require service abroad.''.
       (e) Chief Financial Officers.--Section 901(b)(1) of title 
     31, United States Code, is amended by adding at the end the 
     following:
       ``(Q) The Office of the United States Trade 
     Representative.''.

     SEC. 17372. REPEALS.

       Sections 1 and 2 of the Act of June 5, 1939 (15 U.S.C. 1502 
     and 1503; 53 Stat. 808), relating to the Under Secretary of 
     Commerce, are repealed.

     SEC. 17373. CONFORMING AMENDMENTS RELATING TO EXECUTIVE 
                   SCHEDULE POSITIONS.

       (a) Positions at Level I.--Section 5312 of title 5, United 
     States Code, is amended by amending the item relating to the 
     United States Trade Representative to read as follows:
       ``United States Trade Representative, Office of the United 
     States Trade Representative.''.
       (b) Positions at Level II.--Section 5313 of title 5, United 
     States Code, is amended by adding at the end the following:
       ``Deputy Administrator of the Office of the United States 
     Trade Representative.
       ``Deputy United States Trade Representatives, Office of the 
     United States Trade Representative (2).''.
       (c) Positions at Level III.--Section 5314 of title 5, 
     United States Code, is amended by adding at the end the 
     following:
       ``Assistant Administrators, Office of the United States 
     Trade Representative (3).
       ``Director General for Export Promotion, Office of the 
     United States Trade Representative.''.
       (d) Positions at Level IV.--Section 5315 of title 5, United 
     States Code, is amended--
       (1) by striking the item relating to the Assistant 
     Secretary of Commerce and Director General of the United 
     States and Foreign Commercial Service; and
       (2) by adding at the end the following:
       ``General Counsel, Office of the United States Trade 
     Representative.
       ``Inspector General, Office of the United States Trade 
     Representative.
       ``Chief Financial Officer, Office of the United States 
     Trade Representative.''.

                      Subchapter G--Miscellaneous

     SEC. 17381. EFFECTIVE DATE.

       (a) In General.--This subtitle shall take effect on the 
     effective date specified in section 17209(a), except that--
       (1) section 17336 shall take effect on the date of the 
     enactment of this Act; and
       (2) at any time after the date of the enactment of this Act 
     the officers provided for in subchapter B may be nominated 
     and appointed, as provided in such subchapter.
       (b) Interim Compensation and Expenses.--Funds available to 
     the Department of Commerce or the Office of the United States 
     Trade Representative (or any official or component thereof), 
     with respect to the functions transferred by this subtitle, 
     may be used, with approval of the Director of the Office of 
     Management and Budget, to pay the compensation and expenses 
     of an officer appointed under subsection (a) who will carry 
     out such functions until funds for that purpose are otherwise 
     available.

     SEC. 17382. INTERIM APPOINTMENTS.

       (a) In General.--If one or more officers required by this 
     subtitle to be appointed by and with the advice and consent 
     of the Senate have not entered upon office on the effective 
     date of this subtitle and notwithstanding any other provision 
     of law, the President may designate any officer who was 
     appointed by and with the advice and consent of the Senate, 
     and who was such an officer on the day before the effective 
     date of this subtitle, to act in the office until it is 
     filled as provided by this subtitle.
       (b) Compensation.--Any officer acting in an office pursuant 
     to subsection (a) shall receive compensation at the rate 
     prescribed by this subtitle for such office.

     SEC. 17383. FUNDING REDUCTIONS RESULTING FROM REORGANIZATION.

       (a) Funding Reductions.--Except as provided in subsection 
     (b), for each fiscal year that begins on or after the 
     effective date of this section, the total of amounts 
     obligated or expended by the United States in performing all 
     functions vested in the USTR and the Office pursuant to this 
     subtitle may not exceed 75 percent of the total amount 
     obligated or expended by the United States in performing all 
     such functions for fiscal year 1995.
       (b) Exception.--Subsection (a) shall not apply to 
     obligations or expenditures incurred as a direct consequence 
     of the termination, transfer, or other disposition of 
     functions described in subsection (a) pursuant to this title.
       (c) Rule of Construction.--This section shall take 
     precedence over any other provision of law unless such 
     provision explicitly refers to this section and makes an 
     exception to it.
       (d) Responsibilities of the Director of the Office of 
     Management and Budget.--The Director of the Office of 
     Management and Budget shall--
       (1) ensure compliance with the requirements of this 
     section; and
       (2) include in each report under sections 17106(a) and (b) 
     a description of actions taken to comply with such 
     requirements.
          Subtitle D--Patent and Trademark Office Corporation

     SEC. 17401. SHORT TITLE.

       This subtitle may be cited as the ``Patent and Trademark 
     Office Corporation Act of 1995''.

                 CHAPTER 1--PATENT AND TRADEMARK OFFICE

     SEC. 17411. ESTABLISHMENT OF PATENT AND TRADEMARK OFFICE AS A 
                   CORPORATION.

       Section 1 of title 35, United States Code, is amended to 
     read as follows:

     ``Sec. 1. Establishment

       ``(a) Establishment.--The Patent and Trademark Office is 
     established as a wholly owned Government corporation subject 
     to chapter 91 of title 31, except as otherwise provided in 
     this title.
       ``(b) Offices.--The Patent and Trademark Office shall 
     maintain an office in the District of Columbia, or the 
     metropolitan area thereof, for the service of process and 
     papers and shall be deemed, for purposes of venue in civil 
     actions, to be a resident of the district in which its 
     principal office is located. The Patent and Trademark Office 
     may establish offices in such other places as it considers 
     necessary or appropriate in the conduct of its business.
       ``(c) Reference.--For purposes of this title, the Patent 
     and Trademark Office shall also be referred to as the 
     `Office'.''.

     SEC. 17412. POWERS AND DUTIES.

       Section 2 of title 35, United States Code, is amended to 
     read as follows:

     ``Sec. 2. Powers and Duties

       ``(a) In General.--The Patent and Trademark Office shall be 
     responsible for--
       ``(1) the granting and issuing of patents and the 
     registration of trademarks;
       ``(2) conducting studies, programs, or exchanges of items 
     or services regarding domestic and international patent and 
     trademark law or the administration of the Office, including 
     programs to recognize, identify, assess, and forecast the 
     technology of patented inventions and their utility to 
     industry;
       ``(3) authorizing or conducting studies and programs 
     cooperatively with foreign patent and trademark offices and 
     international organizations, in connection with the granting 
     and issuing of patents and the registration of trademarks; 
     and
       ``(4) disseminating to the public information with respect 
     to patents and trademarks.
       ``(b) Specific Powers.--The Office--
       ``(1) shall have perpetual succession;
       ``(2) shall adopt and use a corporate seal, which shall be 
     judicially noticed and with

[[Page 1787]]

     which letters patent, certificates of trademark 
     registrations, and papers issued by the Office shall be 
     authenticated;
       ``(3) may sue and be sued in its corporate name and be 
     represented by its own attorneys in all judicial and 
     administrative proceedings, subject to the provisions of 
     section 8 of this title;
       ``(4) may indemnify the Commissioner of Patents and 
     Trademarks, and other officers, attorneys, agents, and 
     employees (including members of the Management Advisory Board 
     established in section 5) of the Office for liabilities and 
     expenses incurred within the scope of their employment;
       ``(5) may adopt, amend, and repeal bylaws, rules, and 
     regulations, governing the manner in which its business will 
     be conducted and the powers granted to it by law will be 
     exercised;
       ``(6) may acquire, construct, purchase, lease, hold, 
     manage, operate, improve, alter, and renovate any real, 
     personal, or mixed property, or any interest therein, as it 
     considers necessary to carry out its functions;
       ``(7)(A) may make such purchases, contracts for the 
     construction, maintenance, or management and operation of 
     facilities, and contracts for supplies or services, without 
     regard to section 111 of the Federal Property and 
     Administrative Services Act of 1949 (40 U.S.C. 759); and
       ``(B) may enter into and perform such purchases and 
     contracts for printing services, including the process of 
     composition, platemaking, presswork, silk screen processes, 
     binding, microform, and the products of such processes, as it 
     considers necessary to carry out the functions of the Office, 
     without regard to sections 501 through 517 and 1101 through 
     1123 of title 44;
       ``(8) may use, with their consent, services, equipment, 
     personnel, and facilities of other departments, agencies, and 
     instrumentalities of the Federal Government, on a 
     reimbursable basis, and cooperate with such other 
     departments, agencies, and instrumentalities in the 
     establishment and use of services, equipment, and facilities 
     of the Office;
       ``(9) may obtain from the Administrator of General Services 
     such services as the Administrator is authorized to provide 
     to other agencies of the United States, on the same basis as 
     those services are provided to other agencies of the United 
     States;
       ``(10) may use, with the consent of the United States and 
     the agency, government, or international organization 
     concerned, the services, records, facilities, or personnel of 
     any State or local government agency or instrumentality or 
     foreign government or international organization to perform 
     functions on its behalf;
       ``(11) may determine the character of and the necessity for 
     its obligations and expenditures and the manner in which they 
     shall be incurred, allowed, and paid, subject to the 
     provisions of this title and the Act of July 5, 1946 
     (commonly referred to as the `Trademark Act of 1946');
       ``(12) may retain and use all of its revenues and receipts, 
     including revenues from the sale, lease, or disposal of any 
     real, personal, or mixed property, or any interest therein, 
     of the Office, in carrying out the functions of the Office, 
     including for research and development and capital 
     investment, subject to the provisions of section 10101 of the 
     Omnibus Budget Reconciliation Act of 1990 (35 U.S.C. 41 
     note);
       ``(13) shall have the priority of the United States with 
     respect to the payment of debts from bankrupt, insolvent, and 
     decedents' estates;
       ``(14) may accept monetary gifts or donations of services, 
     or of real, personal, or mixed property, in order to carry 
     out the functions of the Office;
       ``(15) may execute, in accordance with its bylaws, rules, 
     and regulations, all instruments necessary and appropriate in 
     the exercise of any of its powers;
       ``(16) may provide for liability insurance and insurance 
     against any loss in connection with its property, other 
     assets, or operations either by contract or by self-
     insurance; and
       ``(17) shall pay any settlement or judgment entered against 
     it from the funds of the Office and not from amounts 
     available under section 1304 of title 31.''.

     SEC. 17413. ORGANIZATION AND MANAGEMENT.

       Section 3 of title 35, United States Code, is amended to 
     read as follows:

     ``Sec. 3. Officers and employees

       ``(a) Commissioner.--
       ``(1) In general.--The management of the Patent and 
     Trademark Office shall be vested in a Commissioner of Patents 
     and Trademarks (hereafter in this title referred to as the 
     `Commissioner'), who shall be a citizen of the United States 
     and who shall be appointed by the President, by and with the 
     advice and consent of the Senate. The Commissioner shall be a 
     person who, by reason of professional background and 
     experience in patent and trademark law, is especially 
     qualified to manage the Office.
       ``(2) Duties.--
       ``(A) In general.--The Commissioner shall be responsible 
     for the management and direction of the Office, including the 
     issuance of patents and the registration of trademarks.
       ``(B) Advising the president.--The Commissioner shall 
     advise the President of all activities of the Patent and 
     Trademark Office undertaken in response to obligations of the 
     United States under treaties and executive agreements, or 
     which relate to cooperative programs with those authorities 
     of foreign governments that are responsible for granting 
     patents or registering trademarks. The Commissioner shall 
     also recommend to the President changes in law or policy 
     which may improve the ability of United States citizens to 
     secure and enforce patent rights or trademark rights in the 
     United States or in foreign countries.
       ``(C) Consulting with the management advisory board.--The 
     Commissioner shall consult with the Management Advisory Board 
     established in section 5 on a regular basis on matters 
     relating to the operation of the Patent and Trademark Office, 
     and shall consult with the Board before submitting budgetary 
     proposals to the Office of Management and Budget or changing 
     or proposing to change patent or trademark user fees or 
     patent or trademark regulations.
       ``(D) Security clearances.--The Commissioner, in 
     consultation with the Director of the Office of Personnel 
     Management, shall maintain a program for identifying national 
     security positions and providing for appropriate security 
     clearances.
       ``(3) Term.--The Commissioner shall serve a term of 5 
     years, and may continue to serve after the expiration of the 
     Commissioner's term until a successor is appointed and 
     assumes office. The Commissioner may be reappointed to 
     subsequent terms.
       ``(4) Oath.--The Commissioner shall, before taking office, 
     take an oath to discharge faithfully the duties of the 
     Office.
       ``(5) Compensation.--The Commissioner shall receive 
     compensation at the rate of pay in effect for Level III of 
     the Executive Schedule under section 5314 of title 5.
       ``(6) Removal.--The Commissioner may be removed from office 
     by the President only for cause.
       ``(7) Designee of commissioner.--The Commissioner shall 
     designate an officer of the Office who shall be vested with 
     the authority to act in the capacity of the Commissioner in 
     the event of the absence or incapacity of the Commissioner.
       ``(b) Officers and Employees of the Office.--
       ``(1) Deputy commissioners.--The Commissioner shall appoint 
     a Deputy Commissioner for Patents and a Deputy Commissioner 
     for Trademarks for terms that shall expire on the date on 
     which the Commissioner's term expires. The Deputy 
     Commissioner for Patents shall be a person with demonstrated 
     experience in patent law and the Deputy Commissioner for 
     Trademarks shall be a person with demonstrated experience in 
     trademark law. The Deputy Commissioner for Patents and the 
     Deputy Commissioner for Trademarks shall be the principal 
     policy advisors to the Commissioner on all aspects of the 
     activities of the Office that affect the administration of 
     patent and trademark operations, respectively.
       ``(2) Other officers and employees.--The Commissioner 
     shall--
       ``(A) appoint an Inspector General and such other officers, 
     employees (including attorneys), and agents of the Office as 
     the Commissioner considers necessary to carry out its 
     functions;
       ``(B) fix the compensation of such officers and employees; 
     and
       ``(C) define the authority and duties of such officers and 
     employees and delegate to them such of the powers vested in 
     the Office as the Commissioner may determine.
     The Office shall not be subject to any administratively or 
     statutorily imposed limitation on positions or personnel, and 
     no positions or personnel of the Office shall be taken into 
     account for purposes of applying any such limitation, except 
     to the extent otherwise specifically provided by statute with 
     respect to the Office.
       ``(c) Limits on Compensation.--Except as otherwise provided 
     in this title or any other provision of law, the basic pay of 
     an officer or employee of the Office for any calendar year 
     may not exceed the annual rate of basic pay in effect for 
     level IV of the Executive Schedule under section 5315 of 
     title 5. The Commissioner shall by regulation establish a 
     limitation on the total compensation payable to officers or 
     employees of the Office, which may not exceed the annual rate 
     of basic pay in effect for level I of the Executive Schedule 
     under section 5312 of title 5.
       ``(d) Inapplicability of Title 5 Generally.--Except as 
     otherwise provided in this section, officers and employees of 
     the Office shall not be subject to the provisions of title 5 
     relating to Federal employees.
       ``(e) Continued Applicability of Certain Provision of Title 
     5.--The following provisions of title 5 shall apply to the 
     Office and its officers and employees:
       ``(1) Section 3110 (relating to employment of relatives; 
     restrictions).
       ``(2) Subchapter II of chapter 55 (relating to withholding 
     pay).
       ``(3) Subchapter II of chapter 73 (relating to employment 
     limitations).
       ``(f) Provisions of Title 5 Relating to Certain Benefits.--
       ``(1) Retirement.--(A)(i) Any individual who becomes an 
     officer or employee of the Office pursuant to subsection (h) 
     shall, if such individual has at least 3 years of creditable 
     service (within the meaning of section 8332 or 8411 of title 
     5) as of the effective date of the Patent and Trademark 
     Office Corporation Act of 1995, remain subject to subchapter 
     III of chapter 83 or chapter 84 of such title, as the case 
     may be, so long as such individual continues to hold an 
     office or position in or under the Office without a break in 
     service.
       ``(ii)(I) Except as provided in subclause (II), with 
     respect to an individual described in clause (i), the Office 
     shall make the appropriate withholding from pay and shall pay

[[Page 1788]]

     the contributions required of an employing agency into the 
     Civil Service Retirement and Disability Fund and, if 
     applicable, the Thrift Savings Fund in accordance with 
     applicable provisions of subchapter III of chapter 83 or 
     chapter 84 of title 5, as the case may be.
       ``(II) In the case of an officer or employee who remains 
     subject to subchapter III of chapter 83 of such title by 
     virtue of this subparagraph, the Office shall, instead of the 
     amount which would otherwise be required under the second 
     sentence of section 8334(a)(1) of title 5, contribute an 
     amount equal to the normal-cost percentage (determined with 
     respect to officers and employees of the Office using dynamic 
     assumptions, as defined by section 8401(9) of such title) of 
     the individual's basic pay, minus the amount required to be 
     withheld from such pay under such section 8334(a)(1).
       ``(B)(i) Notwithstanding subsection (d), the provisions of 
     subchapter III of chapter 83 or chapter 84 of title 5 (as 
     applicable) which relate to disability shall be considered to 
     remain in effect, with respect to an individual who becomes 
     an officer or employee of the Office pursuant to subsection 
     (h), until the end of the 2-year period beginning on the 
     effective date of the Patent and Trademark Office Corporation 
     Act of 1995 or, if earlier, until such individual satisfies 
     the prerequisites for coverage under any program offered by 
     the Office to replace the disability retirement program under 
     chapter 83 or 84 of title 5.
       ``(ii) This clause applies with respect to any officer or 
     employee of the Office who is receiving disability coverage 
     under this subparagraph and has completed the service 
     requirement specified in the first sentence of section 
     8337(a) or 8451(a)(1)(A) of title 5 (as applicable), but who 
     is not described in subparagraph (A)(i). In the case of any 
     individual to whom this clause applies, the Office shall pay 
     into the Civil Service Retirement and Disability Fund an 
     amount equal to that portion of the normal-cost percentage 
     (determined in the same manner as under subparagraph 
     (A)(ii)(II)) of the basic pay of such individual (for service 
     performed during the period during which such individual is 
     receiving such coverage) allocable to such coverage. Any 
     amounts payable under this clause shall be paid at such time 
     and in such manner as mutually agreed to by the Office and 
     the Office of Personnel Management, and shall be in lieu of 
     any individual or agency contributions otherwise required.
       ``(2) Health benefits.--(A) Officers and employees of the 
     Office shall not become ineligible to participate in the 
     health benefits program under chapter 89 of title 5 by reason 
     of subsection (d) until the effective date of elections made 
     during the first election period (under section 8905(f) of 
     title 5) beginning after the end of the 2-year period 
     beginning on the effective date of the the Patent and 
     Trademark Office Corporation Act of 1995.
       ``(B)(i) With respect to any individual who becomes an 
     officer or employee of the Office pursuant to subsection (h), 
     the eligibility of such individual to participate in such 
     program as an annuitant (or of any other person to 
     participate in such program as an annuitant based on the 
     death of such individual) shall be determined disregarding 
     the requirements of section 8905(b) of title 5. The preceding 
     sentence shall not apply if the individual ceases to be an 
     officer or employee of the Office for any period of time 
     after becoming an officer or employee of the Office pursuant 
     to subsection (h) and before separation.
       ``(ii) The Government contributions authorized by section 
     8906 for health benefits for anyone participating in the 
     health benefits program pursuant to this subparagraph shall 
     be made by the Office in the same manner as provided under 
     section 8906(g)(2) of title 5 with respect to the United 
     States Postal Service for individuals associated therewith.
       ``(iii) For purposes of this subparagraph, the term 
     `annuitant' has the meaning given such term by section 
     8901(3) of title 5.
       ``(3) Life insurance.--(A) Officers and employees of the 
     Office shall not become ineligible to participate in the life 
     insurance program under chapter 87 of title 5 by reason of 
     subsection (d) until the first day after the end of the 2-
     year period beginning on the effective date of the the Patent 
     and Trademark Office Corporation Act of 1995.
       ``(B)(i) Eligibility for life insurance coverage after 
     retirement or while in receipt of compensation under 
     subchapter I of chapter 81 of title 5 shall be determined, in 
     the case of any individual who becomes an officer or employee 
     of the Office pursuant to subsection (h), without regard to 
     the requirements of section 8706(b) (1) or (2), but subject 
     to the condition specified in the last sentence of paragraph 
     (2)(B)(i) of this subsection.
       ``(ii) Government contributions under section 8708(d) on 
     behalf of any such individual shall be made by the Office in 
     the same manner as provided under paragraph (3) thereof with 
     respect to the United States Postal Service for individuals 
     associated therewith.
       ``(4) Employees' compensation fund.--The Office shall 
     remain responsible for reimbursing the Employees' 
     Compensation Fund, pursuant to section 8147 of title 5, for 
     compensation paid or payable after the effective date of the 
     Patent and Trademark Office Corporation Act of 1995 in 
     accordance with chapter 81 of title 5 with regard to any 
     injury, disability, or death due to events arising before 
     such date, whether or not a claim has been filed or is final 
     on such date.
       ``(5) Requirement that the office offer certain minimum 
     number of life and health insurance policies.--The Office 
     shall offer at least 1 life insurance policy and at least 3 
     health insurance policies to its officers and employees, 
     comparable to existing Federal benefits, beginning on the 
     first day after the end of the 2-year period beginning on the 
     effective date of the Patent and Trademark Office Corporation 
     Act of 1995.
       ``(g) Labor-Management Relations.--
       ``(1) Labor relations and employee relations programs.--The 
     Office shall develop labor relations and employee relations 
     programs with the objective of improving productivity and 
     efficiency, incorporating the following principles:
       ``(A) Such programs shall be consistent with the merit 
     principles in section 2301(b) of title 5.
       ``(B) Such programs shall provide veterans preference 
     protections equivalent to those established by sections 2801, 
     3308-3318, and 3320 of title 5.
       ``(C)(i) In order to maximize individual freedom of choice 
     in the pursuit of employment and to encourage an economic 
     climate conducive to economic growth, the right to work shall 
     not be subject to undue restraint or coercion. The right to 
     work shall not be infringed or restricted in any way based on 
     membership in, affiliation with, or financial support of a 
     labor organization.
       ``(ii) No person shall be required, as a condition of 
     employment or continuation of employment:
       ``(I) To resign or refrain from voluntary membership in, 
     voluntary affiliation with, or voluntary financial support of 
     a labor organization.
       ``(II) To become or remain a member of a labor 
     organization.
       ``(III) To pay any dues, fees, assessments, or other 
     charges of any kind or amount to a labor organization.
       ``(IV) To pay to any charity or other third party, in lieu 
     of such payments, any amount equivalent to or a pro-rata 
     portion of dues, fees, assessments, or other charges 
     regularly required of members of a labor organization.
       ``(V) To be recommended, approved, referred, or cleared by 
     or through a labor organization.
       ``(iii) This subparagraph shall not apply to a person 
     described in section 7103(a)(2)(v) of title 5 or a 
     `supervisor', `management official', or `confidential 
     employee' as those terms are defined in 7103(a)(10), (11), 
     and (13) of such title.
       ``(iv) Any labor organization recognized by the Office as 
     the exclusive representative of a unit of employees of the 
     Office shall represent the interests of all employees in that 
     unit without discrimination and without regard to labor 
     organization membership.
       ``(2) Adoption of existing labor agreements.--The Office 
     shall adopt all labor agreements which are in effect, as of 
     the day before the effective date of the Patent and Trademark 
     Office Corporation Act of 1995, with respect to such Office 
     (as then in effect). Each such agreement shall remain in 
     effect for the 2-year period commencing on such date, unless 
     the agreement provides for a shorter duration or the parties 
     agree otherwise before such period ends.
       ``(h) Carryover of Personnel.--
       ``(1) From pto.--Effective as of the effective date of the 
     Patent and Trademark Office Corporation Act of 1995, all 
     officers and employees of the Patent and Trademark Office on 
     the day before such effective date shall become officers and 
     employees of the Office, without a break in service.
       ``(2) Other personnel.--Any individual who, on the day 
     before the effective date of the Patent and Trademark Office 
     Corporation Act of 1995, is an officer or employee of the 
     Department of Commerce (other than an officer or employee 
     under paragraph (1)) shall be transferred to the Office if--
       ``(A) such individual serves in a position for which a 
     major function is the performance of work reimbursed by the 
     Patent and Trademark Office, as determined by the Secretary 
     of Commerce;
       ``(B) such individual serves in a position that performed 
     work in support of the Patent and Trademark Office during at 
     least half of the incumbent's work time, as determined by the 
     Secretary of Commerce; or
       ``(C) such transfer would be in the interest of the Office, 
     as determined by the Secretary of Commerce in consultation 
     with the Commissioner of Patents and Trademarks.
     Any transfer under this paragraph shall be effective as of 
     the same effective date as referred to in paragraph (1), and 
     shall be made without a break in service.
       ``(3) Accumulated leave.--The amount of sick and annual 
     leave and compensatory time accumulated under title 5 before 
     the effective date described in paragraph (1), by officers or 
     employees of the Patent and Trademark Office who so become 
     officers or employees of the Office, are obligations of the 
     Office.
       ``(4) Termination rights.--Any employee referred to in 
     paragraph (1) or (2) of this subsection whose employment with 
     the Office is terminated during the 2-year period beginning 
     on the effective date of the Patent and Trademark Office 
     Corporation Act of 1995 shall be entitled to rights and 
     benefits, to be afforded by the Office, similar to those such 
     employee would have had under Federal law if termination had 
     occurred immediately before such date. An employee who would 
     have been entitled to appeal any such termination to the 
     Merit Systems Protection Board, if such termination had 
     occurred immediately

[[Page 1789]]

     before such effective date, may appeal any such termination 
     occurring within this 2-year period to the Board under such 
     procedures as it may prescribe.
       ``(5) Continuation in office of certain officers.--(A) The 
     individual serving as the Commissioner of Patents and 
     Trademarks on the day before the effective date of the Patent 
     and Trademark Office Corporation Act of 1995 may serve as the 
     Commissioner until the earlier of 1 year after the effective 
     date of that Act or the date on which a Commissioner is 
     appointed under subsection (a).
       ``(B) The individual serving as the Assistant Commissioner 
     for Patents on the day before the effective date of the 
     Patent and Trademark Office Corporation Act of 1995 may serve 
     as the Deputy Commissioner for Patents until the earlier of 1 
     year after the effective date of that Act or the date on 
     which a Deputy Commissioner for Patents is appointed under 
     subsection (b).
       ``(C) The individual serving as the Assistant Commissioner 
     for Trademarks on the day before the effective date of the 
     Patent and Trademark Office Corporation Act of 1995 may serve 
     as the Deputy Commissioner for Trademarks until the earlier 
     of 1 year after the effective date of that Act or the date on 
     which a Deputy Commissioner for Trademarks is appointed under 
     subsection (b).
       ``(i) Competitive Status.--For purposes of appointment to a 
     position in the competitive service for which an officer or 
     employee of the Office is qualified, such officer or employee 
     shall not forfeit any competitive status, acquired by such 
     officer or employee before the effective date of the Patent 
     and Trademark Office Corporation Act of 1995, by reason of 
     becoming an officer or employee of the Office pursuant to 
     subsection (h).
       ``(j) Savings Provisions.--All orders, determinations, 
     rules, and regulations regarding compensation and benefits 
     and other terms and conditions of employment, in effect for 
     the Office and its officers and employees immediately before 
     the effective date of the Patent and Trademark Office 
     Corporation Act of 1995, shall continue in effect with 
     respect to the Office and its officers and employees until 
     modified, superseded, or set aside by the Office or a court 
     of appropriate jurisdiction or by operation of law.''.

      SEC. 17414. MANAGEMENT ADVISORY BOARD.

       Chapter 1 of part I of title 35, United States Code, is 
     amended by inserting after section 4 the following:

     ``Sec. 5. Patent and Trademark Office Management Advisory 
       Board

       ``(a) Establishment of Management Advisory Board.--
       ``(1) Appointment.--The Patent and Trademark Office shall 
     have a Management Advisory Board (hereafter in this title 
     referred to as the `Board') of 12 members, 4 of whom shall be 
     appointed by the President, 4 of whom shall be appointed by 
     the Speaker of the House of Representatives, and 4 of whom 
     shall be appointed by the President pro tempore of the 
     Senate. Not more than 3 of the 4 members appointed by each 
     appointing authority shall be members of the same political 
     party.
       ``(2) Terms.--Members of the Board shall be appointed for a 
     term of 4 years each, except that of the members first 
     appointed by each appointing authority, 1 shall be for a term 
     of 1 year, 1 shall be for a term of 2 years, and 1 shall be 
     for a term of 3 years. No member may serve more than 1 term.
       ``(3) Chair.--The President shall designate the chair of 
     the Board, whose term as chair shall be for 3 years.
       ``(4) Timing of appointments.--Initial appointments to the 
     Board shall be made within 3 months after the effective date 
     of the Patent and Trademark Office Corporation Act of 1995, 
     and vacancies shall be filled within 3 months after they 
     occur.
       ``(5) Vacancies.--Vacancies shall be filled in the manner 
     in which the original appointment was made under this 
     subsection. Members appointed to fill a vacancy occurring 
     before the expiration of the term for which the member's 
     predecessor was appointed shall be appointed only for the 
     remainder of that term. A member may serve after the 
     expiration of that member's term until a successor is 
     appointed.
       ``(b) Basis for Appointments.--Members of the Board shall 
     be citizens of the United States who shall be chosen so as to 
     represent the interests of diverse users of the Patent and 
     Trademark Office, and shall include individuals with 
     substantial background and achievement in corporate finance 
     and management.
       ``(c) Applicability of Certain Ethics Laws.--Members of the 
     Board shall be special Government employees within the 
     meaning of section 202 of title 18.
       ``(d) Meetings.--The Board shall meet at the call of the 
     chair to consider an agenda set by the chair.
       ``(e) Duties.--The Board shall--
       ``(1) review the policies, goals, performance, budget, and 
     user fees of the Patent and Trademark Office, and advise the 
     Commissioner on these matters; and
       ``(2) within 60 days after the end of each fiscal year, 
     prepare an annual report on the matters referred to in 
     paragraph (1), transmit the report to the President and the 
     Committees on the Judiciary of the Senate and the House of 
     Representatives, and publish the report in the Patent and 
     Trademark Office Official Gazette.
       ``(f) Staff.--The Board shall employ a staff of not more 
     than 10 members and shall procure support services for the 
     staff adequate to enable the Board to carry out its 
     functions, using funds available to the Commissioner under 
     section 42 of this title. The Board shall ensure that members 
     of the staff, other than clerical staff, are especially 
     qualified in the areas of patents, trademarks, or management 
     of public agencies. Persons employed by the Board shall 
     receive compensation as determined by the Board, which may 
     not exceed the limitations set forth in section 3(c) of this 
     title, shall serve in accordance with terms and conditions of 
     employment established by the Board, and shall be subject 
     solely to the direction of the Board, notwithstanding any 
     other provision of law.
       ``(g) Compensation.--Members of the Board shall be 
     compensated for each day (including travel time) during which 
     they are attending meetings or conferences of the Board or 
     otherwise engaged in the business of the Board, at the rate 
     which is the daily equivalent of the annual rate of basic pay 
     in effect for level III of the Executive Schedule under 
     section 5314 of title 5, and while away from their homes or 
     regular places of business they may be allowed travel 
     expenses, including per diem in lieu of subsistence, as 
     authorized by section 5703 of title 5.
       ``(h) Access to Information.--Members of the Board shall be 
     provided access to records and information in the Patent and 
     Trademark Office, except for personnel or other privileged 
     information and information concerning patent applications 
     required to be kept in confidence by section 122 of this 
     title.''.

      SEC. 17415. INDEPENDENCE FROM DEPARTMENT OF COMMERCE.

       (a) Duties of Commissioner.--Section 6 of title 35, United 
     States Code, is amended--
       (1) by striking ``, under the direction of the Secretary of 
     Commerce,'' each place it appears; and
       (2) by striking ``, subject to the approval of the 
     Secretary of Commerce,''.
       (b) Regulations for Agents and Attorneys.--Section 31 of 
     title 35, United States Code, is amended by striking ``, 
     subject to the approval of the Secretary of Commerce,''.

     SEC. 17416. TRADEMARK TRIAL AND APPEAL BOARD.

       Section 17 of the Act of July 5, 1946 (commonly referred to 
     as the ``Trademark Act of 1946'') (15 U.S.C. 1067) is amended 
     to read as follows:
       ``Sec. 17. (a) In every case of interference, opposition to 
     registration, application to register as a lawful concurrent 
     user, or application to cancel the registration of a mark, 
     the Commissioner shall give notice to all parties and shall 
     direct a Trademark Trial and Appeal Board to determine and 
     decide the respective rights of registration.
       ``(b) The Trademark Trial and Appeal Board shall include 
     the Commissioner, the Deputy Commissioner for Patents, the 
     Deputy Commissioner for Trademarks, and members competent in 
     trademark law who are appointed by the Commissioner.''.

     SEC. 17417. BOARD OF PATENT APPEALS AND INTERFERENCES.

       Section 7 of title 35, United States Code, is amended to 
     read as follows:

     ``Sec. 7. Board of Patent Appeals and Interferences

       ``(a) Establishment and Composition.--There shall be in the 
     Patent and Trademark Office a Board of Patent Appeals and 
     Interferences. The Commissioner, the Deputy Commissioner for 
     Patents, the Deputy Commissioner for Trademarks, and the 
     examiners-in-chief shall constitute the Board. The examiners-
     in-chief shall be persons of competent legal knowledge and 
     scientific ability.
       ``(b) Duties.--The Board of Patent Appeals and 
     Interferences shall, on written appeal of an applicant, 
     review adverse decisions of examiners upon applications for 
     patents and shall determine priority and patentability of 
     invention in interferences declared under section 135(a) of 
     this title. Each appeal and interference shall be heard by at 
     least 3 members of the Board, who shall be designated by the 
     Commissioner. Only the Board of Patent Appeals and 
     Interferences may grant rehearings.''.

     SEC. 17418. SUITS BY AND AGAINST THE CORPORATION.

       Chapter 1 of part I of title 35, United States Code, is 
     amended--
       (1) by redesignating sections 8 through 14 as sections 9 
     through 15; and
       (2) by inserting after section 7 the following new section:

     ``Sec. 8. Suits by and against the Corporation

       ``(a) In General.--
       ``(1) Actions under united states law.--Any civil action or 
     proceeding to which the Patent and Trademark Office is a 
     party is deemed to arise under the laws of the United States. 
     The Federal courts shall have exclusive jurisdiction over all 
     civil actions by or against the Office.
       ``(2) Contract claims.--Any action or proceeding against 
     the Office in which any claim is cognizable under the 
     Contract Disputes Act of 1978 (41 U.S.C. 601 and following) 
     shall be subject to that Act. For purposes of that Act, the 
     Commissioner shall be deemed to be the agency head with 
     respect to contract claims arising with respect to the 
     Office. Any other action or proceeding against the Office 
     founded upon contract may be brought in an appropriate 
     district court, notwithstanding any provision of title 28.
       ``(3) Tort claims.--(A) Any action or proceeding against 
     the Office in which any claim is cognizable under the 
     provisions of section 1346(b) and chapter 171 of title 28, 
     shall be governed by those provisions.
       ``(B) Any other action or proceeding against the Office 
     founded upon tort may be

[[Page 1790]]

     brought in an appropriate district court without regard to 
     the provisions of section 1346(b) and chapter 171 of title 
     28.
       ``(4) Prohibition on attachment, liens, etc.--No 
     attachment, garnishment, lien, or similar process, 
     intermediate or final, in law or equity, may be issued 
     against property of the Office.
       ``(5) Substitution of office as party.--The Office shall be 
     substituted as defendant in any civil action or proceeding 
     against an officer or employee of the Office, if the Office 
     determines that the officer or employee was acting within the 
     scope of his or her employment with the Office. If the Office 
     refuses to certify scope of employment, the officer or 
     employee may at any time before trial petition the court to 
     find and certify that the officer or employee was acting 
     within the scope of his or her employment. Upon certification 
     by the court, the Office shall be substituted as the party 
     defendant. A copy of the petition shall be served upon the 
     Office. In any such civil action or proceeding to which 
     paragraph (3)(A) applies, the provisions of section 1346(b) 
     and chapter 171 of title 28 shall apply in lieu of this 
     paragraph.
       ``(b) Relationship With Justice Department.--
       ``(1) Exercise by office of attorney general's 
     authorities.--Except as provided in this section, with 
     respect to any action or proceeding in which the Office is a 
     party or an officer or employee thereof is a party in his or 
     her official capacity, the Office, officer, or employee may 
     exercise, without prior authorization from the Attorney 
     General, the authorities and duties that otherwise would be 
     exercised by the Attorney General on behalf of the Office, 
     officer, or employee under title 28 and other laws.
       ``(2) Appearances by attorney general.--Notwithstanding 
     paragraph (1), at any time the Attorney General may, in any 
     action or proceeding described in paragraph (1), file an 
     appearance on behalf of the Office or the officer or employee 
     involved, without the consent of the Office or the officer or 
     employee. Upon such filing, the Attorney General shall 
     represent the Office or such officer or employee with 
     exclusive authority in the conduct, settlement, or compromise 
     of that action or proceeding.
       ``(3) Consultations with and assistance by attorney 
     general.--The Office may consult with the Attorney General 
     concerning any legal matter, and the Attorney General shall 
     provide advice and assistance to the Office, including 
     representing the Office in litigation, if requested by the 
     Office.
       ``(4) Representation before supreme court.--The Attorney 
     General shall represent the Office in all cases before the 
     United States Supreme Court.
       ``(5) Qualifications of attorneys.--An attorney admitted to 
     practice to the bar of the highest court of at least one 
     State in the United States or the District of Columbia and 
     employed by the Office may represent the Office in any legal 
     proceeding in which the Office or an officer or employee of 
     the Office is a party or interested, regardless of whether 
     the attorney is a resident of the jurisdiction in which the 
     proceeding is held and notwithstanding any other 
     prerequisites of qualification or appearance required by the 
     court or administrative body before which the proceeding is 
     conducted.''.

      SEC. 17419. ANNUAL REPORT OF COMMISSIONER.

       Section 15 of title 35, United States Code, as redesignated 
     by section 17418 of this Act, is amended to read as follows:

     ``Sec. 15. Annual report to Congress

       ``The Commissioner shall report to the Congress, not later 
     than 180 days after the end of each fiscal year, the moneys 
     received and expended by the Office, the purposes for which 
     the moneys were spent, the quality and quantity of the work 
     of the Office, and other information relating to the Office. 
     The report under this section shall also meet the 
     requirements of section 9106 of title 31, to the extent that 
     such requirements are not inconsistent with the preceding 
     sentence. The report required under this section shall be 
     deemed to be the report of the Patent and Trademark Office 
     under section 9106 of title 31, and the Commissioner shall 
     not file a separate report under such section.''.

     SEC. 17420. SUSPENSION OR EXCLUSION FROM PRACTICE.

       Section 32 of title 35, United States Code, is amended by 
     inserting before the last sentence the following: ``The 
     Commissioner shall have the discretion to designate any 
     attorney who is an officer or employee of the Patent and 
     Trademark Office to conduct the hearing required by this 
     section.''.

     SEC. 17421. FUNDING.

       Section 42 of title 35, United States Code, is amended to 
     read as follows:

     ``Sec. 42. Patent and Trademark Office funding

       ``(a) Fees Payable to the Office.--All fees for services 
     performed by or materials furnished by the Patent and 
     Trademark Office shall be payable to the Office.
       ``(b) Use of Moneys.--Moneys of the Patent and Trademark 
     Office not otherwise used to carry out the functions of the 
     Office shall be kept in cash on hand or on deposit, or 
     invested in obligations of the United States or guaranteed by 
     the United States, or in obligations or other instruments 
     which are lawful investments for fiduciary, trust, or public 
     funds. Fees available to the Commissioner under this title 
     shall be used exclusively for the processing of patent 
     applications and for other services and materials relating to 
     patents. Fees available to the Commissioner under section 31 
     of the Act of July 5, 1946 (commonly referred to as the 
     `Trademark Act of 1946'; 15 U.S.C. 1113), shall be used 
     exclusively for the processing of trademark registrations and 
     for other services and materials relating to trademarks.
       ``(c) Borrowing Authority.--The Patent and Trademark Office 
     is authorized to issue from time to time for purchase by the 
     Secretary of the Treasury its debentures, bonds, notes, and 
     other evidences of indebtedness (hereafter in this subsection 
     referred to as `obligations') to assist in financing its 
     activities. Borrowing under this subsection shall be subject 
     to prior approval in appropriation Acts. Such borrowing shall 
     not exceed amounts approved in appropriation Acts. Any such 
     borrowing shall be repaid only from fees paid to the Office 
     and surcharges appropriated by the Congress. Such obligations 
     shall be redeemable at the option of the Office before 
     maturity in the manner stipulated in such obligations and 
     shall have such maturity as is determined by the Office with 
     the approval of the Secretary of the Treasury. Each such 
     obligation issued to the Treasury shall bear interest at a 
     rate not less than the current yield on outstanding 
     marketable obligations of the United States of comparable 
     maturity during the month preceding the issuance of the 
     obligation as determined by the Secretary of the Treasury. 
     The Secretary of the Treasury shall purchase any obligations 
     of the Office issued under this subsection and for such 
     purpose the Secretary of the Treasury is authorized to use as 
     a public-debt transaction the proceeds of any securities 
     issued under chapter 31 of title 31, and the purposes for 
     which securities may be issued under that chapter are 
     extended to include such purpose. Payment under this 
     subsection of the purchase price of such obligations of the 
     Patent and Trademark Office shall be treated as public debt 
     transactions of the United States.''.

     SEC. 17422. AUDITS.

       Chapter 4 of part I of title 35, United States Code, is 
     amended by adding at the end the following new section:

     ``Sec. 43. Audits

       ``(a) In General.--Financial statements of the Patent and 
     Trademark Office shall be prepared on an annual basis in 
     accordance with generally accepted accounting principles. 
     Such statements shall be audited by an independent certified 
     public accountant chosen by the Commissioner. The audit shall 
     be conducted in accordance with standards that are consistent 
     with generally accepted Government auditing standards and 
     other standards established by the Comptroller General, and 
     with the generally accepted auditing standards of the private 
     sector, to the extent feasible. The Commissioner shall 
     transmit to the Committees on the Judiciary of the House of 
     Representatives and the Senate the results of each audit 
     under this subsection.
       ``(b) Review by Comptroller General.--The Comptroller 
     General may review any audit of the financial statement of 
     the Patent and Trademark Office that is conducted under 
     subsection (a). The Comptroller General shall report to the 
     Congress and the Office the results of any such review and 
     shall include in such report appropriate recommendations.
       ``(c) Audit by Comptroller General.--The Comptroller 
     General may audit the financial statements of the Office and 
     such audit shall be in lieu of the audit required by 
     subsection (a). The Office shall reimburse the Comptroller 
     General for the cost of any audit conducted under this 
     subsection.
       ``(d) Access to Office Records.--All books, financial 
     records, report files, memoranda, and other property that the 
     Comptroller General deems necessary for the performance of 
     any audit shall be made available to the Comptroller General.
       ``(e) Applicability in Lieu of Title 31 Provisions.--This 
     section applies to the Office in lieu of the provisions of 
     section 9105 of title 31.''.

     SEC. 17423. TRANSFERS.

       (a) Transfer of Functions.--Except as otherwise provided in 
     this Act, there are transferred to, and vested in, the Patent 
     and Trademark Office all functions, powers, and duties vested 
     by law in the Secretary of Commerce or the Department of 
     Commerce or in the officers or components in the Department 
     of Commerce with respect to the authority to grant patents 
     and register trademarks, and in the Patent and Trademark 
     Office, as in effect on the day before the effective date of 
     this subtitle, and in the officers and components of such 
     Office.
       (b) Transfer of Funds and Property.--The Secretary of 
     Commerce shall transfer to the Patent and Trademark Office, 
     on the effective date of this subtitle, so much of the 
     assets, liabilities, contracts, property, records, and 
     unexpended and unobligated balances of appropriations, 
     authorizations, allocations, and other funds employed, held, 
     used, arising from, available to, or to be made available to 
     the Department of Commerce, including funds set aside for 
     accounts receivable which are related to functions, powers, 
     and duties which are vested in the Patent and Trademark 
     Office by this subtitle.

            CHAPTER 2--EFFECTIVE DATE; TECHNICAL AMENDMENTS

      SEC. 17431. EFFECTIVE DATE.

       This subtitle shall take effect 6 months after the date of 
     the enactment of this Act.

     SEC. 17432. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Amendments to Title 35.--
       (1) The table of contents for part I of title 35, United 
     States Code, is amended by

[[Page 1791]]

     amending the item relating to chapter 1 to read as follows:

``1. Establishment, Officers and Employees, Functions..........1.''....

       (2) The table of sections for chapter 1 of title 35, United 
     States Code, is amended to read as follows:

     ``CHAPTER 1--ESTABLISHMENT, OFFICERS 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.''.
       (3) The table of contents for chapter 4 of part I of title 
     35, United States Code, is amended by adding at the end the 
     following new item:

``43. Audits.''.
       (b) Other Provisions of Law.--
       (1) Section 9101(3) of title 31, United States Code, is 
     amended by adding at the end the following:
       ``(O) the Patent and Trademark Office.''.
       (2) Section 500(e) of title 5, United States Code, is 
     amended by striking ``Patent Office'' and inserting ``Patent 
     and Trademark Office''.
       (3) Section 5102(c)(23) of title 5, United States Code, is 
     amended by striking ``Department of Commerce''.
       (4) Section 5316 of title 5, United States Code (5 U.S.C. 
     5316) is amended by striking ``Commissioner of Patents, 
     Department of Commerce.'', ``Deputy Commissioner of Patents 
     and Trademarks.'', ``Assistant Commissioner for Patents.'', 
     and ``Assistant Commissioner for Trademarks.''.
       (5) Section 12 of the Act of February 14, 1903 (15 U.S.C. 
     1511) is amended by striking ``(d) Patent and Trademark 
     Office;'' and redesignating subsections (a) through (g) as 
     paragraphs (1) through (6), respectively.
       (6) The Act of April 12, 1892 (27 Stat. 395; 20 U.S.C. 91) 
     is amended by striking ``Patent Office'' and inserting 
     ``Patent and Trademark Office''.
       (7) Sections 505(m) and 512(o) of the Federal Food, Drug, 
     and Cosmetic Act (21 U.S.C. 355(m) and 360b(o)) are each 
     amended by striking ``of the Department of Commerce''.
       (8) Section 105(e) of the Federal Alcohol Administration 
     Act (27 U.S.C. 205(e)) is amended by striking ``Patent 
     Office'' and inserting ``Patent and Trademark Office''.
       (9) Section 1744 of title 28, United States Code is 
     amended--
       (A) by striking ``Patent Office'' each place it appears and 
     inserting ``Patent and Trademark Office''; and
       (B) by striking ``Commissioner of Patents'' and inserting 
     ``Commissioner of Patents and Trademarks''.
       (10) Section 1745 of title 28, United States Code, is 
     amended by striking ``United States Patent Office'' and 
     inserting ``Patent and Trademark Office''.
       (11) Section 1928 of title 28, United States Code, is 
     amended by striking ``Patent Office'' and inserting ``Patent 
     and Trademark Office''.
       (12) Section 160 of the Atomic Energy Act of 1954 (42 
     U.S.C. 2190) is amended--
       (A) by striking ``United States Patent Office'' and 
     inserting ``Patent and Trademark Office''; and
       (B) by striking ``Commissioner of Patents'' and inserting 
     ``Commissioner of Patents and Trademarks''.
       (13) Section 305(c) of the National Aeronautics and Space 
     Act of 1958 (42 U.S.C. 2457(c)) is amended by striking 
     ``Commissioner of Patents'' and inserting ``Commissioner of 
     Patents and Trademarks''.
       (14) Section 12(a) of the Solar Heating and Cooling 
     Demonstration Act of 1974 (42 U.S.C. 5510(a)) is amended by 
     striking ``Commissioner of the Patent Office'' and inserting 
     ``Commissioner of Patents and Trademarks''.
       (15) Section 1111 of title 44, United States Code, is 
     amended by striking ``the Commissioner of Patents,''.
       (16) Section 1114 of title 44, United States Code, is 
     amended by striking ``the Commissioner of Patents,''.
       (17) Section 1123 of title 44, United States Code, is 
     amended by striking ``the Patent Office.''.
       (18) Sections 1337 and 1338 of title 44, United States 
     Code, and the items relating to those sections in the table 
     of contents for chapter 13 of such title, are repealed.
       (19) Section 10(i) of the Trading With the Enemy Act (50 
     U.S.C. App. 10(i)) is amended by striking ``Commissioner of 
     Patents'' and inserting ``Commissioner of Patents and 
     Trademarks''.
       (20) Section 8G(a)(2) of the Inspector General Act of 1978 
     (5 U.S.C. App.) is amended by inserting ``the Patent and 
     Trademark Office,'', after ``the Panama Canal Commission,''.
                  Subtitle E--Miscellaneous Provisions

     SEC. 17501. REFERENCES.

       Any reference in any other Federal law, Executive order, 
     rule, regulation, or delegation of authority, or any document 
     of or pertaining to a department or office from which a 
     function is transferred by this title--
       (1) to the head of such department or office is deemed to 
     refer to the head of the department or office to which such 
     function is transferred; or
       (2) to such department or office is deemed to refer to the 
     department or office to which such function is transferred.

     SEC. 17502. EXERCISE OF AUTHORITIES.

       Except as otherwise provided by law, a Federal official to 
     whom a function is transferred by this title may, for 
     purposes of performing the function, exercise all authorities 
     under any other provision of law that were available with 
     respect to the performance of that function to the official 
     responsible for the performance of the function immediately 
     before the effective date of the transfer of the function 
     under this title.

     SEC. 17503. SAVINGS PROVISIONS.

       (a) Legal Documents.--All orders, determinations, rules, 
     regulations, permits, grants, loans, contracts, agreements, 
     certificates, licenses, and privileges--
       (1) that have been issued, made, granted, or allowed to 
     become effective by the President, the Secretary of Commerce, 
     the United States Trade Representative, any officer or 
     employee of any office transferred by this title, or any 
     other Government official, or by a court of competent 
     jurisdiction, in the performance of any function that is 
     transferred by this title, and
       (2) that are in effect on the effective date of such 
     transfer (or become effective after such date pursuant to 
     their terms as in effect on such effective date),
     shall continue in effect according to their terms until 
     modified, terminated, superseded, set aside, or revoked in 
     accordance with law by the President, any other authorized 
     official, a court of competent jurisdiction, or operation of 
     law.
       (b) Proceedings.--This title shall not affect any 
     proceedings or any application for any benefits, service, 
     license, permit, certificate, or financial assistance pending 
     on the date of the enactment of this Act before an office 
     transferred by this title, but such proceedings and 
     applications shall be continued. Orders shall be issued in 
     such proceedings, appeals shall be taken therefrom, and 
     payments shall be made pursuant to such orders, as if this 
     Act had not been enacted, and orders issued in any such 
     proceeding shall continue in effect until modified, 
     terminated, superseded, or revoked by a duly authorized 
     official, by a court of competent jurisdiction, or by 
     operation of law. Nothing in this subsection shall be 
     considered to prohibit the discontinuance or modification of 
     any such proceeding under the same terms and conditions and 
     to the same extent that such proceeding could have been 
     discontinued or modified if this title had not been enacted.
       (c) Suits.--This title shall not affect suits commenced 
     before the date of the enactment of this Act, and in all such 
     suits, proceeding shall be had, appeals taken, and judgments 
     rendered in the same manner and with the same effect as if 
     this title had not been enacted.
       (d) Nonabatement of Actions.--No suit, action, or other 
     proceeding commenced by or against the Department of Commerce 
     or the Secretary of Commerce, or by or against any individual 
     in the official capacity of such individual as an officer or 
     employee of an office transferred by this title, shall abate 
     by reason of the enactment of this title.
       (e) Continuance of Suits.--If any Government officer in the 
     official capacity of such officer is party to a suit with 
     respect to a function of the officer, and under this title 
     such function is transferred to any other officer or office, 
     then such suit shall be continued with the other officer or 
     the head of such other office, as applicable, substituted or 
     added as a party.
       (f) Administrative Procedure and Judicial Review.--Except 
     as otherwise provided by this title, any statutory 
     requirements relating to notice, hearings, action upon the 
     record, or administrative or judicial review that apply to 
     any function transferred by this title shall apply to the 
     exercise of such function by the head of the Federal agency, 
     and other officers of the agency, to which such function is 
     transferred by this title.

     SEC. 17504. TRANSFER OF ASSETS.

       Except as otherwise provided in this title, so much of the 
     personnel, property, records, and unexpended balances of 
     appropriations, allocations, and other funds employed, used, 
     held, available, or to be made available in connection with a 
     function transferred to an official or agency by this title 
     shall be available to the official or the head of that 
     agency, respectively, at such time or times as the Director 
     of the Office of Management and Budget directs for use in 
     connection with the functions transferred.

     SEC. 17505. DELEGATION AND ASSIGNMENT.

       Except as otherwise expressly prohibited by law or 
     otherwise provided in this title, an official to whom 
     functions are transferred under this title (including the 
     head of any office to which functions are transferred under 
     this title) may delegate any of the functions so transferred 
     to such officers and employees of the office of the official 
     as the official may designate, and may authorize successive 
     redelegations of such functions as may be necessary or 
     appropriate. No delegation of functions under this section or 
     under any other provision of this title shall relieve the 
     official to whom a function is transferred

[[Page 1792]]

     under this title of responsibility for the administration of 
     the function.

     SEC. 17506. AUTHORITY OF DIRECTOR OF THE OFFICE OF MANAGEMENT 
                   AND BUDGET WITH RESPECT TO FUNCTIONS 
                   TRANSFERRED.

       (a) Determinations.--If necessary, the Director shall make 
     any determination of the functions that are transferred under 
     this title.
       (b) Incidental Transfers.--The Director, at such time or 
     times as the Director shall provide, may make such 
     determinations as may be necessary with regard to the 
     functions transferred by this title, and to make such 
     additional incidental dispositions of personnel, assets, 
     liabilities, grants, contracts, property, records, and 
     unexpended balances of appropriations, authorizations, 
     allocations, and other funds held, used, arising from, 
     available to, or to be made available in connection with such 
     functions, as may be necessary to carry out the provisions of 
     this title. The Director shall provide for the termination of 
     the affairs of all entities terminated by this title and for 
     such further measures and dispositions as may be necessary to 
     effectuate the purposes of this title.

     SEC. 17507. CERTAIN VESTING OF FUNCTIONS CONSIDERED 
                   TRANSFERS.

       For purposes of this title, the vesting of a function in a 
     department or office pursuant to reestablishment of an office 
     shall be considered to be the transfer of the 
     function.

     SEC. 17508. AVAILABILITY OF EXISTING FUNDS.

       Existing appropriations and funds available for the 
     performance of functions, programs, and activities terminated 
     pursuant to this title shall remain available, for the 
     duration of their period of availability, for necessary 
     expenses in connection with the termination and resolution of 
     such functions, programs, and activities.

     SEC. 17509. DEFINITIONS.

       For purposes of this title--
       (1) the term ``function'' includes any duty, obligation, 
     power, authority, responsibility, right, privilege, activity, 
     or program; and
       (2) the term `office' includes any office, administration, 
     agency, bureau, institute, council, unit, organizational 
     entity, or component thereof.
                      TITLE XVIII--WELFARE REFORM

     SEC. 18001. ENACTMENT OF THE PERSONAL RESPONSIBILITY ACT OF 
                   1995.

       H.R. 4, as passed by the House of Representatives on March 
     24, 1995, is hereby enacted with the following amendments:
       (1) In section 101, insert
     ``(a) In General.--'' before ``Title IV of the Social 
     Security Act''.
       (2) At the end of section 101, add the following:
       (b) Submission of State Plan for Fiscal Year 1996 Deemed 
     Acceptance of Grant Limitations and Formula.--The submission 
     of a plan by a State under section 402(a) of the Social 
     Security Act (as in effect pursuant to the amendment made by 
     subsection (a) of this section) for fiscal year 1996 is 
     deemed to constitute the State's acceptance of the grant 
     limitations under section 403(a)(1)(A)(i) of such Act (as so 
     in effect) for fiscal year 1996 (including the formula for 
     computing the amount of the grant).
       (3) Strike section 403(a)(1)(A) of the Social Security Act, 
     as proposed to be added by section 101, and insert the 
     following:
       ``(A) In general.--Each eligible State shall be entitled to 
     receive from the Secretary--
       ``(i) for fiscal year 1996, a grant in an amount equal to--

       ``(I) the State family assistance grant for fiscal year 
     1996; minus
       ``(II) the total amount of obligations to the State under 
     part A of this title (as in effect before the effective date 
     of this part) for fiscal year 1996, other than with respect 
     to amounts expended for child care pursuant to subsection (g) 
     or (i) of section 402 of this title (as so in effect); and

       ``(ii) for each of fiscal years 1997, 1998, 1999, and 2000, 
     a grant in an amount equal to the State family assistance 
     grant for the fiscal year.
       (4) In section 201, insert
     ``(a) In General.--'' before ``Part B of title IV of the 
     Social Security Act''.
       (5) At the end of section 201, add the following:
       (b) Submission of State Plan for Fiscal Year 1996 Deemed 
     Acceptance of Grant Limitations and Formula.--The submission 
     of a plan by a State under section 422(a) of the Social 
     Security Act (as in effect pursuant to the amendment made by 
     subsection (a) of this section) for fiscal year 1996 is 
     deemed to constitute the State's acceptance of the grant 
     limitations under section 423(a)(1)(A) of such Act (as so in 
     effect) for fiscal year 1996 (including the formula for 
     computing the amount of the grant).
       (6) Strike section 423(a)(1) of the Social Security Act, as 
     proposed to be added by section 201, and insert the 
     following:
       ``(1) In general.--Each eligible State shall be entitled to 
     receive from the Secretary--
       ``(A) for fiscal year 1996, a grant in an amount equal to--
       ``(i) the State share of the child protection amount for 
     fiscal year 1996; minus
       ``(ii) the total amount of obligations to the State under 
     parts B and E of this title (as in effect before the 
     effective date of this part) for fiscal year 1996; and
       ``(B) for each subsequent fiscal year specified in 
     subsection (b)(1), a grant in an amount equal to the State 
     share of the child protection amount for the fiscal year.
       (7) Strike section 301(b) and insert the following:
       (b) Authorization of Appropriations.--Section 658B of the 
     Child Care and Development Block Grant Act of 1990 (42 U.S.C. 
     9858B) is amended to read as follows:

     ``SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated to carry out this 
     subchapter $1,804,000,000 for fiscal year 1996 and 
     $2,093,000,000 for each of the fiscal years 1997, 1998, 1999, 
     2000, 2001, and 2002.''.
       (8) In the matter preceding paragraph (1) of section 3 of 
     the Child Nutrition Act of 1966, as proposed to be amended by 
     section 321, strike ``The Secretary'' and insert ``(a) In 
     General.--The Secretary''.
       (9) At the end of section 3 of the Child Nutrition Act of 
     1966, as proposed to be amended by section 321, add the 
     following:
       ``(b) Additional Requirements.--
       ``(1) Restriction on allotments.--
       ``(A) Computation.--The Secretary shall provide for the 
     computation of State obligation allotments in accordance with 
     this section for each of the fiscal years 1996 through 2000.
       ``(B) Limitation on obligations.--The Secretary shall not 
     enter into obligations with any State under this Act for a 
     fiscal year in excess of the obligation allotment for that 
     State for the fiscal year, as determined under subsection 
     (a). The sum of such obligation allotments for all States in 
     any fiscal year shall not exceed the amount appropriated to 
     carry out this Act for that fiscal year.
       ``(2) Agreement.--The submission of an application by a 
     State under section 4 is deemed to constitute the State's 
     acceptance of the obligation allotment limitations under this 
     section (including the formula for computing the amount of 
     such obligation allotment).
       (10) In the matter preceding paragraph (1) of section 3 of 
     the National School Lunch Act, as proposed to be amended by 
     section 341, strike ``The Secretary'' and insert ``(a) In 
     General.--The Secretary''.
       (11) At the end of section 3 of the National School Lunch 
     Act, as proposed to be amended by section 341, add the 
     following:
       ``(b) Additional Requirements.--
       ``(1) Restriction on allotments.--
       ``(A) Computation.--The Secretary shall provide for the 
     computation of State obligation allotments in accordance with 
     this section for each of the fiscal years 1996 through 2000.
       ``(B) Limitation on obligations.--
       ``(i) In general.--Subject to clause (ii), the Secretary 
     shall not enter into obligations with any State under this 
     Act for a fiscal year in excess of the obligation allotment 
     for that State for the fiscal year, as determined under 
     subsection (a). The sum of such obligation allotments for all 
     States in any fiscal year shall not exceed the school-based 
     nutrition amount for that fiscal year.
       ``(ii) Reduction for post-enactment new obligations in 
     fiscal year 1996.--

       ``(I) In general.--The amount of the obligation allotment 
     otherwise provided under this section for fiscal year 1996 
     for a State under this Act (as in effect on and after the 
     date of the enactment of the Personal Responsibility Act of 
     1995) shall be reduced by the amount of the obligations 
     described in subclause (II) that are entered into under this 
     Act or under the Child Nutrition Act of 1966 on or after 
     October 1, 1995, but prior to the date of the enactment of 
     the Personal Responsibility Act of 1995.
       ``(II) Amount of obligations described.--(aa) Except as 
     provided in division (bb), the amount of the obligations 
     described in this subclause are 100 percent of the amount of 
     the obligations entered into under this Act and under the 
     Child Nutrition Act of 1966 (except obligations entered into 
     under section 17 of such Act).
       ``(bb) For purposes of obligations entered into under the 
     summer food service program for children under section 13 of 
     this Act, the child and adult care food program under section 
     17 of this Act, and the special milk program under section 3 
     of the Child Nutrition Act of 1966, the amount of the 
     obligations described in this subclause are 12.5 percent of 
     the amount the obligations entered into under each such 
     program.

       ``(2) Agreement.--The submission of an application by a 
     State under section 4 is deemed to constitute the State's 
     acceptance of the obligation allotment limitations under this 
     section (including the formula for computing the amount of 
     such obligation allotment).
       ``(3) Termination of programs; limitation on new obligation 
     authority.--
       ``(A) Elimination of individual entitlement.--Effective on 
     the date of the enactment of the Personal Responsibility Act 
     of 1995--
       ``(i) except as provided in subparagraph (B), the Federal 
     Government has no obligation to provide payment with respect 
     to items and services provided under this Act (as in effect 
     on and after the date of the enactment of the Personal 
     Responsibility Act of 1995); and
       ``(ii) this Act (as in effect on and after the date of the 
     enactment of the Personal Responsibility Act of 1995) shall 
     not be construed as providing for an entitlement, under 
     Federal law in relation to the Federal Government, in an 
     individual or person at the time of provision or receipt of 
     services.
       ``(B) Limitation on obligation authority.--Notwithstanding 
     any other provision of this Act, the Secretary is authorized 
     to enter into obligations with any State under this Act for 
     expenses incurred after the date of the enactment of the 
     Personal Responsi

[[Page 1793]]

     bility Act and during fiscal year 1996, but not in excess of 
     the obligation allotment for that State for fiscal year 1996, 
     as determined under subsection (a).
              TITLE XIX--CONTRACT WITH AMERICA-TAX RELIEF

     SEC. 19001. ENACTMENT OF CONTRACT WITH AMERICA TAX RELIEF ACT 
                   OF 1995.

       (a) In General.--Title VI of H.R. 1215 of the 104th 
     Congress, as passed by the House of Representatives, is 
     hereby enacted with the following modifications to such 
     title:
       (1) Strike subtitle E (relating to social security earnings 
     test) and redesignate subtitles F and G as subtitles E and F, 
     respectively.
       (2) Strike subsections (c)(2) and (d)(2) of section 6201.
       (3) Strike the amendment contained in paragraph (2) of 
     section 6301(d) and insert the following: ``Subsection (h) of 
     section 1 is amended by adding at the end the following new 
     sentence: `For purposes of this subsection, taxable income 
     shall be computed without regard to the deduction allowed by 
     section 1202.' ''
       (4) Strike section 6321 (relating to depreciation 
     adjustment for certain property placed in service after 
     December 31, 1994).
       (5) Strike part III of subtitle C (relating to alternative 
     minimum tax relief).
       (6) Strike subtitle F (as redesignated by paragraph (1)) 
     and insert the following:

      ``Subtitle F--Tax Reduction Contingent on Deficit Reduction

     ``SEC. 6701. TAX REDUCTION CONTINGENT ON DEFICIT REDUCTION.

       ``This title, which is contained within the Act that--
       ``(1) carries out the concurrent resolution on the budget 
     for fiscal year 1996 that provides that the budget of the 
     United States will be in balance by fiscal year 2002; and
       ``(2) achieves a level of deficit reduction pursuant to the 
     reconciliation instructions of that concurrent resolution 
     that will result in a budget of the United States that will 
     be in balance by fiscal year 2002; and
       ``(B) is certified pursuant to the requirements set forth 
     in section 210 of that concurrent resolution,
     shall take effect as so provided by its effective date 
     provisions.

     ``SEC. 6702. MONITORING.

       ``The Committees on the Budget of the House of 
     Representatives and the Senate shall each monitor progress on 
     achieving a balanced budget consistent with the most recently 
     agreed to concurrent resolution on the budget for fiscal year 
     1996 or any subsequent fiscal year (and the reconciliation 
     Act for that resolution) or the most recently agreed to 
     concurrent resolution on the budget that would achieve a 
     balanced budget by fiscal year 2002 (and the reconciliation 
     Act for that resolution). After consultation with the 
     Director of the Congressional Budget Office, each such 
     committee shall submit a report of its findings to its House 
     and the President on or before December 15, 1995, and 
     annually thereafter. Each such report shall contain the 
     following:
       ``(1) Estimates of the deficit levels (based on legislation 
     enacted through the date of the report) for each fiscal year 
     through fiscal year 2002.
       ``(2) An analysis of the variance (if any) between those 
     estimated deficit levels and the levels set forth in the 
     concurrent resolution on the budget for fiscal year 1996 or 
     the most recently agreed to concurrent resolution on the 
     budget that would achieve a balanced budget by fiscal year 
     2002.
       ``(3) Policy options to achieve the additional levels of 
     deficit reduction necessary to balance the budget of the 
     United States by fiscal year 2002.

     ``SEC. 6703. CONGRESSIONAL ACTION.

       ``Each House of Congress shall incorporate the policy 
     options included in the report of its Committee on the Budget 
     under section 6702(a)(3) (or other policy options) in 
     developing a concurrent resolution on the budget for any 
     fiscal year that achieves the additional levels of deficit 
     reduction necessary to balance the budget of the United 
     States by fiscal year 2002.

     ``SEC. 6704. PRESIDENTIAL ACTION.

       ``If the President submits a budget under section 1105(a) 
     of title 31, United States Code, that does not provide for a 
     balanced budget for the United States by fiscal year 2002, 
     then the President shall include with that submission a 
     complete budget that balances the budget by that fiscal 
     year.''
       (7) Conform the table of contents accordingly.
       (b) Technical Correction.--Effective with respect to 
     taxable years ending after December 31, 1994, paragraph (1) 
     of section 1201(b) of the Internal Revenue Code of 1986, as 
     added by such title VI, is amended to read as follows:
       ``(1) In general.--In the case of any taxable year ending 
     after December 31, 1994, and beginning before January 1, 
     1996, in applying subsection (a), net capital gain for such 
     taxable year shall not exceed such net capital gain 
     determined by taking into account only gain or loss properly 
     taken into account for the portion of the taxable year after 
     December 31, 1994.''

     SEC. 19002. COMPLIANCE WITH CONCURRENT RESOLUTION ON THE 
                   BUDGET.

       (a) In General.--For purposes of the Internal Revenue Code 
     of 1986, the taxpayer's net modified chapter 1 liability for 
     any taxable year shall be such liability determined without 
     regard to this section--
       (1) increased by 27 percent of the excess (if any) of--
       (A) the amount which would be the taxpayer's net modified 
     chapter 1 liability for such year if such liability were 
     determined without regard to the amendments made by subtitles 
     A, B, C, and D of title VI of H.R. 1215 of the 104th 
     Congress, as passed by the House of Representatives, over
       (B) the taxpayer's net modified chapter 1 liability for 
     such year determined without regard to this section, or
       (2) reduced by 27 percent of the excess (if any) of the 
     amount described in paragraph (1)(B) over the liability 
     described in paragraph (1)(A).
       (b) Net Modified Chapter 1 Liability.--For purposes of 
     subsection (a), the term ``net modified chapter 1 liability'' 
     means the liability for tax under chapter 1 of the Internal 
     Revenue Code of 1986 determined--
       (1) without regard to sections 1201 and 1202 of such Code, 
     as amended by such title VI,
       (2) without regard to the amendments made by sections 6103 
     and 6104 of such title VI,
       (3) after the application of any credit against such tax 
     other than the credits under sections 31, 33, and 34 of such 
     Code, and
       (4) before crediting any payment of estimated tax for the 
     taxable year.
       (c) Capital Gains.--
       (1) Capital gains deduction for taxpayers other than 
     corporations.--For purposes of applying section 1202 of the 
     Internal Revenue Code of 1986, as added by such title VI--
       (A) in the case of taxable years ending before January 1, 
     1996, ``42.5 percent'' shall be substituted for ``50 
     percent'' in subsection (a) thereof, and
       (B) in the case of taxable years ending after December 31, 
     1995, ``34.5 percent'' shall be substituted for ``50 
     percent'' in subsection (a) thereof.
       (2) Alternative capital gains tax for corporations.--
       (A) For purposes of applying section 1201 of such Code, as 
     amended by such title VI--
       (i) in the case of taxable years ending before January 1, 
     1996, ``26.5 percent'' shall be substituted for ``25 
     percent'' in subsection (a)(2) thereof, and
       (ii) in the case of taxable years ending after December 31, 
     1995, ``31.9 percent'' shall be substituted for ``25 
     percent'' in subsection (a)(2) thereof.
       (B) For purposes of applying section 852(b)(3)(D)(iii) of 
     such Code, as amended by such title VI--
       (i) in the case of taxable years ending before January 1, 
     1996, ``73.5 percent'' shall be substituted for ``75 
     percent'' in subsection (a)(2) thereof, and
       (ii) in the case of taxable years ending after December 31, 
     1995, ``68.1 percent'' shall be substituted for ``75 
     percent'' in subsection (a)(2) thereof.
       (3) Indexing.--For purposes of applying section 1022 of 
     such Code, as added by such title VI, only 69 percent of the 
     applicable inflation adjustment under subsection (c)(2) of 
     such section 1022 shall be taken into account.
       (4) Conforming changes.--Proper adjustments shall be made 
     to the percentages and fractions in the following provisions 
     to reflect the percentages in paragraphs (1) and (2):
       (A) Sections 170(c), 1445(e), and 7518(g)(6)(A) of such 
     Code.
       (B) Section 607(h)(6)(A) of the Merchant Marine Act, 1936.
       (d) American Dream Savings Accounts.--For purposes of 
     applying section 408A of such Code, as added by such title 
     VI--
       (1) only 69 percent of the income on the assets held in an 
     American Dream Savings Account (which would otherwise be 
     includible in gross income) shall be excludible from gross 
     income,
       (2) only 69 percent of any distribution attributable to 
     amounts not previously included in gross income shall be 
     entitled to the treatment described in subsection (d)(1) of 
     such section 408A, and
       (3) only 69 percent of any payment or distribution referred 
     to in subsection (d)(3)(B) of such section 408A shall be 
     entitled to the treatment described in such subsection.
       (e) Spousal Individual Retirement Accounts.--For purposes 
     of applying sections 219 and 408 of such Code--
       (1) only 69 percent of the contributions to an individual 
     retirement plan which are allowable as a deduction solely by 
     reason of the amendments made by section 6104 of such title 
     VI shall be allowed as a deduction, and
       (2) only 69 percent of the income on the assets held in an 
     individual retirement plan which are attributable to 
     contributions permitted solely by reason of the amendments 
     made by section 6104 of such title VI (which would otherwise 
     be includible in gross income) shall be excludible from gross 
     income.
       (f) Alternative Minimum Tax.--
       (1) In general.--In the case of taxable years beginning 
     after December 31, 1994--
       (A) in the case of a taxpayer other than a corporation, the 
     tax imposed by section 55 of such Code shall be determined 
     without regard to paragraph (1) of section 56(a) of such 
     Code, and
       (B) in the case of a corporation, the tentative minimum tax 
     under section 55 of such Code shall be zero.
       (2) Delay in benefit of repeal for taxable years 1995 and 
     1996.--
       (A) In general.--Paragraph (1) shall not apply to any 
     taxable year beginning before January 1, 1997, but there 
     shall be allowed as a credit against the tax imposed by 
     subtitle A of such Code for each taxable year referred to in 
     subparagraph (C) an amount equal to

[[Page 1794]]

     the credit determined under subparagraph (B).
       (B) Amount of credit.--The credit determined under this 
     subparagraph for any taxable year to which this paragraph 
     applies is an amount equal to \1/3\ of the excess (if any) 
     of--
       (i) the aggregate tax paid under section 55 of such Code 
     for taxable years beginning after December 31, 1994, and 
     before January 1, 1997, over
       (ii) the amount of tax which would have been imposed by 
     such section 55 for such taxable years had paragraph (1) 
     applied to such taxable years.
       (C) Years credit allowed.--The taxable years referred to in 
     this subparagraph are the first 3 taxable years of the 
     taxpayer beginning after December 31, 1996.
       (D) Coordination with other provisions.--For purposes of 
     the Internal Revenue Code of 1986, the credit allowed under 
     paragraph (1) shall be treated as a credit allowed under 
     subpart C of part IV of subchapter A of chapter 1 of such 
     Code and as referred to in paragraph (2) of 1324(b) of title 
     31, United States Code, immediately before the period at the 
     end thereof.
       (g) Comparable Treatment for Estate and Gift Tax Changes.--
     A rule similar to the rule of subsection (a) shall apply to 
     any reduction in liability for tax under subtitle B of such 
     Code by reason of the amendments made by section 6351 of such 
     title VI.
                      TITLE XX--BUDGET ENFORCEMENT

     SEC. 20001. SHORT TITLE; PURPOSE.

       (a) Short Title.--This title may be cited as the ``Seven-
     Year Balanced Budget Enforcement Act of 1995''.
       (b) Purpose.--This title extends and reduces the 
     discretionary spending limits and extends the pay-as-you-go 
     requirements.

     SEC. 20002. DISCRETIONARY SPENDING LIMITS.

       (a) Limits.--Section 601(a)(2) of the Congressional Budget 
     Act of 1974 is amended by striking subparagraphs (A), (B), 
     (C), (D), and (F), by redesignating subparagraph (E) as 
     subparagraph (A) and by striking ``and'' at the end of that 
     subparagraph, and by inserting after subparagraph (A) the 
     following new subparagraphs:
       ``(B) with respect to fiscal year 1996, for the 
     discretionary category: $485,074,000,000 in new budget 
     authority and $531,768,000,000 in outlays;
       ``(C) with respect to fiscal year 1997, for the 
     discretionary category: $481,423,000,000 in new budget 
     authority and $519,288,000,000 in outlays;
       ``(D) with respect to fiscal year 1998, for the 
     discretionary category: $489,233,000,000 in new budget 
     authority and $511,173,000,000 in outlays;
       ``(E) with respect to fiscal year 1999, for the 
     discretionary category: $480,420,000,000 in new budget 
     authority and $508,695,000,000 in outlays;
       ``(F) with respect to fiscal year 2000, for the 
     discretionary category: $487,347,000,000 in new budget 
     authority and $512,202,000,000 in outlays;
       ``(G) with respect to fiscal year 2001, for the 
     discretionary category: $494,307,000,000 in new budget 
     authority and $514,109,000,000 in outlays; and
       ``(H) with respect to fiscal year 2002, for the 
     discretionary category: $496,188,000,000 in new budget 
     authority and $512,426,000,000 in outlays;''.
       (b) Committee Allocations and Enforcement.--Section 602 of 
     the Congressional Budget Act of 1974 is amended--
       (1) in subsection (c), by striking ``1995'' and inserting 
     ``2002'' and by striking the last sentence; and
       (2) in subsection (d), by striking ``1992 to 1995'' in the 
     side heading and inserting ``1996 to 2002'' and by striking 
     ``1992 through 1995'' and inserting ``1996 through 2002''.
       (c) Term of Budget Resolutions.--Section 606 of the 
     Congressional Budget Act of 1974 is amended--
       (1) in its section heading by striking ``5-year'' and 
     inserting ``term of'';
       (2) in the sideheading of subsection (a), by striking ``5-
     Year'' and inserting ``Term of'';
       (3) in subsection (a), by striking ``1992, 1993, 1994, or 
     1995'' and inserting ``1996 or any fiscal year thereafter 
     through 2002'' and by inserting ``at least'' before ``each''; 
     and
       (4) in subsection (d)(1), by striking ``1992, 1993, 1994, 
     and 1995'' and inserting ``1996 or any fiscal year thereafter 
     through 2002'', and by striking ``(i) and (ii)''.
       (d) Effective Date.--Section 607 of the Congressional 
     Budget Act of 1974 is amended by striking ``1991 to 1998'' 
     and inserting ``1996 to 2002''.
       (e) Sequestration Regarding Violent Crime Reduction Trust 
     Fund.--(1) Section 251A(b)(1) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended by striking 
     subparagraphs (B), (C), and (D) and its last sentence and 
     inserting the following:
       ``(B) For fiscal year 1996, $2,227,000,000.
       ``(C) For fiscal year 1997, $3,846,000,000.
       ``(D) For fiscal year 1998, $4,901,000,000.
       ``(E) For fiscal year 1999, $5,639,000,000.
       ``(F) For fiscal year 2000, $6,225,000,000.''.
       (2) Section 310002 of the Violent Crime Control and Law 
     Enforcement Act of 1994 (42 U.S.C. 14212) is repealed.
       (f) Conforming Amendment.--The item relating to section 606 
     in the table of contents set forth in section 1(b) of the 
     Congressional Budget and Impoundment Control Act of 1974 is 
     amended by striking ``5-year'' and inserting ``Term of''.

     SEC. 20003. GENERAL STATEMENT AND DEFINITIONS.

       (a) General Statement.--Section 250(b) of the Balanced 
     Budget and Emergency Deficit Control Act of 1985 is amended 
     by striking the first two sentences and inserting the 
     following: ``This part provides for the enforcement of 
     deficit reduction by reducing and extending the discretionary 
     spending limits though fiscal year 2002 and permanently 
     extending pay-as-you-go requirements.''.
       (b) Definitions.--Section 250(c) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended--
       (1) by striking paragraph (4) and inserting the following:
       ``(4) The term `category' means:
       ``(A) For fiscal years 1996 through 2000, all discretionary 
     appropriations except those subject to section 251A; and
       ``(B) For fiscal year 2001 and any subsequent fiscal year, 
     all discretionary appropriations.'';
       (2) by striking paragraph (6) and inserting the following:
       ``(6) The term `budgetary resources' means new budget 
     authority, unobligated balances, direct spending authority, 
     and obligation limitations.'';
       (3) in paragraph (9), by striking ``1992'' and inserting 
     ``1996''; and
       (4) in paragraph (14), by striking ``through fiscal year 
     1995''.

     SEC. 20004. ENFORCING DISCRETIONARY SPENDING LIMITS.

       Section 251 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended--
       (1) in the side heading of subsection (a), by striking 
     ``1991-1998'' and inserting ``1996-2002'';
       (2) in the first sentence of subsection (b)(1), by striking 
     ``1992, 1993, 1994, 1995, 1996, 1997 or 1998'' and inserting 
     ``1997 or any fiscal year thereafter through 2002'' and by 
     striking ``through 1998'' and inserting ``through 2002'';
       (3) in subsection (b)(1), by striking ``the following:'' 
     and all that follows through ``The adjustments'' and 
     inserting ``the following: the adjustments'' and by striking 
     subparagraphs (B) and (C);
       (4) in subsection (b)(2), by striking ``1991, 1992, 1993, 
     1994, 1995, 1996, 1997, or 1998'' and inserting ``1996 or any 
     fiscal year thereafter through 2002'' and by striking 
     ``through 1998'' and inserting ``through 2002'';
       (5) in subsection (b)(2)(E), by striking clauses (i), (ii), 
     and (iii) and by striking ``(iv) if, for fiscal years 1994, 
     1995, 1996, 1997, and 1998'' and inserting ``If, for fiscal 
     years 1996 through 2002''; and
       (6) in subsection (b)(2)(F), by striking everything after 
     ``the adjustment in outlays'' and inserting ``for a category 
     for a fiscal year is the amount of the excess but not to 
     exceed 0.5 percent of the adjusted discretionary spending 
     limit on outlays for that fiscal year in fiscal year 1996 or 
     any fiscal year thereafter through 2002.''.

     SEC. 20005. ENFORCING PAY-AS-YOU-GO.

       (a) Extension.--(1) Section 252 of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended--
       (A) in the side heading of subsection (a), by striking 
     ``Fiscal Years 1992-1998''; and
       (B) in subsection (e), by striking ``, for any fiscal year 
     from 1991 through 1998,'' and by striking ``through 1995''.
       (b) Rolling Pay-As-You-Go Scorecard.--Section 252(d) of the 
     Balanced Budget and Emergency Deficit Control Act of 1985 is 
     amended by striking ``each fiscal year through fiscal year 
     1998'' each place it appears and inserting ``the current year 
     (if applicable), the budget year, and each of the first 4 
     outyears''.

     SEC. 20006. REPORTS AND ORDERS.

       Section 254 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended--
       (1) in subsection (d)(2), by striking ``1998'' and 
     inserting ``2002''; and
       (2)(A) in subsection (g)(2)(A), by striking ``1998'' and 
     inserting ``2002''; and
       (B) in subsection (g)(3), by striking ``in each outyear 
     through 1998'' and inserting ``in each of the 4 ensuing 
     outyears''.

     SEC. 20007. TECHNICAL CORRECTION.

       Section 258 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985, entitled ``Modification of Presidential 
     Order'', is repealed.

     SEC. 20008. SPECIAL RULE ON INTERRELATIONSHIP BETWEEN CHANGES 
                   IN DISCRETIONARY SPENDING LIMITS AND PAY-AS-
                   YOU-GO REQUIREMENTS.

       (a)(1) Section 252 of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 is amended by adding at the end 
     the following new subsection:
       ``(f) Special Rule on Interrelationship Between Sections 
     251, 251A, and 252.--Whenever legislation is enacted during 
     the 104th Congress that decreases the discretionary spending 
     limits for budget authority and outlays for a fiscal year 
     under section 601(a)(2) of the Congressional Budget Act of 
     1974 or in section 251A(b) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985, or both, then, for 
     purposes of subsection (b), an amount equal to that decrease 
     in the discretionary spending limit for outlays shall be 
     treated as direct spending legislation decreasing the deficit 
     for that fiscal year.''.
       (2) Section 310(a) of the Congressional Budget Act of 1974 
     is amended by striking ``or'' at the end of paragraph (3), by 
     redesignating paragraph (4) as paragraph (5) and by striking 
     ``and (3)'' in such redesignated paragraph (5) and inserting 
     ``(3), and (4)'', and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) carry out section 252(f) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985; or''.

[[Page 1795]]

       (b) For purposes of section 252(f) of the Balanced Budget 
     and Emergency Deficit Control Act of 1985 (as amended by 
     subsection (a)(1))--
       (1) reductions in the discretionary spending limit for 
     outlays under section 601(a)(2) of the Congressional Budget 
     Act of 1974 for each of fiscal years 1999 through 2002 under 
     section 20002 shall be measured as reductions from the 
     discretionary spending limit for outlays for fiscal year 1998 
     as in effect immediately before the enactment of this Act; 
     and
       (2) reductions in the discretionary spending limit for 
     outlays under section 251A(b) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 for each of fiscal 
     years 1996 through 2000 under section 20002 shall be measured 
     as reductions in outlays for that fiscal year under section 
     251A(b) as in effect immediately before the enactment of this 
     Act.

     SEC. 20009. MEDICARE SAVINGS CANNOT BE USED TO PAY FOR TAX 
                   CUTS.

       Any net savings in direct spending and receipts in the 
     Medicare program for any fiscal year resulting from the 
     enactment of this Act or H.R. 2425 (as applicable) shall not 
     be counted for purposes of section 252 of the Balanced Budget 
     and Emergency Deficit Control Act of 1985.

     SEC. 20010. EFFECTIVE DATE.

       (a) Expiration.--Section 275(b) of the Balanced Budget and 
     Emergency Deficit Control Act of 1985 is amended--
       (1) by striking ``Part C of this title, section'' and 
     inserting ``Sections 251, 253, 258B, and''; and
       (2) by striking ``1995'' and inserting ``2002''.
       (b) Expiration.--Section 14002(c)(3) of the Omnibus Budget 
     Reconciliation Act of 1993 (2 U.S.C. 900 note) is repealed.

     SEC. 20011. APPLICATION OF SECTION 251 ADJUSTMENTS.

       Section 251(b)(2) of the Balanced Budget and Emergency 
     Deficit Control Act of 1985 is amended by adding at the end 
     the following new subparagraph:
       ``(H) Special allowance for welfare reform.--If, for any 
     fiscal year, appropriations are enacted for accounts 
     specified in clauses (i) and (ii), the adjustment shall be 
     the sum of:
       ``(i) the excess of the appropriation for the fiscal year 
     for the Child Care and Development Block Grant over 
     $1,082,000,000, but not to exceed $722,000,000 in fiscal year 
     1996 or $1,011,000,000 in fiscal year 1997 through 2002; and
       ``(ii) the excess of the appropriation for the fiscal year 
     for the Family Nutrition Block Grant Program over 
     $3,470,000,000, but not to exceed $692,000,000 in fiscal year 
     1996, $1,307,000,000 in fiscal year 1997, $1,466,000,000 in 
     fiscal year 1998, $1,650,000,000 in fiscal year 1999, 
     $1,838,000,000 in fiscal year 2000, $2,075,000,000 in fiscal 
     year 2001, or $2,324,000,000 in fiscal year 2002;
     and the outlays flowing in all years from such excess 
     appropriations (as reduced pursuant to the limitations in 
     clauses (i) and (ii).''.

     SEC. 20012. SPECIAL RULES APPLICABLE TO DEPARTMENT OF DEFENSE 
                   SEQUESTRATION.

       Section 255 of the Balanced Budget and Emergency Deficit 
     Control Act of 1985 is amended by striking subsection (h) 
     (relating to optional exemption of military personnel) and 
     adding at the end the following new subsection:
       ``(j) Optional Exemption for Military Personnel.--
       ``(1) Authority for exemption.--The President may, with 
     respect to any military personnel account, exempt that 
     account from sequestration or provide for a lower uniform 
     percentage reduction than would otherwise apply.
       ``(B) The President may not use the authority provided by 
     subparagraph (A) unless he notifies the Congress of the 
     manner in which such authority will be exercised on or before 
     the initial snapshot date for the budget year.
       ``(2) Authority for Military Technicians and Medical 
     Personnel.--
       ``(A) Whenever the President exempts a military personnel 
     account from sequestration under paragraph (1) and after all 
     other sequestrations to Department of Defense account have 
     been made, the Secretary of Defense may transfer amounts to 
     any appropriation for operation and maintenance for the 
     current fiscal year from amounts available under any other 
     appropriation to the Department of Defense, but--
       ``(i) amounts so transferred shall be available only for 
     the pay of military technicians, the pay of medical 
     personnel, and other expenses of medical programs (including 
     CHAMPUS); and
       ``(ii) the total amount transferred to any operations and 
     maintenance appropriation shall not exceed the amount 
     sequestered from such appropriation.
       ``(C) The authority to make transfers pursuant to 
     subparagraph (A) is in addition to any authority of the 
     Secretary of Defense to make transfers of appropriated funds 
     under any other provision of law.
       ``(D) The Secretary of Defense may carry out a transfer of 
     funds under subparagraph (A) only after notifying the 
     Committees on Appropriations of the Senate and House of 
     Representatives of the proposed transfer and a period of 20 
     calendar days in session has elapsed after such notice is 
     received.''.

     SEC. 20013. TREATMENT OF DIRECT STUDENT LOANS.

       Section 504 of the Federal Credit Reform Act of 1990 is 
     amended by adding at the end the following new subsection:
       ``(h) Treatment of Direct Student Loans.--The cost of a 
     direct loan under the Federal direct student loan program 
     shall be the net present value, at the time when the direct 
     loan is disbursed, of the following cash flows for the 
     estimated life of the loan:
       ``(1) Loan disbursements.
       ``(2) Repayments of principal.
       ``(3) Payments of interest and other payments by or to the 
     Government over the life of the loan after adjusting for 
     estimated defaults, prepayments, fees, penalties, and other 
     recoveries.
       ``(4) Direct expenses, including--
       ``(A) activities related to credit extension, loan 
     origination, loan servicing, management of contractors, and 
     payments to contractors, other government entities, and 
     program participants;
       ``(B) collection of delinquent loans; and
       ``(C) writeoff and closeout of loans.''.

     SEC. 20014. DEFINITION OF PROGRAMS, PROJECTS, AND ACTIVITIES 
                   FOR DEPARTMENT OF DEFENSE APPROPRIATIONS.

       For purposes of the Balanced Budget and Emergency Deficit 
     Control Act of 1985, the term program, project, and activity 
     for appropriations contained in any Department of Defense 
     appropriation Act shall be defined as the most specific level 
     of budget items identified in the most recent Department of 
     Defense appropriation Act, the accompanying House and Senate 
     Committee reports, the conference report and accompanying 
     joint explanatory statement of the managers of the committee 
     of conference, the related classified annexes and reports, 
     and the P-1 and R-1 budget justification documents as 
     subsequently modified by congressional action: Provided, That 
     the following exception to the above definition shall apply:
       For the Military Personnel and the Operation and 
     Maintenance accounts, the term ``program, project, and 
     activity'' is defined as the appropriation accounts contained 
     in the most recent Department of Defense appropriation Act: 
     Provided further, That at the time the President submits his 
     budget for any fiscal year, the Department of Defense shall 
     transmit to the Committees on Appropriations and the 
     Committees on Armed Services of the Senate and the House of 
     Representatives a budget justification document to be known 
     as the ``O-1'' which shall identify, at the budget activity, 
     activity group, and subactivity group level, the amounts 
     requested by the President to be appropriated to the 
     Department of Defense for operation and maintenance in any 
     budget request, or amended budget request, for that fiscal 
     year.

  The bill, as amended, was ordered to be engrossed and read a third 
time, was read a third time by title.
  Mr. GEPHARDT moved to recommit the bill to the Committee on the Budget 
with instructions to report the bill back to the House with 
modifications to preserve and protect the health and income security of 
our seniors and our children and to achieve fairness by denying revenue 
reductions favoring the rich and excluding revenue increases on working 
class families and to retain Section 5003 relating to Federal retirement 
provisions for Members of Congress and Congressional employees.
  After debate,
  By unanimous consent, the previous question was ordered on the motion 
to recommit with instructions.
  The question being put,
  Will the House recommit said bill with instructions?
  The SPEAKER pro tempore, Mr. DREIER, announced that the nays had it.
  Mr. GEPHARDT demanded that the vote be taken by the yeas and nays, 
which demand was supported by one-fifth of the Members present, so the 
yeas and nays were ordered.
  The vote was taken by electronic device.

It was decided in the

Yeas

180

negative

Nays

250
```