Calendar No. 98

103D CONGRESS

1ST SESSION S. 1134

A BILL

To provide for reconciliation pursuant to section 7

fiscal year 1994.of the concurrent resolution on the budget for

JUNE 22, 1993

Read twice and placed on the calendar
II

Calendar No. 98

103D CONGRESS

1ST SESSION S. 1134

To provide for reconciliation pursuant to section 7 of the concurrent resolution

on the budget for fiscal year 1994.

IN THE SENATE OF THE UNITED STATES

JUNE 22, 1993

Mr. SASSER, from the Committee on the Budget, reported the following

original bill; which was read twice and placed on the calendar

A BILL

To provide for reconciliation pursuant to section 7 of the

concurrent resolution on the budget for fiscal year 1994.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Omnibus Budget Rec5 onciliation Act of 1993’’.

6 SEC. 2. TABLE OF CONTENTS.

7 The table of contents is as follows:

TITLE I—COMMITTEE ON AGRICULTURE, NUTRITION, AND

FORESTRY

TITLE II—COMMITTEE ON ARMED SERVICES
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TITLE III—COMMITTEE ON BANKING, HOUSING, AND URBAN

AFFAIRS

TITLE IV—COMMUNICATIONS AND TRANSPORTATION

TITLE V—COMMITTEE ON ENERGY AND NATURAL RESOURCES

TITLE VI—COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

TITLE VII—FINANCE COMMITTEE RECONCILIATION PROVISIONS

RELATING TO MEDICARE, MEDICAID, AND OTHER PROGRAMS

TITLE VIII—FINANCE COMMITTEE REVENUE PROVISIONS

TITLE IX—COMMITTEE ON FOREIGN RELATIONS

TITLE X—COMMITTEE ON GOVERNMENTAL AFFAIRS

TITLE XI—COMMITTEE ON THE JUDICIARY

TITLE XII—COMMITTEE ON LABOR AND HUMAN RESOURCES

TITLE XIII—VETERANS’ PROGRAMS

1 TITLE I—COMMITTEE ON AGRI2 CULTURE, NUTRITION, AND

3 FORESTRY

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

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

6 ‘‘Agricultural Reconciliation Act of 1993’’.

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

8 this title is as follows:

Sec. 1001. Short title and table of contents.

Subtitle A—Commodity Programs

Sec. 1101. Wheat program.

Sec. 1102. Feed grain program.

Sec. 1103. Upland cotton program.

Sec. 1104. Rice program.

Sec. 1105. Dairy program.

Sec. 1106. Tobacco program.

Sec. 1107. Sugar program.

Sec. 1108. Oilseeds program.

Sec. 1109. Peanut program.

Sec. 1110. Honey program.

Sec. 1111. Wool and mohair program.
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Subtitle B—Restructuring of Loan Programs

Sec. 1201. Electric and telephone loan programs.

Subtitle C—Food Stamp Program

Sec. 1301. Uniform reimbursement rates.

Subtitle D—Agricultural Trade

Sec. 1401. Market promotion program.

Sec. 1402. Acreage reduction requirements.

Sec. 1403. End-use certificates.

Sec. 1404. Sense of Congress regarding the export of vegetable oil.

Subtitle E—Miscellaneous

Sec. 1501. Federal crop insurance.

Sec. 1502. Environmental conservation acreage reserve program amendments.

Sec. 1503. Admission, entrance, and recreation fees.

Sec. 1504. Sense of the Senate regarding deficit reduction.

1 Subtitle A—Commodity Programs

2 SEC. 1101. WHEAT PROGRAM.

3 Section 107B(c)(1)(E) of the Agricultural Act of

4 1949 (7 U.S.C. 1445b–3a(c)(1)(E)) is amended—

5 (1) in the subparagraph heading, by striking

6 ‘‘0/92 PROGRAM’’ and inserting ‘‘0/85 PROGRAM’’;

7 and

8 (2) by inserting after ‘‘8 percent’’ both places

9 it appears in clause (i) the following: ‘‘for each of

10 the 1991 through 1993 crops, and 15 percent for

11 each of the 1994 and 1995 crops (except as provided

12 in clause (vii)),’’, and by adding at the end of the

13 subparagraph the following new clause:

14 ‘‘(vii) EXCEPTIONS TO 0/85.—In the

15 case of each of the 1994 and 1995 crops

16 of wheat, producers on a farm shall be eli-
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1 gible to receive deficiency payments as pro2 vided in clause (ii) if an acreage limitation

3 program under subsection (e) is in effect

4 for the crop and—

5 ‘‘(I)(aa) the producers have been

6 determined by the Secretary (in ac7 cordance with section 503(c)) to be

8 prevented from planting the crop or

9 have incurred a reduced yield for the

10 crop (due to a natural disaster); and

11 ‘‘(bb) the producers elect to de12 vote a portion of the maximum pay13 ment acres for wheat (as calculated

14 under subparagraph (C)(ii)) equal to

15 more than 8 percent of the wheat

16 acreage, to conservation uses; or

17 ‘‘(II) the producers elect to de18 vote a portion of the maximum pay19 ment acres for wheat (as calculated

20 under subparagraph (C)(ii)) equal to

21 more than 8 percent of the wheat

22 acreage, to alternative crops as pro23 vided in subparagraph (F).’’.
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1 SEC. 1102. FEED GRAIN PROGRAM.

2 (a) 0/92 PROGRAM.—Section 105B(c)(1)(E) of the

3 Agricultural Act of 1949 (7 U.S.C. 1444f(c)(1)(E)) is

4 amended—

5 (1) in the subparagraph heading, by striking

6 ‘‘0/92 PROGRAM’’ and inserting ‘‘0/85 PROGRAM’’;

7 and

8 (2) by inserting after ‘‘8 percent’’ both places

9 it appears in clause (i) the following: ‘‘for each of

10 the 1991 through 1993 crops, and 15 percent for

11 each of the 1994 and 1995 crops (except as provided

12 in clause (vii)),’’, and by adding at the end of the

13 subparagraph the following new clause:

14 ‘‘(vii) EXCEPTIONS TO 0/85.—In the

15 case of each of the 1994 and 1995 crops

16 of feed grains, producers on a farm shall

17 be eligible to receive deficiency payments

18 as provided in clause (ii) if an acreage lim19 itation program under subsection (e) is in

20 effect for the crop and—

21 ‘‘(I)(aa) the producers have been

22 determined by the Secretary (in ac23 cordance with section 503(c)) to be

24 prevented from planting the crop or

25 have incurred a reduced yield for the

26 crop (due to a natural disaster); and
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1 ‘‘(bb) the producers elect to de2 vote a portion of the maximum pay3 ment acres for feed grains (as cal4 culated under subparagraph (C)(ii))

5 equal to more than 8 percent of the

6 feed grain acreage, to conservation

7 uses; or

8 ‘‘(II) the producers elect to de9 vote a portion of the maximum pay10 ment acres for feed grains (as cal11 culated under subparagraph (C)(ii))

12 equal to more than 8 percent of the

13 feed grain acreage, to alternative

14 crops as provided in subparagraph

15 (F).’’.

16 (b) TECHNICAL AMENDMENT.—Section

17 105B(c)(1)(B)(iii)(IV)(bb) of such Act is amended by

18 striking ‘‘clause (i)(I)’’ and inserting ‘‘clauses (i)(I) and

19 (ii)(I)’’.

20 SEC. 1103. UPLAND COTTON PROGRAM.

21 (a) 50/92 PROGRAM.—Section 103B(c)(1)(D) of the

22 Agricultural Act of 1949 (7 U.S.C. 1444–2(c)(1)(D)) is

23 amended—
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1 (1) in the subparagraph heading, by striking

2 ‘‘50/92 PROGRAM’’ and inserting ‘‘50/85 PROGRAM’’;

3 and

4 (2) by inserting after ‘‘8 percent’’ both places

5 it appears in clause (i) the following: ‘‘for each of

6 the 1991 through 1993 crops, and 15 percent for

7 each of the 1994 and 1995 crops (except as provided

8 in clause (v)(II)),’’, and in clause (v)—

9 (A) by striking ‘‘(v) PREVENTED PLANT10 ING.—If’’ and inserting the following:

11 ‘‘(v) PREVENTED PLANTING AND RE12 DUCED YIELDS.—

13 ‘‘(I) 1991 THROUGH 1993

14 CROPS.—In the case of each of the

15 1991 through 1993 crops of upland

16 cotton, if’’; and

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

18 subclause:

19 ‘‘(II) 1994 AND 1995 CROPS.—In

20 the case of each of the 1994 and 1995

21 crops of upland cotton, producers on a

22 farm shall be eligible to receive defi23 ciency payments as provided in clause

24 (iii) if an acreage limitation program
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1 under subsection (e) is in effect for

2 the crop and—

3 ‘‘(aa) the producers have

4 been determined by the Secretary

5 (in accordance with section

6 503(c)) to be prevented from

7 planting the crop or have in8 curred a reduced yield for the

9 crop (due to a natural disaster)

10 and the producers elect to devote

11 a portion of the maximum pay12 ment acres for upland cotton (as

13 calculated under subparagraph

14 (C)(ii)) equal to more than 8 per15 cent of the upland cotton acre16 age, to conservation uses; or

17 ‘‘(bb) the producers elect to

18 devote a portion of the maximum

19 payment acres for upland cotton

20 (as calculated under subpara21 graph (C)(ii)) equal to more than

22 8 percent of the upland cotton

23 acreage, to alternative crops as

24 provided in subparagraph (E).’’.
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1 (b) ACREAGE LIMITATION PROGRAM.—Section

2 103B(e)(1)(D) of such Act is amended by inserting after

3 ‘‘30 percent’’ the following: ‘‘for each of the 1991 through

1994 crops, and 291 4 ⁄2 percent for the 1995 crop’’.

5 SEC. 1104. RICE PROGRAM.

6 Section 101B(c)(1)(D) of the Agricultural Act of

7 1949 (7 U.S.C. 1441–2(c)(1)(D)) is amended—

8 (1) in the subparagraph heading, by striking

9 ‘‘50/92 PROGRAM’’ and inserting ‘‘50/85 PROGRAM’’;

10 and

11 (2) by inserting after ‘‘8 percent’’ both places

12 it appears in clause (i) the following: ‘‘for each of

13 the 1991 through 1993 crops, and 15 percent for

14 each of the 1994 and 1995 crops (except as provided

15 in clause (v)(II)),’’, and in clause (v)—

16 (A) by striking ‘‘(v) PREVENTED PLANT17 ING.—If’’ and inserting the following:

18 ‘‘(v) PREVENTED PLANTING AND RE19 DUCED YIELDS.—

20 ‘‘(I) 1991 THROUGH 1993

21 CROPS.—In the case of each of the

22 1991 through 1993 crops of rice, if’’;

23 and

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

25 subclause:
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1 ‘‘(II) 1994 AND 1995 CROPS.—In

2 the case of each of the 1994 and 1995

3 crops of rice, producers on a farm

4 shall be eligible to receive deficiency

5 payments as provided in clause (iii) if

6 an acreage limitation program under

7 subsection (e) is in effect for the crop

8 and—

9 ‘‘(aa) the producers have

10 been determined by the Secretary

11 (in accordance with section

12 503(c)) to be prevented from

13 planting the crop or have in14 curred a reduced yield for the

15 crop (due to a natural disaster)

16 and the producers elect to devote

17 a portion of the maximum pay18 ment acres for rice (as calculated

19 under subparagraph (C)(ii))

20 equal to more than 8 percent of

21 the rice acreage, to conservation

22 uses; or

23 ‘‘(bb) the producers elect to

24 devote a portion of the maximum

25 payment acres for rice (as cal-
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1 culated under subparagraph

2 (C)(ii)) equal to more than 8 per3 cent of the rice acreage, to alter4 native crops as provided in sub5 paragraph (E).’’.

6 SEC. 1105. DAIRY PROGRAM.

7 (a) IN GENERAL.—Section 204 of the Agricultural

8 Act of 1949 (7 U.S.C. 1446e) is amended—

9 (1) in subsection (c)(3)—

10 (A) in the first sentence of subparagraph

11 (A), by striking ‘‘The Secretary’’ and inserting

12 ‘‘Subject to subparagraph (B), the Secretary’’;

13 (B) by redesignating subparagraph (B) as

14 subparagraph (C); and

15 (C) by inserting after subparagraph (A)

16 the following new subparagraph:

17 ‘‘(B) GUIDELINES.—In the case of pur18 chases of butter and nonfat dry milk that are

19 made by the Secretary under this section on or

20 after the date of enactment of this clause, in al21 locating the rate of price support between the

22 purchase prices of butter and nonfat dry milk

23 under this paragraph, the Secretary may not—

24 ‘‘(i) offer to purchase butter for more

25 than $0.65 per pound; or
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1 ‘‘(ii) offer to purchase nonfat dry milk

2 for less than $1.034 per pound.’’; and

3 (2) in subsection (h)(2)—

4 (A) by striking ‘‘and’’ at the end of sub5 paragraph (A);

6 (B) by striking the period at the end of

7 subparagraph (B) and inserting ‘‘; and’’; and

8 (C) by adding at the end the following new

9 subparagraph:

10 ‘‘(C) during calendar year 1996, 10 cents

11 per hundredweight of milk marketed, which

12 rate shall be adjusted on or before May 1 of

13 calendar year 1996 in the manner provided in

14 subparagraph (B).’’.

15 (b) SALE, MARKETING, OR USE OF BOVINE GROWTH

16 HORMONE.—Section 204 of such Act is amended—

17 (1) by redesignating subsection (k) as sub18 section (l); and

19 (2) by inserting after subsection (j) the follow20 ing new subsection:

21 ‘‘(k) SALE, MARKETING, OR USE OF BOVINE

22 GROWTH HORMONE.—

23 ‘‘(1) DEFINITION OF BOVINE GROWTH HOR24 MONE.—As used in this subsection, the term ‘bovine

25 growth hormone’ means a synthetic growth hormone
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1 produced through the process of recombinant DNA

2 techniques that is intended for use in bovine ani3 mals.

4 ‘‘(2) PROHIBITION ON SALE, MARKETING, OR

5 USE.—During the period beginning on the date of

6 enactment of this paragraph and ending on Septem7 ber 30, 1994, it shall be unlawful for a person to

8 sell, market, or use bovine growth hormone for com9 mercial agricultural purposes.

10 ‘‘(3) ENFORCEMENT.—Not later than 30 days

11 after the date of enactment of this paragraph, the

12 Secretary shall issue regulations to provide for the

13 enforcement of the prohibition contained in para14 graph (2).’’.

15 (c) COMMERCIAL USE OF BOVINE GROWTH HOR16 MONE IN OTHER COUNTRIES.—Section 204(k) of such

17 Act (as added by subsection (b)(2)) is further amended

18 by adding at the end the following new paragraph:

19 ‘‘(4) EXTENSION.—The Secretary shall have

20 the authority to continue the prohibition on the com21 mercial use of bovine growth hormone beyond the

22 period referred to in paragraph (2) until the Presi23 dent certifies to Congress that other major milk and

24 dairy exporting countries have approved the com25 mercial use of bovine growth hormone.’’.
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1 (d) CONFORMING AMENDMENTS.—Section 204 of

2 such Act is amended—

3 (1) in the section heading, by striking ‘‘1995’’

4 and inserting ‘‘1996’’;

5 (2) by striking ‘‘1995’’ each place it appears

6 (other than in subsection (h)(2)(B)) and inserting

7 ‘‘1996’’; and

8 (3) in subsection (g)(2), by striking ‘‘1994’’

9 and inserting ‘‘1995’’.

10 SEC. 1106. TOBACCO PROGRAM.

11 (a) DOMESTIC MARKETING ASSESSMENT.—Part I of

12 subtitle B of title III of the Agricultural Adjustment Act

13 of 1938 (7 U.S.C. 1311 et seq.) is amended by adding

14 at the end the following new section:

15 ‘‘SEC. 320C. DOMESTIC MARKETING ASSESSMENT.

16 ‘‘(a) CERTIFICATION.—A domestic manufacturer of

17 cigarettes shall certify to the Secretary, for each calendar

18 year, the percentage of the quantity of tobacco that the

19 manufacturer uses to produce cigarettes during the year

20 that is produced in the United States.

21 ‘‘(b) PENALTIES.—

22 ‘‘(1) IN GENERAL.—A domestic manufacturer

23 of cigarettes that has failed, as determined by the

24 Secretary after notice and opportunity for a hearing,

25 to use in the manufacture of cigarettes during a cal-
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1 endar year at least 75 percent of tobacco produced

2 in the United States, or to comply with subsection

3 (a), shall be subject to the requirements of sub4 sections (c), (d), and (e).

5 ‘‘(2) FAILURE TO CERTIFY.—For purposes of

6 this section, if a manufacturer fails to comply with

7 subsection (a), the manufacturer shall be presumed

8 to have used only imported tobacco in the manufac9 ture of cigarettes produced by the manufacturer.

10 ‘‘(3) REPORTS AND RECORDS.—The Secretary

11 may require a manufacturer to make such reports

12 and maintain such records as are necessary to carry

13 out this section in accordance with section 373.

14 ‘‘(c) DOMESTIC MARKETING ASSESSMENT.—

15 ‘‘(1) IN GENERAL.—A domestic manufacturer

16 of cigarettes described in subsection (b) shall remit

17 to the Commodity Credit Corporation a nonrefund18 able marketing assessment in accordance with this

19 subsection.

20 ‘‘(2) AMOUNT.—The amount of an assessment

21 imposed on a manufacturer under this subsection

22 shall be determined by multiplying—

23 ‘‘(A) the quantity by which the quantity of

24 imported tobacco used by the manufacturer to

25 produce cigarettes during a preceding calendar
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1 year exceeds 25 percent of the quantity of all

2 tobacco used by the manufacturer to produce

3 cigarettes during the preceding calendar year;

4 by

5 ‘‘(B) the difference between—

‘‘(i) 1 6 ⁄2 of the sum of—

7 ‘‘(I) the average price per pound

8 received by domestic producers for

9 Burley tobacco during the preceding

10 calendar year; and

11 ‘‘(II) the average price per pound

12 received by domestic producers for

13 Flue-cured tobacco during the preced14 ing calendar year; and

15 ‘‘(ii) the average price per pound of

16 unmanufactured imported tobacco during

17 the preceding calendar year, as determined

18 by the Secretary.

19 ‘‘(3) COLLECTION.—An assessment imposed

20 under this subsection shall be—

21 ‘‘(A) collected by this Secretary and trans22 mitted to the Commodity Credit Corporation;

23 and

24 ‘‘(B) enforced in the same manner as pro25 vided in section 320B.
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1 ‘‘(d) PURCHASE OF BURLEY TOBACCO.—

2 ‘‘(1) IN GENERAL.—A domestic manufacturer

3 of cigarettes described in subsection (b) shall pur4 chase from the inventories of the producer-owned co5 operative marketing associations for Burley tobacco

6 described in section 320B(a)(2), at the applicable

7 list price published by the association, the quantity

8 of tobacco described in paragraph (2).

9 ‘‘(2) QUANTITY.—Subject to paragraph (3), the

10 quantity of Burley tobacco required to be purchased

11 by a manufacturer during a calendar year under this

subsection shall equal 1 12 ⁄2 of the quantity of imported

13 tobacco used by the manufacturer to produce ciga14 rettes during the preceding calendar year that ex15 ceeds 25 percent of the quantity of all tobacco used

16 by the manufacturer to produce cigarettes during

17 the preceding calendar year.

18 ‘‘(3) LIMITATION.—If the total quantity of Bur19 ley tobacco required to be purchased by all manufac20 turers under paragraph (2) would reduce the inven21 tories of the producer-owned cooperative marketing

22 associations for Burley tobacco to less than the re23 serve stock level for Burley tobacco, the Secretary

24 shall reduce the quantity of tobacco required to be

25 purchased by manufacturers under paragraph (2),
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1 on a pro rata basis, to ensure that the inventories

2 will not be less than the reserve stock level for Bur3 ley tobacco.

4 ‘‘(4) NONCOMPLIANCE.—If a manufacturer fails

5 to purchase from the inventories of the producer6 owned cooperative marketing associations the quan7 tity of Burley tobacco required under this sub8 section, the manufacturer shall be subject to a pen9 alty of 75 percent of the average market price (cal10 culated to the nearest whole cent) for Burley tobacco

11 for the immediately preceding year on the quantity

12 of tobacco as to which the failure occurs.

13 ‘‘(5) PURCHASE REQUIREMENTS.—Tobacco

14 purchased by a manufacturer under this subsection

15 shall not be included in determining the quantity of

16 tobacco purchased by the manufacturer under sec17 tion 320B.

18 ‘‘(e) PURCHASE OF FLUE-CURED TOBACCO.—

19 ‘‘(1) IN GENERAL.—A domestic manufacturer

20 of cigarettes described in subsection (b) shall pur21 chase from the inventories of the producer-owned co22 operative marketing association for Flue-cured to23 bacco described in section 320B(a)(2), at the appli24 cable list price published by the association, the

25 quantity of tobacco described in paragraph (2).
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1 ‘‘(2) QUANTITY.—Subject to paragraph (3), the

2 quantity of Flue-cured tobacco required to be pur3 chased by a manufacturer during a calendar year

under this subsection shall equal 1 4 ⁄2 of the quantity

5 of imported tobacco used by the manufacturer to

6 produce cigarettes during the preceding calendar

7 year that exceeds 25 percent of the quantity of all

8 tobacco used by the manufacturer to produce ciga9 rettes during the preceding calendar year.

10 ‘‘(3) LIMITATION.—If the total quantity of

11 Flue-cured tobacco required to be purchased by all

12 manufacturers under paragraph (2) would reduce

13 the inventories of the producer-owned cooperative

14 marketing association for Flue-cured tobacco to less

15 than the reserve stock level for Flue-cured tobacco,

16 the Secretary shall reduce the quantity of tobacco

17 required to be purchased by manufacturers under

18 paragraph (2), on a pro rata basis, to ensure that

19 the inventories will not be less than the reserve stock

20 level for Flue-cured tobacco.

21 ‘‘(4) NONCOMPLIANCE.—If a manufacturer fails

22 to purchase from the inventories of the producer23 owned cooperative marketing association the quan24 tity of Flue-cured tobacco required under this sub25 section, the manufacturer shall be subject to a pen-
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1 alty of 75 percent of the average market price (cal2 culated to the nearest whole cent) for Flue-cured to3 bacco for the immediately preceding year on the

4 quantity of tobacco as to which the failure occurs.

5 ‘‘(5) PURCHASE REQUIREMENTS.—Tobacco

6 purchased by a manufacturer under this subsection

7 shall not be included in determining the quantity of

8 tobacco purchased by the manufacturer under sec9 tion 320B.

10 ‘‘(f) ENFORCEMENT.—The Secretary may enforce

11 this section in the courts of the United States.’’.

12 (b) BUDGET DEFICIT ASSESSMENT.—

13 (1) IN GENERAL.—Section 106 of the Agricul14 tural Act of 1949 (7 U.S.C. 1445) is amended—

15 (A) in subsection (g)(1), by striking

16 ‘‘1995’’ and inserting ‘‘1998’’; and

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

18 subsection:

19 ‘‘(h)(1) Effective only for each of the 1994 through

20 1998 crops of tobacco, an importer of tobacco that is pro21 duced outside the United States shall remit to the Com22 modity Credit Corporation a nonrefundable marketing as23 sessment in an amount equal to the product obtained by

24 multiplying—
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1 ‘‘(A) the number of pounds of tobacco that is

2 imported by the importer; by

3 ‘‘(B) the sum of—

4 ‘‘(i) the per pound marketing assessment

5 imposed on purchasers of domestic Burley to6 bacco pursuant to subsection (g); and

7 ‘‘(ii) the per pound marketing assessment

8 imposed on purchasers of domestic Flue-cured

9 tobacco pursuant to subsection (g).

10 ‘‘(2) An assessment imposed under this subsection

11 shall be paid by the importer.

12 ‘‘(3)(A) The importer shall remit the assessment at

13 such time and in such manner as may be prescribed by

14 the Secretary.

15 ‘‘(B) If the importer fails to comply with subpara16 graph (A), the importer shall be liable for a marketing

17 penalty at a rate equal to 37.5 percent of the sum of the

18 average market price (calculated to the nearest whole

19 cent) of Flue-cured and Burley tobacco for the imme20 diately preceding year on the quantity of tobacco as to

21 which the failure occurs.

22 ‘‘(C) The Secretary may reduce an assessment in

23 such amount as the Secretary determines equitable in any

24 case in which the Secretary determines that the failure
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1 was unintentional or without knowledge on the part of the

2 person concerned.

3 ‘‘(D) Any assessment provided for under this sub4 section shall be assessed by the Secretary after notice and

5 opportunity for a hearing.

6 ‘‘(4)(A) Any person against whom a penalty is as7 sessed under this subsection may obtain review of the pen8 alty in an appropriate district court of the United States

9 by filing a civil action in the court not later than 30 days

10 after the penalty is imposed.

11 ‘‘(B) The Secretary shall promptly file in the court

12 a certified copy of the record on which the penalty is

13 based.

14 ‘‘(5) The district courts of the United States shall

15 have jurisdiction to review and enforce any penalty im16 posed under this subsection.

17 ‘‘(6) An amount equivalent to any penalty collected

18 by the Secretary under this subsection shall be deposited

19 for use by the Commodity Credit Corporation.’’.

20 (2) IMPORTER ASSESSMENTS FOR NO NET COST

21 TOBACCO FUND.—Section 106A of such Act (7

22 U.S.C. 1445–1) is amended—

23 (A) in subsection (c), by inserting ‘‘and

24 importers’’ after ‘‘purchasers’’;

25 (B) in subsection (d)(1)(A)—
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1 (i) by striking ‘‘and’’ at the end of

2 clause (i); and

3 (ii) by inserting after clause (ii) the

4 following new clause:

5 ‘‘(iii) each importer of Flue-cured or

6 Burley tobacco shall pay to the appropriate

7 association, for deposit in the Fund of the

8 association, an assessment, in an amount

9 that is equal to the product obtained by

10 multiplying—

11 ‘‘(I) the number of pounds of to12 bacco that is imported by the im13 porter; by

14 ‘‘(II) the sum of the amount of

15 per pound producer contributions and

16 purchaser assessments that are pay17 able by domestic producers and pur18 chasers of Flue-cured and Burley to19 bacco under clauses (i) and (ii); and’’;

20 (C) in subsection (d)(2)—

21 (i) by inserting ‘‘or importer’’ after

22 ‘‘or purchaser’’;

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

24 subparagraph (B);
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1 (iii) by inserting ‘‘and’’ at the end of

2 subparagraph (C); and

3 (iv) by adding at the end the following

4 new subparagraph:

5 ‘‘(D) if the tobacco involved is imported by

6 an importer, from the importer.’’; and

7 (D) in subsection (h)(1)—

8 (i) by redesignating subparagraphs

9 (B) and (C) as subparagraphs (C) and

10 (D), respectively; and

11 (ii) by inserting after subparagraph

12 (A) the following new subparagraph:

13 ‘‘(B) Each importer who fails to pay to the associa14 tion an assessment as required by subsection (d)(2) at

15 such time and in such manner as may be prescribed by

16 the Secretary, shall be liable, in addition to any amount

17 due, to a marketing penalty at a rate equal to 75 percent

18 of the average market price (calculated to the nearest

19 whole cent) for the respective kind of tobacco for the im20 mediately preceding year on the quantity of tobacco as to

21 which the failure occurs.’’.

22 (3) IMPORTER ASSESSMENTS TO NO NET COST

23 TOBACCO ACCOUNT.—Section 106B of such Act (7

24 U.S.C. 1445–2) is amended—
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1 (A) in subsection (c)(1), by striking ‘‘pro2 ducers and purchasers’’ and inserting ‘‘produc3 ers, purchasers, and importers’’;

4 (B) in subsection (d)(1)—

5 (i) by designating the first and second

6 sentences as subparagraphs (A) and (B),

7 respectively; and

8 (ii) by adding at the end the following

9 new subparagraph:

10 ‘‘(C) The Secretary shall also require (in lieu of any

11 requirement under section 106A(d)(1)) that each importer

12 of Flue-cured and Burley tobacco shall pay to the Cor13 poration, for deposit in the Account of the association, an

14 assessment, as determined under paragraph (2) and col15 lected under paragraph (3), with respect to purchases of

16 all such kind of tobacco imported by the importer.’’;

17 (C) in subsection (d)(2), by adding at the

18 end the following new subparagraph:

19 ‘‘(C) The amount of the assessment to be paid by

20 importers shall be an amount that is equal to the product

21 obtained by multiplying—

22 ‘‘(i) the number of pounds of tobacco that is

23 imported by the importer; by

24 ‘‘(ii) the sum of the amount of per pound pro25 ducer and purchaser assessments that are payable
26

•S 1134 PCS

1 by domestic producers and purchasers of the respec2 tive kind of tobacco under this paragraph.’’;

3 (D) in subsection (d)(3), by adding at the

4 end the following new subparagraph:

5 ‘‘(D) If Flue-cured or Burley tobacco is imported by

6 an importer, any importer assessment required by sub7 section (d) shall be collected from the importer.’’; and

8 (E) in subsection (j)(1)—

9 (i) by redesignating subparagraphs

10 (B) and (C) as subparagraphs (C) and

11 (D), respectively; and

12 (ii) by inserting after subparagraph

13 (A) the following new subparagraph:

14 ‘‘(B) Each importer who fails to pay to the Corpora15 tion an assessment as required by subsection (d) at such

16 time and in such manner as may be prescribed by the Sec17 retary, shall be liable, in addition to any amount due, to

18 a marketing penalty at a rate equal to 75 percent of the

19 average market price (calculated to the nearest whole

20 cent) for the respective kind of tobacco for the imme21 diately preceding year on the quantity of tobacco as to

22 which the failure occurs.’’.

23 (c) FEES FOR INSPECTING IMPORTED TOBACCO.—

24 The second sentence of section 213(d) of the Tobacco Ad25 justment Act of 1983 (7 U.S.C. 511r(d)) is amended by
27

•S 1134 PCS

1 inserting before the period at the end the following: ‘‘, and

2 which shall be comparable to fees and charges fixed and

3 collected for services provided in connection with tobacco

4 produced in the United States’’.

5 (d) EXTENSION OF QUOTA REDUCTION FLOORS.—

6 (1) BURLEY TOBACCO.—Section

7 319(c)(3)(C)(ii) of the Agricultural Adjustment Act

8 of 1938 (7 U.S.C. 1314e(c)(3)(C)(ii)) is amended—

9 (A) by striking ‘‘1993’’ and inserting

10 ‘‘1996’’; and

11 (B) by inserting before the period at the

12 end the following: ‘‘, except that, in the case of

13 each of the 1995 and 1996 crops of Burley to14 bacco, the Secretary may waive the require15 ments of this clause if the Secretary determines

16 that the requirements would likely result in in17 ventories of the producer-owned cooperative

18 marketing associations for Burley tobacco de19 scribed in section 320B(a)(2) to exceed 150

20 percent of the reserve stock level for Burley

21 tobacco’’.

22 (2) FLUE-CURED TOBACCO.—Section

23 317(a)(1)(C)(ii) of such Act (7 U.S.C.

24 1314c(a)(1)(C)(ii)) is amended—
28

•S 1134 PCS

1 (A) by striking ‘‘1993’’ and inserting

2 ‘‘1996’’; and

3 (B) by inserting before the period at the

4 end the following: ‘‘, except that, in the case of

5 each of the 1995 and 1996 crops of Flue-cured

6 tobacco, the Secretary may waive the require7 ments of this clause if the Secretary determines

8 that the requirements would likely result in in9 ventories of the producer-owned cooperative

10 marketing association for Flue-cured tobacco

11 described in section 320B(a)(2) to exceed 150

12 percent of the reserve stock level for Flue-cured

13 tobacco’’.

14 SEC. 1107. SUGAR PROGRAM.

15 Section 206(i) of the Agricultural Act of 1949 (7

16 U.S.C. 1446g(i)) is amended—

17 (1) in paragraph (1), by striking ‘‘equal to’’

18 and all that follows through the period and inserting

19 the following: ‘‘equal to—

20 ‘‘(A) in the case of marketings during each

21 of fiscal years 1992 through 1994, .18 cents

22 per pound of raw cane sugar, processed by the

23 processor from domestically produced sugarcane

24 or sugarcane molasses, that has been marketed

25 (including the transfer or delivery of the sugar
29

•S 1134 PCS

1 to a refinery for further processing or market2 ing); and

3 ‘‘(B) in the case of marketings during each

4 of fiscal years 1995 and 1996, .198 cents per

5 pound of raw cane sugar, processed by the

6 processor from domestically produced sugarcane

7 or sugarcane molasses, that has been marketed

8 (including the transfer or delivery of the sugar

9 to a refinery for further processing or market10 ing).’’; and

11 (2) in paragraph (2), by striking ‘‘equal to’’

12 and all that follows through the period and inserting

13 the following: ‘‘equal to—

14 ‘‘(A) in the case of marketings during each

15 of fiscal years 1992 through 1994, .193 cents

16 per pound of beet sugar, processed by the proc17 essor from domestically produced sugar beets or

18 sugar beet molasses, that has been marketed;

19 and

20 ‘‘(B) in the case of marketings during each

21 of fiscal years 1995 and 1996, .2123 cents per

22 pound of beet sugar, processed by the processor

23 from domestically produced sugar beets or

24 sugar beet molasses, that has been marketed.’’.
30

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1 SEC. 1108. OILSEEDS PROGRAM.

2 (a) LOAN LEVEL.—Section 205(c) of the Agricultural

3 Act of 1949 (7 U.S.C. 1446f(c)) is amended—

4 (1) in paragraph (1), by inserting after ‘‘$5.02

5 per bushel’’ the following: ‘‘for each of the 1991

6 through 1993 crops and $4.92 per bushel for each

7 of the 1994 and 1995 crops’’; and

8 (2) in paragraph (2), by inserting after ‘‘$0.089

9 per pound’’ the following: ‘‘for each of the 1991

10 through 1993 crops and $0.087 per pound for each

11 of the 1994 and 1995 crops’’.

12 (b) LOAN MATURITY.—Section 205(h) of such Act is

13 amended by striking ‘‘mature on the last day of the 9th

14 month following the month the application for the loan

15 is made.’’ and inserting the following: ‘‘mature—

16 ‘‘(1) in the case of each of the 1991 through

17 1993 crops, on the last day of the 9th month follow18 ing the month the application for the loan is made;

19 and

20 ‘‘(2) in the case of each of the 1994 and 1995

21 crops, on the last day of the 9th month following the

22 month the application for the loan is made, except

23 that the loan may not mature later than the last day

24 of the fiscal year in which the application is made.’’.
31

•S 1134 PCS

1 (c) LOAN ORIGINATION FEE.—Section 205(m) of

2 such Act is amended by adding at the end the following

3 new paragraph:

4 ‘‘(3) APPLICABILITY.—This subsection shall

5 apply only to each of the 1991 through 1993 crops

6 of oilseeds.’’.

7 SEC. 1109. PEANUT PROGRAM.

8 Section 108B(g) of the Agricultural Act of 1949 (7

9 U.S.C. 1445c–3(g)) is amended—

10 (1) in paragraph (1), by inserting after ‘‘1 per11 cent’’ both places it appears the following: ‘‘for each

12 of the 1991 through 1993 crops, and 1.1 percent for

13 each of the 1994 and 1995 crops,’’; and

14 (2) in paragraph (2)(A)—

(A) in clause (i), by striking ‘‘1 15 ⁄2 percent’’

16 and inserting ‘‘.5 percent for each of the 1991

17 through 1993 crops, and .6 percent for each of

18 the 1994 and 1995 crops,’’; and

(B) in clause (ii), by striking ‘‘1 19 ⁄2 percent’’

20 and inserting ‘‘.5 percent’’.

21 SEC. 1110. HONEY PROGRAM.

22 (a) REDUCED SUPPORT RATE.—Section 207(a) of

23 the Agricultural Act of 1949 (7 U.S.C. 1446h(a)) is

24 amended by striking ‘‘than 53.8 cents per pound.’’ and

25 inserting the following: ‘‘than—
32

•S 1134 PCS

1 ‘‘(1) 53.8 cents per pound for each of the 1991

2 through 1993 crops; and

3 ‘‘(2) 47 cents per pound for each of the 1994

4 through 1997 crops.’’.

5 (b) PAYMENT LIMITATIONS.—Section 207(e)(1) of

6 such Act is amended—

7 (1) by striking ‘‘and’’ at the end of subpara8 graph (C); and

9 (2) by striking subparagraph (D) and inserting

10 the following new subparagraphs:

11 ‘‘(D) $125,000 in the 1994 crop year;

12 ‘‘(E) $100,000 in the 1995 crop year;

13 ‘‘(F) $75,000 in the 1996 crop year; and

14 ‘‘(G) $50,000 in the 1997 crop year.’’.

15 (c) CONFORMING AMENDMENTS.—Section 207 of

16 such Act (as amended by subsection (b)) is further amend17 ed by striking ‘‘1995’’ each place it appears (other than

18 in subsection (e)(1)(E)) and inserting ‘‘1997’’.

19 SEC. 1111. WOOL AND MOHAIR PROGRAM.

20 (a) PAYMENT LIMITATIONS.—Section 704(b)(1) of

21 the National Wool Act of 1954 (7 U.S.C. 1783(b)(1)) is

22 amended—

23 (1) by striking ‘‘and’’ at the end of subpara24 graph (C); and
33

•S 1134 PCS

1 (2) by striking subparagraph (D) and inserting

2 the following new subparagraphs:

3 ‘‘(D) $125,000 for the 1994 marketing

4 year;

5 ‘‘(E) $100,000 for the 1995 marketing

6 year;

7 ‘‘(F) $75,000 for the 1996 marketing year;

8 and

9 ‘‘(G) $50,000 for the 1997 marketing

10 year.’’.

11 (b) SUPPORT PRICE FOR SHORN WOOL.—Paragraph

12 (3) of section 703(b) of such Act (7 U.S.C. 1782(b)(3))

13 is amended to read as follows:

14 ‘‘(3) Effective only for each of the 1994 through 1997

15 marketing years, the support price for shorn wool shall

16 not exceed the support price for shorn wool for the 1993

17 marketing year.’’.

18 (c) MARKETING ASSESSMENT.—Section 704(c) of

19 such Act (7 U.S.C. 1783(c)) is amended by striking

20 ‘‘through 1995’’ and inserting ‘‘and 1992’’.

21 (d) MARKETING CHARGES.—Section 706 of such Act

22 (7 U.S.C. 1785) is amended by inserting after the second

23 sentence the following new sentence: ‘‘In determining the

24 net sales proceeds and national payment rates for shorn
34

•S 1134 PCS

1 wool and shorn mohair, the Secretary shall not deduct

2 marketing charges for commissions, coring, or grading.’’.

3 (e) TECHNICAL AND CONFORMING AMENDMENTS.—

4 (1) TECHNICAL AMENDMENT.—Section

5 703(b)(2) of such Act (7 U.S.C. 1782(b)(2)) is

6 amended by striking ‘‘1982’’ and inserting ‘‘1990’’.

7 (2) CONFORMING AMENDMENTS.—Section 703

8 of such Act (7 U.S.C. 1782) is amended by striking

9 ‘‘1995’’ both places it appears in subsections (a) and

10 (b) and inserting ‘‘1997’’.

11 Subtitle B—Restructuring of Loan

12 Programs

13 SEC. 1201. ELECTRIC AND TELEPHONE LOAN PROGRAMS.

14 (a) LOAN PROGRAMS UNDER THE RURAL ELEC15 TRIFICATION ACT OF 1936.—

16 (1) INSURED LOAN PROGRAMS.—Section 305 of

17 the Rural Electrification Act of 1936 (7 U.S.C. 935)

18 is amended—

19 (A) by striking subsections (b) and (d);

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

22 (C) by inserting after subsection (b) (as so

23 redesignated) the following new subsections:

24 ‘‘(c) INSURED ELECTRIC LOANS.—

25 ‘‘(1) HARDSHIP LOANS.—
35

•S 1134 PCS

1 ‘‘(A) IN GENERAL.—The Administrator

2 shall make insured electric loans, to the extent

3 of qualifying applications for the loans, at an

4 interest rate of 5 percent per year to any appli5 cant for a loan who meets each of the following

6 requirements:

7 ‘‘(i) The average revenue per kilowatt8 hour sold by the applicant is not less than

9 120 percent of the average revenue per kil10 owatt-hour sold by all utilities in the State

11 in which the applicant provides service.

12 ‘‘(ii) The average residential revenue

13 per kilowatt-hour sold by the applicant is

14 not less than 120 percent of the average

15 residential revenue per kilowatt-hour sold

16 by all utilities in the State in which the ap17 plicant provides service.

18 ‘‘(iii) The average per capita income

19 of the residents receiving electric service

20 from the applicant is less than the average

21 per capita income of the residents of the

22 State in which the applicant provides serv23 ice, or the median household income of the

24 households receiving electric service from

25 the applicant is less than the median
36

•S 1134 PCS

1 household income of the households in the

2 State.

3 ‘‘(B) SEVERE HARDSHIP LOANS.—In addi4 tion to hardship loans that are made under sub5 paragraph (A), the Administrator may make an

6 insured electric loan at an interest rate of 5

7 percent per year to an applicant for a loan if,

8 in the sole discretion of the Administrator, the

9 applicant has experienced a severe hardship.

10 ‘‘(C) LIMITATION.—The Administrator

11 may not make a loan under this paragraph to

12 an applicant for the purpose of furnishing or

13 improving electric service to a consumer located

14 in an urban area (as defined by the Bureau of

15 the Census) if the average number of consum16 ers per mile of line of the total electric system

17 of the applicant exceeds 17.

18 ‘‘(2) MUNICIPAL RATE LOANS.—

19 ‘‘(A) IN GENERAL.—The Administrator

20 shall make insured electric loans, to the extent

21 of qualifying applications for the loans, at the

22 interest rate described in subparagraph (B) for

23 the term or terms selected by the applicant pur24 suant to subparagraph (C).

25 ‘‘(B) INTEREST RATE.—
37

•S 1134 PCS

1 ‘‘(i) IN GENERAL.—Subject to clause

2 (ii), the interest rate described in this sub3 paragraph on a loan to a qualifying appli4 cant shall be—

5 ‘‘(I) the interest rate determined

6 by the Administrator to be equal to

7 the current market yield on outstand8 ing municipal obligations with remain9 ing periods to maturity similar to the

10 term selected by the applicant pursu11 ant to subparagraph (C), but not

12 greater than the rate determined

13 under section 307(a)(3)(A) of the

14 Consolidated Farm and Rural Devel15 opment Act (7 U.S.C. 1927(a)(3)(A))

16 that is based on the current market

17 yield on outstanding municipal obliga18 tions; plus

19 ‘‘(II) if the applicant for the loan

20 makes an election pursuant to sub21 paragraph (D) to include in the loan

22 agreement the right of the applicant

23 to prepay the loan, a rate equal to the

24 amount by which—
38

•S 1134 PCS

1 ‘‘(aa) the interest rate on

2 commercial loans for a similar

3 period that afford the borrower

4 such a right; exceeds

5 ‘‘(bb) the interest rate on

6 commercial loans for the period

7 that do not afford the borrower

8 such a right.

9 ‘‘(ii) MAXIMUM RATE.—The interest

10 rate described in this subparagraph on a

11 loan to an applicant for the loan shall not

12 exceed 7 percent if—

13 ‘‘(I) the average number of con14 sumers per mile of line of the total

15 electric system of the applicant is less

16 than 5.50; or

17 ‘‘(II)(aa) the average revenue per

18 kilowatt-hour sold by the applicant is

19 more than the average revenue per

20 kilowatt-hour sold by all utilities in

21 the State in which the applicant pro22 vides service; and

23 ‘‘(bb) the average per capita in24 come of the residents receiving electric

25 service from the applicant is less than
39

•S 1134 PCS

1 the average per capita income of the

2 residents of the State in which the ap3 plicant provides service, or the median

4 household income of the households

5 receiving electric service from the ap6 plicant is less than the median house7 hold income of the households in the

8 State.

9 ‘‘(iii) EXCEPTION.—Clause (ii) shall

10 not apply to a loan to be made to an appli11 cant for the purpose of furnishing or im12 proving electric service to consumers lo13 cated in an urban area (as defined by the

14 Bureau of the Census) if the average num15 ber of consumers per mile of line of the

16 total electric system of the applicant ex17 ceeds 17.

18 ‘‘(C) LOAN TERM.—

19 ‘‘(i) IN GENERAL.—Subject to clause

20 (ii), the applicant for a loan under this

21 paragraph may select the term for which

22 an interest rate shall be determined pursu23 ant to subparagraph (B), and, at the end

24 of the term (and any succeeding term se25 lected by the applicant under this subpara-
40

•S 1134 PCS

1 graph), may renew the loan for another

2 term selected by the applicant.

3 ‘‘(ii) MAXIMUM TERM.—

4 ‘‘(I) APPLICANT.—The applicant

5 may not select a term that ends more

6 than 35 years after the beginning of

7 the first term the applicant selects

8 under clause (i).

9 ‘‘(II) ADMINISTRATOR.—The Ad10 ministrator may prohibit an applicant

11 from selecting a term that would re12 sult in the total term of the loan being

13 greater than the expected useful life

14 of the assets being financed.

15 ‘‘(D) CALL PROVISION.—The Adminis16 trator shall offer any applicant for a loan under

17 this paragraph the option to include in the loan

18 agreement the right of the applicant to prepay

19 the loan on terms consistent with similar provi20 sions of commercial loans.

21 ‘‘(3) OTHER SOURCE OF CREDIT NOT RE22 QUIRED IN CERTAIN CASES.—The Administrator

23 may not require any applicant for a loan made

24 under this subsection who is eligible for a loan under

25 paragraph (1) to obtain a loan from another source
41

•S 1134 PCS

1 as a condition of approving the application for the

2 loan or advancing any amount under the loan.

3 ‘‘(d) INSURED TELEPHONE LOANS.—

4 ‘‘(1) HARDSHIP LOANS.—

5 ‘‘(A) IN GENERAL.—The Administrator

6 shall make insured telephone loans, to the ex7 tent of qualifying applications for the loans, at

8 an interest rate of 5 percent per year, to any

9 applicant who meets each of the following re10 quirements:

11 ‘‘(i) The average number of subscrib12 ers per mile of line in the proposed service

13 area of the applicant is not more than 4.

14 ‘‘(ii) The applicant is capable of pro15 ducing net income or margins, after inter16 est payments on the loan applied for, of

17 not less than 100 percent (but not more

18 than 300 percent) of the interest require19 ments on all of the outstanding and pro20 posed loans of the applicant.

21 ‘‘(iii) The Administrator has approved

22 a telecommunications modernization plan

23 for the State under paragraph (3) and, if

24 the plan was developed by telephone bor-
42

•S 1134 PCS

1 rowers under this title, the applicant is a

2 participant in the plan.

3 ‘‘(B) AUTHORITY TO WAIVE TIER RE4 QUIREMENT.—The Administrator may waive

5 the requirement of subparagraph (A)(ii) in any

6 case in which the Administrator determines

7 (and sets forth the reasons for the waiver in

8 writing) that the requirement would prevent

9 emergency restoration of the telephone system

10 of the applicant or result in severe hardship to

11 the applicant.

12 ‘‘(C) EFFECT OF LACK OF FUNDS.—On re13 quest of any applicant who is eligible for a loan

14 under this paragraph for which funds are not

15 available, the applicant shall be considered to

16 have applied for a loan under title IV.

17 ‘‘(2) COST-OF-MONEY LOANS.—

18 ‘‘(A) IN GENERAL.—The Administrator

19 may make insured telephone loans for the ac20 quisition, purchase, and installation of tele21 phone lines, systems, and facilities (other than

22 buildings used primarily for administrative pur23 poses, vehicles not used primarily in construc24 tion, and customer premise equipment) related

25 to the furnishing, improvement, or extension of
43

•S 1134 PCS

1 rural telecommunications service, at an interest

2 rate equal to the then current cost of money to

3 the Government of the United States for loans

4 of similar maturity, but not more than 7 per5 cent per year, to any applicant for a loan who

6 meets the following requirements:

7 ‘‘(i) The average number of subscrib8 ers per mile of line in the service area of

9 the applicant is not more than 15.

10 ‘‘(ii) The applicant is capable of pro11 ducing net income or margins, before in12 terest payments on the loan applied for, of

13 not less than 100 percent (but not more

14 than 500 percent) of the interest require15 ments on all of the outstanding and pro16 posed loans of the applicant.

17 ‘‘(iii) The Administrator has approved

18 a telecommunications modernization plan

19 for the State under paragraph (3), and, if

20 the plan was developed by telephone bor21 rowers under this title, the applicant is a

22 participant in the plan.

23 ‘‘(B) CALL PROVISION.—The Adminis24 trator shall offer any applicant for a loan under

25 this paragraph the option to include in the loan
44

•S 1134 PCS

1 agreement the right of the applicant to prepay

2 the loan on terms consistent with similar provi3 sions of commercial loans.

4 ‘‘(C) CONCURRENT LOAN AUTHORITY.—On

5 request of any applicant for a loan under this

6 paragraph during any fiscal year, the Adminis7 trator shall—

8 ‘‘(i) consider the application to be for

9 a loan under this paragraph and a loan

10 under section 408; and

11 ‘‘(ii) if the applicant is eligible for a

12 loan, make a loan to the applicant under

13 this paragraph in an amount equal to the

14 amount that bears the same ratio to the

15 total amount of loans for which the appli16 cant is eligible under this paragraph and

17 under section 408, as the amount made

18 available for loans under this paragraph

19 for the fiscal year bears to the total

20 amount made available for loans under this

21 paragraph and under section 408 for the

22 fiscal year.

23 ‘‘(D) EFFECT OF LACK OF FUNDS.—On

24 request of any applicant who is eligible for a

25 loan under this paragraph for which funds are
45

•S 1134 PCS

1 not available, the applicant shall be considered

2 to have applied for a loan guarantee under

3 section 306.

4 ‘‘(3) STATE TELECOMMUNICATIONS MOD5 ERNIZATION PLANS.—

6 ‘‘(A) APPROVAL.—If, not later than 180

7 days after final regulations are promulgated to

8 carry out this paragraph, the public utility com9 mission of any State develops a telecommuni10 cations modernization plan that meets the re11 quirements of subparagraph (B), the Adminis12 trator shall approve the plan for the State. If

13 a State does not develop a plan in accordance

14 with the requirements of the preceding sen15 tence, the Administrator shall approve any tele16 communications modernization plan for the

17 State that meets the requirements that is devel18 oped by a majority of the borrowers of tele19 phone loans made under this title who are

20 located in the State.

21 ‘‘(B) REQUIREMENTS.—For purposes of

22 subparagraph (A), a telecommunications mod23 ernization plan must, at a minimum, meet the

24 following objectives:
46

•S 1134 PCS

1 ‘‘(i) The plan must provide for the

2 elimination of party line service.

3 ‘‘(ii) The plan must provide for the

4 availability of telecommunications services

5 for improved business, educational, and

6 medical services.

7 ‘‘(iii) The plan must encourage and

8 improve computer networks and informa9 tion highways for subscribers in rural

10 areas.

11 ‘‘(iv) The plan must provide for—

12 ‘‘(I) subscribers in rural areas to

13 be able to receive through telephone

14 lines—

15 ‘‘(aa) multiple voices;

16 ‘‘(bb) video images; and

17 ‘‘(cc) data at a rate of at

18 least 1,000,000 bits of informa19 tion per second; and

20 ‘‘(II) the proper routing of infor21 mation to subscribers.

22 ‘‘(v) The plan must provide for uni23 form deployment schedules to ensure that

24 advanced services are deployed at the same

25 time in rural and nonrural areas.
47

•S 1134 PCS

1 ‘‘(vi) The plan must provide for such

2 additional requirements for service stand3 ards as may be required by the Adminis4 trator.

5 ‘‘(C) FINALITY OF APPROVAL.—

6 ‘‘(i) IN GENERAL.—A telecommuni7 cations modernization plan approved under

8 subparagraph (A) may not subsequently be

9 disapproved. Notwithstanding subsection

10 (c)(1)(A)(iii), subsection (c)(2)(A)(iii), and

11 section 408(b)(4)(C), the Administrator

12 and the Governor of the telephone bank

13 may make a loan to a borrower serving a

14 State that does not have a telecommuni15 cation modernization plan approved by the

16 Administrator if the loan is made less than

17 1 year after the Administrator has adopted

18 final regulations implementing subsection

19 (c)(3).’’.

20 (2) RURAL TELEPHONE BANK LOAN PRO21 GRAM.—Section 408 of such Act (7 U.S.C. 948) is

22 amended—

23 (A) in subsection (a), by striking ‘‘, (2)’’

24 and all that follows through ‘‘408 of this Act,’’

25 and inserting ‘‘, (2) for the acquisition, pur-
48

•S 1134 PCS

1 chase, and installation of telephone lines, sys2 tems, and facilities (other than buildings used

3 primarily for administrative purposes, vehicles

4 not used primarily in construction, and cus5 tomer premise equipment) related to the fur6 nishing, improvement, or extension of rural tele7 communications service,’’; and

8 (B) in subsection (b)—

9 (i) by striking paragraph (4) and in10 serting the following new paragraph:

11 ‘‘(4) The Governor of the telephone bank may

12 make a loan under this section only to an applicant

13 for the loan who meets the following requirements:

14 ‘‘(A) The average number of subscribers

15 per mile of line in the service area of the appli16 cant is not more than 15.

17 ‘‘(B) The applicant is capable of producing

18 net income or margins, after interest payments

19 on the loan applied for, of not less than 100

20 percent (but not more than 500 percent) of the

21 interest requirements on all of the outstanding

22 and proposed loans of the applicant.

23 ‘‘(C) The Administrator has approved,

24 under section 305(d)(3), a telecommunications

25 modernization plan for the State in which the
49

•S 1134 PCS

1 applicant is located, and, if the plan was devel2 oped by telephone borrowers under title III, the

3 applicant is a participant in the plan.’’;

4 (ii) in paragraph (8)—

5 (I) by inserting ‘‘(A)’’ after

6 ‘‘(8)’’;

7 (II) by striking ‘‘if such prepay8 ment is not made later than Septem9 ber 30, 1988’’ and inserting ‘‘except

10 for any prepayment penalty provided

11 for in a loan agreement entered into

12 before the date of enactment of the

13 Omnibus Budget Reconciliation Act of

14 1993’’; and

15 (III) by adding at the end the

16 following new subparagraph:

17 ‘‘(B) If a borrower prepays part or all of a loan

18 made under this section, then, notwithstanding sec19 tion 407(b), the Governor of the telephone bank

20 shall use the full amount of the prepayment to repay

21 obligations of the telephone bank issued pursuant to

22 section 407(b) before October 1, 1991, to the extent

23 any such obligations are outstanding.’’; and

24 (iii) by adding at the end the follow25 ing new paragraphs:
50

•S 1134 PCS

1 ‘‘(9) On request of any applicant for a loan

2 under this section during any fiscal year, the Gov3 ernor of the telephone bank shall—

4 ‘‘(A) consider the application to be for a

5 loan under this section and a loan under section

6 305(d)(2); and

7 ‘‘(B) if the applicant is eligible for a loan,

8 make a loan to the applicant under this section

9 in an amount equal to the amount that bears

10 the same ratio to the total amount of loans for

11 which the applicant is eligible under this section

12 and under section 305(d)(2), as the amount

13 made available for loans under this section for

14 the fiscal year bears to the total amount made

15 available for loans under this section and under

16 section 305(d)(2) for the fiscal year.

17 ‘‘(10) On request of any applicant who is eligi18 ble for a loan under this section for which funds are

19 not available, the applicant shall be considered to

20 have applied for a loan under section 305(d)(2).’’.

21 (3) FUNDING.—Section 314 of such Act (7

22 U.S.C. 940d) is amended to read as follows:
51

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1 ‘‘SEC. 314. LIMITATIONS ON AUTHORIZATION OF APPRO2 PRIATIONS.

3 ‘‘(a) DEFINITION OF ADJUSTMENT PERCENTAGE.—

4 As used in this section, the term ‘adjustment percentage’

5 means, with respect to a fiscal year, the percentage (if

6 any) by which—

7 ‘‘(1) the average of the Consumer Price Index

8 (as defined in section 1(f)(5) of the Internal Reve9 nue Code of 1986) for the 1-year period ending on

10 July 31 of the immediately preceding fiscal year;

11 exceeds

12 ‘‘(2) the average of the Consumer Price Index

13 (as so defined) for the 1-year period ending on July

14 31, 1993.

15 ‘‘(b) FISCAL YEARS 1994 THROUGH 1998.—In the

16 case of each of fiscal years 1994 through 1998, there are

17 authorized to be appropriated to the Administrator such

18 sums as may be necessary for the cost of loans in the

19 following amounts, for the following purposes:

20 ‘‘(1) ELECTRIC HARDSHIP LOANS.—For loans

21 under section 305(c)(1)—

22 ‘‘(A) for fiscal year 1994, $125,000,000;

23 and

24 ‘‘(B) for each of fiscal years 1995 through

25 1998, $125,000,000, increased by the adjust26 ment percentage for the fiscal year.
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1 ‘‘(2) ELECTRIC MUNICIPAL RATE LOANS.—For

2 loans under section 305(c)(2)—

3 ‘‘(A) for fiscal year 1994, $600,000,000;

4 and

5 ‘‘(B) for each of fiscal years 1995 through

6 1998, $600,000,000, increased by the adjust7 ment percentage for the fiscal year.

8 ‘‘(3) TELEPHONE HARDSHIP LOANS.—For

9 loans under section 305(d)(1)—

10 ‘‘(A) for fiscal year 1994, $125,000,000;

11 and

12 ‘‘(B) for each of fiscal years 1995 through

13 1998, $125,000,000, increased by the adjust14 ment percentage for the fiscal year.

15 ‘‘(4) TELEPHONE COST-OF-MONEY LOANS.—

16 For loans under section 305(d)(2)—

17 ‘‘(A) for fiscal year 1994, $198,000,000;

18 and

19 ‘‘(B) for each of fiscal years 1995 through

20 1998, $198,000,000, increased by the adjust21 ment percentage for the fiscal year.

22 ‘‘(c) FUNDING LEVELS.—The Administrator shall

23 make insured loans under this title for the purposes, in

24 the amounts, and for the periods of time specified in sub25 section (b), as provided in advance in appropriations Acts.
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1 ‘‘(d) AVAILABILITY OF FUNDS FOR INSURED

2 LOANS.—Amounts made available for loans under section

3 305 are authorized to remain available until expended.’’.

4 (4) MISCELLANEOUS AMENDMENTS.—

5 (A) Section 2 of such Act (7 U.S.C. 902)

6 is amended—

7 (i) by inserting ‘‘(a)’’ before ‘‘The Ad8 ministrator’’;

9 (ii) by striking ‘‘telephone service in

10 rural areas, as hereinafter provided;’’ and

11 inserting ‘‘electric and telephone service in

12 rural areas, as provided in this Act, and

13 for the purpose of assisting electric bor14 rowers to implement demand side manage15 ment and energy conservation programs;’’;

16 and

17 (iii) by adding at the end the follow18 ing new subsection:

19 ‘‘(b) Not later than January 1, 1994, the Adminis20 trator shall issue interim regulations to implement the au21 thority contained in subsection (a) to make loans for the

22 purpose of assisting electric borrowers to implement de23 mand side management and energy conservation pro24 grams. If the regulations are not issued by January 1,

25 1994, the Administrator shall consider any demand side
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1 management program that is approved by a State agency

2 to be eligible for the loans.’’.

3 (B) Section 4 of such Act (7 U.S.C. 904)

4 is amended by inserting after ‘‘central station

5 service’’ the following: ‘‘and for the furnishing

6 and improving of electric service to persons in

7 rural areas, including by assisting electric bor8 rowers to implement demand side management

9 and energy conservation programs’’.

10 (C) Section 13 of such Act (7 U.S.C. 913)

11 is amended—

12 (i) by inserting ‘‘, except as provided

13 in section 203(b),’’ before ‘‘shall be deemed

14 to mean any area’’; and

15 (ii) by striking ‘‘city, village, or bor16 ough having a population in excess of fif17 teen hundred inhabitants’’ and inserting

18 ‘‘urban area, as defined by the Bureau of

19 the Census’’.

20 (D) Section 203(b) of such Act (7 U.S.C.

21 924(b)) is amended by striking ‘‘one thousand

22 five hundred’’ and inserting ‘‘5,000’’.

23 (E) Section 305 of such Act (7 U.S.C.

24 935) (as amended by subsection (a)(1)) is fur25 ther amended—
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1 (i) by striking ‘‘SEC. 305. INSURED

2 LOANS; INTEREST RATES AND LENDING

3 LEVELS.—(a) The’’ and inserting the fol4 lowing:

5 ‘‘SEC. 305. INSURED LOANS; INTEREST RATES AND LEND6 ING LEVELS.

7 ‘‘(a) IN GENERAL.—The’’; and

8 (ii) in subsection (b), by striking ‘‘(b)

9 Loans’’ and inserting ‘‘(b) INSURED

10 LOANS.—Loans’’.

11 (F) Section 307 of such Act (7 U.S.C.

12 937) is amended by adding at the end the fol13 lowing new sentence: ‘‘The Administrator may

14 not request any applicant for an electric loan

15 under this Act to apply for and accept a loan

16 in an amount exceeding 30 percent of the credit

17 needs of the applicant.’’.

18 (G) Section 406 of such Act (7 U.S.C.

19 946) is amended by adding at the end the

20 following new subsection:

21 ‘‘(i) The Governor of the telephone bank may invest

22 in obligations of the United States the amounts in the ac23 count in the Treasury of the United States numbered

24 12X8139 (known as the ‘RTB Equity Fund’).’’.
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1 (H) Section 18 of such Act (7 U.S.C. 918)

2 is amended—

3 (i) by inserting ‘‘(a) NO CONSIDER4 ATION OF BORROWER’S LEVEL OF GEN5 ERAL FUNDS.—’’ before ‘‘The Adminis6 trator’’; and

7 (ii) by adding at the end the following

8 new subsections:

9 ‘‘(b) NO LOAN ORIGINATION FEES.—The Adminis10 trator and the Governor of the telephone bank may not

11 charge any fee or charge not expressly provided in this

12 Act in connection with any loan made or guaranteed under

13 this Act.

14 ‘‘(c) CONSULTANTS.—

15 ‘‘(1) IN GENERAL.—To facilitate timely action

16 on applications by borrowers for financial assistance

17 under this Act and for approvals required of the

18 agency pursuant to the terms of outstanding loan or

19 security instruments or otherwise, the Administrator

20 may use consultants funded by the borrower, paid

21 for out of the general funds of the borrower, for fi22 nancial, legal, engineering, and other technical ad23 vice and services in connection with the review of the

24 application by the Rural Electrification Administra25 tion.
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1 ‘‘(2) CONFLICTS OF INTEREST.—The Adminis2 trator shall establish procedures for the selection

3 and the provision of technical services by consultants

4 to ensure that the consultants have no financial or

5 other potential conflicts of interest in the outcome of

6 the application of the borrower.

7 ‘‘(3) PAYMENT OF COSTS.—The Administrator

8 may not, without the consent of the borrower, re9 quire, as a condition of processing an application for

10 approval, that the borrower agree to pay the costs,

11 fees, and expenses of consultants hired to provide

12 technical or advisory services to the Administrator.

13 ‘‘(4) CONTRACTS, GRANTS, AND AGREE14 MENTS.—The Administrator may enter into such

15 contracts, grants, or cooperative agreements as are

16 necessary to carry out this section without regard to

17 any requirement for competition, section 3709 of the

18 Revised Statutes (41 U.S.C. 5) and section 3324 of

19 title 31, United States Code.

20 ‘‘(5) USE OF CONSULTANTS.—Nothing in this

21 subsection shall limit the authority of the Adminis22 trator to retain the services of consultants from

23 funds made available to the Administrator or other24 wise.’’.
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1 (I) Title III of such Act is amended by in2 serting after section 306B (7 U.S.C. 936b) the

3 following new sections:

4 ‘‘SEC. 306C. ELIGIBILITY OF DISTRIBUTION BORROWERS

5 FOR LOANS, LOAN GUARANTEES, AND LIEN

6 ACCOMMODATIONS.

7 ‘‘For the purpose of determining the eligibility of a

8 distribution borrower not in default on the repayment of

9 a loan made or guaranteed under this Act for a loan, loan

10 guarantee, or lien accommodation under this title, a de11 fault by a borrower from which the distribution borrower

12 purchases wholesale power shall not—

13 ‘‘(1) be considered a default by the distribution

14 borrower;

15 ‘‘(2) reduce the eligibility of the distribution

16 borrower for assistance under this Act; or

17 ‘‘(3) be the cause, directly or indirectly, of im18 posing any requirement or restriction on the bor19 rower as a condition of the assistance, except such

20 requirements or restrictions as are necessary to im21 plement a debt restructuring agreed on by the power

22 supply borrower and the Government.
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1 ‘‘SEC. 306D. ADMINISTRATIVE PROHIBITIONS APPLICABLE

2 TO ELECTRIC BORROWERS.

3 ‘‘The Administrator may not require prior approval

4 of, impose any requirement, restriction, or prohibition with

5 respect to the operations of, or deny or delay the granting

6 of a lien accommodation to, any electric borrower under

7 this Act whose net worth exceeds 110 percent of the out8 standing principal balance on all loans made or guaran9 teed to the borrower by the Administrator.’’.

10 (b) EXPANDED ELIGIBILITY FOR LOANS FOR WATER

11 AND WASTE DISPOSAL FACILITIES.—Section 306(a)(1) of

12 the Consolidated Farm and Rural Development Act (7

13 U.S.C. 1926(a)(1)) is amended by inserting after the first

14 sentence the following new sentence: ‘‘The Secretary may

15 also make loans to any borrower to whom a loan has been

16 made under the Rural Electrification Act of 1936 (7

17 U.S.C. 901 et seq.), for the conservation, development,

18 use, and control of water, and the installation of drainage

19 or waste disposal facilities, primarily serving farmers,

20 ranchers, farm tenants, farm laborers, rural businesses,

21 and other rural residents.’’.

22 (c) RURAL ECONOMIC DEVELOPMENT.—Section 364

23 of the Consolidated Farm and Rural Development Act (7

24 U.S.C. 2006f) is amended by adding at the end the follow25 ing new subsection:

26 ‘‘(g) RURAL ECONOMIC DEVELOPMENT.—
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1 ‘‘(1) IN GENERAL.—A borrower of a loan or

2 loan guarantee under the Rural Electrification Act

3 of 1936 (7 U.S.C. 901 et seq.) shall be eligible for

4 assistance under all programs administered by the

5 Rural Development Administration.

6 ‘‘(2) PARTICIPATION.—The Administrator of

7 the Rural Development Administration shall encour8 age and facilitate the full participation of borrowers

9 referred to in paragraph (1) in programs adminis10 tered by the Rural Development Administration.’’.

11 (d) REGULATIONS.—Not later than October 1, 1993,

12 interim final rules shall be issued by—

13 (1) the Administrator of the Rural Electrifica14 tion Administration in the case of amendments made

15 by this section to programs administered by the

16 Administrator; and

17 (2) the Administrator of the Rural Development

18 Administration in the case of amendments made by

19 this section to programs administered by the Admin20 istrator.

21 Subtitle C—Food Stamp Program

22 SEC. 1301. UNIFORM REIMBURSEMENT RATES.

23 (a) IN GENERAL.—Section 16 of the Food Stamp Act

24 of 1977 (7 U.S.C. 2025) is amended—

25 (1) in the first sentence of subsection (a)—
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1 (A) by striking ‘‘and (5)’’ and inserting

2 ‘‘(5)’’;

3 (B) by inserting before ‘‘: Provided,’’ the

4 following: ‘‘, (6) automated data processing and

5 information retrieval systems subject to the

6 conditions set forth in subsection (g), (7) food

7 stamp program investigations and prosecutions,

8 and (8) implementing and operating the immi9 gration status verification system established

10 under section 1137(d) of the Social Security

11 Act (42 U.S.C. 1320b–7(d))’’; and

12 (C) in the proviso, by striking ‘‘authorized

13 to pay each State agency an amount not less

14 than 75 per centum of the costs of State food

15 stamp program investigations and prosecutions,

16 and is further’’;

17 (2) in subsection (g)—

18 (A) by striking ‘‘an amount equal to 63

19 percent effective on October 1, 1991, of’’ and

20 inserting ‘‘the amount authorized under sub21 section (a)(6) for’’; and

22 (B) by striking ‘‘automatic’’ and inserting

23 ‘‘automated’’;

24 (3) by striking subsection (j); and
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1 (4) by redesignating subsection (k) as sub2 section (j).

3 (b) EFFECTIVE DATE.—

4 (1) IN GENERAL.—Except as provided in para5 graph (2), the amendments made by this section

6 shall be effective with respect to calendar quarters

7 beginning on or after April 1, 1994.

8 (2) BIENNIAL LEGISLATURES.—In the case of a

9 State whose legislature meets biennially, and does

10 not have a regular session scheduled in calendar

11 year 1994, and that demonstrates to the satisfaction

12 of the Secretary of Agriculture that there is no

13 mechanism, under the constitution and laws of the

14 State, for appropriating the additional funds re15 quired by the amendments made by this section be16 fore the next such regular legislative session, the

17 Secretary may delay the effective date of all or part

18 of the amendments made by subsection (a) until the

19 beginning date of a calendar quarter that is not

20 later than the first calendar quarter beginning after

21 the close of the first regular session of the State leg22 islature after the date of enactment of this Act.
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1 Subtitle D—Agricultural Trade

2 SEC. 1401. MARKET PROMOTION PROGRAM.

3 (a) REDUCTION OF FUNDING LEVEL.—Section

4 211(c) of the Agricultural Trade Act of 1978 (7 U.S.C.

5 5641(c)) is amended—

6 (1) in paragraph (1)—

7 (A) by striking ‘‘1995’’ and inserting

8 ‘‘1993’’; and

9 (B) by striking ‘‘and’’ at the end;

10 (2) by redesignating paragraph (2) as para11 graph (3); and

12 (3) by inserting after paragraph (1) the follow13 ing new paragraph:

14 ‘‘(2) in addition to any funds that may be spe15 cifically appropriated to implement a market devel16 opment program, for each of fiscal years 1994 and

17 1995, of the funds of, or an equal value of commod18 ities owned by, the Commodity Credit Corporation—

19 ‘‘(A) not less than $33,000,000 for—

20 ‘‘(i) branded promotion activities in21 volving small-sized commercial entities and

22 medium-sized commercial entities that are

23 beginning exporters; and

24 ‘‘(ii) activities other than branded pro25 motion activities that only benefit small-
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1 sized commercial entities and medium2 sized commercial entities, or (as deter3 mined by the Secretary) small-sized agri4 cultural producers and medium-sized agri5 cultural producers; and

6 ‘‘(B) in addition to funding specified in

7 subparagraph (A), not less than $77,000,000

8 for program activities by any eligible trade or9 ganization, including organizations specified

10 under subparagraph (A); and’’.

11 (b) DEFINITIONS.—Section 102 of such Act (7

12 U.S.C. 5602) is amended by adding at the end the follow13 ing new paragraph:

14 ‘‘(9) COMMERCIAL ENTITY.—

15 ‘‘(A) IN GENERAL.—The term ‘commercial

16 entity’ means a cooperative or private organiza17 tion that exports or promotes an agricultural

18 commodity, including an entity that controls, is

19 controlled by, or is under common control with

20 such a cooperative or private organization.

21 ‘‘(B) MEDIUM-SIZED COMMERCIAL EN22 TITY.—The term ‘medium-sized commercial en23 tity’ means a commercial entity that employs

24 not less than 51, nor more than 500, individ25 uals.
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1 ‘‘(C) SMALL-SIZED COMMERCIAL EN2 TITY.—The term ‘small-sized commercial entity’

3 means a commercial entity that employs not

4 more than 50 individuals.’’.

5 SEC. 1402. ACREAGE REDUCTION REQUIREMENTS.

6 (a) IN GENERAL.—Section 1104 of the Omnibus

7 Budget Reconciliation Act of 1990 (7 U.S.C. 1445b–3a

8 note) is amended—

9 (1) in subsection (a), by striking paragraph (2)

10 and inserting the following new paragraph:

11 ‘‘(2) corn under which the acreage planted to

12 corn for harvest on a farm would be limited to the

13 corn crop acreage base for the farm for the crop reduced by not less than 71 14 ⁄2 percent.’’; and

15 (2) in subsection (b)(2), by striking ‘‘grain sor16 ghum, and barley,’’.

17 (b) READJUSTMENT OF SUPPORT LEVELS.—Section

18 1302 of such Act (7 U.S.C. 1421 note) is amended—

19 (1) in subsection (b)—

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

21 (B) by redesignating paragraphs (2) and

22 (3) as paragraphs (1) and (2), respectively;

23 (2) in subsection (c), by striking ‘‘and other

24 programs’’; and

25 (3) in subsection (d)—
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1 (A) in paragraph (1)—

2 (i) by striking subparagraph (A); and

3 (ii) by redesignating subparagraphs

4 (B) and (C) as subparagraphs (A) and

5 (B), respectively;

6 (B) in paragraph (2), by striking ‘‘(A),

7 (B), and (C)’’ and inserting ‘‘(A) and (B)’’; and

8 (C) in paragraph (3)—

9 (i) by striking ‘‘measures specified in

10 subparagraph (A) of paragraph (1) and’’;

11 and

12 (ii) by striking ‘‘(B) or (C)’’ and in13 serting ‘‘(A) or (B)’’.

14 SEC. 1403. END-USE CERTIFICATES.

15 (a) IN GENERAL.—Subtitle A of title IV of the Agri16 cultural Trade Act of 1978 (7 U.S.C. 5661 et seq.) is

17 amended—

18 (1) by redesignating section 404 (7 U.S.C.

19 5664) as section 405; and

20 (2) by inserting after section 403 the following

21 new section:

22 ‘‘SEC. 404. END-USE CERTIFICATES.

23 ‘‘(a) DEFINITIONS.—As used in this section:

24 ‘‘(1) COVERED FOREIGN COMMODITY.—The

25 term ‘covered foreign commodity’ means any wheat
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1 or barley produced in a foreign country that is im2 ported into the United States, including any im3 ported commodity that will be subsequently commin4 gled with a like commodity produced in the United

5 States.

6 ‘‘(2) END-USE CERTIFICATE.—The term ‘end7 use certificate’ means a certification that describes—

8 ‘‘(A) the class, quantity, and country of or9 igin of the covered foreign commodity;

10 ‘‘(B) the importer and consignee of the

11 covered foreign commodity;

12 ‘‘(C) the end use for which the consignee

13 will use the covered foreign commodity; and

14 ‘‘(D) at the option of the Secretary, the

15 sales price and quality of the covered foreign

16 commodity.

17 ‘‘(b) STATEMENT OF PURPOSE.—The Secretary shall

18 improve monitoring of the end use of covered foreign com19 modities, as provided in this section, in order to ensure

20 that exports of agricultural commodities under the pro21 grams authorized by this Act and other agricultural trade

22 programs are entirely produced in the United States.

23 ‘‘(c) REQUIREMENT ON COVERED FOREIGN COM24 MODITIES.—The Commissioner of Customs shall not per25 mit the entry into, or the withdrawal from a warehouse
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1 for use in, the United States of a covered foreign commod2 ity, unless the importer of record presents an end-use cer3 tificate for the covered foreign commodity that complies

4 with this section at the time of entry or withdrawal, as

5 appropriate.

6 ‘‘(d) MAINTENANCE OF CERTIFICATE WITH COV7 ERED FOREIGN COMMODITY.—The end-use certificate

8 shall be maintained with the covered foreign commodity

9 until the commodity reaches the end use of the commodity

10 within the United States. The end use of a covered foreign

11 commodity includes feeding to livestock, first stage proc12 essing for human consumption, exporting from the United

13 States, or (as determined by the Secretary) other end

14 uses.

15 ‘‘(e) CERTIFICATION.—The Secretary shall require

16 any importer or consignee of a covered foreign commodity

17 to certify, on a quarterly basis, the end use or transfer,

18 during the period the commodity is a covered foreign com19 modity, by the importer or consignee, along with any addi20 tional information the Secretary determines to be appro21 priate.

22 ‘‘(f) COMPLIANCE.—Subsections (b), (c), and (d) of

23 section 402 shall apply to an importer or consignee of a

24 covered foreign commodity subject to the terms and condi25 tions specified in this section.’’.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 subsection (a) shall become effective on the date that is

3 120 days after the date of enactment of this Act.

4 SEC. 1404. SENSE OF CONGRESS REGARDING THE EXPORT

5 OF VEGETABLE OIL.

6 It is the sense of Congress that the Secretary of Agri7 culture should continue aggressively to promote the export

8 of vegetable oil through all available authorities, including

9 but not limited to the export enhancement program estab10 lished under section 301 of the Agricultural Trade Act of

11 1978 (7 U.S.C. 5651).

12 Subtitle E—Miscellaneous

13 SEC. 1501. FEDERAL CROP INSURANCE.

14 (a) ACTUARIAL SOUNDNESS.—Section 506 of the

15 Federal Crop Insurance Act (7 U.S.C. 1506) is amended

16 by adding at the end the following new subsection:

17 ‘‘(n) ACTUARIAL SOUNDNESS.—The Corporation

18 shall take such actions as are necessary to improve the

19 actuarial soundness of Federal multiperil crop insurance

20 coverage made available under this title to achieve, on and

21 after October 1, 1995, an overall projected loss ratio of

22 not greater than 1.1, including—

23 ‘‘(1) instituting appropriate requirements for

24 documentation of the actual production history of in25 sured producers to establish recorded or appraised
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1 yields for Federal crop insurance coverage that more

2 accurately reflect the associated actuarial risk, ex3 cept that the Corporation may not carry out this

4 paragraph in a manner that would prevent begin5 ning farmers from obtaining adequate Federal crop

6 insurance, as determined by the Corporation;

7 ‘‘(2) establishing in counties, to the extent prac8 ticable, a crop insurance option based on area yields

9 in a manner that allows an insured producer to qual10 ify for an indemnity if a loss has occurred in a speci11 fied area in which the farm of the insured producer

12 is located;

13 ‘‘(3) establishing a database that contains the

14 social security account and employee identification

15 numbers of participating producers and using the

16 numbers to identify insured producers who are high

17 risk for actuarial purposes and insured producers

18 who have not documented at least 4 years of produc19 tion history, to assess the performance of insurance

20 providers, and for other purposes permitted by law;

21 and

22 ‘‘(4) taking any other measures authorized by

23 law to improve the actuarial soundness of the Fed24 eral crop insurance program while maintaining
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1 fairness and effective coverage for agricultural

2 producers.’’.

3 (b) CONFORMING AMENDMENTS.—

4 (1) REINSURANCE.—Section 508(h) of such Act

5 (7 U.S.C. 1508(h)) is amended by striking the fifth

6 sentence and inserting the following new sentence:

7 ‘‘The Corporation shall also pay operating and ad8 ministrative costs to insurers of policies on which the

9 Corporation provides reinsurance in an amount de10 termined by the Corporation.’’.

11 (2) AREA YIELD PLAN.—Section 508 of such

12 Act (7 U.S.C. 1508) is amended by adding at the

13 end the following new subsection:

14 ‘‘(n) AREA YIELD PLAN.—

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

16 provision of this title, the Corporation may offer,

17 only as an option to individual crop insurance cov18 erage available under this Act, a crop insurance plan

19 based on an area yield that allows an insured pro20 ducer to qualify for an indemnity if a loss has oc21 curred in an area, as specified by the Corporation,

22 in which the farm of the producer is located.

23 ‘‘(2) LEVEL OF COVERAGE.—Under a plan of24 fered under paragraph (1), an insured producer

25 shall be allowed to select the level of production at
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1 which an indemnity will be paid consistent with

2 terms and conditions established by the Corpora3 tion.’’.

4 (3) YIELD COVERAGE.—Section 508A of such

5 Act (7 U.S.C. 1508a) is amended—

6 (A) in subsection (a)(1), by striking ‘‘may’’

7 and inserting ‘‘shall’’; and

8 (B) in subsection (b)—

9 (i) in paragraph (1)(A)—

10 (I) by striking ‘‘A crop insurance

11 contract’’ and all that follows through

12 ‘‘producer—’’ and inserting ‘‘Under

13 regulations issued by the Corporation,

14 a crop insurance contract offered

15 under this title to an eligible insured

16 producer of a commodity with respect

17 to which the Corporation provides

18 crop insurance coverage shall make

19 available to the producer either—’’;

20 (II) by striking ‘‘or’’ at the end

21 of clause (i);

22 (III) in clause (ii)—

23 (aa) by striking ‘‘5’’ and in24 serting ‘‘4 building to 10’’; and
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1 (bb) by striking the period

2 at the end and inserting ‘‘; or’’;

3 and

4 (IV) by adding at the end the fol5 lowing new clause:

6 ‘‘(iii) yield coverage based on—

7 ‘‘(I) not less than 65 percent of

8 the transitional yield of the producer

9 (adjusted to reflect actual experience),

10 as specified in regulations issued by

11 the Corporation based on production

12 history requirements; or

13 ‘‘(II) the area yield under section

14 508(n) for the crop established under

15 the program for the commodity in16 volved.’’;

17 (ii) in paragraph (1)(B)—

18 (I) by striking ‘‘two’’ and insert19 ing ‘‘3’’; and

20 (II) by inserting after ‘‘subpara21 graph (A)’’ the following: ‘‘, where

22 available (as determined by the Cor23 poration),’’;

24 (iii) in paragraph (2)—
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1 (I) by striking ‘‘5’’ and inserting

2 ‘‘4 building to 10’’; and

3 (II) by inserting after ‘‘previous

4 crops,’’ the following: ‘‘not less than

5 65 percent of the transitional yield of

6 the producer (adjusted to reflect ac7 tual experience), or the area yield,’’;

8 and

9 (iv) in paragraph (3)(A)(i), by insert10 ing after ‘‘farm program yield’’ the follow11 ing: ‘‘, not less than 65 percent of the

12 transitional yield of the producer (adjusted

13 to reflect actual experience), as specified in

14 regulations issued by the Corporation

15 based on production history requirements,

16 or the area yield under section 508(n),

17 whichever is applicable,’’.

18 (c) EFFECTIVE DATE.—

19 (1) IN GENERAL.—Except as provided in para20 graph (2), this section and the amendments made by

21 this section shall become effective on October 1,

22 1993.

23 (2) REGULATIONS.—Not later than 30 days

24 after the date of enactment of this Act, the Sec25 retary of Agriculture shall publish, for public com-
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1 ment, proposed regulations to implement the amend2 ments made by this section.

3 SEC. 1502. ENVIRONMENTAL CONSERVATION ACREAGE RE4 SERVE PROGRAM AMENDMENTS.

5 Subtitle D of title XII of the Food Security Act of

6 1985 (16 U.S.C. 3830 et seq.) is amended—

7 (1) in section 1230(b) (16 U.S.C. 3830(b)), by

8 striking ‘‘to place in’’ and all that follows through

9 ‘‘acres’’;

10 (2) in section 1231(d) (16 U.S.C. 3831(d))—

11 (A) by striking ‘‘may’’ and inserting

12 ‘‘shall’’;

13 (B) by striking ‘‘the amount of acres speci14 fied in section 1230(b)’’ and inserting ‘‘a total

15 of 38,000,000 acres during the 1986 through

16 1995 calendar years’’; and

17 (C) by striking ‘‘each of calendar years

18 1994 and 1995’’ and inserting ‘‘the 1995 cal19 endar year’’;

20 (3) in section 1237 (16 U.S.C. 3837)—

21 (A) by striking subsection (b) and insert22 ing the following new subsection:

23 ‘‘(b) MINIMUM ENROLLMENT.—The Secretary shall

24 enroll into the wetlands reserve program—
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1 ‘‘(1) a total of not less than 330,000 acres by

2 the end of the 1995 calendar year; and

3 ‘‘(2) a total of not less than 975,000 acres dur4 ing the 1991 through 2000 calendar years.’’; and

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

6 and inserting ‘‘2000’’; and

7 (4) in section 1241 (16 U.S.C. 3841)—

8 (A) in subsection (a)—

9 (i) by striking ‘‘(a)(1) During each of

10 the fiscal years ending September 30,

11 1986, and September 30, 1987’’ and in12 serting ‘‘(a) During each of fiscal years

13 1994 through 2000’’; and

14 (ii) by striking paragraph (2); and

15 (B) in subsection (b), by striking ‘‘(A)

16 through (E)’’ and inserting ‘‘A through E’’.

17 SEC. 1503. ADMISSION, ENTRANCE, AND RECREATION FEES.

18 (a) DEFINITIONS.—As used in this section:

19 (1) AREA OF CONCENTRATED PUBLIC USE.—

20 The term ‘‘area of concentrated public use’’ means

21 an area administered by the Secretary that meets

22 each of the following criteria:

23 (A) The area is managed primarily for out24 door recreation purposes.
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1 (B) Facilities and services necessary to ac2 commodate heavy public use are provided in the

3 area.

4 (C) The area contains at least one major

5 recreation attraction.

6 (D) Public access to the area is provided

7 in such a manner that admission fees can be ef8 ficiently collected at 1 or more centralized loca9 tions.

10 (2) BOAT LAUNCHING FACILITY.—The term

11 ‘‘boat launching facility’’ includes any boat launch12 ing facility, regardless of whether specialized facili13 ties or services, such as mechanical or hydraulic boat

14 lifts or facilities, are provided.

15 (3) CAMPGROUND.—The term ‘‘campground’’

16 means any campground where a majority of the fol17 lowing amenities are provided, as determined by the

18 Secretary:

19 (A) Tent or trailer spaces.

20 (B) Drinking water.

21 (C) An access road.

22 (D) Refuse containers.

23 (E) Toilet facilities.
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1 (F) The personal collection of recreation

2 use fees by an employee or agent of the Sec3 retary.

4 (G) Reasonable visitor protection.

5 (H) If campfires are permitted in the

6 campground, simple devices for containing the

7 fires.

8 (4) SECRETARY.—The term ‘‘Secretary’’ means

9 the Secretary of Agriculture.

10 (b) AUTHORITY TO IMPOSE FEES.—The Secretary—

11 (1) may charge admission or entrance fees at

12 national monuments, national volcanic monuments,

13 national scenic areas, and areas of concentrated

14 public use administered by the Secretary;

15 (2) acting through the Forest Service, shall re16 imburse the Agricultural Stabilization and Conserva17 tion Service for administrative costs incurred under

18 the Stewardship Incentive Program for the actual

19 cost of services provided by the Agricultural Sta20 bilization and Conservation Service, except that the

21 actual costs shall not exceed 10 percent of the total

22 annual appropriation for the program; and

23 (3) may charge recreation use fees at lands ad24 ministered by the Secretary in connection with the

25 use of specialized outdoor recreation sites, equip-
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1 ment, services, and facilities, including visitors’ cen2 ters, picnic tables, boat launching facilities, and

3 campgrounds.

4 (c) AMOUNT OF FEES.—The amount of the admis5 sion, entrance, and recreation fees authorized to be im6 posed under this section shall be determined by the Sec7 retary.

8 SEC. 1504. SENSE OF THE SENATE REGARDING DEFICIT RE9 DUCTION.

10 It is the sense of the Senate that—

11 (1) farmers should pay no more than their fair

12 share of any budget reduction necessary to achieve

13 the goal of deficit reduction; and

14 (2) the level of budget reduction should take

15 into account and be adjusted to reflect any BTU or

16 energy taxes, any other taxes, reduction in interest

17 rates, and other user fees.

18 TITLE II—COMMITTEE ON

19 ARMED SERVICES

20 SEC. 2001. LIMITATION ON COST-OF-LIVING ADJUSTMENTS

21 FOR MILITARY RETIREES.

22 Paragraph (2) of section 1401a(b) of title 10, United

23 States Code, is amended to read as follows:

24 ‘‘(2) PRE-AUGUST 1, 1986 MEMBERS.—
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1 ‘‘(A) GENERAL RULE.—The Secretary

2 shall increase the retired pay of each member

3 and former member who first became a member

4 of a uniformed service before August 1, 1986,

5 by the percent (adjusted to the nearest one6 tenth of 1 percent) by which—

7 ‘‘(i) the price index for the base quar8 ter of that year, exceeds

9 ‘‘(ii) the base index.

10 ‘‘(B) SPECIAL RULES FOR FISCAL YEARS

11 1994 THROUGH 1998.—

12 ‘‘(i) FISCAL YEARS 1994 THROUGH

13 1997.—In the case of an increase in retired

14 pay that, pursuant to paragraph (1), be15 comes effective on December 1 of 1993,

16 1994, 1995, or 1996, the initial month for

17 which such increase is payable as part of

18 such retired pay shall (notwithstanding

19 such December 1 effective date) be Sep20 tember of the following year.

21 ‘‘(ii) FISCAL YEAR 1998.—In the case

22 of an increase in retired pay that, pursuant

23 to paragraph (1), becomes effective on De24 cember 1, 1997, the initial month for

25 which such increase is payable as part of
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1 such retired pay shall (notwithstanding

2 such December 1 effective date) be August

3 1998.

4 ‘‘(C) INAPPLICABILITY TO DISABILITY RE5 TIREES.—Subparagraph (B) does not apply

6 with respect to the retired pay of a member re7 tired under chapter 61 of this title.’’.

8 TITLE III—COMMITTEE ON

9 BANKING, HOUSING, AND

10 URBAN AFFAIRS

11 SEC. 3001. NATIONAL DEPOSITOR PREFERENCE.

12 (a) IN GENERAL.—Section 11(d)(11) of the Federal

13 Deposit Insurance Act (12 U.S.C. 1821(d)(11)) is amend14 ed to read as follows:

15 ‘‘(11) DEPOSITOR PREFERENCE.—

16 ‘‘(A) IN GENERAL.—Subject to section

17 5(e)(2)(C), amounts realized from the liquida18 tion or other resolution of any insured deposi19 tory institution by any receiver appointed for

20 such institution shall be distributed to pay

21 claims (other than secured claims to the extent

22 of any such security) in the following order of

23 priority:

24 ‘‘(i) Administrative expenses of the re25 ceiver.
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1 ‘‘(ii) Any deposit liability of the insti2 tution.

3 ‘‘(iii) Any other general or senior li4 ability of the institution (which is not a li5 ability described in clause (iv) or (v)).

6 ‘‘(iv) Any obligation subordinated to

7 depositors or general creditors (which is

8 not an obligation described in clause (v)).

9 ‘‘(v) Any obligation to shareholders or

10 members arising as a result of their status

11 as shareholders or members (including any

12 depository institution holding company or

13 any shareholder or creditor of such com14 pany).

15 ‘‘(B) EFFECT ON STATE LAW.—

16 ‘‘(i) IN GENERAL.—The provisions of

17 subparagraph (A) shall not supersede the

18 law of any State except to the extent such

19 law is inconsistent with the provisions of

20 such subparagraph, and then only to the

21 extent of the inconsistency.

22 ‘‘(ii) PROCEDURE FOR DETERMINA23 TION OF INCONSISTENCY.—Upon the Cor24 poration’s own motion or upon the request

25 of any person with a claim described in
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1 subparagraph (A)(i) or any State which is

2 submitted to the Corporation in accordance

3 with procedures which the Corporation

4 shall prescribe, the Corporation shall deter5 mine whether any provision of the law of

6 any State is inconsistent with any provi7 sion of subparagraph (A) and the extent of

8 any such inconsistency.

9 ‘‘(iii) JUDICIAL REVIEW.—The final

10 determination of the Corporation under

11 clause (ii) shall be subject to judicial re12 view under chapter 7 of title 5, United

13 States Code.

14 ‘‘(C) ACCOUNTING REPORT.—Any distribu15 tion by the Corporation in connection with any

16 claim described in subparagraph (A)(vi) shall be

17 accompanied by the accounting report required

18 under paragraph (15)(B).’’.

19 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

20 (1) Section 11(c)(13) of the Federal Deposit

21 Insurance Act (12 U.S.C. 1821(c)(13)) is amend22 ed—

23 (A) in subparagraph (A), by striking ‘‘sub24 ject to subparagraph (B),’’;
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1 (B) by inserting ‘‘and’’ after the semicolon

2 at the end of subparagraph (A);

3 (C) by striking subparagraph (B); and

4 (D) by redesignating subparagraph (C) as

5 subparagraph (B).

6 (2) Section 11(g)(4) of the Federal Deposit In7 surance Act (12 U.S.C. 1921(g)(4)) is amended by

8 striking ‘‘If the Corporation’’ and inserting ‘‘Subject

9 to subsection (d)(11), if the Corporation’’.

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

11 this section shall apply with respect to insured depository

12 institutions for which a receiver is appointed after the date

13 of the enactment of this Act.

14 SEC. 3002. TRANSFER OF FEDERAL RESERVE SURPLUSES.

15 (a) IN GENERAL.—The 1st undesignated paragraph

16 of section 7 of the Federal Reserve Act (12 U.S.C. 289)

17 is amended to read as follows:

18 ‘‘(a) DIVIDENDS AND SURPLUS FUNDS OF RESERVE

19 BANKS.—

20 ‘‘(1) STOCKHOLDER DIVIDENDS.—

21 ‘‘(A) IN GENERAL.—After all necessary ex22 penses of a Federal reserve bank have been

23 paid or provided for, the stockholders of the

24 bank shall be entitled to receive an annual divi25 dend of 6 percent on paid-in capital stock.
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1 ‘‘(B) DIVIDEND CUMULATIVE.—The enti2 tlement to dividends under subparagraph shall

3 be cumulative.

4 ‘‘(2) DEPOSIT OF NET EARNINGS IN SURPLUS

5 FUND.—That portion of net earnings of each Fed6 eral reserve bank which remains after dividend

7 claims under subparagraph (A) have been fully met

8 shall be deposited in the surplus fund of the bank.

9 ‘‘(3) PAYMENT TO TREASURY.—During fiscal

10 years 1997 and 1998, any amount in the surplus

11 fund of any Federal reserve bank in excess of the

12 amount equal to 3 percent of the total paid-in cap13 ital and surplus of the member banks of such bank

14 shall be transferred to the Board for transfer to the

15 Secretary of the Treasury for deposit in the general

16 fund of the Treasury.’’.

17 (b) ADDITIONAL TRANSFERS FOR FISCAL YEARS

18 1997 AND 1998.—

19 (1) IN GENERAL.—In addition to the amounts

20 required to be transferred from the surplus funds of

21 the Federal reserve banks pursuant to section

22 7(a)(3) of the Federal Reserve Act, the Federal re23 serve banks shall transfer from such surplus funds

24 to the Board of Governors of the Federal Reserve

25 System for transfer to the Secretary of the Treasury
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1 for deposit in the general fund of the Treasury, a

2 total amount of $106,000,000 in fiscal year 1997

3 and a total amount of $107,000,000 in fiscal year

4 1998.

5 (2) ALLOCATION BY FED.—Of the total amount

6 required to be paid by the Federal reserve banks

7 under paragraph (1) for fiscal year 1997 or 1998,

8 the Board of Governors of the Federal Reserve Sys9 tem shall determine the amount each such bank

10 shall pay in such fiscal year.

11 (3) REPLENISHMENT OF SURPLUS FUND PRO12 HIBITED.—No Federal reserve bank may replenish

13 such bank’s surplus fund by the amount of any

14 transfer by such bank under paragraph (1) during

15 fiscal years 1997 and 1998.

16 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

17 (1) The penultimate undesignated paragraph of

18 section 7 of the Federal Reserve Act (12 U.S.C.

19 290) is amended by striking ‘‘The net earnings de20 rived’’ and inserting ‘‘(b) USE OF EARNINGS TRANS21 FERRED TO THE TREASURY.—The net earnings de22 rived’’.

23 (2) The last undesignated paragraph of section

24 7 of the Federal Reserve Act (12 U.S.C. 531) is

25 amended by striking ‘‘Federal reserve banks’’ and
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1 inserting ‘‘(c) EXEMPTION FROM TAXATION.—Fed2 eral reserve banks’’.

3 SEC. 3003. USE OF RETURN DATA FOR INCOME VERIFICA4 TION UNDER CERTAIN HOUSING ASSISTANCE

5 PROGRAMS.

6 (a) AMENDMENTS TO HOUSING ACTS.—Section 904

7 of the Stewart B. McKinney Homeless Assistance Amend8 ments Act of 1988 (42 U.S.C. 3544) is amended as fol9 lows:

10 (1) DEFINITION.—In subsection (a), by adding

11 at the end the following:

12 ‘‘(4) PROGRAM OF THE DEPARTMENT OF HOUS13 ING AND URBAN DEVELOPMENT.—The term ‘pro14 gram of the Department of Housing and Urban De15 velopment’ includes Indian housing programs as16 sisted under title II of the United States Housing

17 Act of 1937.’’.

18 (2) CONSENT FORMS.—In subsection (b)—

19 (A) in paragraph (1), by striking ‘‘and’’ at

20 the end;

21 (B) in paragraph (2), by striking the pe22 riod at the end and inserting ‘‘; and’’;

23 (C) by inserting after paragraph (2) the

24 following new paragraph:
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1 ‘‘(3) sign a consent form approved by the Sec2 retary authorizing the Secretary to request the Com3 missioner of Social Security and the Secretary of the

4 Treasury to release information pursuant to section

5 6103(l)(7)(D)(ix) of the Internal Revenue Code of

6 1986 with respect to such applicant or participant

7 for the sole purpose of the Secretary verifying in8 come information pertinent to the applicant’s or par9 ticipant’s eligibility or level of benefits.’’; and

10 (D) in the last sentence, by striking

11 ‘‘This’’ and inserting the following: ‘‘Except as

12 provided in this subsection, this’’.

13 (2) APPLICANT, PARTICIPANT, AND PUBLIC

14 HOUSING AGENCY PROTECTIONS.—In subsection

15 (c)(2)—

16 (A) in subparagraph (A)—

17 (i) in the matter preceding clause

18 (i)—

19 (I) by inserting after ‘‘compensa20 tion law’’ the following: ‘‘or pursuant

21 to section 6103(l)(7)(D)(ix) of the In22 ternal Revenue Code of 1986 from the

23 Commissioner of Social Security or

24 the Secretary of the Treasury’’; and
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1 (II) by inserting ‘‘(in the case of

2 information obtained pursuant to such

3 section 303(i))’’ before ‘‘representa4 tives’’; and

5 (ii) in clause (ii), by inserting ‘‘or

6 public housing agency’’ after ‘‘owner’’ each

7 place it appears; and

8 (B) in subparagraph (B), by inserting

9 after ‘‘wages’’ each place it appears the follow10 ing: ‘‘, other earnings or income,’’.

11 (3) PENALTY.—In subsection (c)(3)—

12 (A) in subparagraph (A), by inserting ‘‘or

13 section 6103(l)(7)(D)(ix) of the Internal Reve14 nue Code of 1986’’ after ‘‘Social Security Act’’;

15 and

16 (B) in the first sentence of subparagraph

17 (B)—

18 (i) by striking clause (i) and inserting

19 the following: ‘‘(i) a negligent or knowing

20 disclosure of information referred to in this

21 section, section 303(i) of the Social Secu22 rity Act, or section 6103(l)(7)(D)(ix) of

23 the Internal Revenue Code of 1986 about

24 such person by an officer or employee of

25 any public housing agency or owner (or
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1 employee thereof), which disclosure is not

2 authorized by this section, such section

3 303(i), such section 6103(l)(7)(D)(ix), or

4 any regulation implementing this section,

5 such section 303(i), or such section

6 6103(l)(7)(D)(ix), or’’; and

7 (ii) in clause (ii), by inserting ‘‘such

8 section 6103(l)(7)(D)(ix),’’ after ‘‘303(i),’’.

9 (4) CONFORMING AMENDMENT.—The heading

10 of subsection (c) of section 904 of the Stewart B.

11 McKinney Homeless Assistance Amendments Act of

12 1988 is amended by striking ‘‘STATE EMPLOY13 MENT’’.

14 (5) OPERATING SUBSIDY ADJUSTMENTS.—Sec15 tion 9(a) of the United States Housing Act of 1937

16 (42 U.S.C. 1437g(c)) is amended by adding at the

17 end the following:

18 ‘‘(4) Adjustments to a public housing agency’s oper19 ating subsidy made by the Secretary under this section

20 shall reflect actual changes in rental income collections re21 sulting from the application of section 904 of the Stewart

22 B. McKinney Homeless Assistance Amendments Act of

23 1988.’’.

24 (b) CONFORMING INTERNAL REVENUE CODE

25 AMENDMENTS.—
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1 (1) IN GENERAL.—Subparagraph (D) of section

2 6103(l)(7) of the Internal Revenue Code of 1986

3 (26 U.S.C. 6103(l)(7)(D); relating to the disclosure

4 of return information to Federal, State, and local

5 agencies administering certain programs) is amend6 ed—

7 (A) in clause (vii), by striking ‘‘, and’’ at

8 the end and inserting a semicolon;

9 (B) in clause (viii), by striking the period

10 at the end and inserting ‘‘; and’’;

11 (C) by inserting after clause (viii) the fol12 lowing new clause:

13 ‘‘(ix) any housing assistance program

14 administered by the Department of Hous15 ing and Urban Development that involves

16 initial and periodic review of an applicant’s

17 or participant’s income, except that return

18 information may be disclosed under this

19 paragraph only to the Secretary of Hous20 ing and Urban Development and only with

21 respect to applicants for and participants

22 in such programs who have signed consent

23 forms under section 904(b)(3) of the Stew24 art B. McKinney Homeless Assistance

25 Amendments Act of 1988.’’; and
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1 (D) by adding at the end the following:

2 ‘‘Clause (ix) shall not apply after September

3 30, 1998.’’.

4 (2) AMENDMENT TO THE HEADING.—The head5 ing of paragraph (7) of section 6103(l) of the Inter6 nal Revenue Code of 1986 is amended by inserting

7 after ‘‘1977,’’ the following: ‘‘CERTAIN HOUSING AS8 SISTANCE PROGRAMS,’’.

9 SEC. 3004. GNMA REMIC GUARANTEE FEES.

10 Section 306(g)(3) of the National Housing Act (12

11 U.S.C. 1721(g)(3)) is amended by adding at the end the

12 following new subparagraph:

13 ‘‘(E)(i) Notwithstanding subparagraphs (A) through

14 (D), fees charged for the guarantee of, or commitment to

15 guarantee, multiclass securities backed by a trust or pool

16 of securities or notes guaranteed by the Association under

17 this subsection, and other related fees shall be charged by

18 the Association in an amount the Association deems ap19 propriate. The Association shall take such action as may

20 be necessary to reasonably assure that such portion of the

21 benefit, resulting from the Association’s multiclass securi22 ties program, as the Association determines is appropriate

23 accrues to mortgagors who execute eligible mortgages

24 after the date of the enactment of this subparagraph.
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1 ‘‘(ii) In its annual report, the Association shall pro2 vide a summary of each activity of the Association pertain3 ing to the Association’s multiclass securities program.

4 Each summary shall contain a description of the activity

5 and shall include—

6 ‘‘(I) information pertaining to the size of the

7 transactions closed, the number of mortgages in8 volved, the amount of fees charged, those persons or

9 entities receiving payments for services provided and

10 the amounts of such payments; and

11 ‘‘(II) an estimate of the portion of the benefit

12 of the multiclass securities program accruing to

13 mortgagors as well as a description of any action

14 taken by the Association to ensure such accrual.

15 ‘‘(iii) The Association shall provide for the initial im16 plementation of the program for which fees are charged

17 under the first sentence of clause (i) by notice published

18 in the Federal Register. The notice shall be effective upon

19 publication and shall provide an opportunity for public

20 comment. Not later than 12 months after publication of

21 the notice, the Association shall issue regulations for such

22 program based on the notice, comments received, and the

23 experience of the Association in carrying out the program

24 during such period.
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1 ‘‘(iv) The Association shall consult with persons or

2 entities in such manner as the Association deems appro3 priate to ensure the efficient commencement and operation

4 of the multiclass securities program.

5 ‘‘(v) No State or local law, and no Federal law (ex6 cept Federal law enacted expressly in limitation of this

7 clause after the effective date of this subparagraph) shall

8 preclude or limit the exercise by the Association of its

9 power to contract with persons or entities, and its rights

10 to enforce such contracts, for the purpose of ensuring the

11 efficient commencement and continued operation of the

12 multiclass securities program.

13 ‘‘(vi) Prior to the commencement of the multiclass

14 securities program, the Association shall provide to the

15 Committee on Banking, Housing, and Urban Affairs of

16 the Senate and the Committee on Banking, Finance and

17 Urban Affairs of the House of Representatives a report

18 describing the Association’s design of the multiclass secu19 rities program, including program elements that ensure

20 the minimization of risks arising from the operation of the

21 multiclass securities program, such as—

22 ‘‘(I) any industry proven safeguards, including

23 capital standards for sponsors and provisions for in24 demnification from private parties for events that
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1 may result in the Association’s liability under its

2 guaranty or commitment to guaranty; and

3 ‘‘(II) the sufficiency of the Association’s staff

4 resources to administer the multiclass securities pro5 gram.’’.

6 SEC. 3005. MUTUAL MORTGAGE INSURANCE FUND PRE7 MIUMS.

8 To improve the actuarial soundness of the Mutual

9 Mortgage Insurance Fund under the National Housing

10 Act, the Secretary of Housing and Urban Development

11 shall increase the rate at which the Secretary earns the

12 single premium payment collected at the time of insurance

13 of a mortgage that is an obligation of such Fund (with

14 respect to the rate in effect on the date of the enactment

15 of this Act). In establishing such increased rate, the Sec16 retary shall consider any current audit findings and re17 serve analyses and information regarding the expected av18 erage duration of mortgages that are obligations of such

19 Fund and may consider any other information that the

20 Secretary determines to be appropriate.
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1 TITLE IV—COMMUNICATIONS

2 AND TRANSPORTATION

3 Subtitle A—Spectrum Allocation

4 and Auction

5 SEC. 401. SHORT TITLE.

6 This subtitle may be cited as the ‘‘Emerging Tele7 communications Technologies Act of 1993’’.

8 SEC. 402. FINDINGS.

9 The Congress finds that—

10 (1) the Federal Government currently reserves

11 for its own use, or has priority of access to, approxi12 mately 40 percent of the electromagnetic spectrum

13 that is assigned for use pursuant to the Communica14 tions Act of 1934;

15 (2) many of such frequencies are underutilized

16 by Federal Government licensees;

17 (3) the public interest requires that many of

18 such frequencies be utilized more efficiently by Fed19 eral Government and non-Federal licensees;

20 (4) additional frequencies are assigned for serv21 ices that could be obtained more efficiently from

22 commercial providers or other vendors;

23 (5) scarcity of assignable frequencies for licens24 ing by the Commission can and will—
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1 (A) impede the development and commer2 cialization of new telecommunications products

3 and services;

4 (B) limit the capacity and efficiency of

5 telecommunications systems in the United

6 States;

7 (C) prevent some State and local police,

8 fire, and emergency services from obtaining ur9 gently needed radio channels; and

10 (D) adversely affect the productive capac11 ity and international competitiveness of the

12 United States economy;

13 (6) a reassignment of these frequencies can

14 produce significant economic returns;

15 (7) a reassignment of Federal Government fre16 quencies can be accomplished without adverse im17 pact on amateur radio licenses that currently share

18 allocations with Federal Government stations;

19 (8) current spectrum assignment procedures—

20 comparative hearings and lotteries—can be expen21 sive and time consuming, can strain the limited re22 sources of the Federal Communications Commission,

23 and can result in an inefficient distribution of spec24 trum and an unjustified windfall to speculators;
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1 (9) competitive bidding could reduce the cost in

2 time and money—and increase the efficiency—of the

3 spectrum assignment process for certain radio serv4 ices, discourage speculative applications, encourage

5 the efficient use of spectrum by licensees, and fairly

6 compensate United States taxpayers for use of a

7 scarce public natural resource;

8 (10) competitive bidding should be structured

9 to—

10 (A) facilitate introduction of new spec11 trum-based technologies and services and entry

12 of new companies into the telecommunications

13 market;

14 (B) recognize the legitimate needs of rural

15 telephone companies in providing spectrum16 based, common carrier services in rural markets

17 in which they provide telephone exchange serv18 ice by wire;

19 (C) give appropriate consideration to small

20 businesses and minority-owned businesses that

21 want to participate in the competitive bidding

22 process;

23 (D) recognize the need to make reasonably

24 priced mobile communications services available

25 to businesses in rural areas;
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1 (E) recognize the need to ensure that ade2 quate spectrum continues to be available for

3 public safety services; and

4 (F) otherwise further the public interest;

5 (11) competitive bidding should apply only to

6 the granting of new spectrum licenses and should

7 not—

8 (A) disrupt the operations of existing spec9 trum licensees;

10 (B) alter existing spectrum allocation pro11 cedures;

12 (C) apply to certain services governed by

13 public interest regulations;

14 (D) diminish the existing authority of the

15 Federal Communications Commission to regu16 late or reclaim spectrum licenses;

17 (E) prevent or discourage the allocation of

18 spectrum to meet the current or future needs of

19 public safety services; or

20 (F) grant any right to a spectrum licensee

21 different from the rights awarded to licensees

22 who obtain their license through assignment

23 methods other than competitive bidding;

24 (12) in appropriating revenues received from

25 competitive bidding, priority should be given to—
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1 (A) funding spectrum management, plan2 ning, monitoring, and enforcement and other

3 activities of the Federal Communications Com4 mission, the National Telecommunications and

5 Information Administration, and other Federal

6 agencies aimed at increasing the efficiency and

7 effectiveness of spectrum use, facilitating the

8 introduction of new spectrum-based tech9 nologies and services, and enhancing the inter10 national competitiveness of the United States

11 and the ability of American companies to enter

12 new markets; and

13 (B) extending the reach of public radio

14 and television to underserved areas of the Unit15 ed States and underserved groups of Americans

16 and enhancing the ability of public tele17 communications to deliver needed original, high18 quality public service programming; and

19 (13) because commercial mobile services require

20 a Federal license and the Federal Government is at21 tempting to promote competition for such services,

22 and because providers of such services do not exer23 cise market power vis-a-vis telephone exchange serv24 ice carriers and State regulation can be a barrier to

25 the development of competition in this market, uni-
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1 form national policy is necessary and in the public

2 interest.

3 SEC. 403. NATIONAL SPECTRUM PLANNING.

4 (a) PLANNING ACTIVITIES.—The Assistant Secretary

5 of Commerce for Communications and Information and

6 the Chairman of the Commission shall meet, at least bian7 nually, to conduct joint spectrum planning with respect

8 to the following issues:

9 (1) the future spectrum requirements for public

10 and private uses, including State and local govern11 ment public safety agencies;

12 (2) the spectrum allocation actions necessary to

13 accommodate those uses; and

14 (3) actions necessary to promote the efficient

15 use of the spectrum, including spectrum manage16 ment techniques to promote increased shared use of

17 the spectrum that does not cause harmful inter18 ference, as a means of increasing commercial access.

19 (b) REPORT ON PLANNING ACTIVITIES.—Not later

20 than 24 months after the date of enactment of this Act,

21 the Assistant Secretary of Commerce for Communications

22 and Information and the Chairman of the Commission

23 shall submit a joint report to the Committee on Energy

24 and Commerce of the House of Representatives and the

25 Committee on Commerce, Science, and Transportation of
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1 the Senate on the joint spectrum planning activities con2 ducted under subsection (a) and recommendations for ac3 tion developed pursuant to such activities. The report shall

4 contain recommendations for the reform of the process of

5 allocating spectrum between Federal uses and non-Federal

6 uses.

7 (c) PROCEDURES TO ENSURE OPPORTUNITY FOR

8 MINORITY-OWNED BUSINESSES AND SMALL BUSI9 NESSES.—The Commission shall develop procedures to en10 sure that minority-owned businesses and small businesses

11 are given the opportunity to provide spectrum-based serv12 ices. In developing such procedures, the Commission shall

13 consider the use of tax certificates and bidding pref14 erences.

15 (d) STUDY ON SPECTRUM NEEDS OF PUBLIC SAFE16 TY AGENCIES.—The Commission shall complete and sub17 mit to Congress, not later than 18 months after the date

18 of enactment of this Act, a study of current and future

19 spectrum needs of State and local government public safe20 ty agencies through the year 2010, and a specific plan to

21 satisfy those spectrum needs.
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1 SEC. 404. RECOMMENDATIONS FOR REALLOCATION OF

2 CERTAIN FREQUENCIES.

3 (a) IDENTIFICATION REQUIRED.—For purposes of

4 reallocation, the Secretary shall identify frequencies

5 that—

6 (1) are allocated on a primary basis for Federal

7 Government use;

8 (2) are not required for the present or identifi9 able future needs of the Federal Government;

10 (3) can feasibly be made available, as of the

11 date of such identification or at any time during the

12 next 15 years, for use under the Act (other than for

13 Federal Government stations under section 305 of

14 the Act) without resulting in costs to the Federal

15 Government, or loss of services or benefits to the

16 public, that are excessive in relation to the benefits

17 to the public that may be provided by non-Federal

18 licensees; and

19 (4) are most likely to have the greatest poten20 tial for productive uses and public benefits under the

21 Act if allocated for commercial uses.

22 (b) MINIMUM AMOUNT OF SPECTRUM REC23 OMMENDED.—

24 (1) OVERALL RECOMMENDATION.—In accord25 ance with the provisions of this section, the Sec26 retary shall recommend for reallocation, for use
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1 other than by Federal Government stations under

2 section 305 of the Act (47 U.S.C. 305), at least 200

3 megahertz of frequencies identified under subsection

4 (a) that are located below 5 gigahertz. At least one5 half of such frequencies shall be located below 3

6 gigahertz.

7 (2) MIXED USES PERMITTED TO BE COUNT8 ED.—Among the frequencies recommended under

9 this section for reallocation, the Secretary may in10 clude frequencies and frequency bands that are to be

11 partially retained for use by Federal Government

12 stations but that are also recommended to be reallo13 cated under the Act for use by non-Federal stations,

14 except that—

15 (A) such mixed-use frequencies and fre16 quency bands may not count toward more than

17 one-half of the 200 megahertz minimum re18 quired by paragraph (1);

19 (B) such mixed-use frequencies and fre20 quency bands may not be so counted unless the

21 assignments of the frequencies to Federal Gov22 ernment stations under section 305 of the Act

23 (47 U.S.C. 305) are limited by geographic area,

24 by time, or by other means so as to guarantee

25 that the potential use to be made by such Fed-
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1 eral Government stations is substantially less

2 (as measured by geographic area, time, or oth3 erwise) than the potential use to be made by

4 non-Federal stations; and

5 (C) the operational sharing permitted

6 under this paragraph shall be subject to coordi7 nation procedures that the Commission and the

8 Secretary shall jointly establish and implement

9 to ensure against harmful interference.

10 (c) CONSIDERATION OF CRITERIA FOR IDENTIFICA11 TION.—

12 (1) NEEDS OF THE FEDERAL GOVERNMENT.—

13 In determining whether a frequency meets the cri14 teria specified in subsection (a)(2), the Secretary

15 shall—

16 (A) consider whether the frequency is used

17 to provide a communications service that is or

18 could be made available from a commercial car19 rier or other vendor;

20 (B) seek to promote—

21 (i) the maximum practicable reliance

22 on commercially available substitutes;

23 (ii) the sharing of frequencies (as per24 mitted under subsection (b)(2));
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1 (iii) the development and use of new

2 communications technologies; and

3 (iv) the use of nonradiating commu4 nications systems where practicable; and

5 (C) seek to avoid—

6 (i) serious degradation of Federal

7 Government services and operations;

8 (ii) excessive costs to the Federal Gov9 ernment and users of Federal Government

10 services; and

11 (iii) excessive disruption of existing

12 use of Federal Government frequencies by

13 amateur radio licensees.

14 (2) FEASIBILITY OF USE.—In determining

15 whether a frequency meets the criteria specified in

16 subsection (a)(3), the Secretary shall—

17 (A) assume that the frequency will be as18 signed by the Commission under section 303 of

19 the Act (47 U.S.C. 303) within 15 years;

20 (B) assume reasonable rates of scientific

21 progress and growth of demand for tele22 communications services;

23 (C) seek to include frequencies which can

24 be used to stimulate the development of new

25 technologies; and
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•S 1134 PCS

1 (D) consider the immediate and recurring

2 costs to reestablish services displaced by the

3 reallocation of spectrum.

4 (3) COMMERCIAL USE.—In determining wheth5 er a frequency meets the criteria specified in sub6 section (a)(4), the Secretary shall consider—

7 (A) the extent to which equipment is avail8 able that is capable of utilizing such frequency;

9 (B) the proximity of frequencies that are

10 already assigned for commercial or other non11 Federal use;

12 (C) the extent to which, in general, com13 mercial users could share the frequency with

14 amateur radio licensees; and

15 (D) the activities of foreign governments in

16 making frequencies available for experimen17 tation or commercial assignments in order to

18 support their domestic manufacturers of equip19 ment.

20 (4) OTHER USES.—

21 (A) APPLICABILITY OF CRITERIA.—The

22 criteria specified by subsection (a) shall be

23 deemed not to be met for any purpose under

24 this subtitle with regard to any frequency as25 signment to, or any frequency assignment used
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1 by, a Federal power agency for the purpose of

2 withdrawing that assignment.

3 (B) MIXED USE ELIGIBILITY.—The fre4 quencies assigned to any Federal power agency

5 may only be eligible for mixed use under sub6 section (b)(2) in geographically separate areas,

7 but in those cases where a frequency is to be

8 shared by an affected Federal power agency

9 and a non-Federal user, such use by the non10 Federal user shall not cause harmful inter11 ference to the affected Federal power agency or

12 adversely affect the reliability of its power sys13 tem.

14 (C) DEFINITION.—As used in this para15 graph, the term ‘‘Federal power agency’’ means

16 the Tennessee Valley Authority, the Bonneville

17 Power Administration, the Western Area Power

18 Administration, or the Southwestern Power Ad19 ministration.

20 (d) PROCEDURE FOR IDENTIFICATION OF

21 REALLOCABLE BANDS OF FREQUENCIES.—

22 (1) REPORT IDENTIFYING 30 MEGAHERTZ FOR

23 IMMEDIATE REALLOCATION.—Within 6 months after

24 the date of enactment of this Act, the Secretary

25 shall prepare and submit to the President and the
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•S 1134 PCS

1 Congress a report that recommends for immediate

2 reallocation no less than 30 megahertz of fre3 quencies identified under subsection (a). None of the

4 frequencies covered by such report may be allocated

5 for mixed use as described in subsection (b)(2). Not

6 less than one-half of such frequencies shall be

7 located below 3 gigahertz.

8 (2) PRELIMINARY REPORT ON OTHER

9 REALLOCABLE FREQUENCIES.—Within 6 months

10 after the date of enactment of this Act, the Sec11 retary shall prepare, make publicly available, and

12 submit to the President and the Congress a prelimi13 nary report that recommends for reallocation at

14 least 170 megahertz of frequencies identified under

15 subsection (a), other than those recommended for

16 immediate reallocation under paragraph (1).

17 (3) PUBLIC COMMENT; CHANGES TO REPORT.—

18 The Secretary shall receive public comment on the

19 preliminary report required by paragraph (2) and

20 shall, based upon the comments, make such changes

21 to the report as are warranted to meet the objectives

22 of this section.

23 (4) DIRECT DISCUSSIONS.—The Secretary shall

24 encourage and provide opportunity for direct discus25 sions among commercial representatives and Federal
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1 Government users of the spectrum to aid the Sec2 retary in determining which frequencies to rec3 ommend for reallocation. The Secretary shall provide

4 notice to the public of any such discussions, includ5 ing the name or names of any businesses or other

6 persons represented in such discussions, and shall

7 provide the public with an opportunity to comment

8 on the results of any such negotiations prior to the

9 submission of the final report required by paragraph

10 (5).

11 (5) FINAL REPORT ON OTHER REALLOCABLE

12 FREQUENCIES.—Within 18 months after the date of

13 enactment of this Act, the Secretary shall prepare

14 and submit to the President and the Congress a

15 final report that recommends the reallocation of at

16 least 170 megahertz of frequencies as described in

17 paragraph (2). Not less than one-half of such fre18 quencies shall be located below 3 gigahertz.

19 (6) LIMITATION ON REALLOCATION.—None of

20 the frequencies recommended for reallocation in the

21 reports required by this subsection shall have been

22 recommended, prior to the date of enactment of this

23 Act, for reallocation to non-Federal use by inter24 national agreement.
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1 (e) TIMETABLE FOR REALLOCATION AND LIMITA2 TION.—The Secretary shall, as part of the reports re3 quired by paragraphs (1) and (2) of subsection (d), in4 clude a timetable that recommends dates by which the

5 President shall withdraw or limit assignments of the fre6 quencies specified in the reports. In setting the rec7 ommended effectived dates, the Secretary shall—

8 (1) consider the need to reallocate frequencies

9 as early as possible, taking into account the require10 ments of section 406;

11 (2) consider the useful remaining life of equip12 ment that has been purchased or contracted for pur13 chase to operate on identified frequencies;

14 (3) consider the need to coordinate frequency

15 use with other nations; and

16 (4) take into account the relationship between

17 the costs to the Federal Government of changing to

18 different frequencies and the benefits that may be

19 obtained from commercial and other non-Federal

20 uses of the reassigned frequencies.

21 SEC. 405. WITHDRAWAL OR LIMITATION OF ASSIGNMENT

22 TO FEDERAL GOVERNMENT STATIONS.

23 (a) IN GENERAL.—The President shall—

24 (1) within 12 months after receipt of the report

25 required by section 404(d)(1), withdraw the assign-
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1 ment to a Federal Government station of any fre2 quency in the frequencies recommended by that re3 port for immediate reallocation;

4 (2) by the effective date recommended by the

5 Secretary under section 404(e) (except as provided

6 in subsection (b)(4) of this section), withdraw or

7 limit the assignment to a Federal Government sta8 tion of any frequency which the report required by

9 section 404(d)(3) recommends be reallocated or

10 made available for mixed use on such recommended

11 effective date;

12 (3) assign or reassign other frequencies to Fed13 eral Government stations as necessary to adjust to

14 such withdrawal or limitation of assignments; and

15 (4) transmit a notice and description to the

16 Commission and each House of Congress of the ac17 tions taken under this subsection.

18 (b) EXCEPTIONS.—

19 (1) AUTHORITY TO SUBSTITUTE.—If the Presi20 dent determines that a circumstance described in

21 paragraph (2) exists, the President—

22 (A) may substitute an alternative fre23 quency for the frequency that is subject to such

24 determination and withdraw (or limit) the as-
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•S 1134 PCS

1 signment of that alternative frequency in the

2 manner required by subsection (a); and

3 (B) shall submit a statement of the rea4 sons for taking the action described in subpara5 graph (A) to the Committee on Energy and

6 Commerce of the House of Representatives and

7 the Committee on Commerce, Science, and

8 Transportation of the Senate.

9 (2) GROUNDS FOR SUBSTITUTION.—Each of

10 the following subparagraphs describes a cir11 cumstance referred to in paragraph (1):

12 (A) The reassignment would seriously jeop13 ardize the national defense interests of the

14 United States.

15 (B) The frequency proposed for reassign16 ment is uniquely suited to meeting important

17 governmental needs.

18 (C) The reassignment would seriously jeop19 ardize public health or safety.

20 (D) The reassignment will result in costs

21 to the Federal Government that are excessive in

22 relation to the benefits that may be obtained

23 from commercial or other non-Federal uses of

24 the reassigned frequency.
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1 (E) The reassignment will disrupt the ex2 isting use of a Federal Government band of fre3 quencies by amateur radio licensees.

4 (3) CRITERIA FOR SUBSTITUTED FRE5 QUENCIES.—For purposes of paragraph (1), a fre6 quency may not be substituted for a frequency iden7 tified and recommended under section 404 for

8 reallocation, unless the substituted frequency also

9 meets each of the criteria specified by section

10 404(a).

11 (4) DELAYS IN IMPLEMENTATION.—If the

12 President determines that any action cannot be com13 pleted by the effective date recommended by the Sec14 retary pursuant to section 404(e), or that such an

15 action by such date would result in a frequency

16 being unused as a consequence of the Commission’s

17 plan under section 404(b), the President may—

18 (A) withdraw or limit the assignment to

19 Federal Government stations on a later date

20 that is consistent with such plan, except that

21 the President shall notify each Committee spec22 ified in paragraph (1)(B) and the Commission

23 of the reason that withdrawal or limitation at

24 a later date is required; or
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1 (B) substitute alternative frequencies pur2 suant to this subsection.

3 (c) COSTS OF WITHDRAWING FREQUENCIES AS4 SIGNED TO THE FEDERAL GOVERNMENT.—

5 (1) REIMBURSEMENT AUTHORIZED.—Any Fed6 eral agency, or non-Federal entity operating on be7 half of a Federal agency, whose operation is dis8 placed from a frequency pursuant to this section

9 may be reimbursed, from revenues received pursuant

10 to section 408, not more than the incremental costs

11 such agency or entity incurs (in such amounts as are

12 provided in advance in an appropriations Act) that

13 are directly attributable to the displacement from

14 the frequency. The estimates of these costs shall be

15 prepared by the affected agency, in consultation with

16 the Department of Commerce.

17 (2) AUTHORIZATION OF APPROPRIATIONS.—

18 There are authorized to be appropriated to the af19 fected Federal agencies such sums as may be nec20 essary to carry out the purposes of this subsection.

21 (d) EXISTING AUTHORITY RETAINED.—

22 (1) ADDITIONAL REALLOCATION.—Nothing in

23 this subtitle prevents or limits additional reallocation

24 of spectrum from the Federal Government to the

25 commercial or other sectors.
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1 (2) IMPLEMENTATION OF NEW TECHNOLOGIES

2 AND SERVICES.—Notwithstanding any other provi3 sion of this subtitle—

4 (A) the Secretary may at any time allow

5 frequencies allocated on a primary basis for

6 Federal Government use to be used by non7 Federal licensees on a mixed-use basis for the

8 purpose of facilitating the prompt implementa9 tion of new technologies or services; and

10 (B) the Commission shall expedite and give

11 priority to the allocation of any frequencies

12 identified pursuant to subparagraph (A), and

13 any associated licensing.

14 SEC. 406. ALLOCATION AND ASSIGNMENT OF FREQUENCIES

15 BY THE COMMISSION.

16 (a) ALLOCATION AND ASSIGNMENT OF IMMEDIATELY

17 AVAILABLE FREQUENCIES.—With respect to the fre18 quencies made available for immediate reallocation pursu19 ant to section 405(a)(1), the Commission, not later than

20 18 months after the date of enactment of this Act, shall

21 issue rules to allocate such frequencies and shall propose

22 rules to assign such frequencies.

23 (b) ALLOCATION AND ASSIGNMENT OF REMAINING

24 AVAILABLE FREQUENCIES.—With respect to the fre25 quencies made available for reallocation pursuant to sec-
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1 tion 405(a)(2), the Commission shall, not later than 1

2 year after receipt of the final report identified in section

3 404(d)(4), prepare, in consultation with the Assistant Sec4 retary of Commerce for Communications and Information,

5 submit to the President and the Congress, and implement,

6 a plan for the allocation and assignment under the Act

7 of such frequencies. Such plan shall—

8 (1) not propose the immediate allocation and

9 assignment of all such frequencies but, taking into

10 account the timetable recommended by the Secretary

11 pursuant to section 404(e), shall propose—

12 (A) gradually to allocate and assign the

13 frequencies remaining, after making the res14 ervation required by subparagraph (B), over the

15 course of 10 years beginning on the date of

16 submission of such plan; and

17 (B) to reserve a significant portion of such

18 frequencies for distribution beginning after the

19 end of such 10-year period;

20 (2) contain appropriate provisions to ensure the

21 availability of frequencies for (A) new technologies

22 and services in accordance with the policies of sec23 tion 7 of the Act (47 U.S.C. 157) and (B) the safety

24 of life and property in accordance with the policies

25 of section 1 of the Act (47 U.S.C. 151);
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1 (3) address (A) the feasibility of reallocating

2 portions of the spectrum from current commercial

3 and other non-Federal uses to provide for more effi4 cient use of the spectrum, and (B) innovation and

5 marketplace developments that may affect the rel6 ative efficiencies of different spectrum allocations;

7 (4) not prevent the Commission from allocating

8 frequencies, and assigning licenses to use fre9 quencies, not included in the plan; and

10 (5) not preclude the Commission from making

11 changes to the plan in future proceedings.

12 (c) AMENDMENT TO THE ACT.—Section 303 of the

13 Act (47 U.S.C. 303) is amended by adding at the end the

14 following new subsection:

15 ‘‘(v) Have authority to assign licenses to use the fre16 quencies reallocated from United States Government use

17 to non-United States Government use pursuant to the

18 Emerging Telecommunications Technologies Act of 1993;

19 except that any such assignment shall be made expressly

20 subject to the right of the President to reclaim such fre21 quencies under section 7 of such Act.’’.

22 SEC. 407. AUTHORITY TO RECLAIM REASSIGNED FRE23 QUENCIES.

24 (a) AUTHORITY OF PRESIDENT.—Subsequent to the

25 withdrawal of assignment to Federal Government stations
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1 pursuant to section 405, the President may reclaim reas2 signed frequencies for reassignment to Federal Govern3 ment stations in accordance with this section.

4 (b) PROCEDURE FOR RECLAIMING FREQUENCIES.—

5 (1) UNALLOCATED FREQUENCIES.—If the fre6 quencies to be reclaimed have not been allocated or

7 assigned by the Commission pursuant to the Act,

8 the President shall follow the procedures for substi9 tution of frequencies established by section 405(b) of

10 this subtitle.

11 (2) ALLOCATED FREQUENCIES.—If the fre12 quencies to be reclaimed have been allocated or as13 signed by the Commission, the President shall follow

14 the procedures for substitution of frequencies estab15 lished by section 405(b) of this subtitle, except that

16 the notification required by section 405(b)(1)(B)

17 shall include—

18 (A) a timetable to accommodate an orderly

19 transition for displaced licensees to obtain new

20 frequencies and equipment necessary for its uti21 lization; and

22 (B) an estimate of the cost of displacing

23 spectrum uses licensed by the Commission.

24 (c) COSTS OF RECLAIMING FREQUENCIES; APPRO25 PRIATIONS AUTHORIZED.—The Federal Government shall
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1 bear all costs of reclaiming frequencies pursuant to this

2 section, including the cost of equipment which is rendered

3 unusable, the cost of relocating operations to a different

4 frequency, and any other costs that are directly attrib5 utable to the reclaiming of the frequency pursuant to this

6 section. There are authorized to be appropriated such

7 sums as may be necessary to carry out the purposes of

8 this section.

9 (d) EFFECTIVE DATE OF RECLAIMED FRE10 QUENCIES.—The Commission shall not withdraw licenses

11 for any reclaimed frequencies until the end of the fiscal

12 year following the fiscal year in which the President’s noti13 fication is received.

14 (e) EFFECT ON OTHER LAW.—Nothing in this sec15 tion shall be construed to limit or otherwise affect the au16 thority of the President under section 706 of the Act (47

17 U.S.C. 606).

18 SEC. 408. COMPETITIVE BIDDING.

19 (a) COMPETITIVE BIDDING.—

20 (1) IN GENERAL.—

21 (A) FIVE-YEAR AUTHORIZATION.—The

22 Commission shall, during fiscal years 1994

23 through 1998, use the competitive bidding proc24 ess authorized under the amendment made by

25 subsection (b) to grant all radio spectrum li-
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1 censes for which two or more mutually exclusive

2 applications have been filed, including the 200

3 megahertz of spectrum made available to the

4 Commission under this subtitle, and including

5 the licenses issued for a personal communica6 tions service established pursuant to the pro7 ceeding entitled ‘‘Amendment to the Commis8 sion’s Rules to Establish New Personal Com9 munications Services’’, or any successor pro10 ceeding, except for those licenses identified in

11 subparagraphs (A) through (E) of section

12 309(j)(4) of the Act and those licenses that the

13 Commission determines should in the public in14 terest be issued by comparative hearing under

15 section 309(a) through (f) of the Act. To the

16 extent possible, and consistent with the pur17 poses of this subtitle, the Commission shall seek

18 to ensure that revenues received pursuant to

19 the competitive bidding process are received be20 fore the end of fiscal year 1998.

21 (B) EXPIRATION OF REQUIREMENTS.—

22 The requirements of subparagraph (A) shall ex23 pire either—

24 (i) upon a determination by the Sec25 retary of the Treasury that competitive
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1 bidding has resulted in or is reasonably ex2 pected to result in the receipt of

3 $7,200,000,000 by the end of fiscal year

4 1998, or

5 (ii) at the end of fiscal year 1998,

6 whichever is earlier.

7 (C) REPORT TO PRESIDENT AND CON8 GRESS.—The Commission shall prepare, in con9 sultation with the Assistant Secretary of Com10 merce for Communications and Information,

11 and submit to the President and the Congress,

12 not later than March 31, 1997, and March 31,

13 1999, reports on the use of competitive bidding

14 under subparagraph (A). Such reports shall ex15 amine, in addition to any other matters deemed

16 appropriate by the Commission, whether and to

17 what extent—

18 (i) competitive bidding significantly

19 improved the efficiency and effectiveness of

20 the process for granting radio spectrum

21 licenses;

22 (ii) competitive bidding facilitated the

23 introduction of new spectrum-based tech24 nologies and the entry of new companies

25 into the telecommunications market;
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1 (iii) the needs of rural spectrum users

2 were adequately addressed in the competi3 tive bidding process;

4 (iv) small businesses and minority5 owned businesses were able to participate

6 successfully in the competitive bidding

7 process; and

8 (v) statutory changes are needed to

9 improve the competitive bidding process.

10 (2) RETENTION OF REVENUES.—Notwithstand11 ing paragraph (6) of section 309(j) of the Act, as

12 added by this subtitle, the salaries and expenses ac13 count of the Commission shall retain as an offsetting

14 collection such sums as may be necessary from the

15 receipts received pursuant to such section for the

16 costs of developing and implementing the program

17 required by subsection (a)(1)(A). Such offsetting col18 lections shall be available for obligation subject to

19 the terms and conditions of the receiving appropria20 tions account, and shall be deposited in such ac21 counts on a quarterly basis. Any funds appropriated

22 to the Commission for fiscal years 1994 through

23 1998 for the purpose of assigning licenses using ran24 dom selection under section 309(i) of the Act shall
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1 be used by the Commission to implement section

2 309(j) of the Act.

3 (b) COMPETITIVE BIDDING AUTHORIZATION.—Sec4 tion 309 of the Act (47 U.S.C. 309) is amended by adding

5 at the end the following new subsection:

6 ‘‘(j)(1) Subject to the exemptions and conditions set

7 forth in the other provisions of this subsection, if there

8 are two or more mutually exclusive applications for any

9 construction permit or initial license which will involve any

10 use of the electromagnetic spectrum, the Commission shall

11 have authority to use competitive bidding in the granting

12 of such construction permit or initial license.

13 ‘‘(2)(A) The Commission shall, within 6 months after

14 the date of enactment of the Emerging Telecommuni15 cations Technologies Act of 1993 and following public no16 tice and comment proceedings, issue rules establishing

17 competitive bidding procedures under this subsection.

18 Such rules shall include safeguards to protect the public

19 interest in the use of the spectrum and shall ensure the

20 opportunity for successful participation by small busi21 nesses and minority-owned businesses.

22 ‘‘(B)(i) In the rules issued pursuant to subparagraph

23 (A), the Commission shall require potential bidders to file

24 a first-stage application indicating an intent to participate

25 in the competitive bidding process and containing such
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1 other information as the Commission finds necessary.

2 After conducting the bidding, the Commission shall re3 quire the wining bidder to file a second-stage application.

4 After determining that such application is acceptable for

5 filing and that the winning bidder is qualified as described

6 in clause (ii), the Commission shall grant the permit or

7 license to the winning bidder.

8 ‘‘(ii) No permit or license shall be granted to a win9 ning bidder pursuant to clause (i) unless the Commission

10 determines that such winning bidder is qualified pursuant

11 to section 308(b) and subsection (a) of this section, on

12 the basis of the information contained in the first-stage

13 and second-stage applications submitted pursuant to

14 clause (i).

15 ‘‘(iii) Each participant in the competitive bidding

16 process shall be subject to the schedule of charges con17 tained in section 8.

18 ‘‘(C) In the rules issued pursuant to subparagraph

19 (A), the Commission, in addition to other actions it finds

20 necessary to implement competitive bidding fairly and

21 effectively, shall—

22 ‘‘(i) establish the method of bidding (including

23 but not limited to sealed bids) and the basis for pay24 ment (such as installment or lump sum payments,

25 royalties on future income, a combination thereof, or
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1 other reasonable forms of payment specified by the

2 Commission); and

3 ‘‘(ii) establish other appropriate conditions on

4 such permits and licenses that serve the public

5 interest.

6 ‘‘(3)(A)(i) If the Commission decides to use competi7 tive bidding to grant two or more national, regional, or

8 local licenses per market in a terrestrial service that will

9 compete with telephone exchange service provided by a

10 qualified common carrier, the Commission shall designate

11 one such license per market as a rural program license.

12 ‘‘(ii) The Commission shall define the geographic

13 boundaries of the rural program license to correspond to

14 the geographic area of the telephone exchange service by

15 which the qualified common carrier became eligible for the

16 rural program license under subparagraph (E)(ii).

17 ‘‘(B)(i) Except as provided in subparagraph (D), the

18 Commission shall either grant a rural program license to

19 the qualified common carrier providing telephone exchange

20 service in the area covered by such license, or grant a

21 license to a consortium of such qualified carriers.

22 ‘‘(ii) No qualified common carrier that receives a

23 rural program license shall be eligible to—

24 ‘‘(I) receive any other license to provide the

25 same service in such area; or
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1 ‘‘(II) own any equity interest in, become a cred2 itor of, or otherwise become affiliated with any en3 tity that holds a license to provide the same service

4 in such area.

5 ‘‘(iii) Any qualified common carrier that receives a

6 rural program license shall (I) provide to all other licens7 ees providing the same service in such area the same qual8 ity of access to its wire network that it provides itself,

9 and (II) shall interconnect its wireless service with the

10 wireless service provided by another licensee providing the

11 same service on the same frequency in a different geo12 graphic area. Such other licensee shall provide an equiva13 lent interconnection with the wireless service of such rural

14 program licensee.

15 ‘‘(iv) The Commission may establish other rules or

16 conditions for the award of a rural program license, con17 sistent with the intent of this paragraph.

18 ‘‘(C)(i) Upon the grant of a rural program license

19 to a qualified common carrier, such carrier shall pay a

20 fee (in lump sum or installment payments, in royalties on

21 future income, in a combination thereof, or on any other

22 reasonable basis specified by the Commission) equal to the

23 value of such license. The value of such license shall be

24 the average of the amounts paid by persons granted li25 censes through competitive bidding to provide the same
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1 service in such area, except that the Commission shall de2 termine the value of such license by any reasonable means

3 when the geographic area served by the rural program li4 cense is not congruent with the geographic area served by

5 the other license or licenses. The Commission shall ensure

6 that the total amount paid by qualified common carriers

7 for all the licenses issued to them under the rural program

8 shall equal the total value, as determined under clause (ii),

9 of such licenses.

10 ‘‘(ii) The Commission shall determine the total value

11 of the licenses issued under the rural program to qualified

12 common carriers by first adding the amounts paid for the

13 licenses not subject to the rural program, and dividing

14 that sum by the number of licenses per market that are

15 not subject to the rural program. The Commission shall

16 then subtract from the amount found in the previous cal17 culation the total amount paid for the licenses issued for

18 the non-rural areas under bidding subject to the rural pro19 gram and the total amount paid for licenses issued pursu20 ant to subparagraph (D). The amount remaining shall be

21 the total value of all the licenses issued under the rural

22 program to qualified common carriers.

23 ‘‘(D) If no qualified common carrier applies for a

24 rural program license in a particular market and the Com25 mission awards the non-rural program licenses through
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1 competitive bidding, the rural program shall not apply for

2 that particular market and the Commission shall use com3 petitive bidding to award the licenses for the former rural

4 program areas, either separately or as part of larger li5 cense areas.

6 ‘‘(E) For purposes of this paragraph—

7 ‘‘(i) the term ‘rural area’ means any geographic

8 area that does not include either—

9 ‘‘(I) any incorporated place of 10,000 in10 habitants or more, or any part thereof; or

11 ‘‘(II) any territory, incorporated or unin12 corporated, included in an urbanized area (as

13 defined by the Bureau of the Census as of the

14 date of enactment of the Emerging Tele15 communications Technologies Act of 1993); and

16 ‘‘(ii) the term ‘qualified common carrier’ means

17 a common carrier that—

18 ‘‘(I) either provides telephone exchange

19 service by wire in a rural area, provides tele20 phone exchange service by wire to less than

21 10,000 subscribers, or is a telephone utility

22 whose income accrues to a State or political

23 subdivision thereof; and

24 ‘‘(II) submits an application for a rural

25 program license that meets the standards estab-
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1 lished by the Commission to determine ability

2 to provide the service covered by the license.

3 ‘‘(F) The provisions of subparagraph (A)(ii) do not

4 limit the Commission’s discretion to determine, for li5 censes issued other than under this paragraph, the size

6 of any market area or the number of licensees for any

7 service.

8 ‘‘(4) The competitive bidding authority provided to

9 the Commission in paragraph (1) shall not—

10 ‘‘(A) because of the need to avoid excessive

11 service disruption, extend to license renewals and

12 modifications;

13 ‘‘(B) because of the essential services they pro14 vide, extend to licenses reserved for the United

15 States Government and State or local government

16 entities;

17 ‘‘(C) because of their public service obligations,

18 extend to licenses to provide amateur operator serv19 ices, over-the-air terrestrial radio and television

20 broadcast services, public safety services, and radio

21 astronomy services;

22 ‘‘(D) because they do not involve mutually ex23 clusive applications, extend to private radio end-user

24 licenses, including Specialized Mobile Radio Service
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1 (SMRS), maritime, and aeronautical end-user

2 licenses;

3 ‘‘(E) because of the need to avoid excessive

4 service disruption, extend to any license grant to a

5 non-Federal licensee being moved from its current

6 frequency assignment to a different one by the Com7 mission in order to make spectrum available for new

8 technologies; and

9 ‘‘(F) extend to any other service, class of serv10 ices, or assignments that the Commission deter11 mines, after conducting public notice and comment

12 proceedings, should be exempt from competitive bid13 ding because of public interest factors warranting an

14 exemption to the extent the Commission determines

15 the use of competitive bidding would jeopardize ap16 propriate treatment of those factors.

17 ‘‘(5) No provision of this subsection or of the Emerg18 ing Telecommunications Technologies Act of 1993 shall

19 be construed, in any way, to—

20 ‘‘(A) alter spectrum allocation criteria and pro21 cedures established by the other provisions of this

22 Act;

23 ‘‘(B) allow the Commission to consider potential

24 revenues from competitive bidding when making de25 cisions concerning spectrum allocation;
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1 ‘‘(C) diminish the authority of the Commission

2 under the other provisions of this Act to regulate or

3 reclaim spectrum licenses;

4 ‘‘(D) grant any right to a spectrum licensee dif5 ferent from the rights awarded to licensees who ob6 tained their license through assignment methods

7 other than competitive bidding; or

8 ‘‘(E) prevent the Commission from awarding li9 censes to those persons who make significant con10 tributions to the development of a new telecommuni11 cations service or technology.

12 ‘‘(6) Moneys received from competitive bidding pur13 suant to this subsection shall be deposited in the general

14 fund of the Treasury.’’

15 (c) STATE AND LOCAL TAX TREATMENT OF LI16 CENSES AND PERMITS.—Title VII of the Act (47 U.S.C.

17 601 et seq.) is amended by adding at the end the following

18 new section:

19 ‘‘SEC. 714. STATE AND LOCAL TAX TREATMENT OF LI20 CENSES AND PERMITS.

21 ‘‘A license or permit issued by the Commission under

22 this Act shall not be treated as the property of the licensee

23 for property tax purposes, or other similar tax purposes,

24 by any State or local government entity.’’.
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1 SEC. 409. REGULATORY PARITY.

2 (a) AMENDMENT.—Section 332 of the Act (47 U.S.C.

3 332) is amended—

4 (1) by striking ‘‘PRIVATE LAND’’ from the head5 ing of the section; and

6 (2) by amending subsection (c) to read as

7 follows:

8 ‘‘(c)(1)(A) A person engaged in the provision of com9 mercial mobile services shall, insofar as such person is so

10 engaged, be treated as a common carrier for purposes of

11 this Act, except that the Commission may waive the re12 quirements of sections 203, 204, 205, and 214, and the

13 30-day notice provision of section 309(a), for commercial

14 mobile services and such other provisions of title II as the

15 Commission may, consistent with the public interest,

16 specify by rule. In prescribing any such rule, the Commis17 sion may not waive for commercial mobile services the re18 quirements of section 201, 202, 206, 208, 209, 215(c),

19 216, 217, 220 (d) or (e), 223, 225, 226 (a), (b), (c), (d),

20 (e), (f), (g), or (i), 227, or 228, or any other provision

21 that is necessary in order to ensure that the charges, prac22 tices, classifications, or regulations for or in connection

23 with commercial mobile services are just and reasonable

24 and are not unjustly or unreasonably discriminatory or

25 that is otherwise in the public interest.
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1 ‘‘(B) Upon reasonable request of any person provid2 ing commercial mobile service, the Commission shall order

3 a common carrier to establish physical connections with

4 such service pursuant to section 201. Except to the extent

5 that the Commission is required to respond to such a re6 quest, this subparagraph shall not be construed as a limi7 tation or expansion of the Commission’s authority to order

8 interconnection under this Act.

9 ‘‘(2) A person engaged in private land mobile service

10 shall not, insofar as such person is so engaged, be treated

11 as a common carrier for any purpose under this Act. A

12 common carrier shall not provide any dispatch service on

13 any frequency allocated for common carrier service, except

14 to the extent that such dispatch service is provided on sta15 tions licensed by the Commission in the Specialized Mobile

16 Radio Service prior to May 24, 1993, or is provided on

17 stations licensed in the domestic public land mobile radio

18 service before January 1, 1982. The Commission may by

19 regulation terminate, in whole or in part, the prohibition

20 contained in the preceding sentence if the commission de21 termines that such termination will service the public

22 interest.

23 ‘‘(3)(A) Notwithstanding sections 2(b) and 221(b),

24 no State or local government shall have any authority to

25 regulate the entry of or the rates charged by any commer-
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1 cial mobile service or any private land mobile service, ex2 cept that this paragraph shall not prohibit a State from

3 regulating the other terms and conditions of commercial

4 mobile services. Nothing in this subparagraph shall ex5 empt providers of commercial mobile services (where such

6 services are a substitute for land line telephone exchange

7 service for a substantial portion of the communications

8 within such State) from requirements imposed by a State

9 commission on all providers of telecommunications serv10 ices necessary to ensure the continued availability of tele11 phone exchange service at affordable rates.

12 ‘‘(B) Notwithstanding subparagraph (A), a State

13 may petition the Commission for authority to regulate the

14 rates for any commercial mobile service if such State dem15 onstrates that (i) such service is a substitute for land line

16 telephone exchange service for a substantial portion of the

17 communications within such State, or (ii) market condi18 tions with respect to such services fail to protect subscrib19 ers adequately from unjust and unreasonable rates or

20 rates that are unjustly or unreasonably discriminatory.

21 The Commission shall provide reasonable opportunity for

22 public comment in response to such petition, and shall,

23 within 9 months after the date of its submission, grant

24 or deny such petition. If the Commission grants such peti25 tion, the Commission shall authorize the State to exercise
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1 under State law such authority over rates, for such periods

2 of time, as the Commission deems necessary to ensure that

3 such rates are just and reasonable and not unjustly or

4 unreasonably discriminatory.

5 ‘‘(C) If a State has in effect on June 1, 1993, any

6 regulation concerning the rates for any commercial mobile

7 service, such State may, no later than 1 year after the

8 date of enactment of the Emerging Telecommunications

9 Technologies Act of 1993, petition the Commission re10 questing that the State be authorized to continue exercis11 ing authority over such rates. The State’s existing regula12 tion shall, notwithstanding subparagraph (A), remain in

13 effect until the Commission issues a final order granting

14 or denying such petition. The Commission shall review

15 such petition in accordance with the procedures and sched16 ule established in subparagraph (B), and shall grant such

17 petition if the State satisfies the showing required under

18 subparagraph (B)(i) or (B)(ii). If the Commission grants

19 such petition, the Commission shall authorize the State

20 to exercise under the State law such authority over rates,

21 for such period of time, as the Commission deems nec22 essary to ensure that such rates are just and reasonable

23 and not unjustly or unreasonably discriminatory.

24 ‘‘(D) After a reasonable period of time, as determined

25 by the Commission, has elapsed from the issuance of an
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1 order under subparagraph (B) or (C), any interested party

2 may petition the Commission for an order that the exer3 cise of authority by a State pursuant to such subpara4 graph is no longer necessary to ensure that the rates for

5 commercial mobile services are just and reasonable and

6 not unjustly or unreasonably discriminatory. The Commis7 sion shall provide reasonable opportunity for public com8 ment in response to such petition, and shall, within 9

9 months after the date of its submission, grant or deny

10 such petition in whole or in part.

11 ‘‘(4) Nothing in this subsection shall be construed to

12 alter or affect the regulatory treatment required by title

13 IV of the Communications Satellite Act of 1962 of the

14 corporation authorized by title III of such Act.

15 ‘‘(5) The Commission shall continue to determine

16 whether the provision of space segment capacity by sat17 ellite systems to providers of commercial mobile services

18 shall be treated as common carriage.

19 ‘‘(6) The provisions of section 310(b) shall not apply

20 to any lawful foreign ownership in a provider of commer21 cial mobile services prior to May 24, 1993, if that provider

22 was not regulated as a common carrier prior to the date

23 of enactment of the Emerging Telecommunications Tech24 nologies Act of 1993 and is deemed to be a common

25 carrier under this Act.
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1 ‘‘(7) For purposes of this section—

2 ‘‘(A) the term ‘commercial mobile service’

3 means any mobile service (as defined in section

4 3(n)) that, as specified by regulation by the Com5 mission, is provided for profit and makes inter6 connected service available (i) to the public or (ii) to

7 such broad classes of eligible users as to be effec8 tively available to a substantial portion of the public;

9 ‘‘(B) the term ‘interconnected service’ means

10 service that is interconnected with the public

11 switched network (as such term is defined by regula12 tion by the Commission) or service for which inter13 connection pursuant to paragraph (1)(B) is pending;

14 and

15 ‘‘(C) the term ‘private land mobile service’

16 means any mobile service (as defined in section

17 3(n)) that is not a commercial mobile service under

18 subparagraph (A).’’.

19 (b) CONFORMING AMENDMENTS.—

20 (1) DEFINITION OF MOBILE SERVICE.—Section

21 3 of the Act (47 U.S.C. 153) is amended—

22 (A) in subsection (n)—

23 (i) by inserting ‘‘(1)’’ immediately

24 after ‘‘and includes’’; and
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1 (ii) by inserting immediately before

2 the period at the end the following: ‘‘, (2)

3 a mobile service which provides a regularly

4 interacting group of base, mobile, portable,

5 and associated control and relay stations

6 (whether licensed on an individual, cooper7 ative, or multiple basis) for private one8 way or two-way land mobile radio commu9 nications by eligible users over designated

10 areas of operation, and (3) any service for

11 which a license is required in a personal

12 communications service established pursu13 ant to the proceeding entitled ‘Amendment

14 to the Commission’s Rules to Establish

15 New Personal Communications Services’

16 (GEN Docket No. 90–314; ET Docket No.

17 92–100), or any successor proceeding; but

18 such term does not include any rural radio

19 service as defined by the Commission and

20 does not include the provision, by a local

21 exchange carrier, of telephone exchange

22 service by radio instead of by wire’’; and

23 (B) by striking subsection (gg).

24 (2) REGULATION OF INTRASTATE COMMUNICA25 TIONS.—Section 2(b) of the Act (47 U.S.C. 152(b))
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1 is amended by inserting ‘‘and section 332’’ imme2 diately after ‘‘inclusive,’’.

3 (c) RULEMAKING SCHEDULE; EFFECTIVE DATE.—

4 (1) RULEMAKING REQUIRED.—Within 1 year

5 after the date of enactment of this Act, the Commis6 sion shall—

7 (A) issue such modifications or termi8 nations of its regulations as are necessary to

9 implement the amendments made by subsection

10 (a);

11 (B) make such other modifications of such

12 regulations as may be necessary to promote

13 parity in the regulatory treatment of providers

14 of all commercial mobile services that offer

15 services that are substantially similar; and

16 (C) include in such modifications and ter17 minations such provisions as are necessary to

18 provide for an orderly transition to the regu19 latory treatment required by such amendments.

20 (2) EFFECTIVE DATE.—The amendments made

21 by subsection (a) shall be effective 1 year after such

22 date of enactment, except that—

23 (A) section 332(c)(1)(A) of the Act, as

24 added by such amendments, shall take effect

25 upon such date of enactment; and
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1 (B) any person that provides private land

2 mobile services before such date of enactment

3 shall continue to be treated as a provider of pri4 vate land mobile service until 3 years after such

5 date of enactment.

6 SEC. 410. DEADLINES FOR PCS ORDERS AND LICENSING.

7 The Commission shall—

8 (1) within 180 days after the date of enactment

9 of this Act, issue a final report and order (A) in the

10 matter entitled ‘‘Redevelopment of Spectrum to En11 courage Innovation in the Use of New Telecommuni12 cations Technologies’’ (ET Docket No. 92–9); and

13 (B) in the matter entitled ‘‘Amendment of the Com14 mission’s Rules to Establish New Personal Commu15 nications Services’’ (GEN Docket No. 90–314; ET

16 Docket No. 92–100); and

17 (2) within 270 days after such date of enact18 ment, commence issuing licenses and permits in the

19 personal communications service.

20 SEC. 411. DEFINITIONS.

21 As used in this subtitle:

22 (1) The term ‘‘allocation’’ means an entry in

23 the National Table of Frequency Allocations of a

24 given frequency band for the purpose of its use by

25 one or more radiocommunication services.
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1 (2) The term ‘‘assignment’’ means an author2 ization given to a station licensee to use specific fre3 quencies or channels in a particular geographic area.

4 (3) The term ‘‘commercial carrier’’ means any

5 entity that uses a facility licensed by the Federal

6 Communications Commission pursuant to the Com7 munications Act of 1934 for hire or for its own use,

8 but does not include Federal Government stations li9 censed pursuant to section 305 of the Act (47

10 U.S.C. 305).

11 (4) The term ‘‘Commission’’ means the Federal

12 Communications Commission.

13 (5) The term ‘‘Secretary’’ means the Secretary

14 of Commerce.

15 (6) The term ‘‘the Act’’ means the Communica16 tions Act of 1934 (47 U.S.C. 151 et seq.).

17 Subtitle B—Vessel Tonnage Duties

18 SEC. 451. EXTENSION OF VESSEL TONNAGE DUTIES.

19 (a) EXTENSION OF DUTIES.—Section 36 of the Act

20 of August 5, 1909 (36 Stat. 111; 46 App. U.S.C. 121),

21 is amended—

22 (1) by striking ‘‘and 1995,’’ each place it ap23 pears and inserting in lieu thereof ‘‘1995, 1996,

24 1997, and 1998,’’;
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1 (2) by striking ‘‘place,’’ and inserting in lieu

2 thereof ‘‘place;’’; and

3 (3) by striking ‘‘port, not, however, to include

4 vessels in distress or not engaged in trade’’ and in5 serting in lieu thereof ‘‘port. However, neither duty

6 shall be imposed on vessels in distress or not en7 gaged in trade’’.

8 (b) CONFORMING AMENDMENT.—The Act of March

9 8, 1910 (36 Stat. 234; 46 App. U.S.C. 132), is amended

10 by striking ‘‘and 1995,’’ and inserting in lieu thereof

11 ‘‘1995, 1996, 1997, and 1998.’’.

12 (c) TECHNICAL CORRECTION.—

13 (1) CORRECTION.—Section 10402(a) of the

14 Omnibus Budget Reconciliation Act of 1990 (104

15 Stat. 1388–398) is amended by striking ‘‘in the sec16 ond paragraph’’.

17 (2) EFFECTIVE DATE.—The amendment made

18 by paragraph (1) shall be effective on and after No19 vember 5, 1990.
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1 TITLE V—COMMITTEE ON EN2 ERGY AND NATURAL RE3 SOURCES

4 Subtitle A—Recreation and

5 Commercial Use Fees

6 SEC. 5001. ADMISSION FEES.

7 Section 4(a) of the Land and Water Conservation

8 Fund Act of 1965 (16 U.S.C. 460l–6a(a)), is amended:

9 (1) by inserting in the first sentence of the first

10 paragraph after the words ‘‘National Park System’’

11 the words ‘‘and for fiscal years 1994 through 1998,

12 the Bureau of Land Management’’ and by inserting

13 after the words ‘‘National Recreation Areas’’ the

14 words ‘‘, and for fiscal years 1994 through 1998,

15 National Monuments, National Volcanic Monuments,

16 National Scenic Areas, and areas of concentrated

17 public use’’; and

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

19 paragraph:

20 ‘‘(13) For the purposes of this subsection,

21 ‘areas of concentrated public use’ shall meet each of

22 the following criteria:

23 ‘‘(A) be managed primarily for outdoor

24 recreation purposes;
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1 ‘‘(B) provide facilities and services nec2 essary to accommodate heavy public use;

3 ‘‘(C) contain at least one major recreation

4 attraction including, but not limited to, a lake,

5 river, historical site, or geologic feature; and

6 ‘‘(D) provide public access such that ad7 mission fees can be efficiently collected at one

8 or more centralized locations.’’.

9 SEC. 5002. RECREATION USE FEES.

10 (a) IN GENERAL.—The first sentence of section 4(b)

11 of the Land and Water Conservation Fund Act of 1965

12 (16 U.S.C. 460l–6a(b)) is amended by striking out ‘‘visi13 tors’ centers,’’ and all that follows down through the pe14 riod at the end thereof and inserting the following: ‘‘scenic

15 drives, or toilet facilities: Provided, That in no event shall

16 there be any charge for the use of any campground not

17 having a majority of the following: tent or trailer spaces,

18 picnic tables, drinking water, access road, refuse contain19 ers, toilet facilities, fee collection by an employee or agent

20 of the Federal agency operating the facility, reasonable

21 visitor protection, and simple devices for containing a

22 campfire (where campfires are permitted). For purposes

23 of this subsection, the term ‘specialized outdoor recreation

24 site’ includes but shall not be limited to campgrounds,
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1 swimming sites, boat launch facilities, and managed park2 ing lots.’’.

3 (b) COSTS OF COLLECTION.—Section 4(i) of the

4 Land and Water Conservation Fund Act of 1965 (16

5 U.S.C. 460l–6a(i)) is amended by inserting ‘‘(A)’’ after

6 ‘‘(1)’’ and by adding the following at the end of paragraph

7 (1):

8 ‘‘(B) Notwithstanding subparagraph (A), in any

9 fiscal year, the Secretary of Agriculture and the Sec10 retary of the Interior may withhold from the special

11 account established under subparagraph (A) such

12 portion of all receipts the fees collected in that fiscal

13 year under this section as such Secretary determines

14 to be equal to the additional fee collection costs for

15 that fiscal year. The amounts so withheld shall be

16 retained by the Secretary of Agriculture or the Sec17 retary of the Interior and shall be available, without

18 further appropriation, for expenditure by the Sec19 retary concerned in the fiscal year in which collected

20 to cover such additional fee collection costs. The

21 Secretary concerned shall deposit in the special ac22 count established pursuant to subparagraph (A) any

23 amounts so retained which remain unexpended and

24 unobligated at the end of such fiscal year. For the

25 purposes of this subparagraph, for any fiscal year,
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1 the term ‘additional fee collection costs’ means those

2 costs for personnel and infrastructure directly asso3 ciated with the collection fees imposed under this

4 section which exceed the costs for personnel and in5 frastructure directly associated with the collection of

6 such fees during fiscal year 1993.’’.

7 (c) COMMERICAL TOUR USE FEES.—(1) For fiscal

8 years 1994 through 1998, in the case of each unit of the

9 National Park System for which an admission fee is

10 charged under section 4 of the Land and Water Conserva11 tion Fund Act of 1965 (16 U.S.C. 460l–4), the Secretary

12 of the Interior shall establish, by October 1, 1993, a com13 mercial tour use fee to be imposed on each vehicle entering

14 the unit for the purpose of providing commercial tour serv15 ices within the unit. Fee revenue derived from such com16 mercial tour use fees shall be deposited into the special

17 account established under section 4(i) of the Land and

18 Water Conservation Fund Act of 1965.

19 (2) The Secretary shall establish the amount of fee

20 per entry as follows:

21 (A) $25 per vehicle with a passenger capacity

22 of 25 persons or less, and

23 (B) $50 per vehicle with a passenger capacity

24 of more than 25 persons.
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1 (3) The commercial tour use fee imposed under this

2 subsection shall not apply to either of the following:

3 (A) Any vehicle transporting organized school

4 groups or outings conducted for educational pur5 poses by schools or other bona fide edu6 cational institutions.

7 (B) Any vehicle entering a park system unit

8 pursuant to a contract issued under the Act of Octo9 ber 9, 1965 (16 U.S.C. 20–20g) entitled ‘‘An Act re10 lating to the establishment of concession policies in

11 the areas administered by the National Park Service

12 and for other purposes.’’.

13 (d) NON-FEDERAL GOLDEN EAGLE PASSPORT

14 SALES.—Section 4(a)(1)(A) of the Land and Water Con15 servation Fund Act of 1965 (16 U.S.C. 460l–6a(a)(1)(A))

16 is amended by redesignating the paragraph as

17 4(a)(1)(A)(i) and adding at the end thereof the following

18 new paragraph:

19 ‘‘(ii) For fiscal years 1994 through 1998, the Sec20 retary of the Interior and the Secretary of Agriculture

21 may authorize businesses, non-profit entities, and other

22 organizations to sell and collect fees for the Golden Eagle

23 Passport subject to such conditions as the Secretaries may

24 jointly prescribe. The Secretaries shall develop detailed

25 guidelines for promotional advertising of non-Federal
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1 Golden Eagle Passport sales and shall monitor compliance

2 with such guidelines. The Secretaries may authorize the

3 sellers to maintain an inventory of Golden Eagle Passports

4 for periods not to exceed 6 months, and to withhold

5 amounts up to, but not exceeding 7 per centum of the

6 fees of the gross fees collected from the sale of such pass7 ports as reimbursement for actual expenses of the sales.’’.

8 SEC. 5003. RADIO AND TELEVISION COMMUNICATION SITE

9 FEES.

10 (a) Notwithstanding any other provision of law, the

11 Secretary of Agriculture and the Secretary of the Interior

12 (hereinafter referred to as ‘‘the Secretaries’’), shall assess

13 and collect charges for utilization of radio and television

14 communications sites located on Federal lands adminis15 tered by the Forest Service or the Bureau of Land Man16 agement at such rates as the Forest Service and the Bu17 reau of Land Management shall establish or at such modi18 fied rates as are established pursuant to the provisions

19 of subsection (b) of this section.

20 (b) The schedule of charges established under this

21 section shall be reviewed by the Forest Service and the

22 Bureau of Land Management on an annual basis, and

23 shall be adjusted by the Forest Service and the Bureau

24 of Land Management to reflect changes in the Consumer

25 Price Index. Increases or decreases in charges shall apply
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1 to all categories of charges, but any increase or decrease

2 shall not total less than 3 percent or more than 5 percent

3 of the charge assessed to the user in the preceding year.

4 The Bureau of Land Management and the Forest Service

5 shall transmit to the Congress notification of any such ad6 justment not later than 60 days before the effective date

7 of such adjustment.

8 (1) Under the schedule of charges established

9 under the section, if any radio or television commu10 nications site user is to be charged an amount that

11 is greater than $1,000 more than the amount such

12 site user pays to the Bureau of Land Management

13 or the Forest Service as of January 1, 1993, then

14 during the first year in which the schedule of

15 charges is in effect, such site user shall pay an

16 amount equal to the amount it paid to the Bureau

17 of Land Management or the Forest Service as of

18 January 1, 1993 plus $1,000. Each year thereafter,

19 such site user shall pay the full amount under the

20 schedule of charges, as modified pursuant to the

21 subsection.

22 (2) Under the schedule of charges established

23 under this section, if any radio or television commu24 nications site user is to be charged an amount that

25 is less than the amount such site user paid to the
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1 Bureau of Land Management or the Forest Service

2 as of January 1, 1993, such site user shall continue

3 to pay the higher amount until such time as the

4 charge to the site user in the schedule of charges

5 equals or exceeds that amount, as modified pursuant

6 to this subsection.

7 (c)(1) If the radio or television communications site

8 user is permitted under the terms of its site use authoriza9 tion from the Bureau of Land Management or the Forest

10 Service to grant access to the site to additional users, then

11 the radio or television communications site user shall pay

12 annually to the Bureau of Land Management or the For13 est Service an amount equal to 25 percent of the gross

14 income it receives from each such additional user during

15 that year.

16 (2) Authorizations to radio and television commu17 nications site users shall require such site users to provide

18 the Bureau of Land Management or the Forest Service

19 with a certified list which identifies all additional users

20 of such sites and all gross revenues received from such

21 additional users. The Bureau of Land Management and

22 the Forest Service shall not require any additional user

23 of a radio or television communications site to obtain a

24 separate authorization to use such a site.
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1 (d)(1) The Secretaries shall prescribe appropriate

2 rules and regulations to carry out the provisions of this

3 section.

4 (2) Ten years after the date of enactment of this sec5 tion, the Secretaries shall establish a broad-based advisory

6 group, including representatives from the radio and tele7 vision broadcast industry, to review the schedule of

8 charges and other acceptable criteria for determining fair

9 market value for radio and television communications site

10 users. The advisory group shall report its findings to the

11 Congress no later than 1 year after it is established.

12 (e)(1) Until modified pursuant to subsection (b) of

13 this section, the schedule of charges for television commu14 nications site users which the Secretaries shall prescribe

15 pursuant to subsection (a) of this section shall be as listed

16 in exhibit 3, (television rental fee schedule) in the report

17 of the radio and television broadcast use fee advisory com18 mittee dated December 1992.

19 (2) Until modified pursuant to subsection (b) of this

20 section, the schedule of charges for radio communications

21 site users which the Secretaries shall prescribe pursuant

22 to subsection (a) of this section shall be as listed in exhibit

23 4, (radio rental fee schedule) in the report of the radio

24 and television broadcast use fee advisory committee dated

25 December 1992.
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1 (f)(1) The Secretaries are directed to jointly establish

2 a broad-based advisory group comprised of representatives

3 from the non-broadcast communications industry (users of

4 both private and public communication sites) and the two

5 agencies to review recommendations on acceptable criteria

6 for determining fair market values and next best alter7 native use.

8 (2) The advisory group shall review the methodology

9 used in any previous studies and reach concurrence on

10 such methodology.

11 (3) The advisory group shall also assess the validity

12 of the results of such studies, taking into account all rea13 sonable options for the establishment of fair market values

14 and next best alternative use.

15 (4) The advisory group shall report its findings to

16 the Committee on Energy and Natural Resources of the

17 United States Senate and the Committee on Natural Re18 sources of the United States House of Representatives

19 within one year after the enactment of this Act.

20 Subtitle B—Hardrock Mining

21 Claim Maintenance Fee

22 SEC. 5101. FEE.

23 (a) Except as provided in section 2511(e)(2) of the

24 Energy Policy Act of 1992, for each unpatented mining

25 claim, mill or tunnel site on federally owned lands, whether
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1 located before or after enactment of this Act, each claim2 ant shall pay to the Secretary of the Interior, on or before

3 August 31 of each year, for years 1994 through 1998, a

4 claim maintenance fee of $100 per claim to hold such

5 unpatented mining claim, mill or tunnel site for the assess6 ment year beginning at noon on the next day, September

7 1. Such claim maintenance fee shall be in lieu of the as8 sessment work requirement contained in the Mining Law

9 of 1872 (30 U.S.C. 28–28e) and the related filing require10 ments contained in section 314(a) and (c) of the Federal

11 Land Policy and Management Act of 1976 (43 U.S.C.

12 1744(a) and (c)).

13 (b)(1) The claim maintenance fee required under this

14 section shall be waived for a claimant who certifies in writ15 ing to the Secretary that on the date the payment was

16 due, the claimant and all related parties—

17 (A) held not more than 10 mining claims, mill

18 sites, or tunnel sites, or any combination thereof, on

19 public lands; and

20 (B) have performed assessment work required

21 under the Mining Law of 1872 (30 U.S.C. 28–28e)

22 to maintain the mining claims held by the claimant

23 and such related parties for the assessment year

24 ending on noon of September 1 of the calendar year
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1 in which payment of the claim maintenance fee was

2 due.

3 (2) For purposes of paragraph (1), with respect to

4 any claimant, the term ‘‘all related parties’’ means—

5 (A) the spouse and dependent children (as de6 fined in section 152 of the Internal Revenue Code of

7 1986), of the claimant; or

8 (B) a person affiliated with the claimant, in9 cluding—

10 (i) a person controlled by, controlling, or

11 under common control with the claimant; or

12 (ii) a subsidiary or parent company or cor13 poration of the claimant.

14 (c)(1) The Secretary shall adjust the fees required

15 by this section to reflect changes in the Consumer Price

16 Index published by the Bureau of Labor Statistics of the

17 Department of Labor every 5 years after the date of enact18 ment of this Act, or more frequently if the Secretary deter19 mines an adjustment to be reasonable.

20 (2) The Secretary shall provide claimants notice of

21 any adjustment made under this subsection not later than

22 July 1 of any year in which the adjustment is made.

23 (3) A fee adjustment under this section shall begin

24 to apply the calendar year following the calendar year in

25 which it is made.
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1 (d) Monies received under this section shall be depos2 ited as miscellaneous receipts in the Treasury.

3 SEC. 5102. LOCATION.

4 (a) Notwithstanding any provision of law, for every

5 unpatented mining claim, mill or tunnel site located after

6 the date of enactment of this subtitle and before Septem7 ber 30, 1998, the locator shall, at the time the location

8 notice is recorded with the Bureau of Land Management,

9 pay to the Secretary of the Interior a location fee, in addi10 tion to the fee required by section 5101, of $25.00 per

11 claim.

12 (b) Moneys received under this section shall be depos13 ited as miscellaneous receipts in the Treasury.

14 SEC. 5103. CO-OWNERSHIP.

15 The co-ownership provisions of the Mining Law of

16 1872 (30 U.S.C. 28–28e) will remain in effect except that

17 the annual claim maintenance fee, where applicable, shall

18 replace applicable assessment requirements and expendi19 tures.

20 SEC. 5104. FAILURE TO PAY.

21 Failure to pay the claim maintenance fee as required

22 by section 5101 of this subtitle shall conclusively con23 stitute a forfeiture of the unpatented mining claim, mill

24 or tunnel site by the claimant and the claim shall be

25 deemed null and void by operation of law.
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1 SEC. 5105. OTHER REQUIREMENTS.

2 (a) Nothing in this subtitle shall change or modify

3 the requirements of section 314(b) of the Federal Land

4 Policy and Management Act of 1976 (43 U.S.C. 1744(b)),

5 or the requirements of section 314(c) of the Federal Land

6 Policy and Management Act of 1976 (43 U.S.C. 1744(c))

7 related to filings required by section 314(b), which remain

8 in effect.

9 (b) The third sentence of 2324 of the Revised Stat10 utes (30 U.S.C. 28) is amended by inserting after ‘‘On

11 each claim located after the 10th day of May, 1972,’’ the

12 following: ‘‘that is eligible for a waiver under section 5101

13 of the Omnibus Budget Reconciliation Act of 1993,’’.

14 SEC. 5106. REGULATIONS.

15 The Secretary of the Interior shall promulgate rules

16 and regulations to carry out the purposes of this subtitle

17 as soon as practicable after the date of enactment of this

18 subtitle.

19 Subtitle C—Commonwealth of

20 Northern Mariana Islands

21 Agreement

22 SEC. 5201. COMMONWEALTH OF NORTHERN MARIANA IS23 LANDS AGREEMENT.

24 Public Law 94–241 (90 Stat. 263), as amended, is

25 further amended by striking ‘‘law’’ in subsection 4(b) and

26 inserting in lieu thereof the following: ‘‘law: Provided,
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1 That for fiscal years 1994 through 1998, payments shall

2 be limited to the amounts and for the purposes set forth

3 in the Agreement of the Special Representatives on Future

4 Federal Financial Assistance of the Northern Mariana Is5 lands, executed on December 17, 1992 between the special

6 representative of the President and the special representa7 tives of the Governor of the Northern Mariana Islands:

8 Provided further, That after 1998, the amount shall con9 tinue at the annual amount of $27.720 million.

10 Subtitle D—Mineral Receipts

11 SEC. 5301. AMENDMENT TO THE MINERAL LEASING ACT.

12 Section 35 of the Mineral Leasing Act, as amended

13 (30 U.S.C. 191) is amended as follows:

14 (1) by deleting the last sentence and redesignat15 ing the remaining language as subsection (a);

16 (2) by amending subsection (a) by inserting the

17 words ‘‘and, subject to the provisions of subsection

18 (b),’’ between the words ‘‘United States;’’ and ‘‘50

19 per centum’’;

20 (3) by adding a new subsection (b) as follows:

21 ‘‘(b)(1) In calculating the amount to be paid to States

22 during any fiscal year under this section or under any

23 other provision of law requiring payment to a State of any

24 revenues derived from the leasing of any onshore lands

25 or interest in land owned by the United States for the
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1 production of the same types of minerals leasable under

2 this Act or of geothermal steam, 50 per centum of the

3 portion of the enacted appropriation of the Department

4 of the Interior and any other agency during the preceding

5 fiscal year allocable to the administration of all laws pro6 viding for the leasing of any onshore lands or interest in

7 land owned by the United States for the production of the

8 same types of minerals leasable under this Act or of geo9 thermal steam, and in enforcing such laws, shall be de10 ducted from the receipts derived under those laws in ap11 proximately equal amounts each month (subject to para12 graph (4)) prior to the division and distribution of such

13 receipts between the States and the United States.

14 ‘‘(2) The proportion of the deduction provided in

15 paragraph (1) allocable to each State shall be determined

16 by dividing the monies disbursed to the State during the

17 preceding fiscal year derived from onshore mineral leasing

18 referred to in paragraph (1) in that State by the total

19 money disbursed to States during the preceding fiscal year

20 from such onshore mineral leasing in all States.

21 ‘‘(3) In the event the deduction apportioned to any

22 State under this subsection exceeds 50 per centum of the

23 Secretary of the Interior’s estimate of the amounts attrib24 utable to onshore mineral leasing referred to in paragraph

25 (1) within that State during the preceding fiscal year, the
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1 deduction from receipts received from leases in that State

2 shall be limited to such estimated amounts and the total

3 amount to be deducted from such onshore mineral leasing

4 receipts shall be reduced accordingly.

5 ‘‘(4) If the amount otherwise deductible under this

6 subsection in any month from the portion of receipts to

7 be distributed to a State exceeds the amount payable to

8 the State during that month, any amount exceeding the

9 amount payable shall be carried forward and deducted

10 amounts payable to the State in subsequent months. If

11 any amount remains to be carried forward at the end of

12 the fiscal year, such amount shall not be deducted from

13 any disbursements in any subsequent fiscal year.

14 ‘‘(5) All deductions to be made pursuant to this sub15 section shall be made in full during the fiscal year in which

16 such deductions were incurred.

17 ‘‘(6) All amounts deducted under this subsection

18 from monies otherwise payable to a State shall be credited

19 to miscellaneous receipts in the Treasury.’’.

20 SEC. 5302. CONFORMING AMENDMENTS.

21 (a) Section 6 of the Mineral Leasing Act for Acquired

22 Lands, as amended (30 U.S.C. 355), is amended by add23 ing the following words ‘‘Subject to the provisions of 30

24 U.S.C. 191(b),’’ at the beginning of the first sentence.
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1 (b) Section 5(a) of the Geothermal Steam Act, as

2 amended (30 U.S.C. 1019), is amended by adding the

3 words ‘‘Subject to the provisions of 30 U.S.C. 191(b),’’

4 at the beginning of that section.

5 TITLE VI—COMMITTEE ON ENVI6 RONMENT AND PUBLIC

7 WORKS

8 SEC. 6001. NUCLEAR REGULATORY COMMISSION ANNUAL

9 CHARGES.

10 Section 6101(a)(3) of the Omnibus Budget Reconcili11 ation Act of 1990 (42 U.S.C. 2214(a)(3)) is amended by

12 striking ‘‘September 30, 1995’’ and inserting ‘‘September

13 30, 1998’’.

14 SEC. 6002. CORPS OF ENGINEERS RECREATION USER FEES.

15 (a) IN GENERAL.—Section 210 of the Flood Control

16 Act of 1968 (16 U.S.C. 460d–3) is amended—

17 (1) by inserting ‘‘(a)’’ before ‘‘No entrance’’;

18 (2) by striking the second sentence; and

19 (3) by adding at the end the following new sub20 section:

21 ‘‘(b)(1) Except as provided in paragraph (2), notwith22 standing section 4(b) of the Land and Water Conservation

23 Fund Act of 1965 (16 U.S.C. 460l–6a(b)), the Secretary

24 of the Army may charge fees for the use of developed
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1 recreation sites and facilities, including campsites, swim2 ming beaches, and boat launching ramps.

3 ‘‘(2) The Secretary may not charge fees for the use

4 or provision of drinking water, wayside exhibits, general

5 purpose roads, overlook sites, toilet facilities, or general

6 visitor information.

7 ‘‘(3) Fees collected under this subsection shall be de8 posited into the special account established in the Treas9 ury of the United States for the Army Corps of Engineers

10 under section 4(i) of the Land and Water Conservation

11 Fund Act of 1965 (16 U.S.C. 460l–6a(i)).’’.

12 (b) CONFORMING AMENDMENT.—Section 4(b) of the

13 Land and Water Conservation Fund Act of 1965 (16

14 U.S.C. 460l–6a(b)) is amended by striking the second

15 sentence.

16 TITLE VII—FINANCE COMMIT17 TEE RECONCILIATION PROVI18 SIONS RELATING TO MEDI19 CARE, MEDICAID, AND OTHER

20 PROGRAMS

21 SEC. 7000. AMENDMENTS TO SOCIAL SECURITY ACT; REF22 ERENCES; TABLE OF CONTENTS.

23 (a) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex24 cept as otherwise specifically provided, whenever in this

25 title an amendment is expressed in terms of an amend-
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1 ment to or repeal of a section or other provision, the ref2 erence shall be considered to be made to that section or

3 other provision of the Social Security Act.

4 (b) REFERENCES TO OBRA.—In this title, the terms

5 ‘‘OBRA–1986’’, ‘‘OBRA–1987’’, ‘‘OBRA–1989’’, and

6 ‘‘OBRA–1990’’ refer to the Omnibus Budget Reconcili7 ation Act of 1986 (Public Law 99–509), the Omnibus

8 Budget Reconciliation Act of 1987 (Public Law 100–203),

9 the Omnibus Budget Reconciliation Act of 1989 (Public

10 Law 101–239), and the Omnibus Budget Reconciliation

11 Act of 1990 (Public Law 101–508), respectively.

12 (c) REFERENCES TO OMNIBUS BUDGET RECONCILI13 ATION ACT OF 1993.—Any reference in this title (or in

14 any amendment made by this title) to the Omnibus Budg15 et Reconciliation Act of 1993 shall be deemed to be a ref16 erence to this title.

17 (d) TABLE OF CONTENTS.—The table of contents of

18 this title is as follows:

Sec. 7000. Amendments to Social Security Act; references; table of contents.

Subtitle A—Medicare

PART I—PROVISIONS RELATING TO PART A

Sec. 7101. Payment updates for inpatient hospital services.

Sec. 7102. Payment for indirect costs of medical education.

Sec. 7103. Loss of regional referral center status.

Sec. 7104. Medicare-dependent, small rural hospital payment extension.

Sec. 7105. Elimination of return on equity for proprietary skilled nursing facilities.

Sec. 7106. Extension of 10 percent reduction in payments for capital-related

costs of inpatient hospital services.

Sec. 7107. Skilled nursing facility cost limits.

Sec. 7108. Payments for hospice care.
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PART II—PROVISIONS RELATING TO PART B

SUBPART A—PHYSICIANS’ SERVICES

Sec. 7201. Reduction in default update for conversion factor for 1994.

Sec. 7202. Reduction in performance standard rate of increase and increase in

maximum reduction permitted in default update and classification of primary care services as a separate category of services.

Sec. 7203. Phased-in reduction in practice expense relative value units for certain services.

Sec. 7204. Limitation on payment for the anesthesia care team.

Sec. 7205. Separate payment for interpretation of electrocardiograms.

Sec. 7206. Payments for new physicians and practitioners.

Sec. 7207. Extra-billing limits.

SUBPART B—OUTPATIENT HOSPITAL SERVICES AND AMBULATORY SURGICAL

SERVICES

Sec. 7221. Extension of 10 percent reduction in payments for capital-related

costs of outpatient hospital services.

Sec. 7222. Extension of reduction in payments for other costs of outpatient

hospital services.

Sec. 7223. Changes to payment formulas for certain outpatient hospital services.

Sec. 7224. Reduction in payments for intraocular lenses.

SUBPART C—DURABLE MEDICAL EQUIPMENT

Sec. 7231. Revisions to payment rules for durable medical equipment.

Sec. 7232. Treatment of nebulizers and aspirators.

Sec. 7233. Payment for surgical dressings.

Sec. 7234. Payments for tens devices.

SUBPART D—PART B PREMIUM

Sec. 7251. Part B premium.

SUBPART E—OTHER PROVISIONS

Sec. 7261. Reduction in update for certain part B services.

Sec. 7262. Payments for clinical diagnostic laboratory tests.

PART III—PROVISIONS RELATING TO PARTS A AND B

Sec. 7301. Payments for direct graduate medical education costs.

Sec. 7302. Revision of home health agency cost limits.

Sec. 7303. Medicare as secondary payer.

Sec. 7304. Extension of self-referral ban to additional specified services.

Sec. 7305. Reduction in payment for erythropoietin.

Subtitle B—Medicaid Program

PART I—PROGRAM SAVINGS PROVISIONS

SUBPART A—REPEAL OF MANDATE

Sec. 7401. Personal care services furnished outside the home as optional benefit.
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SUBPART B—OUTPATIENT PRESCRIPTION DRUGS

Sec. 7411. Permitting prescription drug formularies under State plans.

Sec. 7412. Elimination of special exemption from prior authorization for new

drugs.

Sec. 7413. Modifications to drug rebate program.

SUBPART C—RESTRICTIONS ON DIVESTITURE OF ASSETS AND ESTATE

RECOVERY

Sec. 7421. Medicaid estate recoveries.

Sec. 7422. Transfers of assets.

Sec. 7423. Treatment of certain trusts.

SUBPART D—IMPROVEMENT IN IDENTIFICATION AND COLLECTION OF THIRD

PARTY PAYMENTS

Sec. 7431. Liability of third parties to pay for care and services.

Sec. 7432. Medical child support.

Sec. 7433. Offset of payment obligations relating to medical assistance against

overpayments of State and Federal income taxes.

SUBPART E—ASSURING PROPER PAYMENTS TO DISPROPORTIONATE SHARE

HOSPITALS

Sec. 7441. Assuring proper payments to disproportionate share hospitals.

SUBPART F—ANTI-FRAUD AND ABUSE PROVISIONS

Sec. 7451. Application of medhcare rules limiting certain physician referrals.

PART II—OTHER MEDICAID PROVISIONS

Sec. 7501. Extension of demonstration project on the effect of allowing States

to extend medicaid coverage to certain low-income families.

Subtitle C—Income Security Programs

Sec. 7601. Matching of State administrative costs.

Sec. 7602. State paternity establishment programs.

Sec. 7603. Fees for Federal administration of State supplementary payments.

Subtitle D—Miscellaneous Provisions

PART I—TRADE PROVISIONS

Sec. 7701. Extension of authority to levy customs user fees.

Sec. 7702. Extension of, and authorization of appropriations for, trade adjustment assistance program.

PART II—IMPROVED ACCESS TO CHILDHOOD IMMUNIZATIONS

Sec. 7801. Findings and purpose.

Sec. 7802. Medicaid immunization provisions.

Sec. 7803. Central bulk purchasing program for pediatric vaccines.

PART III—DISCLOSURE PROVISIONS

Sec. 7901. Disclosure of return information for administration of certain veterans programs.
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Sec. 7902. Disclosure of return information to carry out income contingent repayment of student loans.

Sec. 7903. Use of return information for income verification under certain

housing assistance programs.

Sec. 7904. Use of return information for health coverage clearinghouse.

PART IV—OTHER PROVISIONS

Sec. 7950. Disallowance of interest on certain overpayments of tax.

Sec. 7951. Fees for applications for alcohol labeling and formula reviews.

Sec. 7952. Use of Harbor Maintenance Trust Fund amounts for administrative

expenses.

Sec. 7953. Increase in presidential election campaign fund check-off.

Sec. 7954. Increase in public debt limit.

1 Subtitle A—Medicare

2 PART I—PROVISIONS RELATING TO PART A

3 SEC. 7101. PAYMENT UPDATES FOR INPATIENT HOSPITAL

4 SERVICES.

5 (a) REDUCTION.—

6 (1) PPS HOSPITALS.—

7 (A) IN GENERAL.—Section

8 1886(b)(3)(B)(i) (42 U.S.C.

9 1395ww(b)(3)(B)(i)) is amended—

10 (i) in the matter preceding subclause

11 (I), by striking ‘‘fiscal year’’ and inserting

12 ‘‘particular time period’’,

13 (ii) in subclause (VIII), by inserting

14 ‘‘and the 3 succeeding months’’ after ‘‘fis15 cal year 1993’’,

16 (iii) in subclause (IX)—

17 (I) by striking ‘‘fiscal year’’,

18 (II) by inserting ‘‘minus 2.18

19 percentage points’’ after ‘‘market bas-
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1 ket percentage increase’’ the first

2 place it appears, and

3 (III) by striking ‘‘plus 1.5 per4 centage points’’ and inserting ‘‘minus

5 .68 percentage point’’,

6 (iv) in subclause (X)—

7 (I) by striking ‘‘fiscal year’’,

8 (II) by inserting ‘‘minus 2.27

9 percentage points’’ after ‘‘market bas10 ket percentage increase’’, and

11 (III) by striking ‘‘and’’ at the

12 end,

13 (v) in subclause (XI)—

14 (I) by striking ‘‘for fiscal year

15 1996 and each subsequent fiscal year’’

16 and inserting ‘‘for 1996’’,

17 (II) by inserting ‘‘minus 2.0 per18 centage points’’ after ‘‘market basket

19 percentage increase’’, and

20 (III) by striking the period and

21 inserting a comma, and

22 (vi) by adding at the end the following

23 new subclauses:
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1 ‘‘(XII) for 1997, the market basket percentage

2 increase minus 1.0 percentage point for hospitals in

3 all areas, and

4 ‘‘(XIII) for 1998 and each subsequent year, the

5 market basket percentage increase for hospitals in

6 all areas.’’.

7 (B) ADJUSTMENT OF LABOR AND NON8 LABOR PORTIONS OF STANDARDIZED

9 AMOUNTS.—Section 1886(d)(3)(A) (42 U.S.C.

10 1395ww(d)(3)(A)) is amended by adding at the

11 end the following new clause:

12 ‘‘(vi) For discharges occurring on or after

13 January 1, 1995, the Secretary shall adjust the

14 ratio of the labor portion to non-labor portion

15 of each average standardized amount to equal

16 such ratio for the national average standardized

17 amount.’’.

18 (2) OTHER HOSPITALS.—Section

19 1886(b)(3)(B)(ii) (42 U.S.C. 1395ww(b)(3)(B)(ii))

20 is amended—

21 (A) by striking ‘‘, (C), (D),’’

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

23 subclause (III),

24 (C) by striking subclause (IV) and insert25 ing the following new subclauses:
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1 ‘‘(IV) fiscal years 1988 through 1993 and the

2 3 succeeding months, is the market basket percent3 age increase,

4 ‘‘(V) 1994, is 75 percent of the difference be5 tween the market basket percentage increase and

6 1.0 percentage point,

7 ‘‘(VI) 1995 through 1997, is the market basket

8 percentage increase minus 1.0 percentage points,

9 and

10 ‘‘(VII) 1998 and each subsequent year, is the

11 market basket percentage increase.’’.

12 (3) SOLE COMMUNITY AND MEDICARE-DEPEND13 ENT, SMALL RURAL HOSPITALS.—

14 (A) IN GENERAL.—Section 1886(b)(3)(B)

15 (42 U.S.C. 1395ww(b)(3)(B)) is amended by

16 adding at the end the following new clause:

17 ‘‘(iv) For purposes of subparagraphs (C) and (D), the

18 applicable percentage increase for discharges occurring

19 during—

20 ‘‘(I) cost reporting periods beginning in fiscal

21 year 1986 through fiscal year 1993 and the 3 suc22 ceeding months, is the increase specified in clause

23 (ii),
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1 ‘‘(II) for 1994, is 75 percent of the difference

2 between the market basket percentage increase and

3 2.0 percentage points,

4 ‘‘(III) for 1995, is the market basket percent5 age increase, minus 2.0 percentage points, and

6 ‘‘(IV) for 1996 and each subsequent year, is the

7 increase described in clause (i) for such year.

8 For purposes of subclause (I), the annual update applied

9 for a cost reporting period beginning during calendar year

10 1993 is adjusted to reflect only the time period occurring

11 from the beginning of the hospital’s cost reporting period

12 through December 31, 1993.’’.

13 (B) TARGET AMOUNT ADJUSTMENT.—

14 (i) SOLE COMMUNITY HOSPITAL.—

15 Section 1886(b)(3)(C) (42 U.S.C.

16 1395ww(b)(3)(C)) is amended—

17 (I) in clause (i)(II), by striking

18 ‘‘or’’,

19 (II) in clause (ii)—

20 (aa) by inserting ‘‘or portion

21 of a cost reporting period occur22 ring before December 31, 1993,’’

23 before ‘‘the target amount’’,
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1 (bb) by striking ‘‘subpara2 graph (B)(ii)’’ and inserting

3 ‘‘subparagraph (B)(iv)’’, and

4 (cc) by striking the period at

5 the end and inserting a comma,

6 and

7 (dd) by adding at the end

8 the following new clauses:

9 ‘‘(iii) with respect to discharges occurring in

10 1994, the target amount for the cost reporting pe11 riod beginning in 1993 increased by the applicable

12 percentage increase under subparagraph (B)(iv), or

13 ‘‘(iv) with respect to discharges occurring in

14 1995 and each subsequent year, the target amount

15 for the preceding year increased by the applicable

16 percentage increase under subparagraph (B)(iv).’’.

17 (ii) MEDICARE-DEPENDENT, SMALL

18 RURAL HOSPITAL.—Section 1886(b)(3)(D)

19 (42 U.S.C. 1395ww(b)(3)(D)) is amend20 ed—

21 (I) in clause (i)(II), by striking

22 ‘‘or’’,

23 (II) in clause (ii)—

24 (aa) by inserting ‘‘or portion

25 of a cost reporting period occur-
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1 ring before December 31, 1993,’’

2 before ‘‘the target amount’’,

3 (bb) by striking ‘‘subpara4 graph (B)(ii)’’ and inserting

5 ‘‘subparagraph (B)(iv)’’, and

6 (cc) by striking the period at

7 the end and inserting ‘‘, or’’ and

8 (dd) by adding at the end

9 the following new clause:

10 ‘‘(iii) with respect to discharges occurring in

11 1994, the target amount for the cost reporting pe12 riod beginning in 1993 increased by the applicable

13 percentage increase under subparagraph (B)(iv).’’.

14 (4) DELAY IN INCREASE IN DISPROPORTIONATE

15 SHARE PAYMENTS FOR CERTAIN URBAN HOS16 PITALS.—Section 1886(d)(5)(F)(vii)(II) (42 U.S.C.

17 1395ww(d)(5)(F)(vii)(II)) is amended—

18 (A) in subdivision (b), by striking ‘‘Sep19 tember 30, 1993’’ and inserting ‘‘December 31,

20 1993’’, and

21 (B) in subdivision (c), by striking ‘‘October

22 1, 1993’’ and inserting ‘‘January 1, 1994’’.

23 (5) REGIONAL FLOOR EXTENDED.—Section

24 1886(d)(1)(A) (42 U.S.C. 1395ww(d)(1)(A)) is

25 amended—
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1 (i) in clause (ii), by striking ‘‘or’’ at

2 the end;

3 (ii) in clause (iii), by striking ‘‘Sep4 tember 30, 1993, ’’ and inserting ‘‘Decem5 ber 31, 1993’’; and

6 (iii) by adding at the end the follow7 ing new clause:

8 ‘‘(iv) beginning on and after January 1, 1994,

9 is equal to the national adjusted DRG prospective

10 payment rate determined under paragraph (3) for

11 such discharges.’’.

12 (b) CONFORMING AMENDMENTS.—

13 (1) Section 1886(b)(3)(B)(iii) (42 U.S.C.

14 1395ww(b)(3)(B)(iii)) is amended—

15 (A) by inserting ‘‘beginning in’’ after ‘‘cost

16 reporting periods’’,

17 (B) by striking ‘‘fiscal year’’ the first place

18 it appears and inserting ‘‘particular time pe19 riod’’,

20 (C) by striking ‘‘or fiscal year’’ the first

21 and second place it appears, and

22 (D) by striking ‘‘cost reporting period or

23 fiscal year’’ and inserting ‘‘period’’.

24 (2) The first sentence in the matter in section

25 1886(d)(3) (42 U.S.C. 1395ww(d)(3)) preceding
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1 subparagraph (A) is amended by inserting ‘‘or cal2 endar’’ after ‘‘fiscal’’ the first place it appears.

3 (3) Section 1886(d)(3)(A)(ii) (42 U.S.C.

4 1395ww(d)(3)(A)(ii)) is amended—

5 (A) by striking ‘‘1994,’’ and inserting

6 ‘‘1992, in the 15-month period beginning on

7 October 1, 1992, and in 1994,’’, and

8 (B) by striking ‘‘fiscal year’’ the second

9 and third place it appears and inserting ‘‘time

10 period’’.

11 (4) Section 1886(d)(3)(A)(iii) (42 U.S.C.

12 1395ww(d)(3)(A)(iii)) is amended by striking ‘‘the

13 fiscal year beginning on October 1, 1994’’ and in14 serting ‘‘1995’’.

15 (5) Section 1886(d)(3)(A)(iv) (42 U.S.C.

16 1395ww(d)(3)(A)(iv)) is amended—

17 (A) by striking ‘‘fiscal year beginning on

18 or after October 1, 1995’’ and inserting ‘‘year

19 beginning on or after January 1, 1996’’,

20 (B) by striking ‘‘and within each region’’,

21 and

22 (C) by striking ‘‘fiscal’’ each place it ap23 pears.

24 (6) Section 1886(d)(3)(D) (42 U.S.C.

25 1395ww(d)(3)(D)) is amended—
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1 (A) by inserting ‘‘or calendar’’ after ‘‘fis2 cal’’ each place it appears, and

3 (B) by inserting ‘‘for each fiscal year

4 through 1993’’ after ‘‘and shall establish’’.

5 (7) Section 1886(d)(3)(E) (42 U.S.C.

6 1395ww(d)(3)(E)) is amended—

7 (A) in the second sentence, by striking

8 ‘‘October 1, 1993’’ and inserting ‘‘January 1,

9 1994’’, and

10 (B) in the last sentence, by inserting ‘‘or

11 calendar’’ after ‘‘fiscal’’ the first and last place

12 it appears.

13 (8)(A) Section 1886(d)(4)(C)(iii) (42 U.S.C.

14 1395ww(d)(4)(C)(iii)) is amended—

15 (i) by inserting ‘‘or calendar’’ after ‘‘fiscal’’

16 the first place it appears, and

17 (ii) by deleting ‘‘fiscal’’ the third place it

18 appears.

19 (B) The requirements of paragraphs (3)(E) and

20 (4)(C)(iii) of section 1886(d) of the Social Security

21 Act (42 U.S.C. 1395ww(d)(4)(C)(iii)) shall be ap22 plied on a 15-month basis for the period beginning

23 on October 1, 1992, and ending on December 31,

24 1993.
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1 (9) Section 1886(d)(4)(E) is (42 U.S.C.

2 1395ww(d)(4)(E)) is amended by striking ‘‘October

3 1, 1993’’ and inserting ‘‘January 1, 1994’’.

4 (10)(A) Section 1886(d)(5)(A)(iv) (42 U.S.C.

5 1395ww(d)(5)(A)(iv)) is amended by inserting ‘‘or

6 calendar’’ after ‘‘fiscal’’.

7 (B) The requirement of section

8 1886(d)(5)(A)(iv) of the Social Security Act (42

9 U.S.C. 1395ww(d)(5)(A)(iv)) shall be applied on a

10 15-month basis for the period beginning on October

11 1, 1992, and ending on December 31, 1993.

12 (11) Section 1886(d)(5)(B)(i) (42 U.S.C.

13 1395ww(d)(5)(B)(i)) is amended by striking ‘‘or, if

14 applicable, the amount determined under paragraph

15 (1)(A)(iii)’’ and inserting ‘‘or, the amount deter16 mined under paragraphs (1)(A)(iii) or (1)(A)(iv), as

17 applicable’’.

18 (12) Section 1886(d)(5)(E)(ii) (42 U.S.C.

19 1395ww(d)(5)(E)(ii)) is amended by inserting ‘‘or

20 calendar’’ after ‘‘fiscal’’.

21 (13) Section 1886(d)(6) (42 U.S.C.

22 1395ww(d)(5)(6)) is amended by striking ‘‘the Sep23 tember 1 before each fiscal year (beginning with fis24 cal year 1984)’’ and inserting ‘‘December 1 each

25 year’’.
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1 (14) The matter in section 1886(d)(9)(A) (42

2 U.S.C. 1395ww(d)(9)(A)) preceding clause (i) is

3 amended by striking ‘‘fiscal year’’ and inserting

4 ‘‘particular time period’’.

5 (15) Section 1886(d)(9)(C)(i) (42 U.S.C.

6 1395ww(d)(9)(C)(i)) is amended—

7 (A) by striking ‘‘fiscal year’’ the first place

8 it appears and inserting ‘‘time period’’, and

9 (B) by striking ‘‘fiscal years’’ and inserting

10 ‘‘time periods’’.

11 (16) Subparagraphs (A) and (B) of section

12 1886(e)(3) (42 U.S.C. 1395ww(e)(3)) are each

13 amended by striking ‘‘that fiscal year’’ and inserting

14 ‘‘the coming fiscal or calendar year’’.

15 (17) The first sentence of section 1886(e)(4)(A)

16 (42 U.S.C. 1395ww(e)(4)(A)) is amended by insert17 ing ‘‘or calendar’’ after ‘‘fiscal’’ the first and last

18 place it appears.

19 (18) Section 1886(e)(4)(B) (42 U.S.C.

20 1395ww(e)(4)(B)) is amended by inserting ‘‘or cal21 endar’’ after ‘‘fiscal’’.

22 (19) Section 1886(e)(5)(A) (42 U.S.C.

23 1395ww(e)(5)(A)) is amended by striking ‘‘that fis24 cal year’’ and inserting ‘‘the coming fiscal or cal25 endar year’’.
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1 (20) The second and third sentences of section

2 1886(e)(5) (42 U.S.C. 1395ww(e)(5)) are each

3 amended by inserting ‘‘or calendar’’ after ‘‘fiscal’’

4 each place it appears.

5 SEC. 7102. PAYMENT FOR INDIRECT COSTS OF MEDICAL

6 EDUCATION.

7 Section 1886(d)(5)(B)(ii) (42 U.S.C.

8 1395ww(d)(5)(B)(ii)) is amended to read as follows:

9 ‘‘(ii) For purposes of clause (i)(II), the indirect

10 teaching adjustment factor is equal to c × (((1+r)

11 to the nth power) –1), where ‘r’ is the ratio of the

12 hospital’s full-time equivalent interns and residents

13 to beds and ‘n’ equals .405. For discharges occur14 ring on or after—

15 ‘‘(I) May 1, 1986, and before January 1,

16 1994, ‘c’ is equal to 1.89,

17 ‘‘(II) January 1, 1994, and before January

18 1, 1996, ‘c’ is equal to 1.728, and

19 ‘‘(III) January 1, 1996, ‘c’ is equal to

20 1.605.’’.

21 SEC. 7103. LOSS OF REGIONAL REFERRAL CENTER STATUS.

22 (a) CONTINUATION OF OTHER URBAN PAYMENT

23 RATE THROUGH CALENDAR YEAR 1994.—Effective on

24 the date of the enactment of this Act, any hospital that

25 was classified as a regional referral center under section
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•S 1134 PCS

1 1886(d)(5)(C) of the Social Security Act as of September

2 30, 1992, shall continue to be paid under this subsection

3 the standardized amount for hospitals located in other

4 urban areas for discharges occurring before the earlier

5 of—

6 (1) January 1, 1995, or

7 (2) the reclassification of such hospital as an

8 urban hospital under section 1886(d)(10)(C) of such

9 Act.

10 (b) PERMITTING HOSPITALS TO DECLINE RECLASSI11 FICATION.—If any hospital fails to qualify as a rural refer12 ral center under section 1886(d)(5)(C) of the Social Secu13 rity Act as a result of a decision by the Medicare Geo14 graphic Classification Review Board under section

15 1886(d)(10) of such Act to reclassify the hospital as being

16 located in an urban area for fiscal year 1993 or fiscal year

17 1994, the Secretary of Health and Human Services

18 shall—

19 (1) notify such hospital of such failure to qual20 ify,

21 (2) provide an opportunity for such hospital to

22 decline such reclassification, and

23 (3) if the hospital declines such reclassification,

24 administer the Social Security Act (other than sec-
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1 tion 1886(d)(8)(D)) for such fiscal year as if the de2 cision by the Review Board had not occurred.

3 (c) REQUIRING LUMP-SUM RETROACTIVE PAYMENT

4 FOR HOSPITALS LOSING CLASSIFICATION.—

5 (1) IN GENERAL.—In the case of any regional

6 referral center described in subsection (a), the Sec7 retary of Health and Human Services shall make a

8 lump-sum payment to the center equal to the dif9 ference between—

10 (A) the aggregate payment made to the

11 center under section 1886 of the Social Security

12 Act (excluding outlier payments under sub13 section (d)(5)(A) of such section) during the pe14 riod of applicability described in paragraph (2),

15 and

16 (B) the aggregate payment that would

17 have been made to the center under such sec18 tion if, during the period of applicability, the

19 center had been paid as if subsection (a) of this

20 section had been in effect.

21 (2) PERIOD OF APPLICABILITY.—In paragraph

22 (1), the ‘‘period of applicability’’ is the period that

23 begins on October 1, 1992, and ends on the date of

24 the enactment of this Act.
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1 SEC. 7104. MEDICARE-DEPENDENT, SMALL RURAL HOS2 PITAL PAYMENT EXTENSION.

3 (a) EXTENSION OF ADDITIONAL PAYMENTS.—

4 (1) IN GENERAL.—Section 1886(d)(5)(G) (42

5 U.S.C. 1395ww(d)(5)(G)) is amended—

6 (A) in clause (i)—

7 (i) by inserting ‘‘(or portion thereof)’’

8 after ‘‘cost reporting period’’ in the matter

9 preceding subclause (I), and

10 (ii) by striking ‘‘March 31, 1993,’’

11 and all that follows and inserting: ‘‘Janu12 ary 1, 1995, in the case of a subsection (d)

13 hospital which is a medicare-dependent,

14 small rural hospital, payment under para15 graph (1)(A) shall be equal to the sum of

16 the amount determined under clause (ii)

17 and the amount determined under clause

18 (iii) or (iv) of paragraph (1)(A).’’;

19 (B) by redesignating clauses (ii) and (iii)

20 as clauses (iii) and (iv); and

21 (C) by inserting after clause (i) the follow22 ing new clause:

23 ‘‘(ii) The amount determined under this clause is—

24 ‘‘(I) for discharges occurring during the first 3

25 12-month cost reporting periods that begin on or

26 after April 1, 1990, the amount by which the hos-
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1 pital’s target amount for the cost reporting period

2 (as defined in subsection (b)(3)(D)) exceeds the

3 amount determined under clause (iii) or (iv) para4 graph (1)(A); and

5 ‘‘(II) for discharges occurring during any subse6 quent cost reporting period (or portion thereof), 50

7 percent of the amount by which the hospital’s target

8 amount for the cost reporting period (as defined in

9 subsection (b)(3)(D)) exceeds the amount deter10 mined under clause (iii) or (iv) of paragraph

11 (1)(A).’’.

12 (2) EFFECTIVE DATE.—The amendments made

13 by paragraph (1) shall be effective as if included in

14 the amendment made by section 6003(f) of OBRA–

15 1989.

16 (b) PERMITTING HOSPITALS TO DECLINE RECLASSI17 FICATION.—If any hospital fails to qualify as a medicare18 dependent, small rural hospital under section

19 1886(d)(5)(G)(i) of the Social Security Act as a result of

20 a decision by the Medicare Geographic Classification Re21 view Board under section 1886(d)(10) of such Act to re22 classify the hospital as being located in an urban area for

23 fiscal year 1993 or fiscal year 1994 the Secretary of

24 Health and Human Services shall—
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1 (1) notify such hospital of such failure to qual2 ify,

3 (2) provide an opportunity for such hospital to

4 decline such reclassification, and

5 (3) if the hospital declines such reclassification,

6 administer the Social Security Act (other than sec7 tion 1886(d)(8)(D)) for such fiscal year as if the de8 cision by the Review Board had not occurred.

9 (c) REQUIRING LUMP-SUM RETROACTIVE PAY10 MENT.—

11 (1) IN GENERAL.—In the case of a hospital

12 treated as a medicare-dependent, small rural hos13 pital under section 1886(d)(5)(G) of the Social Se14 curity Act, the Secretary of Health and Human

15 Services shall make a lump-sum payment to the hos16 pital equal to the difference between—

17 (A) the aggregate payment made to the

18 hospital under section 1886 of such Act (ex19 cluding outlier payments under subsection

20 (d)(5)(A) of such section) during the period of

21 applicability described in paragraph (2), and

22 (B) the aggregate payment that would

23 have been made to the hospital under such sec24 tion if, during the period of applicability, sec-
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1 tion 1886(d)(5)(G) of such Act had been ap2 plied as if—

3 (i) the reference in clause (i) to

4 ‘‘March 31, 1993,’’ had been deemed a ref5 erence to ‘‘January 1, 1995,’’; and

6 (ii) the amendments made by sub7 section (a) had been in effect.

8 (2) PERIOD OF APPLICABILITY.—In paragraph

9 (1), the ‘‘period of applicability’’ is, with respect to

10 a hospital, the period that begins on the first day of

11 the hospital’s first 12-month cost reporting period

12 that begins after April 1, 1992, and ends on the

13 date of the enactment of this Act.

14 SEC. 7105. ELIMINATION OF RETURN ON EQUITY FOR PRO15 PRIETARY SKILLED NURSING FACILITIES.

16 (a) REPEAL OF REQUIREMENT FOR RETURN ON EQ17 UITY.—(1) Section 1861(v)(1)(B) (42 U.S.C.

18 1395x(v)(1)(B)) is amended to read as follows:

19 ‘‘(B) In the case of extended care services, the regula20 tions under subparagraph (A) shall not include provision

21 for specific recognition of a return on equity capital.’’.

22 (2) Section 1878(f)(2) (42 U.S.C. 1395oo(f)(2)) is

23 amended by striking ‘‘the rate of return on equity capital

24 established by regulation pursuant to section

25 1861(v)(1)(B) and in effect at the time’’ and inserting
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1 ‘‘the average of the rates of interest on obligations issued

2 for purchase by the Federal Hospital Insurance Trust

3 Fund for each of the months any part of which is included

4 in the cost reporting period in which’’.

5 (3) Section 1881(b)(2)(C) (42 U.S.C.

6 1395rr(b)(2)(C)) is amended by striking all that follows

7 ‘‘capital’’ up to the period.

8 (b) EFFECTIVE DATE.—The amendments made by

9 subsection (a) apply to portions of cost reporting periods

10 occurring on or after October 1, 1993.

11 SEC. 7106. EXTENSION OF 10 PERCENT REDUCTION IN PAY12 MENTS FOR CAPITAL-RELATED COSTS OF IN13 PATIENT HOSPITAL SERVICES.

14 The second sentence of section 1886(g)(1)(A) (42

15 U.S.C. 1395ww(g)(1)(A)) is amended by striking ‘‘1995’’

16 and inserting ‘‘1998’’.

17 SEC. 7107. SKILLED NURSING FACILITY COST LIMITS.

18 (a) SKILLED NURSING FACILITY COST LIMITS.—

19 (1) IN GENERAL.—Section 1888(a) (42 U.S.C.

20 1395yy(a)) is amended by striking ‘‘112 percent of

21 the mean’’ and inserting ‘‘110 percent of the me22 dian’’ each place it appears.

23 (2) EFFECTIVE DATE.—The amendments made

24 by paragraph (1) shall apply to cost reporting peri25 ods beginning on or after October 1, 1993.
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1 (b) SKILLED NURSING FACILITY WAGE INDEX.—

2 Not later than 1 year after the date of the enactment of

3 this Act, the Secretary of Health and Human Services

4 shall begin to collect data on employee compensation and

5 paid hours of employment in skilled nursing facilities for

6 the purpose of constructing a skilled nursing facility wage

7 index adjustment to the routine service cost limits re8 quired under section 1888(a) of the Social Security Act.

9 (c) PROPAC REPORT.—The Prospective Payment

10 Assessment Commission shall, by March 31, 1994, study

11 and report to the Congress on the impact of applying the

12 routine per diem cost limits for skilled nursing facilities

13 on a regional basis.

14 SEC. 7108. PAYMENTS FOR HOSPICE CARE.

15 Section 1814(i)(1)(C) (42 U.S.C. 1395f(i)(1)(C)) is

16 amended—

17 (1) in clause (ii), by striking ‘‘during a subse18 quent fiscal year’’ and inserting ‘‘during fiscal years

19 1991, 1992, and 1993 (and the 3 succeeding

20 months)’’; and

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

22 clause:

23 ‘‘(iii) With respect to routine home care and other

24 services included in hospice care furnished during calendar

25 years 1994, 1995, 1996, 1997, and 1998, the payment
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1 rates for such care and services shall be the payment rates

2 in effect under this subparagraph during the previous cal3 endar year increased by the market basket percentage in4 crease (as so defined) otherwise applicable to discharges

5 occurring in the calendar year, reduced by 1 percentage

6 point.’’.

7 PART II—PROVISIONS RELATING TO PART B

8 Subpart A—Physicians’ Services

9 SEC. 7201. REDUCTION IN DEFAULT UPDATE FOR CONVER10 SION FACTOR FOR 1994.

11 Section 1848(d)(3)(A) (42 U.S.C. 1395w–

12 4(d)(3)(A)) is amended—

13 (1) in clause (i), by striking ‘‘clause (iii)’’ and

14 inserting ‘‘clauses (iii) and (iv)’’, and

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

16 clause:

17 ‘‘(iv) ADJUSTMENT IN PERCENTAGE

18 INCREASE FOR 1994.—In applying clause

19 (i) for services (other than primary care

20 services) furnished in 1994, the percentage

21 increase in the appropriate update index

22 shall be reduced by—

23 ‘‘(I) 8 percentage points for sur24 gical services (as defined for purposes

25 of subsection (j)(1)), and
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1 ‘‘(II) 4.4 percentage points for

2 other services.’’.

3 SEC. 7202. REDUCTION IN PERFORMANCE STANDARD RATE

4 OF INCREASE AND INCREASE IN MAXIMUM

5 REDUCTION PERMITTED IN DEFAULT UP6 DATE AND CLASSIFICATION OF PRIMARY

7 CARE SERVICES AS A SEPARATE CATEGORY

8 OF SERVICES.

9 (a) REDUCTION IN PERFORMANCE STANDARD FAC10 TOR.—Section 1848(f)(2)(B) (42 U.S.C. 1395w–

11 4(f)(2)(B)) is amended to read as follows:

12 ‘‘(B) PERFORMANCE STANDARD FAC13 TOR.—For purposes of subparagraph (A)—

14 ‘‘(i) IN GENERAL.—Except as pro15 vided in clause (ii), the performance stand16 ard factor—

17 ‘‘(I) for 1993 is 2 percentage

18 points,

‘‘(II) for 1994 is 31 19 ⁄2 percentage

20 points, and

21 ‘‘(III) for each succeeding year is

22 4 percentage points.

23 ‘‘(ii) PRIMARY CARE SERVICES.—The

24 performance standard factor for primary
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1 care services (as defined in section

2 1842(i)(4)) is 0 percentage points.’’.

3 (b) INCREASE IN MAXIMUM REDUCTION PERMITTED

4 IN DEFAULT UPDATE.—Section 1848(d)(3)(B)(ii) (42

5 U.S.C. 1395w–4(d)(3)(B)(ii)) is amended—

6 (1) in subclause (II), by striking ‘‘or 1995’’,

7 and

8 (2) in subclause (III), by striking ‘‘3’’ and in9 serting ‘‘5’’.

10 (c) CLASSIFICATION OF PRIMARY CARE SERVICES AS

11 SEPARATE CATEGORY OF SERVICES.—

12 (1) IN GENERAL.—Section 1848(j)(1) (42

13 U.S.C. 1395w–4(j)(1)) is amended by inserting ‘‘,

14 primary care services (as defined in section

15 1842(i)(4)),’’ after ‘‘Secretary)’’.

16 (2) EFFECTIVE DATE.—The amendment made

17 by paragraph (1) shall apply—

18 (A) to volume performance standard rates

19 of increase established under section 1848(f) of

20 the Social Security Act for fiscal years begin21 ning on or after October 1, 1993, and

22 (B) to updates in the conversion factors

23 for physicians’ services established under sec24 tion 1848(d) of such Act for physicians’ serv-
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1 ices to be furnished in calendar years beginning

2 after 1995.

3 SEC. 7203. PHASED-IN REDUCTION IN PRACTICE EXPENSE

4 RELATIVE VALUE UNITS FOR CERTAIN SERV5 ICES.

6 (a) IN GENERAL.—Section 1848(c)(2) (42 U.S.C.

7 1395w–4(c)(2)) is amended by adding at the end the fol8 lowing new subparagraph:

9 ‘‘(E) REDUCTION IN PRACTICE EXPENSE

10 RELATIVE VALUE UNITS FOR CERTAIN SERV11 ICES.—

12 ‘‘(i) IN GENERAL.—Subject to clause

13 (ii), the Secretary shall reduce the practice

14 expense relative value units applied to serv15 ices described in clause (iii) furnished in—

16 ‘‘(I) 1994, by 25 percent of the

17 number by which the number of prac18 tice expense relative value units (de19 termined for 1994 without regard to

20 this subparagraph) exceeds the num21 ber of work relative value units deter22 mined for 1994,

23 ‘‘(II) 1995, by an additional 25

24 percent of such excess, and
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1 ‘‘(III) 1996, by an additional 25

2 percent of such excess.

3 ‘‘(ii) FLOOR ON REDUCTIONS.—The

4 practice expense relative value units for a

5 physician’s service shall not be reduced

6 under this subparagraph to a number less

7 than 110 percent of the number of work

8 relative value units.

9 ‘‘(iii) SERVICES COVERED.—For pur10 poses of clause (i), the services described in

11 this clause are physicians’ services that are

12 not described in clause (iv) and for

13 which—

14 ‘‘(I) there are work relative value

15 units, and

16 ‘‘(II) the number of practice ex17 pense relative value units (determined

18 for 1994) exceeds 110 percent of the

19 number of work relative value units

20 (determined for such year).

21 ‘‘(iv) EXCLUDED SERVICES.—For

22 purposes of clause (iii), the services de23 scribed in this clause are services which

24 the Secretary determines at least 75 per-
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1 cent of which are provided under this title

2 in an office setting.’’.

3 (b) DEVELOPMENT OF RESOURCE-BASED METH4 ODOLOGY FOR PRACTICE EXPENSES.—

5 (1) The Secretary of Health and Human Serv6 ices shall develop a methodology for implementing in

7 1997 a resource-based system for determining prac8 tice expense relative value units for each physician’s

9 service.

10 (2) The Secretary shall transmit a report by

11 June 30, 1996, on the methodology developed under

12 paragraph (1) to the Committee on Ways and Means

13 and the Committee on Energy and Commerce of the

14 House of Representatives and the Committee on Fi15 nance of the Senate. The report shall include a pres16 entation of data utilized in developing the methodol17 ogy and an explanation of the methodology.

18 SEC. 7204. LIMITATION ON PAYMENT FOR THE ANESTHESIA

19 CARE TEAM.

20 (a) LIMIT ON PAYMENT TO A PHYSICIAN FOR MEDI21 CAL DIRECTION.—

22 (1) IN GENERAL.—Section 1848(a) (42 U.S.C.

23 1395w–4(a)) is amended by adding at the end the

24 following new paragraph:
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1 ‘‘(5) SPECIAL RULE FOR MEDICAL DIREC2 TION.—

3 ‘‘(A) IN GENERAL.—With respect to physi4 cians’ services furnished on or after January 1,

5 1994, and consisting of medical direction of 2,

6 3, or 4 concurrent anesthesia cases, the fee

7 schedule amount to be applied shall not exceed

8 one-half of the amount described in subpara9 graph (B).

10 ‘‘(B) AMOUNT.—The amount described in

11 this subparagraph, for a physician’s medical di12 rection of the performance of anesthesia serv13 ices, is the following percentage of the fee

14 schedule amount otherwise applicable under this

15 section if the anesthesia services were person16 ally performed by the physician alone:

17 ‘‘(i) For services furnished during

18 1994, 120 percent.

19 ‘‘(ii) For services furnished during

20 1995, 115 percent.

21 ‘‘(iii) For services furnished during

22 1996, 110 percent.

23 ‘‘(iv) For services furnished during

24 1997, 105 percent.
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1 ‘‘(v) For services furnished after

2 1997, 100 percent.’’.

3 (2) ELIMINATION OF REDUCTION FOR MEDICAL

4 DIRECTION OF MULTIPLE NURSE ANESTHETISTS.—

5 Section 1842(b) (42 U.S.C. 1395u(b)) is amended

6 by striking paragraph (13).

7 (b) PAYMENT TO A CERTIFIED REGISTERED NURSE

8 ANESTHETIST FOR MEDICALLY DIRECTED SERVICES.—

9 Subparagraph (B) of section 1833(l)(4) (42 U.S.C.

10 1395l(l)(4)) is amended—

11 (1) in clause (i), by inserting ‘‘and before Janu12 ary 1, 1994,’’ after ‘‘1991,’’;

13 (2) in clause (ii)—

14 (A) by adding ‘‘and’’ at the end of

15 subclause (II),

16 (B) by striking the comma at the end of

17 subclause (III) and inserting a period, and

18 (C) by striking subclauses (IV) through

19 (VII); and

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

21 clause:

22 ‘‘(iii) In the case of services of a certified registered

23 nurse anesthetist who is medically directed or medically

24 supervised by a physician which are furnished on or after

25 January 1, 1994, the fee schedule amount shall be 50 per-
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1 cent of the amount described in section 1848(a)(5)(B)

2 with respect to the physician.’’.

3 SEC. 7205. SEPARATE PAYMENT FOR INTERPRETATION OF

4 ELECTROCARDIOGRAMS.

5 (a) IN GENERAL.—Paragraph (3) of section 1848(b)

6 (42 U.S.C. 1395w–4(b)) is amended to read as follows:

7 ‘‘(3) TREATMENT OF INTERPRETATION OF

8 ELECTROCARDIOGRAMS.—The Secretary—

9 ‘‘(A) shall make separate payment under

10 this section for the interpretation of electro11 cardiograms performed or ordered to be per12 formed as part of or in conjunction with a visit

13 to or a consultation with a physician, and

14 ‘‘(B) shall adjust the relative values estab15 lished for visits and consultations under sub16 section (c) so as not to include relative value

17 units for interpretations of electrocardiograms

18 in the relative value for visits and consulta19 tions.’’.

20 (b) ASSURING BUDGET NEUTRALITY.—Section

21 1848(c)(2) (42 U.S.C. 1395w–4(c)(2)), as amended by

22 section 7203(a), is further amended by adding at the end

23 the following new subparagraph:

24 ‘‘(F) BUDGET NEUTRALITY ADJUST25 MENTS.—The Secretary—
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1 ‘‘(i) shall reduce the relative values

2 for all services (other than anesthesia serv3 ices) established under this paragraph

4 (and, in the case of anesthesia services, the

5 conversion factor established by the Sec6 retary for such services) by such percent7 age as the Secretary determines to be nec8 essary so that, beginning in 1996, the

9 amendment made by section 7205(a) of

10 the Omnibus Budget Reconciliation Act of

11 1993 would not result in expenditures

12 under this section that exceed the amount

13 of such expenditures that would have been

14 made if such amendment had not been

15 made, and

16 ‘‘(ii) shall reduce the amounts deter17 mined under subsection (a)(2)(B)(ii)(I) by

18 such percentage as the Secretary deter19 mines to be required to assure that, taking

20 into account the reductions made under

21 clause (i), the amendment made by section

22 7205(a) of the Omnibus Budget Reconcili23 ation Act of 1993 would not result in ex24 penditures under this section in 1994 that

25 exceed the amount of such expenditures
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1 that would have been made if such amend2 ment had not been made.’’.

3 (c) CONFORMING AMENDMENTS.—Section 1848 (42

4 U.S.C. 1395w–4) is amended—

5 (1) in subsection (a)(2)(B)(ii)(I), by inserting

6 ‘‘and as adjusted under subsection (c)(2)(F)(ii)’’

7 after ‘‘for 1994’’;

8 (2) in subsection (c)(2)(A)(i), by adding at the

9 end the following: ‘‘Such relative values are subject

10 to adjustment under subparagraph (F)(i).’’; and

11 (3) in subsection (i)(1)(B), by adding at the

12 end ‘‘including adjustments under subsection

13 (c)(2)(F),’’.

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

15 this section shall apply to services furnished on or after

16 January 1, 1994.

17 SEC. 7206. PAYMENTS FOR NEW PHYSICIANS AND PRACTI18 TIONERS.

19 (a) EQUAL TREATMENT OF NEW PHYSICIANS AND

20 PRACTITIONERS.—(1) Section 1848(a) (42 U.S.C.

21 1395w–4(a)), as amended by section 7204(a), is further

22 amended by striking paragraph (4) and by redesignating

23 paragraph (5) as paragraph (4).

24 (2) Section 1842(b)(4) (42 U.S.C. 1395u(b)(4)) is

25 amended by striking subparagraph (F).
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1 (b) BUDGET NEUTRALITY ADJUSTMENT.—Notwith2 standing any other provision of law, the Secretary of

3 Health and Human Services shall reduce the following val4 ues and amounts for 1994 (to be applied for that year

5 and subsequent years) by such uniform percentage as the

6 Secretary determines to be required to assure that the

7 amendments made by subsection (a) will not result in ex8 penditures under part B of title XVIII of the Social Secu9 rity Act in 1994 that exceed the amount of such expendi10 tures that would have been made if such amendments had

11 not been made:

12 (1) The relative values established under section

13 1848(c) of such Act for services (other than anesthe14 sia services) and, in the case of anesthesia services,

15 the conversion factor established under section 1848

16 of such Act for such services.

17 (2) The amounts determined under section

18 1848(a)(2)(B)(ii)(I) of such Act.

19 (3) The prevailing charges or fee schedule

20 amounts to be applied under such part for services

21 of a health care practitioner (as defined in section

22 1842(b)(4)(F)(ii)(I) of such Act, as in effect before

23 the date of the enactment of this Act).
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1 (c) CONFORMING AMENDMENTS.—Section 1848 (42

2 U.S.C. 1395w–4), as amended by section 7205(c), is

3 amended—

4 (1) in subsection (a)(2)(B)(ii)(I), by inserting

5 ‘‘and under section 7206(b) of the Omnibus Budget

6 Reconciliation Act of 1993’’ after ‘‘subsection

7 (c)(2)(F)(ii)’’;

8 (2) in subsection (c)(2)(A)(i), by inserting ‘‘and

9 section 7206(b) of the Omnibus Budget Reconcili10 ation Act of 1993’’ after ‘‘under subparagraph

11 (F)(i)’’; and

12 (3) in subsection (i)(1)(B), by inserting ‘‘and

13 section 7206(b) of the Omnibus Budget Reconcili14 ation Act of 1993’’ after ‘‘under subsection

15 (c)(2)(F)’’.

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

17 subsection (a) shall apply to services furnished on or after

18 January 1, 1994.

19 SEC. 7207. EXTRA-BILLING LIMITS.

20 (a) ENFORCEMENT AND UNIFORM APPLICATION.—

21 (1) ENFORCEMENT.—Paragraph (1) of section

22 1848(g) (42 U.S.C. 1395w–4(g)) is amended to read

23 as follows:

24 ‘‘(1) LIMITATION ON ACTUAL CHARGES.—
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1 ‘‘(A) IN GENERAL.—In the case of a

2 nonparticipating physician or nonparticipating

3 supplier or other person (as defined in section

4 1842(i)(2)) who does not accept payment on an

5 assignment-related basis for a physician’s serv6 ice furnished with respect to an individual en7 rolled under this part, the following rules apply:

8 ‘‘(i) APPLICATION OF LIMITING

9 CHARGE.—No person may bill or collect an

10 actual charge for the service in excess of

11 the limiting charge described in paragraph

12 (2) for such service.

13 ‘‘(ii) NO LIABILITY FOR EXCESS

14 CHARGES.—No person is liable for pay15 ment of any amounts billed for the service

16 in excess of such limiting charge.

17 ‘‘(iii) CORRECTION OF EXCESS

18 CHARGES.—If such a physician, supplier,

19 or other person bills, but does not collect,

20 an actual charge for a service in violation

21 of clause (i), the physician, supplier, or

22 other person shall reduce on a timely basis

23 the actual charge billed for the service to

24 an amount not to exceed the limiting

25 charge for the service.
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1 ‘‘(iv) REFUND OF EXCESS COLLEC2 TIONS.—If such a physician, supplier, or

3 other person collects an actual charge for

4 a service in violation of clause (i), the phy5 sician, supplier, or other person shall pro6 vide on a timely basis a refund to the indi7 vidual charged in the amount by which the

8 amount collected exceeded the limiting

9 charge for the service. The amount of such

10 a refund shall be reduced to the extent the

11 individual has an outstanding balance owed

12 to the physician.

13 ‘‘(B) SANCTIONS.—If a physician, supplier,

14 or other person—

15 ‘‘(i) knowingly and willfully bills or

16 collects for services in violation of subpara17 graph (A)(i) on a repeated basis, or

18 ‘‘(ii) fails to comply with clause (iii)

19 or (iv) of subparagraph (A) on a timely

20 basis,

21 the Secretary may apply sanctions against the

22 physician, supplier, or other person in accord23 ance with paragraph (2) of section 1842(j). In

24 applying this subparagraph, paragraph (4) of

25 such section applies in the same manner as
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1 such paragraph applies to such section and any

2 reference in such section to a physician is

3 deemed also to include a reference to a supplier

4 or other person under this subparagraph.

5 ‘‘(C) TIMELY BASIS.—For purposes of this

6 paragraph, a reduction or refund under clauses

7 (iii) and (iv) of subparagraph (A) shall be treat8 ed as done on a timely basis if the reduction or

9 refund is made not later than 30 days after the

10 date the physician, supplier, or other person is

11 notified by the carrier under this part of such

12 violation and of the requirements of subpara13 graph (A).’’.

14 (2) UNIFORM APPLICATION OF EXTRA-BILLING

15 LIMITS TO PHYSICIANS’ SERVICES.—

16 (A) IN GENERAL.—Section 1848(g)(2)(C)

17 (42 U.S.C. 1395w–4(g)(2)(C)) is amended by

18 inserting ‘‘or for nonparticipating suppliers or

19 other persons’’ after ‘‘nonparticipating physi20 cians’’.

21 (B) CONFORMING DEFINITION.—Section

22 1842(i)(2) (42 U.S.C. 1395u(i)(2)) is amend23 ed—

24 (i) by striking ‘‘, and the term’’ and

25 inserting ‘‘; the term’’, and
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1 (ii) by inserting before the period at

2 the end the following: ‘‘; and the term

3 ‘nonparticipating supplier or other person’

4 means a supplier or other person (exclud5 ing a provider of services) that is not a

6 participating physician or supplier (as de7 fined in subsection (h)(1))’’.

8 (3) ADDITIONAL CONFORMING AMENDMENTS.—

9 Section 1848 (42 U.S.C. 1395w–4) is amended—

10 (A) in subsection (a)(3)—

11 (i) by inserting ‘‘AND SUPPLIERS’’

12 after ‘‘PHYSICIANS’’ in the heading,

13 (ii) by inserting ‘‘or a

14 nonparticipating supplier or other person’’

15 after ‘‘nonparticipating physician’’, and

16 (iii) by adding at the end the follow17 ing: ‘‘In the case of physicians’ services

18 (including services which the Secretary ex19 cludes pursuant to subsection (j)(3)) of a

20 nonparticipating physician, supplier, or

21 other person for which payment is made

22 under this part on a basis other than the

23 fee schedule amount, the payment shall be

24 based on 95 percent of the payment basis
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1 for such services furnished by a participat2 ing physician, supplier, or other person.’’;

3 (B) in subsection (g)(1)(A), as amended by

4 subsection (a), in the matter before clause (i),

5 by inserting ‘‘(including services which the Sec6 retary excludes pursuant to subsection (j)(3))’’

7 after ‘‘a physician’s service’’;

8 (C) in subsection (g)(2)(D), by inserting

9 ‘‘(or, if payment under this part is made on a

10 basis other than the fee schedule under this sec11 tion, 95 percent of the other payment basis)’’

12 after ‘‘subsection (a)’’;

13 (D) in subsection (g)(3)(B)—

14 (i) by inserting after the first sentence

15 the following: ‘‘No person is liable for pay16 ment of any amounts billed for such a

17 service in violation of the preceding sen18 tence.’’, and

19 (ii) in the last sentence, by striking

20 ‘‘previous sentence’’ and inserting ‘‘first

21 sentence’’;

22 (E) in subsection (h)—

23 (i) by inserting ‘‘or nonparticipating

24 supplier or other person furnishing physi25 cians’ services (as defined in section
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1 1848(j)(3))’’ after ‘‘physician’’ the first

2 place it appears,

3 (ii) by inserting ‘‘, supplier, or other

4 person’’ after ‘‘physician’’ the second place

5 it appears, and

6 (iii) by inserting ‘‘, suppliers, and

7 other persons’’ after ‘‘physicians’’ the sec8 ond place it appears; and

9 (F) in subsection (j)(3), by inserting ‘‘, ex10 cept for purposes of subsections (a)(3), (g), and

11 (h),’’ after ‘‘tests and’’.

12 (b) CLARIFICATION OF MANDATORY ASSIGNMENT

13 RULES FOR CERTAIN PRACTITIONERS.—

14 (1) IN GENERAL.—Section 1842(b) (42 U.S.C.

15 1395u(b)) is amended by adding at the end the fol16 lowing new paragraph:

17 ‘‘(19)(A) Payment for any service furnished by a

18 practitioner described in subparagraph (C) and for which

19 payment may be made under this part on a reasonable

20 charge or fee schedule basis may only be made under this

21 part on an assignment-related basis.

22 ‘‘(B) A practitioner described in subparagraph (C) or

23 other person may not bill (or collect any amount from)

24 the individual or another person for any service described

25 in subparagraph (A), except for deductible and coinsur-
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1 ance amounts applicable under this part. No person is lia2 ble for payment of any amounts billed for such a service

3 in violation of the previous sentence. If a practitioner or

4 other person knowingly and willfully bills (or collects an

5 amount) for such a service in violation of such sentence,

6 the Secretary may apply sanctions against the practitioner

7 or other person in the same manner as the Secretary may

8 apply sanctions against a physician in accordance with

9 subsection (j)(2) in the same manner as such section ap10 plies with respect to a physician. Paragraph (4) of sub11 section (j) shall apply in this subparagraph in the same

12 manner as such paragraph applies to such section.

13 ‘‘(C) A practitioner described in this subparagraph

14 is any of the following:

15 ‘‘(i) A physician assistant, nurse practitioner, or

16 clinical nurse specialist (as defined in section

17 1861(aa)(5)).

18 ‘‘(ii) A certified registered nurse anesthetist (as

19 defined in section 1861(bb)(2)).

20 ‘‘(iii) A certified nurse-midwife (as defined in

21 section 1861(gg)(2)).

22 ‘‘(iv) A clinical social worker (as defined in sec23 tion 1861(hh)(1)).

24 ‘‘(v) A clinical psychologist (as defined by the

25 Secretary for purposes of section 1861(ii)).
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1 ‘‘(D) For purposes of this paragraph, a service fur2 nished by a practitioner described in subparagraph (C) in3 cludes any services and supplies furnished as incident to

4 the service as would otherwise be covered under this part

5 if furnished by a physician or as incident to a physician’s

6 service.’’.

7 (2) CONFORMING AMENDMENTS.—

8 (A) Section 1833 (42 U.S.C. 1395l) is

9 amended—

10 (i) in subsection (l)(5), by striking

11 subparagraph (B) and redesignating sub12 paragraph (C) as subparagraph (B);

13 (ii) by striking subsection (p); and

14 (iii) in subsection (r), by striking

15 paragraph (3) and redesignating para16 graph (4) as paragraph (3).

17 (B) Section 1842(b)(12) (42 U.S.C.

18 1395u(b)(12)) is amended by striking subpara19 graph (C).

20 (c) INFORMATION ON EXTRA-BILLING LIMITS.—

21 (1) PART OF EXPLANATION OF MEDICARE BEN22 EFITS.—Section 1842(h)(7) (42 U.S.C.

23 1395u(h)(7)) is amended—

24 (A) by striking ‘‘and’’ at the end of sub25 paragraph (B),
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1 (B) in subparagraph (C), by striking ‘‘shall

2 include’’,

3 (C) in subparagraph (C), by striking the

4 period at the end and inserting ‘‘, and’’, and

5 (D) by adding at the end the following new

6 subparagraph:

7 ‘‘(D) in the case of services for which the billed

8 amount exceeds the limiting charge imposed under

9 section 1848(g), information regarding such applica10 ble limiting charge (including information concern11 ing the right to a refund under section

12 1848(g)(1)(A)(iv)).’’.

13 (2) DETERMINATIONS BY CARRIERS.—Subpara14 graph (G) of section 1842(b)(3) (42 U.S.C.

15 1395u(b)(3)) is amended to read as follows:

16 ‘‘(G) will, for a service that is furnished with

17 respect to an individual enrolled under this part,

18 that is not paid on an assignment-related basis, and

19 that is subject to a limiting charge under section

20 1848(g)—

21 ‘‘(i) determine, prior to making payment,

22 whether the amount billed for such service ex23 ceeds the limiting charge applicable under sec24 tion 1848(g)(2);
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1 ‘‘(ii) notify the physician, supplier, or other

2 person periodically (but not less often than once

3 every 30 days) of determinations that amounts

4 billed exceeded such applicable limiting charges;

5 and

6 ‘‘(iii) provide for prompt response to in7 quiries of physicians, suppliers, and other per8 sons concerning the accuracy of such limiting

9 charges for their services;’’.

10 (d) REPORT ON CHARGES IN EXCESS OF LIMITING

11 CHARGE.—Section 1848(g)(6)(B) (42 U.S.C. 1395w–

12 4(g)(6)(B)) is amended by inserting ‘‘the extent to which

13 actual charges exceed limiting charges, the number and

14 types of services involved, and the average amount of ex15 cess charges and’’ after ‘‘report to the Congress’’.

16 (e) MISCELLANEOUS AND TECHNICAL AMEND17 MENTS.—Section 1833 (42 U.S.C. 1395l) is amended—

18 (1) in subsection (a)(1)—

19 (A) by striking ‘‘and’’ before ‘‘(N)’’;

20 (B) with respect to the matter inserted by

21 section 4155(b)(2)(B) of OBRA–1990—

22 (i) by striking ‘‘(M)’’ and inserting ‘‘,

23 and (O)’’; and
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1 (ii) by transferring and inserting it

2 (as amended) immediately before the semi3 colon at the end;

4 (C) by striking ‘‘and’’ before ‘‘(O)’’, and

5 (D) by inserting before the semicolon at

6 the end the following: ‘‘, and (P) with respect

7 to services described in clauses (i), (ii) and (iv)

8 of section 1861(s)(2)(K), the amounts paid are

9 subject to the provisions of section

10 1842(b)(12)’’; and

11 (2) in subsection (h)(5)(D)—

12 (A) by striking ‘‘paragraphs (2) and (3)’’

13 and by inserting ‘‘paragraph (2)’’, and

14 (B) by adding at the end the following:

15 ‘‘Paragraph (4) of such section shall apply in

16 this subparagraph in the same manner as such

17 paragraph applies to such section.’’.

18 (f) EFFECTIVE DATES.—

19 (1) ENFORCEMENT AND UNIFORM APPLICA20 TION; MISCELLANEOUS AND TECHNICAL AMEND21 MENTS.—The amendments made by subsections (a)

22 and (e) shall apply to services furnished on or after

23 the date of the enactment of this Act; except that

24 the amendments made by subsection (a) shall not
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1 apply to services of a nonparticipating supplier or

2 other person furnished before January 1, 1994.

3 (2) PRACTITIONERS.—The amendments made

4 by subsection (b) shall apply to services furnished on

5 or after January 1, 1994.

6 (3) EOMBS.—The amendments made by sub7 section (c)(1) shall apply to explanations of benefits

8 provided on or after January 1, 1994.

9 (4) CARRIER DETERMINATIONS.—The amend10 ments made by subsection (c)(2) shall apply to con11 tracts as of January 1, 1994.

12 (5) REPORT.—The amendment made by sub13 section (d) shall apply to reports for years beginning

14 after 1993.

15 Subpart B—Outpatient Hospital Services and

16 Ambulatory Surgical Services

17 SEC. 7221. EXTENSION OF 10 PERCENT REDUCTION IN PAY18 MENTS FOR CAPITAL-RELATED COSTS OF

19 OUTPATIENT HOSPITAL SERVICES.

20 Section 1861(v)(1)(S)(ii)(I) (42 U.S.C.

21 1395x(v)(1)(S)(ii)(I)) is amended by striking ‘‘fiscal year

22 1992, 1993, 1994, or 1995’’ and inserting ‘‘fiscal years

23 1992 through 1998’’.
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1 SEC. 7222. EXTENSION OF REDUCTION IN PAYMENTS FOR

2 OTHER COSTS OF OUTPATIENT HOSPITAL

3 SERVICES.

4 Section 1861(v)(1)(S)(ii)(II) (42 U.S.C.

5 1395x(v)(1)(S)(ii)(II)) is amended by striking ‘‘, 1992,

6 1993, 1994, or 1995’’ and inserting ‘‘through 1998’’.

7 SEC. 7223. CHANGES TO PAYMENT FORMULAS FOR CER8 TAIN OUTPATIENT HOSPITAL SERVICES.

9 (a) AMBULATORY SURGICAL CENTER PROCE10 DURES.—Section 1833(i)(3) (42 U.S.C. 1395l(i)(3)) is

11 amended—

12 (1) in subparagraph (A), by striking clause (ii)

13 and inserting the following:

14 ‘‘(ii) the lesser of—

15 ‘‘(I) the aggregate blended

16 amount, less the amount a provider

17 may charge as described in clause (ii)

18 of section 1866(a)(2)(A), or

19 ‘‘(II) 80 percent of the aggregate

20 blended amount.’’;

21 (2) in subparagraph (B)—

22 (A) in clause (i), by striking ‘‘The blend

23 amount’’ and inserting ‘‘For purposes of sub24 paragraph (A), the aggregate blended amount’’,

25 (B) in subclause (I) of clause (i), by strik26 ing ‘‘the amount described in subparagraph
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1 (A)(i)’’ and inserting ‘‘the lesser of the reason2 able cost of such services (as determined under

3 section 1861(v)) or the customary charges with

4 respect to such services’’, and

5 (C) in subclause (II) of clause (i), by strik6 ing ‘‘of 80 percent’’.

7 (b) RADIOLOGY SERVICES AND DIAGNOSTIC PROCE8 DURES.—Section 1833(n) (42 U.S.C. 1395l(n)) is amend9 ed—

10 (1) in paragraph (1), by redesignating subpara11 graph (B) as paragraph (2) and by redesignating

12 clauses (i) and (ii) of such paragraph (as so redesig13 nated) and subclauses (I) and (II) of such clauses

14 as subparagraphs (A) and (B) and clauses (i) and

15 (ii), respectively;

16 (2) in paragraph (1), by striking ‘‘(A) The ag17 gregate amount’’ and inserting ‘‘The aggregate

18 amount’’;

19 (3) in paragraph (1), by redesignating clause (i)

20 as subparagraph (A) and by striking clause (ii) and

21 inserting the following:

22 ‘‘(B) the lesser of—

23 ‘‘(i) the aggregate blended amount,

24 less the amount a provider may charge as
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1 described in clause (ii) of section

2 1866(a)(2)(A), or

3 ‘‘(ii) 80 percent of the aggregate

4 blended amount.’’; and

5 (4) in paragraph (2) (as so redesignated)—

6 (A) in subparagraph (A) (as so redesig7 nated), by striking ‘‘The blend amount’’ and in8 serting ‘‘The aggregate blended amount’’,

9 (B) in subparagraph (A)(i) (as so redesig10 nated) by striking ‘‘(as defined in clause (ii)) of

11 the amount described in subparagraph (A)(i);’’

12 and inserting ‘‘the lesser of the reasonable cost

13 of such services (as determined under section

14 1861(v)) or the customary charges with respect

15 to such services’’,

16 (C) in subparagraph (A)(iii) (as so redesig17 nated) by striking ‘‘(as defined in clause

18 (ii)(II))’’, and

19 (D) in subparagraph (B) (as so redesig20 nated), by striking ‘‘In this subparagraph’’ and

21 inserting ‘‘For purposes of subparagraph (A)’’.

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

23 this section shall apply to portions of cost reporting peri24 ods occurring on or after October 1, 1993.
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1 SEC. 7224. REDUCTION IN PAYMENTS FOR INTRAOCULAR

2 LENSES.

3 (a) PAYMENT FOR INTRAOCULAR LENS.—Section

4 4151(c)(3) of OBRA–1990 is amended—

5 (1) by striking ‘‘center’’ and all that follows

6 and inserting ‘‘center—

7 ‘‘(A) on or after the date of the enactment

8 of this Act and on or before December 31,

9 1993, shall be equal to $200; and

10 ‘‘(B) on or after January 1, 1994, and on

11 or before December 31, 1998, shall be equal to

12 $150.’’; and

13 (2) in the heading, by striking ‘‘2-YEAR FREEZE

14 IN ALLOWANCE’’ and inserting ‘‘ALLOWANCE’’.

15 (b) CONFORMING AMENDMENTS.—

16 (1) PAYMENT AMOUNTS FOR SERVICES FUR17 NISHED IN AMBULATORY SURGICAL CENTERS.—

18 (A)(i) Section 1833(i)(2)(A)(i) (42 U.S.C.

19 1395l(i)(2)(A)(i)) is amended by striking the comma

20 at the end and inserting the following: ‘‘, as deter21 mined in accordance with a survey (based upon a

22 representative sample of procedures and facilities)

23 taken not later than January 1, 1995, and every 5

24 years thereafter, of the actual audited costs incurred

25 by such centers in providing such services,’’.
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1 (ii) The second sentence of section 1833(i)(1)

2 (42 U.S.C. 1395l(i)(1)) is amended by striking the

3 period and inserting the following: ‘‘, in consultation

4 with appropriate trade and professional organiza5 tions.’’.

6 (B) Section 4151(c)(3) of OBRA–1990, as

7 amended in subsection (a), is amended by striking

8 ‘‘for the insertion of an intraocular lens’’ and insert9 ing ‘‘for an intraocular lens inserted’’.

10 (2) ADJUSTMENTS TO PAYMENT AMOUNTS FOR

11 NEW TECHNOLOGY INTRAOCULAR LENSES.—(A)

12 Notwithstanding section 4151(c)(3) of OBRA–1990

13 (as amended by subsection (a)), the Secretary of

14 Health and Human Services (in this paragraph re15 ferred to as the ‘‘Secretary’’) shall, not later than 1

16 year after the date of the enactment of this Act, de17 velop and implement a process under which inter18 ested parties may request review by the Secretary of

19 the appropriateness of the reimbursement amount

20 provided under section 1833(i)(2)(A)(iii) of the So21 cial Security Act with respect to a class of new tech22 nology intraocular lenses. For purposes of the pre23 ceding sentence, an intraocular lens may not be

24 treated as a new technology intraocular lens unless
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1 it has been approved by the Food and Drug Admin2 istration.

3 (B) In determining whether to provide an ad4 justment of payment with respect to a particular

5 lens under subparagraph (A), the Secretary shall

6 take into account whether use of the lens is likely to

7 result in reduced risk of intraoperative or post8 operative complication or trauma, accelerated post9 operative recovery, reduced induced astigmatism, im10 proved postoperative visual acuity, more stable post11 operative vision, or other comparable clinical advan12 tages.

13 (C) The Secretary shall publish notice in the

14 Federal Register from time to time (but no less

15 often than once each year) of a list of the requests

16 that the Secretary has received for review under this

17 subsection, and shall provide for a 30-day comment

18 period on the lenses that are the subjects of the re19 quests contained in such notice. The Secretary shall

20 publish a notice of the determinations with respect

21 to intraocular lenses listed in the notice within 90

22 days after the close of the comment period.

23 (D) Any adjustment of a payment amount (or

24 payment limit) made under this paragraph shall be25 come effective not later than 30 days after the date
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1 on which the notice with respect to the adjustment

2 is published under subparagraph (C).

3 (3) BLEND AMOUNTS FOR AMBULATORY SUR4 GICAL CENTER PAYMENTS.—

5 (A) IN GENERAL.—Subclauses (I) and (II)

6 of section 1833(i)(3)(B)(ii) (42 U.S.C.

7 1395l(i)(3)(B)(ii)) are each amended—

8 (i) by striking ‘‘for reporting’’ and in9 serting ‘‘for portions of cost reporting’’;

10 and

11 (ii) by striking ‘‘and on or before’’

12 and inserting ‘‘and ending on or before’’.

13 (B) EFFECTIVE DATE.—The amendments

14 made by subparagraph (A) shall take effect as

15 if included in the enactment of OBRA–1990.

16 Subpart C—Durable Medical Equipment

17 SEC. 7231. REVISIONS TO PAYMENT RULES FOR DURABLE

18 MEDICAL EQUIPMENT.

19 (a) BASING NATIONAL PAYMENT LIMITS ON MEDIAN

20 OF LOCAL PAYMENT AMOUNTS.—

21 (1) INEXPENSIVE AND ROUTINELY PURCHASED

22 ITEMS; ITEMS REQUIRING FREQUENT AND SUBSTAN23 TIAL SERVICING.—(A) Paragraphs (2)(C)(i)(II) and

24 (3)(C)(i)(II) of section 1834(a) (42 U.S.C.

25 1395m(a)) are each amended—
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1 (i) by striking ‘‘1992’’ the first place it ap2 pears and inserting ‘‘1992, 1993, and 1994’’;

3 and

4 (ii) by striking ‘‘1992’’ the second place it

5 appears and inserting ‘‘the year’’.

6 (B) Paragraphs (2)(C)(ii) and (3)(C)(ii) of sec7 tion 1834(a) (42 U.S.C. 1395m(a)) are each amend8 ed—

9 (i) by striking ‘‘and’’ at the end of

10 subclause (I);

11 (ii) by redesignating subclause (II) as (IV);

12 and

13 (iii) by inserting after subclause (I) the fol14 lowing new subclauses:

15 ‘‘(II) for 1992 and 1993, the

16 amount determined under this clause

17 for the preceding year increased by

18 the covered item update for such sub19 sequent year,

20 ‘‘(III) for 1994, the local pay21 ment amount determined under clause

22 (i) for such item or device for that

23 year, except that the national limited

24 payment amount may not exceed 100

25 percent of the median of all local pay-
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1 ment amounts determined under such

2 clause for such item for that year and

3 may not be less than 85 percent of

4 the median of all local payment

5 amounts determined under such

6 clause for such item or device for that

7 year, and’’.

8 (2) MISCELLANEOUS DEVICES AND ITEMS.—

9 Section 1834(a)(8) (42 U.S.C. 1395m(a)(8)) is

10 amended—

11 (A) in subparagraph (A)(ii)(III), by strik12 ing ‘‘1992’’ and inserting ‘‘1992, 1993, and

13 1994’’; and

14 (B) in subparagraph (B)—

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

16 clause (i),

17 (ii) by redesignating clause (ii) as (iv),

18 and

19 (iii) by inserting after clause (i) the

20 following new clauses:

21 ‘‘(ii) for 1992 and 1993, the amount

22 determined under this subparagraph for

23 the preceding year increased by the cov24 ered item update for such subsequent year;
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1 ‘‘(iii) for 1994, the local purchase

2 price computed under subparagraph (A)(ii)

3 for the item for the year, except that such

4 national limited purchase price may not ex5 ceed 100 percent of the median of all local

6 purchase prices computed for the item

7 under such subparagraph for the year and

8 may not be less than 85 percent of the me9 dian of all local purchase prices computed

10 under such subparagraph for the item for

11 the year; and’’.

12 (3) OXYGEN AND OXYGEN EQUIPMENT.—Sec13 tion 1834(a)(9) (42 U.S.C. 1395m(a)(9)) is amend14 ed—

15 (A) in subparagraph (A)(ii)(II), by striking

16 ‘‘1991 and 1992’’ and inserting ‘‘1991, 1992,

17 1993, and 1994’’; and

18 (B) in subparagraph (B)—

19 (i) by striking ‘‘and’’ at the end of

20 clause (i),

21 (ii) by redesignating clause (ii) as (iv),

22 and

23 (iii) by inserting after clause (i) the

24 following new clauses:
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1 ‘‘(ii) for 1992 and 1993, the amount

2 determined under this subparagraph for

3 the preceding year increased by the cov4 ered item update for such subsequent year;

5 ‘‘(iii) for 1994, the local monthly pay6 ment rate computed under subparagraph

7 (A)(ii) for the item for the year, except

8 that such national limited monthly pay9 ment rate may not exceed 100 percent of

10 the median of all local monthly payment

11 rates computed for the item under such

12 subparagraph for the year and may not be

13 less than 85 percent of the median of all

14 local monthly payment rates computed for

15 the item under such subparagraph for the

16 year; and’’.

17 (b) PAYMENT FOR PROSTHETIC DEVICES AND

18 ORTHOTICS AND PROSTHETICS.—

19 (1) IN GENERAL.—Section 1834(h)(2) (42

20 U.S.C. 1395m(h)(2)) is amended—

21 (A) in subparagraph (A)(ii)(II), by striking

22 ‘‘1992 or 1993’’ and inserting ‘‘1992, 1993, or

23 1994’’;

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

25 ‘‘each subsequent year’’ and inserting ‘‘1993’’;
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1 (C) in subparagraph (C)(iv), by striking

2 ‘‘regional purchase price computed under sub3 paragraph (B)’’ and inserting ‘‘national limited

4 purchase price computed under subparagraph

5 (E)’’;

6 (D) in subparagraph (D)(ii), by striking ‘‘a

7 subsequent year’’ and inserting ‘‘1993’’; and

8 (E) by adding at the end the following new

9 subparagraph:

10 ‘‘(E) COMPUTATION OF NATIONAL LIM11 ITED PURCHASE PRICE.—With respect to the

12 furnishing of a particular item in a year, the

13 Secretary shall compute a national limited pur14 chase price—

15 ‘‘(i) for 1994, equal to the local pur16 chase price computed under subparagraph

17 (A)(ii)(II) for the item for the year, except

18 that such national limited purchase price

19 may not exceed 100 percent of the median

20 of all local purchase prices for the item

21 computed under such subparagraph for the

22 year, and may not be less than 85 percent

23 of the median of all local purchase prices

24 for the item computed under such subpara25 graph for the year; and
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1 ‘‘(ii) for each subsequent year, equal

2 to the amount determined under this sub3 paragraph for the preceding year increased

4 by the applicable percentage increase for

5 such subsequent year.’’.

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

7 this section shall apply to items furnished on or after Jan8 uary 1, 1994.

9 SEC. 7232. TREATMENT OF NEBULIZERS AND ASPIRATORS.

10 (a) IN GENERAL.—Section 1834(a)(3)(A) (42 U.S.C.

11 1395m(a)(3)(A)) is amended by striking ‘‘(such as ventila12 tors, aspirators, IPPB machines, and nebulizers)’’.

13 (b) PAYMENT FOR ACCESSORIES RELATING TO

14 NEBULIZERS AND ASPIRATORS.—Section 1834(a)(2)(A)

15 (42 U.S.C. 1395m(a)) is amended—

16 (1) by striking ‘‘or’’ at the end of clause (i),

17 (2) by adding ‘‘or’’ at the end of clause (ii), and

18 (3) by inserting after clause (ii) the following

19 new clause:

20 ‘‘(iii) which is an accessory used in

21 conjunction with a nebulizer or aspirator,’’.

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

23 this section shall apply to items furnished on or after Jan24 uary 1, 1994.
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1 SEC. 7233. PAYMENT FOR SURGICAL DRESSINGS.

2 (a) IN GENERAL.—Section 1834 (42 U.S.C. 1395m)

3 is amended by adding at the end the following new sub4 section:

5 ‘‘(i) PAYMENT FOR SURGICAL DRESSINGS.—

6 ‘‘(1) IN GENERAL.—Payment under this sub7 section for surgical dressings (described in section

8 1861(s)(5)) shall be made in a lump sum amount

9 for the purchase of the item in an amount equal to

10 80 percent of the lesser of—

11 ‘‘(A) the actual charge for the item; or

12 ‘‘(B) a payment amount determined in ac13 cordance with the methodology described in

14 subparagraphs (B) and (C) of subsection (a)(2)

15 (except that in applying such methodology, the

16 national limited payment amount referred to in

17 such subparagraphs shall be initially computed

18 based on local payment amounts using average

19 reasonable charges for the 12-month period

20 ending December 31, 1992, increased by the

21 covered item updates described in such sub22 section for 1993 and 1994).

23 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not

24 apply to surgical dressings that are—

25 ‘‘(A) furnished as an incident to a physi26 cian’s professional service; or
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1 ‘‘(B) furnished by a home health agency.’’.

2 (b) CONFORMING AMENDMENT.—Section 1833(a)(1)

3 (42 U.S.C. 1395l(a)(1)), as amended by section

4 7207(e)(1), is amended—

5 (1) by striking ‘‘and’’ before ‘‘(P)’’, and

6 (2) by inserting before the semicolon at the end

7 the following: ‘‘, and (Q) with respect to surgical

8 dressings, the amounts paid shall be the amounts

9 determined under section 1834(j)’’.

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

11 this section shall apply to items furnished on or after Jan12 uary 1, 1994.

13 SEC. 7234. PAYMENTS FOR TENS DEVICES.

14 (a) IN GENERAL.—Section 1834(a)(1)(D) (42 U.S.C.

15 1395m(a)(1)(D)) is amended by striking ‘‘15 percent’’ the

16 second place it appears and inserting ‘‘45 percent’’.

17 (b) EFFECTIVE DATE.—The amendment made by

18 subsection (a) shall apply to items furnished on or after

19 January 1, 1994.

20 Subpart D—Part B Premium

21 SEC. 7251. PART B PREMIUM.

22 Section 1839(e) (42 U.S.C. 1395r(e)) is amended—

23 (1) in paragraph (1)(A), by striking ‘‘December

24 1983 and prior to January 1991 shall be an amount

25 equal to 50 percent’’ and inserting ‘‘after December
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•S 1134 PCS

1 1995 and prior to January 1999 shall be an amount

2 equal to 50 percent’’, and

3 (2) in paragraph (2), by striking ‘‘1991’’ and

4 inserting ‘‘1998’’.

5 Subpart E—Other Provisions

6 SEC. 7261. REDUCTION IN UPDATE FOR CERTAIN PART B

7 SERVICES.

8 (a) DURABLE MEDICAL EQUIPMENT.—Section

9 1834(a)(14) (42 U.S.C. 1395m(a)(14)) is amended—

10 (1) in subparagraph (A), by striking ‘‘and’’ at

11 the end;

12 (2) in subparagraph (B), by striking ‘‘a subse13 quent year’’ and inserting ‘‘1993’’, and by striking

14 the period and inserting a semicolon; and

15 (3) by adding at the end the following new sub16 paragraphs:

17 ‘‘(C) for 1994 , no percentage change;

18 ‘‘(D) for 1995, 1996, 1997, and 1998, the

19 percentage increase in the consumer price index

20 for all urban consumers (U.S. city average) for

21 the 12-month period ending with June of the

22 previous year, reduced by 1 percentage point;

23 and

24 ‘‘(E) for any subsequent year, the percent25 age increase in the consumer price index for all
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1 urban consumers (U.S. city average) for the 12-

2 month period ending with June of the previous

3 year.’’.

4 (b) ORTHOTICS AND PROSTHETICS.—Section

5 1834(h)(4)(A) (42 U.S.C. 1395m(h)(4)(A)) is amended—

6 (1) in clause (i), by striking ‘‘and’’;

7 (2) in clause (ii), by striking ‘‘a subsequent

8 year’’ and inserting ‘‘1992 and 1993’’, and by strik9 ing the semicolon and inserting a comma; and

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

11 clauses:

12 ‘‘(iii) for 1994, 0 percent,

13 ‘‘(iv) for 1995, 1996, 1997, and 1998,

14 the percentage increase in the consumer

15 price index for all urban consumers (Unit16 ed States city average) for the 12-month

17 period ending with June of the previous

18 year, reduced by 1 percentage point, and

19 ‘‘(v) for any subsequent year, the per20 centage increase in the consumer price

21 index for all urban consumers (United

22 States city average) for the 12-month pe23 riod ending with June of the previous

24 year;’’.

25 (c) AMBULATORY SURGICAL CENTERS.—
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1 (1) NO UPDATE IN 1994.—Notwithstanding the

2 second sentence of subparagraph (A) or the second

3 sentence of subparagraph (B) of section 1833(i)(2)

4 of the Social Security Act, the Secretary of Health

5 and Human Services shall not provide for any infla6 tion update in the payment amounts under such

7 subparagraphs (A) and (B) for 1994.

8 (2) AUTOMATIC APPLICATION OF INFLATION

9 ADJUSTMENT.—Section 1833(i)(2) (42 U.S.C.

10 1395l(i)(2)) is amended—

11 (A) in the second sentence of subpara12 graph (A) and the second sentence of subpara13 graph (B), by striking ‘‘and may be adjusted by

14 the Secretary, when appropriate,’’; and

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

16 subparagraphs:

17 ‘‘(C) Notwithstanding the second sentence of sub18 paragraph (A) or the second sentence of subparagraph

19 (B), if the Secretary has not updated amounts established

20 under such subparagraphs with respect to facility services

21 furnished during 1995, 1996, 1997, or 1998, such

22 amounts shall be increased by the percentage increase in

23 the Consumer Price Index for all Urban Consumers (U.S.

24 city average) as estimated by the Secretary for the 12-
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1 month period ending with the midpoint of the fiscal year

2 involved, reduced by 1 percentage point.

3 ‘‘(D) Notwithstanding the second sentence of sub4 paragraph (A) or the second sentence of subparagraph

5 (B), if the Secretary has not updated amounts established

6 under such subparagraphs with respect to facility services

7 furnished during any subsequent year (beginning with

8 1999), such amounts shall be increased by the percentage

9 increase in the Consumer Price Index for all Urban Con10 sumers (U.S. city average) as estimated by the Secretary

11 for the 12-month period ending with June of the previous

12 year.’’.

13 (d) RURAL HEALTH CLINIC SERVICES; FEDERALLY14 QUALIFIED HEALTH CENTER SERVICES; COMPREHEN15 SIVE OUTPATIENT REHABILITATION FACILITY SERV16 ICES.—In determining the amount of payment made for

17 rural health clinic services, Federally qualified health cen18 ter services, or comprehensive outpatient rehabilitation fa19 cility services furnished under part B of title XVIII of the

20 Social Security Act for services furnished—

21 (1) in 1994, the Secretary of Health and

22 Human Services shall provide that any inflation up23 date, in the applicable limits used to determine the

24 costs which are reasonable and related to the cost of

25 furnishing such services under section 1833(a)(3) of
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•S 1134 PCS

1 such Act, that would otherwise have applied for

2 1994 shall be deemed to be 0 percent; and

3 (2) in 1995, 1996, 1997, and 1998, the Sec4 retary of Health and Human Services shall provide

5 that any inflation update in such applicable limits

6 shall be such update that would otherwise have ap7 plied for such year, reduced by 1 percentage point.

8 (e) DIALYSIS SERVICES.—In determining the amount

9 of payment made for dialysis services furnished under part

10 B of title XVIII of the Social Security Act—

11 (1) in 1994, the Secretary of Health and

12 Human Services shall provide that any inflation up13 date, in the payment amounts determined under sec14 tion 1881(b)(2)(B) of such Act or the rates deter15 mined under section 1881(b)(7) of such Act, that

16 would otherwise have applied for 1994 shall be

17 deemed to be 0 percent; and

18 (2) in 1995, 1996, 1997, and 1998, the Sec19 retary of Health and Human Services shall provide

20 that any inflation update in such payment amounts

21 or rates shall be such update that would otherwise

22 have applied for such year, reduced by 1 percentage

23 point.

24 (f) PARENTERAL AND ENTERAL NUTRIENTS, SUP25 PLIES, AND EQUIPMENT.—In determining the amount of
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1 payment under part B of title XVIII of the Social Security

2 Act during 1994, the charges determined to be reasonable

3 with respect to parenteral and enteral nutrients, supplies,

4 and equipment may not exceed the charges determined to

5 be reasonable with respect to such nutrients, supplies, and

6 equipment during 1993.

7 (g) OTHER PART B ITEMS AND SERVICES.—

8 (1) In determining the amount of payment

9 made for an item or service furnished during 1994

10 under part B of title XVIII of the Social Security

11 Act, other than physicians’ services, clinical labora12 tory services, or an item or service to which a pre13 ceding provision of (or amendment made by) sub14 section (a), (b), (c), (d), (e), or (f) applies, the Sec15 retary of Health and Human Services shall provide

16 that any inflation update in the fee schedule amount

17 for the item or service established under such part

18 B of such title, or (if applicable) any applicable limit

19 used to determine the actual charge, reasonable

20 charge, or reasonable cost for the item or service

21 under such part, that would otherwise have applied

22 for 1994 shall be deemed to be 0 percent.

23 (2) In determining the amount of payment

24 made for an item or service furnished in 1995,

25 1996, 1997, and 1998 under part B of title XVIII
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1 of the Social Security Act, other than physician’s

2 services, clinical laboratory service, or an item or

3 service to which a preceding provision of (or amend4 ment made by) subsection (a), (b), (c), (d), or (e)

5 applies, the Secretary of Health and Human Serv6 ices shall provide that any inflation update in such

7 fee schedule amount, or (if applicable) such applica8 ble limit, shall be such update that would otherwise

9 have applied for such year, reduced by 1 percentage

10 point.

11 SEC. 7262. PAYMENTS FOR CLINICAL DIAGNOSTIC LABORA12 TORY TESTS.

13 (a) LOWER CAP.—Section 1833(h)(4)(B) (42 U.S.C.

14 1395l(h)(4)(B)) is amended—

15 (1) by striking ‘‘and’’ at the end of clause (iii),

16 (2) in clause (iv), by inserting ‘‘and before Jan17 uary 1, 1994,’’ after ‘‘1990,’’,

18 (3) by striking the period at the end of clause

19 (iv) and inserting ‘‘, and’’, and

20 (4) by adding at the end the following:

21 ‘‘(v) after December 31, 1993, is equal to 76

22 percent of the median of all the fee schedules estab23 lished for that test for that laboratory setting under

24 paragraph (1).’’.
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1 (b) NO UPDATE FOR 1994 THROUGH 1998.—Section

2 1833(h)(2)(A)(ii)(II) (42 U.S.C. 1395l(h)(2)(A)(ii)(III))

3 is amended by inserting ‘‘1994, 1995, 1996, 1997, and

4 1998’’ after ‘‘1988’’.

5 PART III—PROVISIONS RELATING TO PARTS A

6 AND B

7 SEC. 7301. PAYMENTS FOR DIRECT GRADUATE MEDICAL

8 EDUCATION COSTS.

9 (a) WEIGHTING FACTORS.—Section 1886(h)(4)(C)

10 (42 U.S.C. 1395ww(h)(4)(C)) is amended to read as fol11 lows:

12 ‘‘(C) WEIGHTING FACTORS FOR CERTAIN

13 RESIDENTS.—Subject to subparagraph (D),

14 such rules shall provide, in calculating the num15 ber of full-time-equivalent residents in an ap16 proved residency program—

17 ‘‘(i) with respect to residents entering

18 an approved medical residency training

19 program before September 1, 1993—

20 ‘‘(I) for a resident who is in the

21 resident’s initial residency period, the

22 weighting factor is 1.00, and

23 ‘‘(II) for a resident who is not in

24 the resident’s initial residency period,

25 the weighting factor is .50; and
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1 ‘‘(ii) with respect to residents entering

2 an approved medical residency training

3 program on or after September 1, 1993—

4 ‘‘(I) for a resident who is in the

5 resident’s initial residency period, and

6 is in—

7 ‘‘(aa) a primary care resi8 dency, the weighting factor is

9 1.10, and

10 ‘‘(bb) any other residency,

11 the weighting factor is 0.70, and

12 ‘‘(II) for a resident who is not in

13 the resident’s initial residency period,

14 the weighting factor is 0.50.’’.

15 (b) INITIAL RESIDENCY PERIOD.—

16 (1) IN GENERAL.—Section 1886(h)(5)(F) (42

17 U.S.C. 1395ww(h)(5)(F)) is amended by striking

18 ‘‘plus one year’’.

19 (2) EFFECTIVE DATE.—The amendment made

20 by paragraph (1) shall be effective on and after July

21 1, 1995.

22 (c) PRIMARY CARE RESIDENCY.—Section 1886(h)(5)

23 (42 U.S.C. 1395ww(h)(5)) is amended by adding at the

24 end the following new subparagraph:
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•S 1134 PCS

1 ‘‘(I) PRIMARY CARE RESIDENCY.—The

2 term ‘primary care residency’ means a resi3 dency training program in family medicine, gen4 eral internal medicine, general pediatrics, pre5 ventive care, geriatric care, or osteopathic gen6 eral practice.’’.

7 (d) PREVENTIVE CARE SERVICES AS PART OF INI8 TIAL RESIDENCY PERIOD.—Section 1886(h)(5)(F)(ii) (42

9 U.S.C. 1395ww(h)(5)(F)(ii)) is amended by inserting ‘‘or

10 a preventive care residency or fellowship program’’ after

11 ‘‘fellowship program’’.

12 (e) SUCCESSOR EXAMS INCLUDED IN DEFINITION OF

13 FMGEMS EXAMINATION.—

14 (1) IN GENERAL.—Section 1886(h)(5)(E) is

15 amended by inserting ‘‘or any successor examina16 tion’’ after ‘‘Medical Sciences’’.

17 (2) EFFECTIVE DATE.—The amendment made

18 by paragraph (1) shall apply as if included in the

19 enactment of the Consolidated Omnibus Budget

20 Reconciliation Act of 1985 (Public Law 99–272).

21 (f) REPORT BY THE SECRETARY.—

22 (1) RECOMMENDATIONS.—The Secretary shall

23 make recommendations—
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1 (A) concerning the extent to which vari2 ation in the approved FTE per resident

3 amounts should be reduced;

4 (B) whether the approved FTE per resi5 dent amounts should be adjusted to account for

6 substantial changes in the operation of an ap7 proved medical residency training program

8 since the base year calculation; and

9 (C) potential changes in the graduate med10 ical education payment system that would pro11 mote residency training in nonhospital ambula12 tory site.

13 (2) REPORT.—Not later than July 31, 1994,

14 the Secretary shall deliver a report to Congress

15 which shall contain recommendations on each of the

16 matters under paragraph (1).

17 SEC. 7302. REVISION OF HOME HEALTH AGENCY COST LIM18 ITS.

19 (a) IN GENERAL.—Section 1861(v)(1)(L) (42 U.S.C.

20 1395x(v)(1)(L)(i)) is amended—

21 (1) in clause (i), by striking ‘‘for cost reporting

22 periods’’ and all that follows through to the period

23 and inserting ‘‘110 percent of the median of the

24 labor-related and nonlabor per visit costs for home

25 health agencies.’’, and
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1 (2) in clause (ii), by striking ‘‘specific basis,’’

2 and all that follows through ‘‘agencies.’’ and insert3 ing ‘‘specific basis.’’.

4 (b) EFFECTIVE DATE.—The amendments made by

5 subsection (a) shall apply to cost reporting periods begin6 ning on or after October 1, 1993.

7 SEC. 7303. MEDICARE AS SECONDARY PAYER.

8 (a) EXTENSION OF AND MODIFICATIONS TO DATA

9 MATCH PROGRAM.—(1)(A) Section 1862(b)(5)(C)(iii) (42

10 U.S.C. 1395y(b)(5)(C)(iii)) is amended by striking

11 ‘‘1995’’ and inserting ‘‘1998’’.

12 (B) Section 6103(l)(12)(F) of the Internal Revenue

13 Code of 1986 is amended—

14 (i) in clause (i), by striking ‘‘1995’’ and insert15 ing ‘‘1998’’,

16 (ii) in clause (ii)(I), by striking ‘‘1994’’ and in17 serting ‘‘1997’’, and

18 (iii) in clause (ii)(II), by striking ‘‘1995’’ and

19 inserting ‘‘1998’’.

20 (2)(A) Section 6103(l)(12)(B)(i) of the Internal Rev21 enue Code of 1986 is amended by inserting ‘‘, above an

22 amount (if any) specified by the Secretary of Health and

23 Human Services,’’ after ‘‘section 3401(a))’’.

24 (B) The matter in section 6103(l)(12)(B)(ii) of such

25 Code preceding subclause (I) is amended by inserting ‘‘,
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1 above an amount (if any) specified by the Secretary of

2 Health and Human Services,’’ after ‘‘wages’’.

3 (C) The heading to section 6103(l)(12) of such Code

4 is amended by striking ‘‘TAXPAYER IDENTITY’’ and insert5 ing ‘‘RETURN’’.

6 (3)(A) Section 6103(l)(12) of the Internal Revenue

7 Code of 1986, as amended by paragraph (1), is amend8 ed—

9 (i) by redesignating subparagraphs (E) and (F)

10 as subparagraphs (F) and (G), respectively, and

11 (ii) by inserting after subparagraph (D) the fol12 lowing new subparagraph:

13 ‘‘(E) DISCLOSURE CONCERNING ENFORCE14 MENT ACTIVITIES.—The Secretary shall, upon

15 written request from the Secretary of Health

16 and Human Services, disclose to the Secretary

17 of Health and Human Services the status of

18 any activities undertaken (with respect to per19 sons specified by the Secretary of Health and

20 Human Services) to enforce the requirements of

21 section 5000.’’.

22 (B) Section 6103(l)(12)(D)(i) of such Code is amend23 ed by striking ‘‘this paragraph’’ and inserting ‘‘subpara24 graphs (A) through (C)’’.
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1 (C) The heading to section 6103(l)(12) of such Code

2 is amended by inserting ‘‘AND FOR FACILITATION OF EN3 FORCEMENT OF MEDICARE SECONDARY PAYER REQUIRE4 MENTS’’ before the period.

5 (D) Section 1862(b)(5)(C)(i) (42 U.S.C.

6 1395y(b)(5)(C)(i)) is amended by striking

7 ‘‘6103(l)(12)(D)(iii)’’ and inserting ‘‘6103(l)(12)(F)(iii)’’.

8 (b) PERMANENT APPLICATION TO DISABLED ACTIVE

9 INDIVIDUALS.—Section 1862(b)(1)(B) (42 U.S.C.

10 1395y(b)(1)(B)) is amended by striking clause (iii).

11 (c) APPLICATION OF ESRD RULES TO CERTAIN

12 AGED AND DISABLED BENEFICIARIES AND INCREASE IN

13 MEDICARE SECONDARY PAYER COVERAGE FOR ESRD

14 SERVICES TO 24-MONTHS.—(1) Subparagraphs (A)(iv)

15 and (B)(ii) of section 1862(b)(1) (42 U.S.C. 1395y(b)(1))

16 are each amended—

17 (A) by striking ‘‘Clause (i) shall not apply’’ and

18 inserting ‘‘Subparagraph (C) shall apply instead of

19 clause (i)’’, and

20 (B) by inserting ‘‘(without regard to entitle21 ment under section 226)’’ after ‘‘individual is, or’’.

22 (2) Section 1862(b)(1)(C) (42 U.S.C.

23 1395y(b)(1)(C)) is amended—
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1 (A) in the second sentence, by striking ‘‘on or

2 before January 1, 1996’’ and inserting before ‘‘Jan3 uary 1, 1994’’, and

4 (B) by adding at the end the following: ‘‘Effec5 tive for items and services furnished on or after Jan6 uary 1, 1994, and before October 1, 1998, (with re7 spect to periods beginning on or after July 1, 1992),

8 this subparagraph shall be applied by substituting

9 ‘24-month’ for ‘12-month’ each place it appears.’’.

10 (d) APPLICATION OF EXCISE TAX TO FAILURE TO

11 REIMBURSE FEDERAL GOVERNMENT.—

12 (1) IN GENERAL.—Section 5000(c) of the Inter13 nal Revenue Code of 1986 is amended by striking

14 ‘‘of section 1862(b)(1)’’ and inserting ‘‘of paragraph

15 (1), or with the requirements of paragraph (2), of

16 section 1862(b).’’.

17 (2) EFFECTIVE DATE.—The amendment made

18 by paragraph (1) shall apply to demands for repay19 ment issued after the date of the enactment of this

20 Act.

21 (e) RETROACTIVE EXEMPTION FOR CERTAIN SITUA22 TIONS INVOLVING RELIGIOUS ORDERS.—Section

23 1862(b)(1)(D) of the Social Security Act (42 U.S.C.

24 1395y(b)(1)(D)) applies, with respect to items and serv25 ices furnished before October 1, 1989, to any claims that
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1 the Secretary of Health and Human Services had not

2 identified before that date as subject to the provisions of

3 this subsection.

4 (f) UNIFORM RULES FOR SIZE OF EMPLOYER.—(1)

5 Section 1862(b)(1) (42 U.S.C. 1395y(b)(1)) is amended

6 by adding at the end the following new subparagraph:

7 ‘‘(E) GENERAL PROVISIONS.—

8 ‘‘(i) EXCLUSION OF GROUP HEALTH

9 PLAN OF A SMALL EMPLOYER.—Subpara10 graphs (A) through (C) shall not apply to

11 a group health plan unless the plan is a

12 plan of, or contributed to by, an employer

13 or employee organization that has 20 or

14 more individuals in current employment

15 status for each working day in each of 20

16 or more calendar weeks in the current cal17 endar year or the preceding calendar year.

18 ‘‘(ii) EXCEPTION FOR SMALL EMPLOY19 ERS IN MULTIEMPLOYER OR MULTIPLE

20 EMPLOYER GROUP HEALTH PLANS.—Sub21 paragraphs (A) through (C) shall not apply

22 with respect to individuals enrolled in a

23 multiemployer or multiple employer group

24 health plan if the coverage of the individ25 uals under the plan is by virtue of current
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1 employment status with an employer that

2 does not have 20 or more individuals in

3 current employment status for each work4 ing day in each of 20 or more calendar

5 weeks in the current calendar year or the

6 preceding calendar year; but the exception

7 provided in this clause applies only if the

8 plan elects treatment under this clause.

9 ‘‘(iii) SPECIAL RULES.—For purposes

10 of clauses (i) and (ii)—

11 ‘‘(I) all employees of corporations

12 which are members of a controlled

13 group of corporations (within the

14 meaning of section 1563(a) of the In15 ternal Revenue Code of 1986, deter16 mined without regard to section

17 1563(a)(4) or section (e)(3)(C) of

18 such Code), shall be treated as em19 ployed by a single employer,

20 ‘‘(II) all employees of trades or

21 businesses (whether or not incor22 porated) which are under common

23 control (under regulations prescribed

24 by the Secretary of the Treasury

25 under section 414(c) of such Code)
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1 shall be treated as employed by a sin2 gle employer,

3 ‘‘(III) all employees of the mem4 bers of an affiliated service group (as

5 defined in section 414(m) of such

6 Code) shall be treated as employed by

7 a single employer, and

8 ‘‘(IV) leased employees (as de9 fined in section 414(n)(2) of such

10 Code) shall be treated as employees of

11 the person for whom they perform

12 services to the extent they are so

13 treated under section 414(n) of such

14 Code.

15 In applying sections of the Internal Reve16 nue Code under this clause, the Secretary

17 shall rely upon regulations and decisions of

18 the Secretary of the Treasury respecting

19 such sections.’’.

20 ‘‘(iv) GROUP HEALTH PLAN DE21 FINED.—For purposes of this subsection,

22 the term ‘group health plan’ has the mean23 ing given such term in section 5000(b) of

24 the Internal Revenue Code of 1986, with-
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1 out regard to section 5000(d) of such

2 Code.

3 ‘‘(v) CURRENT EMPLOYMENT STATUS

4 DEFINED.—For purposes of this sub5 section, an individual has ‘current employ6 ment status’ with an employer if the indi7 vidual is an employee, is the employer, or

8 is associated with the employer in a busi9 ness relationship.

10 ‘‘(vi) EMPLOYER DEFINED.—For pur11 poses of this subsection, the term ‘em12 ployer’ includes a self-employed person.’’.

13 (2)(A) Section 1862(b)(1)(A)(i)(I) (42 U.S.C.

14 1395y(b)(1)(A)(i)(I)) is amended to read as follows:

15 ‘‘(I) may not take into account

16 that an individual (or the individual’s

17 spouse) who is covered under the plan

18 by virtue of the individual’s current

19 employment status with an employer

20 is entitled to benefits under this title

21 under section 226(a), and’’.

22 (B) Section 1862(b)(1)(A)(i)(II) (42 U.S.C.

23 1395y(b)(1)(A)(i)(II)) is amended to read as follows:

24 ‘‘(II) shall provide that any indi25 vidual age 65 or over (and the indi-
246

•S 1134 PCS

1 vidual’s spouse age 65 or older) who

2 is covered under the plan by virtue of

3 the individual’s current employment

4 status with an employer shall be enti5 tled to the same benefits under the

6 plan under the same conditions as any

7 such individual (or spouse) under age

8 65.’’.

9 (C) Section 1862(b)(1)(A) (42 U.S.C.

10 1395y(b)(1)(A)), as amended by subsection (c)(1), is

11 amended—

12 (i) by striking clauses (ii), (iii), and (v), and

13 (ii) by redesignating clause (iv) as clause (ii).

14 (3)(A) Section 1862(b)(1)(B) (42 U.S.C.

15 1395y(b)(1)(B)(i)) is amended—

16 (i) by striking the heading and inserting the fol17 lowing new heading:

18 ‘‘(B) DISABLED INDIVIDUALS UNDER

19 GROUP HEALTH PLANS.—’’, and

20 (ii) by striking clause (i) and inserting the fol21 lowing new clause:

22 ‘‘(i) IN GENERAL.—A group health plan

23 may not take into account that an individual

24 (or a member of the individual’s family) who is

25 covered under the plan by virtue of the individ-
247

•S 1134 PCS

1 ual’s current employment status with an em2 ployer is entitled to benefits under this title

3 under section 226(b).’’.

4 (B) Section 1862(b)(1)(B) (42 U.S.C.

5 1395y(b)(1)(B)) is amended by striking clause (iv).

6 (4) Section 1862(b)(1)(C) (42 U.S.C.

7 1395y(b)(1)(C)) is amended—

8 (A) in the matter preceding clause (i), by strik9 ing ‘‘(as defined in subparagraph (A)(v))’’,

10 (B) by striking ‘‘solely’’ each place it appears,

11 (C) by striking ‘‘by reason of’’ and inserting

12 ‘‘under’’ each place it appears, and

13 (D) by inserting ‘‘or eligible for’’ after ‘‘entitled

14 to’’ the first and last place it appears.

15 (5) The second sentence of section 1862(b)(2)(A) (42

16 U.S.C. 1395y(b)(2)(A)) is amended by striking ‘‘or large

17 group health plan’’.

18 (6)(A) Subsection (a) of section 5000 of the Internal

19 Revenue Code of 1986 is amended by inserting ‘‘(including

20 a self-employed person)’’ after ‘‘employer’’;

21 (B) Subsection (b) of section 5000 of such Code is

22 amended to read as follows:

23 ‘‘(b) GROUP HEALTH PLAN.—The term ‘group

24 health plan’ means a plan (including a self-insured plan)

25 of, or contributed to by, an employer (including a self-em-
248

•S 1134 PCS

1 ployed person) or employee organization to provide health

2 care (directly or otherwise) to the employees, former em3 ployees, the employer, others associated or formerly asso4 ciated with the employer in a business relationship, or

5 their families.’’; and

6 (C) Subsection (c) of section 5000 of such Code by

7 striking ‘‘or large group health plan’’.

8 (D) Section 6103(l)(12)(F)(ii) of such Code (as re9 designated by subsection (a)(3)(A)(i) of this section) is

10 amended to read as follows:

11 ‘‘(ii) GROUP HEALTH PLAN.—The

12 term ‘group health plan’ means any group

13 health plan (as defined in section

14 5000(b)).’’.

15 (g) EFFECTIVE DATE.—The amendments made by

16 subsections (c)(1), (d), and (f) apply to items and services

17 furnished after the third calendar month beginning after

18 the date of enactment of this Act.

19 SEC. 7304. EXTENSION OF SELF-REFERRAL BAN TO ADDI20 TIONAL SPECIFIED SERVICES.

21 (a) EXTENSION TO DESIGNATED HEALTH SERV22 ICES.—

23 (1) IN GENERAL.—Section 1877(h) (42 U.S.C.

24 1395nn(h)) is amended by adding at the end the fol25 lowing new paragraph:
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•S 1134 PCS

1 ‘‘(8) DESIGNATED HEALTH SERVICES.—The

2 term ‘designated health services’ means—

3 ‘‘(A) clinical laboratory services;

4 ‘‘(B) physical or occupational therapy serv5 ices;

6 ‘‘(C) radiology or other diagnostic services;

7 ‘‘(D) radiation therapy services;

8 ‘‘(E) the furnishing of durable medical

9 equipment;

10 ‘‘(F) the furnishing of parenteral and en11 teral nutrition nutrients, supplies, and equip12 ment;

13 ‘‘(G) home health services; and

14 ‘‘(H) the furnishing of prosthetics,

15 orthotics, and prosthetic devices.’’.

16 (2) CONFORMING AMENDMENTS.—Section 1877

17 (42 U.S.C. 1395nn) is amended—

18 (A) by striking ‘‘clinical laboratory serv19 ices’’ and ‘‘CLINICAL LABORATORY SERVICES’’

20 and inserting ‘‘designated health services’’ and

21 ‘‘DESIGNATED HEALTH SERVICES’’, respectively,

22 each place either appears in subsections (a)(1),

23 (b)(2)(A)(ii), (d)(1), (d)(2), and (d)(3); and

24 (B) by striking ‘‘clinical laboratory serv25 ice’’ and inserting ‘‘designated health service’’
250

•S 1134 PCS

1 each place it appears in subsections (g)(1) and

2 (h)(7)(B).

3 (b) MODIFICATION TO EXCEPTION FOR IN-OFFICE

4 ANCILLARY SERVICES.—Section 1877(b)(2) (42 U.S.C.

5 1395nn(b)(2)) is amended—

6 (1) by inserting ‘‘(other than durable medical

7 equipment and parenteral and enteral nutrition

8 equipment and supplies)’’ after ‘‘services’’ the first

9 place it appears; and

10 (2) in subparagraph (A)(ii)(II), by striking

11 ‘‘centralized provision’’ and inserting ‘‘provision of

12 some or all’’.

13 (c) TREATMENT OF COMPENSATION ARRANGE14 MENTS.—

15 (1) RENTAL OF OFFICE SPACE AND EQUIP16 MENT.—

17 (A) IN GENERAL.—Paragraph (1) of sec18 tion 1877(e) (42 U.S.C. 1395nn(e)) is amended

19 to read as follows:

20 ‘‘(1) RENTAL OF OFFICE SPACE; RENTAL OF

21 EQUIPMENT.—

22 ‘‘(A) OFFICE SPACE.—Payments made by

23 a lessee to a lessor for the use of premises if—
251

•S 1134 PCS

1 ‘‘(i) the lease is set out in writing,

2 signed by the parties, and specifies the

3 premises covered by the lease,

4 ‘‘(ii) the space rented or leased is rea5 sonable and necessary for the legitimate

6 business purposes of the lease or rental

7 and is used exclusively by the lessee when

8 being used by the lessee, except that the

9 lessee may make payments for the use of

10 space consisting of common areas if such

11 payments do not exceed the lessee’s pro

12 rata share of expenses for such space

13 based upon the ratio of the space used ex14 clusively by the lessee to the total amount

15 of space (other than common areas) occu16 pied by all persons using such common

17 areas,

18 ‘‘(iii) the lease provides for a term of

19 rental or lease for at least one year,

20 ‘‘(iv) the rental charges over the term

21 of the lease are set in advance, are consist22 ent with fair market value, and are not de23 termined in a manner that takes into ac24 count the volume or value of any referrals
252

•S 1134 PCS

1 or other business generated between the

2 parties,

3 ‘‘(v) the lease would be commercially

4 reasonable even if no referrals were made

5 between the parties,

6 ‘‘(vi) the lease covers all of the prem7 ises leased between the parties for the pe8 riod of the lease, and

9 ‘‘(vii) the compensation arrangement

10 meets such other requirements as the Sec11 retary may impose by regulation as needed

12 to protect against program or patient

13 abuse.

14 ‘‘(B) EQUIPMENT.—Payments made by a

15 lessee of equipment to the lessor of the equip16 ment for the use of the equipment if—

17 ‘‘(i) the lease is set out in writing,

18 signed by the parties, and specifies the

19 equipment covered by the lease,

20 ‘‘(ii) the equipment rented or leased is

21 reasonable and necessary for the legitimate

22 business purposes of the lease or rental

23 and is used exclusively by the lessee when

24 being used by the lessee,
253

•S 1134 PCS

1 ‘‘(iii) the lease provides for a term of

2 rental or lease of at least one year,

3 ‘‘(iv) the rental charges over the term

4 of the lease are set in advance, are consist5 ent with fair market value, and are not de6 termined in a manner that takes into ac7 count the volume or value of any referrals

8 or other business generated between the

9 parties,

10 ‘‘(v) the lease would be commercially

11 reasonable even if no referrals were made

12 between the parties,

13 ‘‘(vi) the lease covers all of the equip14 ment leased between the parties for the pe15 riod of the lease, and

16 ‘‘(vii) the compensation arrangement

17 meets such other requirements as the Sec18 retary may impose by regulation as needed

19 to protect against program or patient

20 abuse.’’.

21 (B) CONFORMING AMENDMENT.—Section

22 1877(h) (42 U.S.C. 1395nn(h)) is amended by

23 striking paragraphs (5) and (6) and by redesig24 nating paragraphs (7) and (8) (as added by
254

•S 1134 PCS

1 subsection (a)(1)) as paragraphs (5) and (6),

2 respectively.

3 (2) BONA FIDE EMPLOYMENT RELATION4 SHIPS.—Section 1877(e)(2) (42 U.S.C.

5 1395nn(e)(2)) is amended—

6 (A) by striking ‘‘AND SERVICE’’ and ‘‘WITH

7 HOSPITALS’’;

8 (B) by striking ‘‘An arrangement’’ and all

9 that follows through ‘‘if’’ and inserting ‘‘Any

10 amount paid by an employer to a physician (or

11 an immediate family member of such physician)

12 who has a bona fide employment relationship

13 with the employer for the provision of services

14 if’’;

15 (C) in subparagraphs (A), (B), and (D), by

16 striking ‘‘arrangement’’ and inserting ‘‘employ17 ment relationship’’;

18 (D) in subparagraph (C), by striking ‘‘hos19 pital’’ and inserting ‘‘employer’’; and

20 (E) by adding at the end the following new

21 flush sentence:

22 ‘‘Subparagraph (B)(ii) shall not be construed as pro23 hibiting the payment of remuneration in the form of

24 a productivity bonus based on services performed
255

•S 1134 PCS

1 personally by the physician (or an immediate family

2 member of such physician).’’.

3 (3) PERSONAL SERVICE ARRANGEMENTS.—Sec4 tion 1877(e)(3) (42 U.S.C. 1395nn(e)(3)) is amend5 ed to read as follows:

6 ‘‘(3) SERVICE ARRANGEMENTS.—

7 ‘‘(A) PERSONAL SERVICE ARRANGE8 MENTS.—Remuneration from an entity under

9 an arrangement if—

10 ‘‘(i) the arrangement is set out in

11 writing, signed by the parties, and specifies

12 the services covered by the arrangement,

13 ‘‘(ii) the arrangement covers all of the

14 services to be provided,

15 ‘‘(iii) the aggregate services con16 tracted for do not exceed those that are

17 reasonable and necessary for the legitimate

18 business purposes of the arrangement,

19 ‘‘(iv) the term of the arrangement is

20 for at least one year,

21 ‘‘(v) the compensation to be paid over

22 the term of the arrangement is set in ad23 vance, does not exceed fair market value,

24 and is not determined in a manner that

25 takes into account the volume or value of
256

•S 1134 PCS

1 any referrals or other business generated

2 between the parties,

3 ‘‘(vi) the services to be performed

4 under the arrangement do not involve the

5 counseling or promotion of a business ar6 rangement of other activity that violates

7 any State or Federal law, and

8 ‘‘(vii) the arrangement meets such

9 other requirements as the Secretary may

10 impose by regulation as needed to protect

11 against program or patient abuse.

12 ‘‘(B) OTHER SERVICE ARRANGEMENTS.—

13 Remuneration from an entity under an arrange14 ment if—

15 ‘‘(i) the arrangement is—

16 ‘‘(I) for specific identifiable serv17 ices as the medical director or as a

18 member of a medical advisory board

19 at the entity pursuant to a require20 ment of this title,

21 ‘‘(II) for specific identifiable phy22 sicians’ services to be furnished to an

23 individual receiving hospice care if

24 payment for such services may only be

25 made under this title as hospice care,
257

•S 1134 PCS

1 ‘‘(III) for specific physicians’

2 services furnished to a nonprofit blood

3 center, or

4 ‘‘(IV) for specific identifiable ad5 ministrative services (other than di6 rect patient care services), but only

7 under exceptional circumstances speci8 fied by the Secretary in regulations;

9 ‘‘(ii) the requirements described in

10 subparagraphs (B) and (C) of paragraph

11 (2) are met with respect to the entity in

12 the same manner as they apply to an em13 ployer; and

14 ‘‘(iii) the arrangement meets such

15 other requirements as the Secretary may

16 impose by regulation as needed to protect

17 against program or patient abuse.’’.

18 (4) HEALTH SERVICES FURNISHED UNDER

19 CERTAIN HOSPITAL ARRANGEMENTS.—Section

20 1877(e) (42 U.S.C. 1395nn(e)) is amended by add21 ing at the end the following new paragraph:

22 ‘‘(7) CERTAIN GROUP PRACTICE ARRANGE23 MENTS WITH A HOSPITAL.—

24 ‘‘(A) IN GENERAL.—An arrangement be25 tween a hospital and a group under which des-
258

•S 1134 PCS

1 ignated health services are provided by the

2 group but are billed by the hospital if—

3 ‘‘(i) the group would be a group prac4 tice, but for the fact that it bills for such

5 services through the hospital;

6 ‘‘(ii) with respect to services provided

7 to an inpatient of the hospital, the ar8 rangement is pursuant to the provision of

9 inpatient hospital services under section

10 1861(b)(3);

11 ‘‘(iii) the arrangement began before

12 December 19, 1989, and has continued in

13 effect without interruption since such date;

14 ‘‘(iv) the group provides substantially

15 all of the designated health services fur16 nished under the arrangement to the hos17 pital’s patients;

18 ‘‘(v) the arrangement is pursuant to

19 an agreement that is set out in writing and

20 that specifies the services to be provided by

21 the parties and the compensation for serv22 ices provided under the arrangement;

23 ‘‘(vi) the compensation paid over the

24 term of the agreement is consistent with

25 fair market value and the compensation
259

•S 1134 PCS

1 per unit of services is fixed in advance and

2 is not determined in a manner that takes

3 into account the volume or value of any re4 ferrals or other business generated between

5 the parties;

6 ‘‘(vii) the compensation is provided

7 pursuant to an agreement which would be

8 commercially reasonable even if no refer9 rals were made to the entity; and

10 ‘‘(viii) the arrangement between the

11 parties meets such other requirements as

12 the Secretary may impose by regulation as

13 needed to protect against program or pa14 tient abuse.’’.

15 (5) ADDITIONAL EXCEPTION.—Section 1877(e)

16 (42 U.S.C. 1395nn(e)) is further amended by adding

17 at the end the following new paragraph:

18 ‘‘(8) PAYMENTS BY A PHYSICIAN FOR ITEMS

19 AND SERVICES.—Payments made by a physician—

20 ‘‘(A) to a laboratory in exchange for the

21 provision of clinical laboratory diagnostic tests,

22 or

23 ‘‘(B) to an entity as compensation for

24 other items or services if the items or services
260

•S 1134 PCS

1 are furnished at a price that is consistent with

2 fair market value.’’.

3 (6) REFERRING PHYSICIANS.—Subparagraph

4 (C) of section 1877(h)(5) (42 U.S.C. 1395nn(h)(5)),

5 as redesignated by subsection (c)(1)(B), is amend6 ed—

7 (A) by inserting ‘‘a request by a radiologist

8 for diagnostic radiology services, and a request

9 by a radiation oncologist for radiation therapy,’’

10 after ‘‘examination services,’’, and

11 (B) by inserting ‘‘, radiologist, or radiation

12 oncologist’’ after ‘‘pathologist’’ the second place

13 it appears.

14 (7) CONFORMING AMENDMENT.—Section

15 1877(b) (42 U.S.C. 1395nn(b)) is amended by strik16 ing paragraph (4) and redesignating paragraph (5)

17 as paragraph (4).

18 (d) REQUIREMENTS FOR GROUP PRACTICE.—

19 (1) ADDITIONAL REQUIREMENTS.—Section

20 1877(h)(4) (42 U.S.C. 1395nn(h)(4)) is amended to

21 read as follows:

22 ‘‘(4) GROUP PRACTICE.—

23 ‘‘(A) DEFINITION OF GROUP PRACTICE.—

24 The term ‘group practice’ means a group of 2

25 or more physicians legally organized as a part-
261

•S 1134 PCS

1 nership, professional corporation, foundation,

2 not-for-profit corporation, faculty practice plan,

3 or similar association—

4 ‘‘(i) in which each physician who is a

5 member of the group provides substantially

6 the full range of services which the physi7 cian routinely provides, including medical

8 care, consultation, diagnosis, or treatment,

9 through the joint use of shared office

10 space, facilities, equipment and personnel;

11 ‘‘(ii) for which substantially all of the

12 services of the physicians who are members

13 of the group are provided through the

14 group and are billed in the name of the

15 group and amounts so received are treated

16 as receipts of the group;

17 ‘‘(iii) in which the overhead expenses

18 of and the income from the practice are

19 distributed in accordance with methods

20 previously determined by members of the

21 group;

22 ‘‘(iv) except as provided in subpara23 graph (B)(i), in which no physician who is

24 a member of the group directly or indi25 rectly receives compensation based on the
262

•S 1134 PCS

1 volume or value of referrals by the physi2 cian;

3 ‘‘(v) in which, on average, there are

4 no less than 5 physicians per office loca5 tion, but if a group has less than 15 physi6 cians such group may have up to 3 office

7 locations any one of which may have less

8 than 5 physicians;

9 ‘‘(vi) in which members of the group

10 personally conduct no less than 75 percent

11 of the physician-patient encounters of the

12 group practice; and

13 ‘‘(vii) which meets such other stand14 ards as the Secretary may impose by regu15 lation.

16 ‘‘(B) SPECIAL RULES.—

17 ‘‘(i) PROFITS AND PRODUCTIVITY BO18 NUSES.—A physician in a group practice

19 may be paid a share of overall profits of

20 the group, or a productivity bonus based

21 on services personally performed or serv22 ices incident to such personally performed

23 services, so long as the share or bonus is

24 not determined in any manner which is di-
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•S 1134 PCS

1 rectly related to the volume or value of re2 ferrals by such physician.

3 ‘‘(ii) FACULTY PRACTICE PLANS.—In

4 the case of a faculty practice plan associ5 ated with a hospital, institution of higher

6 education, or medical school with an ap7 proved medical residency training program

8 in which physician members may provide a

9 variety of different specialty services and

10 provide professional services both within

11 and outside the group, as well as perform

12 other tasks such as research, subparagraph

13 (A) shall be applied only with respect to

14 the services provided within the faculty

15 practice plan.

16 ‘‘(C) DEFINITION OF OFFICE LOCATION.—

17 For purposes of this paragraph, the term ‘office

18 location’ means an office where physician serv19 ices are offered to patients except that—

20 ‘‘(i) such term does not include—

21 ‘‘(I) a location consisting solely of a

22 diagnostic facility, nursing facility, or

23 treatment facility such as a physical or oc24 cupational therapy center, or a facility pro-
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•S 1134 PCS

1 viding administrative services affiliated

2 with the group practice; or

3 ‘‘(II) an office located in a rural area

4 (as defined in section 1886(d)(2)(D)) if at

5 least 85 percent of the physicians’ services

6 furnished at the location are furnished to

7 individuals who reside in such a rural area;

8 and

9 ‘‘(ii) any office location which is located

10 immediately adjacent to another office location

11 shall be treated as the same office location.’’.

12 (2) USE OF BILLING NUMBERS, ETC.—Section

13 1877 (42 U.S.C. 1395nn) is amended—

14 (A) in subsection (b)(2)(B), by inserting

15 ‘‘under a billing number assigned to the group

16 practice’’ after ‘‘member’’,

17 (B) in subsection (h)(4)(A)(ii), as added

18 by subsection (d)(1), by inserting ‘‘and under a

19 billing number assigned to the group’’ after ‘‘in

20 the name of the group’’, and

21 (C) in subsection (h)(4)(A)(iii), as so

22 added, by striking ‘‘by members of the group’’.

23 (3) CONFORMING AMENDMENT.—Section

24 1877(h) (42 U.S.C. 1395nn(h)) is amended by strik-
265

•S 1134 PCS

1 ing ‘‘DEFINITIONS.—’’ and inserting ‘‘DEFINITIONS

2 AND SPECIAL RULES.—’’.

3 (e) EXPANDING RURAL PROVIDER EXCEPTION TO

4 COVER COMPENSATION ARRANGEMENTS.—

5 (1) IN GENERAL.—Section 1877(b) (42 U.S.C.

6 1395nn(b)) is amended—

7 (A) by redesignating paragraph (4), as re8 designated by subsection (c)(7), as paragraph

9 (5), and

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

11 following new paragraph:

12 ‘‘(4) RURAL PROVIDERS.—In the case of des13 ignated health services if—

14 ‘‘(A) the services are furnished in a rural

15 area (as defined in section 1886(d)(2)(D)), and

16 ‘‘(B) substantially all of the services fur17 nished by the entity furnishing the services de18 scribed in subparagraph (A) are furnished to

19 individuals entitled to benefits under this title

20 who reside in such a rural area.’’.

21 (2) CONFORMING AMENDMENTS.—Section

22 1877(d) (42 U.S.C. 1395nn(d)) is amended—

23 (A) by striking paragraph (2), and

24 (B) by redesignating paragraph (3) as

25 paragraph (2).
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•S 1134 PCS

1 (f) EXEMPTION OF COMPENSATION ARRANGEMENTS

2 INVOLVING CERTAIN TYPES OF REMUNERATION.—Sec3 tion 1877(h)(1) (42 U.S.C. 1395nn(h)(1)) is amended—

4 (1) in subparagraph (A), by inserting before the

5 period at the end the following: ‘‘other than an ar6 rangement involving only remuneration described in

7 subparagraph (C)’’, and

8 (2) by adding at the end the following new sub9 paragraph:

10 ‘‘(C) Remuneration described in this subpara11 graph is any remuneration consisting of any of the

12 following:

13 ‘‘(i) The forgiveness of amounts owed for

14 inaccurate tests or procedures, mistakenly per15 formed tests or procedures, or the correction of

16 minor billing errors.

17 ‘‘(ii) The provision of items, devices, or

18 supplies of minor value that are used to—

19 ‘‘(I) collect, transport, process, or

20 store specimens for the entity providing

21 the item, device, or supply, or

22 ‘‘(II) communicate the results of tests

23 or procedures for such entity.’’.
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•S 1134 PCS

1 (g) EXCEPTION FOR PUBLICLY-TRADED SECURI2 TIES.—Section 1877(c) (42 U.S.C. 1395nn(c)) is amend3 ed—

4 (1) in the matter preceding paragraph (1), by

5 striking ‘‘on terms generally available to the public’’

6 and inserting ‘‘through public trading on a public

7 exchange or which were inherited’’; and

8 (2) in paragraph (2), by striking ‘‘total assets

9 exceeding $100,000,000’’ and inserting ‘‘stockholder

10 equity exceeding $75,000,000’’.

11 (h) MISCELLANEOUS AND TECHNICAL CORREC12 TIONS.—Section 1877 (42 U.S.C. 1395nn) is amended—

13 (1) in subsection (b)(2)(A)(i), by striking ‘‘who

14 are employed by such physician or group practice

15 and who are personally’’ and inserting ‘‘who are di16 rectly’’;

17 (2) in the fourth sentence of subsection (f)—

18 (A) by striking ‘‘provided’’ and inserting

19 ‘‘furnished’’, and

20 (B) by striking ‘‘provides’’ and inserting

21 ‘‘furnish’’;

22 (3) in the last sentence of subsection (f)—

23 (A) by striking ‘‘providing’’ each place it

24 appears and inserting ‘‘furnishing’’,
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•S 1134 PCS

1 (B) by striking ‘‘with respect to the provid2 ers’’ and inserting ‘‘with respect to the enti3 ties’’, and

4 (C) by striking ‘‘diagnostic imaging serv5 ices of any type’’ and inserting ‘‘magnetic reso6 nance imaging, computerized axial tomography

7 scans, and ultrasound services’’; and

8 (4) in subsection (a)(2)(B), by striking ‘‘sub9 section (h)(1)(A)’’ and inserting ‘‘subsection (h)(1)’’.

10 (i) EFFECTIVE DATES.—

11 (1) Except as provided in paragraph (2), the

12 amendments made by this section shall apply to re13 ferrals made on or after January 1, 1992.

14 (2) The amendments made by subsection (a)

15 apply with respect to a referral by a physician for

16 designated health services (as defined in section

17 1877(h)(6) of the Social Security Act) made after

18 December 31, 1994.

19 SEC. 7305. REDUCTION IN PAYMENT FOR ERYTHRO20 POIETIN.

21 (a) IN GENERAL.—Section 1881(b)(11)(B)(ii)(I) (42

22 U.S.C. 1395rr(b)(11)(B)(ii)(I)) is amended—

23 (1) by striking ‘‘1991’’ and inserting ‘‘1994’’,

24 and

25 (2) by striking ‘‘$11’’ and inserting ‘‘$10’’.
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•S 1134 PCS

1 (b) EFFECTIVE DATE.—The amendments made by

2 subsection (a) apply to erythropoietin furnished after

3 1993.

4 Subtitle B—Medicaid Program

5 PART I—PROGRAM SAVINGS PROVISIONS

6 Subpart A—Repeal of Mandate

7 SEC. 7401. PERSONAL CARE SERVICES FURNISHED OUT8 SIDE THE HOME AS OPTIONAL BENEFIT.

9 (a) IN GENERAL.—Section 1905(a) (42 U.S.C.

10 1396d(a)), as amended by subsection (b), is amended—

11 (1) in paragraph (7), by striking ‘‘including

12 personal care services’’ and all that follows through

13 ‘‘nursing facility’’;

14 (2) in paragraph (23), by striking ‘‘and’’ at the

15 end;

16 (3) by redesignating paragraph (24) as para17 graph (25); and

18 (4) by inserting after paragraph (23) the fol19 lowing new paragraph:

20 ‘‘(24) personal care services furnished to an in21 dividual who is not an inpatient or resident of a

22 nursing facility or other medical institution that are

23 (A) authorized by a physician for the individual in

24 accordance with a plan of treatment, (B) provided

25 by an individual who is qualified to provide such
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1 services and who is not a member of the individual’s

2 family, (C) supervised by a registered nurse, and

3 (D) furnished in a home or other location; and’’.

4 (b) REDESIGNATIONS TO PARAGRAPHS ADDED BY

5 OBRA–1990.—Section 1905(a) (42 U.S.C. 1396d(a)) is

6 amended—

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

8 (21);

9 (2) in paragraph (24), by striking the comma

10 at the end and inserting ‘‘; and’’; and

11 (3) by redesignating paragraphs (22), (23), and

12 (24) as paragraphs (24), (22), and (23), respec13 tively, and by transferring and inserting paragraph

14 (24), as so redesignated, after paragraph (23), as so

15 redesignated.

16 (c) CONFORMING AMENDMENTS.—(1) Section

17 1902(a)(10)(C)(iv) (42 U.S.C. 1396a(a)(10)(C)(iv)) is

18 amended by striking ‘‘through (21)’’ and inserting

19 ‘‘through (24)’’.

20 (2) Section 1902(j) (42 U.S.C. 1396a(j)) is amended

21 by striking ‘‘through (22)’’ and inserting ‘‘through (25)’’.

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

23 this section shall take effect as if included in the enact24 ment of OBRA–1990.
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1 Subpart B—Outpatient Prescription Drugs

2 SEC. 7411. PERMITTING PRESCRIPTION DRUG

3 FORMULARIES UNDER STATE PLANS.

4 (a) ELIMINATION OF PROHIBITION AGAINST USE OF

5 FORMULARIES.—Paragraph (54) of section 1902(a) (42

6 U.S.C. 1396a(a)) is amended to read as follows:

7 ‘‘(54) in the case of a State plan that provides

8 medical assistance for covered outpatient drugs (as

9 defined in section 1927(k)), comply with the applica10 ble requirements of section 1927;’’.

11 (b) STANDARDS FOR FORMULARIES.—Section

12 1927(d) (42 U.S.C. 1396r–8(d)), as amended by section

13 7412(a), is amended—

14 (1) by adding at the end of paragraph (1) the

15 following new subparagraph:

16 ‘‘(C) In the case of a State that establishes a

17 formulary in accordance with paragraph (6), the

18 State may exclude coverage of a covered outpatient

19 drug that is not included in the formulary.’’; and

20 (2) by inserting after paragraph (5) the follow21 ing new paragraph:

22 ‘‘(6) REQUIREMENTS FOR FORMULARIES.—A

23 State may establish a formulary only if the following

24 requirements are met:

25 ‘‘(A) The formulary is developed by a com26 mittee consisting of physicians, pharmacists,
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1 and other appropriate individuals appointed by

2 the Governor of the State or, at the option of

3 the State, the State’s drug use review board es4 tablished under subsection (g)(3).

5 ‘‘(B) The formulary includes each covered

6 outpatient drug of a manufacturer which has

7 entered into and complies with an agreement

8 under subsection (a) unless the drug is con9 tained in the list referred to in paragraph (2)

10 or excluded in accordance with subparagraph

11 (C).

12 ‘‘(C)(i) The committee may exclude a cov13 ered outpatient drug with respect to the treat14 ment of a specific disease or condition for an

15 identified population (if any) only if the com16 mittee finds that the excluded drug does not

17 have a significant, clinically meaningful thera18 peutic advantage in terms of safety, effective19 ness, or clinical outcome of such treatment for

20 such population over other drugs included in

21 the formulary.

22 ‘‘(ii) The committee’s finding under clause

23 (i) shall be based on—

24 ‘‘(I) the drug’s labeling, or
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1 ‘‘(II) in the case of a drug the pre2 scribed use of which is not approved under

3 the Federal Food, Drug, and Cosmetic Act

4 but is a medically accepted indication, on

5 information from the appropriate compen6 dia described in subsection (k)(6).

7 ‘‘(D) With respect to a recommendation to

8 exclude a covered outpatient drug from the for9 mulary or to exclude a prescribed use of such

10 a drug, the committee issues a written expla11 nation of its recommendation that is available

12 to the public.

13 ‘‘(E) The State plan permits coverage of a

14 drug excluded from the formulary pursuant to

15 a prior authorization program that is consistent

16 with paragraph (5) unless the drug is contained

17 in the list referred to in paragraph (2).

18 ‘‘(F) The formulary meets such other re19 quirements as the Secretary may impose.’’.

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

21 this section shall apply to calendar quarters beginning on

22 or after October 1, 1993, without regard to whether or

23 not regulations to carry out such amendments have been

24 promulgated by such date.
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1 SEC. 7412. ELIMINATION OF SPECIAL EXEMPTION FROM

2 PRIOR AUTHORIZATION FOR NEW DRUGS.

3 (a) IN GENERAL.—Section 1927(d) (42 U.S.C.

4 1396r–8(d)) is amended by striking paragraph (6).

5 (b) CONFORMING AMENDMENT.—(1) Section

6 1927(d)(1)(A) (42 U.S.C. 1396r–8(d)(1)(A)) is amended

7 by striking ‘‘Except as provided in paragraph (6), a State’’

8 and inserting ‘‘A State’’.

9 (2) Section 1927(d)(3) (42 U.S.C. 1396r–8(d)(3)) is

10 amended by striking ‘‘(except with respect’’ and all that

11 follows through ‘‘of this paragraph)’’.

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

13 this section shall apply to calendar quarters beginning on

14 or after October 1, 1993, without regard to whether or

15 not regulations to carry out such amendments have been

16 promulgated by such date.

17 SEC. 7413. MODIFICATIONS TO DRUG REBATE PROGRAM.

18 (a) ELIMINATION OF ADDITIONAL REBATE BASED

19 ON WEIGHTED AVERAGE MANUFACTURER PRICE.—Para20 graph (2) of section 1927(c) (42 U.S.C. 1396r–8(c)) is

21 amended to read as follows:

22 ‘‘(2) ADDITIONAL REBATE FOR SINGLE SOURCE

23 AND INNOVATOR MULTIPLE SOURCE DRUGS.—

24 ‘‘(A) IN GENERAL.—The amount of the re25 bate for a calendar quarter with respect to each

26 dosage form and strength of a single source
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1 drug or an innovator multiple source drug, is

2 increased by an amount equal to the product

3 of—

4 ‘‘(i) the total number of dosage units

5 dispensed after December 31, 1990, for

6 which payment was made under the State

7 plan for the period reported by the State

8 under subsection (b)(2), and

9 ‘‘(ii) the amount (if any) by which—

10 ‘‘(I) the average manufacturer

11 price for the dosage form and

12 strength of the drug for the period,

13 exceeds

14 ‘‘(II) the average manufacturer

15 price for such dosage form and

16 strength for the calendar quarter be17 ginning July 1, 1990, increased by the

18 percentage by which the average of

19 the consumer price indices for all

20 urban consumers (U.S. city average)

21 for months during the calendar quar22 ter exceeds such index for September

23 1990.

24 ‘‘(B) SPECIAL RULE.—In the case of a

25 covered outpatient drug approved by the Food
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1 and Drug Administration after October 1,

2 1990, subclause (II) of subparagraph (A)(ii)

3 shall be applied by substituting ‘the first full

4 calendar quarter after the drug was marketed’

5 for ‘the calendar quarter beginning July 1,

6 1990’ and ‘the month prior to the first month

7 of the first full calendar quarter after the drug

8 was marketed’ for ‘September 1990’.’’.

9 (b) BASE DATE FOR COVERED OUTPATIENT DRUG

10 SOLD OR TRANSFERRED.—Paragraph (2) of section

11 1927(c) (42 U.S.C. 1396r–8(c)), as amended by sub12 section (a), is amended by adding at the end the following

13 new subparagraph:

14 ‘‘(C) BASE DATE FOR COVERED OUT15 PATIENT DRUG SOLD OR TRANSFERRED.—For

16 purposes of computing the additional rebate

17 under this paragraph for any covered outpatient

18 drug that is sold or transferred to any entity,

19 including a division or subsidiary of a manufac20 turer, the base date for such drug after such

21 sale or transfer shall be the original base date

22 established for such drug.’’.

23 (c) MAXIMUM ALLOWABLE COST LIMITATIONS.—

24 Section 1927 (42 U.S.C. 1396r–8) is amended by adding

25 at the end the following new subsection:
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1 ‘‘(l) MAXIMUM ALLOWABLE COST LIMITATIONS.—

2 This section shall not supersede or affect provisions in ef3 fect prior to January 1, 1991, relating to maximum allow4 able cost limitations for payment by States for covered

5 outpatient drugs, and rebates under this section shall be

6 made without regard to whether or not payment by the

7 State for such drugs is subject to such limitations or the

8 amount of such cost limitations.’’.

9 (d) EFFECTIVE DATES.—(1) The amendments made

10 by subsections (a) and (c) shall be effective as if included

11 in the enactment of section 4401 of OBRA–1990.

12 (2) The amendment made by subsection (b) shall be

13 effective on the date of the enactment of this Act.

14 Subpart C—Restrictions on Divestiture of Assets and

15 Estate Recovery

16 SEC. 7421. MEDICAID ESTATE RECOVERIES.

17 (a) MANDATE TO SEEK RECOVERY.—The matter

18 preceding subparagraph (A) of section 1917(b)(1) (42

19 U.S.C. 1396p(b)(1)) is amended to read as follows: ‘‘The

20 State agency shall seek adjustment or recovery of any

21 medical assistance correctly paid on behalf of an individual

22 under the State plan—’’.

23 (b) HARDSHIP WAIVER.—Section 1917(b) (42 U.S.C.

24 1396p(b)) is amended by adding at the end the following

25 new paragraph:
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1 ‘‘(3) The State agency shall establish procedures (in

2 accordance with standards specified by the Secretary)

3 under which the agency shall waive the application of this

4 subsection if such application would work an undue hard5 ship as determined on the basis of criteria established by

6 the Secretary.’’.

7 (c) DEFINITION OF ESTATE.—Section 1917(b) (42

8 U.S.C. 1396p(b)), as amended by subsection (b), is

9 amended by adding at the end the following new para10 graph:

11 ‘‘(4) DEFINITION.—For purposes of this section, the

12 term ‘estate’, with respect to a deceased individual—

13 ‘‘(A) shall include all real and personal property

14 and other assets included within the individual’s es15 tate, as defined for purposes of State law with re16 spect to inheritance, and

17 ‘‘(B) may include, at the option of the State,

18 any or all other real or personal property or other

19 assets in which the individual had any legal title or

20 interest at the time of death, including such assets

21 conveyed to a survivor, heir, or assign of the de22 ceased individual through joint tenancy, tenancy in

23 common, survivorship, life estate, living trust, or

24 other arrangement.’’.
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1 (d) EFFECTIVE DATE.—(1)(A) Except as provided in

2 subparagraph (B), the amendments made by this section

3 shall apply to payments under title XIX of the Social Se4 curity Act for calendar quarters beginning on or after Oc5 tober 1, 1993.

6 (B) In the case of a State plan for medical assistance

7 under title XIX of the Social Security Act which the Sec8 retary of Health and Human Services determines requires

9 State legislation (other than legislation appropriating

10 funds) in order for the plan to meet the additional require11 ments imposed by the amendments made by this section,

12 the State plan shall not be regarded as failing to comply

13 with the requirements imposed by such amendments solely

14 on the basis of its failure to meet these additional require15 ments before the first day of the first calendar quarter

16 beginning after the close of the first regular session of the

17 State legislature that begins after the date of the enact18 ment of this Act. For purposes of the preceding sentence,

19 in the case of a State that has a 2-year legislative session,

20 each year of such session shall be deemed to be a separate

21 regular session of the State legislature.

22 (2) The amendments made by this section shall not

23 apply to individuals who died before October 1, 1993.
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1 SEC. 7422. TRANSFERS OF ASSETS.

2 (a) MANDATORY AND OPTIONAL PERIODS OF INELI3 GIBILITY.—Section 1917(c) (42 U.S.C. 1396p(c)) is

4 amended—

5 (1) by amending paragraph (1) to read as fol6 lows:

7 ‘‘(1)(A) In order to meet the requirements of this

8 subsection for purposes of section 1902(a)(18), the State

9 plan shall provide that any institutionalized individual (or

10 the spouse of such individual) who disposes of assets for

11 less than fair market value on the date specified in sub12 paragraph (B)(ii), or at any time thereafter during such

13 individual’s lifetime, is ineligible for medical assistance

14 for—

15 ‘‘(i) nursing facility services,

16 ‘‘(ii) a level of care in any institution equivalent

17 to that of nursing facility services, and

18 ‘‘(iii) home or community-based services under

19 subsection (c) or (d) of section 1915,

20 during any and all applicable periods specified in para21 graph (2).

22 ‘‘(B)(i) The date specified in this clause, with respect

23 to an institutionalized individual, is the first date as of

24 which the individual—

25 ‘‘(I) is an institutionalized individual, and
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1 ‘‘(II) has applied for or is receiving medical as2 sistance under the State plan.

3 ‘‘(ii) The date specified in this clause, with respect

4 to an institutionalized individual, is the date 30 months

5 before the date specified in clause (i) (or, at the option

6 of the State, such earlier date as provided by the State

7 in accordance with paragraph (3)(A)(iii)).’’;

8 (2) by redesignating paragraphs (2) through

9 (5) as paragraphs (4) through (7) and by inserting

10 after paragraph (1) the following new paragraphs:

11 ‘‘(2) The period of ineligibility required under para12 graph (1) with respect to an institutionalized individual—

13 ‘‘(A) shall be a number of months equal to—

14 ‘‘(i) the total uncompensated value of all

15 assets transferred by the individual or the indi16 vidual’s spouse on or after the date specified in

17 paragraph (1)(B)(ii), divided by

18 ‘‘(ii) the average cost to a private patient

19 of nursing facility services in the State (or, at

20 the option of the State, in the community in

21 which the individual is institutionalized) on the

22 date specified in paragraph (1)(B)(i) based on

23 costs which include the cost of services included

24 in the State’s nursing facility reimbursement

25 rate; and
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1 ‘‘(B) shall begin with the first month in

2 which—

3 ‘‘(i) the individual—

4 ‘‘(I) is an institutionalized individual,

5 ‘‘(II) is (or but for the provisions of

6 this subsection would be) entitled to have

7 medical assistance paid under the State

8 plan for services specified under paragraph

9 (1), and

10 ‘‘(III) is receiving or is an applicant

11 for such medical assistance, and

12 ‘‘(ii) the State has become aware that as13 sets have been transferred.

14 ‘‘(3)(A) The State plan may include, in accordance

15 with this paragraph, any or all of the following provisions

16 concerning eligibility for medical assistance of individuals

17 who (or whose spouses) dispose of assets for less than fair

18 market value:

19 ‘‘(i) The State plan may provide for periods of

20 ineligibility for medical assistance for long-term care

21 services specified by the State and approved by the

22 Secretary for any or all individuals (or groups of in23 dividuals) otherwise eligible for such medical assist24 ance, in addition to the individuals specified in para25 graph (1).
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1 ‘‘(ii) Subject to such restrictions as the Sec2 retary may impose, the State plan may provide for

3 periods of ineligibility for medical assistance for any

4 long-term care services (in addition to the services

5 specified in paragraph (1)(A)) for which medical as6 sistance is otherwise available under the plan.

7 ‘‘(iii) The State plan may provide for a date on

8 and after which transfers of assets are subject to re9 view earlier than the date specified in paragraph

10 (1)(B)(ii), but not earlier than 4 years before—

11 ‘‘(I) in the case of an institutionalized indi12 vidual, the date specified in paragraph

13 (1)(B)(i), or 

14 ‘‘(II) in the case of any other individual,

15 the date on which the individual applied for

16 medical assistance under the State plan.

17 ‘‘(B)(i) The period of ineligibility imposed by the

18 State pursuant to this paragraph for services other than

19 those specified in paragraph (1)(A) shall not be longer

20 than the period of ineligibility that would have resulted

21 if the individual had expended the assets transferred for

22 the costs of medical care furnished on and after the date

23 the individual applied for medical assistance, as deter24 mined by the State in accordance with clause (ii).
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1 ‘‘(ii) In determining the period of ineligibility of an

2 individual pursuant to clause (i), the State—

3 ‘‘(I) may presume that the individual’s cost of

4 medical care furnished is equal to the average cost

5 to a private patient for such care on a daily, month6 ly, or other basis, or

7 ‘‘(II) may use any other method approved by

8 the Secretary.’’;

9 (3) in paragraph (4), as redesignated—

10 (A) by amending subparagraph (B) to read

11 as follows:

12 ‘‘(B) the resources—

13 ‘‘(i) were transferred to the individual’s

14 spouse or to another for the sole benefit of the

15 individual’s spouse and did not exceed the

16 amount permitted under section 1924(f)(1);

17 ‘‘(ii) were transferred from the individual’s

18 spouse to another for the sole benefit of the in19 dividual’s spouse and did not exceed the

20 amount permitted under section 1924(f)(1); or

21 ‘‘(iii) were transferred to the individual’s

22 child described in subparagraph (A)(ii)(II);’’;

23 (B) in subparagraph (C)—

24 (i) by striking ‘‘any’’;
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1 (ii) by striking ‘‘or (ii)’’ and inserting

2 ‘‘(ii)’’; and

3 (iii) by striking ‘‘; or’’ and inserting ‘‘,

4 or (iii) all assets transferred by an individ5 ual for less than fair market value have

6 been returned to the individual;’’;

7 (C) by amending subparagraph (D) to read

8 as follows:

9 ‘‘(D) the State determines (in accordance with

10 regulations promulgated by the Secretary) that de11 nial of eligibility would work an undue hardship;

12 or’’;

13 (D) by adding at the end the following new

14 subparagraph:

15 ‘‘(E) the State determines that the total fair

16 market value of all of the assets transferred by the

17 individual during the period between the date speci18 fied in paragraph (1)(B)(i) and the date specified by

19 the State under paragraph (1)(B)(ii) are below an

20 amount determined appropriate by the State and ap21 proved by the Secretary.’’; and

22 (E) by adding at the end the following

23 flush sentence:

24 ‘‘In determining whether an individual has made a satis25 factory showing to the State under subparagraph (C)(ii),
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1 the State shall consider the individual’s health status at

2 the time of the transfer of assets and whether, at the time

3 of such transfer, the individual retained assets sufficient

4 to meet the individual’s foreseeable future health care

5 needs based on such health status.’’;

6 (4) by striking paragraph (5), as redesignated,

7 and inserting the following:

8 ‘‘(5) For purposes of this subsection, in the case of

9 an asset held by an individual in common with another

10 person or persons in a joint tenancy, tenancy in common,

11 or similar arrangement, the asset (or the affected portion

12 of such asset) shall be considered to be transferred by such

13 individual when any action is taken, either by such individ14 ual or by any other person, that reduces or eliminates such

15 individual’s ownership or control of such asset, except to

16 the extent an action taken by a person other than the indi17 vidual is an action consistent with partial ownership of

18 the asset, as provided in regulations issued by the Sec19 retary.’’;

20 (5) by adding the following at the end of para21 graph (6), as redesignated: ‘‘In the case of a trans22 fer by the spouse of an institutionalized individual

23 which results in a period of ineligibility for medical

24 assistance under a State plan for the institutional25 ized individual, a State shall apply a reasonable
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1 methodology to transfer all or a portion of any such

2 period of ineligibility to such spouse if the spouse be3 comes an institutionalized individual.’’; and

4 (6) by amending paragraph (7), as redesig5 nated, to read as follows:

6 ‘‘(7) For purposes of this subsection:

7 ‘‘(A) The term ‘assets’, with respect to an indi8 vidual, includes all income and resources of the indi9 vidual and of the individual’s spouse, including any

10 income or resources which the individual or such in11 dividual’s spouse is entitled to but does not receive

12 because of action—

13 ‘‘(i) by the individual or such individual’s

14 spouse,

15 ‘‘(ii) by a person, including a court or ad16 ministrative body, with legal authority to act in

17 place of or on behalf of the individual or such

18 individual’s spouse, or

19 ‘‘(iii) by any person, including any court or

20 administrative body, acting at the direction or

21 upon the request of the individual or such indi22 vidual’s spouse.

23 ‘‘(B) The term ‘income’ has the meaning given

24 such term in section 1612.
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1 ‘‘(C) The term ‘resources’ has the meaning

2 given such term in section 1613, without regard (in

3 the case of an institutionalized individual) to the ex4 clusion described in subsection (a)(1) of such sec5 tion.

6 ‘‘(D) The term ‘institutionalized individual’

7 means, and the term ‘individual is institutionalized’

8 refers to, an individual receiving any of the services

9 specified in paragraph (1)(A).’’.

10 (b) CONFORMING AMENDMENTS.—(1) Section

11 1902(a)(51) (42 U.S.C. 1396a(a)(51)) is amended—

12 (A) by striking ‘‘(A)’’; and

13 (B) by striking ‘‘, and (B)’’ and all that follows

14 and inserting a semicolon.

15 (2) Section 1924(f)(1) (42 U.S.C. 1396r–5(f)(1)) is

16 amended by striking ‘‘transfer an amount’’ and inserting

17 ‘‘transfer an amount sufficient to make the resources of

18 the community spouse’’.

19 (c) REQUIREMENTS FOR NURSING FACILITIES.—

20 (1) MEDICAID PROGRAM.—Section

21 1919(c)(5)(A)(i) (42 U.S.C. 1396r(c)(5)(A)(i)) is

22 amended by striking ‘‘and (III)’’ and inserting ‘‘(III)

23 not require individuals applying to reside or residing

24 in the facility, or family members of such individ25 uals, to provide any financial information other than
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1 to identify the source of payment for such individ2 ual’s stay in the facility, and (IV)’’.

3 (2) MEDICARE PROGRAM.—Section

4 1819(c)(5)(A)(i) (42 U.S.C. 1395i–3(c)(5)(A)(i)) is

5 amended by striking ‘‘and (III)’’ and inserting ‘‘(III)

6 not require individuals applying to reside or residing

7 in the facility, or family members of such individ8 uals, to provide any financial information other than

9 to identify the source of payment for such individ10 ual’s stay in the facility, and (IV)’’.

11 (d) EFFECTIVE DATE.—(1)(A) Except as provided in

12 subparagraph (B), the amendments made by this section

13 shall apply to calendar quarters beginning on or after Oc14 tober 1, 1993.

15 (B) In the case of a State plan for medical assistance

16 under title XIX of the Social Security Act which the Sec17 retary of Health and Human Services determines requires

18 State legislation (other than legislation appropriating

19 funds) in order for the plan to meet the additional require20 ments imposed by the amendments made by this section,

21 the State plan shall not be regarded as failing to comply

22 with the requirements imposed by such amendments solely

23 on the basis of its failure to meet these additional require24 ments before the first day of the first calendar quarter

25 beginning after the close of the first regular session of the
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1 State legislature that begins after the date of the enact2 ment of this Act. For purposes of the preceding sentence,

3 in the case of a State that has a 2-year legislative session,

4 each year of such session shall be deemed to be a separate

5 regular session of the State legislature.

6 (2) The amendments made by this section shall not

7 apply with respect to assets disposed of before the date

8 which is 60 days after the date of the enactment of this

9 Act.

10 SEC. 7423. TREATMENT OF CERTAIN TRUSTS.

11 (a) IN GENERAL.—Section 1917 (42 U.S.C. 1396p)

12 is amended by adding at the end the following:

13 ‘‘(d)(1) For purposes of determining an individual’s

14 eligibility for, or amount of, benefits under a State plan

15 under this title, the following rules shall apply to a trust

16 established by such individual:

17 ‘‘(A) In the case of a revocable trust—

18 ‘‘(i) the corpus of the trust shall be consid19 ered resources available to the individual,

20 ‘‘(ii) payments from the trust to or for the

21 benefit of the individual shall be considered in22 come of the individual, and

23 ‘‘(iii) any other payments from the trust

24 shall be considered a transfer of assets by the

25 individual subject to subsection (c).
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1 ‘‘(B) In the case of an irrevocable trust—

2 ‘‘(i) the portion of the corpus from which,

3 or the income on the corpus from which, pay4 ment to the individual could be made shall be

5 considered resources available to the individual,

6 and payments from that portion of the corpus

7 or income—

8 ‘‘(I) to or for the benefit of the indi9 vidual, shall be considered income of the

10 individual, and

11 ‘‘(II) for any other purpose, shall be

12 considered a transfer of assets by the indi13 vidual subject to subsection (c); and

14 ‘‘(ii) any portion of the trust from which,

15 or any income on the corpus from which, no

16 payment could under any circumstances be

17 made to the individual shall be considered, as of

18 the date of establishment of the trust (or, if

19 later, the date on which payment to the individ20 ual was foreclosed) a transfer of assets by the

21 individual subject to subsection (c), and pay22 ments from such portion of the trust after such

23 date shall be disregarded.

24 ‘‘(2)(A) For purposes of this subsection, an individual

25 shall be considered to have established a trust if—
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1 ‘‘(i) any of the following individuals established

2 such trust other than by will:

3 ‘‘(I) the individual,

4 ‘‘(II) the individual’s spouse,

5 ‘‘(III) a person, including a court or ad6 ministrative body, with legal authority to act in

7 place of or on behalf of the individual or the in8 dividual’s spouse, or

9 ‘‘(IV) a person, including any court or ad10 ministrative body, acting at the direction or

11 upon the request of the individual or the indi12 vidual’s spouse; and

13 ‘‘(ii) assets of the individual were used to form

14 all or part of the corpus of the trust.

15 ‘‘(B) In the case of a trust the corpus of which in16 cludes assets of an individual (as determined under sub17 paragraph (A)) and assets of any other person or persons,

18 the provisions of this subsection shall apply to the portion

19 of the trust attributable to the assets of the individual.

20 ‘‘(3) This subsection shall apply without regard to—

21 ‘‘(A) the purposes for which a trust is estab22 lished,

23 ‘‘(B) whether the trustees have or exercise any

24 discretion under the trust,
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1 ‘‘(C) any restrictions on when or whether dis2 tributions may be made from the trust, or

3 ‘‘(D) any restrictions on the use of distributions

4 from the trust.

5 ‘‘(4)(A) This subsection shall not apply to any of the

6 following trusts:

7 ‘‘(i) A trust containing the assets of a disabled

8 individual (as determined under section 1614(a)(3))

9 established for the benefit of such individual by a

10 parent, grandparent, legal guardian of the individ11 ual, or a court if the State will receive all amounts

12 remaining in the trust upon the death of such indi13 vidual up to an amount equal to the total medical

14 assistance received by the individual under a State

15 plan under this title.

16 ‘‘(ii) A trust established in a State for the bene17 fit of an individual if—

18 ‘‘(I) the trust is composed only of pension,

19 Social Security, and other income to the indi20 vidual (and accumulated income in the trust),

21 ‘‘(II) the State will receive all amounts re22 maining in the trust upon the death of such in23 dividual up to an amount equal to the total

24 medical assistance received by the individual

25 under a State plan under this title, and
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1 ‘‘(III) the State makes medical assistance

2 available to individuals described in section

3 1902(a)(10)(A)(ii)(V), but does not make such

4 assistance available to individuals for nursing

5 facility services under section 1902(a)(10)(C).

6 ‘‘(B) For purposes of this subsection, the term ‘trust’

7 includes any legal instrument or device that is similar to

8 a trust but includes an annuity only to such extent and

9 in such manner as the Secretary specifies.

10 ‘‘(C) The State agency shall establish procedures (in

11 accordance with standards specified by the Secretary)

12 under which the agency waives the application of this sub13 section with respect to an individual if the individual es14 tablishes that such application would work an undue hard15 ship on the individual as determined on the basis of cri16 teria established by the Secretary.

17 ‘‘(5) For purposes of this subsection, the terms ‘as18 sets’, ‘income’, and ‘resources’ shall have the meaning

19 given to such terms under subsection (c)(7).’’.

20 (b) CONFORMING AMENDMENTS.—(1) Section

21 1902(a)(18) (42 U.S.C. 1396a(a)(18)) is amended by

22 striking ‘‘and transfers of assets’’ and inserting ‘‘, trans23 fers of assets, and treatment of certain trusts’’.

24 (2) Section 1902 (42 U.S.C. 1396a) is amended by

25 repealing subsection (k).
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1 (c) EFFECTIVE DATE.—(1)(A) Except as provided in

2 subparagraph (B), the amendments made by this section

3 shall apply to payments under title XIX of the Social Se4 curity Act for calendar quarters beginning on or after Oc5 tober 1, 1993.

6 (B) In the case of a State plan for medical assistance

7 under title XIX of the Social Security Act which the Sec8 retary of Health and Human Services determines requires

9 State legislation (other than legislation appropriating

10 funds) in order for the plan to meet the additional require11 ments imposed by the amendments made by this section,

12 the State plan shall not be regarded as failing to comply

13 with the requirements imposed by such amendments solely

14 on the basis of its failure to meet these additional require15 ments before the first day of the first calendar quarter

16 beginning after the close of the first regular session of the

17 State legislature that begins after the date of the enact18 ment of this Act. For purposes of the preceding sentence,

19 in the case of a State that has a 2-year legislative session,

20 each year of such session shall be deemed to be a separate

21 regular session of the State legislature.

22 (2) The amendments made by this section shall not

23 apply with respect to trusts established before the date

24 which is 60 days after the date of the enactment of this

25 Act.
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1 Subpart D—Improvement in Identification and

2 Collection of Third Party Payments

3 SEC. 7431. LIABILITY OF THIRD PARTIES TO PAY FOR CARE

4 AND SERVICES.

5 (a) LIABILITY OF ERISA PLANS.—(1) Section

6 1902(a)(25)(A) (42 U.S.C. 1396a(a)(25)(A)) is amended

7 by striking ‘‘insurers)’’ and inserting ‘‘insurers, group

8 health plans (as defined in section 607(1) of the Employee

9 Retirement Income Security Act of 1974), service benefit

10 plans, and health maintenance organizations)’’.

11 (2) Section 1903(o) (42 U.S.C. 1396b(o)) is amended

12 by striking ‘‘regulation)’’ and inserting ‘‘regulation and in13 cluding a group health plan (as defined in section 607(1)

14 of the Employee Retirement Income Security Act of

15 1974)), a service benefit plan, and a health maintenance

16 organization’’.

17 (b) REQUIRING STATE TO PROHIBIT INSURERS

18 FROM TAKING MEDICAID STATUS INTO ACCOUNT.—Sec19 tion 1902(a)(25) (42 U.S.C. 1396a(a)(25)) is amended—

20 (1) by striking ‘‘and’’ at the end of subpara21 graph (F);

22 (2) by adding ‘‘and’’ at the end of subpara23 graph (G); and

24 (3) by adding after subparagraph (G) the fol25 lowing new subparagraph:
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1 ‘‘(H) assurances satisfactory to the Sec2 retary that the State has in effect laws which

3 prohibit any health insurer (including a group

4 health plan, as defined in section 607(1) of the

5 Employee Retirement Income Security Act of

6 1974, a service benefit plan, and a health main7 tenance organization), in enrolling an individual

8 or in making any payments for benefits to the

9 individual or on the individual’s behalf, from

10 taking into account that the individual is eligi11 ble for or is provided medical assistance under

12 a plan under this title for such State, or any

13 other State;’’.

14 (c) STATE RIGHT TO THIRD PARTY PAYMENTS FOR

15 RECIPIENT.—Section 1902(a)(25) (42 U.S.C.

16 1396a(a)(25)), as amended by subsection (b), is amend17 ed—

18 (1) by striking ‘‘and’’ at the end of subpara19 graph (G);

20 (2) by adding ‘‘and’’ at the end of subpara21 graph (H); and

22 (3) by adding after subparagraph (H) the fol23 lowing new subparagraph:

24 ‘‘(I) assurances satisfactory to the Sec25 retary that the State has in effect laws under
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1 which, to the extent that payment has been

2 made under the State plan for medical assist3 ance for health care items or services furnished

4 to an individual, the State is considered to have

5 acquired the rights of such individual to pay6 ment by any other party for such health care

7 items or services;’’.

8 (d) EFFECTIVE DATE.—(1) Except as provided in

9 paragraph (2), the amendments made by subsections

10 (a)(1), (b), and (c) shall apply to calendar quarters begin11 ning on or after October 1, 1993, without regard to wheth12 er or not final regulations to carry out such amendments

13 have been promulgated by such date.

14 (2) In the case of a State plan for medical assistance

15 under title XIX of the Social Security Act which the Sec16 retary of Health and Human Services determines requires

17 State legislation (other than legislation appropriating

18 funds) in order for the plan to meet the additional require19 ments imposed by the amendments made by subsections

20 (a) and (b), the State plan shall not be regarded as failing

21 to comply with the requirements of such title solely on the

22 basis of its failure to meet these additional requirements

23 before the first day of the first calendar quarter beginning

24 after the close of the first regular session of the State leg25 islature that begins after the date of the enactment of this
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1 Act. For purposes of the preceding sentence, in the case

2 of a State that has a 2-year legislative session, each year

3 of such session shall be deemed to be a separate regular

4 session of the State legislature.

5 (3) The amendment made by subsection (a)(2) shall

6 apply to items and services furnished on or after October

7 1, 1993.

8 SEC. 7432. MEDICAL CHILD SUPPORT.

9 (a) STATE PLAN REQUIREMENT.—Section 1902(a)

10 (42 U.S.C. 1396a(a)), as amended by subsection (c), is

11 amended—

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

13 (58);

14 (2) by striking the period at the end of para15 graph (59) and inserting ‘‘; and’’; and

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

17 paragraph:

18 ‘‘(60) provide that the State agency shall pro19 vide assurances satisfactory to the Secretary that

20 the State has in effect the laws relating to medical

21 child support required under section 1908.’’.

22 (b) MEDICAL CHILD SUPPORT LAWS.—Title XIX

23 (42 U.S.C 1936 et seq.) is amended by inserting after sec24 tion 1907 the following new section:
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1 ‘‘REQUIRED LAWS RELATING TO MEDICAL CHILD

2 SUPPORT

3 ‘‘SEC. 1908. (a) IN GENERAL.—The laws relating to

4 medical child support, which a State is required to have

5 in effect under section 1902(a)(60), are as follows:

6 ‘‘(1) A law that prohibits an insurer from deny7 ing enrollment of a child under the health coverage

8 of the child’s parent on the ground that—

9 ‘‘(A) the child was born out of wedlock,

10 ‘‘(B) the child is not claimed as a depend11 ent on the parent’s Federal income tax return,

12 or

13 ‘‘(C) the child does not reside with the par14 ent or in the insurer’s service area.

15 ‘‘(2) In any case in which a parent is required

16 by a court or administrative order to provide health

17 coverage for a child and the parent is eligible for

18 family health coverage through an insurer, a law

19 that requires such insurer—

20 ‘‘(A) to permit such parent to enroll under

21 such family coverage any such child who is oth22 erwise eligible for such coverage (without regard

23 to any enrollment season restrictions and sub24 ject to the requirements under paragraph (1));

25 and
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1 ‘‘(B) if such a parent fails to provide such

2 health insurance coverage for any such child, to

3 enroll such child under such family coverage

4 upon application by the child’s other parent or

5 by the State agency administering the program

6 under this title or part D of title IV.

7 ‘‘(3) In any case in which a parent is required

8 by a court or administrative order to provide health

9 coverage for a child and the parent is eligible for

10 family health coverage through an employer doing

11 business in the State, a law that requires such em12 ployer—

13 ‘‘(A) to permit such parent to enroll under

14 such family coverage any such child who is oth15 erwise eligible for such coverage (without regard

16 to any enrollment season restrictions and sub17 ject to the requirements under paragraph (1));

18 ‘‘(B) if such a parent fails to provide such

19 health insurance coverage for a child, to enroll

20 such child under such family coverage upon ap21 plication by the child’s other parent or by the

22 State agency administering the program under

23 this title or part D of title IV;
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1 ‘‘(C) not to disenroll (or eliminate coverage

2 of) any such child unless the employer is pro3 vided satisfactory written evidence that—

4 ‘‘(i) such court or administrative

5 order is no longer in effect, or

6 ‘‘(ii) the child is or will be enrolled in

7 comparable health coverage which will take

8 effect not later than the effective date of

9 such disenrollment; and

10 ‘‘(D) to withhold from such employee’s

11 compensation the employee’s share (if any) of

12 premiums for health coverage and to pay such

13 share of premiums to the insurer.

14 ‘‘(4) A law that prohibits an insurer from im15 posing requirements on a State agency, which has

16 been assigned the rights of an individual eligible for

17 medical assistance under this title and covered for

18 health benefits from the insurer, that are different

19 from requirements applicable to an agent or assignee

20 of any other individual so covered.

21 ‘‘(5) A law that requires an insurer, in any case

22 in which a child has health coverage through the in23 surer of a noncustodial parent—
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1 ‘‘(A) to provide such information to the

2 custodial parent as may be necessary for the

3 child to obtain benefits through such coverage;

4 ‘‘(B) to permit the custodial parent (or

5 provider, with the custodial parent’s approval)

6 to submit claims for covered services without

7 the approval of the noncustodial parent; and

8 ‘‘(C) to make payment on claims submitted

9 in accordance with subparagraph (B) directly to

10 such custodial parent, the provider, or the State

11 agency.

12 ‘‘(6) A law that permits the State agency under

13 this title to garnish the wages, salary, or other em14 ployment income of, and requires withholding

15 amounts from State tax refunds to, any person

16 who—

17 ‘‘(A) is required by court or administrative

18 order to provide coverage of the costs of health

19 services to a child who is eligible for medical as20 sistance under this title,

21 ‘‘(B) has received payment from a third

22 party for the costs of such services to such

23 child, but

24 ‘‘(C) has not used such payments to reim25 burse, as appropriate, either the other parent or
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1 guardian of such child or the provider of such

2 services,

3 to the extent necessary to reimburse the State agen4 cy for expenditures for such costs under its plan

5 under this title, but any claims for current or past6 due child support shall take priority over any such

7 claims for the costs of such services.

8 ‘‘(b) SPECIAL RULE.—The Secretary may provide by

9 regulation for such exceptions to the requirement under

10 subsection (a)(3) as the Secretary determines necessary

11 to ensure compliance with the conditions of any order re12 ferred to in such subsection or with the maximum

13 amounts permitted to be withheld under section 303(b)

14 of the Consumer Credit Protection Act.

15 ‘‘(c) DEFINITION.—For purposes of this subsection,

16 the term ‘insurer’ includes a group health plan, as defined

17 in section 607(1) of the Employee Retirement Income Se18 curity Act of 1974, a health maintenance organization,

19 and an entity offering a service benefit plan.’’.

20 (c) REDESIGNATIONS TO PARAGRAPHS ADDED BY

21 OBRA–1990.—Section 1902(a) (42 U.S.C. 1396a(a)) is

22 amended—

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

24 (54);
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1 (2) in the paragraph (55) inserted by section

2 4602(a)(3) of OBRA–1990, by striking the period at

3 the end and inserting a semicolon;

4 (3) by redesignating the paragraph (55) in5 serted by section 4604(b)(3) of OBRA–1990 as

6 paragraph (56), by transferring and inserting it

7 after the paragraph (55) inserted by section

8 4602(a)(3) of such Act, and by striking the period

9 at the end and inserting a semicolon;

10 (4) by placing paragraphs (57) and (58), in11 serted by section 4751(a)(1)(C) of OBRA–1990, im12 mediately after paragraph (56), as redesignated by

13 paragraph (3);

14 (5) in the paragraph (58) inserted by section

15 4751(a)(1)(C) of OBRA–1990, by striking the pe16 riod at the end and inserting ‘‘; and’’; and

17 (6) by redesignating the paragraph (58) in18 serted by section 4752(c)(1)(C) of OBRA–1990 as

19 paragraph (59) and by transferring and inserting it

20 after the paragraph (58) inserted by section

21 4751(a)(1)(C) of such Act.

22 (d) EFFECTIVE DATE.—(1) Except as provided in

23 paragraph (2), the amendments made by this section

24 apply to calendar quarters beginning on or after April 1,

25 1994.
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1 (2) In the case of a State plan under title XIX of

2 the Social Security Act which the Secretary of Health and

3 Human Services determines requires State legislation in

4 order for the plan to meet the additional requirements im5 posed by the amendments made by this section, the State

6 plan shall not be regarded as failing to comply with the

7 requirements of such title solely on the basis of its failure

8 to meet these additional requirements before the first day

9 of the first calendar quarter beginning after the close of

10 the first regular session of the State legislature that be11 gins after the date of enactment of this Act. For purposes

12 of the preceding sentence, in the case of a State that has

13 a 2-year legislative session, each year of such session shall

14 be deemed to be a separate regular session of the State

15 legislature.

16 SEC. 7433. OFFSET OF PAYMENT OBLIGATIONS RELATING

17 TO MEDICAL ASSISTANCE AGAINST OVERPAY18 MENTS OF STATE AND FEDERAL INCOME

19 TAXES.

20 (a) AMENDMENTS TO THE INTERNAL REVENUE

21 CODE OF 1986.—

22 (1) IN GENERAL.—Section 6402 of the Internal

23 Revenue Code of 1986 is amended—
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1 (A) by redesignating subsections (e), (f),

2 (g), (h), and (i) as subsections (f), (g), (h), (i),

3 and (j), respectively; and

4 (B) by adding after subsection (d) the fol5 lowing new subsection:

6 ‘‘(e) COLLECTION OF CERTAIN DEBTS OWED TO

7 STATES.—

8 ‘‘(1) IN GENERAL.—Upon receiving notice from

9 any State under section 1931(b)(1) of the Social Se10 curity Act that a named person owes a legally en11 forceable debt for any payment obligation relating to

12 medical assistance, the Secretary shall—

13 ‘‘(A) reduce the amount of any overpay14 ment payable to such person by the amount of

15 such debt;

16 ‘‘(B) pay the amount by which such over17 payment is reduced under subparagraph (A) to

18 such State; and

19 ‘‘(C) notify the person making such over20 payment that such overpayment has been re21 duced by an amount necessary to satisfy such

22 debt.

23 ‘‘(2) PRIORITIES FOR OFFSET.—Any overpay24 ment by a person shall be reduced pursuant to this

25 subsection after such overpayment is reduced pursu-
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1 ant to subsections (c) and (d) and before such over2 payment is credited to the future liability for tax of

3 such person pursuant to subsection (b). Any over4 payment by a person shall be applied against any

5 debts described in paragraph (1) in the order in

6 which such debts accrued.

7 ‘‘(3) NOTICE; PROTECTION OF OTHER PERSONS

8 FILING JOINT RETURN.—For purposes of this sub9 section, rules similar to the rules described in clause

10 (i) and the first sentence of clause (ii) of subsection

11 (d)(3)(B) shall apply.

12 ‘‘(4) DEFINITION.—For purposes of this sub13 section, the term ‘medical assistance’ means medical

14 assistance provided under title XIX of the Social Se15 curity Act.’’.

16 (2) CONFORMING AMENDMENT.—Section

17 6402(f) of the Internal Revenue Code of 1986, as

18 redesignated, is amended by striking ‘‘(c) or (d)’’

19 and inserting ‘‘(c), (d), or (e)’’.

20 (3) EFFECTIVE DATE.—The amendments made

21 by this subsection shall be effective for taxable years

22 beginning after December 31, 1993.

23 (b) AMENDMENTS TO THE SOCIAL SECURITY ACT.—
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1 (1) STATE PLAN AMENDMENT.—Section

2 1902(a) (42 U.S.C. 1396a(a)), as amended by sec3 tion 7432, is amended—

4 (A) by striking ‘‘and’’ at the end of para5 graph (59);

6 (B) by striking the period at the end of

7 paragraph (60) and inserting ‘‘; and’’; and

8 (C) by adding at the end the following new

9 paragraph:

10 ‘‘(61) provide that recovery of any legally en11 forceable debt for any payment obligation relating to

12 medical assistance provided under this title shall be

13 made in accordance with a program for the collec14 tion of such debt from State and Federal tax re15 funds in accordance with section 1931.’’.

16 (2) PROGRAM FOR COLLECTIONS FROM STATE

17 AND FEDERAL TAX REFUNDS.—Title XIX (42 U.S.C

18 1936 et seq.) is amended by adding at the end the

19 following new section:

20 ‘‘COLLECTION OF PAYMENT OBLIGATIONS RELATING TO

21 MEDICAL ASSISTANCE FROM STATE AND FEDERAL

22 TAX REFUNDS

23 ‘‘SEC. 1931. (a) STATE TAX REFUNDS.—If a State

24 with a State plan approved under this title has a State

25 income tax system, such State shall require the State

26 agency administering the State plan and the State agency
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1 responsible for administering the States income tax sys2 tem to develop and implement a program under which any

3 person determined appropriate by the State agency admin4 istering the State plan who owes a legally enforceable debt

5 for any payment obligation relating to medical assistance

6 provided under this title will have withheld an appropriate

7 amount from any refund otherwise payable to such person

8 under the State income tax system.

9 ‘‘(b) FEDERAL TAX REFUNDS.—

10 ‘‘(1) NOTICE TO THE SECRETARY OF THE

11 TREASURY.—

12 ‘‘(A) IN GENERAL.—If a State with a

13 State plan approved under this title—

14 ‘‘(i) implements a program described

15 in subsection (a), or

16 ‘‘(ii) is a State that does not have a

17 State income tax system,

18 the State agency administering such plan may

19 provide a notice to the Secretary of the Treas20 ury regarding any person determined appro21 priate by such State agency who owes a legally

22 enforceable debt for any payment obligation re23 lating to medical assistance provided under this

24 title and the Secretary of the Treasury shall

25 withhold an appropriate amount from any re-
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1 fund otherwise payable to such person in ac2 cordance with section 6402(e) of the Internal

3 Revenue Code of 1986 (hereafter in this section

4 referred to as the ‘Code’).

5 ‘‘(B) REGULATIONS RELATING TO NO6 TICES.—The Secretary of the Treasury shall

7 issue regulations, after consultation with the

8 Secretary, which—

9 ‘‘(i) prescribe the timing by which

10 State agencies may submit notices of pay11 ment obligations relating to medical assist12 ance,

13 ‘‘(ii) specify the manner in which such

14 notices must be submitted,

15 ‘‘(iii) specify the necessary informa16 tion that must be contained in or accom17 pany such notices,

18 ‘‘(iv) specify the minimum payment

19 obligation relating to medical assistance to

20 which the offset procedures may be ap21 plied,

22 ‘‘(v) specify the fee that a State must

23 pay to reimburse the Secretary of the

24 Treasury for the full cost of applying the

25 offset procedure, and
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1 ‘‘(vi) provide that the Secretary of the

2 Treasury will advise the Secretary, not less

3 frequently than annually, of the States

4 which have furnished notices under this

5 subsection, the number of cases in each

6 State with respect to which such notices

7 have been furnished, the total amount of

8 payment obligations sought to be collected

9 under this subsection by each State, and

10 the amount of such collections actually

11 made in the case of each State.

12 ‘‘(2) NOTICE.—Prior to notifying the Secretary

13 of the Treasury under paragraph (1), the State

14 agency shall send a notice to the person owing the

15 legally enforceable debt for a payment obligation re16 lating to medical assistance provided under this title

17 which—

18 ‘‘(A) explains that a withholding may be

19 made under 6402(e) of the Code from any re20 fund otherwise payable to such person,

21 ‘‘(B) instructs the person having the pay22 ment obligation of the steps which may be

23 taken to contest the State’s determination that

24 such payment obligation is owed or the amount

25 of the payment obligation, and
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1 ‘‘(C) provides information with respect to

2 procedures to be followed, in the case of a joint

3 return, to protect the share of the refund which

4 may be payable to another person.

5 ‘‘(3) EXCESS WITHHOLDING.—In any case in

6 which an amount was withheld under section

7 6402(e) of the Code and the State subsequently de8 termines that the amount certified as owing with re9 spect to medical assistance was in excess of the

10 amount actually owed at the time the amount with11 held is distributed to the State, the State shall pay

12 the excess amount withheld to the named person de13 termined to have the payment obligation (or, in the

14 case of amounts withheld on the basis of a joint re15 turn, jointly to the parties filing such return).’’.

16 (3) EFFECTIVE DATE.—

17 (A) IN GENERAL.—The amendments made

18 by this paragraph shall apply to calendar quar19 ters beginning on or after December 31, 1993.

20 (B) SPECIAL RULE.—In the case of a

21 State which the Secretary determines requires

22 State legislation (other than legislation author23 izing or appropriating funds) in order to comply

24 with the amendments made by subparagraph

25 (A), the State shall not be regarded as failing
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1 to comply with such amendments solely on the

2 basis of its failure to meet the requirements of

3 such amendments before the first day of the

4 first calendar quarter beginning after the close

5 of the first regular session of the State legisla6 ture that begins after the date of the enactment

7 of this Act. For purposes of the preceding sen8 tence, in the case of a State that has a 2-year

9 legislative session, each year of such session

10 shall be deemed to be a separate regular session

11 of the State legislature.

12 Subpart E—Assuring Proper Payments to

13 Disproportionate Share Hospitals

14 SEC. 7441. ASSURING PROPER PAYMENTS TO DISPROPOR15 TIONATE SHARE HOSPITALS.

16 (a) DISPROPORTIONATE SHARE HOSPITALS RE17 QUIRED TO PROVIDE MINIMUM LEVEL OF SERVICES TO

18 MEDICAID PATIENTS.—Section 1923 (42 U.S.C. 1396r–

19 4) is amended—

20 (1) in subsection (a)(1)(A), by striking ‘‘re21 quirement’’ and inserting ‘‘requirements’’;

22 (2) in subsection (b)(1), by striking ‘‘require23 ment’’ and inserting ‘‘requirements’’;

24 (3) in the heading to subsection (d), by striking

25 ‘‘REQUIREMENT’’ and inserting ‘‘REQUIREMENTS’’;
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1 (4) by adding at the end of subsection (d) the

2 following new paragraph:

3 ‘‘(3) No hospital may be defined or deemed as

4 a disproportionate share hospital under a State plan

5 under this title or under subsection (b) or (e) of this

6 section unless the hospital has a medicaid inpatient

7 utilization rate (as defined in subsection (b)(2)) of

8 not less than 1 percent.’’;

9 (5) in subsection (e)(1)—

10 (A) by striking ‘‘and’’ before ‘‘(B)’’, and

11 (B) by inserting before the period at the

12 end the following: ‘‘, and (C) the plan meets the

13 requirement of subsection (d)(3) and such pay14 ment adjustments are made consistent with the

15 fourth sentence of subsection (c)’’; and

16 (6) in subsection (e)(2)—

17 (A) in subparagraph (A), by inserting

18 ‘‘(other than the fourth sentence of subsection

19 (c))’’ after ‘‘(c)’’,

20 (B) by striking ‘‘and’’ at the end of sub21 paragraph (A),

22 (C) by striking the period at the end of

23 subparagraph (B) and inserting ‘‘, and’’, and

24 (D) by adding at the end the following new

25 subparagraph:
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1 ‘‘(C) subsection (d)(3) shall apply.’’.

2 (b) LIMITING AMOUNT OF PAYMENT ADJUSTMENTS

3 FOR STATE OR COUNTY HOSPITALS TO UNCOVERED

4 COSTS.—Subsection (c) of section 1923 (42 U.S.C.

5 1396r–4) is amended by adding at the end the following:

6 ‘‘A payment adjustment during a year is not considered

7 to be consistent with this subsection with respect to a hos8 pital owned or operated by a State (or by an instrumental9 ity of, or a unit of government within, a State) if the pay10 ment adjustment exceeds the costs incurred during the

11 year of furnishing hospital services (as determined by the

12 Secretary and net of payments under this title, other than

13 under this section, and by uninsured patients) by the hos14 pital to individuals who either are eligible for medical as15 sistance under the State plan or have no health insurance

16 (or other source of third party coverage) for services pro17 vided during the year. For purposes of the preceding sen18 tence, payments made to a hospital for services provided

19 to indigent patients made by a State or a unit of local

20 government within a State shall not be considered to be

21 a source of third party payment.’’.

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

23 this section shall apply to payments to States under sec24 tion 1903(a) of the Social Security Act which are for pay-
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1 ments to hospitals made under State plans after the end

2 of the State fiscal year that ends during 1995.

3 Subpart F—Anti-Fraud and Abuse Provisions

4 SEC. 7451. APPLICATION OF MEDICARE RULES LIMITING

5 CERTAIN PHYSICIAN REFERRALS.

6 (a) IN GENERAL.—Section 1903(i) (42 U.S.C.

7 1396b(i)), as amended by subsection (b), is amended—

8 (1) in paragraph (12), by striking ‘‘or’’ at the

9 end,

10 (2) in paragraph (13), by striking the period at

11 the end and inserting ‘‘; or’’, and

12 (3) by inserting after paragraph (13) the fol13 lowing new paragraph:

14 ‘‘(14) with respect to any amount expended for

15 an item or service for which payment would be de16 nied under section 1877(g)(1) if the item or service

17 were furnished to an individual entitled to benefits

18 under title XVIII.’’.

19 (b) REDESIGNATIONS.—Section 1903(i) (42 U.S.C.

20 1396b(i)), as amended by section 2(b)(2) of the Medicaid

21 Voluntary Contribution and Provider-Specific Tax Amend22 ments of 1991, is amended—

23 (1) by redesignating the paragraph (12) in24 serted by section 4752(a)(2) of OBRA–1990 as

25 paragraph (11), by transferring and inserting it
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1 after the paragraph (10) inserted by section

2 4401(a)(1)(B) of OBRA–1990, and by striking the

3 period at the end and inserting a semicolon;

4 (2) by redesignating the paragraph (14) in5 serted by section 4752(e) of OBRA–1990 as para6 graph (12), by transferring and inserting it after

7 paragraph (11), as redesignated by paragraph (2),

8 and by striking the period at the end and inserting

9 ‘‘; or’’; and

10 (3) by redesignating the paragraph (11) in11 serted by section 4801(e)(16)(A) of OBRA–1990 as

12 paragraph (13) and by transferring and inserting it

13 after paragraph (12), as redesignated by paragraph

14 (3), and by striking ‘‘; or’’ and inserting a period.

15 (c) EFFECTIVE DATE.—The amendment made by

16 subsection (a) shall apply to items and services furnished

17 on or after October 1, 1993.

18 PART II—OTHER MEDICAID PROVISIONS

19 SEC. 7501. EXTENSION OF DEMONSTRATION PROJECT ON

20 THE EFFECT OF ALLOWING STATES TO EX21 TEND MEDICAID COVERAGE TO CERTAIN

22 LOW-INCOME FAMILIES.

23 (a) IN GENERAL.—Section 4745 of OBRA–1990 is

24 amended—
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1 (1) in paragraph (1) of subsection (e), by strik2 ing ‘‘$12,000,000 in each of fiscal years 1991, 1992,

3 and 1993, and to no more than $4,000,000 in fiscal

4 year 1994’’ and inserting ‘‘$40,000,000’’; and

5 (2) in paragraph (2) of subsection (f) by strik6 ing ‘‘January 1, 1995’’ and inserting ‘‘one year after

7 the termination of the projects’’.

8 (b) EFFECTIVE DATE.—The amendments made by

9 paragraph (1) shall take effect as if included in the enact10 ment of OBRA–1990.

11 Subtitle C—Income Security

12 Programs

13 SEC. 7601. MATCHING OF STATE ADMINISTRATIVE COSTS.

14 (a) AFDC MATCHING.—Section 403(a)(3) (42

15 U.S.C. 603(a)(3)) is amended to read as follows:

16 ‘‘(3) in the case of any State, 50 percent of the

17 total amounts expended during such quarter as

18 found necessary by the Secretary for the proper and

19 efficient administration of the State plan, except

20 that no payment shall be made with respect to

21 amounts expended in connection with the provision

22 of any service described in section 2002(a) of this

23 Act other than services furnished pursuant to sec24 tion 402(g); and’’.
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1 (b) TERRITORIAL PROGRAMS FOR AGED, BLIND, AND

2 DISABLED.—Sections 3(a)(4), 1003(a)(3), 1403(a)(3),

3 and 1603(a)(4) (42 U.S.C. 303(a)(3), 1203(a)(3),

4 1353(a)(3), and 1383 note) (as in effect as provided by

5 section 303 of the Social Security Amendments of 1972)

6 are each amended by striking ‘‘the sum of’’ and all that

7 follows and inserting ‘‘50 percent of the total amounts ex8 pended during such quarter as found necessary by the

9 Secretary for the proper and efficient administration of

10 the State plan.’’.

11 (c) REQUIREMENTS FOR ATTESTING TO CITIZENSHIP

12 STATUS.—Paragraph (1)(A) of section 1137(d) (42

13 U.S.C. 1320b–7(d)) is amended to read as follows:

14 ‘‘(1)(A) The State shall require, as a condition

15 of an individual’s eligibility for benefits under a pro16 gram listed in subsection (b), a declaration in writ17 ing, under penalty of perjury—

18 ‘‘(i) by the individual,

19 ‘‘(ii) in the case in which eligibility for pro20 gram benefits is determined on a family or

21 household basis, by any adult member of such

22 individual’s family or household (as applicable),

23 or

24 ‘‘(iii) in the case of an individual born into

25 a family or household receiving benefits under
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1 such program, by any adult member of such

2 family or household no later than the next rede3 termination of eligibility of such family or

4 household following the birth of such individual,

5 stating whether the individual is a citizen or national

6 of the United States, and, if that individual is not

7 a citizen or national of the United States, that the

8 individual is in a satisfactory immigration status.’’.

9 (d) EFFECTIVE DATES.—

10 (1) IN GENERAL.—Except as provided in para11 graph (2), the amendments made by—

12 (A) subsections (a) and (b) shall be effec13 tive with respect to calendar quarters beginning

14 on or after April 1, 1994, and

15 (B) subsection (c) shall be effective on and

16 after the date of the enactment of this Act.

17 (2) SPECIAL RULE.—In the case of a State

18 whose legislature meets biennially, and does not have

19 a regular session scheduled in calendar year 1994,

20 the amendments made by subsections (a) and (b)

21 shall be effective no later than the first day of the

22 first calendar quarter beginning after the close of

23 the first regular session of the State legislature that

24 begins after the date of enactment of this Act.
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1 SEC. 7602. STATE PATERNITY ESTABLISHMENT PROGRAMS.

2 (a) PERFORMANCE STANDARDS FOR STATE PATER3 NITY ESTABLISHMENT PROGRAMS.— Section 452(g) (42

4 U.S.C. 652(g)) is amended—

5 (1) in paragraph (1)—

6 (A) by striking ‘‘1991’’ and inserting

7 ‘‘1994’’;

8 (B) by inserting ‘‘is based on reliable data

9 and’’ before ‘‘equals or exceeds’’; and

10 (C) by striking subparagraphs (A), (B),

11 and (C) and inserting the following new sub12 paragraphs:

13 ‘‘(A) 75 percent;

14 ‘‘(B) for a State with a paternity establish15 ment percentage of not less than 50 percent but

16 less than 75 percent for such fiscal year, the

17 paternity establishment percentage of the State

18 for the immediately preceding fiscal year plus 3

19 percentage points; or

20 ‘‘(C) for a State with a paternity establish21 ment percentage of less than 50 percent for

22 such fiscal year, the paternity establishment

23 percentage of the State for the immediately pre24 ceding fiscal year plus 6 percentage points.’’;

25 and

26 (2) in paragraph (2)—
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1 (A) by striking ‘‘(or under all such plans)’’

2 each place it appears;

3 (B) by inserting ‘‘or part (E)’’ after

4 ‘‘under part A’’ each place it appears;

5 (C) by striking subparagraph (B) and in6 serting the following new subparagraph:

7 ‘‘(B) the term ‘reliable data’ means the

8 most recent data available which are found by

9 the Secretary to be reliable for purposes of this

10 section.’’;

11 (D) by inserting ‘‘unless paternity is estab12 lished for such child’’ after ‘‘the death of a par13 ent’’; and

14 (E) by inserting ‘‘or any child with respect

15 to whom the State agency administering the

16 plan under part E determines (as provided in

17 section 454(4)(B)) that it is against the best in18 terest of such child to do so’’ after ‘‘cooperate

19 under section 402(a)(26)’’.

20 (b) STATE PLAN REQUIREMENTS FOR THE ESTAB21 LISHMENT OF PATERNITY.—Section 466(a) (42 U.S.C.

22 666(a)) is amended—

23 (1) in paragraph (2)—

24 (A) by striking ‘‘at the option of the

25 State,’’; and
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1 (B) by inserting ‘‘or paternity establish2 ment’’ after ‘‘support order issuance and en3 forcement’’;

4 (2) in paragraph (5) by adding at the end the

5 following new subparagraphs:

6 ‘‘(C) Procedures for a simple civil process

7 for voluntarily acknowledging paternity under

8 which the State must provide that the rights

9 and responsibilities of acknowledging paternity

10 are explained and ensure that due process safe11 guards are afforded. Such procedures must in12 clude (i) a hospital-based program for the vol13 untary acknowledgment of paternity during the

14 period immediately preceding or following the

15 birth of a child, and (ii) the inclusion of signa16 ture lines on applications for official birth cer17 tificates which, once signed by the father and

18 the mother, constitute a voluntary acknowledg19 ment of paternity.

20 ‘‘(D) Procedures under which the vol21 untary acknowledgment of paternity creates a

22 rebuttable, or at the option of the State, conclu23 sive presumption of paternity, and under which

24 such voluntary acknowledgment is admissible as

25 evidence of paternity.
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1 ‘‘(E) Procedures under which the voluntary

2 acknowledgment of paternity must be recog3 nized as a basis for seeking a support order

4 without first requiring any further proceedings

5 to establish paternity.

6 ‘‘(F) Procedures which provide that (i) any

7 objection to genetic testing results must be

8 made in writing within a specified number of

9 days before any hearing at which such results

10 may be introduced into evidence, and (ii) if no

11 objection is made, the test results are admissi12 ble as evidence of paternity without the need

13 for foundation testimony or other proof of au14 thenticity or accuracy.

15 ‘‘(G) Procedures which create a rebuttable

16 or, at the option of the State, conclusive pre17 sumption of paternity upon genetic testing re18 sults indicating a threshold probability of the

19 alleged father being the father of the child.

20 ‘‘(H) Procedures requiring a default order

21 to be entered in a paternity case upon a show22 ing of service of process on the defendent and

23 any additional showing required by State law.’’;

24 and
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1 (3) by inserting after paragraph (10) the fol2 lowing new paragraph:

3 ‘‘(11) Procedures under which a State must

4 give full faith and credit to a determination of pater5 nity made by any other State, whether established

6 through voluntary acknowledgment or through ad7 ministrative or judicial processes.’’.

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

9 this section shall become effective with respect to a State

10 on the later of—

11 (1) October 1, 1993 or,

12 (2) the date of enactment by the legislature of

13 such State of all laws required by such amendments,

14 but in no event later than the first day of the first cal15 endar quarter beginning after the close of the first regular

16 session of the State legislature that begins after the date

17 of enactment of this Act. For purposes of the previous

18 sentence, in the case of a State that has a 2-year legisla19 tive session, each year of such session shall be deemed to

20 be a separate regular session of the State legislature.

21 SEC. 7603. FEES FOR FEDERAL ADMINISTRATION OF STATE

22 SUPPLEMENTARY PAYMENTS.

23 (a) IN GENERAL.—
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1 (1) OPTIONAL STATE SUPPLEMENTARY PAY2 MENTS.—Section 1616(d) (42 U.S.C. 1382e(d)) is

3 amended—

4 (A) by inserting ‘‘(1)’’ after ‘‘(d)’’;

5 (B) by inserting ‘‘, plus an administration

6 fee assessed in accordance with paragraph (2)

7 and any additional services fee charged in ac8 cordance with paragraph (3)’’ before the period;

9 and

10 (C) by adding after and below the end the

11 following:

12 ‘‘(2)(A) The Secretary shall assess each State an ad13 ministration fee in an amount equal to—

14 ‘‘(i) the number of supplementary payments

15 made by the Secretary on behalf of the State under

16 this section for any month in a fiscal year; multi17 plied by

18 ‘‘(ii) the applicable rate for the fiscal year.

19 ‘‘(B) As used in subparagraph (A), the term ‘applica20 ble rate’ means—

21 ‘‘(i) for fiscal year 1995, $1.67;

22 ‘‘(ii) for fiscal year 1996, $3.33;

23 ‘‘(iii) for fiscal year 1997, $5.00; and

24 ‘‘(iv) for fiscal year 1998 and each succeeding

25 fiscal year, $5.00, or such different rate as the Sec-
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1 retary determines pursuant to criteria established in

2 regulations is appropriate for the State, taking into

3 account the complexity of the State’s supplementary

4 payment program.

5 ‘‘(C) All fees collected pursuant to this paragraph

6 shall be transferred to the United States at the same time

7 that amounts for such supplementary payments are re8 quired to be so transferred.

9 ‘‘(3)(A) The Secretary shall charge a State an addi10 tional services fee if, at the request of the State, the Sec11 retary provides additional services beyond the level cus12 tomarily provided, in the administration of State supple13 mentary payments pursuant to this section.

14 ‘‘(B) The additional services fee shall be in an

15 amount that the Secretary determines is necessary to

16 cover all costs (including indirect costs) incurred by the

17 Federal Government in furnishing the additional services

18 referred to in subparagraph (A).

19 ‘‘(C) The additional services fee shall be payable in

20 advance or by way of reimbursement.

21 ‘‘(4) All administration fees and additional services

22 fees collected pursuant to this subsection shall be depos23 ited in the general fund of the Treasury of the United

24 States as miscellaneous receipts.’’.
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1 (2) MANDATORY STATE SUPPLEMENTARY PAY2 MENTS.—Section 212(b)(3) of Public Law 93–66

3 (42 U.S.C. 1382 note) is amended—

4 (A) by inserting ‘‘(A)’’ after ‘‘(3)’’;

5 (B) by inserting ‘‘, plus an administration

6 fee assessed in accordance with subparagraph

7 (B) and any additional services fee charged in

8 accordance with subparagraph (C)’’ before the

9 period; and

10 (C) by adding after and below the end the

11 following:

12 ‘‘(B)(i) The Secretary shall assess each State an ad13 ministration fee in an amount equal to—

14 ‘‘(I) the number of supplementary payments

15 made by the Secretary on behalf of the State under

16 this subsection for any month in a fiscal year; multi17 plied by

18 ‘‘(II) the applicable rate for the fiscal year.

19 ‘‘(ii) As used in clause (i), the term ‘applicable rate’

20 means—

21 ‘‘(I) for fiscal year 1995, $1.67;

22 ‘‘(II) for fiscal year 1996, $3.33;

23 ‘‘(III) for fiscal year 1997, $5.00; and

24 ‘‘(IV) for fiscal year 1998 and each succeeding

25 fiscal year, $5.00, or such different rate as the Sec-
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1 retary determines pursuant to regulations estab2 lished in regulations is appropriate for the State,

3 taking into account the complexity of the State’s

4 supplementary payment program.

5 ‘‘(iii) All fees collected pursuant to this subparagraph

6 shall be transferred to the United States at the same time

7 that amounts for such supplementary payments are re8 quired to be so transferred.

9 ‘‘(C)(i) The Secretary shall charge a State an addi10 tional services fee if, at the request of the State, the Sec11 retary provides additional services beyond the level cus12 tomarily provided, in the administration of State supple13 mentary payments pursuant to this subsection.

14 ‘‘(ii) The additional services fee shall be in an amount

15 that the Secretary determines is necessary to cover all

16 costs (including indirect costs) incurred by the Federal

17 Government in furnishing the additional services referred

18 to in clause (i).

19 ‘‘(iii) The additional services fee shall be payable in

20 advance or by way of reimbursement.

21 ‘‘(D) All administration fees and additional services

22 fees collected pursuant to this paragraph shall be depos23 ited in the general fund of the Treasury of the United

24 States as miscellaneous receipts.’’.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to supplementary payments made

3 pursuant to section 1616(a) of the Social Security Act or

4 section 212(a) of Public Law 93–66 for any calendar

5 month beginning after September 30, 1994, and to serv6 ices furnished after such date, regardless of whether regu7 lations to implement such amendments have been promul8 gated by such date, or whether any agreement entered into

9 under such section 1616(a) or such section 212(a) has

10 been modified.

11 Subtitle D—Miscellaneous

12 Provisions

13 PART I—TRADE PROVISIONS

14 SEC. 7701. EXTENSION OF AUTHORITY TO LEVY CUSTOMS

15 USER FEES.

16 Section 13031(j)(3) of the Consolidated Omnibus

17 Budget Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3))

18 is amended by striking out ‘‘1995’’ and inserting ‘‘1998’’.

19 SEC. 7702. EXTENSION OF, AND AUTHORIZATION OF APPRO20 PRIATIONS FOR, TRADE ADJUSTMENT AS21 SISTANCE PROGRAM.

22 (a) EXTENSION.—Section 285 of the Trade Act of

23 1974 (19 U.S.C. 2271, preceding note) is amended—
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1 (1) by striking ‘‘No’’ and all that follows

2 through ‘‘and no duty’’ in subsection (b) and insert3 ing ‘‘No duty’’; and

4 (2) by adding at the end the following new sub5 section:

6 ‘‘(c) No assistance, vouchers, allowances, or other

7 payments may be provided under chapter 2, and no tech8 nical assistance may be provided under chapter 3, after

9 September 30, 1998.’’.

10 (b) AUTHORIZATION OF APPROPRIATIONS.—

11 (1) CHAPTER 2 ADJUSTMENT ASSISTANCE.—

12 Section 245 of the Trade Act of 1974 (19 U.S.C.

13 2317) is amended by striking ‘‘1988, 1989, 1990,

14 1991, 1992, and 1993’’ and inserting ‘‘1993, 1994,

15 1995, 1996, 1997, and 1998’’.

16 (2) CHAPTER 3 ADJUSTMENT ASSISTANCE.—

17 Section 256(b) of such Act (19 U.S.C. 2346(b)) is

18 amended by striking ‘‘1988, 1989, 1990, 1991,

19 1992, and 1993’’ and inserting ‘‘1993, 1994, 1995,

20 1996, 1997, and 1998’’.

21 PART II—IMPROVED ACCESS TO CHILDHOOD

22 IMMUNIZATIONS

23 SEC. 7801. FINDINGS AND PURPOSE.

24 (a) FINDINGS.—
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1 (1) CURRENT CIRCUMSTANCES.—Congress

2 finds the following:

3 (A) The measles outbreak which occurred

4 between 1989 and 1991 resulted in over 55,000

5 cases, more than 130 deaths, and over 11,000

6 hospitalizations. The national costs of this epi7 demic are estimated to be over $150,000,000.

8 (B) Studies have shown that a high per9 centage of unvaccinated children who got the

10 measles during the outbreak described in sub11 paragraph (A) were participating in the medic12 aid program, resulting in costs to Federal and

13 State governments. For instance, 45 percent of

14 the unvaccinated children in Los Angeles who

15 got the measles, and 75 percent of the

16 unvaccinated children in New York City who

17 got the measles, were participating in the med18 icaid program.

19 (C) Immunizations are among the most

20 cost-effective means of preventing disease.

21 (D) Although Federal support for child22 hood immunizations has been in existence since

23 1962, the full potential of immunizations re24 mains to be achieved. Enactment and enforce25 ment of school immunization requirements have
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1 resulted in excellent immunization levels (96

2 percent or greater) in school children. However,

3 approximately 80 percent of vaccine doses

4 should be received before the second birthday in

5 order to protect children during their most vul6 nerable periods. Many children do not receive

7 their basic immunizations by that time, and in

8 some inner cities as few as 10 percent of 2-

9 year-olds have received a complete series. This

10 low level of immunizations has been reflected in

11 recent years by outbreaks of measles among in12 adequately immunized preschool children.

13 (E) The childhood immunization services

14 delivery infrastructure is both public and pri15 vate. There is considerable evidence to suggest

16 that the private infrastructure has been eroded

17 over the past decade as a result of the signifi18 cantly increased cost of privately purchased vac19 cines.

20 (F) High vaccine costs, coupled with the

21 growing number of uninsured and underinsured

22 families, has resulted in private physicians in23 creasingly referring their private-pay patients to

24 overburdened public clinics for vaccinations.
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1 (G) Eleven States now have programs that

2 provide vaccines without charge to both public

3 and private health care providers. Other States

4 that have sought to establish such programs

5 have been denied additional discounted vaccines

6 by manufacturers.

7 (H) There is no evidence to suggest that a

8 negotiated price that takes into account the rea9 sonable cost of production, marketing, research

10 and development, and distribution will not fairly

11 compensate vaccine manufacturers.

12 (I) The Secretary of Health and Human

13 Services has experience negotiating vaccine pur14 chase through the Federal contract system.

15 (J) The National Vaccine Injury Com16 pensation Program is an essential element in a

17 comprehensive immunization program and

18 should be applied to additional vaccines rec19 ommended for universal use in children.

20 (K) There have been at least 3 causes for

21 the high cost of vaccines: price increases, the

22 introduction of new vaccines, and the establish23 ment of the excise tax on vaccines which funds

24 the National Vaccine Compensation Program.

25 The expansion of a central bulk purchasing pro-
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1 gram which replaces the current purchase of

2 vaccines under the medicaid program will help

3 reduce the cost of vaccines.

4 (2) NEEDED ACTIONS.—With respect to actions

5 necessary to reduce costs of not immunizing at the

6 earliest possible age, Congress finds the following:

7 (A) The Federal Government should pur8 chase and provide free of charge to health care

9 providers vaccines recommended for universal

10 use in certain children. This action will not only

11 remove financial barriers to immunization that

12 impede children from being vaccinated at the

13 appropriate time, but will also facilitate the de14 velopment of an immunization surveillance pro15 gram.

16 (B) The National Vaccine Injury Com17 pensation Program should be extended and im18 proved. Vaccine information materials should be

19 simplified to ensure that parents can under20 stand the benefits and risks of vaccines.

21 (b) PURPOSE.—It is the purpose of this Act to ensure

22 that high-risk children in the United States are fully im23 munized against vaccine preventable infectious diseases at

24 the earliest appropriate age and avert costs to the Federal

25 Government due to lack of immunization.
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1 SEC. 7802. MEDICAID IMMUNIZATION PROVISIONS.

2 (a) RECOMMENDED PEDIATRIC VACCINES.—Title

3 XIX (42 U.S.C. 1396 et seq.), as amended by section

4 7433, is amended by adding at the end the following new

5 section:

6 ‘‘RECOMMENDED PEDIATRIC VACCINES

7 ‘‘SEC. 1932. Not later than October 1, 1994 (and pe8 riodically thereafter as the Secretary determines appro9 priate in view of advances in scientific understanding in

10 the areas of immunization and disease control), the Sec11 retary shall promulgate a list of vaccines that provide im12 munization against naturally occurring infectious diseases

13 and are recommended for universal use in children. The

14 Secretary shall concurrently promulgate recommendations

15 regarding the appropriate dosage for each such vaccine,

16 and a schedule of the age or ages of children at which

17 each vaccine should be administered.’’.

18 (b) ASSURING ADEQUATE PAYMENT RATES FOR AD19 MINISTRATION OF VACCINES TO CHILDREN.—

20 (1) PAYMENT RATES.—Section 1926(a)(4)(B)

21 (42 U.S.C. 1396r–7(a)(4)(B)) is amended by insert22 ing ‘‘(including the administration of vaccines)’’

23 after ‘‘means services’’.

24 (2) EFFECTIVE DATE.—The amendment made

25 by paragraph (1) shall apply to the plan amendment

26 required to be submitted under section 1926(a)(2) of
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1 the Social Security Act by not later than October 1,

2 1994.

3 (c) DENIAL OF FEDERAL FINANCIAL PARTICIPATION

4 FOR INAPPROPRIATE ADMINISTRATION OF SINGLE-ANTI5 GEN VACCINE.—

6 (1) IN GENERAL.—Section 1903(i) (42 U.S.C.

7 1396b(i)), as amended by section 7451, is amend8 ed—

9 (A) in paragraph (13), by striking ‘‘or’’ at

10 the end,

11 (B) in paragraph (14), by striking the pe12 riod at the end and inserting ‘‘; or’’, and

13 (C) by inserting after paragraph (14) the

14 following new paragraph:

15 ‘‘(15) with respect to any amount expended for

16 a single-antigen vaccine and its administration in

17 any case in which the administration of a combined18 antigen vaccine was medically appropriate (as deter19 mined by the Secretary) and cost-beneficial for the

20 disease.’’.

21 (2) EFFECTIVE DATE.—The amendments made

22 by paragraph (1) shall apply to amounts expended

23 for vaccines administered on or after October 1,

24 1994.

25 (d) OUTREACH AND EDUCATION.—
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1 (1) IMMUNIZATION OUTREACH THROUGH EPSDT

2 PROGRAM.—

3 (A) IN GENERAL.—Section 1902(a)(43)(A)

4 (42 U.S.C. 1396a(a)(43)(A)) is amended by in5 serting before the comma at the end the follow6 ing: ‘‘and the need for age-appropriate immuni7 zations against vaccine-preventable diseases’’.

8 (B) EFFECTIVE DATE.—(i) Except as pro9 vided in clause (ii), the amendment made by

10 this paragraph shall apply to calendar quarters

11 beginning on or after October 1, 1994.

12 (ii) In the case of a State plan for medical

13 assistance under title XIX of the Social Secu14 rity Act which the Secretary of Health and

15 Human Services determines requires State leg16 islation (other than legislation appropriating

17 funds) in order for the plan to meet the addi18 tional requirements imposed by the amend19 ments made by this paragraph, the State plan

20 shall not be regarded as failing to comply with

21 the requirements of such title solely on the

22 basis of its failure to meet such additional re23 quirements before the first day of the first cal24 endar quarter beginning after the close of the

25 first regular session of the State legislature that
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1 begins after the date of the enactment of this

2 Act. For purposes of the preceding sentence, in

3 the case of a State that has a 2-year legislative

4 session, each year of such session shall be

5 deemed to be a separate regular session of the

6 State legislature.

7 (2) COORDINATION WITH MATERNAL AND

8 CHILD HEALTH BLOCK GRANT PROGRAMS AND WIC

9 PROGRAMS ON PROVIDING INFORMATION AND EDU10 CATION ON IMMUNIZATIONS.—

11 (A) IN GENERAL.—Section 1902(a)(11)

12 (42 U.S.C. 1396a(a)(11)) is amended—

13 (i) in clause (B)—

14 (I) by striking ‘‘effective July 1,

15 1969,’’,

16 (II) by striking ‘‘and’’ before

17 ‘‘(ii)’’, and

18 (III) by striking ‘‘to him under

19 section 1903’’ and inserting ‘‘to the

20 individual under section 1903, and

21 (iii) providing for coordination of in22 formation and education on pediatric

23 vaccinations and delivery of immuni24 zation services’’; and
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•S 1134 PCS

1 (ii) in clause (C), by inserting ‘‘, in2 cluding the provision of information and

3 education on pediatric vaccinations and the

4 delivery of immunization services,’’ after

5 ‘‘operations under this title’’.

6 (B) EFFECTIVE DATE.—(i) Except as pro7 vided in clause (ii), the amendment made by

8 this paragraph shall apply to calendar quarters

9 beginning on or after October 1, 1994.

10 (ii) In the case of a State plan for medical

11 assistance under title XIX of the Social Secu12 rity Act which the Secretary of Health and

13 Human Services determines requires State leg14 islation (other than legislation appropriating

15 funds) in order for the plan to meet the addi16 tional requirements imposed by the amend17 ments made by this paragraph, the State plan

18 shall not be regarded as failing to comply with

19 the requirements of such title solely on the

20 basis of its failure to meet such additional re21 quirements before the first day of the first cal22 endar quarter beginning after the close of the

23 first regular session of the State legislature that

24 begins after the date of the enactment of this

25 Act. For purposes of the preceding sentence, in
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1 the case of a State that has a 2-year legislative

2 session, each year of such session shall be

3 deemed to be a separate regular session of the

4 State legislature.

5 (e) COORDINATION WITH MATERNAL AND CHILD

6 HEALTH BLOCK GRANT PROGRAMS ON PAYMENT AND

7 REPORTS ON IMMUNIZATION SERVICES.—

8 (1) PAYMENT.—Section 505(a) (42 U.S.C.

9 705(a)) is amended—

10 (A) in paragraph (4), by striking ‘‘; and’’

11 and inserting a semicolon;

12 (B) in paragraph (5), by striking the pe13 riod at the end and inserting ‘‘; and’’; and

14 (C) by adding at the end the following new

15 paragraph:

16 ‘‘(6) provides that the State agency (or agen17 cies) administering the State’s program under this

18 title will coordinate with the State agency admin19 istering the State’s plan under title XIX—

20 ‘‘(A) to authorize payments under title

21 XIX to health care providers who furnish serv22 ices under this title to individuals who are eligi23 ble for medical assistance under title XIX; and

24 ‘‘(B) to establish a system under which

25 health care providers who furnish services
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1 under this title to individuals who are eligible

2 for medical assistance under title XIX shall

3 seek payment for such services under title XIX

4 before seeking payment for such services under

5 this title.’’.

6 (2) REPORTS.—Section 506(a) of such Act (42

7 U.S.C. 706(a)) is amended—

8 (A) in paragraph (1), by striking ‘‘Copies

9 of the report’’ and inserting ‘‘Any information

10 regarding immunization services provided under

11 this title which is included in a report submit12 ted under this section shall conform to the Cen13 ters for Disease Control and Prevention immu14 nization reporting standards for federally pur15 chased vaccines. Copies of the report’’; and

16 (B) in paragraph (2), by inserting imme17 diately after subparagraph (E) the following

18 new subparagraph:

19 ‘‘(F) Information on activities conducted by the

20 State to ensure compliance with the Standards for

21 Immunization Practices, developed and published by

22 the Centers for Disease Control and Prevention

23 under the auspices of the National Vaccine Advisory

24 Committee.’’.
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1 (f) MEDICAID MANAGED CARE PLANS REQUIRED TO

2 COMPLY WITH IMMUNIZATION AND OTHER EPSDT RE3 QUIREMENTS.—

4 (1) IN GENERAL.—Section 1903(m) (42 U.S.C.

5 1396b(m)) is amended—

6 (A) in paragraph (2)(A)—

7 (i) by striking ‘‘and’’ at the end of

8 clause (x),

9 (ii) by striking the period at the end

10 of clause (xi) and inserting ‘‘; and’’, and

11 (iii) by adding at the end the follow12 ing new clause:

13 ‘‘(xii) the entity complies with the requirements

14 of paragraph (7) (relating to EPSDT compliance).’’;

15 and

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

17 paragraph:

18 ‘‘(7) The contract between the State and an entity

19 referred to in paragraph (2)(A)(iii) shall—

20 ‘‘(A) specify which early and periodic screening,

21 diagnostic, and treatment services are to be provided

22 under the contract to individuals under age 21 who

23 are enrolled with the entity;

24 ‘‘(B) in the case of such services which are not

25 to be so provided, specify the steps the entity or the
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1 State will take (through referrals or other arrange2 ments) to assure that such individuals will receive

3 such services; and

4 ‘‘(C) require the entity to submit such periodic

5 reports as may be necessary to enable the State to

6 prepare and submit timely reports under sections

7 1902(a)(43)(D) and 506(a)(2).’’.

8 (2) APPLICATION OF INTERMEDIATE SANC9 TIONS FOR FAILURE TO PROVIDE IMMUNIZATIONS

10 AND OTHER EPSDT SERVICES.—Section

11 1903(m)(5)(A) (42 U.S.C. 1396b(m)(5)(A)) is

12 amended—

13 (A) by striking ‘‘, or’’ at the end of clause

14 (iv) and inserting a semicolon,

15 (B) by striking the comma at the end of

16 clause (v) and inserting ‘‘; or’’, and

17 (C) by inserting after clause (v) the follow18 ing new clause:

19 ‘‘(vi) fails substantially to provide early and

20 periodic screening, diagnostic, and treatment serv21 ices to the extent specified in the contract under

22 paragraph (7)(A);’’.

23 (3) EFFECTIVE DATE.—The amendments made

24 by this subsection shall apply to contract years be25 ginning on or after October 1, 1993, without regard
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1 to whether or not final regulations to carry out such

2 amendments have been promulgated by such date.

3 (g) AVAILABILITY OF MEDICAID PAYMENTS FOR PE4 DIATRIC VACCINE REPLACEMENT PROGRAMS.—

5 (1) IN GENERAL.—Section 1902(a)(32) (42

6 U.S.C. 1396a(a)(32)) is amended—

7 (A) by striking ‘‘and’’ at the end of sub8 paragraph (B),

9 (B) by striking the period at the end of

10 subparagraph (C) and inserting ‘‘; and’’, and

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

12 subparagraph:

13 ‘‘(D) in the case of payment for a pediatric

14 vaccine administered to individuals entitled to

15 medical assistance under the State plan, the

16 State plan may make payment directly to the

17 manufacturer of the vaccine under a voluntary

18 replacement program agreed to by the State

19 pursuant to which the manufacturer (i) supplies

20 doses of the vaccine to providers administering

21 the vaccine, (ii) periodically replaces the supply

22 of the vaccine, and (iii) charges the State the

23 manufacturer’s bid price to the Centers for Dis24 ease Control and Prevention for the vaccine so
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1 administered plus a reasonable premium to

2 cover shipping and handling of returns;’’.

3 (2) EFFECTIVE DATE.—The amendments made

4 by subsection (a) shall take effect on the date of the

5 enactment of this Act.

6 (h) PARENTAL RESPONSIBILITY DEMONSTRATION

7 PROJECTS.—

8 (1) ESTABLISHMENT.—The Secretary of Health

9 and Human Services (hereafter referred to in this

10 subsection as the ‘‘Secretary’’) shall provide for

11 demonstration projects under section 1115 of the

12 Social Security Act designed to improve the rate and

13 timeliness of immunization against childhood dis14 eases in the case of any child (hereafter referred to

15 in this subsection as an ‘‘eligible child’’ or ‘‘eligible

16 children’’) up to age 2 who is a member of a family

17 eligible for aid to families with dependent children

18 under part A of title IV of the Social Security Act

19 (hereafter referred to in this subsection as ‘‘AFDC’’)

20 and who is eligible to receive services under title

21 XIX of the Social Security Act.

22 (2) PROJECTS DESCRIBED.—

23 (A) IN GENERAL.—Each State conducting

24 a demonstration project under this subsection

25 shall establish and operate a parent responsibil-
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1 ity program which shall provide that if a family

2 receiving AFDC for any month includes an eli3 gible child who has not received appropriate im4 munizations (as defined in subparagraph (F))

5 during such month, the State shall reduce the

6 benefits to be received by such family for any

7 succeeding month by all or a portion of the ben8 efits allocable to the parent or guardian of such

9 child (hereafter referred to in this subsection as

10 the ‘‘parental share’’).

11 (B) REASONABLE REDUCTIONS RE12 QUIRED.—Any program established and oper13 ated under subparagraph (A) shall assure that

14 any reductions in the AFDC benefits to be re15 ceived by a family referred to in such subpara16 graph shall be reasonably related to the failure

17 to appropriately immunize an eligible child.

18 (C) LATER COMPLIANCE.—Any reductions

19 in AFDC benefits under subparagraph (A) (ex20 cluding an amount equal to the parental share

21 for one month, which may be retained by the

22 State) shall be paid to the family referred to in

23 such subparagraph upon a demonstration to the

24 State that the eligible child has received appro25 priate immunizations.
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1 (D) LIMITATION.—The total amount of the

2 reductions in the AFDC benefits to be received

3 by a family referred to in subparagraph (A)

4 shall not exceed an amount equal to the paren5 tal share for 7 months.

6 (E) SPECIAL RULE.—Any family referred

7 to in subparagraph (A) may demonstrate to the

8 State that due to particular circumstances a pa9 rental responsibility program established and

10 operated by a State should not be applied to

11 such family.

12 (F) APPROPRIATE IMMUNIZATIONS.—For

13 purposes of this subsection, the term ‘‘appro14 priate immunizations’’ refers to immunizations

15 administered in accordance with the list of rec16 ommended pediatric vaccines promulgated by

17 the Secretary under section 1932 of the Social

18 Security Act and the related recommendations

19 promulgated by the Secretary under such sec20 tion regarding the appropriate dosage for such

21 vaccines and the age or ages at which such vac22 cines should be administered unless the admin23 istration of such immunizations would not be in

24 compliance with any law of the State.

25 (2) APPLICATIONS.—
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1 (A) IN GENERAL.—Each State desiring to

2 conduct a demonstration project under this sub3 section shall prepare and submit to the Sec4 retary an application, at such time, in such

5 manner, and containing any information, in ad6 dition to the information required under sub7 paragraph (B), as the Secretary may require.

8 (B) REQUIRED INFORMATION.—Each ap9 plication submitted by a State under subpara10 graph (A) shall contain the following:

11 (i) A certification by the State that

12 the cost of the demonstration project as

13 conducted by the State will be budget neu14 tral to the Federal Government in accord15 ance with paragraph (6).

16 (ii) A description of the parental re17 sponsibility program to be established and

18 operated by the State under the dem19 onstration project.

20 (iii) A certification by the State that

21 if a family applying for or receiving AFDC

22 benefits includes an eligible child, such

23 family will receive, prior to any action with

24 respect to determination or redetermina25 tion of eligibility, a written notice contain-
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1 ing a description of the State’s parent re2 sponsibility program which shall include—

3 (I) an explanation of the immuni4 zations such child is required to re5 ceive under such program,

6 (II) a schedule listing the age

7 when such immunizations are required

8 to be administered,

9 (III) an explanation that if such

10 child is not properly immunized the

11 family’s monthly AFDC benefit may

12 be reduced by the State, and

13 (IV) an explanation of the proc14 ess by which, and a description of the

15 medical records or other basis by

16 which, a family may recover any

17 AFDC benefits reduced by the State.

18 (iv) A certification by the State that

19 eligible children will be provided immuniza20 tion services by appropriate medical staff

21 without charge at locations that are acces22 sible to such children and their families

23 with respect to location and hours of oper24 ation, including the State or local offices

25 where eligibility determinations are made
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1 under part A of title IV of the Social Secu2 rity Act or title XIX of such Act serving

3 each area in which the demonstration

4 project is conducted or that the State will

5 provide transportation services to another

6 location where the immunization services

7 will be provided by appropriate medical

8 staff without charge.

9 (v) A certification by the State that

10 caseworkers will track the immunization

11 services provided to an eligible child and

12 will notify the parent or guardian of such

13 child with respect to the need for addi14 tional immunization services and a sched15 ule for the appropriate provision of such

16 services.

17 (vi) A certification by the State that

18 the demonstration project will be subject to

19 periodic evaluations intended to measure

20 the impact of the project on the State’s

21 immunization rates.

22 (C) APPROVAL OF APPLICATIONS.—The

23 Secretary shall approve no more than 5 applica24 tions submitted by States under subparagraph

25 (A).
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1 (4) DURATION.—Any demonstration project

2 under this subsection shall be conducted for a period

3 of 3 years.

4 (5) REPORTS.—

5 (A) INTERIM REPORTS.—A State conduct6 ing a demonstration project under this sub7 section shall prepare and submit to the Sec8 retary such interim reports as may be required

9 by the Secretary with respect to the activities

10 conducted by such State under this subsection.

11 (B) FINAL REPORT.—A State conducting a

12 demonstration project under this subsection

13 shall prepare and submit to the Secretary a

14 final report upon the termination of such

15 project which evaluates the effect of the project

16 in achieving the objectives of this subsection

17 and includes such specific data as the Secretary

18 may require such as data relating to the num19 ber of families whose AFDC was reduced under

20 the parent responsibility program and whether

21 the State’s immunization rates improved over

22 the course of the demonstration project.

23 (6) BUDGET NEUTRALITY.—The Secretary shall

24 provide that in carrying out this subsection, the pay25 ments under section 1903 of the Social Security Act
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1 to any State conducting a demonstration project

2 under this subsection for a quarter shall be no great3 er or lesser than what such payments would have

4 been if this subsection had not been enacted.

5 (i) TRANSITION RULE.—

6 (1) MEDICAID USE OF CDC CONTRACT PRICE.—

7 The Secretary of Health and Human Services shall

8 not, on or after the date of the enactment of this

9 Act, enter into a contract for the purchase by the

10 Centers for Disease Control and Prevention of pedi11 atric vaccines for distribution (as provided for in the

12 Public Health Service Act) unless such contract pro13 vides that the charge for such vaccines, for which

14 medical assistance is provided under a State plan

15 under title XIX of the Social Security Act, will not

16 exceed the price negotiated under such contract. The

17 previous sentence shall not apply, with respect to a

18 vaccine for which medical assistance is provided by

19 a State, on and after such date as the State becomes

20 entitled to have the Secretary provide for the pur21 chase and delivery on behalf of the State of that vac22 cine under section 2101 of the Social Security Act.

23 (2) USE BY STATES OF CDC CONTRACT

24 PRICE.—Nothing in paragraph (1) shall be con25 strued as limiting the Federal financial participation
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1 available to States, under title XIX of the Social Se2 curity Act, for the cost of a pediatric vaccine to the

3 contract price described in such paragraph for the

4 vaccine.

5 SEC. 7803. CENTRAL BULK PURCHASING PROGRAM FOR PE6 DIATRIC VACCINES.

7 (a) IN GENERAL.—The Social Security Act (42

8 U.S.C. 301 et seq.) is amended by adding at the end the

9 following new title:

10 ‘‘TITLE XXI—CENTRAL BULK

11 PURCHASING PROGRAM FOR

12 PEDIATRIC VACCINES

13 ‘‘DELIVERY TO STATES OF SUFFICIENT QUANTITIES OF

14 PEDIATRIC VACCINES

15 ‘‘SEC. 2101. (a) IN GENERAL.—In the case of any

16 State that submits to the Secretary an application in ac17 cordance with section 2107, the Secretary, acting through

18 the Director of the Centers for Disease Control and Pre19 vention, shall provide for the purchase and delivery on be20 half of the State of such quantities of pediatric vaccines

21 as may be necessary for the immunization of each eligible

22 child in the State. The preceding sentence is subject to

23 sections 2102(d) and 2109(a).
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1 ‘‘(b) ELIGIBLE CHILDREN.—For purposes of this

2 title, the term ‘eligible child’ means an individual 18 years

3 of age or younger who—

4 ‘‘(1) with respect to the State involved, is enti5 tled to medical assistance under the plan approved

6 for the State under title XIX (including a State op7 erating under a statewide waiver under section

8 1115);

9 ‘‘(2)(A)(i) is uninsured with respect to health

10 insurance policies or plans (including group health

11 plans or prepaid health plans and including em12 ployee welfare benefit plans under the Employee Re13 tirement Income Security Act of 1974), and

14 ‘‘(ii) is a member of a family with an income

15 of less than 75 percent of the State’s median in16 come; or

17 ‘‘(B)(i) is covered under such a policy or plan,

18 but under the policy or plan benefits are not avail19 able with respect to immunizations, and

20 ‘‘(ii) is a member of a family with an income

21 of less than 75 percent of the State’s median in22 come; or

23 ‘‘(3) is an Indian.

24 ‘‘STATES, ELIGIBLE CHILDREN, AND PROVIDERS

25 ‘‘SEC. 2102. (a) STATES.—Subject to subsection (d),

26 in the case of any State that submits to the Secretary an
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1 application in accordance with section 2107, the State is

2 entitled to have the Secretary provide for the purchase and

3 delivery on behalf of the State of pediatric vaccines under

4 section 2101. The preceding sentence constitutes budget

5 authority in advance of appropriations Acts, and rep6 resents the obligation of the Federal Government to pro7 vide for the purchase and delivery to the State of the vac8 cines.

9 ‘‘(b) CHILDREN AND HEALTH CARE PROVIDERS.—

10 Subject to subsection (d), the Secretary may provide for

11 the purchase and delivery of pediatric vaccines under sec12 tion 2101 on behalf of a State only if the State agrees

13 as follows:

14 ‘‘(1) Each eligible child in the State, in receiv15 ing an immunization with a pediatric vaccine from

16 a program-registered provider (as defined in section

17 2103(a)), is entitled to receive the immunization

18 without charge for the cost of such vaccine.

19 ‘‘(2) Each program-registered provider in the

20 State who administers a pediatric vaccine to an eligi21 ble child in the State is entitled to receive such vac22 cine from the State without charge.

23 ‘‘(3) The State will carry out a program to ad24 minister the obligations established pursuant to

25 paragraphs (1) and (2).
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1 ‘‘(c) ENFORCEMENT OF PROVIDER RIGHTS BY ELI2 GIBLE CHILDREN.—With respect to the obligation of a

3 State established in subsection (b)(2), an eligible child (or

4 representative of the child) may enforce the rights of the

5 provider under such paragraph if—

6 ‘‘(1) the provider administered a pediatric vac7 cine to the child notwithstanding the failure of the

8 State to carry out such obligation with respect to the

9 vaccine; or

10 ‘‘(2) an immunization with the vaccine was

11 sought for the child by a parent of the child, but the

12 provider, on the basis of such failure of the State,

13 did not administer the vaccine to the child.

14 ‘‘(d) CERTAIN CONDITIONS.—

15 ‘‘(1) IN GENERAL.—This title does not apply

16 with respect to any vaccine administered before Oc17 tober 1, 1994.

18 ‘‘(2) PUBLIC HEALTH SERVICE ACT PRO19 GRAM.—The Federal Government and the States

20 shall have no obligation pursuant to any provision of

21 this title with respect to any vaccine purchased

22 under section 317 of the Public Health Service Act

23 and administered to an eligible child.

24 ‘‘(3) RELATIONSHIP TO PURCHASE CONTRACTS

25 WITH MANUFACTURERS.—With respect to a pedi-
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1 atric vaccine, the obligation of the Federal Govern2 ment pursuant to subsection (a), and the obligations

3 of the State pursuant to subsection (b), are effective

4 only to the extent that there is in effect a contract

5 under section 2108 for the purchase and delivery of

6 the vaccine.

7 ‘‘(4) SUBMISSION OF APPLICATION.—

8 ‘‘(A) IN GENERAL.—Subject to subpara9 graph (C), the programs established pursuant

10 to subsections (a) and (b) are established with

11 respect to a State upon the State submitting to

12 the Secretary an application in accordance with

13 section 2107.

14 ‘‘(B) CONSIDERATION OF APPLICATION.—

15 An application submitted to the Secretary

16 under section 2107 is deemed to have been sub17 mitted in accordance with such section unless

18 the Secretary, not later than 30 days after the

19 date on which the application is submitted, no20 tifies the State that the application is not in ac21 cordance with such section.

22 ‘‘(C) SPECIAL RULE.—If a State that man23 ufactures a pediatric vaccine and does not re24 ceive the vaccine under section 2101 fails to

25 submit an application in accordance with sec-
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1 tion 2107, the Secretary may, upon the submis2 sion by the State of an application that is in ac3 cordance with such section, provide payment to

4 such State under section 2109(b) as of the date

5 on which the State first submitted an applica6 tion.

7 ‘‘VOLUNTARY PARTICIPATION OF HEALTH CARE

8 PROVIDERS

9 ‘‘SEC. 2103. (a) IN GENERAL.—

10 ‘‘(1) REQUEST FOR PARTICIPATION; REQUIRED

11 APPROVAL.—The Secretary may provide for the pur12 chase and delivery of pediatric vaccines under sec13 tion 2101 on behalf of a State only if the State

14 agrees that federally supplied pediatric vaccines will

15 not be distributed to a health care provider unless—

16 ‘‘(A) the provider submits to the State a

17 written request to participate in the program

18 established by the State pursuant to section

19 2102(b)(3);

20 ‘‘(B) the request is in such form and is

21 made in such manner as the Secretary may re22 quire; and

23 ‘‘(C) the provider makes the agreements

24 described in this section.

25 ‘‘(2) PROGRAM-REGISTERED PROVIDERS.—For

26 purposes of this title, the term ‘program-registered
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1 provider’ means a health care provider that meets

2 the conditions specified in subparagraphs (A)

3 through (C) of paragraph (1).

4 ‘‘(b) ELIGIBILITY OF CHILDREN.—

5 ‘‘(1) IN GENERAL.—An agreement for a health

6 care provider under subsection (a) is that the pro7 vider—

8 ‘‘(A) before administering a pediatric vac9 cine to a child, will ask a parent or guardian of

10 the child such questions as are necessary to de11 termine whether the child is an eligible child;

12 ‘‘(B) will, for a period of time specified by

13 the Secretary, maintain records of responses

14 made to the questions; and

15 ‘‘(C) will, upon request, make such records

16 available to the appropriate State agency in17 volved and to the Secretary, subject to para18 graphs (2) and (3).

19 ‘‘(2) INFORMATIONAL FORM.—The Secretary

20 shall develop, in consultation with States and health

21 care providers, a simple form for providers to fur22 nish to a child’s parent or guardian which allows

23 such parent or guardian to declare that the child is

24 an eligible child and which contains a statement as25 suring the confidentiality of any information re-
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•S 1134 PCS

1 ceived. Each State may elect to utilize the form de2 veloped by the Secretary under this paragraph or an

3 alternate form developed by the State and approved

4 by the Secretary.

5 ‘‘(3) RESTRICTION ON USE OF INFORMATION.—

6 Records provided to a State or to the Secretary

7 under paragraph (1)(C) may be used only for pur8 poses of audit of the program carried out under sec9 tion 2102(b)(3) by the State. The State and the

10 Secretary shall assure confidentiality of such

11 records.

12 ‘‘(c) CHARGES FOR VACCINES.—

13 ‘‘(1) NO CHARGE FOR VACCINE.—An agreement

14 for a health care provider under subsection (a) is

15 that, in administering a federally supplied pediatric

16 vaccine to an eligible child, the provider will not im17 pose a charge for the cost of the vaccine.

18 ‘‘(2) ADMINISTRATION OF VACCINES.—With re19 spect to compliance with an agreement under para20 graph (1), a program-registered provider may im21 pose a fee for the administration of a federally sup22 plied pediatric vaccine that reflects actual regional

23 costs as determined by the Secretary, except that a

24 provider may not deny a child a vaccination due to
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1 the inability of the child’s parent or guardian to pay

2 an administration fee.

3 ‘‘(d) RULES OF CONSTRUCTION.—

4 ‘‘(1) EXTENT OF PARTICIPATION.—This section

5 may not be construed as requiring that a program6 registered provider administer a federally supplied

7 pediatric vaccine to each eligible child for whom an

8 immunization with the vaccine is sought from the

9 provider.

10 ‘‘(2) VERIFICATION OF INFORMATION.—

11 ‘‘(A) PROGRAM-REGISTERED PROVID12 ERS.—With respect to compliance with agree13 ments under subsections (b) and (c), such

14 agreements may not be construed as permitting

15 or requiring a program-registered provider to

16 verify independently the information provided to

17 the provider by a parent pursuant to such sub18 sections.

19 ‘‘(B) PARENTS OR GUARDIANS.—Nothing

20 in this section shall be construed as requiring a

21 child’s parent or guardian to provide proof of

22 the child’s family income or insurance status.

23 ‘‘(3) STATE UNIVERSAL VACCINE PROGRAM.—

24 In the case of a State which purchases sufficient

25 quantities of vaccines to provide all recommended
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•S 1134 PCS

1 pediatric vaccines to all children in the State, noth2 ing in this title shall be construed as requiring pro3 gram-registered providers to collect information, or

4 as requiring a child’s parent or guardian to provide

5 any information, with respect to whether a child is

6 an eligible child under this title.

7 ‘‘INTRASTATE DISTRIBUTION OF PEDIATRIC VACCINES

8 ‘‘SEC. 2104. (a) IN GENERAL.—Not later than 180

9 days after the date of the enactment of the Omnibus

10 Budget Reconciliation Act of 1993, the Secretary shall,

11 through publication in the Federal Register, establish cri12 teria for the delivery on behalf of the States of federally

13 supplied pediatric vaccines to program-registered provid14 ers in the State.

15 ‘‘(b) INVOLVEMENT OF CERTAIN PROVIDERS.—

16 ‘‘(1) IN GENERAL.—In establishing criteria

17 under subsection (a), the Secretary shall establish

18 criteria with respect to encouraging the entities de19 scribed in paragraph (2) to become program-reg20 istered providers.

21 ‘‘(2) RELEVANT PROVIDERS.—The entities re22 ferred to in paragraph (1) are—

23 ‘‘(A) private health care providers; and

24 ‘‘(B)(i) health care providers that receive

25 funds under title V of the Indian Health Care

26 Improvement Act;
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1 ‘‘(ii) the Indian Health Service; and

2 ‘‘(iii) health programs or facilities operated

3 by Indian tribes or tribal organizations.

4 ‘‘(c) CULTURAL CONTEXT OF SERVICES.—In estab5 lishing criteria under subsection (a), the Secretary shall

6 require that, in providing a federally supplied pediatric

7 vaccine to any population of eligible children a substantial

8 portion of whose parents have a limited ability to speak

9 the English language, a State have in effect a reasonable

10 plan to administer the vaccines through program-reg11 istered providers who are able to communicate with the

12 population involved in the language and cultural context

13 that is most appropriate.

14 ‘‘(d) COMPLIANCE BY STATES.—The Secretary may

15 provide for the purchase and delivery of pediatric vaccines

16 under section 2101 on behalf of a State only if the State

17 agrees to maintain compliance with the criteria established

18 under subsection (a).

19 ‘‘GENERAL PROVISIONS

20 ‘‘SEC. 2105. (a) FEDERAL STANDARDS ON ACCOUNT21 ABILITY.—

22 ‘‘(1) ESTABLISHMENT OF STANDARDS.—Not

23 later than 180 days after the date of the enactment

24 of the Omnibus Budget Reconciliation Act of 1993,

25 the Secretary shall, through publication in the Fed26 eral Register, establish standards with respect to de-
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1 termining the extent to which States and program2 registered providers are in compliance with the

3 agreements made under this title.

4 ‘‘(2) COMPLIANCE BY STATES.— The Secretary

5 may provide for the purchase and delivery of pedi6 atric vaccines under section 2101 on behalf of a

7 State only if the State agrees to maintain compli8 ance with the standards established under paragraph

9 (1).

10 ‘‘(b) STATE MAINTENANCE OF IMMUNIZATION

11 LAWS.—The Secretary may provide for the purchase and

12 delivery of vaccines under section 2101 on behalf of a

13 State only if the State certifies to the Secretary that, if

14 the State had in effect as of May 1, 1993, a law that re15 quires some or all health insurance policies or plans to

16 provide some coverage with respect to a pediatric vaccine,

17 the State has not modified or repealed such law in a man18 ner that reduces the amount of coverage so required.

19 ‘‘STATE OPTION REGARDING IMMUNIZATION OF

20 ADDITIONAL CATEGORIES OF CHILDREN

21 ‘‘SEC. 2106. (a) STATE PURCHASES.—Subject to

22 subsections (b) and (c), for the purpose of administering

23 a pediatric vaccine to children in addition to eligible chil24 dren, any participating State under section 2101 may,

25 pursuant to section 2108(a)(2), purchase the vaccine from
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1 a manufacturer of the vaccine at the price in effect under

2 section 2108.

3 ‘‘(b) REQUIREMENTS.—A State may purchase pedi4 atric vaccines pursuant to subsection (a) only if the follow5 ing conditions are met:

6 ‘‘(1) The State agrees that the vaccines will be

7 used to provide immunizations for children who are

8 not eligible children.

9 ‘‘(2) The State designates the particular cat10 egories of children who are to receive the immuniza11 tions, and submits to the Secretary a description of

12 the categories so designated.

13 ‘‘(3) The State provides to the Secretary, in ad14 vance of the negotiations under section 2108, infor15 mation relating to the specific quantities of pediatric

16 vaccines the State wishes to purchase and such other

17 information as the Secretary determines to be nec18 essary to provide for quantities of pediatric vaccines

19 for the State to purchase pursuant to section

20 2108(a)(4).

21 ‘‘(4) The State agrees, subject to subsection (c),

22 that the program established by the State pursuant

23 to section 2102(b)(3) applies to children designated

24 under paragraph (2) to the same extent and in the

25 same manner as the program applies to eligible chil-
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1 dren (except for the State being the purchaser of the

2 pediatric vaccines involved).

3 ‘‘(c) CERTAIN LIMITATIONS.—A State may purchase

4 pediatric vaccines pursuant to subsection (a) only if the

5 State agrees as follows:

6 ‘‘(1) The authorization established in such sub7 section with respect to a pediatric vaccine is subject

8 to the quantity of the vaccine that, on behalf of the

9 State, the Secretary provides for under section

10 2108(a)(2).

11 ‘‘(2) In any case in which multiple contracts are

12 in effect under section 2108 with respect to such a

13 vaccine and the State elects to purchase the vaccine

14 pursuant to subsection (a), the Secretary will deter15 mine which of such contracts will be applicable to

16 the purchase.

17 ‘‘(d) MONITORING BY THE SECRETARY.—The Sec18 retary shall study and report to the Congress annually

19 on—

20 ‘‘(1) the extent to which States elect to pur21 chase pediatric vaccines pursuant to subsection (a),

22 ‘‘(2) the impact of such purchases on the price

23 of the pediatric vaccines purchased by the Federal

24 Government under this title,
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1 ‘‘(3) the effectiveness and efficiency of permit2 ting States to purchase pediatric vaccines pursuant

3 to subsection (a), and

4 ‘‘(4) State procedures and mechanisms for

5 funding the purchase of pediatric vaccines pursuant

6 to subsection (a).

7 ‘‘STATE APPLICATION FOR VACCINES

8 ‘‘SEC. 2107. An application by a State for pediatric

9 vaccines under section 2101(a) is in accordance with this

10 section if the application—

11 ‘‘(1) is submitted not later than the date speci12 fied by the Secretary;

13 ‘‘(2) contains each agreement required in this

14 title (including the agreements required in section

15 2106, if the State is electing to purchase pediatric

16 vaccines pursuant to such section);

17 ‘‘(3) contains any information required in this

18 title to be submitted to the Secretary (including the

19 information required in section 2106, if the State is

20 electing to purchase pediatric vaccines pursuant to

21 such section);

22 ‘‘(4) contains the certification required in sub23 section (b) of section 2105 and, as applicable, the

24 certification required in subsection (c) of such sec25 tion; and
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1 ‘‘(5) is in such form, is made in such manner,

2 and contains such agreements, assurances, and in3 formation as the Secretary determines to be nec4 essary to carry out this title.

5 ‘‘CONTRACTS WITH MANUFACTURERS OF PEDIATRIC

6 VACCINES

7 ‘‘SEC. 2108. (a) IN GENERAL.—Subject to the provi8 sions of this section, the Secretary shall periodically enter

9 into negotiations with manufacturers of pediatric vaccines

10 included on the list promulgated by the Secretary pursu11 ant to section 1932 (hereafter referred to in this section

12 as ‘recommended pediatric vaccines’), or otherwise, for the

13 purpose of maintaining contracts under which—

14 ‘‘(1) the Secretary provides for the purchase of

15 quantities of pediatric vaccines necessary for carry16 ing out section 2101,

17 ‘‘(2) the Secretary provides for the delivery of

18 the vaccines to participating States in amounts nec19 essary for distribution under the Public Health Serv20 ice Act to meet anticipated needs for the routine and

21 catch-up immunization of children in the United

22 States in accordance with the recommendations pro23 mulgated under section 1932,

24 ‘‘(3) the Secretary takes into account minimum

25 waste due to breakage or other unavoidable losses,

26 and
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1 ‘‘(4) each participating State, at the option of

2 the State under section 2106, is permitted to obtain

3 additional quantities of pediatric vaccines (subject to

4 limits in such contracts regarding quantities)

5 through purchasing the vaccines from the manufac6 turers at the price negotiated by the Secretary for

7 the quantities specified in paragraph (1).

8 The Secretary shall enter into the initial negotiations

9 under the preceding sentence not later than 180 days after

10 the date of the enactment of the Omnibus Budget Rec11 onciliation Act of 1993.

12 ‘‘(b) NEGOTIATION OF PURCHASE PRICE.—

13 ‘‘(1) IN GENERAL.—In negotiating the prices at

14 which pediatric vaccines will be purchased from a

15 manufacturer under subsection (a), the Secretary

16 shall negotiate a price that provides a reasonable

17 profit for the manufacturer and that includes the ex18 cise tax under section 4131 of the Internal Revenue

19 Code of 1986 and the costs described in paragraph

20 (2).

21 ‘‘(2) CERTAIN FACTORS.—

22 ‘‘(A) In determining a reasonable profit for

23 a manufacturer under paragraph (1), the Sec24 retary shall consider the following factors:
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1 ‘‘(i) The costs of the manufacturer in

2 researching, developing, and producing the

3 pediatric vaccine involved.

4 ‘‘(ii) The costs of the manufacturer in

5 researching and developing new or im6 proved vaccines (pediatric or otherwise).

7 ‘‘(iii) The costs of shipping and han8 dling pediatric vaccines by a manufacturer

9 or a State in compliance with the agree10 ment under subsection (c).

11 ‘‘(iv) The cost of maintaining ade12 quate capacity for disease outbreak con13 trol.

14 ‘‘(v) Such other factors as the Sec15 retary determines to be appropriate as set

16 forth in regulations issued by the Sec17 retary.

18 ‘‘(B) With respect to factors considered

19 under subparagraph (A), the Secretary may

20 enter into a contract under subsection (a) only

21 if the manufacturer involved provides to the

22 Secretary such information regarding the fac23 tors as the Secretary determines to be appro24 priate as set forth in regulations issued by the

25 Secretary.
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1 ‘‘(3) CONFIDENTIALITY.—With respect to infor2 mation provided to the Secretary by a manufacturer

3 under paragraph (2), the following applies:

4 ‘‘(A) The Secretary shall maintain the con5 fidentiality of the information, with provision

6 for reasonable disclosures.

7 ‘‘(B) For purposes of section 552(b)(4) of

8 title 5, United States Code, the information

9 shall be considered to be trade secrets and com10 mercial or financial information obtained from

11 a person and privileged or confidential.

12 ‘‘(C) Section 1905 of title 18, United

13 States Code, applies to information maintained

14 confidentially under subparagraph (A).

15 ‘‘(c) CHARGES FOR SHIPPING AND HANDLING.—The

16 Secretary may enter into a contract under subsection (a)

17 only—

18 ‘‘(1) if the manufacturer involved agrees that

19 the manufacturer will provide for delivering the vac20 cines on behalf of the States in accordance with the

21 programs established by the States pursuant section

22 2102(b)(3) and agrees not to impose any charges for

23 the costs of such delivery (except to the extent such

24 costs are provided for in the price negotiated under

25 subsection (b)), or
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1 ‘‘(2) for a State that distributes vaccines, if the

2 State will not impose any charges for the costs of

3 such delivery (except to the extent such costs are

4 provided for in the price negotiated under subsection

5 (b)).

6 ‘‘(d) CONSULTATIONS.—

7 ‘‘(1) PREPROCUREMENT CONSULTATIONS.—The

8 Secretary may consult with representatives of State

9 governments, experts in vaccine delivery, health care

10 providers, and others with expertise in purchasing

11 and pricing pharmaceutical products prior to solicit12 ing bids or offers for recommended pediatric vac13 cines under this section. Health care providers shall

14 also furnish periodic estimates to the States of the

15 providers’ future dosage needs for recommended pe16 diatric vaccines distributed under the Public Health

17 Service Act. States receiving Federal grants for im18 munization registries shall report such data to the

19 Secretary. All reports shall be made with such fre20 quency and in such detail as the Secretary may pre21 scribe.

22 ‘‘(2) CONSULTATIONS WITH FEDERAL AGEN23 CIES.—The Secretary shall, in order to determine

24 the appropriate vaccines and amounts of vaccines to

25 be purchased under subsection (a), consult with
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1 Federal agencies involved in research regarding, or

2 the regulation, procurement, or distribution of, rec3 ommended pediatric vaccines. Such consultation may

4 be effected through the establishment of a Vaccine

5 Requirements Panel to be composed entirely of rep6 resentatives of the relevant Federal agencies, or

7 through such other means as the Secretary deter8 mines appropriate.

9 ‘‘(e) NEGOTIATING AUTHORITY OF SECRETARY.—In

10 carrying out subsection (a), the Secretary, to the extent

11 determined by the Secretary to be appropriate, may enter

12 into contracts described in such subsection, may decline

13 to enter into such contracts, and with the consent of the

14 manufacturers involved, may modify such agreements and

15 may extend such agreements.

16 ‘‘(f) CERTAIN CONTRACT PROVISIONS.—

17 ‘‘(1) DURATION.—A contract entered into by

18 the Secretary under subsection (a) is effective for

19 such period as the Secretary and the manufacturer

20 involved may agree in the contract.

21 ‘‘(2) ADVANCE FUNDING.—The Secretary may,

22 pursuant to section 2102(a), enter into contracts

23 under subsection (a) under which the Federal Gov24 ernment is obligated to make outlays, the budget au-
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1 thority for which is not provided for in advance in

2 appropriations Acts.

3 ‘‘(g) REPORTS TO SECRETARY.—The Secretary may

4 enter into a contract under subsection (a) only if the man5 ufacturer involved agrees to submit to the Secretary such

6 reports as the Secretary determines to be appropriate with

7 respect to compliance with the contract. For purposes of

8 paragraph (3) of subsection (b), such reports shall be con9 sidered to be information provided by the manufacturer

10 to the Secretary under paragraph (2) of such subsection.

11 ‘‘(h) MULTIPLE SUPPLIERS.—

12 ‘‘(1) IN GENERAL.—In the case of the pediatric

13 vaccine involved, the Secretary shall, as appropriate,

14 enter into a contract under subsection (a) with each

15 manufacturer of the vaccine that meets the terms

16 and conditions of the Secretary for an award of such

17 a contract (including terms and conditions regarding

18 safety, quality, and price).

19 ‘‘(2) RULE OF CONSTRUCTION.—With respect

20 to multiple contracts entered into pursuant to para21 graph (1), such paragraph may not be construed as

22 prohibiting the Secretary from having in effect dif23 ferent prices under each of such contracts.

24 ‘‘CERTAIN ADMINISTRATIVE VARIATIONS

25 ‘‘SEC. 2109. (a) TRIBES AND TRIBAL ORGANIZA26 TIONS.—
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1 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

2 the Secretary shall provide for the purchase and de3 livery on behalf of each Indian tribe and each tribal

4 organization of such quantities of pediatric vaccines

5 as may be necessary for the immunization of each

6 Indian child in the State in which the tribe or orga7 nization (as the case may be) is located.

8 ‘‘(2) ADMINISTERING PROGRAM.—The Sec9 retary may provide for the purchase and delivery of

10 pediatric vaccines under paragraph (1) on behalf of

11 an Indian tribe or tribal organization only if the

12 tribe or organization (as the case may be) agrees

13 that this title applies to the tribe or organization (in

14 relation to Indian children) to the same extent and

15 in the manner as such title applies to States (in re16 lation to eligible children).

17 ‘‘(b) STATE AS MANUFACTURER.—

18 ‘‘(1) PAYMENTS IN LIEU OF VACCINES.—In the

19 case of a participating State under section 2101 that

20 manufactures a pediatric vaccine and is not receiv21 ing the vaccine under such section, if the Secretary

22 determines that the program of the State under

23 2102(b)(3) is carried out with respect to the vaccine,

24 the Secretary shall provide to the State an amount

25 equal to the value of the quantity of such vaccine
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1 that otherwise would have been delivered to the

2 State under section 2101, subject to the provisions

3 of this subsection.

4 ‘‘(2) DETERMINATION OF VALUE.—In deter5 mining the amount to pay a State under paragraph

6 (1) with respect to a pediatric vaccine, the value of

7 the quantity of vaccine shall be determined on the

8 basis of the price in effect for the vaccine under con9 tracts under section 2108. If more than 1 such con10 tract is in effect, the Secretary shall determine such

11 value on the basis of the average of the prices under

12 the contracts, after weighting each such price in re13 lation to the quantity of vaccine under the contract

14 involved.

15 ‘‘(3) USE OF PAYMENTS.—A State may expend

16 payments received under paragraph (1) only for pur17 poses relating to pediatric vaccines.

18 ‘‘CHILDHOOD IMMUNIZATION TRUST FUND

19 SEC. 2110. (a) ESTABLISHMENT OF FUND.—There

20 is established in the Treasury of the United States a fund

21 to be known as the National Childhood Immunization

22 Trust Fund (in this section referred to as the ‘Fund’),

23 consisting of such amounts as may be appropriated or

24 credited to the Fund as provided in this section.

25 ‘‘(b) TRANSFERS TO THE FUND.—
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1 ‘‘(1) IN GENERAL.—There is hereby appro2 priated to the Fund amounts equivalent to the

3 amount of any reductions in Federal expenditures

4 under title XIX resulting from the enactment of this

5 title and section 1903(x).

6 ‘‘(2) TRANSFERS BASED ON ESTIMATES.—The

7 amounts appropriated by paragraph (1) shall be

8 transferred at least monthly from the general fund

9 of the Treasury to the Fund on the basis of esti10 mates made by the Secretary of the Treasury of the

11 amounts referred to in such section. Proper adjust12 ments shall be made in the amounts subsequently

13 transferred to the extent prior estimates were in ex14 cess of or less than the amounts required to be

15 transferred.

16 ‘‘(c) EXPENDITURES FROM FUND.—

17 (1) IN GENERAL.—Amounts in the Fund are

18 available to the Secretary for the purpose of carry19 ing out this title. Amounts appropriated or credited

20 to the Fund shall remain available until expended.

21 ‘‘(2) BUDGET EFFECT.—Payments under the

22 program under this title, and the costs of carrying

23 out such program, shall be exempt from reduction

24 under any order issued under part C of the Bal-
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1 anced Budget and Emergency Deficit Control Act of

2 1985.

3 ‘‘(d) INVESTMENT.—

4 ‘‘(1) IN GENERAL.—The Secretary of the

5 Treasury shall invest such amounts of the Fund as

6 such Secretary determines are not required to meet

7 current withdrawals from the Fund. Such invest8 ments may be made only in interest-bearing obliga9 tions of the United States. For such purpose, such

10 obligations may be acquired on original issue at the

11 issue price, or by purchase of outstanding obliga12 tions at the market price.

13 ‘‘(2) SALE OF OBLIGATIONS.—Any obligation

14 acquired by the Fund may be sold by the Secretary

15 of the Treasury at the market price.

16 ‘‘(3) AVAILABILITY OF INCOME.—Any interest

17 derived from obligations acquired by the Fund, and

18 proceeds from any sale or redemption of such obliga19 tions, shall be credited to and form a part of the

20 Fund.

21 ‘‘DEFINITIONS

22 ‘‘SEC. 2111. For purposes of this title:

23 ‘‘(1) The term ‘eligible child’ has the meaning

24 given such term in section 2101(b).

25 ‘‘(2) The term ‘federally supplied’, with respect

26 to a pediatric vaccine, means that such vaccine is
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•S 1134 PCS

1 purchased and delivered on behalf of a State under

2 section 2101(a).

3 ‘‘(3) The term ‘health care provider’, with re4 spect to the administration of vaccines to children,

5 means an entity that is licensed or otherwise author6 ized for such administration under the law of the

7 State in which the entity administers the vaccine.

8 ‘‘(4) The term ‘immunization’ means an immu9 nization against a vaccine-preventable disease.

10 ‘‘(5) Each of the terms ‘Indian’, ‘Indian tribe’,

11 and ‘tribal organization’ has the meaning given such

12 term in section 4 of the Indian Health Care Im13 provement Act.

14 ‘‘(6) The term ‘Indian child’ means an Indian

15 who is 18 years of age or younger.

16 ‘‘(7) The term ‘manufacturer’ means any cor17 poration, organization, or institution, whether public

18 or private (including Federal, State, and local de19 partments, agencies, and instrumentalities), which

20 manufactures, imports, processes, or distributes

21 under its label any pediatric vaccine. The term

22 ‘manufacture’ means to manufacture, import, proc23 ess, or distribute a vaccine.

24 ‘‘(8) The term ‘parent’, with respect to a child,

25 means a legal guardian of the child.
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1 ‘‘(9) The term ‘participating State under sec2 tion 2101’ means a State that has submitted to the

3 Secretary an application in accordance with section

4 2107.

5 ‘‘(10) The term ‘pediatric vaccine’ means a vac6 cine included on the list established under section

7 1932.

8 ‘‘(11) The term ‘program-registered provider’

9 has the meaning given such term in 2103(a)(2).

10 ‘‘TERMINATION OF PROGRAM

11 ‘‘SEC. 2112. (a) IN GENERAL.—This title shall cease

12 to be in effect beginning on such date as may be pre13 scribed in Federal law providing for immunization services

14 for all children as part of a broad-based reform of the na15 tional health care system.’’.

16 (b) NATIONAL IMMUNIZATION TRACKING SYSTEM.—

17 On such date as section 2101 of the Social Security Act

18 (as added by subsection (a)) shall cease to be in effect

19 as provided in subsection (a), the Secretary of Health and

20 Human Services shall implement a program to ensure par21 ticipation of all health care providers in a national immu22 nization tracking system.

23 (c) CONTINUED COVERAGE OF COSTS OF A PEDI24 ATRIC VACCINE UNDER GROUP HEALTH PLANS.—

25 (1) REQUIREMENT.—The requirement of this

26 paragraph, with respect to a group health plan for
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1 plan years beginning after the date of the enactment

2 of this Act, is that the group health plan not reduce

3 its coverage of the costs of pediatric vaccines (as de4 fined under section 2111 of the Social Security Act)

5 below the coverage it provided as of May 1, 1993.

6 (2) ENFORCEMENT.—For purposes of sub7 sections (a) through (e) of section 4980B of the In8 ternal Revenue Code of 1986, paragraph (1) is

9 deemed a requirement of subsection (f) of such sec10 tion.

11 (d) STATE CONTRIBUTION TO COST OF IMMUNIZA12 TIONS.—

13 (1) OFFSET OF MEDICAID MATCHING.—Section

14 1903 (42 U.S.C. 1396b) is amended by adding at

15 the end the following new subsection:

16 ‘‘(x) STATE CONTRIBUTION TO COST OF IMMUNIZA17 TIONS.—

18 ‘‘(1) MATCHING REDUCTION REQUIRED.—The

19 amount determined under subsection (a)(1) for any

20 State participating in the central bulk purchasing

21 program for pediatric vaccines under title XXI for

22 any quarter shall be reduced by an amount equal

23 to—

24 ‘‘(A) 25 percent of the product of the

25 State’s base year vaccine expenditures (as de-
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1 fined in paragraph (2)) and the cost-of-living

2 adjustment (as determined under paragraph

3 (4)) for the calendar year in which the quarter

4 ends, less

5 ‘‘(B) the State’s additional compliance

6 costs (as defined in paragraph (3)) for the

7 quarter.

8 ‘‘(2) BASE YEAR VACCINE EXPENDITURES.—

9 ‘‘(A) IN GENERAL.—For purposes of this

10 subsection, the term ‘base year vaccine expendi11 tures’ for any State means an amount equal

12 to—

13 ‘‘(i) the State’s expenditures for pedi14 atric vaccines during the State’s fiscal year

15 1993, as determined by the Secretary in

16 accordance with the methodology estab17 lished under subparagraph (5), less

18 ‘‘(ii) the Federal payments made to

19 the State under subsection (a)(1) with re20 spect to the State expenditures referred to

21 in clause (i).

22 ‘‘(3) ADDITIONAL COMPLIANCE COSTS.—

23 ‘‘(A) IN GENERAL.—For purposes of this

24 subsection, the term ‘additional compliance
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1 costs’ for any State for any quarter means the

2 amount by which—

3 ‘‘(i)(I) the State’s expenditures for the

4 administration of pediatric vaccines for the

5 quarter, less

6 ‘‘(II) the Federal payments to be

7 made to the State under subsection (a)(1)

8 with respect to the State expenditures re9 ferred to in subclause (I), exceeds

10 ‘‘(ii) 25 percent of the product of the

11 State’s base year administration expendi12 tures (as defined in subparagraph (B)) and

13 the cost-of-living adjustment (as deter14 mined under paragraph (4)) for the cal15 endar year in which the quarter ends.

16 ‘‘(B) BASE YEAR VACCINE ADMINISTRA17 TION EXPENDITURES.—For purposes of this

18 subsection, the term ‘base year administration

19 expenditures’ for any State means an amount

20 equal to—

21 ‘‘(i) the State’s expenditures for the

22 administration of pediatric vaccines during

23 the State’s fiscal year 1993, as determined

24 by the Secretary in accordance with the
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1 methodology established under paragraph

2 (5), less

3 ‘‘(ii) the Federal payments made to

4 the State under subsection (a)(1) with re5 spect to the State expenditures referred to

6 in clause (i).

7 ‘‘(4) COST-OF-LIVING-ADJUSTMENT.—

8 ‘‘(A) IN GENERAL.—For purposes of this

9 subsection, the cost-of-living adjustment for any

10 calendar year is the percentage (if any) by

11 which—

12 ‘‘(i) the MCPI for the preceding cal13 endar year, exceeds

14 ‘‘(ii) the MCPI for calendar year

15 1992.

16 ‘‘(B) MCPI FOR ANY CALENDAR YEAR.—

17 For purposes of subparagraph (A), the MCPI

18 for any calendar year is the average of the med19 ical care expenditures category of the Consumer

20 Price Index for all urban consumers (U.S. city

21 average) published by the Department of Labor

22 as of the close of the 12-month period ending

23 on August 31 of such calendar year.

24 ‘‘(5) METHODOLOGY.—
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1 ‘‘(A) IN GENERAL.—The Secretary shall

2 establish by regulation a methodology to esti3 mate the State’s expenditures during the

4 State’s fiscal year 1993—

5 ‘‘(i) for pediatric vaccines under the

6 State plan under this title; and

7 ‘‘(ii) for the administration of pedi8 atric vaccines under the State plan under

9 this title.

10 ‘‘(B) ELEMENTS OF METHODOLOGY.—The

11 methodology established under subparagraph

12 (A)—

13 ‘‘(i) need not be based on actual costs

14 per child;

15 ‘‘(ii) may include assumptions or esti16 mates, based on the most reliable informa17 tion generally available to the Secretary, as

18 to the proportions of children immunized

19 in clinics and by providers in private prac20 tice, vaccine costs per child immunized in

21 each type of setting, and other factors; and

22 ‘‘(iii) shall provide for appropriate ad23 justment of the estimate where the State

24 demonstrates to the Secretary’s satisfac25 tion that its actual expenditures for pedi-
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1 atric vaccines and the administration of

2 such vaccines during the State’s fiscal year

3 1993 were lower than expenditures esti4 mated by the Secretary.

5 ‘‘(6) TRANSFER TO IMMUNIZATION TRUST

6 FUND.—

7 ‘‘(A) IN GENERAL.—For each calendar

8 quarter beginning on or after October 1, 1995,

9 the Secretary shall transfer to the National

10 Childhood Immunization Trust Fund estab11 lished under section 2110 an amount equal to

12 the sum of—

13 ‘‘(i) the total reductions in Federal

14 matching payments to all States pursuant

15 to paragraph (1), and

16 ‘‘(ii) the amount equal to the sum of

17 the Federal share of State expenditures for

18 all States (as defined in subparagraph

19 (B)).

20 ‘‘(B) FEDERAL SHARE OF STATE EXPEND21 ITURES.—For purposes of this paragraph, the

22 term ‘Federal share of State expenditures’, with

23 respect to a State, means an amount equal to

24 the product of—
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1 ‘‘(i) the Federal medical assistance

2 percentage for the State, and

3 ‘‘(ii) the amount specified in para4 graph (1)(A) for the State.’’.

5 (2) EFFECTIVE DATE.—The amendments made

6 by paragraph (1) shall be effective for calendar

7 quarters beginning on or after October 1, 1994.

8 PART III—DISCLOSURE PROVISIONS

9 SEC. 7901. DISCLOSURE OF RETURN INFORMATION FOR AD10 MINISTRATION OF CERTAIN VETERANS PRO11 GRAMS.

12 (a) GENERAL RULE.—Subparagraph (D) of section

13 6103(l)(7) of the Internal Revenue Code of 1986 (relating

14 to disclosure of return information to Federal, State, and

15 local agencies administering certain programs) is amended

16 by striking ‘‘September 30, 1997’’ in the second sentence

17 following clause (viii) and inserting ‘‘September 30,

18 1998’’.

19 (b) AUTHORITY FOR SECRETARY OF VETERANS AF20 FAIRS TO OBTAIN INFORMATION.—Section 5317(g) of

21 title 38, United States Code, is amended by striking out

22 ‘‘September 30, 1997’’ and inserting ‘‘September 30,

23 1998’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect on the date of the enactment

3 of this Act.

4 SEC. 7902. DISCLOSURE OF RETURN INFORMATION TO

5 CARRY OUT INCOME CONTINGENT REPAY6 MENT OF STUDENT LOANS.

7 (a) GENERAL RULE.—Subsection (l) of section 6103

8 of the Internal Revenue Code of 1986 (relating to con9 fidentiality and disclosure of returns and return informa10 tion) is amended by adding at the end thereof the follow11 ing new paragraph:

12 ‘‘(13) DISCLOSURE OF RETURN INFORMATION

13 TO CARRY OUT INCOME CONTINGENT REPAYMENT

14 OF STUDENT LOANS.—

15 ‘‘(A) IN GENERAL.—The Secretary may,

16 upon written request from the Secretary of

17 Education, disclose to officers and employees of

18 the Department of Education return informa19 tion with respect to a taxpayer who has received

20 an applicable student loan and whose loan re21 payment amounts are based in whole or in part

22 on the taxpayer’s income. Such return informa23 tion shall be limited to—

24 ‘‘(i) taxpayer identity information

25 with respect to such taxpayer,
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1 ‘‘(ii) the filing status of such tax2 payer, and

3 ‘‘(iii) the adjusted gross income of

4 such taxpayer.

5 ‘‘(B) RESTRICTION ON USE OF DISCLOSED

6 INFORMATION.—Return information disclosed

7 under subparagraph (A) may be used by offi8 cers and employees of the Department of Edu9 cation only for the purposes of, and to the ex10 tent necessary in, establishing the appropriate

11 income contingent repayment amount for an

12 applicable student loan.

13 ‘‘(C) APPLICABLE STUDENT LOAN.—For

14 purposes of this paragraph, the term ‘applicable

15 student loan’ means—

16 ‘‘(i) any loan made under the program

17 authorized under part D of title IV of the

18 Higher Education Act of 1965, and

19 ‘‘(ii) any loan made under part B or

20 E of title IV of the Higher Education Act

21 of 1965 which is in default and has been

22 assigned to the Department of Education.

23 ‘‘(D) TERMINATION.—This paragraph

24 shall not apply to any request made after Sep25 tember 30, 1998.’’
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1 (b) CONFORMING AMENDMENTS.—

2 (1) So much of paragraph (4) of section

3 6103(m) of such Code as precedes subparagraph (B)

4 thereof is amended to read as follows:

5 ‘‘(4) INDIVIDUALS WHO OWE AN OVERPAYMENT

6 OF FEDERAL PELL GRANTS OR WHO HAVE DE7 FAULTED ON STUDENT LOANS ADMINISTERED BY

8 THE DEPARTMENT OF EDUCATION.—

9 ‘‘(A) IN GENERAL.—Upon written request

10 by the Secretary of Education, the Secretary

11 may disclose the mailing address of any tax12 payer—

13 ‘‘(i) who owes an overpayment of a

14 grant awarded to such taxpayer under sub15 part 1 of part A of title IV of the Higher

16 Education Act of 1965, or

17 ‘‘(ii) who has defaulted on a loan—

18 ‘‘(I) made under part B, D, or E

19 of title IV of the Higher Education

20 Act of 1965, or

21 ‘‘(II) made pursuant to section

22 3(a)(1) of the Migration and Refugee

23 Assistance Act of 1962 to a student

24 at an institution of higher education,
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1 for use only by officers, employees, or agents of

2 the Department of Education for purposes of

3 locating such taxpayer for purposes of collecting

4 such overpayment or loan .’’

5 (2) Subparagraph (B) of section 6103(m)(4) of

6 such Code is amended—

7 (A) in clause (i), by striking ‘‘under part

8 B’’ and inserting ‘‘under part B or D’’; and

9 (B) in clause (ii), by striking ‘‘under part

10 E’’ and inserting ‘‘under subpart 1 of part A,

11 or part D or E,’’;

12 (3) Section 6103(p) of such Code is amended—

13 (A) in paragraph (3)(A), by striking ‘‘(11),

14 or (12), (m)’’ and inserting ‘‘(11), (12), or

15 (13), (m)’’;

16 (B) in paragraph (4)—

17 (i) in the matter preceding subpara18 graph (A), by striking out ‘‘(10), or (11),’’

19 and inserting ‘‘(10), (11), or (13),’’, and

20 (ii) in subparagraph (F)(ii), by strik21 ing ‘‘(11), or (12),’’ and inserting ‘‘(11),

22 (12), or (13),’’.

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

24 this section shall take effect on the date of the enactment

25 of this Act.
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1 SEC. 7903. USE OF RETURN INFORMATION FOR INCOME

2 VERIFICATION UNDER CERTAIN HOUSING AS3 SISTANCE PROGRAMS.

4 (a) IN GENERAL.—Subparagraph (D) of section

5 6103(l)(7) of the Internal Revenue Code of 1986 (relating

6 to the disclosure of return information to Federal, State,

7 and local agencies administering certain programs) is

8 amended—

9 (1) in clause (vii), by striking ‘‘and’’ at the end;

10 (2) in clause (viii), by striking the period at the

11 end and inserting ‘‘; and’’;

12 (3) by inserting after clause (viii) the following

13 new clause:

14 ‘‘(ix) any housing assistance program adminis15 tered by the Department of Housing and Urban De16 velopment that involves initial and periodic review of

17 an applicant’s or participant’s income, except that

18 return information may be disclosed under this

19 clause only on written request by the Secretary of

20 Housing and Urban Development and only for use

21 by officers and employees of the Department of

22 Housing and Urban Development with respect to ap23 plicants for and participants in such programs.’’;

24 and
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1 (4) by adding at the end thereof the following:

2 ‘‘Clause (ix) shall not apply after September 30,

3 1998.’’

4 (b) CONFORMING AMENDMENT.—The heading of

5 paragraph (7) of section 6103(l) of such Code is amended

6 by inserting after ‘‘CODE’’ the following: ‘‘, OR CERTAIN

7 HOUSING ASSISTANCE PROGRAMS’’.

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

9 this section shall take effect on the date of the enactment

10 of this Act.

11 SEC. 7904. USE OF RETURN INFORMATION FOR HEALTH

12 COVERAGE CLEARINGHOUSE.

13 (a) ESTABLISHMENT OF HEALTH COVERAGE CLEAR14 INGHOUSE.—Part A of title XI (42 U.S.C. 1301 et seq.)

15 is amended by adding at the end the following new section:

16 ‘‘THIRD PARTY LIABILITY CLEARINGHOUSE

17 ‘‘SEC. 1144. (a) ESTABLISHMENT OF CLEARING18 HOUSE.—

19 ‘‘(1) IN GENERAL.—The Secretary shall estab20 lish and operate a Third Party Liability Clearing21 house (hereafter in this section referred to as the

22 ‘Clearinghouse’) for the purpose of identifying third

23 parties responsible for payment for health care items

24 and services furnished to beneficiaries of the medi25 care program under title XVIII and the medicaid

26 program under title XIX.
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1 ‘‘(2) DIRECTOR.—The Clearinghouse estab2 lished pursuant to paragraph (1) shall be headed by

3 a Director.

4 ‘‘(b) DATA BANK.—

5 ‘‘(1) MAINTENANCE OF INFORMATION.—The

6 Clearinghouse shall maintain a data bank containing

7 information obtained pursuant to section

8 6103(l)(12) of the Internal Revenue Code of 1986.

9 Information in the data bank shall be retained for

10 not less than 1 year after the date the information

11 was obtained.

12 ‘‘(2) DISCLOSURE OF INFORMATION IN DATA

13 BANK.—The Director is authorized (subject to the

14 restriction in section 6103(l)(12)(E)(i) of the Inter15 nal Revenue Code of 1986) to disclose any informa16 tion in the data bank established pursuant to para17 graph (1) to the Commissioner of Social Security,

18 the Secretary of the Treasury, employers, group

19 health plans, the administrator of the medicare pro20 gram under title XVIII, and the administrators of

21 the medicaid program under title XIX, to the extent

22 necessary to assist the administration of such pro23 grams.

24 ‘‘(c) REQUIREMENT THAT EMPLOYERS FURNISH IN25 FORMATION.—
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1 ‘‘(1) IN GENERAL.—An employer shall furnish

2 to the Director the information requested pursuant

3 to section 6103(l)(12)(C)(i) of the Internal Revenue

4 Code of 1986 within 60 days after receipt of such

5 a request.

6 ‘‘(2) CIVIL MONEY PENALTY FOR FAILURE TO

7 COOPERATE.—An employer (other than a Federal or

8 other governmental entity) who willfully or repeat9 edly fails to provide a timely and accurate response

10 to a request for information pursuant to paragraph

11 (1) shall be subject, in addition to any other pen12 alties that may be prescribed by law, to a civil

13 money penalty of not to exceed $1,000 for each indi14 vidual or individual’s spouse with respect to which

15 such a request is made. The provisions of section

16 1128A (other than subsections (a) and (b)) shall

17 apply to such civil money penalty in the same man18 ner as such provisions apply to penalties or proceed19 ings under section 1128A(a).

20 ‘‘(d) COLLECTIONS FROM THIRD PARTIES.—The Di21 rector is authorized, upon request by the administrator of

22 the medicare program under title XVIII or any adminis23 trator of the medicaid program under title XIX, to assist

24 in the collection of amounts due from liable third parties
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1 to reimburse costs incurred by such program for health

2 care items and services.

3 ‘‘(e) FEES FOR CLEARINGHOUSE SERVICES.—The

4 Director shall establish fees for services provided under

5 section 6103(l)(12)(C)(ii) of the Internal Revenue Code

6 of 1986 and subsection (d) which are designed to cover

7 the full costs to the Clearinghouse of providing such serv8 ices. Clearinghouse services under such section and sub9 section shall be available subject to payment of such fees.

10 ‘‘(f) EVALUATION RESPONSIBILITIES.—The Director

11 shall evaluate methods for improving—

12 ‘‘(1) procedures for the collection, management,

13 and appropriate disclosure of health care coverage

14 information, and

15 ‘‘(2) Federal laws and policies concerning third

16 party liability for medical care.

17 ‘‘(g) DEFINITIONS.—For purposes of this section, the

18 term ‘group health plan’ has the meaning given to such

19 term in section 6103(l)(12)(G) of the Internal Revenue

20 Code of 1986.’’.

21 (b) DISCLOSURE OF TAX RETURN INFORMATION.—

22 (1) IN GENERAL.—Paragraph (12) of section

23 6103(l) of the Internal Revenue Code of 1986, as

24 amended by section 7303, is amended to read as fol25 lows:
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1 ‘‘(12) DISCLOSURE OF CERTAIN TAXPAYER RE2 TURN INFORMATION FOR PURPOSES OF IDENTIFY3 ING HEALTH INSURANCE COVERAGE OF CERTAIN IN4 DIVIDUALS AND SPOUSES.—

5 ‘‘(A) RETURN INFORMATION FROM INTER6 NAL REVENUE SERVICE.—The Secretary shall,

7 upon written request from the Commissioner of

8 Social Security (referred to in this subpara9 graph as the ‘Commissioner’), disclose to the

10 Commissioner available filing status and tax11 payer identity information from the individual

12 master files of the Internal Revenue Service re13 lating to whether any individual identified by

14 the Commissioner was a married individual (as

15 defined in section 7703) for any specified year

16 after 1986, and, if so, the name of the spouse

17 of such individual and such spouse’s TIN.

18 ‘‘(B) RETURN INFORMATION FROM SOCIAL

19 SECURITY ADMINISTRATION.—The Commis20 sioner shall, upon written request from the Di21 rector of the Third Party Liability Clearing22 house (referred to in this subparagraph as the

23 ‘Director’), disclose to the Director the follow24 ing information with respect to the individuals,
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1 and the spouses of such individuals, specified in

2 subparagraph (A):

3 ‘‘(i) For each such individual who is

4 identified as having received wages (as de5 fined in section 3401(a)) above an amount

6 (if any) specified by the Secretary of

7 Health and Human Services from an em8 ployer in a previous year—

9 ‘‘(I) the name and TIN of the in10 dividual,

11 ‘‘(II) the name, address, and

12 TIN of the employer, and

13 ‘‘(III) the information reported

14 under section 6051(a)(10).

15 ‘‘(ii) For each individual who was

16 identified as married under subparagraph

17 (A) and whose spouse is identified as hav18 ing received wages above an amount (if

19 any) specified by the Secretary of Health

20 and Human Services from an employer in

21 a previous year—

22 ‘‘(I) the name and TIN of the in23 dividual,

24 ‘‘(II) the name and TIN of the

25 spouse,
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1 ‘‘(III) the name, address, and

2 TIN of the spouse’s employer, and

3 ‘‘(IV) the information reported

4 under section 6051(a)(10) with re5 spect to the spouse.

6 ‘‘(C) DISCLOSURE BY THIRD PARTY LI7 ABILITY CLEARINGHOUSE.—The Director may

8 (subject to the provisions of subparagraph (E))

9 disclose—

10 ‘‘(i) with respect to the information

11 disclosed under subparagraph (B), to the

12 employer referred to in such subparagraph

13 the name and TIN of each individual iden14 tified under such subparagraph as having

15 received wages from the employer (here16 after referred to in this subparagraph as

17 the ‘employee’) for purposes of determining

18 during what period such employee or the

19 employee’s spouse may be (or have been)

20 covered under a group health plan of the

21 employer and what benefits are or were

22 covered under the plan (including the

23 name, address, and identifying number of

24 the plan),
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1 ‘‘(ii) to the administrator of the medi2 care program under title XVIII of the So3 cial Security Act or to any administrator

4 of the medicaid program under title XIX

5 of such Act the information disclosed

6 under subparagraph (B) and clause (i) for

7 purposes of providing information concern8 ing employment and group health coverage

9 of individuals and individual’s spouses who

10 are program beneficiaries,

11 ‘‘(iii) to any agent of such Director

12 the information referred to in subpara13 graph (B) for purposes of carrying out

14 clauses (i) and (ii) on behalf of such Direc15 tor, and

16 ‘‘(iv) to any person specified in sub17 section (b)(2) of section 1144 of the Social

18 Security Act, information in the data bank

19 established pursuant to subsection (b)(1)

20 of such section, for the purposes specified

21 in such subsection.

22 ‘‘(D) DISCLOSURE BY CERTAIN PROGRAMS

23 TO GROUP HEALTH PLANS.—The administrator

24 of the medicare program under title XVIII of

25 the Social Security Act or any administrator of
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1 the medicaid program under title XIX of such

2 Act may (subject to the provisions of subpara3 graph (E)) disclose information concerning an

4 employee or spouse disclosed to the Director

5 pursuant to subparagraph (B) and redisclosed

6 to such administrator pursuant to subpara7 graph (C)—

8 ‘‘(i) to any group health plan which

9 provides or provided coverage to such em10 ployee or spouse, and

11 ‘‘(ii) to any agent of such adminis12 trator,

13 for purposes of identifying, or collecting on

14 claims under coverage of such employee or

15 spouse under such group health plan.

16 ‘‘(E) SPECIAL RULES.—

17 ‘‘(i) RESTRICTIONS ON DISCLO18 SURE.—Information may be disclosed

19 under subparagraphs (A) through (D) only

20 for purposes of, and to the extent nec21 essary in, determining the extent to which

22 any individual is covered under any group

23 health plan.

24 ‘‘(ii) TIMELY RESPONSE TO RE25 QUESTS.—Any request made under sub-
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1 paragraph (A) or (B) shall be complied

2 with as soon as possible but in no event

3 later than 120 days after the date the re4 quest was made.

5 ‘‘(F) DISCLOSURE CONCERNING ENFORCE6 MENT ACTIVITIES.—The Secretary shall, upon

7 written request from the Secretary of Health

8 and Human Services, disclose to the Secretary

9 of Health and Human Services the status of

10 any activities undertaken (with respect to per11 sons specified by the Secretary of Health and

12 Human Services) to enforce the requirements of

13 section 5000.

14 ‘‘(G) DEFINITIONS.—For purposes of this

15 paragraph, the term ‘group health plan’ means

16 any group health plan (as defined in section

17 5000(b)).’’.

18 (2) REPORTING OF GROUP HEALTH PLAN IN19 FORMATION.—Section 6051(a) of the Internal Reve20 nue Code of 1986 is amended—

21 (A) by striking ‘‘and’’ at the end of para22 graph (8),

23 (B) by striking the period at the end of

24 paragraph (9) and inserting ‘‘, and’’, and
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1 (C) by inserting after paragraph (9) the

2 following new paragraph:

3 ‘‘(10) whether a group health plan (as defined

4 in section 6103(l)(12)(G)) is available to the em5 ployee and the plan coverage (single or family) elect6 ed by such employee (if any).’’.

7 (c) CONFORMING AMENDMENT.—Section 1862(b)(5)

8 (42 U.S.C. 1395y(b)(5)), as amended by section 7303, is

9 amended to read as follows:

10 ‘‘(5) IDENTIFICATION OF SECONDARY PAYER

11 SITUATIONS.—In addition to any other information

12 provided under this title to fiscal intermediaries and

13 carriers, the Administrator shall disclose to such

14 intermediaries and carriers (or to such a single

15 intermediary or carrier as the Secretary may des16 ignate) the information received under section

17 6103(l)(12)(C)(ii) of the Internal Revenue Code of

18 1986.’’.

19 (d) EXCEPTION FROM PRIVACY ACT REQUIRE20 MENTS.—Subsection (a)(8)(B) of section 552a of title 5,

21 United States Code, is amended—

22 (1) in clause (v), by striking ‘‘; or’’ at the end;

23 (2) in clause (vi), by striking the semicolon at

24 the end and inserting ‘‘; or’’; and
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1 (3) by adding at the end the following new

2 clause:

3 ‘‘(vii) matches performed pursuant to

4 section 6103(l)(12) of the Internal Reve5 nue Code of 1986 and section 1144 of the

6 Social Security Act for the purpose of

7 identifying third parties responsible for

8 payment for health care items and services

9 furnished to beneficiaries of certain Fed10 eral and federally assisted programs;’’.

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

12 this section shall take effect on April 1, 1995.

13 PART IV—OTHER PROVISIONS

14 SEC. 7950. DISALLOWANCE OF INTEREST ON CERTAIN

15 OVERPAYMENTS OF TAX.

16 (a) GENERAL RULE.—Subsection (e) of section 6611

17 of the Internal Revenue Code of 1986 (relating to income

18 tax refund within 45 days after return is filed) is amended

19 to read as follows:

20 ‘‘(e) DISALLOWANCE OF INTEREST ON CERTAIN

21 OVERPAYMENTS.—

22 ‘‘(1) REFUNDS WITHIN 45 DAYS AFTER RETURN

23 IS FILED.—If any overpayment of tax imposed by

24 this title is refunded within 45 days after the last

25 day prescribed for filing the return of such tax (de-
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1 termined without regard to any extension of time for

2 filing the return) or, in the case of a return filed

3 after such last date, is refunded within 45 days after

4 the date the return is filed, no interest shall be al5 lowed under subsection (a) on such overpayment.

6 ‘‘(2) REFUNDS AFTER CLAIM FOR CREDIT OR

7 REFUND.—If—

8 ‘‘(A) the taxpayer files a claim for a credit

9 or refund for any overpayment of tax imposed

10 by this title, and

11 ‘‘(B) such overpayment is refunded within

12 45 days after such claim is filed,

13 no interest shall be allowed on such overpayment

14 from the date the claim is filed until the day the re15 fund is made.

16 ‘‘(3) IRS INITIATED ADJUSTMENTS.—If an ad17 justment initiated by the Secretary, results in a re18 fund or credit of an overpayment, interest on such

19 overpayment shall be computed by subtracting 45

20 days from the number of days interest would other21 wise be allowed with respect to such overpayment.’’

22 (b) EFFECTIVE DATES.—

23 (1) Paragraph (1) of section 6611(e) of the In24 ternal Revenue Code of 1986 (as amended by sub25 section (a)) shall apply in the case of returns the
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1 due date for which (determined without regard to

2 extensions) is on or after January 1, 1994.

3 (2) Paragraph (2) of section 6611(e) of such

4 Code (as so amended) shall apply in the case of

5 claims for credit or refund of any overpayment filed

6 on or after January 1, 1995, regardless of the tax7 able period to which such refund relates.

8 (3) Paragraph (3) of section 6611(e) of such

9 Code (as so amended) shall apply in the case of any

10 refund paid on or after January 1, 1995, regardless

11 of the taxable period to which such refund relates.

12 SEC. 7951. FEES FOR APPLICATIONS FOR ALCOHOL LABEL13 ING AND FORMULA REVIEWS.

14 (a) IN GENERAL.—The Secretary of the Treasury or

15 his delegate (hereinafter in this section referred to as the

16 ‘Secretary’) shall establish a program requiring the pay17 ment of user fees for—

18 (1) requests for each certificate of alcohol label

19 approval required under the Federal Alcohol Admin20 istration Act (27 U.S.C. 201 et seq.) and for each

21 request for exemption from such requirement, and

22 (2) requests for each formula review, and re23 quests for each statement of process (including lab24 oratory tests and analyses), under such Act or under

25 chapter 51 of the Internal Revenue Code of 1986.
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1 (b) PROGRAM CRITERIA.—

2 (1) IN GENERAL.—The fees charged under the

3 program required by subsection (a) shall be deter4 mined such that the Secretary estimates that the ag5 gregate of such fees received during any fiscal year

6 will be $5,000,000.

7 (2) MINIMUM FEES.—The fee charged under

8 the program required by subsection (a) shall not be

9 less than—

10 (A) $50 for each request referred to in

11 subsection (a)(1), and

12 (B) $250 for each request referred to in

13 subsection (a)(2).

14 (c) APPLICATION OF SECTION.—Subsection (a) shall

15 apply to requests made on or after the 90th day after the

16 date of the enactment of this Act.

17 (d) DEPOSIT AND CREDIT AS OFFSETTING RE18 CEIPTS.—The amounts collected by the Secretary under

19 the program required by subsection (a) (to the extent such

20 amounts do not exceed $5,000,000) shall be deposited into

21 the Treasury as offsetting receipts and ascribed to the al22 cohol compliance program of the Bureau of Alcohol, To23 bacco, and Firearms.
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1 SEC. 7952. USE OF HARBOR MAINTENANCE TRUST FUND

2 AMOUNTS FOR ADMINISTRATIVE EXPENSES.

3 (a) IN GENERAL.—Paragraph (3) of section 9505(c)

4 of the Internal Revenue Code of 1986 (relating to expendi5 tures from Harbor Maintenance Trust Fund) is amended

6 to read as follows:

7 ‘‘(3) for the payment of all expenses of adminis8 tration incurred by the Department of the Treasury,

9 the Army Corps of Engineers, and the Department

10 of Commerce related to the administration of sub11 chapter A of chapter 36 (relating to harbor mainte12 nance tax), but not in excess of $5,000,000 for any

13 fiscal year.’’

14 (b) EFFECTIVE DATE.—The amendment made by

15 subsection (a) shall apply to fiscal years beginning after

16 the date of the enactment of this Act.

17 SEC. 7953. INCREASE IN PRESIDENTIAL ELECTION CAM18 PAIGN FUND CHECK-OFF.

19 (a) IN GENERAL.—Section 6096(a) of the Internal

20 Revenue Code of 1986 (relating to designation by individ21 uals) is amended—

22 (1) by striking ‘‘$1’’ each place it appears and

23 inserting ‘‘$3’’, and

24 (2) by striking ‘‘$2’’ and inserting ‘‘$6’’.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 subsection (a) apply with respect to tax returns required

3 to be filed after December 31, 1993.

4 SEC. 7954. INCREASE IN PUBLIC DEBT LIMIT.

5 (a) GENERAL RULE.—Subsection (b) of section 3101

6 of title 31, United States Code, is amended by striking

7 out the dollar limitation contained in such subsection and

8 inserting in lieu thereof ‘‘$4,900,000,000,000’’.

9 (b) REPEAL OF TEMPORARY INCREASE.—Effective

10 on and after the date of the enactment of this Act, section

11 1 of Public Law 103–12 is hereby repealed.

12 TITLE VIII—FINANCE COMMIT13 TEE REVENUE PROVISIONS

14 SEC. 8000. SHORT TITLE; ETC.

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

16 ‘‘Revenue Reconciliation Act of 1993’’.

17 (b) AMENDMENT TO 1986 CODE.—Except as other18 wise expressly provided, whenever in this title an amend19 ment or repeal is expressed in terms of an amendment

20 to, or repeal of, a section or other provision, the reference

21 shall be considered to be made to a section or other provi22 sion of the Internal Revenue Code of 1986.

23 (c) SECTION 15 NOT TO APPLY.—Except in the case

24 of the amendments made by section 8221 (relating to cor25 porate rate increase), no amendment made by this title
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1 shall be treated as a change in a rate of tax for purposes

2 of section 15 of the Internal Revenue Code of 1986.

3 (d) WAIVER OF ESTIMATED TAX PENALTIES.—No

4 addition to tax shall be made under section 6654 or 6655

5 of the Internal Revenue Code of 1986 for any period be6 fore April 16, 1994 (March 16, 1994, in the case of a

7 corporation), with respect to any underpayment to the ex8 tent such underpayment was created or increased by any

9 provision of this title.

10 (e) TABLE OF CONTENTS.—

Sec. 8000. Short title; etc.

Subtitle A—Training and Investment Incentives

PART I—PROVISIONS RELATING TO EDUCATION AND TRAINING

Sec. 8101. Employer-provided educational assistance.

Sec. 8102. Targeted jobs credit.

PART II—INVESTMENT INCENTIVES

SUBPART A—RESEARCH CREDIT

Sec. 8111. Extension of research credit.

Sec. 8112. Modification of fixed base percentage for startup companies.

SUBPART B—MODIFICATION TO MINIMUM TAX DEPRECIATION RULES

Sec. 8115. Modification to minimum tax depreciation rules.

SUBPART C—INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES

Sec. 8119. Increase in expense treatment for small businesses.

SUBPART D—TAX EXEMPT BONDS

Sec. 8121. Extension of qualified small issue bonds.

PART III—EXPANSION AND SIMPLIFICATION OF EARNED INCOME TAX

CREDIT

Sec. 8131. Expansion and simplification of earned income tax credit.

PART IV—INCENTIVES FOR INVESTMENT IN REAL ESTATE
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SUBPART A—EXTENSION OF QUALIFIED MORTGAGE BONDS AND LOW-INCOME

HOUSING CREDIT

Sec. 8141. Extension of qualified mortgage bonds.

Sec. 8142. Low-income housing credit.

SUBPART B—PASSIVE LOSS RULES

Sec. 8143. Modification of passive loss rules.

SUBPART C—PROVISIONS RELATING TO REAL ESTATE INVESTMENTS BY

PENSION FUNDS

Sec. 8144. Real estate property acquired by a qualified organization.

Sec. 8145. Repeal of special treatment of publicly treated partnerships.

Sec. 8146. Title-holding companies permitted to receive small amounts of unrelated business taxable income.

Sec. 8147. Exclusion from unrelated business tax of gains from certain property.

Sec. 8148. Exclusion from unrelated business tax of certain fees and option

premiums.

Sec. 8149. Treatment of pension fund investments in real estate investment

trusts.

SUBPART D—INCREASE IN RECOVERY PERIOD FOR NONRESIDENTIAL REAL

PROPERTY

Sec. 8151. Increase in recovery period for nonresidential real property.

PART V—LUXURY TAX

Sec. 8161. Repeal of luxury excise taxes other than on passenger vehicles.

Sec. 8162. Exemption from luxury excise tax for certain equipment installed on

passenger vehicles for use by disabled individuals.

Sec. 8163. Tax on diesel fuel used in noncommercial boats.

PART VI—OTHER CHANGES

Sec. 8171. Alternative minimum tax treatment of contributions of appreciated

property.

Sec. 8172. Substantiation requirement for deduction of certain charitable contributions.

Sec. 8173. Disclosure related to quid pro quo contributions.

Sec. 8174. Certain transfers to railroad retirement account made permanent.

Sec. 8175. Temporary extension of deduction for health insurance costs of selfemployed individuals.

Subtitle B—Revenue Increases

PART I—PROVISIONS AFFECTING INDIVIDUALS

SUBPART A—RATE INCREASES

Sec. 8201. Increase in top marginal rate under section 1.

Sec. 8202. Surtax on high-income taxpayers.

Sec. 8203. Modifications to alternative minimum tax rates and exemption

amounts.

Sec. 8203A. Rate increases not to take effect until July 1, 1993.
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Sec. 8204. Overall limitation on itemized deductions for high-income taxpayers

made permanent.

Sec. 8205. Phaseout of personal exemption of high-income taxpayers made permanent.

Sec. 8206. Provisions to prevent conversion of ordinary income to capital gain.

SUBPART B—OTHER PROVISIONS

Sec. 8207. Repeal of limitation on amount of wages subject to health insurance

employment tax.

Sec. 8208. Top estate and gift tax rates made permanent.

Sec. 8209. Reduction in deductible portion of business meals and entertainment.

Sec. 8210. Elimination of deduction for club membership fees.

Sec. 8211. Disallowance of deduction for certain employee remuneration in excess of $1,000,000.

Sec. 8212. Reduction in compensation taken into account in determining contributions and benefits under qualified retirement plans.

Sec. 8213. Modification to deduction for certain moving expenses.

Sec. 8214. Simplification of individual estimated tax safe harbor based on last

year’s tax.

Sec. 8215. Social security and tier 1 railroad retirement benefits.

PART II—PROVISIONS AFFECTING BUSINESSES

Sec. 8221. Increase in top marginal rate under section 11.

Sec. 8222. Disallowance of deduction for lobbying expenditures.

Sec. 8223. Mark to market accounting method for securities dealers.

Sec. 8224. Clarification of treatment of certain FSLIC financial assistance.

Sec. 8225. Modification of corporate estimated tax rules.

Sec. 8226. Modifications of discharge of indebtedness provisions.

Sec. 8227. Limitation on section 936 credit.

Sec. 8228. Modification to limitation on deduction for certain interest.

PART III—FOREIGN TAX PROVISIONS

SUBPART A—CURRENT TAXATION OF CERTAIN EARNINGS OF CONTROLLED

FOREIGN CORPORATIONS

Sec. 8231. Earnings invested in excess passive assets.

Sec. 8232. Modification to taxation of investment in United States property.

Sec. 8233. Other modifications to Subpart F.

SUBPART B—ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES

Sec. 8234. Allocation of research and experimental expenditures.

SUBPART C—OTHER PROVISIONS

Sec. 8235. Repeal of certain exceptions for working capital.

Sec. 8236. Modifications of accuracy-related penalty.

Sec. 8237. Denial of portfolio interest exemption for contingent interest.

Sec. 8238. Regulations dealing with conduit arrangements.

Sec. 8239. Treatment of export of certain softwood logs.

PART IV—TRANSPORTATION FUELS PROVISIONS
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SUBPART A—TRANSPORTATION FUELS TAX

Sec. 8241. Transportation fuels tax.

SUBPART B—MODIFICATIONS TO TAX ON DIESEL FUEL

Sec. 8242. Modifications to tax on diesel fuel.

Sec. 8243. Floor stocks tax.

SUBPART C—EXTENSION OF MOTOR FUEL TAX RATES; INCREASED DEPOSITS

INTO HIGHWAY TRUST FUND

Sec. 8244. Extension of motor fuel tax rates; increased deposits into Highway

Trust Fund.

PART V—COMPLIANCE PROVISIONS

Sec. 8251. Reporting required for certain payments to corporations.

Sec. 8252. Modifications to substantial understatement and return-preparer

penalties.

Sec. 8253. Returns relating to the cancellation of indebtedness by certain financial entities.

PART VI—TREATMENT OF INTANGIBLES

Sec. 8261. Amortization of goodwill and certain other intangibles.

Sec. 8262. Treatment of certain payments to retired or deceased partner.

PART VII—MISCELLANEOUS PROVISIONS

Sec. 8271. Denial of deduction relating to travel expenses.

Sec. 8272. Increase in withholding from supplemental wage payments.

Sec. 8273. Excise tax on certain vaccines made permanent.

1 Subtitle A—Training and

2 Investment Incentives

3 PART I—PROVISIONS RELATING TO EDUCATION

4 AND TRAINING

5 SEC. 8101. EMPLOYER-PROVIDED EDUCATIONAL ASSIST6 ANCE.

7 (a) EXTENSION OF EXCLUSION.—

8 (1) IN GENERAL.—Subsection (d) of section

9 127 (relating to educational assistance programs) is

10 amended to read as follows:

11 ‘‘(d) TERMINATION.—
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1 ‘‘(1) IN GENERAL.—This section shall not apply

2 to taxable years beginning after June 30, 1994.

3 ‘‘(2) SPECIAL RULE.—In the case of any tax4 able year beginning in 1994, only amounts paid be5 fore July 1, 1994, by the employer for educational

6 assistance for any employee shall be taken into ac7 count for purposes of this section.’’

8 (2) CONFORMING AMENDMENT.—Paragraph (2)

9 of section 103(a) of the Tax Extension Act of 1991

10 is hereby repealed.

11 (b) COORDINATION WITH SECTION 132.—Paragraph

12 (8) of section 132(i) is amended to read as follows:

13 ‘‘(8) APPLICATION OF SECTION TO OTHERWISE

14 TAXABLE EDUCATIONAL OR TRAINING BENEFITS.—

15 Amounts paid or expenses incurred by the employer

16 for education or training provided to the employee

17 which are not excludable from gross income under

18 section 127 shall be excluded from gross income

19 under this section if (and only if) such amounts or

20 expenses are a working condition fringe.’’

21 (c) EFFECTIVE DATES.—

22 (1) SUBSECTION (a).—The amendments made

23 by subsection (a) shall apply to taxable years ending

24 after June 30, 1992.
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•S 1134 PCS

1 (2) SUBSECTION (b).—The amendment made

2 by subsection (b) shall apply to taxable years begin3 ning after December 31, 1988.

4 SEC. 8102. TARGETED JOBS CREDIT.

5 (a) EXTENSION OF CREDIT.—Paragraph (4) of sec6 tion 51(c) (relating to amount of targeted jobs credit) is

7 amended by striking ‘‘1992’’ and inserting ‘‘1994’’.

8 (b) EFFECTIVE DATE.—The amendment made by

9 subsection (a) shall apply to individuals who begin work

10 for the employer after June 30, 1992.

11 PART II—INVESTMENT INCENTIVES

12 Subpart A—Research Credit

13 SEC. 8111. EXTENSION OF RESEARCH CREDIT.

14 (a) IN GENERAL.—Subsection (h) of section 41 (re15 lating to credit for research activities) is amended to read

16 as follows:

17 ‘‘(h) NONAPPLICABILITY.—

18 ‘‘(1) IN GENERAL.—This section shall not apply

19 to amounts paid or incurred during any suspension

20 period.

21 ‘‘(2) BASE AMOUNT.—In the case of any tax22 able year which includes a portion of any suspension

23 period, the base amount with respect to such taxable

24 year shall be the amount which bears the same ratio

25 to the base amount for such year (determined with-
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•S 1134 PCS

1 out regard to this paragraph) as the number of days

2 in such taxable year which are not in any suspension

3 period bears to the total number of days in such tax4 able year.

5 ‘‘(3) FIXED-BASE PERCENTAGE.—The fixed6 base percentage under subsection (c)(3)(B)(ii) shall

7 be computed as if this section were in effect during

8 any suspension period.

9 ‘‘(4) SUSPENSION PERIOD.—For purposes of

10 this subsection, the term ‘suspension period’ in11 cludes—

12 ‘‘(A) the period beginning July 1, 1992,

13 and ending June 30, 1993, and

14 ‘‘(B) any period after June 30, 1994.’’

15 (b) CONFORMING AMENDMENT.—Subparagraph (D)

16 of section 28(b)(1) is amended by striking ‘‘for periods

17 after June 30, 1992’’ and inserting ‘‘during any suspen18 sion period (as defined in section 41(h)(4))’’.

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

20 this section shall apply to taxable years ending after June

21 30, 1992.

22 SEC. 8112. MODIFICATION OF FIXED BASE PERCENTAGE

23 FOR STARTUP COMPANIES.

24 (a) GENERAL RULE.—Clause (ii) of section

25 41(c)(3)(B) is amended to read as follows:
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•S 1134 PCS

1 ‘‘(ii) FIXED-BASE PERCENTAGE.—In a

2 case to which this subparagraph applies,

3 the fixed-base percentage is—

4 ‘‘(I) 3 percent for each of the

5 taxpayer’s 1st 5 taxable years begin6 ning after December 31, 1993, for

7 which the taxpayer has qualified re8 search expenses,

9 ‘‘(II) in the case of the taxpayer’s 6th such taxable year, 1 10 ⁄6 of

11 the percentage which the aggregate

12 qualified research expenses of the tax13 payer for the 4th and 5th such tax14 able years is of the aggregate gross

15 receipts of the taxpayer for such

16 years,

17 ‘‘(III) in the case of the taxpayer’s 7th such taxable year, 1 18 ⁄3 of

19 the percentage which the aggregate

20 qualified research expenses of the tax21 payer for the 5th and 6th such tax22 able years is of the aggregate gross

23 receipts of the taxpayer for such

24 years,
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•S 1134 PCS

1 ‘‘(IV) in the case of the taxpayer’s 8th such taxable year, 1 2 ⁄2 of

3 the percentage which the aggregate

4 qualified research expenses of the tax5 payer for the 5th, 6th, and 7th such

6 taxable years is of the aggregate gross

7 receipts of the taxpayer for such

8 years,

9 ‘‘(V) in the case of the taxpayer’s

9th such taxable year, 2 10 ⁄3 of the per11 centage which the aggregate qualified

12 research expenses of the taxpayer for

13 the 5th, 6th, 7th, and 8th such tax14 able years is of the aggregate gross

15 receipts of the taxpayer for such

16 years,

17 ‘‘(VI) in the case of the taxpayer’s 10th such taxable year, 5 18 ⁄6 of

19 the percentage which the aggregate

20 qualified research expenses of the tax21 payer for the 5th, 6th, 7th, 8th, and

22 9th such taxable years is of the aggre23 gate gross receipts of the taxpayer for

24 such years, and
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•S 1134 PCS

1 ‘‘(VII) for taxable years there2 after, the percentage which the aggre3 gate qualified research expenses for

4 any 5 taxable years selected by the

5 taxpayer from among the 5th through

6 the 10th such taxable years is of the

7 aggregate gross receipts of the tax8 payer for such selected years.’’.

9 (b) CONFORMING AMENDMENTS.—

10 (1) Clause (iii) of section 41(c)(3)(B) is amend11 ed by striking ‘‘clause (i)’’ and inserting ‘‘clauses (i)

12 and (ii)’’.

13 (2) Subparagraph (D) of section 41(c)(3) is

14 amended by striking ‘‘subparagraph (A)’’ and insert15 ing ‘‘subparagraphs (A) and (B)(ii)’’.

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

17 this section shall apply to taxable years beginning after

18 December 31, 1993.

19 Subpart B—Modification To Minimum Tax

20 Depreciation Rules

21 SEC. 8115. MODIFICATION TO MINIMUM TAX DEPRECIA22 TION RULES.

23 (a) ELIMINATION OF ACE DEPRECIATION ADJUST24 MENT.—Clause (i) of section 56(g)(4)(A) (relating to de25 preciation adjustments for computing adjusted current
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•S 1134 PCS

1 earnings) is amended by adding at the end thereof the

2 following new sentence: ‘‘The preceding sentence shall not

3 apply to any property placed in service after December

4 31, 1993, and the depreciation deduction with respect to

5 such property shall be determined under the rules of sub6 section (a)(1)(A).’’.

7 (b) EFFECTIVE DATES.—

8 (1) IN GENERAL.—Except as provided in para9 graph (2), the amendments made by this section

10 shall apply to property placed in service after De11 cember 31, 1993.

12 (2) COORDINATION WITH TRANSITIONAL

13 RULES.—The amendments made by this section

14 shall not apply to any property to which paragraph

15 (1) of section 56(a) of the Internal Revenue Code of

16 1986 does not apply by reason of subparagraph

17 (C)(i) thereof.

18 Subpart C—Increase in Expense Treatment for Small

19 Businesses

20 SEC. 8119. INCREASE IN EXPENSE TREATMENT FOR SMALL

21 BUSINESSES.

22 (a) GENERAL RULE.—Paragraph (1) of section

23 179(b) (relating to dollar limitation) is amended by strik24 ing ‘‘$10,000’’ and inserting ‘‘$15,000’’.
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•S 1134 PCS

1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply to taxable years beginning after

3 December 31, 1992.

4 Subpart D—Tax Exempt Bonds

5 SEC. 8121. EXTENSION OF QUALIFIED SMALL ISSUE BONDS.

6 (a) IN GENERAL.—Subparagraph (B) of section

7 144(a)(12) is amended by striking ‘‘1992’’ and inserting

8 ‘‘1994’’.

9 (b) EFFECTIVE DATE.—The amendment made by

10 subsection (a) shall apply to bonds issued after June 30,

11 1992.

12 PART III—EXPANSION AND SIMPLIFICATION OF

13 EARNED INCOME TAX CREDIT

14 SEC. 8131. EXPANSION AND SIMPLIFICATION OF EARNED

15 INCOME TAX CREDIT.

16 (a) GENERAL RULE.—Section 32 (relating to earned

17 income credit) is amended by striking subsections (a) and

18 (b) and inserting the following:

19 ‘‘(a) ALLOWANCE OF CREDIT.—

20 ‘‘(1) IN GENERAL.—In the case of an eligible

21 individual, there shall be allowed as a credit against

22 the tax imposed by this subtitle for the taxable year

23 an amount equal to the credit percentage of so much

24 of the taxpayer’s earned income for the taxable year

25 as does not exceed the earned income amount.
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•S 1134 PCS

1 ‘‘(2) LIMITATION.—The amount of the credit

2 allowable to a taxpayer under paragraph (1) for any

3 taxable year shall not exceed the excess (if any) of—

4 ‘‘(A) the credit percentage of the earned

5 income amount, over

6 ‘‘(B) the phaseout percentage of so much

7 of the adjusted gross income (or, if greater, the

8 earned income) of the taxpayer for the taxable

9 year as exceeds the phaseout amount.

10 ‘‘(b) PERCENTAGES AND AMOUNTS.—For purposes

11 of subsection (a)—

12 ‘‘(1) PERCENTAGES.—The credit percentage

13 and the phaseout percentage shall be determined as

14 follows:

15 ‘‘(A) IN GENERAL.—In the case of taxable

16 years beginning after 1995:

In the case of an eligible individual with:The credit percentage

is:

The phaseout percentage is:

1 qualifying child ..... 34 ............................... 16.16

2 or more qualifying

children ................. 39 ............................... 20.72

17 ‘‘(B) TRANSITIONAL PERCENTAGES FOR

18 1995.—In the case of a taxable year beginning

19 in 1995:

In the case of an eligible individual with:The credit percentage

is:

The phaseout percentage is:

1 qualifying child ..... 34 ............................... 16.16

2 or more qualifying

children ................. 34 ............................... 15.94
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•S 1134 PCS

1 ‘‘(C) TRANSITIONAL PERCENTAGES FOR

2 1994.—In the case of a taxable year beginning

3 in 1994:

In the case of an eligible individual with:The credit percentage

is:

The phaseout percentage is:

1 qualifying child ..... 26 ............................... 16.16

2 or more qualifying

children ................. 30 ............................... 15.94

4 ‘‘(2) AMOUNTS.—The earned income amount

5 and the phaseout amount shall be determined as fol6 lows:

7 ‘‘(A) IN GENERAL.—In the case of taxable

8 years beginning after 1994:

In the case of an eligible individual with:The earned income

amount is:

The phaseout amount

is:

1 qualifying child ..... $6,000 ........................ $11,000

2 or more qualifying

children ................. $8,500 ........................ $11,000

9 ‘‘(B) TRANSITIONAL AMOUNTS.—In the

10 case of a taxable year beginning in 1994:

In the case of an eligible individual with:The earned income

amount is:

The phaseout amount

is:

1 qualifying child ..... $7,750 ........................ $11,000

2 or more qualifying

children ................. $8,500 ........................ $11,000.’’

11 (b) INFLATION ADJUSTMENTS.—Section 32(i) (relat12 ing to inflation adjustments) is amended—

13 (1) by striking paragraphs (1) and (2) and in14 serting the following new paragraph:

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

16 year beginning after 1994, each dollar amount con-
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•S 1134 PCS

1 tained in subsection (b)(2)(A) shall be increased by

2 an amount equal to—

3 ‘‘(A) such dollar amount, multiplied by

4 ‘‘(B) the cost-of-living adjustment deter5 mined under section 1(f)(3), for the calendar

6 year in which the taxable year begins, by sub7 stituting ‘calendar year 1993’ for ‘calendar year

8 1992’.’’, and

9 (2) by redesignating paragraph (3) as para10 graph (2).

11 (c) CONFORMING AMENDMENTS.—

12 (1) Subparagraph (D) of section 32(c)(3) is

13 amended—

14 (A) by striking ‘‘clause (i) or (ii)’’ in clause

15 (iii) and inserting ‘‘clause (i)’’,

16 (B) by striking clause (ii), and

17 (C) by redesignating clause (iii) as clause

18 (ii).

19 (2) Paragraph (3) of section 162(l) is amended

20 to read as follows:

21 ‘‘(3) COORDINATION WITH MEDICAL DEDUC22 TION.—Any amount paid by a taxpayer for insur23 ance to which paragraph (1) applies shall not be

24 taken into account in computing the amount allow-
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•S 1134 PCS

1 able to the taxpayer as a deduction under section

2 213(a).’’

3 (3) Section 213 is amended by striking sub4 section (f).

5 (4) Subsection (b) of section 3507 is amended

6 by redesignating paragraphs (2) and (3) as para7 graphs (3) and (4), respectively, and by inserting

8 after paragraph (1) the following new paragraph:

9 ‘‘(2) certifies that the employee has 1 or more

10 qualifying children (within the meaning of section

11 32(c)(3)) for such taxable year,’’.

12 (5) Subparagraph (B) of section 3507(c)(2) is

13 amended by striking clauses (i) and (ii) and insert14 ing the following:

15 ‘‘(i) of not more than the credit per16 centage in effect under section 32(b)(1) for

17 an eligible individual with 1 qualifying

18 child and with earned income not in excess

19 of the earned income amount in effect

20 under section 32(b)(2) for such an eligible

21 individual, which

22 ‘‘(ii) phases out at the phaseout per23 centage in effect under section 32(b)(1) for

24 such an eligible individual between the

25 phaseout amount in effect under section
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•S 1134 PCS

1 32(b)(2) for such an eligible individual and

2 the amount of earned income at which the

3 credit under section 32(a) phases out for

4 such an eligible individual, or’’.

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

6 this section shall apply to taxable years beginning after

7 December 31, 1993.

8 PART IV—INCENTIVES FOR INVESTMENT IN

9 REAL ESTATE

10 Subpart A—Extension of Qualified Mortgage Bonds

11 and Low-Income Housing Credit

12 SEC. 8141. EXTENSION OF QUALIFIED MORTGAGE BONDS.

13 (a) IN GENERAL.—Subparagraph (B) of section

14 143(a)(1) (defining qualified mortgage bond) is amended

15 by striking ‘‘1992’’ each place it appears and inserting

16 ‘‘1994’’.

17 (b) MORTGAGE CREDIT CERTIFICATES.—Subsection

18 (h) of section 25 is amended by striking ‘‘1992’’ and in19 serting ‘‘1994’’.

20 (c) EFFECTIVE DATES.—

21 (1) BONDS.—The amendment made by sub22 section (a) shall apply to bonds issued after June

23 30, 1992.
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•S 1134 PCS

1 (2) CERTIFICATES.—The amendment made by

2 subsection (b) shall apply to elections for periods

3 after June 30, 1992.

4 SEC. 8142. LOW-INCOME HOUSING CREDIT.

5 (a) PERMANENT EXTENSION.—

6 (1) IN GENERAL.—Section 42 (relating to low7 income housing credit) is amended by striking sub8 section (o).

9 (2) EFFECTIVE DATE.—The amendments made

10 by paragraph (1) shall apply to periods ending after

11 June 30, 1992.

12 (b) MODIFICATIONS.—

13 (1) HOUSING CREDIT AGENCY DETERMINATION

14 OF REASONABLENESS OF PROJECT COSTS.—Sub15 paragraph (B) of section 42(m)(2) (relating to credit

16 allocated to building not to exceed amount necessary

17 to assure project feasibility) is amended—

18 (A) by striking ‘‘and’’ at the end of clause

19 (ii),

20 (B) by striking the period at the end of

21 clause (iii) and inserting ‘‘, and’’, and

22 (C) by inserting after clause (iii) the fol23 lowing new clause:
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•S 1134 PCS

1 ‘‘(iv) the reasonableness of the devel2 opmental and operational costs of the

3 project.’’

4 (2) UNITS WITH CERTAIN FULL-TIME STU5 DENTS NOT DISQUALIFIED.—Subparagraph (D) of

6 section 42(i)(3) (defining low-income unit) is amend7 ed to read as follows:

8 ‘‘(D) CERTAIN STUDENTS NOT TO DIS9 QUALIFY UNIT.—A unit shall not fail to be

10 treated as a low-income unit merely because it

11 is occupied—

12 ‘‘(i) by an individual who is—

13 ‘‘(I) a student and receiving as14 sistance under title IV of the Social

15 Security Act, or

16 ‘‘(II) enrolled in a job training

17 program receiving assistance under

18 the Job Training Partnership Act or

19 under other similar Federal, State, or

20 local laws, or

21 ‘‘(ii) entirely by full-time students if

22 such students are—

23 ‘‘(I) single parents and their chil24 dren and such parents and children
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•S 1134 PCS

1 are not dependents (as defined in sec2 tion 152) of another individual, or

3 ‘‘(II) married and file a joint re4 turn.’’

5 (3) TREASURY WAIVERS OF CERTAIN DE

6 MINIMIS ERRORS AND RECERTIFICATIONS.—Sub7 section (g) of section 42 (relating to qualified low8 income housing projects) is amended by adding at

9 the end thereof the following new paragraph:

10 ‘‘(8) WAIVER OF CERTAIN DE MINIMIS ERRORS

11 AND RECERTIFICATIONS.—On application by the

12 taxpayer, the Secretary may waive—

13 ‘‘(A) any recapture under subsection (j) in

14 the case of any de minimis error in complying

15 with paragraph (1), or

16 ‘‘(B) any annual recertification of tenant

17 income for purposes of this subsection, if the

18 entire building is occupied by low-income ten19 ants.’’

20 (4) DISCRIMINATION AGAINST TENANTS PRO21 HIBITED.—Section 42(h)(6)(B) (defining extended

22 low-income housing commitment) is amended by re23 designating clauses (iv) and (v) as clauses (v) and

24 (vi) and by inserting after clause (iii) the following

25 new clause:
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•S 1134 PCS

1 ‘‘(iv) which prohibits the refusal to

2 lease to a holder of a voucher or certificate

3 of eligibility under section 8 of the United

4 States Housing Act of 1937 because of the

5 status of the prospective tenant as such a

6 holder,’’.

7 (5) EFFECTIVE DATES.—

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

9 subparagraph (B), the amendments made by

10 this subsection shall apply to—

11 (i) determinations under section 42 of

12 the Internal Revenue Code of 1986 with

13 respect to housing credit dollar amounts

14 allocated from State housing credit ceilings

15 after June 30, 1992, or

16 (ii) buildings placed in service after

17 June 30, 1992, to the extent paragraph

18 (1) of section 42(h) of such Code does not

19 apply to any building by reason of para20 graph (4) thereof, but only with respect to

21 bonds issued after such date.

22 (B) WAIVER AUTHORITY AND PROHIBITED

23 DISCRIMINATION.—The amendments made by

24 paragraphs (3) and (4) shall take effect on the

25 date of the enactment of this Act.
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•S 1134 PCS

1 (c) ELECTION TO DETERMINE RENT LIMITATION

2 BASED ON NUMBER OF BEDROOMS AND DEEP RENT

3 SKEWING.—In the case of a building to which the amend4 ments made by subsection (e)(1) or (n)(2) of section 7108

5 of the Revenue Reconciliation Act of 1989 did not apply,

6 the taxpayer may elect to have such amendments apply

7 to such building but only with respect to tenants first oc8 cupying any unit in the building after the date of the elec9 tion, and only if the taxpayer has met the requirements

10 of the procedures described in section 42(m)(1)(B)(iii) of

11 the Internal Revenue Code of 1986. Such an election may

12 be made only during the 180 day period beginning on the

13 date of the enactment of this Act and, once made, shall

14 be irrevocable.

15 Subpart B—Passive Loss Rules

16 SEC. 8143. MODIFICATION OF PASSIVE LOSS RULES.

17 (a) GENERAL RULE.—Section 469 (relating to pas18 sive activity losses and credits limited) is amended by re19 designating subsections (l) and (m) as subsections (m) and

20 (n), respectively, and by inserting after subsection (k) the

21 following new subsection:

22 ‘‘(l) SPECIAL RULES FOR REAL ESTATE ACTIVI23 TIES.—

24 ‘‘(1) LOSS FROM CERTAIN RENTAL REAL ES25 TATE ACTIVITIES TREATED AS NOT PASSIVE.—If the
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•S 1134 PCS

1 taxpayer meets the requirements of paragraph (2)

2 for the taxable year, subsection (a) shall not apply

3 to so much of the passive activity loss for such tax4 able year as does not exceed the least of—

5 ‘‘(A) the lesser of—

6 ‘‘(i) the net loss for such taxable year

7 from rental real estate activities in which

8 the taxpayer materially participates, or

9 ‘‘(ii) the net loss for such taxable year

10 from all rental real estate activities of the

11 taxpayer,

12 ‘‘(B) the net income of the taxpayer for

13 the taxable year from real property trade or

14 business activities which are not passive activi15 ties, or

16 ‘‘(C) the taxable income of the taxpayer

17 for the taxable year determined without regard

18 to this subsection.

19 A similar rule shall apply to any passive activity

20 credit.

21 ‘‘(2) REQUIREMENTS.—The taxpayer meets the

22 requirements of this paragraph for any taxable year

23 if more than one-half of the personal services per24 formed in trades or businesses by the taxpayer dur25 ing such taxable year are performed in real property
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•S 1134 PCS

1 trades or businesses in which the taxpayer materially

2 participates.

3 ‘‘(3) REAL PROPERTY TRADE OR BUSINESS.—

4 For purposes of this paragraph, the term ‘real prop5 erty trade or business’ means any real property de6 velopment, redevelopment, construction, reconstruc7 tion, acquisition, conversion, rental, operation, man8 agement, leasing, or brokerage trade or business.

9 ‘‘(4) SPECIAL RULES.—

10 ‘‘(A) PERSONAL SERVICES AS AN EM11 PLOYEE.—For purposes of paragraph (2), per12 sonal services performed as an employee shall

13 not be treated as performed in real property

14 trades or businesses. The preceding sentence

15 shall not apply if such employee is a 5-percent

16 owner (as defined in section 416(i)(1)(B)) in

17 the employer.

18 ‘‘(B) CLOSELY HELD C CORPORATIONS.—

19 This subsection shall not apply to any interests

20 held by a closely held C corporation.

21 ‘‘(5) COORDINATION WITH SUBSECTION (i).—

22 ‘‘(A) IN GENERAL.—This subsection shall

23 be applied after the application of subsection

24 (i).
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•S 1134 PCS

1 ‘’(B) AMOUNTS ALLOWED UNDER SUB2 SECTION (i).—For purposes of this sub3 section—

4 ‘‘(i) the passive activity loss and pas5 sive activity credit, and

6 ‘‘(ii) the net loss referred to in para7 graph (1)(A),

8 shall not include any amount allowed under

9 subsection (i).’’

10 (b) EFFECTIVE DATE.—The amendments made by

11 this section shall apply to taxable years beginning after

12 December 31, 1993.

13 Subpart C—Provisions Relating to Real Estate

14 Investments by Pension Funds

15 SEC. 8144. REAL ESTATE PROPERTY ACQUIRED BY A

16 QUALIFIED ORGANIZATION.

17 (a) MODIFICATIONS OF EXCEPTIONS.—Paragraph

18 (9) of section 514(c) (relating to real property acquired

19 by a qualified organization) is amended by adding at the

20 end thereof the following new subparagraphs:

21 ‘‘(G) SPECIAL RULES FOR PURPOSES OF

22 THE EXCEPTIONS.—Except as otherwise pro23 vided by regulations—

24 ‘‘(i) SMALL LEASES DISREGARDED.—

25 For purposes of clauses (iii) and (iv) of
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•S 1134 PCS

1 subparagraph (B), a lease to a person de2 scribed in such clause (iii) or (iv) shall be

3 disregarded if no more than 25 percent of

4 the leasable floor space in a building (or

5 complex of buildings) is covered by the

6 lease and if the lease is on commercially

7 reasonable terms.

8 ‘‘(ii) COMMERCIALLY REASONABLE FI9 NANCING.—Clause (v) of subparagraph (B)

10 shall not apply if the financing is on com11 mercially reasonable terms.

12 ‘‘(H) QUALIFYING SALES BY FINANCIAL

13 INSTITUTIONS.—

14 ‘‘(i) IN GENERAL.—In the case of a

15 qualifying sale by a financial institution,

16 except as provided in regulations, clauses

17 (i) and (ii) of subparagraph (B) shall not

18 apply with respect to financing provided by

19 such institution for such sale.

20 ‘‘(ii) QUALIFYING SALE.—For pur21 poses of this clause, there is a qualifying

22 sale by a financial institution if—

23 ‘‘(I) a qualified organization ac24 quires property described in clause

25 (iii) from a financial institution and
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•S 1134 PCS

1 any gain recognized by the financial

2 institution with respect to the prop3 erty is ordinary income,

4 ‘‘(II) the stated principal amount

5 of the financing provided by the finan6 cial institution does not exceed the

7 amount of the outstanding indebted8 ness (including accrued but unpaid in9 terest) of the financial institution with

10 respect to the property described in

11 clause (iii) immediately before the ac12 quisition referred to in clause (iii) or

13 (v), whichever is applicable, and

14 ‘‘(III) the present value (deter15 mined as of the time of the sale and

16 by using the applicable Federal rate

17 determined under section 1274(d)) of

18 the maximum amount payable pursu19 ant to the financing that is deter20 mined by reference to the revenue, in21 come, or profits derived from the

22 property cannot exceed 30 percent of

23 the total purchase price of the prop24 erty (including the contingent pay25 ments).
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•S 1134 PCS

1 ‘‘(iii) PROPERTY TO WHICH SUBPARA2 GRAPH APPLIES.—Property is described in

3 this clause if such property is foreclosure

4 property, or is real property which—

5 ‘‘(I) was acquired by the quali6 fied organization from a financial in7 stitution which is in conservatorship

8 or receivership, or from the conserva9 tor or receiver of such an institution,

10 and

11 ‘‘(II) was held by the financial

12 institution at the time it entered into

13 conservatorship or receivership.

14 ‘‘(iv) FINANCIAL INSTITUTION.—For

15 purposes of this subparagraph, the term

16 ‘financial institution’ means—

17 ‘‘(I) any financial institution de18 scribed in section 581 or 591(a),

19 ‘‘(II) any other corporation which

20 is a direct or indirect subsidiary of an

21 institution referred to in subclause (I)

22 but only if, by virtue of being affili23 ated with such institution, such other

24 corporation is subject to supervision

25 and examination by a Federal or
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•S 1134 PCS

1 State agency which regulates institu2 tions referred to in subclause (I), and

3 ‘‘(III) any person acting as a

4 conservator or receiver of an entity re5 ferred to in subclause (I) or (II) (or

6 any government agency or corporation

7 succeeding to the rights or interest of

8 such person).

9 ‘‘(v) FORECLOSURE PROPERTY.—For

10 purposes of this subparagraph, the term

11 ‘foreclosure property’ means any real prop12 erty acquired by the financial institution as

13 the result of having bid on such property

14 at foreclosure, or by operation of an agree15 ment or process of law, after there was a

16 default (or a default was imminent) on in17 debtedness which such property secured.’’.

18 (b) CONFORMING AMENDMENT.—Paragraph (9) of

19 section 514(c) is amended—

20 (1) by adding the following new sentence at the

21 end of subparagraph (A): ‘‘For purposes of this

22 paragraph, an interest in a mortgage shall in no

23 event be treated as real property.’’, and

24 (2) by striking the last sentence of subpara25 graph (B).
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•S 1134 PCS

1 (c) EFFECTIVE DATES.—

2 (1) IN GENERAL.—The amendments made by

3 this section shall apply to acquisitions on or after

4 January 1, 1994.

5 (2) SMALL LEASES.—The provisions of section

6 514(c)(9)(G)(i) of the Internal Revenue Code of

7 1986 shall, in addition to any leases to which the

8 provisions apply by reason of paragraph (1), apply

9 to leases entered into on or after January 1, 1994.

10 SEC. 8145. REPEAL OF SPECIAL TREATMENT OF PUBLICLY

11 TREATED PARTNERSHIPS.

12 (a) GENERAL RULE.—Subsection (c) of section 512

13 is amended—

14 (1) by striking paragraph (2),

15 (2) by redesignating paragraph (3) as para16 graph (2), and

17 (3) by striking ‘‘paragraph (1) or (2)’’ in para18 graph (2) (as so redesignated) and inserting ‘‘para19 graph (1)’’.

20 (b) EFFECTIVE DATE.—The amendments made by

21 subsection (a) shall apply to partnership years beginning

22 on or after January 1, 1994.
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1 SEC. 8146. TITLE-HOLDING COMPANIES PERMITTED TO RE2 CEIVE SMALL AMOUNTS OF UNRELATED

3 BUSINESS TAXABLE INCOME.

4 (a) GENERAL RULE.—Paragraph (25) of section

5 501(c) is amended by adding at the end thereof the follow6 ing new subparagraph:

7 ‘‘(G)(i) An organization shall not be treat8 ed as failing to be described in this paragraph

9 merely by reason of the receipt of any otherwise

10 disqualifying income which is incidentally de11 rived from the holding of real property.

12 ‘‘(ii) Clause (i) shall not apply if the

13 amount of gross income described in such

14 clause exceeds 10 percent of the organization’s

15 gross income for the taxable year unless the or16 ganization establishes to the satisfaction of the

17 Secretary that the receipt of gross income de18 scribed in clause (i) in excess of such limitation

19 was inadvertent and reasonable steps are being

20 taken to correct the circumstances giving rise to

21 such income.’’

22 (b) CONFORMING AMENDMENT.—Paragraph (2) of

23 section 501(c) is amended by adding at the end thereof

24 the following new sentence: ‘‘Rules similar to the rules of

25 subparagraph (G) of paragraph (25) shall apply for pur26 poses of this paragraph.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning on or

3 after January 1, 1994.

4 SEC. 8147. EXCLUSION FROM UNRELATED BUSINESS TAX

5 OF GAINS FROM CERTAIN PROPERTY.

6 (a) GENERAL RULE.—Subsection (b) of section 512

7 (relating to modifications) is amended by adding at the

8 end thereof the following new paragraph:

9 ‘‘(16)(A) Notwithstanding paragraph (5)(B),

10 there shall be excluded all gains or losses from the

11 sale, exchange, or other disposition of any real prop12 erty described in subparagraph (B) if—

13 ‘‘(i) such property was acquired by the or14 ganization from—

15 ‘‘(I) a financial institution described

16 in section 581 or 591(a) which is in

17 conservatorship or receivership, or

18 ‘‘(II) the conservator or receiver of

19 such an institution (or any government

20 agency or corporation succeeding to the

21 rights or interests of the conservator or re22 ceiver),

23 ‘‘(ii) such property is designated by the or24 ganization within the 9-month period beginning

25 on the date of its acquisition as property held
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1 for sale, except that not more than one-half (by

2 value determined as of such date) of property

3 acquired in a single transaction may be so

4 designated,

5 ‘‘(iii) such sale, exchange, or disposition

6 occurs before the later of—

7 ‘‘(I) the date which is 30 months after

8 the date of the acquisition of such prop9 erty, or

10 ‘‘(II) the date specified by the Sec11 retary in order to assure an orderly dis12 position of property held by persons de13 scribed in subparagraph (A), and

14 ‘‘(iv) while such property was held by the

15 organization, the aggregate expenditures on im16 provements and development activities included

17 in the basis of the property are (or were) not

18 in excess of 20 percent of the net selling price

19 of such property.

20 ‘‘(B) Property is described in this subparagraph

21 if it is real property which—

22 ‘‘(i) was held by the financial institution at

23 the time it entered into conservatorship or re24 ceivership, or
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1 ‘‘(ii) was foreclosure property (as defined

2 in section 514(c)(9)(H)(v)) which secured in3 debtedness held by the financial institution at

4 such time.

5 For purposes of this subparagraph, real property in6 cludes an interest in a mortgage.’’

7 (b) EFFECTIVE DATE.—The amendment made by

8 subsection (a) shall apply to property acquired on or after

9 January 1, 1994.

10 SEC. 8148. EXCLUSION FROM UNRELATED BUSINESS TAX

11 OF CERTAIN FEES AND OPTION PREMIUMS.

12 (a) LOAN COMMITMENT FEES.—Paragraph (1) of

13 section 512(b) (relating to modifications) is amended by

14 inserting ‘‘amounts received or accrued as consideration

15 for entering into agreements to make loans,’’ before ‘‘and

16 annuities’’.

17 (b) OPTION PREMIUMS.—The second sentence of sec18 tion 512(b)(5) is amended—

19 (1) by striking ‘‘all gains on’’ and inserting ‘‘all

20 gains or losses recognized, in connection with the or21 ganization’s investment activities, from’’,

22 (2) by striking ‘‘, written by the organization in

23 connection with its investment activities,’’ and

24 (3) by inserting ‘‘or real property and all gains

25 or losses from the forfeiture of good-faith deposits
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•S 1134 PCS

1 (that are consistent with established business prac2 tice) for the purchase, sale, or lease of real property

3 in connection with the organization’s investment ac4 tivities’’ before the period.

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

6 this section shall apply to amounts received on or after

7 January 1, 1994.

8 SEC. 8149. TREATMENT OF PENSION FUND INVESTMENTS

9 IN REAL ESTATE INVESTMENT TRUSTS.

10 (a) GENERAL RULE.—Subsection (h) of section 856

11 (relating to closely held determinations) is amended by

12 adding at the end thereof the following new paragraph:

13 ‘‘(3) TREATMENT OF TRUSTS DESCRIBED IN

14 SECTION 401(a).—

15 ‘‘(A) LOOK-THRU TREATMENT.—

16 ‘‘(i) IN GENERAL.—Except as pro17 vided in clause (ii), in determining whether

18 the stock ownership requirement of section

19 542(a)(2) is met for purposes of paragraph

20 (1)(A), any stock held by a qualified trust

21 shall be treated as held directly by its

22 beneficiaries in proportion to their actuar23 ial interests in such trust and shall not be

24 treated as held by such trust.
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1 ‘‘(ii) CERTAIN RELATED TRUSTS NOT

2 ELIGIBLE.—Clause (i) shall not apply to

3 any qualified trust if one or more disquali4 fied persons (as defined in section

5 4975(e)(2), without regard to subpara6 graphs (B) and (I) thereof) with respect to

7 such qualified trust hold in the aggregate

8 5 percent or more in value of the interests

9 in the real estate investment trust and

10 such real estate investment trust has accu11 mulated earnings and profits attributable

12 to any period for which it did not qualify

13 as a real estate investment trust.

14 ‘‘(B) COORDINATION WITH PERSONAL

15 HOLDING COMPANY RULES.—If any entity

16 qualifies as a real estate investment trust for

17 any taxable year by reason of subparagraph

18 (A), such entity shall not be treated as a per19 sonal holding company for such taxable year for

20 purposes of part II of subchapter G of this

21 chapter.

22 ‘‘(C) TREATMENT FOR PURPOSES OF UN23 RELATED BUSINESS TAX.—If any qualified

24 trust holds more than 10 percent (by value) of

25 the interests in any pension-held REIT at any
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•S 1134 PCS

1 time during a taxable year, the trust shall be

2 treated as having for such taxable year gross

3 income from an unrelated trade or business in

4 an amount which bears the same ratio to the

5 aggregate dividends paid (or treated as paid) by

6 the REIT to the trust for the taxable year of

7 the REIT with or within which the taxable year

8 of the trust ends (the ‘REIT year’) as—

9 ‘‘(i) the gross income (less direct ex10 penses related thereto) of the REIT for the

11 REIT year from unrelated trades or busi12 nesses (determined as if the REIT were a

13 qualified trust), bears to

14 ‘‘(ii) the gross income (less direct ex15 penses related thereto) of the REIT for the

16 REIT year.

17 This subparagraph shall apply only if the ratio

18 determined under the preceding sentence is at

19 least 5 percent.

20 ‘‘(D) PENSION-HELD REIT.—The purposes

21 of subparagraph (C)—

22 ‘‘(i) IN GENERAL.—A real estate in23 vestment trust is a pension-held REIT if

24 such trust would not have qualified as a

25 real estate investment trust but for the
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•S 1134 PCS

1 provisions of this paragraph and if such

2 trust is predominantly held by qualified

3 trusts.

4 ‘‘(ii) PREDOMINANTLY HELD.—For

5 purposes of clause (i), a real estate invest6 ment trust is predominantly held by quali7 fied trusts if—

8 ‘‘(I) at least 1 qualified trust

9 holds more than 25 percent (by value)

10 of the interests in such real estate in11 vestment trust, or

12 ‘‘(II) 1 or more qualified trusts

13 (each of whom own more than 10 per14 cent by value of the interests in such

15 real estate investment trust) hold in

16 the aggregate more than 50 percent

17 (by value) of the interests in such real

18 estate investment trust.

19 ‘‘(E) QUALIFIED TRUST.—For purposes of

20 this paragraph, the term ‘qualified trust’ means

21 any trust described in section 401(a) and ex22 empt from tax under section 501(a).’’

23 (b) EFFECTIVE DATE.—The amendment made by

24 this section shall apply to taxable years beginning after

25 December 31, 1993.
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1 Subpart D—Increase in Recovery Period for

2 Nonresidential Real Property

3 SEC. 8151. INCREASE IN RECOVERY PERIOD FOR

4 NONRESIDENTIAL REAL PROPERTY.

5 (a) GENERAL RULE.—Paragraph (1) of section

6 168(c) (relating to applicable recovery period) is amended

7 by striking the item relating to nonresidential real prop8 erty and inserting the following:

‘‘Nonresidential real property .................................................. 38 years.’’.

9 (b) EFFECTIVE DATE.—

10 (1) IN GENERAL.—Except as provided in para11 graph (2), the amendment made by subsection (a)

12 shall apply to property placed in service by the tax13 payer on or after February 25, 1993.

14 (2) EXCEPTION.—The amendments made by

15 this section shall not apply to property placed in

16 service by the taxpayer before January 1, 1994, if—

17 (A) the taxpayer or a qualified person en18 tered into a binding written contract to pur19 chase or construct such property before Feb20 ruary 25, 1993, or

21 (B) the construction of such property was

22 commenced by or for the taxpayer or a quali23 fied person before February 25, 1993.

24 For purposes of this paragraph, the term ‘‘qualified

25 person’’ means any person who transfers his rights
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1 in such a contract or such property to the taxpayer

2 but only if the property is not placed in service by

3 such person before such rights are transferred to the

4 taxpayer.

5 PART V—LUXURY TAX

6 SEC. 8161. REPEAL OF LUXURY EXCISE TAXES OTHER THAN

7 ON PASSENGER VEHICLES.

8 (a) IN GENERAL.—Subchapter A of chapter 31 (re9 lating to retail excise taxes) is amended to read as follows:

10 ‘‘Subchapter A—Luxury Passenger Automobiles

‘‘Sec. 4001. Imposition of tax.

‘‘Sec. 4002. 1st retail sale; uses, etc. treated as sales; determination of price.

‘‘Sec. 4003. Special rules.

11 ‘‘SEC. 4001. IMPOSITION OF TAX.

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

13 on the 1st retail sale of any passenger vehicle a tax equal

14 to 10 percent of the price for which so sold to the extent

15 such price exceeds $30,000.

16 ‘‘(b) PASSENGER VEHICLE.—

17 ‘‘(1) IN GENERAL.—For purposes of this sub18 chapter, the term ‘passenger vehicle’ means any 4-

19 wheeled vehicle—

20 ‘‘(A) which is manufactured primarily for

21 use on public streets, roads, and highways, and

22 ‘‘(B) which is rated at 6,000 pounds un23 loaded gross vehicle weight or less.
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•S 1134 PCS

1 ‘‘(2) SPECIAL RULES.—

2 ‘‘(A) TRUCKS AND VANS.—In the case of a

3 truck or van, paragraph (1)(B) shall be applied

4 by substituting ‘gross vehicle weight’ for ‘un5 loaded gross vehicle weight’.

6 ‘‘(B) LIMOUSINES.—In the case of a lim7 ousine, paragraph (1) shall be applied without

8 regard to subparagraph (B) thereof.

9 ‘‘(c) EXCEPTIONS FOR TAXICABS, ETC.—The tax im10 posed by this section shall not apply to the sale of any

11 passenger vehicle for use by the purchaser exclusively in

12 the active conduct of a trade or business of transporting

13 persons or property for compensation or hire.

14 ‘‘(d) EXEMPTION FOR LAW ENFORCEMENT USES,

15 ETC.—No tax shall be imposed by this section on the sale

16 of any passenger vehicle—

17 ‘‘(1) to the Federal Government, or a State or

18 local government, for use exclusively in police, fire19 fighting, search and rescue, or other law enforce20 ment or public safety activities, or in public works

21 activities, or

22 ‘‘(2) to any person for use exclusively in provid23 ing emergency medical services.

24 ‘‘(e) INFLATION ADJUSTMENT.—
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•S 1134 PCS

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

2 year after 1992, the $30,000 amount in subsection

3 (a) and section 4003(a) shall be increased by an

4 amount equal to—

5 ‘‘(A) $30,000, multiplied by

6 ‘‘(B) the cost-of-living adjustment under

7 section 1(f)(3) for such calendar year, deter8 mined by substituting ‘calendar year 1990’ for

9 ‘calendar year 1992’ in subparagraph (B)

10 thereof.

11 ‘‘(2) ROUNDING.—If any amount as adjusted

12 under paragraph (1) is not a multiple of $100, such

13 amount shall be rounded to the nearest multiple of

14 $100.

15 ‘‘(f) TERMINATION.—The tax imposed by this section

16 shall not apply to any sale or use after December 31,

17 1999.

18 ‘‘SEC. 4002. 1ST RETAIL SALE; USES, ETC. TREATED AS

19 SALES; DETERMINATION OF PRICE.

20 ‘‘(a) 1ST RETAIL SALE.—For purposes of this sub21 chapter, the term ‘1st retail sale’ means the 1st sale, for

22 a purpose other than resale, after manufacture, produc23 tion, or importation.

24 ‘‘(b) USE TREATED AS SALE.—
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•S 1134 PCS

1 ‘‘(1) IN GENERAL.—If any person uses a pas2 senger vehicle (including any use after importation)

3 before the 1st retail sale of such vehicle, then such

4 person shall be liable for tax under this subchapter

5 in the same manner as if such vehicle were sold at

6 retail by him.

7 ‘‘(2) EXEMPTION FOR FURTHER MANUFAC8 TURE.—Paragraph (1) shall not apply to use of a

9 vehicle as material in the manufacture or production

10 of, or as a component part of, another vehicle tax11 able under this subchapter to be manufactured or

12 produced by him.

13 ‘‘(3) EXEMPTION FOR DEMONSTRATION USE.—

14 Paragraph (1) shall not apply to any use of a pas15 senger vehicle as a demonstrator.

16 ‘‘(4) EXCEPTION FOR USE AFTER IMPORTATION

17 OF CERTAIN VEHICLES.—Paragraph (1) shall not

18 apply to the use of a vehicle after importation if the

19 user or importer establishes to the satisfaction of the

20 Secretary that the 1st use of the vehicle occurred be21 fore January 1, 1991, outside the United States.

22 ‘‘(5) COMPUTATION OF TAX.—In the case of

23 any person made liable for tax by paragraph (1), the

24 tax shall be computed on the price at which similar
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1 vehicles are sold at retail in the ordinary course of

2 trade, as determined by the Secretary.

3 ‘‘(c) LEASES CONSIDERED AS SALES.—For purposes

4 of this subchapter—

5 ‘‘(1) IN GENERAL.—Except as otherwise pro6 vided in this subsection, the lease of a vehicle (in7 cluding any renewal or any extension of a lease or

8 any subsequent lease of such vehicle) by any person

9 shall be considered a sale of such vehicle at retail.

10 ‘‘(2) SPECIAL RULES FOR LONG-TERM

11 LEASES.—

12 ‘‘(A) TAX NOT IMPOSED ON SALE FOR

13 LEASING IN A QUALIFIED LEASE.—The sale of

14 a passenger vehicle to a person engaged in a

15 passenger vehicle leasing or rental trade or

16 business for leasing by such person in a long17 term lease shall not be treated as the 1st retail

18 sale of such vehicle.

19 ‘‘(B) LONG-TERM LEASE.—For purposes

20 of subparagraph (A), the term ‘long-term lease’

21 means any long-term lease (as defined in sec22 tion 4052).

23 ‘‘(C) SPECIAL RULES.—In the case of a

24 long-term lease of a vehicle which is treated as

25 the 1st retail sale of such vehicle—
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•S 1134 PCS

1 ‘‘(i) DETERMINATION OF PRICE.—The

2 tax under this subchapter shall be com3 puted on the lowest price for which the ve4 hicle is sold by retailers in the ordinary

5 course of trade.

6 ‘‘(ii) PAYMENT OF TAX.—Rules simi7 lar to the rules of section 4217(e)(2) shall

8 apply.

9 ‘‘(iii) NO TAX WHERE EXEMPT USE

10 BY LESSEE.—No tax shall be imposed on

11 any lease payment under a long-term lease

12 if the lessee’s use of the vehicle under such

13 lease is an exempt use (as defined in sec14 tion 4003(b)) of such vehicle.

15 ‘‘(d) DETERMINATION OF PRICE.—

16 ‘‘(1) IN GENERAL.—In determining price for

17 purposes of this subchapter—

18 ‘‘(A) there shall be included any charge in19 cident to placing the passenger vehicle in condi20 tion ready for use,

21 ‘‘(B) there shall be excluded—

22 ‘‘(i) the amount of the tax imposed by

23 this subchapter,

24 ‘‘(ii) if stated as a separate charge,

25 the amount of any retail sales tax imposed
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•S 1134 PCS

1 by any State or political subdivision there2 of or the District of Columbia, whether the

3 liability for such tax is imposed on the ven4 dor or vendee, and

5 ‘‘(iii) the value of any component of

6 such passenger vehicle if—

7 ‘‘(I) such component is furnished

8 by the 1st user of such passenger ve9 hicle, and

10 ‘‘(II) such component has been

11 used before such furnishing, and

12 ‘‘(C) the price shall be determined without

13 regard to any trade-in.

14 ‘‘(2) OTHER RULES.—Rules similar to the rules

15 of paragraphs (2) and (4) of section 4052(b) shall

16 apply for purposes of this subchapter.

17 ‘‘SEC. 4003. SPECIAL RULES.

18 ‘‘(a) SEPARATE PURCHASE OF VEHICLE AND PARTS

19 AND ACCESSORIES THEREFOR.—Under regulations pre20 scribed by the Secretary—

21 ‘‘(1) IN GENERAL.—Except as provided in para22 graph (2), if—

23 ‘‘(A) the owner, lessee, or operator of any

24 passenger vehicle installs (or causes to be in-
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1 stalled) any part or accessory on such vehicle,

2 and

3 ‘‘(B) such installation is not later than the

4 date 6 months after the date the vehicle was

5 1st placed in service,

6 then there is hereby imposed on such installation a

7 tax equal to 10 percent of the price of such part or

8 accessory and its installation.

9 ‘‘(2) LIMITATION.—The tax imposed by para10 graph (1) on the installation of any part or acces11 sory shall not exceed 10 percent of the excess (if

12 any) of—

13 ‘‘(A) the sum of—

14 ‘‘(i) the price of such part or acces15 sory and its installation,

16 ‘‘(ii) the aggregate price of the parts

17 and accessories (and their installation) in18 stalled before such part or accessory, plus

19 ‘‘(iii) the price for which the pas20 senger vehicle was sold, over

21 ‘‘(B) $30,000.

22 ‘‘(3) EXCEPTIONS.—Paragraph (1) shall not

23 apply if—

24 ‘‘(A) the part or accessory installed is a re25 placement part or accessory,
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1 ‘‘(B) the part or accessory is installed to

2 enable or assist an individual with a disability

3 to operate the vehicle, or to enter or exit the ve4 hicle, by compensating for the effect of such

5 disability, or

6 ‘‘(C) the aggregate price of the parts and

7 accessories (and their installation) described in

8 paragraph (1) with respect to the vehicle does

9 not exceed $200 (or such other amount or

10 amounts as the Secretary may by regulation

11 prescribe).

12 The price of any part or accessory (and its installa13 tion) to which paragraph (1) does not apply by rea14 son of this paragraph shall not be taken into ac15 count under paragraph (2)(A).

16 ‘‘(4) INSTALLERS SECONDARILY LIABLE FOR

17 TAX.—The owners of the trade or business installing

18 the parts or accessories shall be secondarily liable

19 for the tax imposed by this subsection.

20 ‘‘(b) IMPOSITION OF TAX ON SALES, ETC., WITHIN

21 2 YEARS OF VEHICLES PURCHASED TAX-FREE.—

22 ‘‘(1) IN GENERAL.—If—

23 ‘‘(A) no tax was imposed under this sub24 chapter on the 1st retail sale of any passenger

25 vehicle by reason of its exempt use, and
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1 ‘‘(B) within 2 years after the date of such

2 1st retail sale, such vehicle is resold by the pur3 chaser or such purchaser makes a substantial

4 nonexempt use of such vehicle,

5 then such sale or use of such vehicle by such pur6 chaser shall be treated as the 1st retail sale of such

7 vehicle for a price equal to its fair market value at

8 the time of such sale or use.

9 ‘‘(2) EXEMPT USE.—For purposes of this sub10 section, the term ‘exempt use’ means any use of a

11 vehicle if the 1st retail sale of such vehicle is not

12 taxable under this subchapter by reason of such use.

13 ‘‘(c) PARTS AND ACCESSORIES SOLD WITH TAXABLE

14 PASSENGER VEHICLE.—Parts and accessories sold on, in

15 connection with, or with the sale of any passenger vehicle

16 shall be treated as part of the vehicle.

17 ‘‘(d) PARTIAL PAYMENTS, ETC.—In the case of a

18 contract, sale, or arrangement described in paragraph (2),

19 (3), or (4) of section 4216(c), rules similar to the rules

20 of section 4217(e)(2) shall apply for purposes of this sub21 chapter.’’

22 (b) TECHNICAL AMENDMENTS.—

23 (1) Subsection (c) of section 4221 is amended

24 by striking ‘‘4002(b), 4003(c), 4004(a)’’ and insert25 ing ‘‘4001(d)’’.
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•S 1134 PCS

1 (2) Subsection (d) of section 4222 is amended

2 by striking ‘‘4002(b), 4003(c), 4004(a)’’ and insert3 ing ‘‘4001(d)’’.

4 (3) The table of subchapters for chapter 31 is

5 amended by striking the item relating to subchapter

6 A and inserting the following:

‘‘Subchapter A. Luxury passenger vehicles.’’

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

8 this section shall take effect on January 1, 1993.

9 SEC. 8162. EXEMPTION FROM LUXURY EXCISE TAX FOR

10 CERTAIN EQUIPMENT INSTALLED ON PAS11 SENGER VEHICLES FOR USE BY DISABLED IN12 DIVIDUALS.

13 (a) IN GENERAL.—Paragraph (3) of section 4004(b)

14 (relating to separate purchase of article and parts and ac15 cessories therefor), as in effect on the day before the date

16 of the enactment of this Act, is amended—

17 (1) by striking ‘‘or’’ at the end of subparagraph

18 (A),

19 (2) by redesignating subparagraph (B) as sub20 paragraph (C),

21 (3) by inserting after subparagraph (A) the fol22 lowing new subparagraph:

23 ‘‘(B) the part or accessory is installed on

24 a passenger vehicle to enable or assist an indi25 vidual with a disability to operate the vehicle, or
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•S 1134 PCS

1 to enter or exit the vehicle, by compensating for

2 the effect of such disability, or’’, and

3 (4) by inserting after subparagraph (C) the fol4 lowing flush sentence:

5 ‘‘The price of any part or accessory (and its installa6 tion) to which paragraph (1) does not apply by rea7 son of this paragraph shall not be taken into ac8 count under paragraph (2)(A).’’

9 (b) EFFECTIVE DATE.—The amendments made by

10 this section shall take effect as if included in the amend11 ments made by section 11221(a) of the Omnibus Budget

12 Reconciliation Act of 1990.

13 (c) PERIOD FOR FILING CLAIMS.—If refund or credit

14 of any overpayment of tax resulting from the application

15 of the amendments made by this section is prevented at

16 any time before the close of the 1-year period beginning

17 on the date of the enactment of this Act by the operation

18 of any law or rule of law (including res judicata), refund

19 or credit of such overpayment (to the extent attributable

20 to such amendments) may, nevertheless, be made or al21 lowed if claim therefor is filed before the close of such

22 1-year period.

23 SEC. 8163. TAX ON DIESEL FUEL USED IN NONCOMMERCIAL

24 BOATS.

25 (a) GENERAL RULE.—
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1 (1) Paragraph (2) of section 4092(a) (defining

2 diesel fuel) is amended by striking ‘‘or a diesel-pow3 ered train’’ and inserting ‘‘, a diesel-powered train,

4 or a diesel-powered boat’’.

5 (2) Paragraph (1) of section 4041(a) is amend6 ed—

7 (A) by striking ‘‘diesel-powered highway

8 vehicle’’ each place it appears and inserting

9 ‘‘diesel-powered highway vehicle or diesel-pow10 ered boat’’, and

11 (B) by striking ‘‘such vehicle’’ and insert12 ing ‘‘such vehicle or boat’’.

13 (3) Subparagraph (B) of section 4092(b)(1) is

14 amended by striking ‘‘commercial and noncommer15 cial vessels’’ each place it appears and inserting

16 ‘‘vessels for use in an off-highway business use (as

17 defined in section 6421(e)(2)(B))’’.

18 (b) EXEMPTION FOR USE IN FISHERIES OR COM19 MERCIAL NAVIGATION.—Subparagraph (B) of section

20 6421(e)(2) is amended to read as follows:

21 ‘‘(B) USES IN BOATS.—

22 ‘‘(i) IN GENERAL.—Except as other23 wise provided in this subparagraph, the

24 term ‘off-highway business use’ does not

25 include any use in a motorboat.
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•S 1134 PCS

1 ‘‘(ii) FISHERIES AND WHALING.—The

2 term ‘off-highway business use’ shall in3 clude any use in a vessel employed in the

4 fisheries or in the whaling business.

5 ‘‘(iii) EXCEPTION FOR DIESEL

6 FUEL.—The term ‘off-highway business

7 use’ shall include the use of diesel fuel in

8 a boat in the active conduct of—

9 ‘‘(I) a trade or business of com10 mercial fishing or transporting per11 sons or property for compensation or

12 hire, or

13 ‘‘(II) any other trade or business,

14 except that this subclause shall not

15 apply to noncommercial uses described

16 in clause (iv) during a taxable period.

17 ‘‘(iv) TAXABLE PERIODS FOR NON18 COMMERCIAL BOATS.—In the case of any

19 use of diesel fuel in a boat used predomi20 nantly in any activity which is of a type

21 generally considered to constitute enter22 tainment, amusement, or recreation, the

23 taxable period for purposes of clause

24 (iii)(II) shall be—
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1 ‘‘(I) in the case so much of the

2 tax under section 4091 as is attrib3 utable to 4.3 cents of the diesel fuel

4 deficit reduction rate imposed under

5 such section, any period beginning

6 after September 30, 1993, and

7 ‘‘(II) in the case so much of the

8 tax under section 4091 as is not de9 scribed in subclause (I) the period be10 ginning after January 1, 1994, and

11 ending on December 31, 1999.

12 (c) RETENTION OF TAXES IN GENERAL FUND.—

13 (1) TAXES IMPOSED AT HIGHWAY TRUST FUND

14 FINANCING RATE.—Paragraph (4) of section

15 9503(b) (relating to transfers to Highway Trust

16 Fund) is amended—

17 (A) by striking ‘‘and’’ at the end of sub18 paragraph (A),

19 (B) by striking the period at the end of

20 subparagraph (B) and inserting ‘‘, and’’, and

21 (C) by adding at the end thereof the fol22 lowing new subparagraph:

23 ‘‘(C) there shall not be taken into account

24 the taxes imposed by sections 4041 and 4091
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1 on diesel fuel sold for use or used as fuel in a

2 diesel-powered boat.’’

3 (2) TAXES IMPOSED AT LEAKING UNDER4 GROUND STORAGE TANK TRUST FUND FINANCING

5 RATE.—Subsection (b) of section 9508 (relating to

6 transfers to Leaking Underground Storage Tank

7 Trust Fund) is amended by adding at the end there8 of the following new sentence: ‘‘For purposes of this

9 subsection, there shall not be taken into account the

10 taxes imposed by sections 4041 and 4091 on diesel

11 fuel sold for use or used as fuel in a diesel-powered

12 boat.’’

13 (d) EFFECTIVE DATE.—

14 (1) IN GENERAL.—Except as provided in para15 graph (2), the amendments made by this section

16 shall take effect on October 1, 1993.

17 (2) SPECIAL RULE.—No tax shall be imposed

18 before January 1, 1994, under section 4091 of the

19 Internal Revenue Code of 1986 by reason of the

20 amendments made by this section, other than the

21 portion of such tax as is attributable to 4.3 cents of

22 the diesel fuel deficit reduction rate imposed by such

23 section.
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1 PART VI—OTHER CHANGES

2 SEC. 8171. ALTERNATIVE MINIMUM TAX TREATMENT OF

3 CONTRIBUTIONS OF APPRECIATED PROP4 ERTY.

5 (a) REPEAL OF TAX PREFERENCE.—Subsection (a)

6 of section 57 is amended by striking paragraph (6) (relat7 ing to appreciated property charitable deduction) and by

8 redesignating paragraph (7) as paragraph (6).

9 (b) EFFECT ON ADJUSTED CURRENT EARNINGS.—

10 Paragraph (4) of section 56(g) is amended by adding at

11 the end thereof the following new subparagraph:

12 ‘‘(J) TREATMENT OF CHARITABLE CON13 TRIBUTIONS.—Notwithstanding subparagraphs

14 (B) and (C), no adjustment related to the earn15 ings and profits effects of any charitable con16 tribution shall be made in computing adjusted

17 current earnings.’’

18 (c) CONFORMING AMENDMENT.—Subclause (II) of

19 section 53(d)(1)(B)(ii) is amended by striking ‘‘(5) and

20 (6)’’ and inserting ‘‘(5)’’.

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

22 this section shall apply to contributions made after June

23 30, 1992, except that in the case of any contribution of

24 capital gain property which is not tangible personal prop25 erty, such amendments shall apply only if the contribution

26 is made after December 31, 1992.
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1 SEC. 8172. SUBSTANTIATION REQUIREMENT FOR DEDUC2 TION OF CERTAIN CHARITABLE CONTRIBU3 TIONS.

4 (a) SUBSTANTIATION REQUIREMENT.—Section

5 170(f) (providing special rules relating to the deduction

6 of charitable contributions and gifts) is amended by add7 ing at the end the following new paragraph:

8 ‘‘(8) SUBSTANTIATION REQUIREMENT FOR CER9 TAIN CONTRIBUTIONS.—

10 ‘‘(A) GENERAL RULE.—No deduction shall

11 be allowed under subsection (a) for any con12 tribution of $250 or more unless the taxpayer

13 substantiates the contribution by a contempora14 neous written acknowledgment of the contribu15 tion by the donee organization that meets the

16 requirements of subparagraph (B).

17 ‘‘(B) CONTENT OF ACKNOWLEDGMENT.—

18 ‘‘(i) IN GENERAL.—An acknowledg19 ment meets the requirements of this sub20 paragraph if it provides information suffi21 cient to substantiate the amount of the de22 ductible contribution. Nothing in this

23 clause shall be construed as requiring the

24 donee organization to estimate the value of

25 a noncash contribution.
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1 ‘‘(ii) QUID PRO QUO CONTRIBU2 TIONS.—If the contribution was made by

3 means of a payment part of which con4 stituted consideration for goods or services

5 provided by the donee organization, the ac6 knowledgment must provide a good faith

7 estimate of the value of such goods or serv8 ices. The preceding sentence shall not

9 apply to any payment made to an organi10 zation, organized exclusively for religious

11 purposes, in return for which the taxpayer

12 receives solely an intangible religious bene13 fit that generally is not sold in a commer14 cial transaction outside the donative con15 text.

16 ‘‘(C) CONTEMPORANEOUS.—For purposes

17 of subparagraph (A), an acknowledgment shall

18 be considered to be contemporaneous if the tax19 payer obtains the acknowledgment on or before

20 the earlier of—

21 ‘‘(i) the date on which the taxpayer

22 files a return for the taxable year in which

23 the contribution was made, or

24 ‘‘(ii) the due date (including exten25 sions) for filing such return.
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1 ‘‘(D) SUBSTANTIATION NOT REQUIRED

2 FOR CONTRIBUTIONS REPORTED BY THE

3 DONEE ORGANIZATION.—Subparagraph (A)

4 shall not apply to a contribution if the donee

5 organization files a return, on such form and in

6 accordance with such regulations as the Sec7 retary may prescribe, which includes the infor8 mation described in subparagraph (B) with re9 spect to the contribution.

10 ‘‘(E) REGULATIONS.—The Secretary shall

11 prescribe such regulations as may be necessary

12 or appropriate to carry out the purposes of this

13 paragraph, including regulations that may pro14 vide that some or all of the requirements of this

15 paragraph do not apply in appropriate cases.’’

16 (b) EFFECTIVE DATE.—The provisions of this sec17 tion shall apply to contributions made on or after January

18 1, 1994.

19 SEC. 8173. DISCLOSURE RELATED TO QUID PRO QUO

20 CONTRIBUTIONS.

21 (a) DISCLOSURE REQUIREMENT.—Subchapter B of

22 chapter 61 (relating to information and returns) is amend23 ed by redesignating section 6115 as section 6116 and by

24 inserting after section 6114 the following new section:
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1 ‘‘SEC. 6115. DISCLOSURE RELATED TO QUID PRO QUO CON2 TRIBUTIONS.

3 ‘‘(a) DISCLOSURE REQUIREMENT.—If an organiza4 tion described in section 170(c) (other than paragraph (1)

5 thereof) receives a quid pro quo contribution in excess of

6 $75, the organization shall, in connection with the solicita7 tion or receipt of the contribution, provide a written state8 ment which—

9 ‘‘(1) informs the donor that the amount of the

10 contribution that is deductible for Federal income

11 tax purposes is limited to the excess of the amount

12 of any money and the value of any property other

13 than money contributed by the donor over the value

14 of the goods or services provided by the organiza15 tion, and

16 ‘‘(2) provides the donor with a good faith esti17 mate of the value of such goods or services.

18 ‘‘(b) QUID PRO QUO CONTRIBUTION.—For purposes

19 of this section, the term ‘quid pro quo contribution’ means

20 a payment made partly as a contribution and partly in

21 consideration for goods or services provided to the payor

22 by the donee organization. A quid pro quo contribution

23 does not include any payment made to an organization,

24 organized exclusively for religious purposes, in return for

25 which the taxpayer receives solely an intangible religious
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1 benefit that generally is not sold in a commercial trans2 action outside the donative context.’’

3 (b) PENALTY FOR FAILURE TO DISCLOSE.—Part I

4 of subchapter B of chapter 68 (relating to assessable pen5 alties) is amended by inserting after section 6713 the fol6 lowing new section:

7 ‘‘SEC. 6714. FAILURE TO MEET DISCLOSURE REQUIRE8 MENTS APPLICABLE TO QUID PRO QUO CON9 TRIBUTIONS.

10 ‘‘(a) IMPOSITION OF PENALTY.—If an organization

11 fails to meet the disclosure requirement of section 6115

12 with respect to a quid pro quo contribution, such organiza13 tion shall pay a penalty of $10 for each contribution in

14 respect of which the organization fails to make the re15 quired disclosure, except that the total penalty imposed

16 by this subsection with respect to a particular fundraising

17 event or mailing shall not exceed $5,000.

18 ‘‘(b) REASONABLE CAUSE EXCEPTION.—No penalty

19 shall be imposed under this section with respect to any

20 failure if it is shown that such failure is due to reasonable

21 cause.’’

22 (c) CLERICAL AMENDMENTS.—

23 (1) The table for subchapter B of chapter 61

24 is amended by striking the item relating to section

25 6115 and inserting the following new items:
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‘‘Sec. 6115. Disclosure related to quid pro quo contributions.

‘‘Sec. 6116. Cross reference.’’

1 (2) The table for part I of subchapter B of

2 chapter 68 is amended by inserting after the item

3 for section 6713 the following new item:

‘‘Sec. 6714. Failure to meet disclosure requirements applicable to

quid pro quo contributions.’’

4 (d) EFFECTIVE DATE.—The provisions of this sec5 tion shall apply to quid pro quo contributions made on

6 or after January 1, 1994.

7 SEC. 8174. CERTAIN TRANSFERS TO RAILROAD RETIRE8 MENT ACCOUNT MADE PERMANENT.

9 Subsection (c)(1)(A) of section 224 of the Railroad

10 Retirement Solvency Act of 1983 (relating to section 72(r)

11 revenue increase transferred to certain railroad accounts)

12 is amended by striking ‘‘with respect to benefits received

13 before October 1, 1992’’.

14 SEC. 8175. TEMPORARY EXTENSION OF DEDUCTION FOR

15 HEALTH INSURANCE COSTS OF SELF-EM16 PLOYED INDIVIDUALS.

17 (a) IN GENERAL.—

18 (1) EXTENSION.—Paragraph (6) of section

19 162(l) (relating to special rules for health insurance

20 costs of self-employed individuals) is amended by

21 striking ‘‘June 30, 1992’’ and inserting ‘‘December

22 31, 1993’’.
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1 (2) CONFORMING AMENDMENT.—Paragraph (2)

2 of section 110(a) of the Tax Extension Act of 1991

3 is hereby repealed.

4 (3) EFFECTIVE DATE.—The amendments made

5 by this subsection shall apply to taxable years end6 ing after June 30, 1992.

7 (b) DETERMINATION OF ELIGIBILITY FOR EM8 PLOYER-SPONSORED HEALTH PLAN.—

9 (1) IN GENERAL.—Paragraph (2)(B) of section

10 162(l) is amended to read as follows:

11 ‘‘(B) OTHER COVERAGE.—Paragraph (1)

12 shall not apply to any taxpayer for any calendar

13 month for which the taxpayer is eligible to par14 ticipate in any subsidized health plan main15 tained by any employer of the taxpayer or of

16 the spouse of the taxpayer.’’

17 (2) EFFECTIVE DATE.—The amendment made

18 by paragraph (1) shall apply to taxable years begin19 ning after December 31, 1992.
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1 Subtitle B—Revenue Increases

2 PART I—PROVISIONS AFFECTING INDIVIDUALS

3 Subpart A—Rate Increases

4 SEC. 8201. INCREASE IN TOP MARGINAL RATE UNDER SEC5 TION 1.

6 (a) GENERAL RULE.—Section 1 (relating to tax im7 posed) is amended by striking subsections (a) through (e)

8 and inserting the following:

9 ‘‘(a) MARRIED INDIVIDUALS FILING JOINT RETURNS

10 AND SURVIVING SPOUSES.—There is hereby imposed on

11 the taxable income of—

12 ‘‘(1) every married individual (as defined in sec13 tion 7703) who makes a single return jointly with

14 his spouse under section 6013, and

15 ‘‘(2) every surviving spouse (as defined in sec16 tion 2(a)),

17 a tax determined in accordance with the following table:

‘‘If taxable income is: The tax is:

Not over $36,900 .......................... 15% of taxable income.

Over $36,900 but not over

$89,150.

$5,535, plus 28% of the excess over

$36,900.

Over $89,150 but not over

$140,000.

$20,165, plus 31% of the excess over

$89,150.

Over $140,000 ............................... $35,928.50, plus 36% of the excess

over $140,000.

18 ‘‘(b) HEADS OF HOUSEHOLDS.—There is hereby im19 posed on the taxable income of every head of a household

20 (as defined in section 2(b)) a tax determined in accordance

21 with the following table:
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‘‘If taxable income is: The tax is:

Not over $29,600 .......................... 15% of taxable income.

Over $29,600 but not over

$76,400.

$4,440, plus 28% of the excess over

$29,600.

Over $76,400 but not over

$127,500.

$17,544, plus 31% of the excess over

$76,400.

Over $127,500 ............................... $33,385, plus 36% of the excess over

$127,500.

1 ‘‘(c) UNMARRIED INDIVIDUALS (OTHER THAN SUR2 VIVING SPOUSES AND HEADS OF HOUSEHOLDS).—There

3 is hereby imposed on the taxable income of every individ4 ual (other than a surviving spouse as defined in section

5 2(a) or the head of a household as defined in section 2(b))

6 who is not a married individual (as defined in section

7 7703) a tax determined in accordance with the following

8 table:

‘‘If taxable income is: The tax is:

Not over $22,100 .......................... 15% of taxable income.

Over $22,100 but not over

$53,500.

$3,315, plus 28% of the excess over

$22,100.

Over $53,500 but not over

$115,000.

$12,107, plus 31% of the excess over

$53,500.

Over $115,000 ............................... $31,172, plus 36% of the excess over

$115,000.

9 ‘‘(d) MARRIED INDIVIDUALS FILING SEPARATE RE10 TURNS.—There is hereby imposed on the taxable income

11 of every married individual (as defined in section 7703)

12 who does not make a single return jointly with his spouse

13 under section 6013, a tax determined in accordance with

14 the following table:

‘‘If taxable income is: The tax is:

Not over $18,450 .......................... 15% of taxable income.

Over $18,450 but not over

$44,575.

$2,767.50, plus 28% of the excess

over $18,450.
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‘‘If taxable income is: The tax is:

Over $44,575 but not over

$70,000.

$10,082.50, plus 31% of the excess

over $44,575.

Over $70,000 ................................. $17,964.25, plus 36% of the excess

over $70,000.

1 ‘‘(e) ESTATES AND TRUSTS.—There is hereby im2 posed on the taxable income of—

3 ‘‘(1) every estate, and

4 ‘‘(2) every trust,

5 taxable under this subsection a tax determined in accord6 ance with the following table:

‘‘If taxable income is: The tax is:

Not over $1,500 ............................ 15% of taxable income.

Over $1,500 but not over $3,500 .. $225, plus 28% of the excess over

$1,500.

Over $3,500 but not over $5,500 .. $785, plus 31% of the excess over

$3,500.

Over $5,500 ................................... $1,405, plus 36% of the excess over

$5,500.’’

7 (b) CONFORMING AMENDMENTS.—

8 (1) Section 531 is amended by striking ‘‘28

9 percent’’ and inserting ‘‘36 percent’’.

10 (2) Section 541 is amended by striking ‘‘28

11 percent’’ and inserting ‘‘36 percent’’.

12 (3)(A) Subsection (f) of section 1 is amended—

13 (i) by striking ‘‘1990’’ in paragraph (1)

14 and inserting‘‘1993’’, and

15 (ii) by striking ‘‘1989’’ in paragraph

16 (3)(B) and inserting ‘‘1992’’.

17 (B) Subsection (f) of section 1 is amended by

18 adding at the end thereof the following new para19 graph:
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1 ‘‘(7) SPECIAL RULE FOR CERTAIN BRACKETS.—

2 ‘‘(A) CALENDAR YEAR 1994.—In prescrib3 ing the tables under paragraph (1) which apply

4 with respect to taxable years beginning in cal5 endar year 1994, the Secretary shall make no

6 adjustment to the dollar amounts at which the

7 36 percent rate bracket begins or at which the

8 39.6 percent rate begins under any table con9 tained in subsection (a), (b), (c), (d), or (e).

10 ‘‘(B) LATER CALENDAR YEARS.—In pre11 scribing tables under paragraph (1) which apply

12 with respect to taxable years beginning in a cal13 endar year after 1994, the cost-of-living adjust14 ment used in making adjustments to the dollar

15 amounts referred to in subparagraph (A) shall

16 be determined under paragraph (3) by sub17 stituting ‘1993’ for ‘1992’.’’

18 (C) Subparagraph (C) of section 41(e)(5) is

19 amended by striking ‘‘1989’’ each place it appears

20 and inserting ‘‘1992’’.

21 (D) Subparagraph (B) of section 63(c)(4) is

22 amended by striking ‘‘1989’’ and inserting ‘‘1992’’.

23 (E) Subparagraph (B) of section 68(b)(2) is

24 amended by striking ‘‘1989’’ and inserting ‘‘1992’’.
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1 (F) Subparagraph (B) of section 132(f)(6) is

2 amended by striking ‘‘, determined by substituting’’

3 and all that follows down through the period at the

4 end thereof and inserting a period.

5 (G) Subparagraphs (A)(ii) and (B)(ii) of sec6 tion 151(d)(4) are each amended by striking ‘‘1989’’

7 and inserting ‘‘1992’’.

8 (H) Clause (ii) of section 513(h)(2)(C) is

9 amended by striking ‘‘1989’’ and inserting ‘‘1992’’.

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

11 this section shall apply to taxable years beginning after

12 December 31, 1992.

13 SEC. 8202. SURTAX ON HIGH-INCOME TAXPAYERS.

14 (a) GENERAL RULE.—

15 (1) Subsection (a) of section 1 (as amended by

16 section 8201) is amended by striking the last item

17 in the table contained therein and inserting the fol18 lowing:

‘‘Over $140,000 but not over

$250,000.

$35,928.50, plus 36% of the excess

over $140,000.

Over $250,000 ............................... $75,528.50, plus 39.6% of the excess

over $250,000.’’

19 (2) Subsection (b) of section 1 (as so amended)

20 is amended by striking the last item in the table

21 contained therein and inserting the following:

‘‘Over $127,500 but not over

$250,000.

$33,385, plus 36% of the excess over

$127,500.

Over $250,000 ............................... $77,485, plus 39.6% of the excess

over $250,000.’’
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1 (3) Subsection (c) of section 1 (as so amended)

2 is amended by striking the last item in the table

3 contained therein and inserting the following:

‘‘Over $115,000 but not over

$250,000.

$31,172, plus 36% of the excess over

$115,000.

Over $250,000 ............................... $79,772, plus 39.6% of the excess

over $250,000.’’

4 (4) Subsection (d) of section 1 (as so amended)

5 is amended by striking the last item in the table

6 contained therein and inserting the following:

‘‘Over $70,000 but not over

$125,000.

$17,964.25, plus 36% of the excess

over $70,000.

Over $125,000 ............................... $37,764.25, plus 39.6% of the excess

over $125,000.’’

7 (5) Subsection (e) of section 1 (as so amended)

8 is amended by striking the last item in the table

9 contained therein and inserting the following:

‘‘Over $5,500 but not over $7,500 $1,405, plus 36% of the excess over

$5,500.

Over $7,500 ................................... $2,125, plus 39.6% of the excess over

$7,500.’’

10 (b) SURTAX ON NET CAPITAL GAINS.—Section 1(h)

11 (relating to maximum capital gains rate) is amended by

12 striking the period at the end of paragraph (2) and insert13 ing ‘‘, plus’’, and by adding at the end the following new

14 paragraph:

15 ‘‘(3) a tax of 2.8 percent of the lesser of—

16 ‘‘(A) the net capital gain, or

17 ‘‘(B) the amount of taxable income in ex18 cess of the dollar amount at which the last rate

19 bracket begins for such taxable year in the
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1 table contained in subsection (a), (b), (c), (d),

2 or (e), whichever is applicable.’’

3 (c) TECHNICAL AMENDMENT.—Sections 531 and

4 541 (as amended by section 8201) are each amended by

5 striking ‘‘36 percent’’ and inserting ‘‘39.6 percent’’.

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

7 this section shall apply to taxable years beginning after

8 December 31, 1992.

9 SEC. 8203. MODIFICATIONS TO ALTERNATIVE MINIMUM

10 TAX RATES AND EXEMPTION AMOUNTS.

11 (a) INCREASE IN RATE.—Paragraph (1) of section

12 55(b) (defining tentative minimum tax) is amended to

13 read as follows:

14 ‘‘(1) AMOUNT OF TENTATIVE TAX.—

15 ‘‘(A) NONCORPORATE TAXPAYERS.—

16 ‘‘(i) IN GENERAL.—In the case of a

17 taxpayer other than a corporation, the ten18 tative minimum tax for the taxable year is

19 the sum of—

20 ‘‘(I) 26 percent of so much of the

21 taxable excess as does not exceed

22 $175,000, plus

23 ‘‘(II) 28 percent of so much of

24 the taxable excess as exceeds

25 $175,000.
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1 The amount determined under the preced2 ing sentence shall be reduced by the alter3 native minimum tax foreign tax credit for

4 the taxable year.

5 ‘‘(ii) TAXABLE EXCESS.—For pur6 poses of clause (i), the term ‘taxable ex7 cess’ means so much of the alternative

8 minimum taxable income for the taxable

9 year as exceeds the exemption amount.

10 ‘‘(iii) MARRIED INDIVIDUAL FILING

11 SEPARATE RETURN.—In the case of a mar12 ried individual filing a separate return,

13 clause (i) shall be applied by substituting

14 ‘$87,500’ for ‘$175,000’ each place it ap15 pears. For purposes of the preceding sen16 tence, marital status shall be determined

17 under section 7703.

18 ‘‘(B) CORPORATIONS.—In the case of a

19 corporation, the tentative minimum tax for the

20 taxable year is—

21 ‘‘(i) 20 percent of so much of the al22 ternative minimum taxable income for the

23 taxable year as exceeds the exemption

24 amount, reduced by
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1 ‘‘(ii) the alternative minimum tax for2 eign tax credit for the taxable year.’’

3 (b) INCREASE IN EXEMPTION AMOUNTS.—Para4 graph (1) of section 55(d) (defining exemption amount)

5 is amended—

6 (1) by striking ‘‘$40,000’’ in subparagraph (A)

7 and inserting ‘‘$45,000’’,

8 (2) by striking ‘‘$30,000’’ in subparagraph (B)

9 and inserting ‘‘$33,750’’, and

10 (3) by striking ‘‘$20,000’’ in subparagraph (C)

11 and inserting ‘‘$22,500’’.

12 (c) CONFORMING AMENDMENTS.—

13 (1) The last sentence of section 55(d)(3) is

14 amended by striking ‘‘$155,000 or (ii) $20,000’’ and

15 inserting ‘‘$165,000 or (ii) $22,500’’.

16 (2)(A) Subparagraph (A) of section 897(a)(2)

17 is amended by striking ‘‘the amount determined

18 under section 55(b)(1)(A) shall not be less than 21

19 percent of’’ and inserting ‘‘the taxable excess for

20 purposes of section 55(b)(1)(A) shall not be less

21 than’’.

22 (B) The heading for paragraph (2) of section

23 897(a) is amended by striking ‘‘21-PERCENT’’.
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1 (d) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1992.

4 SEC. 8203A. RATE INCREASES NOT TO TAKE EFFECT UNTIL

5 JULY 1, 1993.

6 (a) IN GENERAL.—Section 1 (relating to tax im7 posed) is amended by adding at the end the following new

8 subsection:

9 ‘‘(i) SPECIAL RULES FOR TAXABLE YEARS BEGIN10 NING IN 1993.—

11 ‘‘(1) IN GENERAL.—In the case of taxable years

12 beginning in calendar year 1993, each of the tables

13 contained in subsections (a), (b), (c), (d), and (e)

14 shall be applied—

15 ‘‘(A) by substituting ‘33.5 percent’ for ‘36

16 percent’,

17 ‘‘(B) by substituting ‘35.3 percent’ for

18 ‘39.6 percent’, and

19 ‘‘(C) by substituting for the dollar amount

20 of tax in the last rate bracket the dollar amount

21 determined under the table contained in para22 graph (2).

23 ‘‘(2) DOLLAR AMOUNT OF TAX.—The dollar

24 amount substituted under paragraph (1) shall be de25 termined as follows:
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‘‘In the case of: The dollar amount is:

Subsection (a) .................... $72,778.50 for $75,528.50.

Subsection (b) .................... $74,422.50 for $77,485.00.

Subsection (c) .................... $76,397.00 for $79,772.00.

Subsection (d) .................... $36,389.25 for $37,764.25.

Subsection (e) .................... $2,075.00 for $2,125.00.’’

1 (b) CONFORMING AMENDMENTS.—

2 (1) Sections 531 and 541 (as amended by sec3 tion 8202) are each amended by inserting ‘‘(35.3

4 percent in the case of taxable years beginning in cal5 endar year 1993)’’ after ‘‘39.6 percent’’.

6 (2) Section 1(h)(3), as added by section

7 8202(b), is amended by inserting ‘‘(1.4 percent in

8 the case of taxable years beginning in calendar year

9 1993)’’ after ‘‘2.8 percent’’.

10 (3) Paragraph (1) of section 55(b), as amended

11 by section 8203, is amended by adding at the end

12 the following new subparagraph:

13 ‘‘(C) SPECIAL RULES FOR 1993.—In the

14 case of any taxable year beginning in the cal15 endar year 1993, subparagraph (A)(i) shall be

16 applied by substituting—

17 ‘‘(i) ‘25 percent’ for ‘26 percent’ in

18 subclause (I), and

19 ‘‘(ii) ‘26 percent’ for ‘28 percent’ in

20 subclause (II).’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1992.

4 SEC. 8204. OVERALL LIMITATION ON ITEMIZED DEDUC5 TIONS FOR HIGH-INCOME TAXPAYERS MADE

6 PERMANENT.

7 Subsection (f) of section 68 (relating to overall limita8 tion on itemized deductions) is hereby repealed.

9 SEC. 8205. PHASEOUT OF PERSONAL EXEMPTION OF HIGH10 INCOME TAXPAYERS MADE PERMANENT.

11 Section 151(d)(3) (relating to phaseout of personal

12 exemption) is amended by striking subparagraph (E).

13 SEC. 8206. PROVISIONS TO PREVENT CONVERSION OF OR14 DINARY INCOME TO CAPITAL GAIN.

15 (a) INTEREST EMBEDDED IN FINANCIAL TRANS16 ACTIONS.—

17 (1) IN GENERAL.—Part IV of subchapter P of

18 chapter 1 (relating to special rules for determining

19 capital gains and losses) is amended by adding at

20 the end the following new section:

21 ‘‘SEC. 1258. RECHARACTERIZATION OF GAIN FROM CER22 TAIN FINANCIAL TRANSACTIONS.

23 ‘‘(a) GENERAL RULE.—In the case of any gain—
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1 ‘‘(1) which (but for this section) would be treat2 ed as gain from the sale or exchange of a capital

3 asset, and

4 ‘‘(2) which is recognized on the disposition or

5 other termination of any position which was held as

6 part of a conversion transaction,

7 such gain (to the extent such gain does not exceed the

8 applicable imputed income amount) shall be treated as

9 ordinary income.

10 ‘‘(b) APPLICABLE IMPUTED INCOME AMOUNT.—For

11 purposes of subsection (a), the term ‘applicable imputed

12 income amount’ means, with respect to any disposition or

13 other termination referred to in subsection (a), an amount

14 equal to—

15 ‘‘(1) the amount of interest which would have

16 accrued on the taxpayer’s net investment in the con17 version transaction for the period ending on the date

18 of such disposition or other termination (or, if ear19 lier, the date on which the requirements of sub20 section (c) ceased to be satisfied) at a rate equal to

21 120 percent of the applicable rate, reduced by

22 ‘‘(2) the amount treated as ordinary income

23 under subsection (a) with respect to any prior dis24 position or other termination of a position which was

25 held as a part of such transaction.
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1 The Secretary shall by regulations provide for such reduc2 tions in the applicable imputed income amount as may be

3 appropriate by reason of amounts capitalized under sec4 tion 263(g), ordinary income received, or otherwise.

5 ‘‘(c) CONVERSION TRANSACTION.—For purposes of

6 this section, the term ‘conversion transaction’ means any

7 transaction—

8 ‘‘(1) substantially all of the taxpayer’s expected

9 return from which is attributable to the time value

10 of the taxpayer’s net investment in such transaction,

11 and

12 ‘‘(2) which is—

13 ‘‘(A) the holding of any property (whether

14 or not actively traded), and the entering into a

15 contract to sell such property (or substantially

16 identical property) at a price determined in ac17 cordance with such contract, but only if such

18 property was acquired and such contract was

19 entered into on a substantially contempora20 neous basis,

21 ‘‘(B) an applicable straddle,

22 ‘‘(C) any other transaction which is mar23 keted or sold as producing capital gains and as

24 a transaction described in paragraph (1), or
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1 ‘‘(D) any other transaction specified in

2 regulations prescribed by the Secretary.

3 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur4 poses of this section—

5 ‘‘(1) APPLICABLE STRADDLE.—The term ‘appli6 cable straddle’ means any straddle (within the mean7 ing of section 1092(c)); except that the term ‘per8 sonal property’ shall include stock.

9 ‘‘(2) APPLICABLE RATE.—The term ‘applicable

10 rate’ means—

11 ‘‘(A) the applicable Federal rate deter12 mined under section 1274(d) (compounded

13 semiannually) as if the conversion transaction

14 were a debt instrument, or

15 ‘‘(B) if the term of the conversion trans16 action is indefinite, the Federal short-term

17 rates in effect under section 6621(b) during the

18 period of the conversion transaction

19 (compounded daily).

20 ‘‘(3) TREATMENT OF BUILT-IN LOSSES.—

21 ‘‘(A) IN GENERAL.—If any position with a

22 built-in loss becomes part of a conversion trans23 action—

24 ‘‘(i) for purposes of applying this sub25 title to such position for periods after such
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•S 1134 PCS

1 position becomes part of such transaction,

2 such position shall be taken into account

3 at its fair market value as of the time it

4 became part of such transaction, except

5 that

6 ‘‘(ii) upon the disposition or other ter7 mination of such position in a transaction

8 in which gain or loss is recognized, such

9 built-in loss shall be recognized and shall

10 have a character determined without re11 gard to this section.

12 ‘‘(B) BUILT-IN LOSS.—For purposes of

13 subparagraph (A), the term ‘built-in loss’

14 means the loss (if any) which would have been

15 realized if the position had been disposed of or

16 otherwise terminated at its fair market value as

17 of the time such position became part of such

18 transaction.

19 ‘‘(4) POSITION TAKEN INTO ACCOUNT AT FAIR

20 MARKET VALUE.—In determining the taxpayer’s net

21 investment in any conversion transaction, there shall

22 be included the fair market value of any position

23 which becomes part of such transaction (determined

24 as of the time such position became part of such

25 transaction).
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1 ‘‘(5) SPECIAL RULE FOR OPTIONS DEALERS

2 AND COMMODITIES TRADERS.—

3 ‘‘(A) IN GENERAL.—Subsection (a) shall

4 not apply to transactions —

5 ‘‘(i) of an options dealer in the normal

6 course of the dealer’s trade or business of

7 dealing with options, or

8 ‘‘(ii) of a commodities trader in the

9 normal course of the trader’s trade or

10 business of trading section 1256 contracts.

11 ‘‘(B) DEFINITIONS.—For purposes of this

12 paragraph—

13 ‘‘(i) OPTIONS DEALER.—The term

14 ‘options dealer’ has the meaning given

15 such term by section 1256(g)(8).

16 ‘‘(ii) COMMODITIES TRADER.— The

17 term ‘commodities trader’ means any per18 son who is a member (or, to the extent

19 provided in regulations, is entitled to trade

20 as a member) of a domestic board of trade

21 which is designated as a contract market

22 by the Commodity Futures Trading Com23 mission.

24 ‘‘(C) LIMITED PARTNERS AND LIMITED

25 ENTREPRENEURS.—In the case of any gain
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1 from a transaction recognized by an entity

2 which is allocable to a limited partner or limited

3 entrepreneur (within the meaning of section

4 464(e)(2)), subparagraph (A) shall not apply

5 if—

6 ‘‘(i) substantially all of the limited

7 partner’s (or limited entrepreneur’s) ex8 pected return from the entity is attrib9 utable to the time value of the partner’s

10 (or entrepreneur’s) net investment in such

11 entity,

12 ‘‘(ii) the transaction (or the interest

13 in the entity) was marketed or sold as pro14 ducing capital gains treatment and as a

15 transaction described in subsection (c)(1),

16 or

17 ‘‘(iii) the transaction (or the interest

18 in the entity) is a transaction (or interest)

19 specified in regulations prescribed by the

20 Secretary.’’

21 (2) CLERICAL AMENDMENT.—The table of sec22 tions for part IV of subchapter P of chapter 1 is

23 amended by adding at the end thereof the following

24 new item:

‘‘Sec. 1258. Recharacterization of gain from certain financial

transactions.’’
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•S 1134 PCS

1 (3) EFFECTIVE DATE.—The amendments made

2 by this section shall apply to conversion transactions

3 entered into after April 30, 1993.

4 (b) REPEAL OF CERTAIN EXCEPTIONS TO MARKET

5 DISCOUNT RULES.—

6 (1) MARKET DISCOUNT BONDS ISSUED ON OR

7 BEFORE JULY 18, 1984.—The following provisions

8 are hereby repealed:

9 (A) Section 1276(e).

10 (B) Section 1277(d).

11 (2) TAX-EXEMPT OBLIGATIONS.—

12 (A) IN GENERAL.—Paragraph (1) of sec13 tion 1278(a) (defining market discount bond) is

14 amended—

15 (i) by striking clause (ii) of subpara16 graph (B) and redesignating subclauses

17 (iii) and (iv) of such subparagraph as

18 clauses (ii) and (iii), respectively,

19 (ii) by redesignating subparagraph

20 (C) as subparagraph (D), and

21 (iii) by inserting after subparagraph

22 (B) the following new subparagraph:

23 ‘‘(C) SECTION 1277 NOT APPLICABLE TO

24 TAX-EXEMPT OBLIGATIONS.—For purposes of

25 section 1277, the term ‘market discount bond’
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•S 1134 PCS

1 shall not include any tax-exempt obligation (as

2 defined in section 1275(a)(3)).’’

3 (B) CONFORMING AMENDMENT.—Sections

4 1276(a)(4) and 1278(b)(1) are each amended

5 by striking ‘‘sections 871(a)’’ and inserting

6 ‘‘sections 103, 871(a),’’.

7 (3) EFFECTIVE DATE.—The amendments made

8 by this section shall apply to obligations purchased

9 (within the meaning of section 1272(d)(1) of the In10 ternal Revenue Code of 1986) after April 30, 1993.

11 (c) TREATMENT OF STRIPPED PREFERRED

12 STOCK.—

13 (1) IN GENERAL.—Section 305 is amended by

14 redesignating subsection (e) as subsection (f) and by

15 inserting after subsection (d) the following new sub16 section:

17 ‘‘(e) TREATMENT OF PURCHASER OF STRIPPED PRE18 FERRED STOCK.—

19 ‘‘(1) IN GENERAL.—If any person purchases

20 after April 30, 1993, any stripped preferred stock,

21 then such person, while holding such stock, shall in22 clude in gross income amounts equal to the amounts

23 which would have been so includible if such stripped

24 preferred stock were a bond issued on the purchase
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•S 1134 PCS

1 date and having original issue discount equal to the

2 excess, if any, of—

3 ‘‘(A) the redemption price for such stock,

4 over

5 ‘‘(B) the price at which such person pur6 chased such stock.

7 The preceding sentence shall also apply in the case

8 of any person whose basis in such stock is deter9 mined by reference to the basis in the hands of such

10 purchaser.

11 ‘‘(2) BASIS ADJUSTMENTS.—Appropriate ad12 justments to basis shall be made for amounts includ13 ible in gross income under paragraph (1).

14 ‘‘(3) TAX TREATMENT OF PERSON STRIPPING

15 STOCK.—If any person strips the rights to 1 or more

16 dividends from any stock described in paragraph

17 (5)(B) and after April 30, 1993, disposes of such

18 dividend rights, for purposes of paragraph (1), such

19 person shall be treated as having purchased the

20 stripped preferred stock on the date of such disposi21 tion for a purchase price equal to such person’s

22 adjusted basis in such stripped preferred stock.

23 ‘‘(4) AMOUNTS TREATED AS ORDINARY IN24 COME.—Any amount included in gross income under

25 paragraph (1) shall be treated as ordinary income.
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•S 1134 PCS

1 ‘‘(5) STRIPPED PREFERRED STOCK.—For pur2 poses of this subsection—

3 ‘‘(A) IN GENERAL.—The term ‘stripped

4 preferred stock’ means any stock described in

5 subparagraph (B) if there has been a separa6 tion in ownership between such stock and any

7 dividend on such stock which has not become

8 payable.

9 ‘‘(B) DESCRIPTION OF STOCK.—Stock is

10 described in this subsection if such stock—

11 ‘‘(i) is limited and preferred as to

12 dividends and does not participate in cor13 porate growth to any significant extent,

14 and

15 ‘‘(ii) has a fixed redemption price.

16 ‘‘(6) PURCHASE.—For purposes of this sub17 section, the term ‘purchase’ means—

18 ‘‘(A) any acquisition of stock, where

19 ‘‘(B) the basis of such stock is not deter20 mined in whole or in part by the reference to

21 the adjusted basis of such stock in the hands of

22 the person from whom acquired.’’

23 (2) COORDINATION WITH SECTION 167(e).—

24 Paragraph (2) of section 167(e) is amended to read

25 as follows:
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•S 1134 PCS

1 ‘‘(2) COORDINATION WITH OTHER PROVI2 SIONS.—

3 ‘‘(A) SECTION 273.—This subsection shall

4 not apply to any term interest to which section

5 273 applies.

6 ‘‘(B) SECTION 305(e).—This subsection

7 shall not apply to the holder of the dividend

8 rights which were separated from any stripped

9 preferred stock to which section 305(e)(1) ap10 plies.’’

11 (3) EFFECTIVE DATE.—The amendments made

12 by this subsection shall take effect on April 30,

13 1993.

14 (d) TREATMENT OF CAPITAL GAIN UNDER LIMITA15 TION ON INVESTMENT INTEREST.—

16 (1) IN GENERAL.—Subparagraph (B) of section

17 163(d)(4) (defining investment income) is amended

18 to read as follows:

19 ‘‘(B) INVESTMENT INCOME.—The term

20 ‘investment income’ means the sum of—

21 ‘‘(i) gross income from property held

22 for investment (other than any gain taken

23 into account under clause (ii)(I)),

24 ‘‘(ii) the excess (if any) of—
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•S 1134 PCS

1 ‘‘(I) the net gain attributable to

2 the disposition of property held for in3 vestment, over

4 ‘‘(II) the net capital gain deter5 mined by only taking into account

6 gains and losses from dispositions of

7 property held for investment, plus

8 ‘‘(iii) so much of the net capital gain

9 referred to in clause (ii)(II) (or, if lesser,

10 the net gain referred to in clause (ii)(I)) as

11 the taxpayer elects to take into account

12 under this clause.’’

13 (2) COORDINATION WITH SPECIAL CAPITAL

14 GAINS RATE.—Subsection (h) of section 1, as

15 amended by section 8202(b), is amended by adding

16 at the end the following new sentence:

17 ‘‘For purposes of the preceding sentence, the net capital

18 gain for any taxable year shall be reduced (but not below

19 zero) by the amount which the taxpayer elects to take into

20 account as investment income for the taxable year under

21 section 163(d)(4)(B)(iii).’’

22 (3) EFFECTIVE DATE.—The amendments made

23 by this subsection shall apply to taxable years begin24 ning after December 31, 1992.
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•S 1134 PCS

1 (e) TREATMENT OF CERTAIN APPRECIATED INVEN2 TORY.—

3 (1) IN GENERAL.—Paragraph (1) of section

4 751(d) is amended to read as follows:

5 ‘‘(1) SUBSTANTIAL APPRECIATION.—

6 ‘‘(A) IN GENERAL.—Inventory items of the

7 partnership shall be considered to have appre8 ciated substantially in value if their fair market

9 value exceeds 120 percent of the adjusted basis

10 to the partnership of such property.

11 ‘‘(B) CERTAIN PROPERTY EXCLUDED.—

12 For purposes of subparagraph (A), there shall

13 be excluded any inventory property if a prin14 cipal purpose for acquiring such property was

15 to avoid the provisions of this section relating

16 to inventory items.’’

17 (2) EFFECTIVE DATE.—The amendment made

18 by paragraph (1) shall apply to sales, exchanges,

19 and distributions after April 30, 1993.

20 Subpart B—Other Provisions

21 SEC. 8207. REPEAL OF LIMITATION ON AMOUNT OF WAGES

22 SUBJECT TO HEALTH INSURANCE EMPLOY23 MENT TAX.

24 (a) HOSPITAL INSURANCE TAX.—
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•S 1134 PCS

1 (1) Paragraph (1) of section 3121(a) (defining

2 wages) is amended—

3 (A) by inserting ‘‘in the case of the taxes

4 imposed by sections 3101(a) and 3111(a)’’ after

5 ‘‘(1)’’,

6 (B) by striking ‘‘applicable contribution

7 base (as determined under subsection (x))’’

8 each place it appears and inserting ‘‘contribu9 tion and benefit base (as determined under sec10 tion 230 of the Social Security Act)’’, and

11 (C) by striking ‘‘such applicable contribu12 tion base’’ and inserting ‘‘such contribution and

13 benefit base’’.

14 (2) Section 3121 is amended by striking sub15 section (x).

16 (b) SELF-EMPLOYMENT TAX.—

17 (1) Subsection (b) of section 1402 is amend18 ed—

19 (A) by striking ‘‘that part of the net’’ in

20 paragraph (1) and inserting ‘‘in the case of the

21 tax imposed by section 1401(a), that part of

22 the net’’,

23 (B) by striking ‘‘applicable contribution

24 base (as determined under subsection (k))’’ in

25 paragraph (1) and inserting ‘‘contribution and
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•S 1134 PCS

1 benefit base (as determined under section 230

2 of the Social Security Act)’’,

3 (C) by inserting ‘‘and’’ after ‘‘section

4 3121(b),’’, and

5 (D) by striking ‘‘and (C) includes’’ and all

6 that follows through ‘‘3111(b)’’.

7 (2) Section 1402 is amended by striking sub8 section (k).

9 (c) RAILROAD RETIREMENT TAX.—

10 (1) Subparagraph (A) of section 3231(e)(2) is

11 amended by adding at the end thereof the following

12 new clause:

13 ‘‘(iii) HOSPITAL INSURANCE TAXES.—

14 Clause (i) shall not apply to—

15 ‘‘(I) so much of the rate applica16 ble under section 3201(a) or 3221(a)

17 as does not exceed the rate of tax in

18 effect under section 3101(b), and

19 ‘‘(II) so much of the rate applica20 ble under section 3211(a)(1) as does

21 not exceed the rate of tax in effect

22 under section 1401(b).’’

23 (2) Clause (i) of section 3231(e)(2)(B) is

24 amended to read as follows:
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1 ‘‘(i) TIER 1 TAXES.—Except as pro2 vided in clause (ii), the term ‘applicable

3 base’ means for any calendar year the con4 tribution and benefit base determined

5 under section 230 of the Social Security

6 Act for such calendar year.’’

7 (d) TECHNICAL AMENDMENTS.—

8 (1) Paragraph (1) of section 6413(c) is amend9 ed by striking ‘‘section 3101 or section 3201’’ and

10 inserting ‘‘section 3101(a) or section 3201(a) (to the

11 extent of so much of the rate applicable under sec12 tion 3201(a) as does not exceed the rate of tax in

13 effect under section 3101(a))’’.

14 (2) Subparagraphs (B) and (C) of section

15 6413(c)(2) are each amended by striking ‘‘section

16 3101’’ each place it appears and inserting ‘‘section

17 3101(a)’’.

18 (3) Subsection (c) of section 6413 is amended

19 by striking paragraph (3).

20 (4) Sections 3122 and 3125 are each amended

21 by striking ‘‘applicable contribution base limitation’’

22 and inserting ‘‘contribution and benefit base limita23 tion’’.

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

25 this section shall apply to 1994 and later calendar years.
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•S 1134 PCS

1 SEC. 8208. TOP ESTATE AND GIFT TAX RATES MADE PERMA2 NENT.

3 (a) GENERAL RULE.—The table contained in para4 graph (1) of section 2001(c) is amended by striking the

5 last item and inserting the following new items:

‘‘Over $2,500,000 but not over

$3,000,000.

$1,025,800, plus 53% of the excess

over $2,500,000.

Over $3,000,000 ............................ $1,290,800, plus 55% of the excess

over $3,000,000.’’

6 (b) CONFORMING AMENDMENTS.—

7 (1) Subsection (c) of section 2001 is amended

8 by striking paragraph (2) and by redesignating

9 paragraph (3) as paragraph (2).

10 (2) Paragraph (2) of section 2001(c), as redes11 ignated by paragraph (1), is amended by striking

12 ‘‘($18,340,000 in the case of decedents dying, and

13 gifts made, after 1992)’’.

14 (3) The last sentence of section 2101(b) is

15 amended by striking ‘‘section 2001(c)(3)’’ and in16 serting ‘‘section 2001(c)(2)’’.

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

18 this section shall apply in the case of decedents dying, and

19 gifts made, after December 31, 1992.

20 SEC. 8209. REDUCTION IN DEDUCTIBLE PORTION OF BUSI21 NESS MEALS AND ENTERTAINMENT.

22 (a) GENERAL RULE.—Paragraph (1) of section

23 274(n) (relating to only 80 percent of meal and entertain-
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•S 1134 PCS

1 ment expenses allowed as deduction) is amended by strik2 ing ‘‘80 percent’’ and inserting ‘‘50 percent’’.

3 (b) SUBSTANTIATION REQUIREMENT.—In the case of

4 taxable years beginning after December 31, 1993, Treas5 ury Regulation § 1.274–5T(c)(2)(iii)(B) shall be applied

6 by substituting ‘‘$20’’ for ‘‘$25’’.

7 (c) CONFORMING AMENDMENT.—The subsection

8 heading for section 274(n) is amended by striking ‘‘80’’

9 and inserting ‘‘50’’.

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

11 this section shall apply to taxable years beginning after

12 December 31, 1993.

13 SEC. 8210. ELIMINATION OF DEDUCTION FOR CLUB MEM14 BERSHIP FEES.

15 (a) IN GENERAL.—Subsection (a) of section 274 (re16 lating to disallowance of certain entertainment, etc., ex17 penses) is amended by adding at the end thereof the fol18 lowing new paragraph:

19 ‘‘(3) DENIAL OF DEDUCTION FOR CLUB

20 DUES.—Notwithstanding the preceding provisions of

21 this subsection, no deduction shall be allowed under

22 this chapter for amounts paid or incurred for mem23 bership in any club organized for business, pleasure,

24 recreation, or other social purpose.’’
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•S 1134 PCS

1 (b) EXCEPTION FOR EMPLOYEE RECREATIONAL EX2 PENSES NOT TO APPLY.—Paragraph (4) of section

3 274(e) is amended by adding at the end thereof the follow4 ing: ‘‘This paragraph shall not apply for purposes of sub5 section (a)(3).’’

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

7 this section shall apply to amounts paid or incurred after

8 December 31, 1993.

9 SEC. 8211. DISALLOWANCE OF DEDUCTION FOR CERTAIN

10 EMPLOYEE REMUNERATION IN EXCESS OF

11 $1,000,000.

12 (a) GENERAL RULE.—Section 162 (relating to trade

13 or business expenses) is amended by redesignating sub14 section (m) as subsection (n) and by inserting after sub15 section (l) the following new subsection:

16 ‘‘(m) CERTAIN EXCESSIVE EMPLOYEE REMUNERA17 TION.—

18 ‘‘(1) IN GENERAL.—In the case of any publicly

19 held corporation, no deduction shall be allowed

20 under this chapter for applicable employee remu21 neration with respect to any covered employee to the

22 extent that the amount of such remuneration for the

23 taxable year with respect to such employee exceeds

24 $1,000,000.
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•S 1134 PCS

1 ‘‘(2) PUBLICLY HELD CORPORATION.—For pur2 poses of this subsection, the term ‘publicly held cor3 poration’ means any corporation issuing any class of

4 common equity securities required to be registered

5 under section 12 of the Securities Exchange Act of

6 1934.

7 ‘‘(3) COVERED EMPLOYEE.—For purposes of

8 this subsection, the term ‘covered employee’ means

9 any employee of the taxpayer if—

10 ‘‘(A) as of the close of the taxable year,

11 such employee is the chief executive officer of

12 the taxpayer or is an individual acting in such

13 a capacity, or

14 ‘‘(B) the total compensation for the tax15 able year of such employee is required to be re16 ported to shareholders under the Securities Ex17 change Act of 1934 by reason of such employee

18 being among the 4 highest compensated officers

19 for the taxable year (other than the chief execu20 tive officer).

21 ‘‘(4) APPLICABLE EMPLOYEE REMUNERA22 TION.—For purposes of this subsection—

23 ‘‘(A) IN GENERAL.—Except as otherwise

24 provided in this paragraph, the term ‘applicable

25 employee remuneration’ means, with respect to
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1 any covered employee for any taxable year, the

2 aggregate amount allowable as a deduction

3 under this chapter for such taxable year (deter4 mined without regard to this subsection) for re5 muneration for services performed by such em6 ployee (whether or not during the taxable year).

7 ‘‘(B) EXCEPTION FOR REMUNERATION

8 PAYABLE ON COMMISSION BASIS.—The term

9 ‘applicable employee remuneration’ shall not in10 clude any remuneration payable on a commis11 sion basis solely on account of income generated

12 directly by the individual performance of the in13 dividual to whom such remuneration is payable.

14 ‘‘(C) OTHER PERFORMANCE-BASED COM15 PENSATION.—The term ‘applicable employee re16 muneration’ shall not include any remuneration

17 payable solely on account of the attainment of

18 one or more performance goals, but only if—

19 ‘‘(i) the performance goals are deter20 mined by a compensation committee of the

21 board of directors of the taxpayer which is

22 comprised solely of 2 or more outside di23 rectors,

24 ‘‘(ii) the material terms under which

25 the remuneration is to be paid, including
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•S 1134 PCS

1 the performance goals, are disclosed to

2 shareholders and approved by a majority of

3 the vote in a separate shareholder vote be4 fore the payment of such remuneration,

5 and

6 ‘‘(iii) before any payment of such re7 muneration, the compensation committee

8 referred to in clause (i) certifies that the

9 performance goals and any other material

10 terms were in fact satisfied.

11 ‘‘(D) EXCEPTION FOR EXISTING BINDING

12 CONTRACTS.—The term ‘applicable employee

13 remuneration’ shall not include any remunera14 tion payable under a written binding contract

15 which was in effect on February 17, 1993, and

16 which was not modified thereafter in any mate17 rial respect before such remuneration is paid.

18 ‘‘(E) REMUNERATION.—For purposes of

19 this paragraph, the term ‘remuneration’ in20 cludes any remuneration (including benefits) in

21 any medium other than cash, but shall not in22 clude—

23 ‘‘(i) any payment referred to in so

24 much of section 3121(a)(5) as precedes

25 subparagraph (E) thereof, and
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1 ‘‘(ii) any benefit provided to or on be2 half of an employee if at the time such

3 benefit is provided it is reasonable to be4 lieve that the employee will be able to ex5 clude such benefit from gross income

6 under this chapter.

7 For purposes of clause (i), section 3121(a)(5)

8 shall be applied without regard to section

9 3121(v)(1).

10 ‘‘(F) COORDINATION WITH DISALLOWED

11 GOLDEN PARACHUTE PAYMENTS.—The dollar

12 limitation contained in paragraph (1) shall be

13 reduced (but not below zero) by the amount (if

14 any) which would have been included in the ap15 plicable employee remuneration of the covered

16 employee for the taxable year but for being dis17 allowed under section 280G.’’

18 (b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall apply to amounts which would other20 wise be deductible for taxable years beginning on or after

21 January 1, 1994.
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•S 1134 PCS

1 SEC. 8212. REDUCTION IN COMPENSATION TAKEN INTO AC2 COUNT IN DETERMINING CONTRIBUTIONS

3 AND BENEFITS UNDER QUALIFIED RETIRE4 MENT PLANS.

5 (a) QUALIFICATION REQUIREMENT.—

6 (1) IN GENERAL.—Section 401(a)(17) is

7 amended—

8 (A) by striking ‘‘$200,000’’ in the first

9 sentence and inserting ‘‘$150,000’’,

10 (B) by striking the second sentence, and

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

12 subparagraph:

13 ‘‘(B) COST-OF-LIVING ADJUSTMENT.—

14 ‘‘(i) IN GENERAL.—If, for any cal15 endar year after 1994, the excess (if any)

16 of—

17 ‘‘(I) $150,000, increased by the

18 cost-of-living adjustment for the cal19 endar year, over

20 ‘‘(II) the dollar amount in effect

21 under subparagraph (A) for taxable

22 years beginning in the calendar year,

23 is equal to or greater than $10,000, then

24 the $150,000 amount under subparagraph

25 (A) (as previously adjusted under this sub26 paragraph) for any taxable year beginning
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1 in any subsequent calendar year shall be

2 increased by $10,000.

3 ‘‘(ii) COST-OF-LIVING ADJUSTMENT.—

4 The cost-of-living adjustment for any cal5 endar year shall be the adjustment made

6 under section 415(d) for such calendar

7 year, except that the base period for pur8 poses of section 415(d)(1)(A) shall be the

9 calendar quarter beginning October 1,

10 1993.’’

11 (2) CONFORMING AMENDMENT.—Section

12 401(a)(17) is amended by striking ‘‘(17) A trust’’

13 and inserting:

14 ‘‘(17) COMPENSATION LIMIT.—

15 ‘‘(A) IN GENERAL.—A trust’’.

16 (b) SIMPLIFIED EMPLOYEE PENSIONS.—

17 (1) IN GENERAL.—Paragraphs (3)(C) and

18 (6)(D)(ii) of section 408(k) are each amended by

19 striking ‘‘$200,000’’ and inserting ‘‘$150,000’’.

20 (2) COST-OF-LIVING.—Paragraph (8) of section

21 408(k) is amended to read as follows:

22 ‘‘(8) COST-OF-LIVING ADJUSTMENT.—The Sec23 retary shall adjust the $300 amount in paragraph

24 (2)(C) at the same time and in the same manner as

25 under section 415(d) and shall adjust the $150,000
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1 amount in paragraphs (3)(C) and (6)(D)(ii) at the

2 same time, and by the same amount, as the adjust3 ment under section 401(a)(17)(B).’’

4 (c) OTHER RELATED PROVISIONS.—

5 (1) IN GENERAL.—Sections 404(l) and

6 505(b)(7) are each amended—

7 (A) by striking ‘‘$200,000’’ in the first

8 sentence and inserting ‘‘$150,000’’, and

9 (B) by striking the second sentence and in10 serting ‘‘The Secretary shall adjust the

11 $150,000 amount at the same time, and by the

12 same amount, as the adjustment under section

13 401(a)(17)(B).’’

14 (2) CONFORMING AMENDMENT.—The heading

15 for section 505(b)(7) is amended by striking

16 ‘‘$200,000’’.

17 (d) EFFECTIVE DATES.—

18 (1) IN GENERAL.—Except as provided in para19 graph (2), the amendments made by this section

20 shall apply to benefits accruing in plan years begin21 ning after December 31, 1993.

22 (2) EXCEPTION FOR COLLECTIVELY BARGAINED

23 PLANS.—In the case of a plan maintained pursuant

24 to 1 or more collective bargaining agreements be25 tween employee representatives and 1 or more em-
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•S 1134 PCS

1 ployers ratified before the date of the enactment of

2 this Act, the amendments made by this section shall

3 not apply to contributions or benefits pursuant to

4 such agreements for plan years beginning before the

5 earlier of—

6 (A) the latest of—

7 (i) January 1, 1994,

8 (ii) the date on which the last of such

9 collective bargaining agreements termi10 nates (without regard to any extension,

11 amendment, or modification of such agree12 ments on or after such date of enactment),

13 or

14 (iii) in the case of a plan maintained

15 pursuant to collective bargaining under the

16 Railway Labor Act, the date of execution

17 of an extension or replacement of the last

18 of such collective bargaining agreements in

19 effect on such date of enactment, or

20 (B) January 1, 1997.

21 (3) TRANSITION RULE FOR STATE AND LOCAL

22 PLANS.—

23 (A) IN GENERAL.—In the case of an eligi24 ble participant in a governmental plan (within

25 the meaning of section 414(d) of the Internal
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1 Revenue Code of 1986), the dollar limitation

2 under section 401(a)(17) of such Code shall not

3 apply to the extent the amount of compensation

4 which is allowed to be taken into account under

5 the plan would be reduced below the amount

6 which was allowed to be taken into account

7 under the plan as in effect on July 1, 1993.

8 (B) ELIGIBLE PARTICIPANT.—For pur9 poses of subparagraph (A), an eligible partici10 pant is an individual who first became a partici11 pant in the plan during a plan year beginning

12 before the 1st plan year beginning after the

13 earlier of—

14 (i) the plan year in which the plan is

15 amended to reflect the amendments made

16 by this section, or

17 (ii) December 31, 1995.

18 (C) PLAN MUST BE AMENDED TO INCOR19 PORATE LIMITS.—This paragraph shall not

20 apply to any eligible participant of a plan unless

21 the plan is amended so that the plan incor22 porates by reference the dollar limitation under

23 section 401(a)(17) of the Internal Revenue

24 Code of 1986, effective with respect to

25 noneligible participants for plan years beginning
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1 after December 31, 1995 (or earlier if the plan

2 amendment so provides).

3 SEC. 8213. MODIFICATION TO DEDUCTION FOR CERTAIN

4 MOVING EXPENSES.

5 (a) DOLLAR LIMITATION.—

6 (1) IN GENERAL.—Paragraph (3) of section

7 217(b) is amended by striking subparagraphs (A)

8 and (B) and inserting the following:

9 ‘‘(A) DOLLAR LIMIT.—

10 ‘‘(i) IN GENERAL.—The aggregate

11 amount allowable as a deduction under

12 subsection (a) in connection with a com13 mencement of work shall not exceed

14 $10,000, of which the aggregate amount

15 which is attributable to expenses described

16 in subparagraph (C) or (D) of paragraph

17 (1) shall not exceed $1,500.

18 ‘‘(ii) COST-OF-LIVING ADJUSTMENT.—

19 In the case of taxable years beginning in

20 calendar years after 1994, the $10,000

21 amount under clause (i) shall be increased

22 by an amount equal to the product of such

23 dollar amount and the cost-of-living adjust24 ment determined under section 1(f)(3) for

25 the calendar year in which the taxable year
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1 begins, except that section 1(f)(3)(B) shall

2 be applied by substituting ‘1993’ for

3 ‘1992’. Any amount determined under this

4 clause which is not a multiple of $50 shall

5 be rounded to the next lowest multiple of

6 $50.

7 ‘‘(B) HUSBAND AND WIFE.—If a husband

8 and wife both commence work at a new prin9 cipal place of work within the same general lo10 cation, subparagraph (A) shall be applied as if

11 there was only 1 commencement of work. In the

12 case of a husband and wife filing separate re13 turns, subparagraph (A) shall be applied by

14 substituting ‘$5,000’ for ‘$10,000’ and ‘$750’

15 for ‘$1,500’.’’

16 (2) FOREIGN MOVES.—Paragraph (1) of section

17 217(h) is amended by striking subparagraphs (B)

18 and (C) and inserting:

19 ‘‘(B) subsection (b)(2)(A) shall be applied

20 by substituting ‘$4,500’ for ‘$1,500’, and

21 ‘‘(C) subsection (b)(2)(B) shall be applied

22 as if the last sentence of such subsection read

23 as follows: ‘In the case of a husband and wife

24 filing separate returns, subparagraph (A) (as
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•S 1134 PCS

1 modified by subsection (h)(1)(B)) shall be ap2 plied by substituting ‘‘$2,250’’ for ‘‘$4,500’’.’.’’

3 (b) REPEAL OF DEDUCTION FOR QUALIFIED RESI4 DENCE SALE, ETC., EXPENSES.—

5 (1) IN GENERAL.—Paragraph (1) of section

6 217(b) (defining moving expenses) is amended by in7 serting ‘‘or’’ at the end of subparagraph (C), by

8 striking ‘‘, or’’ at the end of subparagraph (D) and

9 inserting a period, and by striking

10 subparagraph (E).

11 (2) CONFORMING AMENDMENTS.—

12 (A) Subsection (b) of section 217, as

13 amended by subsection (a), is amended by

14 striking paragraph (2) and redesignating para15 graph (3) as paragraph (2).

16 (B) Section 217 is amended by striking

17 subsection (e).

18 (c) DEDUCTION DISALLOWED FOR MEAL EX19 PENSES.—Paragraph (1) of section 217(b) is amended—

20 (1) by striking ‘‘meals and lodging’’ in subpara21 graphs (B), (C) and (D) and inserting ‘‘lodging’’,

22 and

23 (2) by adding at the end thereof the following

24 new sentence:
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•S 1134 PCS

1 ‘‘Such term shall not include any expenses for

2 meals.’’

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

4 this section shall apply to expenses incurred after Decem5 ber 31, 1993.

6 SEC. 8214. SIMPLIFICATION OF INDIVIDUAL ESTIMATED

7 TAX SAFE HARBOR BASED ON LAST YEAR’S

8 TAX.

9 (a) IN GENERAL.—Paragraph (1) of section 6654(d)

10 (relating to amount of required estimated tax install11 ments) is amended by striking subparagraphs (C), (D),

12 (E), and (F) and by inserting the following new subpara13 graph:

14 ‘‘(C) LIMITATION ON USE OF PRECEDING

15 YEAR’S TAX.—

16 ‘‘(i) IN GENERAL.—If the adjusted

17 gross income shown on the return of the

18 individual for the preceding taxable year

19 exceeds $150,000, clause (ii) of subpara20 graph (B) shall be applied by substituting

21 ‘110 percent’ for ‘100 percent’.

22 ‘‘(ii) SEPARATE RETURNS.—In the

23 case of a married individual (within the

24 meaning of section 7703) who files a sepa25 rate return for the taxable year for which
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•S 1134 PCS

1 the amount of the installment is being de2 termined, clause (i) shall be applied by

3 substituting ‘$75,000’ for ‘$150,000’.

4 ‘‘(iii) SPECIAL RULE.—In the case of

5 an estate or trust, adjusted gross income

6 shall be determined as provided in section

7 67(e).’’

8 (b) CONFORMING AMENDMENTS.—

9 (1) Subparagraph (A) of section 6654(j)(3) is

10 amended by striking ‘‘and subsection (d)(1)(C)(iii)

11 shall not apply’’.

12 (2) Paragraph (4) of section 6654(l) is amend13 ed by striking ‘‘paragraphs (1)(C)(iv) and (2)(B)(i)

14 of subsection (d)’’ and inserting ‘‘subsection

15 (d)(2)(B)(i)’’.

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

17 this section shall apply to taxable years beginning after

18 December 31, 1993.

19 SEC. 8215. SOCIAL SECURITY AND TIER 1 RAILROAD RE20 TIREMENT BENEFITS.

21 (a) ADDITIONAL INCLUSION FOR CERTAIN TAX22 PAYERS.—

23 (1) IN GENERAL.—Subsection (a) of section 86

24 (relating to social security and tier 1 railroad retire-
520

•S 1134 PCS

1 ment benefits) is amended by adding at the end the

2 following new paragraph:

3 ‘‘(2) ADDITIONAL AMOUNT.—In the case of a

4 taxpayer with respect to whom the amount deter5 mined under subsection (b)(1)(A) exceeds the ad6 justed base amount, the amount included in gross

7 income under this section shall be equal to the lesser

8 of—

9 ‘‘(A) the sum of—

10 ‘‘(i) 85 percent of such excess, plus

11 ‘‘(ii) the lesser of the amount deter12 mined under paragraph (1) or an amount

13 equal to one-half of the difference between

14 the adjusted base amount and the base

15 amount of the taxpayer, or

16 ‘‘(B) 85 percent of the social security bene17 fits received during the taxable year.’’

18 (2) CONFORMING AMENDMENTS.—Subsection

19 (a) of section 86 is amended—

20 (A) by striking ‘‘Gross’’ and inserting:

21 ‘‘(1) IN GENERAL.—Except as provided in para22 graph (2), gross’’, and

23 (B) by redesignating paragraphs (1) and

24 (2) as subparagraphs (A) and (B), respectively.
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•S 1134 PCS

1 (b) ADJUSTED BASE AMOUNT.—Section 86(c) (de2 fining base amount) is amended to read as follows:

3 ‘‘(c) BASE AMOUNT AND ADJUSTED BASE

4 AMOUNT.—For purposes of this section—

5 ‘‘(1) BASE AMOUNT.—The term ‘base amount’

6 means—

7 ‘‘(A) except as otherwise provided in this

8 paragraph, $25,000,

9 ‘‘(B) $32,000 in the case of a joint return,

10 and

11 ‘‘(C) zero in the case of a taxpayer who—

12 ‘‘(i) is married as of the close of the

13 taxable year (within the meaning of section

14 7703) but does not file a joint return for

15 such year, and

16 ‘‘(ii) does not live apart from his

17 spouse at all times during the taxable year.

18 ‘‘(2) ADJUSTED BASE AMOUNT.—The term ‘ad19 justed base amount’ means—

20 ‘‘(A) except as otherwise provided in this

21 paragraph, $32,000,

22 ‘‘(B) $40,000 in the case of a joint return,

23 and

24 ‘‘(C) zero in the case of a taxpayer de25 scribed in paragraph (1)(C).’’
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•S 1134 PCS

1 (c) TRANSFERS TO THE HOSPITAL INSURANCE

2 TRUST FUND.—

3 (1) IN GENERAL.—Paragraph (1) of section

4 121(e) of the Social Security Amendments of 1983

5 (Public Law 92–21) is amended by—

6 (A) striking ‘‘There’’ and inserting:

7 ‘‘(A) There’’;

8 (B) inserting ‘‘(i)’’ immediately following

9 ‘‘amounts equivalent to’’; and

10 (C) striking the period and inserting the

11 following: ‘‘, less (ii) the amounts equivalent to

12 the aggregate increase in tax liabilities under

13 chapter 1 of the Internal Revenue Code of 1986

14 which is attributable to the amendments to sec15 tion 86 of such Code made by section 8215 of

16 the Revenue Reconciliation Act of 1993.

17 ‘‘(B) There are hereby appropriated to the

18 hospital insurance trust fund amounts equal to

19 the increase in tax liabilities described in sub20 paragraph (A)(ii). Such appropriated amounts

21 shall be transferred from the general fund of

22 the Treasury on the basis of estimates of such

23 tax liabilities made by the Secretary of the

24 Treasury. Transfers shall be made pursuant to

25 a schedule made by the Secretary of the Treas-
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•S 1134 PCS

1 ury that takes into account estimated timing of

2 collection of such liabilities.’’

3 (2) DEFINITION.—Paragraph (3) of section

4 121(e) of such Act is amended by redesignating sub5 paragraph (B) as subparagraph (C), and by insert6 ing after subparagraph (A) the following new sub7 paragraph:

8 ‘‘(B) HOSPITAL INSURANCE TRUST

9 FUND.—The term ‘hospital insurance trust

10 fund’ means the fund established pursuant to

11 section 1817 of the Social Security Act.’’.

12 (3) CONFORMING AMENDMENT.—Paragraph (2)

13 of section 121(e) of such Act is amended in the first

14 sentence by striking ‘‘paragraph (1)’’ and inserting

15 ‘‘paragraph (1)(A).’’

16 (4) TECHNICAL AMENDMENTS.—Paragraph

17 (1)(A) of section 121(e) of such Act, as redesignated

18 and amended by paragraph (1), is amended by strik19 ing ‘‘1954’’ and inserting ‘‘1986’’.

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

21 subsections (a) and (b) shall apply to taxable years begin22 ning after December 31, 1993.
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•S 1134 PCS

1 PART II—PROVISIONS AFFECTING BUSINESSES

2 SEC. 8221. INCREASE IN TOP MARGINAL RATE UNDER SEC3 TION 11.

4 (a) GENERAL RULE.—Paragraph (1) of section 11(b)

5 (relating to amount of tax) is amended—

6 (1) by striking ‘‘and’’ at the end of subpara7 graph (B),

8 (2) by striking subparagraph (C) and inserting

9 the following:

10 ‘‘(C) 34 percent of so much of the taxable

11 income as exceeds $75,000 but does not exceed

12 $10,000,000, and

13 ‘‘(D) 35 percent of so much of the taxable

14 income as exceeds $10,000,000.’’, and

15 (3) by adding at the end thereof the following

16 new sentence: ‘‘In the case of a corporation which

17 has taxable income in excess of $15,000,000, the

18 amount of the tax determined under the foregoing

19 provisions of this paragraph shall be increased by an

20 additional amount equal to the lesser of (i) 3 percent

21 of such excess, or (ii) $100,000.’’

22 (b) CERTAIN PERSONAL SERVICE CORPORATIONS.—

23 Paragraph (2) of section 11(b) is amended by striking ‘‘34

24 percent’’ and inserting ‘‘35 percent’’.

25 (c) CONFORMING AMENDMENTS.—
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•S 1134 PCS

1 (1) Clause (iii) of section 852(b)(3)(D) is

2 amended by striking ‘‘66 percent’’ and inserting ‘‘65

3 percent’’.

4 (2) Subsection (a) of section 1201 is amended

5 by striking ‘‘34 percent’’ each place it appears and

6 inserting ‘‘35 percent’’.

7 (3) Paragraphs (1) and (2) of section 1445(e)

8 are each amended by striking ‘‘34 percent’’ and in9 serting ‘‘35 percent’’.

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

11 this section shall apply to taxable years beginning on or

12 after January 1, 1993; except that the amendment made

13 by subsection (c)(3) shall take effect on the date of the

14 enactment of this Act.

15 SEC. 8222. DISALLOWANCE OF DEDUCTION FOR LOBBYING

16 EXPENDITURES.

17 (a) DISALLOWANCE OF DEDUCTION.—

18 (1) IN GENERAL.—Part IX of subchapter B of

19 chapter 1 (relating to items not deductible) is

20 amended by adding at the end the following new sec21 tion:

22 ‘‘SEC. 280I. LOBBYING EXPENDITURES.

23 ‘‘(a) DEDUCTION DISALLOWED.—No deduction shall

24 be allowed under this chapter for any amount paid or in25 curred—
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•S 1134 PCS

1 ‘‘(1) for lobbying activities, or

2 ‘‘(2) to another person for the conduct of lobby3 ing activities.

4 ‘‘(b) LOBBYING ACTIVITIES.—For purposes of this

5 section—

6 ‘‘(1) IN GENERAL.—The term ‘lobbying activity’

7 means—

8 ‘‘(A) any lobbying contact, or

9 ‘‘(B) any activity in support of a lobbying

10 contact.

11 ‘‘(2) SUPPORT ACTIVITIES.—For purposes of

12 paragraph (1)(B), the following shall be treated as

13 in support of a lobbying contact:

14 ‘‘(A) Any preparation or planning activity

15 relating to a lobbying contact (including, in the

16 case of a lobbyist, the formulation, review, and

17 management of the lobbying contacts on behalf

18 of a client).

19 ‘‘(B) Any research or other background

20 work relating to a lobbying contact.

21 ‘‘(C) Any activity coordinating the lobbying

22 activity of 2 or more persons.

23 ‘‘(3) MEALS, ENTERTAINMENT, OR TRAVEL.—

24 Any amount paid or incurred in connection with the

25 providing of meals, entertainment, or travel to a cov-
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•S 1134 PCS

1 ered legislative or executive branch official (or to an

2 individual accompanying such official) shall be treat3 ed as paid or incurred for a lobbying activity without

4 regard to whether it is in support of a lobbying con5 tact.

6 ‘‘(c) LOBBYING CONTACT.—For purposes of this sec7 tion—

8 ‘‘(1) IN GENERAL.—The term ‘lobbying contact’

9 means—

10 ‘‘(A) in the case of a lobbyist, any oral or

11 written communication with a covered legisla12 tive or executive branch official, and

13 ‘‘(B) in the case of any other person, any

14 oral or written communication with a covered

15 legislative or executive branch official in connec16 tion with an attempt to influence governmental

17 actions described in paragraph (2).

18 ‘‘(2) GOVERNMENTAL ACTIONS AFFECTED.—

19 The following governmental actions are described in

20 this paragraph:

21 ‘‘(A) The formulation, modification, adop22 tion, or repeal of legislation (including legisla23 tive proposals).

24 ‘‘(B) The formulation, modification, adop25 tion, or repeal of a Federal rule, regulation,
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•S 1134 PCS

1 Executive order, or any other program, policy,

2 or position of the United States.

3 ‘‘(C) The administration or execution of a

4 Federal program or policy (including the nego5 tiation, award, or administration of a Federal

6 contract, grant, loan, permit, or license).

7 ‘‘(3) EXCEPTIONS.—The term ‘lobbying con8 tact’ shall not include any contact—

9 ‘‘(A) required by subpoena, civil investiga10 tive demand, or otherwise compelled by statute,

11 regulation, or other action of Congress, a State

12 or local legislative body, or a Federal agency,

13 ‘‘(B) made in response to a notice in the

14 Federal Register, Commerce Business Daily, or

15 other similar publication soliciting communica16 tions from the public and directed to the agency

17 official specifically designated in the notice to

18 receive such communications,

19 ‘‘(C) made to Federal agency officials with

20 regard to judicial proceedings, criminal or civil

21 law enforcement inquiries, investigations or pro22 ceedings, or filings required by statute or regu23 lation,

24 ‘‘(D) made in compliance with written

25 agency procedures regarding an adjudication
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•S 1134 PCS

1 conducted by the agency under section 554 of

2 title 5, United States Code, or any substantially

3 similar provision, or

4 ‘‘(E) made on behalf of an individual with

5 regard to such individual’s benefits, employ6 ment, other personal matters involving only

7 that individual, or disclosures by that individual

8 pursuant to applicable whistleblower statutes,

9 ‘‘(F) in the case of any governmental ac10 tion described in paragraph (2) (B) or (C),

11 which consists of written comments filed in a

12 public docket or other communications made on

13 the record in a public proceeding, or

14 ‘‘(G) in the case of any governmental ac15 tion described in paragraph (2)(C), which con16 sists of communications which are made to offi17 cials serving in the agency responsible for tak18 ing such action who serve in the Senior Execu19 tive Service or who are members of the uni20 formed services whose pay grade is lower than

21 0–9 under section 201 of title 37, United States

22 Code.

23 ‘‘(d) SPECIAL RULE FOR EXEMPT ORGANIZA24 TIONS.—
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1 ‘‘(1) TREATMENT OF DUES, ETC.—Subsection

2 (a) shall apply to dues, assessments, or other similar

3 amounts paid by any person to an organization ex4 empt from taxation under this chapter (other than

5 an organization described in section 170(c)) to the

6 extent such dues, assessments, or amounts are at7 tributable to amounts paid or incurred by the orga8 nization which are described in subsection (a).

9 ‘‘(2) SPECIAL RULE FOR CHARITIES.—In the

10 case of an organization described in section 170(c)

11 (other than paragraph (1) thereof or section

12 170(b)(1)(A)(i)), subsection (a) shall apply to any

13 dues, assessments, contributions, or other similar

14 amounts which are paid to the organization and

15 which are otherwise deductible under this chapter to

16 the extent that any such amount—

17 ‘‘(A) is attributable to amounts paid or in18 curred by the organization which are described

19 in subsection (a),

20 ‘‘(B) is in connection with lobbying activi21 ties of direct financial interest to the payor’s

22 (or a related person’s) trade or business, and

23 ‘‘(C) when added to all other payments

24 made by the payor (and any related person) to
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1 the organization during the calendar year in

2 which the taxable year begins, exceeds $2,000.

3 ‘‘(3) ALLOCATION RULES.—For purposes of

4 this subsection—

5 ‘‘(A) dues or other similar amounts paid

6 during any calendar year shall, except as pro7 vided by the Secretary, only be attributable to

8 amounts not deductible under subsection (a)

9 which are paid or incurred by the organization

10 during such calendar year, and

11 ‘‘(B) amounts which are not deductible

12 under subsection (a) shall be treated as paid

13 first out of dues or other similar amounts.

14 ‘‘(4) REPORTING REQUIREMENTS.—

‘‘For requirements of organization to notify contributors, see section 6050O.

15 ‘‘(e) OTHER RULES AND DEFINITIONS.—For pur16 poses of this section—

17 ‘‘(1) SPECIAL RULE FOR CERTAIN TAX18 PAYERS.—In the case of—

19 ‘‘(A) any taxpayer engaged in the trade or

20 business of conducting activities described in

21 subsection (a), or

22 ‘‘(B) any taxpayer who is an employee who

23 is reimbursed by his employer for expenses in24 curred in conducting such activities,
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•S 1134 PCS

1 subsection (a) shall not apply to expenditures of the

2 taxpayer in conducting such activities on behalf of

3 another person or his employer (but shall apply to

4 payments by such other person or the employer to

5 the taxpayer for conducting the activities).

6 ‘‘(2) AGENCY.—The term ‘agency’ has the same

7 meaning given such term by section 551(1) of title

8 5, United States Code.

9 ‘‘(3) COVERED EXECUTIVE BRANCH OFFI10 CIAL.—The term ‘covered executive branch official’

11 means—

12 ‘‘(A) the President,

13 ‘‘(B) the Vice President,

14 ‘‘(C) any officer or employee of the Execu15 tive Office of the President, other than a cleri16 cal or secretarial employee,

17 ‘‘(D) any officer or employee serving in an

18 Executive level I, II, III, IV, or V position, as

19 designated in statute or Executive order,

20 ‘‘(E) any officer or employee serving in a

21 Senior Executive Service position as defined

22 under section 3232(a)(2) of title 5, United

23 States Code,
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1 ‘‘(F) any member of the uniformed services

2 whose pay grade is at or in excess of O–7 under

3 section 201 of title 37, United States Code, and

4 ‘‘(G) any officer or employee serving in a

5 position of confidential or policy-determining

6 character under schedule C of the excepted

7 service pursuant to section 7511 of title 5,

8 United States Code.

9 ‘‘(4) COVERED LEGISLATIVE BRANCH OFFI10 CIAL.—The term ‘covered legislative branch official’

11 means—

12 ‘‘(A) a Member of Congress,

13 ‘‘(B) an elected officer of Congress,

14 ‘‘(C) any employee of a Member of the

15 House of Representatives, of a committee of the

16 House of Representatives, or on the leadership

17 staff of the House of Representatives,

18 ‘‘(D) any employee of a Senator, of a Sen19 ate committee, or on the leadership staff of the

20 Senate, and

21 ‘‘(E) any employee of a joint committee of

22 the Congress.

23 Such term includes any member, officer, or employee

24 of a State or local legislative body.
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1 ‘‘(5) LOBBYIST.—The term ‘lobbyist’ means

2 any person who is employed or retained by another

3 person to perform services which include any at4 tempt to influence a governmental action described

5 in subsection (c)(2). Such term does not include a

6 person whose lobbying activities are only incidental

7 to, and are not a significant part of, the services the

8 person performs for such other person. For purposes

9 of the preceding sentence, lobbying activities shall

10 not include activities described in subsection (c)(3).

11 ‘‘(6) LEGISLATION.—The term ‘legislation’ has

12 the meaning given such term by section 4911(e)(2).

13 ‘‘(7) COORDINATION WITH SECTION 4911.—No

14 tax shall be imposed under section 4911 on any

15 amount with respect to which a deduction is not al16 lowed by reason of subsection (d).

17 ‘‘(f) CROSS REFERENCE.—

‘‘For disallowance of deductions for grassroots

lobbying expenditures, see section 162(e)(2).’’

18 (2) CONFORMING AMENDMENTS.—

19 (A) Section 162(e) (relating to appear20 ances, etc., with respect to legislation) is

21 amended to read as follows:

22 ‘‘(e) DENIAL OF DEDUCTION FOR CERTAIN POLITI23 CAL EXPENDITURES.—
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•S 1134 PCS

1 ‘‘(1) IN GENERAL.—No deduction shall be al2 lowed under this chapter for any amount paid or in3 curred—

4 ‘‘(A) for participation in, or intervention

5 in, any political campaign on behalf of (or in

6 opposition to) any candidate for public office, or

7 ‘‘(B) in connection with any attempt to in8 fluence the general public, or segments thereof,

9 with respect to legislative matters, elections, or

10 referendums.

11 ‘‘(2) APPLICATION TO DUES.—

12 ‘‘(A) IN GENERAL.—No deduction shall be

13 allowed under this chapter for the portion of

14 dues or other similar amounts paid by the tax15 payer to an organization which is allocable to

16 the expenditures described in paragraph (1).

17 ‘‘(B) ALLOCATION.—For purposes of sub18 paragraph (A), expenditures described in para19 graph (1) shall be treated as paid first out of

20 dues or other similar amounts.

21 ‘‘(3) CROSS REFERENCE.—

‘‘For disallowance of deductions for lobbying expenditures, see section 280I.’’
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•S 1134 PCS

1 (B) The table of sections for part IX of

2 subchapter B of chapter 1 is amended by add3 ing at the end the following new item:

‘‘Sec. 280I. Lobbying expenditures.’’

4 (3) EFFECTIVE DATE.—The amendments made

5 by this subsection shall apply to amounts paid or in6 curred after December 31, 1993.

7 (b) REPORTING REQUIREMENTS RELATING TO LOB8 BYING EXPENDITURES.—

9 (1) IN GENERAL.—Subpart B of part III of

10 subchapter A of chapter 61 (relating to information

11 concerning transactions with other persons) is

12 amended by adding at the end the following new sec13 tion:

14 ‘‘SEC. 6050O. RETURNS RELATING TO LOBBYING EXPENDI15 TURES OF CERTAIN ORGANIZATIONS.

16 ‘‘(a) REQUIREMENT OF REPORTING.—Each organi17 zation described in section 280I(d) shall make a return,

18 according to the forms or regulations prescribed by the

19 Secretary, setting forth the names and addresses of per20 sons paying dues to the organization, the amount of the

21 dues paid by such person, and the portion of such dues

22 which is nondeductible under section 280I.

23 ‘‘(b) STATEMENTS TO BE FURNISHED TO PERSONS

24 WITH RESPECT TO WHOM INFORMATION IS FUR25 NISHED.—Any organization required to make a return
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1 under subsection (a) shall furnish to each person whose

2 name is required to be set forth in such return a written

3 statement showing—

4 ‘‘(1) the name and address of the organization,

5 and

6 ‘‘(2) the dues paid by the person during the cal7 endar year and the portion of such dues which is

8 nondeductible under section 280I.

9 The written statement required under the preceding sen10 tence shall be furnished (either in person or in a statement

11 mailing by first-class mail which includes adequate notice

12 that the statement is enclosed) to the persons on or before

13 January 31 of the year following the calendar year for

14 which the return under subsection (a) was made and shall

15 be in such form as the Secretary may prescribe by regula16 tions.

17 ‘‘(c) DE MINIMUS EXCEPTION.—This section shall

18 not apply to any organization for any calendar year if the

19 organization’s lobbying expenditures described in section

20 280I(a) for such year are less than $2,000. For purposes

21 of the preceding sentence, overhead costs otherwise alloca22 ble to lobbying activities shall not be taken into account.

23 ‘‘(d) WAIVER.—The Secretary may waive the report24 ing requirements of this section with respect to any orga25 nization or class of organizations if the Secretary deter-
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•S 1134 PCS

1 mines that such reporting is not necessary to carry out

2 the purposes of section 280I.

3 ‘‘(e) DUES.—For purposes of this section, the term

4 ‘dues’ includes assessments, contributions, and other simi5 lar amounts.’’

6 (2) PENALTIES.—

7 (A) RETURNS.—Subparagraph (B) of sec8 tion 6724(d)(1) (defining information return) is

9 amended by striking ‘‘or’’ at the end of clause

10 (xi), by striking the period at the end of the

11 clause (xii) relating to section 4101(d) and in12 serting a comma, by redesignating the clause

13 (xii) relating to section 338(h)(10) as clause

14 (xiii), by striking the period at the end of clause

15 (xiii) (as so redesignated) and inserting ‘‘, or’’,

16 and by adding at the end the following new

17 clause:

18 ‘‘(xiv) section 6050O(a) (relating to

19 information on nondeductible lobbying ex20 penditures).’’

21 (B) PAYEE STATEMENTS.—Paragraph (2)

22 of section 6724(d) (defining payee statement) is

23 amended by striking ‘‘or’’ at the end of sub24 paragraph (R), by striking the period at the

25 end of subparagraph (S) and inserting ‘‘, or’’,
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•S 1134 PCS

1 and by adding at the end the following new sub2 paragraph:

3 ‘‘(T) section 6050O(b) (relating to returns

4 on nondeductible lobbying expenditures).’’

5 (3) CONFORMING AMENDMENT.—The table of

6 sections for subpart B of part III of subchapter A

7 of chapter 61 is amended by adding at the end the

8 following new item:

‘‘Sec. 6050O. Returns relating to lobbying expenditures of certain

organizations.’’

9 (4) EFFECTIVE DATE.—The amendments made

10 by this subsection shall apply to calendar years be11 ginning after December 31, 1993.

12 SEC. 8223. MARK TO MARKET ACCOUNTING METHOD FOR

13 SECURITIES DEALERS.

14 (a) GENERAL RULE.—Subpart D of part II of sub15 chapter E of chapter 1 (relating to inventories) is amend16 ed by adding at the end thereof the following new section:

17 ‘‘SEC. 475. MARK TO MARKET ACCOUNTING METHOD FOR

18 DEALERS IN SECURITIES.

19 ‘‘(a) GENERAL RULE.—Notwithstanding any other

20 provision of this subpart, the following rules shall apply

21 to securities held by a dealer in securities:

22 ‘‘(1) Any security which is inventory in the

23 hands of the dealer shall be included in inventory at

24 its fair market value.
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1 ‘‘(2) In the case of any security which is not in2 ventory in the hands of the dealer and which is held

3 at the close of any taxable year—

4 ‘‘(A) the dealer shall recognize gain or loss

5 as if such security were sold for its fair market

6 value on the last business day of such taxable

7 year, and

8 ‘‘(B) any gain or loss shall be taken into

9 account for such taxable year.

10 Proper adjustment shall be made in the amount of

11 any gain or loss subsequently realized for gain or

12 loss taken into account under the preceding sen13 tence. The Secretary may provide by regulations for

14 the application of this paragraph at times other than

15 the times provided in this paragraph.

16 ‘‘(b) EXCEPTIONS.—

17 ‘‘(1) IN GENERAL.—Subsection (a) shall not

18 apply to—

19 ‘‘(A) any security held for investment, and

20 ‘‘(B) any security which is a hedge with re21 spect to—

22 ‘‘(i) a security to which subsection (a)

23 does not apply, or
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•S 1134 PCS

1 ‘‘(ii) a position, right to income, or a

2 liability which is not a security in the

3 hands of the taxpayer.

4 To the extent provided in regulations, subparagraph

5 (B) shall not apply to any security held by a person

6 in its capacity as a dealer in securities.

7 ‘‘(2) IDENTIFICATION REQUIRED.—A security

8 shall not be treated as described in subparagraph

9 (A) or (B) of paragraph (1), as the case may be, un10 less such security is clearly identified in the dealer’s

11 records as being described in such subparagraph be12 fore the close of the day on which it was acquired,

13 originated, or entered into (or such other time as the

14 Secretary may by regulations prescribe).

15 ‘‘(3) SECURITIES SUBSEQUENTLY NOT EX16 EMPT.—If a security ceases to be described in para17 graph (1) at any time after it was identified as such

18 under paragraph (2), subsection (a) shall apply to

19 any changes in value of the security occurring after

20 the cessation.

21 ‘‘(4) SPECIAL RULE FOR PROPERTY HELD FOR

22 INVESTMENT.—To the extent provided in regula23 tions, subparagraph (A) of paragraph (1) shall not

24 apply to any security described in subparagraph (D)
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1 or (E) of subsection (c)(2) which is held by a dealer

2 in such securities.

3 ‘‘(c) DEFINITIONS.—For purposes of this section—

4 ‘‘(1) DEALER IN SECURITIES DEFINED.—The

5 term ‘dealer in securities’ means a taxpayer who—

6 ‘‘(A) regularly purchases securities from or

7 sells securities to customers in the ordinary

8 course of a trade or business; or

9 ‘‘(B) regularly offers to enter into, assume,

10 offset, assign or otherwise terminate positions

11 in securities with customers in the ordinary

12 course of a trade or business.

13 ‘‘(2) SECURITY DEFINED.—The term ‘security’

14 means any—

15 ‘‘(A) share of stock in a corporation;

16 ‘‘(B) partnership or beneficial ownership

17 interest in a widely held or publicly traded part18 nership or trust;

19 ‘‘(C) note, bond, debenture, or other evi20 dence of indebtedness;

21 ‘‘(D) interest rate, currency, or equity no22 tional principal contract;

23 ‘‘(E) evidence of an interest in, or a deriv24 ative financial instrument in, any security de25 scribed in subparagraph (A), (B), (C), or (D),
543

•S 1134 PCS

1 or any currency, including any option, forward

2 contract, short position, and any similar finan3 cial instrument in such a security or currency;

4 and

5 ‘‘(F) position which—

6 ‘‘(i) is not a security described in sub7 paragraph (A), (B), (C), (D), or (E),

8 ‘‘(ii) is a hedge with respect to such

9 a security, and

10 ‘‘(iii) is clearly identified in the deal11 er’s records as being described in this sub12 paragraph before the close of the day on

13 which it was acquired or entered into (or

14 such other time as the Secretary may by

15 regulations prescribe).

16 Subparagraph (E) shall not include any contract to

17 which section 1256(a) applies.

18 ‘‘(3) HEDGE.—The term ‘hedge’ means any po19 sition which reduces the dealer’s risk of interest rate

20 or price changes or currency fluctuations, including

21 any position which is reasonably expected to become

22 a hedge within 60 days after the acquisition of the

23 position.

24 ‘‘(d) SPECIAL RULES.—For purposes of this sec25 tion—
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1 ‘‘(1) COORDINATION WITH CERTAIN RULES.—

2 The rules of sections 263(g), 263A, and 1256(a)

3 shall not apply to securities to which subsection (a)

4 applies, and section 1091 shall not apply (and sec5 tion 1092 shall apply) to any loss recognized under

6 subsection (a).

7 ‘‘(2) IMPROPER IDENTIFICATION.—If a tax8 payer—

9 ‘‘(A) identifies any security under sub10 section (b)(2) as being described in subsection

11 (b)(1) and such security is not so described, or

12 ‘‘(B) fails under subsection (c)(2)(F)(iii) to

13 identify any position which is described in sub14 section (c)(2)(F) (without regard to clause (iii)

15 thereof) at the time such identification is re16 quired,

17 the provisions of subsection (a) shall apply to such

18 security or position, except that any loss under this

19 section prior to the disposition of the security or po20 sition shall be recognized only to the extent of gain

21 previously recognized under this section (and not

22 previously taken into account under this paragraph)

23 with respect to such security or position.

24 ‘‘(3) CHARACTER OF GAIN OR LOSS.—
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•S 1134 PCS

1 ‘‘(A) IN GENERAL.—Except as provided in

2 subparagraph (B) or section 1236(b)—

3 ‘‘(i) IN GENERAL.—Any gain or loss

4 with respect to a security under subsection

5 (a)(2) shall be treated as ordinary income

6 or loss.

7 ‘‘(ii) SPECIAL RULE FOR DISPOSI8 TIONS.—If—

9 ‘‘(I) gain or loss is recognized

10 with respect to a security before the

11 close of the taxable year, and

12 ‘‘(II) subsection (a)(2) would

13 have applied if the security were held

14 as of the close of the taxable year,

15 such gain or loss shall be treated as ordi16 nary income or loss.

17 ‘‘(B) EXCEPTION.—Subparagraph (A)

18 shall not apply to any gain or loss which is allo19 cable to a period during which—

20 ‘‘(i) the security is described in sub21 section (b)(1)(B) (without regard to sub22 section (b)(2)),

23 ‘‘(ii) the security is held by a person

24 other than in connection with its activities

25 as a dealer in securities, or
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•S 1134 PCS

1 ‘‘(iii) the security is improperly identi2 fied (within the meaning of subparagraph

3 (A) or (B) of paragraph (2)).

4 ‘‘(e) REGULATORY AUTHORITY.—The Secretary shall

5 prescribe such regulations as may be necessary or appro6 priate to carry out the purposes of this section, including

7 rules—

8 ‘‘(1) to prevent the use of year-end transfers,

9 related parties, or other arrangements to avoid the

10 provisions of this section, and

11 ‘‘(2) to provide for the application of this sec12 tion to any security which is a hedge which cannot

13 be identified with a specific security, position, right

14 to income, or liability.’’

15 (b) CONFORMING AMENDMENTS.—

16 (1) Paragraph (1) of section 988(d) is amend17 ed—

18 (A) by striking ‘‘section 1256’’ and insert19 ing ‘‘section 475 or 1256’’, and

20 (B) by striking ‘‘1092 and 1256’’ and in21 serting ‘‘475, 1092, and 1256’’.

22 (2) The table of sections for subpart D of part

23 II of subchapter E of chapter 1 is amended by add24 ing at the end thereof the following new item:

‘‘Sec. 475. Mark to market accounting method for dealers in securities.’’
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•S 1134 PCS

1 (c) EFFECTIVE DATE.—

2 (1) IN GENERAL.—The amendments made by

3 this section shall apply to all taxable years ending on

4 or after December 31, 1993.

5 (2) CHANGE IN METHOD OF ACCOUNTING.—In

6 the case of any taxpayer required by this section to

7 change its method of accounting for any taxable

8 year—

9 (A) such change shall be treated as initi10 ated by the taxpayer,

11 (B) such change shall be treated as made

12 with the consent of the Secretary, and

13 (C) except as provided in paragraph (3),

14 the net amount of the adjustments required to

15 be taken into account by the taxpayer under

16 section 481 of the Internal Revenue Code of

17 1986 shall be taken into account ratably over

18 the 5-taxable year period beginning with the

19 first taxable year ending on or after December

20 31, 1993.

21 (3) SPECIAL RULE FOR FLOOR SPECIALISTS

22 AND MARKET MAKERS.—

23 (A) IN GENERAL.—If—

24 (i) a taxpayer (or any predecessor)

25 used the last-in first-out (LIFO) method of
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•S 1134 PCS

1 accounting with respect to any qualified se2 curities for the 5-taxable year period end3 ing with its last taxable year ending before

4 December 31, 1993, and

5 (ii) any portion of the net amount de6 scribed in paragraph (2)(C) is attributable

7 to the use of such method of accounting,

8 then paragraph (2)(C) shall be applied by tak9 ing such portion into account ratably over the

10 15-taxable year period beginning with the first

11 taxable year ending on or after December 31,

12 1993.

13 (B) QUALIFIED SECURITY.—For purposes

14 of this paragraph, the term ‘‘qualified security’’

15 means any security acquired—

16 (i) by a floor specialist (as defined in

17 section 1236(d)(2) of the Internal Revenue

18 Code of 1986) in connection with the spe19 cialist’s duties as a specialist on an ex20 change, but only if the security is one in

21 which the specialist is registered with the

22 exchange, or

23 (ii) by a taxpayer who is a market

24 maker in connection with the taxpayer’s

25 duties as a market maker, but only if—
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•S 1134 PCS

1 (I) the security is included on the

2 National Association of Security Deal3 ers Automated Quotation System,

4 (II) the taxpayer is registered as

5 a market maker in such security with

6 the National Association of Security

7 Dealers, and

8 (III) as of the last day of the

9 taxable year preceding the taxpayer’s

10 first taxable year ending on or after

11 December 31, 1993, the taxpayer (or

12 any predecessor) has been actively

13 and regularly engaged as a market

14 maker in such security for the 2-year

15 period ending on such date (or, if

16 shorter, the period beginning 61 days

17 after the security was listed in such

18 quotation system and ending on such

19 date).

20 SEC. 8224. CLARIFICATION OF TREATMENT OF CERTAIN

21 FSLIC FINANCIAL ASSISTANCE.

22 (a) GENERAL RULE.—For purposes of chapter 1 of

23 the Internal Revenue Code of 1986—

24 (1) any FSLIC assistance with respect to any

25 loss of principal, capital, or similar amount upon the
550

•S 1134 PCS

1 disposition of any asset shall be taken into account

2 as compensation for such loss for purposes of section

3 165 of such Code, and

4 (2) any FSLIC assistance with respect to any

5 debt shall be taken into account for purposes of sec6 tion 166, 585, or 593 of such Code in determining

7 whether such debt is worthless (or the extent to

8 which such debt is worthless) and in determining the

9 amount of any addition to a reserve for bad debts

10 arising from the worthlessness or partial worthless11 ness of such debts.

12 (b) FSLIC ASSISTANCE.—For purposes of this sec13 tion, the term ‘‘FSLIC assistance’’ means any assistance

14 (or right to assistance) with respect to a domestic building

15 and loan association (as defined in section 7701(a)(19) of

16 such Code without regard to subparagraph (C) thereof)

17 under section 406(f) of the National Housing Act or sec18 tion 21A of the Federal Home Loan Bank Act (or under

19 any similar provision of law).

20 (c) EFFECTIVE DATE.—

21 (1) IN GENERAL.—Except as otherwise pro22 vided in this subsection—

23 (A) The provisions of this section shall

24 apply to taxable years ending on or after March
551

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1 4, 1991, but only with respect to FSLIC assist2 ance not credited before March 4, 1991.

3 (B) If any FSLIC assistance not credited

4 before March 4, 1991, is with respect to a loss

5 sustained or charge-off in a taxable year ending

6 before March 4, 1991, for purposes of deter7 mining the amount of any net operating loss

8 carryover to a taxable year ending on or after

9 March 4, 1991, the provisions of this section

10 shall apply to such assistance for purposes of

11 determining the amount of the net operating

12 loss for the taxable year in which such loss was

13 sustained or debt written off. Except as pro14 vided in the preceding sentence, this section

15 shall not apply to any FSLIC assistance with

16 respect to a loss sustained or charge-off in a

17 taxable year ending before March 4, 1991.

18 (2) EXCEPTIONS.—The provisions of this sec19 tion shall not apply to any assistance to which the

20 amendments made by section 1401(a)(3) of the Fi21 nancial Institutions Reform, Recovery, and Enforce22 ment Act of 1989 apply.
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•S 1134 PCS

1 SEC. 8225. MODIFICATION OF CORPORATE ESTIMATED TAX

2 RULES.

3 (a) INCREASE IN REQUIRED INSTALLMENT BASED

4 ON CURRENT YEAR TAX.—

5 (1) IN GENERAL.—Clause (i) of section

6 6655(d)(1)(B) (relating to amount of required in7 stallment) is amended by striking ‘‘91 percent’’ each

8 place it appears and inserting ‘‘100 percent’’.

9 (2) CONFORMING AMENDMENTS.—

10 (A) Subsection (d) of section 6655 is

11 amended—

12 (i) by striking paragraph (3), and

13 (ii) by striking ‘‘91 PERCENT’’ in the

14 paragraph heading of paragraph (2) and

15 inserting ‘‘100 PERCENT’’.

16 (B) Clause (ii) of section 6655(e)(2)(B) is

17 amended by striking the table contained therein

18 and inserting the following:

‘‘In the case of the following re- The applicable

quired installments: percentage is:

1st .................................................................. 25

2nd ................................................................. 50

3rd ................................................................. 75

4th ................................................................. 100.’’

19 (C) Clause (i) of section 6655(e)(3)(A) is

20 amended by striking ‘‘91 percent’’ and inserting

21 ‘‘100 percent’’.
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1 (b) MODIFICATION OF PERIODS FOR APPLYING

2 ANNUALIZATION.—

3 (1) Clause (i) of section 6655(e)(2)(A) is

4 amended—

5 (A) by striking ‘‘or for the first 5 months’’

6 in subclause (II),

7 (B) by striking ‘‘or for the first 8 months’’

8 in subclause (III), and

9 (C) by striking ‘‘or for the first 11

10 months’’ in subclause (IV).

11 (2) Paragraph (2) of section 6655(e) is amend12 ed by adding at the end thereof the following new

13 subparagraph:

14 ‘‘(C) ELECTION FOR DIFFERENT

15 ANNUALIZATION PERIODS.—

16 ‘‘(i) If the taxpayer makes an election

17 under this clause—

18 ‘‘(I) subclause (I) of subpara19 graph (A)(i) shall be applied by sub20 stituting ‘2 months’ for ‘3 months’,

21 ‘‘(II) subclause (II) of subpara22 graph (A)(i) shall be applied by sub23 stituting ‘4 months’ for ‘3 months’,

24 ‘‘(III) subclause (III) of subpara25 graph (A)(i) shall be applied by sub-
554

•S 1134 PCS

1 stituting ‘7 months’ for ‘6 months’,

2 and

3 ‘‘(IV) subclause (IV) of subpara4 graph (A)(i) shall be applied by sub5 stituting ‘10 months’ for ‘9 months’.

6 ‘‘(ii) If the taxpayer makes an election

7 under this clause—

8 ‘‘(I) subclause (II) of subpara9 graph (A)(i) shall be applied by sub10 stituting ‘5 months’ for ‘3 months’,

11 ‘‘(II) subclause (III) of subpara12 graph (A)(i) shall be applied by sub13 stituting ‘8 months’ for ‘6 months’,

14 and

15 ‘‘(III) subclause (IV) of subpara16 graph (A)(i) shall be applied by sub17 stituting ‘11 months’ for ‘9 months’.

18 ‘‘(iii) An election under clause (i) or

19 (ii) shall apply to the taxable year for

20 which made and such an election shall be

21 effective only if made on or before the date

22 required for the payment of the first re23 quired installment for such taxable year.’’

24 (3) The last sentence of section 6655(g)(3) is

25 amended by striking ‘‘and subsection (e)(2)(A)’’ and
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•S 1134 PCS

1 inserting ‘‘and, except in the case of an election

2 under subsection (e)(2)(C), subsection (e)(2)(A)’’.

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

4 this section shall apply to taxable years beginning after

5 December 31, 1993.

6 SEC. 8226. MODIFICATIONS OF DISCHARGE OF INDEBTED7 NESS PROVISIONS.

8 (a) REPEAL OF STOCK FOR DEBT EXCEPTION IN

9 DETERMINING INCOME FROM DISCHARGE OF INDEBTED10 NESS.—

11 (1) IN GENERAL.—Subsection (e) of section

12 108 is amended—

13 (A) by striking paragraph (10) and by re14 designating paragraph (11) as paragraph (10),

15 and

16 (B) by amending paragraph (8) to read as

17 follows:

18 ‘‘(8) INDEBTEDNESS SATISFIED BY CORPORA19 TION’S STOCK.—For purposes of determining income

20 of a debtor from discharge of indebtedness, if a

21 debtor corporation transfers stock to a creditor in

22 satisfaction of its indebtedness, such corporation

23 shall be treated as having satisfied the indebtedness

24 with an amount of money equal to the fair market

25 value of the stock.’’
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•S 1134 PCS

1 (2) CONFORMING AMENDMENT.—Subparagraph

2 (C) of section 382(l)(5) is amended to read as fol3 lows:

4 ‘‘(C) COORDINATION WITH SECTION 108.—

5 In applying section 108(e)(8) to any case to

6 which subparagraph (A) applies, there shall not

7 be taken into account any indebtedness for in8 terest described in subparagraph (B).’’

9 (3) EFFECTIVE DATE.—

10 (A) IN GENERAL.—Except as otherwise

11 provided in this paragraph, the amendments

12 made by this subsection shall apply to stock

13 transferred after June 17, 1993, in satisfaction

14 of any indebtedness.

15 (B) EXCEPTION FOR TITLE 11 CASES.—

16 The amendments made by this subsection shall

17 not apply to stock transferred in satisfaction of

18 any indebtedness if such transfer is in a title 11

19 or similar case (as defined in section

20 368(a)(3)(A) of the Internal Revenue Code of

21 1986) which was filed on or before June 17,

22 1993.

23 (C) EXCEPTION FOR BINDING CON24 TRACTS.—The amendments made by this sec25 tion shall not apply to any stock transferred
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•S 1134 PCS

1 after June 17, 1993, and before January 1,

2 1994, if such transfer is pursuant to a binding

3 contract in effect on June 17, 1993, and at all

4 times thereafter before the transfer.

5 (D) EXCEPTION FOR CERTAIN FILINGS.—

6 The amendments made by this section shall not

7 apply to any stock transferred in satisfaction of

8 any indebtedness if—

9 (i) such transfer occurs after June 17,

10 1993, and before January 1, 1994, and

11 (ii) the taxpayer had filed with the Se12 curities and Exchange Commission on or

13 before June 17, 1993, a registration state14 ment which proposed a stock-for-debt ex15 change with respect to such indebtedness,

16 and which discussed the possible applica17 tion of the stock-for-debt exception to such

18 exchange.

19 (b) TAX ATTRIBUTES SUBJECT TO REDUCTION.—

20 (1) MINIMUM TAX CREDIT.—Section 108(b)(2)

21 (relating to tax attributes affected; order of reduc22 tion) is amended by redesignating subparagraphs

23 (C), (D), and (E) as subparagraphs (D), (E), and

24 (F) and by adding after subparagraph (B) the fol25 lowing new subparagraph:
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•S 1134 PCS

1 ‘‘(C) MINIMUM TAX CREDIT.—The amount

2 of the minimum tax credit available under sec3 tion 53(b) as of the beginning of the taxable

4 year immediately following the taxable year of

5 the discharge.’’

6 (2) PASSIVE ACTIVITY LOSSES AND CREDITS.—

7 Section 108(b)(2), as amended by paragraph (1), is

8 amended by redesignating subparagraph (F) as sub9 paragraph (G) and by adding after subparagraph

10 (E) the following new subparagraph:

11 ‘‘(F) PASSIVE ACTIVITY LOSS AND CREDIT

12 CARRYOVERS.—Any passive activity loss or

13 credit carryover of the taxpayer under section

14 469(b) from the taxable year of the discharge.’’

15 (3) CONFORMING AMENDMENTS.—

16 (A) Subparagraph (B) of section 108(b)(3)

17 is amended to read as follows:

18 ‘‘(B) CREDIT CARRYOVER REDUCTION.—

19 The reductions described in subparagraphs (B),

(C), and (G) shall be 331 20 ⁄3 cents for each dollar

21 excluded by subsection (a). The reduction de22 scribed in subparagraph (F) in any passive activity credit carryover shall be 331 23 ⁄3 cents for

24 each dollar excluded by subsection (a).’’
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1 (B) Subparagraph (B) of section 108(b)(4)

2 is amended by striking ‘‘(C)’’ in the text and

3 heading thereof and inserting ‘‘(D)’’.

4 (C) Subparagraph (C) of section 108(b)(4)

5 is amended by striking ‘‘(E)’’ in the text and

6 heading thereof and inserting ‘‘(G)’’.

7 (D) Subparagraph (B) of section 108(g)(3)

8 is amended—

9 (i) by striking ‘‘subparagraphs (A),

10 (B), (C), and (E)’’ and inserting ‘‘subpara11 graphs (A), (B), (C), (D), (F), and (G)’’,

12 (ii) by striking ‘‘subparagraphs (B)

13 and (E)’’ and inserting ‘‘subparagraphs

14 (B), (C), and (G)’’, and

15 (iii) by inserting before the period at

16 the end the following: ‘‘and the attribute

17 described in subparagraph (F) of sub18 section (b)(2) to the extent attributable to

19 any passive activity credit carryover’’.

20 (4) EFFECTIVE DATE.—The amendments made

21 by this section shall apply to taxable years beginning

22 after December 31, 1993.
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1 SEC. 8227. LIMITATION ON SECTION 936 CREDIT.

2 (a) GENERAL RULE.—Subsection (a) of section 936

3 (relating to Puerto Rico and possession tax credit) is

4 amended—

5 (1) by striking ‘‘as provided in paragraph (3)’’

6 in paragraph (1) and inserting ‘‘as otherwise pro7 vided in this section’’;

8 (2) by adding at the end thereof the following

9 new paragraph:

10 ‘‘(4) LIMITATIONS ON CREDIT FOR ACTIVE

11 BUSINESS INCOME.—

12 ‘‘(A) IN GENERAL.—The amount of the

13 credit determined under paragraph (1)(A) for

14 any taxable year shall not exceed the sum of the

15 following amounts:

16 ‘‘(i) 95 percent of the sum of—

17 ‘‘(I) the aggregate amount of the

18 possession corporation’s qualified pos19 session wages for such taxable year,

20 plus

21 ‘‘(II) the allocable employee

22 fringe benefit expenses of the posses23 sion corporation for the taxable year.

24 ‘‘(ii) The sum of—

25 ‘‘(I) 50 percent of the deprecia26 tion deductions allowable under sec-
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1 tion 167 to the possession corporation

2 for the taxable year with respect to

3 short-life qualified tangible property,

4 ‘‘(II) 75 percent of the deprecia5 tion deductions allowable under sec6 tion 167 to the possession corporation

7 for the taxable year with respect to

8 medium-life qualified tangible prop9 erty, and

10 ‘‘(III) 100 percent of the depre11 ciation deductions allowable under

12 section 167 to the possession corpora13 tion for the taxable year with respect

14 to long-life qualified tangible property.

15 ‘‘(iii) If the possession corporation

16 does not have an election to use the meth17 od described in subsection (h)(5)(C)(ii) (re18 lating to profit split) in effect for the tax19 able year, the amount of qualified posses20 sion income taxes for the taxable year allo21 cable to nonsheltered income.

22 ‘‘(B) ELECTION TO TAKE REDUCED CRED23 IT.—
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•S 1134 PCS

1 ‘‘(i) IN GENERAL.—If an election

2 under this subparagraph applies to a pos3 session corporation for any taxable year—

4 ‘‘(I) subparagraph (A), and the

5 provisions of subsection (i), shall not

6 apply to such possession corporation

7 for such taxable year, and

8 ‘‘(II) the credit determined under

9 paragraph (1)(A) for such taxable

10 year shall be the applicable percentage

11 of the credit which would otherwise

12 have been determined under such

13 paragraph.

14 Notwithstanding subclause (I), a posses15 sion corporation to which an election under

16 this subparagraph applies shall be entitled

17 to the benefits of subsection (i)(3)(B) for

18 taxes allocable (on a pro rata basis) to tax19 able income the tax on which is not offset

20 by reason of this subparagraph.

21 ‘‘(ii) APPLICABLE PERCENTAGE.—The

22 term ‘applicable percentage’ means the

23 percentage determined in accordance with

24 the following table:

‘‘In the case of taxable The percentage is:

year beginning in:

1994 ......................................................................................... 60
563

•S 1134 PCS

‘‘In the case of taxable The percentage is:

year beginning in:

1995 ......................................................................................... 55

1996 ......................................................................................... 50

1997 ......................................................................................... 45

1998 and thereafter ................................................................. 40.

1 ‘‘(iii) ELECTION.—

2 ‘‘(I) IN GENERAL.—An election

3 under this subparagraph by any pos4 session corporation may be made only

5 for the corporation’s first taxable year

6 beginning after December 31, 1993,

7 for which it is a possession corpora8 tion.

9 ‘‘(II) PERIOD OF ELECTION.—An

10 election under this subparagraph shall

11 apply to the taxable year for which

12 made and all subsequent taxable years

13 unless revoked.

14 ‘‘(III) AFFILIATED GROUPS.—If,

15 for any taxable year, an election is not

16 in effect for any possession corpora17 tion which is a member of an affili18 ated group, any election under this

19 subparagraph for any other member

20 of such group is revoked for such tax21 able year and all subsequent taxable

22 years. For purposes of this subclause,
564

•S 1134 PCS

1 members of an affiliated group shall

2 be determined without regard to the

3 exceptions contained in section

4 1504(b) and as if the constructive

5 ownership rules of section 1563(e) ap6 plied for purposes of section 1504(a).

7 The Secretary may prescribe regula8 tions to prevent the avoidance of this

9 subclause through deconsolidation or

10 otherwise.

11 ‘‘(C) CROSS REFERENCE.—

‘‘For definitions and special rules applicable to

this paragraph, see subsection (i).’’

12 (b) DEFINITIONS AND SPECIAL RULES.—Section 936

13 is amended by adding at the end thereof the following new

14 subsection:

15 ‘‘(i) DEFINITIONS AND SPECIAL RULES RELATING

16 TO LIMITATIONS OF SUBSECTION (a)(4).—

17 ‘‘(1) QUALIFIED POSSESSION WAGES.—For

18 purposes of this section—

19 ‘‘(A) IN GENERAL.—The term ‘qualified

20 possession wages’ means wages paid or incurred

21 by the possession corporation during the tax22 able year in connection with the active conduct

23 of a trade or business within a possession of the

24 United States to any employee for services per-
565

•S 1134 PCS

1 formed in such possession, but only if such

2 services are performed while the principal place

3 of employment of such employee is within such

4 possession.

5 ‘‘(B) LIMITATION ON AMOUNT OF WAGES

6 TAKEN INTO ACCOUNT.—

7 ‘‘(i) IN GENERAL.—The amount of

8 wages which may be taken into account

9 under subparagraph (A) with respect to

10 any employee for any taxable year shall

11 not exceed 85 percent of the contribution

12 and benefit base determined under section

13 230 of the Social Security Act for the cal14 endar year in which such taxable year be15 gins.

16 ‘‘(ii) TREATMENT OF PART-TIME EM17 PLOYEES, ETC.—If—

18 ‘‘(I) any employee is not em19 ployed by the possession corporation

20 on a substantially full-time basis at all

21 times during the taxable year, or

22 ‘‘(II) the principal place of em23 ployment of any employee with the

24 possession corporation is not within a
566

•S 1134 PCS

1 possession at all times during the tax2 able year,

3 the limitation applicable under clause (i)

4 with respect to such employee shall be the

5 appropriate portion (as determined by the

6 Secretary) of the limitation which would

7 otherwise be in effect under clause (i).

8 ‘‘(C) TREATMENT OF CERTAIN EMPLOY9 EES.—The term ‘qualified possession wages’

10 shall not include any wages paid to employees

11 who are assigned by the employer to perform

12 services for another person, unless the principal

13 trade or business of the employer is to make

14 employees available for temporary periods to

15 other persons in return for compensation. All

16 possession corporations treated as 1 corporation

17 under paragraph (6) shall be treated as 1 em18 ployer for purposes of the preceding sentence.

19 ‘‘(D) WAGES.—

20 ‘‘(i) IN GENERAL.—Except as pro21 vided in clause (ii), the term ‘wages’ has

22 the meaning given to such term by sub23 section (b) of section 3306 (determined

24 without regard to any dollar limitation

25 contained in such section). For purposes of
567

•S 1134 PCS

1 the preceding sentence, such subsection (b)

2 shall be applied as if the term ‘United

3 States’ included all possessions of the

4 United States.

5 ‘‘(ii) SPECIAL RULE FOR AGRICUL6 TURAL LABOR AND RAILWAY LABOR.—In

7 any case to which subparagraph (A) or (B)

8 of paragraph (1) of section 51(h) applies,

9 the term ‘wages’ has the meaning given to

10 such term by section 51(h)(2).

11 ‘‘(2) ALLOCABLE EMPLOYEE FRINGE BENEFIT

12 EXPENSES.—

13 ‘‘(A) IN GENERAL.—The allocable em14 ployee fringe benefit expenses of any possession

15 corporation for any taxable year is an amount

16 which bears the same ratio to the amount de17 termined under subparagraph (B) for such tax18 able year as—

19 ‘‘(i) the aggregate amount of the pos20 session corporation’s qualified possession

21 wages for such taxable year, bears to

22 ‘‘(ii) the aggregate amount of the

23 wages paid or incurred by such possession

24 corporation during such taxable year.
568

•S 1134 PCS

1 In no event shall the amount determined under

2 the preceding sentence exceed 15 percent of the

3 amount referred to in clause (i).

4 ‘‘(B) EXPENSES TAKEN INTO ACCOUNT.—

5 For purposes of subparagraph (A), the amount

6 determined under this subparagraph for any

7 taxable year is the aggregate amount allowable

8 as a deduction under this chapter to the posses9 sion corporation for such taxable year (deter10 mined without regard to paragraph (5)) with

11 respect to—

12 ‘‘(i) employer contributions under a

13 stock bonus, pension, profit-sharing, or an14 nuity plan,

15 ‘‘(ii) employer-provided coverage

16 under any accident or health plan for em17 ployees, and

18 ‘‘(iii) the cost of life or disability in19 surance provided to employees.

20 Any amount treated as wages under paragraph

21 (1)(D) shall not be taken into account under

22 this subparagraph.

23 ‘‘(3) TREATMENT OF POSSESSION TAXES.—

24 ‘‘(A) AMOUNT OF CREDIT FOR POSSESSION

25 CORPORATIONS NOT USING PROFIT SPLIT.—
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•S 1134 PCS

1 ‘‘(i) IN GENERAL.—For purposes of

2 subsection (a)(4)(A)(iii), the amount of the

3 qualified possession income taxes for any

4 taxable year allocable to nonsheltered in5 come shall be an amount which bears the

6 same ratio to the possession income taxes

7 for such taxable year as—

8 ‘‘(I) the increase in the tax liabil9 ity of the possession corporation

10 under this chapter by reason of sub11 section (a)(4)(A) (without regard to

12 clause (iii) thereof) and paragraph (5)

13 of this subsection, bears to

14 ‘‘(II) the tax liability of the pos15 session corporation for the taxable

16 year determined without regard to the

17 credit allowable under this section and

18 without regard to paragraph (5) of

19 this subsection.

20 ‘‘(ii) LIMITATION ON AMOUNT OF

21 TAXES TAKEN INTO ACCOUNT.—Possession

22 income taxes shall not be taken into ac23 count under clause (i) for any taxable year

24 to the extent that the amount of such
570

•S 1134 PCS

1 taxes exceeds 9 percent of the amount of

2 the taxable income for such taxable year.

3 ‘‘(B) DEDUCTION FOR POSSESSION COR4 PORATIONS USING PROFIT SPLIT.—Notwith5 standing subsection (c) if a possession corpora6 tion is not described in subsection (a)(4)(A)(iii)

7 for any taxable year, such possession corpora8 tion shall be allowed a deduction for such tax9 able year in an amount which bears the same

10 ratio to the possession income taxes for such

11 taxable year as—

12 ‘‘(i) the increase in the tax liability of

13 the possession corporation under this chap14 ter by reason of subsection (a)(4)(A) and

15 paragraph (5) of this subsection, bears to

16 ‘‘(ii) the tax liability of the possession

17 corporation for the taxable year deter18 mined without regard to the credit allow19 able under this section and without regard

20 to paragraph (5) of this subsection.

21 In determining the credit under subsection (a)

22 and in applying the preceding sentence, taxable

23 income shall be determined without regard to

24 the preceding sentence.
571

•S 1134 PCS

1 ‘‘(C) POSSESSION INCOME TAXES.—For

2 purposes of this paragraph, the term ‘posses3 sion income taxes’ means any taxes of a posses4 sion of the United States which are treated as

5 not being income, war profits, or excess profits

6 taxes paid or accrued to a possession of the

7 United States by reason of subsection (c).

8 ‘‘(4) CATEGORIES OF DEPRECIABLE PROP9 ERTY.—For purposes of this section—

10 ‘‘(A) QUALIFIED TANGIBLE PROPERTY.—

11 The term ‘qualified tangible property’ means

12 any tangible property used by the possession

13 corporation in a possession of the United States

14 in the active conduct of a trade or business

15 within such possession.

16 ‘‘(B) SHORT-LIFE QUALIFIED TANGIBLE

17 PROPERTY.—The term ‘short-life qualified tan18 gible property’ means any qualified tangible

19 property to which section 168 applies and which

20 is 3-year property or 5-year property for pur21 poses of such section.

22 ‘‘(C) MEDIUM-LIFE QUALIFIED TANGIBLE

23 PROPERTY.—The term ‘medium-life qualified

24 tangible property’ means any qualified tangible

25 property to which section 168 applies and which
572

•S 1134 PCS

1 is 7-year property or 10-year property for pur2 poses of such section.

3 ‘‘(D) LONG-LIFE QUALIFIED TANGIBLE

4 PROPERTY.—The term ‘long-life qualified tan5 gible property’ means any qualified tangible

6 property to which section 168 applies and which

7 is not described in subparagraph (B) or (C).

8 ‘‘(E) TRANSITIONAL RULE.—In the case of

9 any qualified tangible property to which section

10 168 (as in effect on the day before the date of

11 the enactment of the Tax Reform Act of 1986)

12 applies, any reference in this paragraph to sec13 tion 168 shall be treated as a reference to such

14 section as so in effect.

15 ‘‘(5) DENIAL OF DOUBLE BENEFIT.—

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

17 other provision of this chapter, no deduction

18 shall be allowed to a possession corporation

19 for—

20 ‘‘(i) any qualified possession wages,

21 ‘‘(ii) any allocable employee fringe

22 benefit expenses, and

23 ‘‘(iii) any depreciation deductions re24 ferred to in subsection (a)(4)(A)(ii).
573

•S 1134 PCS

1 ‘‘(B) COORDINATION WITH OTHER PROVI2 SIONS.—Subparagraph (A) shall not apply for

3 purposes of—

4 ‘‘(i) determining the amount of the

5 credit allowable under subsection (a)(1)(A)

6 or otherwise determining the taxable in7 come of the possession corporation under

8 any other provision of this section, and

9 ‘‘(ii) determining adjustments to the

10 basis of any property on account of depre11 ciation deductions.

12 ‘‘(6) ELECTION TO COMPUTE CREDIT ON CON13 SOLIDATED BASIS.—

14 ‘‘(A) IN GENERAL.—Any affiliated group

15 may elect to treat all possession corporations

16 which would be members of such group but for

17 section 1504(b) (3) or (4) as 1 corporation for

18 purposes of this section. The credit determined

19 under this section with respect to such 1 cor20 poration shall be allocated among such posses21 sion corporations in such manner as the Sec22 retary may prescribe.

23 ‘‘(B) ELECTION.—An election under sub24 paragraph (A) shall apply to the taxable year

25 for which made and all succeeding taxable years
574

•S 1134 PCS

1 unless revoked with the consent of the Sec2 retary.

3 ‘‘(7) POSSESSION CORPORATION.—The term

4 ‘possession corporation’ means a domestic corpora5 tion for which the election provided in subsection (a)

6 is in effect.’’

7 (c) MINIMUM TAX TREATMENT.—

8 (1) IN GENERAL.—Clause (ii) of section

9 56(g)(4)(C) (relating to treatment of special rule for

10 certain dividends) is amended by striking ‘‘sections

11 936 and 921’’ and inserting ‘‘sections 936 (including

12 subsections (a)(4) and (i) thereof) and 921’’.

13 (2) TREATMENT OF FOREIGN TAXES.—Clause

14 (iii) of section 56(g)(4)(C) is amended by adding at

15 the end thereof the following subclauses:

16 ‘‘(IV) SEPARATE APPLICATION

17 OF FOREIGN TAX CREDIT LIMITA18 TIONS.—In determining the alter19 native minimum foreign tax credit,

20 section 904(d) shall be applied as if

21 dividends from a corporation eligible

22 for the credit provided by section 936

23 were a separate category of income re24 ferred to in a subparagraph of section

25 904(d)(1).
575

•S 1134 PCS

1 ‘‘(V) COORDINATION WITH LIMI2 TATION ON 936 CREDIT.—Any ref3 erence in this clause to a dividend re4 ceived from a corporation eligible for

5 the credit provided by section 936

6 shall be treated as a reference to the

7 portion of any such dividend for which

8 the dividends received deduction is

9 disallowed under clause (i) after the

10 application of clause (ii)(I).’’

11 (d) CONFORMING AMENDMENT.—Paragraph (4) of

12 section 904(b) is amended by inserting before the period

13 at the end thereof the following: ‘‘(without regard to sub14 sections (a)(4) and (i) thereof)’’.

15 (e) INCREASE IN LIMITATION ON COVER OVER.—

16 Paragraph (1) of section 7652(f) is amended to read as

17 follows:

18 ‘‘(1) $10.50 ($11.30 in the case of distilled

19 spirits brought into the United States during the 5-

20 year period beginning on October 1, 1993), or.’’

21 (f) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to taxable years beginning after

23 December 31, 1993; except that the amendment made by

24 subsection (e) shall take effect on October 1, 1993.
576

•S 1134 PCS

1 SEC. 8228. MODIFICATION TO LIMITATION ON DEDUCTION

2 FOR CERTAIN INTEREST.

3 (a) GENERAL RULE.—Paragraph (3) of section

4 163(j) (defining disqualified interest) is amended to read

5 as follows:

6 ‘‘(3) DISQUALIFIED INTEREST.—For purposes

7 of this subsection, the term ‘disqualified interest’

8 means—

9 ‘‘(A) any interest paid or accrued by the

10 taxpayer (directly or indirectly) to a related

11 person if no tax is imposed by this subtitle with

12 respect to such interest, and

13 ‘‘(B) any interest paid or accrued by the

14 taxpayer with respect to any indebtedness to a

15 person who is not a related person if—

16 ‘‘(i) there is a disqualified guarantee

17 of such indebtedness, and

18 ‘‘(ii) no gross basis tax is imposed by

19 this subtitle with respect to such interest.’’

20 (b) DEFINITIONS.—Paragraph (6) of section 163(j)

21 is amended by adding at the end thereof the following new

22 subparagraphs:

23 ‘‘(D) DISQUALIFIED GUARANTEE.—

24 ‘‘(i) IN GENERAL.—Except as pro25 vided in clause (ii), the term ‘disqualified
577

•S 1134 PCS

1 guarantee’ means any guarantee by a re2 lated person which is—

3 ‘‘(I) an organization exempt from

4 taxation under this subtitle, or

5 ‘‘(II) a foreign person.

6 ‘‘(ii) EXCEPTIONS.—The term ‘dis7 qualified guarantee’ shall not include a

8 guarantee—

9 ‘‘(I) in any circumstances identi10 fied by the Secretary by regulation,

11 where the interest on the indebtedness

12 would have been subject to a net basis

13 tax if the interest had been paid to

14 the guarantor, or

15 ‘‘(II) if the taxpayer owns a con16 trolling interest in the guarantor.

17 For purposes of subclause (II), except as

18 provided in regulations, the term ‘a con19 trolling interest’ means direct or indirect

20 ownership of at least 80 percent of the

21 total voting power and value of all classes

22 of stock of a corporation, or 80 percent of

23 the profit and capital interests in any other

24 entity. For purposes of the preceding sen25 tence, the rules of paragraphs (1) and (5)
578

•S 1134 PCS

1 of section 267(c) shall apply; except that

2 such rules shall also apply to interest in

3 entities other than corporations.

4 ‘‘(iii) GUARANTEE.—Except as pro5 vided in regulations, the term ‘guarantee’

6 includes any arrangement under which a

7 person (directly or indirectly through an

8 entity or otherwise) assures, on a condi9 tional or unconditional basis, the payment

10 of another person’s obligation under any

11 indebtedness.

12 ‘‘(E) GROSS BASIS AND NET BASIS

13 TAXATION.—

14 ‘‘(i) GROSS BASIS TAX.—The term

15 ‘gross basis tax’ means any tax imposed by

16 this subtitle which is determined by ref17 erence to the gross amount of any item of

18 income without any reduction for any de19 duction allowed by this subtitle.

20 ‘‘(ii) NET BASIS TAX.—The term ‘net

21 basis tax’ means any tax imposed by this

22 subtitle which is a not a gross basis tax.’’

23 (c) CONFORMING AMENDMENT.—Subparagraph (B)

24 of section 163(j)(5) is amended by striking ‘‘to a related

25 person’’.
579

•S 1134 PCS

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

2 this section shall apply to interest paid or accrued in tax3 able years beginning after December 31, 1993.

4 PART III—FOREIGN TAX PROVISIONS

5 Subpart A—Current Taxation of Certain Earnings of

6 Controlled Foreign Corporations

7 SEC. 8231. EARNINGS INVESTED IN EXCESS PASSIVE AS8 SETS.

9 (a) GENERAL RULE.—Paragraph (1) of section

10 951(a) (relating to amounts included in gross income of

11 United States shareholders) is amended by striking ‘‘and’’

12 at the end of subparagraph (A), by striking the period

13 at the end of subparagraph (B) and inserting ‘‘; and’’,

14 and by adding at the end thereof the following new sub15 paragraph:

16 ‘‘(C) the amount determined under section

17 956A with respect to such shareholder for such

18 year (but only to the extent not excluded from

19 gross income under section 959(a)(3)).’’

20 (b) AMOUNT OF INCLUSION.—Subpart F of part III

21 of subchapter N of chapter 1 is amended by inserting after

22 section 956 the following new section:
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•S 1134 PCS

1 ‘‘SEC. 956A. EARNINGS INVESTED IN EXCESS PASSIVE AS2 SETS.

3 ‘‘(a) GENERAL RULE.—In the case of any controlled

4 foreign corporation, the amount determined under this

5 section with respect to any United States shareholder for

6 any taxable year is the lesser of—

7 ‘‘(1) the excess (if any) of—

8 ‘‘(A) such shareholder’s pro rata share of

9 the amount of the controlled foreign corpora10 tion’s excess passive assets for such taxable

11 year, over

12 ‘‘(B) the amount of earnings and profits

13 described in section 959(c)(1)(B) with respect

14 to such shareholder, or

15 ‘‘(2) such shareholder’s pro rata share of the

16 applicable earnings of such controlled foreign cor17 poration determined after the application of section

18 951(a)(1)(B).

19 ‘‘(b) APPLICABLE EARNINGS.—For purposes of this

20 section, the term ‘applicable earnings’ means, with respect

21 to any controlled foreign corporation, the sum of—

22 ‘‘(1) the amount referred to in section

23 316(a)(1) to the extent such amount was accumu24 lated in taxable years beginning after September 30,

25 1993, and
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•S 1134 PCS

1 ‘‘(2) the amount referred to in section

2 316(a)(2),

3 but reduced by distributions made during the taxable year

4 and reduced by the earnings and profits described in sec5 tion 959(c)(1) to the extent that the earnings and profits

6 so described were accumulated in taxable years beginning

7 after September 30, 1993.

8 ‘‘(c) EXCESS PASSIVE ASSETS.—For purposes of this

9 section—

10 ‘‘(1) IN GENERAL.—The excess passive assets

11 of any controlled foreign corporation for any taxable

12 year is the excess (if any) of—

13 ‘‘(A) the average of the amounts of passive

14 assets held by such corporation as of the close

15 of each quarter of such taxable year, over

16 ‘‘(B) 25 percent of the average of the

17 amounts of total assets held by such corpora18 tion as of the close of each quarter of such tax19 able year.

20 For purposes of the preceding sentence, the amount

21 taken into account with respect to any asset shall be

22 its adjusted basis as determined for purposes of

23 computing earnings and profits.

24 ‘‘(2) PASSIVE ASSET.—
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•S 1134 PCS

1 ‘‘(A) IN GENERAL.—Except as otherwise

2 provided in this section, the term ‘passive asset’

3 means any asset held by the controlled foreign

4 corporation which produces passive income (as

5 defined in section 1296(b)) or is held for the

6 production of such income.

7 ‘‘(B) COORDINATION WITH SECTION 956.—

8 The term ‘passive asset’ shall not include any

9 United States property (as defined in section

10 956).

11 ‘‘(3) CERTAIN RULES TO APPLY.—For purposes

12 of this subsection, the rules of the following provi13 sions shall apply:

14 ‘‘(A) Section 1296(c) (relating to look-thru

15 rules).

16 ‘‘(B) Section 1297(d) (relating to leasing

17 rules).

18 ‘‘(C) Section 1297(e) (relating to intangi19 ble property).

20 ‘‘(d) TREATMENT OF CERTAIN CHAINS OF CON21 TROLLED FOREIGN CORPORATION.—

22 ‘‘(1) IN GENERAL.—For purposes of applying

23 subsection (c)—

24 ‘‘(A) all controlled foreign corporations

25 which are members of the same CFC chain
583

•S 1134 PCS

1 shall be treated as 1 controlled foreign corpora2 tion, and

3 ‘‘(B) the amount of the excess passive as4 sets determined with respect to such 1 corpora5 tion shall be allocated among the controlled for6 eign corporations which are members of such

7 chain in proportion to their respective amounts

8 of applicable earnings.

9 ‘‘(2) CFC CHAIN.—For purposes of paragraph

10 (1), the term ‘CFC chain’ means any chain of con11 trolled foreign corporations connected through stock

12 ownership, but only if more than 50 percent (by vote

13 or value) of the stock of each member of such chain

14 (other than the top tier corporation) is owned (di15 rectly or indirectly) by one or more other members

16 of the chain.

17 ‘‘(e) SPECIAL RULE WHERE CORPORATION CEASES

18 TO BE CONTROLLED FOREIGN CORPORATION DURING

19 TAXABLE YEAR.—If any foreign corporation ceases to be

20 a controlled foreign corporation during any taxable year—

21 ‘‘(1) the determination of any United States

22 shareholder’s pro rata share shall be made on the

23 basis of stock owned (within the meaning of section

24 958(a)) by such shareholder on the last day during
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•S 1134 PCS

1 the taxable year on which the foreign corporation is

2 a controlled foreign corporation, and

3 ‘‘(2) the amount of such corporation’s excess

4 passive assets for such taxable year shall be deter5 mined by only taking into account quarters ending

6 on or before such last day, and

7 ‘‘(3) in determining applicable earnings, the

8 amount taken into account by reason of being de9 scribed in paragraph (2) of section 316(a) shall be

10 the portion of the amount so described which is allo11 cable (on a pro rata basis) to the part of such year

12 during which the corporation is a controlled foreign

13 corporation.

14 ‘‘(f) REGULATIONS.—The Secretary shall prescribe

15 such regulations as may be necessary to carry out the pur16 poses of this section, including regulations to prevent the

17 avoidance of the provisions of this section through reorga18 nizations or otherwise.’’

19 (c) PREVIOUSLY TAXED INCOME RULES.—

20 (1) IN GENERAL.—Subsection (a) of section

21 959 (relating to exclusion from gross income of pre22 viously taxed earnings and profits) is amended by

23 striking ‘‘or’’ at the end of paragraph (1), by adding

24 ‘‘or’’ at the end of paragraph (2), and by inserting

25 after paragraph (2) the following new paragraph:
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•S 1134 PCS

1 ‘‘(3) such amounts would, but for this sub2 section, be included under section 951(a)(1)(C) in

3 the gross income of,’’.

4 (2) ALLOCATION RULES.—

5 (A) Subsection (a) of section 959 is

6 amended by adding at the end thereof the fol7 lowing new sentence: ‘‘The rules of subsection

8 (c) shall apply for purposes of paragraph (1) of

9 this subsection and the rules of subsection (f)

10 shall apply for purposes of paragraphs (2) and

11 (3) of this subsection.’’.

12 (B) Section 959 is amended by adding at

13 the end thereof the following new subsection:

14 ‘‘(f) ALLOCATION RULES FOR CERTAIN INCLU15 SIONS.—

16 ‘‘(1) IN GENERAL.—For purposes of this sec17 tion—

18 ‘‘(A) amounts that would be included

19 under subparagraph (B) of section 951(a)(1)

20 (determined without regard to this section)

21 shall be treated as attributable first to earnings

22 described in subsection (c)(2), and then to earn23 ings described in subsection (c)(3), and

24 ‘‘(B) amounts that would be included

25 under subparagraph (C) of section 951(a)(1)
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•S 1134 PCS

1 (determined without regard to this section)

2 shall be treated as attributable first to earnings

3 described in subsection (c)(2) to the extent the

4 earnings so described were accumulated in tax5 able years beginning after September 30, 1993,

6 and then to earnings described in subsection

7 (c)(3).

8 ‘‘(2) TREATMENT OF DISTRIBUTIONS.—In ap9 plying this section, actual distributions shall be

10 taken into account before amounts that would be in11 cluded under subparagraphs (B) and (C) of section

12 951(a)(1) (determined without regard to this

13 section).’’

14 (C) Paragraph (1) of section 959(c) is

15 amended to read as follows:

16 ‘‘(1) first to the aggregate of—

17 ‘‘(A) earnings and profits attributable to

18 amounts included in gross income under section

19 951(a)(1)(B) (or which would have been in20 cluded except for subsection (a)(2) of this sec21 tion), and

22 ‘‘(B) earnings and profits attributable to

23 amounts included in gross income under section

24 951(a)(1)(C) (or which would have been in-
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•S 1134 PCS

1 cluded except for subsection (a)(3) of this

2 section),

3 with any distribution being allocated between earn4 ings and profits described in subparagraph (A) and

5 earnings and profits described in subparagraph (B)

6 proportionately on the basis of the respective

7 amounts of such earnings and profits,’’.

8 (3) CONFORMING AMENDMENTS.—

9 (A) Subsections (a) and (b) of section 959

10 are each amended by striking ‘‘earnings and

11 profits for a taxable year’’ and inserting ‘‘earn12 ings and profits’’.

13 (B) Paragraph (2) of section 959(c) is

14 amended to read as follows:

15 ‘‘(2) then to earnings and profits attributable to

16 amounts included in gross income under section

17 951(a)(1)(A) (but reduced by amounts not included

18 under subparagraph (B) or (C) of section 951(a)(1)

19 because of the exclusions in paragraphs (2) and (3)

20 of subsection (a) of this section), and’’

21 (C) Subsection (b) of section 989 is

22 amended by striking ‘‘section 951(a)(1)(B)’’

23 and inserting ‘‘subparagraph (B) or (C) of sec24 tion 951(a)(1)’’.
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1 (d) MODIFICATIONS TO PASSIVE FOREIGN INVEST2 MENT COMPANY RULES.—

3 (1) ADJUSTED BASIS USED IN CERTAIN DETER4 MINATIONS.—Subsection (a) of section 1296 is

5 amended by striking the material following para6 graph (2) and inserting the following:

7 ‘‘In the case of a controlled foreign corporation (or any

8 other foreign corporation if such corporation so elects), the

9 determination under paragraph (2) shall be based on the

10 adjusted bases (as determined for purposes of computing

11 earnings and profits) of its assets in lieu of their value.

12 Such an election, once made, may be revoked only with

13 the consent of the Secretary.’’

14 (2) TREATMENT OF CERTAIN SUBPART F IN15 CLUSIONS.—Subsection (b) of section 1297 is

16 amended by adding at the end thereof the following

17 new paragraph:

18 ‘‘(9) TREATMENT OF CERTAIN SUBPART F IN19 CLUSIONS.—Any amount included in gross income

20 under subparagraph (B) or (C) of section 951(a)(1)

21 shall be treated as a distribution received with re22 spect to the stock.’’

23 (3) TREATMENT OF CERTAIN DEALERS IN SE24 CURITIES.—Subsection (b) of section 1296 is
589

•S 1134 PCS

1 amended by adding at the end thereof the following

2 new paragraph:

3 ‘‘(3) TREATMENT OF CERTAIN DEALERS IN SE4 CURITIES.—

5 ‘‘(A) IN GENERAL.—In the case of any for6 eign corporation which is a controlled foreign

7 corporation (as defined in section 957(a)), the

8 term ‘passive income’ does not include any in9 come derived in the active conduct of a securi10 ties business by such corporation if such cor11 poration is registered as a securities broker or

12 dealer under section 15(a) of the Securities Ex13 change Act of 1934 or is registered as a Gov14 ernment securities broker or dealer under sec15 tion 15C(a) of such Act. To the extent provided

16 in regulations, such term shall not include any

17 income derived in the active conduct of a securi18 ties business by a controlled foreign corporation

19 which is not so registered.

20 ‘‘(B) APPLICATION OF LOOK-THRU

21 RULES.—For purposes of paragraph (2)(C),

22 rules similar to the rules of subparagraph (A)

23 of this paragraph shall apply in determining

24 whether any income of a related person (wheth25 er or not a corporation) is passive income.
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•S 1134 PCS

1 ‘‘(C) LIMITATION.—The preceding provi2 sions of this paragraph shall only apply in the

3 case of persons who are United States share4 holders (as defined in section 951(b)) in the

5 controlled foreign corporation.’’

6 (4) LEASING AND INTANGIBLE ASSET RULES.—

7 Section 1297 is amended by redesignating sub8 section (d) as subsection (f) and by inserting after

9 subsection (c) the following new subsections:

10 ‘‘(d) TREATMENT OF CERTAIN LEASED PROP11 ERTY.—For purposes of this part:

12 ‘‘(1) IN GENERAL.—Any tangible personal

13 property with respect to which a foreign corporation

14 is the lessee under a lease with a term of at least

15 12 months shall be treated as an asset actually held

16 by such corporation.

17 ‘‘(2) DETERMINATION OF ADJUSTED BASIS.—

18 ‘‘(A) IN GENERAL.—The adjusted basis of

19 any asset to which paragraph (1) applies shall

20 be the unamortized portion (as determined

21 under regulations prescribed by the Secretary)

22 of the present value of the payments under the

23 lease for the use of such property.

24 ‘‘(B) PRESENT VALUE.—For purposes of

25 subparagraph (A), the present value of pay-
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•S 1134 PCS

1 ments described in subparagraph (A) shall be

2 determined in the manner provided in regula3 tions prescribed by the Secretary—

4 ‘‘(i) as of the beginning of the lease

5 term, and

6 ‘‘(ii) except as provided in such regu7 lations, by using a discount rate equal to

8 the applicable Federal rate determined

9 under section 1274(d)—

10 ‘‘(I) by substituting the lease

11 term for the term of the debt instru12 ment, and

13 ‘‘(II) without regard to para14 graph (2) or (3) thereof.

15 ‘‘(3) EXCEPTIONS.—This subsection shall not

16 apply in any case where—

17 ‘‘(A) the lessor is a related person (as de18 fined in section 954(d)(3)) with respect to the

19 foreign corporation, or

20 ‘‘(B) a principal purpose of leasing the

21 property was to avoid the provisions of this

22 section.

23 ‘‘(e) SPECIAL RULES FOR CERTAIN INTANGIBLES.—

24 ‘‘(1) RESEARCH EXPENDITURES.—The adjusted

25 basis of the total assets of a controlled foreign cor-
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•S 1134 PCS

1 poration shall be increased by the research or experi2 mentation expenditures (within the meaning of sec3 tion 174) paid or incurred by such foreign corpora4 tion during the taxable year and the preceding 2

5 taxable years.

6 ‘‘(2) CERTAIN LICENSED INTANGIBLES.—In the

7 case of any intangible property (as defined in section

8 936(h)(3)(B)) with respect to which a controlled for9 eign corporation is a licensee and which is used by

10 such foreign corporation in the active conduct of a

11 trade or business, the adjusted basis of the total as12 sets of such foreign corporation shall be increased by

13 an amount equal to 300 percent of the payments

14 made during the taxable year for the use of such in15 tangible property. For purposes of the preceding

16 sentence, payments to a foreign person shall not be

17 taken into account if such foreign person is a related

18 person (as defined in section 954(d)(3)) with respect

19 to the controlled foreign corporation.

20 ‘‘(3) CONTROLLED FOREIGN CORPORATION.—

21 For purposes of this subsection, the term ‘controlled

22 foreign corporation’ has the meaning given such

23 term by section 957(a).’’

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

25 this section shall apply to taxable years of foreign corpora-
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•S 1134 PCS

1 tions beginning after September 30, 1993, and to taxable

2 years of United States shareholders in which or with which

3 such taxable years of foreign corporations end.

4 SEC. 8232. MODIFICATION TO TAXATION OF INVESTMENT

5 IN UNITED STATES PROPERTY.

6 (a) GENERAL RULE.—Section 956 (relating to in7 vestment of earnings in United States property) is amend8 ed—

9 (1) by redesignating subsections (b) and (c) as

10 subsections (c) and (d), respectively, and

11 (2) by striking subsection (a) and inserting the

12 following:

13 ‘‘(a) GENERAL RULE.—In the case of any controlled

14 foreign corporation, the amount determined under this

15 section with respect to any United States shareholder for

16 any taxable year is the lesser of—

17 ‘‘(1) the excess (if any) of—

18 ‘‘(A) such shareholder’s pro rata share of

19 the average of the amounts of United States

20 property held (directly or indirectly) by the con21 trolled foreign corporation as of the close of

22 each quarter of such taxable year, over

23 ‘‘(B) the amount of earnings and profits

24 described in section 959(c)(1)(A) with respect

25 to such shareholder, or
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•S 1134 PCS

1 ‘‘(2) such shareholder’s pro rata share of the

2 applicable earnings of such controlled foreign cor3 poration.

4 The amount taken into account under paragraph (1) with

5 respect to any property shall be its adjusted basis as deter6 mined for purposes of computing earnings and profits, re7 duced by any liability to which the property is subject.

8 ‘‘(b) ADJUSTMENTS FOR CERTAIN DISTRIBUTIONS;

9 OTHER SPECIAL RULES.—

10 ‘‘(1) APPLICABLE EARNINGS.—For purposes of

11 this section, the term ‘applicable earnings’ has the

12 meaning given to such term by section 956A(b), ex13 cept that the provisions of such section disregarding

14 earnings and profits accumulated in taxable years

15 beginning before October 1, 1993 shall be dis16 regarded.

17 ‘‘(2) SPECIAL RULE WHERE CORPORATION

18 CEASES TO BE CONTROLLED FOREIGN CORPORA19 TION.—Rules similar to the rules of section 956A(e)

20 shall apply for purposes of this section.’’

21 (b) CONFORMING AMENDMENTS.—

22 (1) Subparagraph (B) of section 951(a)(1) is

23 amended to read as follows:

24 ‘‘(B) the amount determined under section

25 956 with respect to such shareholder for such
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•S 1134 PCS

1 year (but only to the extent not excluded from

2 gross income under section 959(a)(2)); and’’

3 (2) Subsection (a) of section 951 is amended by

4 striking paragraph (4).

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

6 this section shall apply to taxable years of controlled for7 eign corporations beginning after September 30, 1993,

8 and to taxable years of United States shareholders in

9 which or with which such taxable years of controlled for10 eign corporations end.

11 SEC. 8233. OTHER MODIFICATIONS TO SUBPART F.

12 (a) SAME COUNTRY EXCEPTION NOT TO APPLY TO

13 CERTAIN DIVIDENDS.—

14 (1) IN GENERAL.—Paragraph (3) of section

15 954(c) (relating to certain income received from re16 lated persons) is amended by adding at the end

17 thereof the following new subparagraph:

18 ‘‘(C) EXCEPTION FOR CERTAIN DIVI19 DENDS.—Subparagraph (A)(i) shall not apply

20 to any dividend with respect to any stock which

21 is attributable to earnings and profits of the

22 distributing corporation accumulated during

23 any period during which the person receiving

24 such dividend did not hold such stock.’’
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•S 1134 PCS

1 (2) EFFECTIVE DATE.—The amendment made

2 by paragraph (1) shall apply to taxable years of con3 trolled foreign corporations beginning after Septem4 ber 30, 1993, and to taxable years of United States

5 shareholders in which or with which such taxable

6 years of controlled foreign corporations end.

7 (b) SIMPLIFICATION OF SECTION 960(b).—

8 (1) IN GENERAL.—Subsection (b) of section

9 960 is amended—

10 (A) by redesignating paragraphs (3) and

11 (4) as paragraphs (4) and (5), respectively, and

12 (B) by striking paragraphs (1) and (2) and

13 inserting the following new paragraphs:

14 ‘‘(1) INCREASE IN SECTION 904 LIMITATION.—

15 In the case of any taxpayer who—

16 ‘‘(A) either (i) chose to have the benefits

17 of subpart A of this part for a taxable year be18 ginning after September 30, 1993, in which he

19 was required under section 951(a) to include

20 any amount in his gross income, or (ii) did not

21 pay or accrue for such taxable year any income,

22 war profits, or excess profits taxes to any for23 eign country or to any possession of the United

24 States,
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•S 1134 PCS

1 ‘‘(B) chooses to have the benefits of sub2 part A of this part for any taxable year in

3 which he receives 1 or more distributions or

4 amounts which are excludable from gross in5 come under section 959(a) and which are at6 tributable to amounts included in his gross in7 come for taxable years referred to in subpara8 graph (A), and

9 ‘‘(C) for the taxable year in which such

10 distributions or amounts are received, pays, or

11 is deemed to have paid, or accrues income, war

12 profits, or excess profits taxes to a foreign

13 country or to any possession of the United

14 States with respect to such distributions or

15 amounts,

16 the limitation under section 904 for the taxable year

17 in which such distributions or amounts are received

18 shall be increased by the lesser of the amount of

19 such taxes paid, or deemed paid, or accrued with re20 spect to such distributions or amounts or the

21 amount in the excess limitation account as of the be22 ginning of such taxable year.

23 ‘‘(2) EXCESS LIMITATION ACCOUNT.—

24 ‘‘(A) ESTABLISHMENT OF ACCOUNT.—

25 Each taxpayer meeting the requirements of
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•S 1134 PCS

1 paragraph (1)(A) shall establish an excess limi2 tation account. The opening balance of such ac3 count shall be zero.

4 ‘‘(B) INCREASES IN ACCOUNT.—For each

5 taxable year beginning after September 30,

6 1993, the taxpayer shall increase the amount in

7 the excess limitation account by the excess (if

8 any) of—

9 ‘‘(i) the amount by which the limita10 tion under section 904(a) for such taxable

11 year was increased by reason of the total

12 amount of the inclusions in gross income

13 under section 951(a) for such taxable year,

14 over

15 ‘‘(ii) the amount of any income, war

16 profits, and excess profits taxes paid, or

17 deemed paid, or accrued to any foreign

18 country or possession of the United States

19 which were allowable as a credit under sec20 tion 901 for such taxable year and which

21 would not have been allowable but for the

22 inclusions in gross income described in

23 clause (i).

24 Proper reductions in the amount added to the

25 account under the preceding sentence for any
599

•S 1134 PCS

1 taxable year shall be made for any increase in

2 the credit allowable under section 901 for such

3 taxable year by reason of a carryback if such

4 increase would not have been allowable but for

5 the inclusions in gross income described in

6 clause (i).

7 ‘‘(C) DECREASES IN ACCOUNT.—For each

8 taxable year beginning after September 30,

9 1993, for which the limitation under section

10 904 was increased under paragraph (1), the

11 taxpayer shall reduce the amount in the excess

12 limitation account by the amount of such in13 crease.

14 ‘‘(3) DISTRIBUTIONS OF INCOME PREVIOUSLY

15 TAXED IN YEARS BEGINNING BEFORE OCTOBER 1,

16 1993.—If the taxpayer receives a distribution or

17 amount in a taxable year beginning after September

18 30, 1993, which is excluded from gross income

19 under section 959(a) and is attributable to any

20 amount included in gross income under section

21 951(a) for a taxable year beginning before October

22 1, 1993, the limitation under section 904 for the

23 taxable year in which such amount or distribution is

24 received shall be increased by the amount deter25 mined under this subsection as in effect on the day
600

•S 1134 PCS

1 before the date of the enactment of the Revenue

2 Reconcilation Act of 1993.’’

3 (2) EFFECTIVE DATE.—The amendment made

4 by paragraph (1) shall apply to taxable years begin5 ning after September 30, 1993.

6 Subpart B—Allocation of Research and Experimental

7 Expenditures

8 SEC. 8234. ALLOCATION OF RESEARCH AND EXPERI9 MENTAL EXPENDITURES.

10 (a) GENERAL RULE.—Subparagraph (B) of section

11 864(f)(1) (relating to allocation of research and experi12 mental expenditures) is amended by striking ‘‘64 percent’’

13 each place it appears and inserting ‘‘50 percent’’.

14 (b) CONFORMING AMENDMENTS.—

15 (1) Subsection (f) of section 864 is amended by

16 striking paragraph (5) and inserting the following

17 new paragraphs:

18 ‘‘(5) REGULATIONS.—The Secretary shall pre19 scribe such regulations as may be appropriate to

20 carry out the purposes of this subsection, including

21 regulations relating to the determination of whether

22 any expenses are attributable to activities conducted

23 in the United States or outside the United States

24 and regulations providing such adjustments to the

25 provisions of this subsection as may be appropriate
601

•S 1134 PCS

1 in the case of cost-sharing arrangements and con2 tract research.

3 ‘‘(6) APPLICABILITY.—This subsection shall

4 apply to the taxpayer’s first taxable year (beginning

5 on or before August 1, 1994) following the tax6 payer’s last taxable year to which Revenue Proce7 dure 92–56 applies or would apply if the taxpayer

8 elected the benefits of such Revenue Procedure.’’

9 (2) Subparagraph (D) of section 864(f)(4) is

10 amended by striking ‘‘subparagraph (C)’’ and insert11 ing ‘‘subparagraph (B) or (C)’’.

12 Subpart C—Other Provisions

13 SEC. 8235. REPEAL OF CERTAIN EXCEPTIONS FOR WORK14 ING CAPITAL.

15 (a) PROVISIONS RELATING TO OIL AND GAS IN16 COME.—

17 (1) AMENDMENTS TO SECTION 907.—

18 (A) Paragraph (1) of section 907(c) is

19 amended by adding at the end thereof the fol20 lowing new flush sentence:

21 ‘‘Such term does not include any dividend or interest in22 come which is passive income (as defined in section

23 904(d)(2)(A)).’’.
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•S 1134 PCS

1 (B) Paragraph (2) of section 907(c) is

2 amended by adding at the end thereof the fol3 lowing new flush sentence:

4 ‘‘Such term does not include any dividend or interest in5 come which is passive income (as defined in section

6 904(d)(2)(A)).’’.

7 (2) SEPARATE APPLICATION OF FOREIGN TAX

8 CREDIT.—Clause (iii) of section 904(d)(2)(A) is

9 amended by inserting ‘‘and’’ at the end of subclause

10 (II), by striking ‘‘, and’’ at the end of subclause

11 (III) and inserting a period, and by striking

12 subclause (IV).

13 (3) TREATMENT UNDER SUBPART F.—

14 (A) Paragraph (1) of section 954(g) is

15 amended by adding at the end thereof the fol16 lowing new flush sentence:

17 Such term shall not include any foreign personal holding

18 company income (as defined in subsection (c)).’’.

19 (B) Paragraph (8) of section 954(b) is

20 amended by striking ‘‘(1),’’.

21 (b) TREATMENT OF SHIPPING INCOME.—Subsection

22 (f) of section 954 is amended by adding at the end thereof

23 the following new sentence: ‘‘Such term shall not include

24 any dividend or interest income which is foreign personal

25 holding company income (as defined in subsection (c)).’’.
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•S 1134 PCS

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

2 this section shall apply to taxable years beginning after

3 December 31, 1992.

4 SEC. 8236. MODIFICATIONS OF ACCURACY-RELATED PEN5 ALTY.

6 (a) THRESHOLD REQUIREMENT.—Clause (ii) of sec7 tion 6662(e)(1)(B) (relating to substantial valuation

8 misstatement under chapter 1) is amended to read as

9 follows:

10 ‘‘(ii) the net section 482 transfer price

11 adjustment for the taxable year exceeds

12 the lesser of $5,000,000 or 10 percent of

13 the taxpayer’s gross receipts.’’

14 (b) CERTAIN ADJUSTMENTS EXCLUDED IN DETER15 MINING THRESHOLD.—Subparagraph (B) of section

16 6662(e)(3) is amended to read as follows:

17 ‘‘(B) CERTAIN ADJUSTMENTS EXCLUDED

18 IN DETERMINING THRESHOLD.—For purposes

19 of determining whether the threshold require20 ments of paragraph (1)(B)(ii) are met, the fol21 lowing shall be excluded:

22 ‘‘(i) Any portion of the net increase in

23 taxable income referred to in subparagraph

24 (A) which is attributable to any redeter25 mination of a price if—
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•S 1134 PCS

1 ‘‘(I) it is established that the tax2 payer determined such price in ac3 cordance with a specific pricing meth4 od set forth in the regulations pre5 scribed under section 482 and that

6 the taxpayer’s use of such method was

7 reasonable,

8 ‘‘(II) the taxpayer has docu9 mentation (which was in existence as

10 of the time of filing the return) which

11 sets forth the determination of such

12 price in accordance with such a meth13 od and which establishes that the use

14 of such method was reasonable, and

15 ‘‘(III) the taxpayer provides such

16 documentation to the Secretary within

17 30 days of a request for such docu18 mentation.

19 ‘‘(ii) Any portion of the net increase

20 in taxable income referred to in subpara21 graph (A) which is attributable to a rede22 termination of price where such price was

23 not determined in accordance with such a

24 specific pricing method if—
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1 ‘‘(I) the taxpayer establishes that

2 none of such pricing methods was

3 likely to result in a price that would

4 clearly reflect income, the taxpayer

5 used another pricing method to deter6 mine such price, and such other pric7 ing method was likely to result in a

8 price that would clearly reflect in9 come,

10 ‘‘(II) the taxpayer has docu11 mentation (which was in existence as

12 of the time of filing the return) which

13 sets forth the determination of such

14 price in accordance with such other

15 method and which establishes that the

16 requirements of subclause (I) were

17 satisfied, and

18 ‘‘(III) the taxpayer provides such

19 documentation to the Secretary within

20 30 days of request for such docu21 mentation.

22 ‘‘(iii) Any portion of such net increase

23 which is attributable to any transaction

24 solely between foreign corporations unless,

25 in the case of any such corporations, the
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•S 1134 PCS

1 treatment of such transaction affects the

2 determination of income from sources with3 in the United States or taxable income ef4 fectively connected with the conduct of a

5 trade or business within the United

6 States.’’

7 (c) COORDINATION WITH REASONABLE CAUSE EX8 CEPTION.—Paragraph (3) of section 6662(e) is amended

9 by adding at the end thereof the following new sub10 paragraph:

11 ‘‘(D) COORDINATION WITH REASONABLE

12 CAUSE EXCEPTION.—For purposes of section

13 6664(c) the taxpayer shall not be treated as

14 having reasonable cause for any portion of an

15 underpayment attributable to a net section 482

16 transfer price adjustment unless such taxpayer

17 meets the requirements of clause (i), (ii), or (iii)

18 of subparagraph (B) with respect to such por19 tion.’’

20 (d) CONFORMING AMENDMENT.—Clause (iii) of sec21 tion 6662(h)(2)(A) is amended to read as follows:

22 ‘‘(iii) in paragraph (1)(B)(ii)—

23 ‘‘(I) ‘$20,000,000’ for

24 ‘$5,000,000’, and
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•S 1134 PCS

1 ‘‘(II) ‘20 percent’ for ‘10 per2 cent’.’’

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

4 this section shall apply to taxable years beginning after

5 December 31, 1993.

6 SEC. 8237. DENIAL OF PORTFOLIO INTEREST EXEMPTION

7 FOR CONTINGENT INTEREST.

8 (a) GENERAL RULE.—

9 (1) Subsection (h) of section 871 (relating to

10 repeal of tax on interest of nonresident alien individ11 uals received from certain portfolio debt invest12 ments) is amended by redesignating paragraphs (4),

13 (5), and (6) as paragraphs (5), (6), and (7), respec14 tively, and by inserting after paragraph (3) the fol15 lowing new paragraph:

16 ‘‘(4) PORTFOLIO INTEREST NOT TO INCLUDE

17 CERTAIN CONTINGENT INTEREST.—For purposes of

18 this subsection—

19 ‘‘(A) IN GENERAL.—Except as otherwise

20 provided in this paragraph, the term ‘portfolio

21 interest’ shall not include—

22 ‘‘(i) any interest if the amount of such

23 interest is determined by reference to—
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•S 1134 PCS

1 ‘‘(I) any receipts, sales or other

2 cash flow of the debtor or a related

3 person,

4 ‘‘(II) any income or profits of the

5 debtor or a related person,

6 ‘‘(III) any change in value of any

7 property of the debtor or a related

8 person, or

9 ‘‘(IV) any dividend, partnership

10 distributions, or similar payments

11 made by the debtor or a related per12 son, or

13 ‘‘(ii) any other type of contingent in14 terest that is identified by the Secretary by

15 regulation, where a denial of the portfolio

16 interest exemption is necessary or appro17 priate to prevent avoidance of Federal in18 come tax.

19 ‘‘(B) RELATED PERSON.—The term ‘relat20 ed person’ means any person who is related to

21 the debtor within the meaning of section 267(b)

22 or 707(b)(1), or who is a party to any arrange23 ment undertaken for a purpose of avoiding the

24 application of this paragraph.
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•S 1134 PCS

1 ‘‘(C) EXCEPTIONS.—Subparagraph (A)(i)

2 shall not apply to—

3 ‘‘(i) any amount of interest solely by

4 reason of the fact that the timing of any

5 interest or principal payment is subject to

6 a contingency,

7 ‘‘(ii) any amount of interest solely by

8 reason of the fact that the interest is paid

9 with respect to nonrecourse or limited re10 course indebtedness,

11 ‘‘(iii) any amount of interest all or

12 substantially all of which is determined by

13 reference to any other amount of interest

14 not described in subparagraph (A) (or by

15 reference to the principal amount of in16 debtedness on which such other interest is

17 paid),

18 ‘‘(iv) any amount of interest solely by

19 reason of the fact that the debtor or a re20 lated person enters into a hedging trans21 action to reduce the risk of interest rate or

22 currency fluctuations with respect to such

23 interest,

24 ‘‘(v) any amount of interest deter25 mined by reference to—
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•S 1134 PCS

1 ‘‘(I) changes in the value of prop2 erty (including stock) that is actively

3 traded (within the meaning of section

4 1092(d)) other than property de5 scribed in section 897(c)(1) or (g),

6 ‘‘(II) the yield on property de7 scribed in subclause (I), other than a

8 debt instrument that pays interest de9 scribed in subparagraph (A), or stock

10 or other property that represents a

11 beneficial interest in the debtor or a

12 related person, or

13 ‘‘(III) changes in any index of

14 the value of property described in

15 subclause (I) or of the yield on prop16 erty described in subclause (II), and

17 ‘‘(vi) any other type of interest identi18 fied by the Secretary by regulation.

19 ‘‘(D) EXCEPTION FOR CERTAIN EXISTING

20 INDEBTEDNESS.—Subparagraph (A) shall not

21 apply to any interest paid or accrued with re22 spect to any indebtedness with a fixed term—

23 ‘‘(i) which was issued on or before

24 April 7, 1993, or
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1 ‘‘(ii) which was issued after such date

2 pursuant to a written binding contract in

3 effect on such date and at all times there4 after before such indebtedness was issued.’’

5 (2) Subsection (c) of section 881 is amended by

6 redesignating paragraphs (4), (5), and (6) as para7 graphs (5), (6), and (7), respectively, and by insert8 ing after paragraph (3) the following new para9 graph:

10 ‘‘(4) PORTFOLIO INTEREST NOT TO INCLUDE

11 CERTAIN CONTINGENT INTEREST.—For purposes of

12 this subsection, the term ‘portfolio interest’ shall not

13 include any interest which is treated as not being

14 portfolio interest under the rules of section

15 871(h)(4).’’

16 (b) CONFORMING AMENDMENTS.—

17 (1) Clause (ii) of section 871(h)(2)(B) is

18 amended by striking ‘‘paragraph (4)’’ and inserting

19 ‘‘paragraph (5)’’.

20 (2) Clause (ii) of section 881(c)(2)(B) is

21 amended by striking ‘‘section 871(h)(4)’’ and insert22 ing ‘‘section 871(h)(5)’’.

23 (3) Paragraph (6) of section 881(c) (as redesig24 nated by subsection (a)) is amended by striking
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•S 1134 PCS

1 ‘‘section 871(h)(5)’’ each place it appears and in2 serting ‘‘section 871(h)(6)’’.

3 (4) Paragraph (9) of section 1441(c) is amend4 ed by striking ‘‘section 871(h)(3)’’ and inserting

5 ‘‘section 871(h)(3) or (4)’’.

6 (5) Subsection (a) of section 1442 is amend7 ed—

8 (A) by striking ‘‘871(h)(3)’’ and inserting

9 ‘‘871(h)(3) or (4)’’, and

10 (B) by striking ‘‘881(c)(3)’’ and inserting

11 ‘‘881(c)(3) or (4)’’.

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

13 this section shall apply to interest received after December

14 31, 1993.

15 SEC. 8238. REGULATIONS DEALING WITH CONDUIT AR16 RANGEMENTS.

17 Section 7701 is amended by redesignating subsection

18 (l) as subsection (m) and by inserting after subsection (k)

19 the following new subsection:

20 ‘‘(l) REGULATIONS RELATING TO CONDUIT AR21 RANGEMENTS.—The Secretary may prescribe regulations

22 recharacterizing any multiple-party financing transaction

23 as a transaction directly among any 2 or more of such

24 parties where the Secretary determines that such
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1 recharacterization is appropriate to prevent avoidance of

2 any tax imposed by this title.’’

3 SEC. 8239. TREATMENT OF EXPORT OF CERTAIN

4 SOFTWOOD LOGS.

5 (a) FOREIGN SALES CORPORATIONS.—Paragraph (2)

6 of section 927(a) (relating to exclusion of certain prop7 erty) is amended by striking ‘‘or’’ at the end of subpara8 graph (C), by striking the period at the end of subpara9 graph (D) and inserting ‘‘, or’’, and by adding at the end

10 the following:

11 ‘‘(E) any unprocessed timber which is a

12 softwood.

13 For purposes of subparagraph (E), the term ‘un14 processed timber’ means any log, cant, or similar

15 form of timber.’’

16 (b) DOMESTIC INTERNATIONAL SALES CORPORA17 TIONS.—Paragraph (2) of section 993(c) (relating to ex18 clusion of certain property) is amended—

19 (1) by striking ‘‘or’’ at the end of subparagraph

20 (C), by striking the period at the end of subpara21 graph (D) and inserting ‘‘, or’’, and by adding after

22 subparagraph (D) the following new subparagraph:

23 ‘‘(E) any unprocessed timber which is a

24 softwood.’’, and
614

•S 1134 PCS

1 (2) by adding at the end the following new sen2 tence: ‘‘For purposes of subparagraph (E), the term

3 ‘unprocessed timber’ means any log, cant, or similar

4 form of timber.’’

5 (c) SOURCE RULE.—Subsection (b) of section 865

6 (relating to source rules for personal property sales) is

7 amended by adding at the end the following: ‘‘Notwith8 standing the preceding sentence, any income from the sale

9 of any unprocessed timber which is a softwood and was

10 cut from an area in the United States shall be sourced

11 in the United States and the rules of sections 862(a)(6)

12 and 863(b) shall not apply to any such income. For pur13 poses of the preceding sentence, the term ‘unprocessed

14 timber’ means any log, cant, or similar form of timber.’’

15 (d) ELIMINATION OF DEFERRAL.—Subsection (d) of

16 section 954 is amended by adding at the end the following

17 new paragraph:

18 ‘‘(4) SPECIAL RULE FOR CERTAIN TIMBER

19 PRODUCTS.—For purposes of subsection (a)(2), the

20 term ‘foreign base company sales income’ includes

21 any income (whether in the form of profits, commis22 sions, fees, or otherwise) derived in connection

23 with—

24 ‘‘(A) the sale of any unprocessed timber

25 referred to in section 865(b), or
615

•S 1134 PCS

1 ‘‘(B) the milling of any such timber out2 side the United States.

3 Subpart G shall not apply to any amount treated as

4 subpart F income by reason of this paragraph.’’

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

6 this section shall apply to sales, exchanges, or other dis7 positions after the date of the enactment of this Act.

8 PART IV—TRANSPORTATION FUELS PROVISIONS

9 Subpart A—Transportation Fuels Tax

10 SEC. 8241. TRANSPORTATION FUELS TAX.

11 (a) GASOLINE.—

12 (1) IN GENERAL.—Clause (iii) of section

13 4081(a)(2)(B) (relating to rates of tax) is amended

14 to read as follows:

15 ‘‘(iii) the deficit reduction rate is 6.8 cents

16 a gallon (4.3 cents a gallon on and after Octo17 ber 1, 1995).’’

18 (2) DEFICIT REDUCTION RATE MADE PERMA19 NENT.—Section 4081(d) (relating to termination) is

20 amended by striking paragraph (3).

21 (b) DIESEL FUEL AND AVIATION FUEL.—

22 (1) DIESEL FUEL.—

23 (A) IN GENERAL.—Paragraph (4) of sec24 tion 4091(b) (relating to rate of tax) is amend25 ed by striking ‘‘2.5 cents per gallon’’ and in-
616

•S 1134 PCS

1 serting ‘‘6.8 cents per gallon (4.3 cents per gal2 lon on and after October 1, 1995)’’.

3 (B) DIESEL FUEL DEFICIT REDUCTION

4 RATE MADE PERMANENT.—Section 4091(b)(6)

5 (relating to termination) is amended by striking

6 subparagraph (D).

7 (2) AVIATION FUEL.—

8 (A) IN GENERAL.—Clause (ii) of section

9 4091(b)(1)(A) (relating to rate of tax) is

10 amended by inserting ‘‘and the aviation fuel

11 deficit reduction rate’’ after ‘‘rate’’.

12 (B) AVIATION FUEL DEFICIT REDUCTION

13 RATE.—Subsection (b) of section 4091 is

14 amended by redesignating paragraph (6) as

15 paragraph (7) and by inserting after paragraph

16 (5) the following new paragraph:

17 ‘‘(6) AVIATION FUEL DEFICIT REDUCTION

18 RATE.—For purposes of paragraph (1), the aviation

19 fuel deficit reduction rate is 4.3 cents per gallon.’’

20 (C) NONGASOLINE IN NONCOMMERCIAL

21 AVIATION.—Paragraph (1) of section 4041(c)

22 (relating to noncommercial aviation) is amended

23 by striking ‘‘of 17.5 cents a gallon upon’’ and

24 inserting ‘‘at a rate equal to the sum of the Air-
617

•S 1134 PCS

1 port and Airway Trust Fund financing rate

2 plus the aviation fuel deficit reduction rate on’’.

3 (D) GASOLINE IN NONCOMMERCIAL AVIA4 TION.—Paragraph (3) of section 4041(c) is

5 amended to read as follows:

6 ‘‘(3) RATE OF TAX.—The rate of tax imposed

7 by paragraph (2) on any gasoline is 1 cent.’’

8 (3) CONFORMING AMENDMENTS.—

9 (A) Subparagraphs (A) and (B) of section

10 4093(c)(2) are amended to read as follows:

11 ‘‘(A) NO REFUND OF CERTAIN TAXES ON

12 FUEL USED IN DIESEL-POWERED TRAINS.—In

13 the case of fuel sold for use in a diesel-powered

14 train, paragraph (1) shall not apply to so much

15 of the tax imposed by section 4091 as is attrib16 utable to the Leaking Underground Storage

17 Tank Trust Fund financing rate and the diesel

18 fuel deficit reduction rate imposed under such

19 section. The preceding sentence shall not apply

20 in the case of fuel sold for exclusive use by a

21 State or any political subdivision thereof.

22 ‘‘(B) NO REFUND OF CERTAIN TAXES ON

23 FUEL USED IN AIRCRAFT.—In the case of fuel

24 sold for use in any aircraft (except supplies for

25 vessels or aircraft within the meaning of section
618

•S 1134 PCS

1 4221(d)(3)), paragraph (1) also shall not apply

2 to so much of the tax imposed by section 4091

3 as is attributable to the Leaking Underground

4 Storage Tank Trust Fund financing rate and

5 the aviation fuel deficit reduction rate imposed

6 by such section. The preceding sentence shall

7 not apply in the case of fuel sold for exclusive

8 use by a State or any political subdivision

9 thereof.’’

10 (B) Section 4093(d) is amended by insert11 ing ‘‘and the aviation fuel deficit reduction

12 rate’’ after ‘‘rate’’.

13 (c) SPECIAL FUELS.—Section 4041(m)(1)(A) is

14 amended by striking ‘‘1.25 cents’’ and inserting ‘‘5.55

15 cents (4.3 cents on and after October 1, 1995)’’.

16 (d) FUEL USED IN COMMERCIAL TRANSPORTATION

17 ON INLAND WATERWAYS.—

18 (1) IN GENERAL.—Section 4042(b)(1) (relating

19 to amount of tax) is amended—

20 (A) by striking ‘‘and’’ at the end of sub21 paragraph (A),

22 (B) by striking the period at the end of

23 subparagraph (B) and inserting ‘‘, and’’, and

24 (C) by adding at the end thereof the fol25 lowing new subparagraph:
619

•S 1134 PCS

1 ‘‘(C) the deficit reduction rate.’’

2 (2) RATE.—Section 4042(b)(2) (relating to

3 rates) is amended by adding at the end the following

4 new subparagraph:

5 ‘‘(C) The deficit reduction rate is 4.3 cents

6 per gallon.’’

7 (e) CONFORMING AMENDMENTS.—

8 (1) Section 6421(f) is amended—

9 (A) by striking subparagraph (B) of para10 graph (2) and inserting the following:

11 ‘‘(B) in aviation which is not noncommer12 cial aviation (as so defined) with respect to the

13 tax imposed by section 4081 at the Leaking

14 Underground Storage Tank Trust Fund financ15 ing rate and at the deficit reduction rate to the

16 extent such deficit reduction rate does not ex17 ceed 4.3 cents per gallon.’’, and

18 (B) by inserting ‘‘and at the deficit reduc19 tion rate to the extent such deficit reduction

20 rate does not exceed 4.3 cents per gallon’’ after

21 ‘‘financing rate’’ in paragraph (3), and

22 (C) by inserting ‘‘AND DEFICIT REDUCTION

23 TAX’’ after ‘‘TAX’’ in the heading for paragraph

24 (3).
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•S 1134 PCS

1 (2) Section 6427(l) is amended by striking

2 paragraphs (3) and (4) and inserting the following

3 new paragraphs:

4 ‘‘(3) NO REFUND OF CERTAIN TAXES ON FUEL

5 USED IN DIESEL-POWERED TRAINS.—In the case of

6 fuel used in a diesel-powered train, paragraph (1)

7 shall not apply to so much of the tax imposed by

8 section 4091 as is attributable to the Leaking Un9 derground Storage Tank Trust Fund financing rate

10 and the diesel fuel deficit reduction rate imposed by

11 such section. The preceding sentence shall not apply

12 in the case of fuel sold for exclusive use by a State

13 or any political subdivision thereof.

14 ‘‘(4) NO REFUND OF CERTAIN TAXES ON FUEL

15 USED IN AIRCRAFT.—In the case of fuel used in any

16 aircraft (except supplies for vessels or aircraft within

17 the meaning of section 4221(d)(3)), paragraph (1)

18 also shall not apply to so much of the tax imposed

19 by section 4091 as is attributable to the Leaking

20 Underground Storage Tank Trust Fund financing

21 rate and the aviation fuel deficit reduction rate im22 posed by such section. The preceding sentence shall

23 not apply in the case of fuel sold for exclusive use

24 by a State or any political subdivision thereof.’’

25 (3) Section 9502(b) is amended—
621

•S 1134 PCS

1 (A) by striking ‘‘subsections (c) and (e) of

2 section 4041’’ in paragraph (1) and inserting

3 ‘‘sections 4041(c)(1) (to the extent attributable

4 to the Airport and Airway Trust Fund financ5 ing rate), 4041(c)(2), and 4041(e)’’, and

6 (B) by striking ‘‘the deficit reduction rate’’

7 in paragraph (2) and inserting ‘‘so much of the

8 deficit reduction rate as exceeds 4.3 cents per

9 gallon’’.

10 (f) EFFECTIVE DATE.—The amendments made by

11 this section shall take effect on October 1, 1993.

12 (g) FLOOR STOCKS TAXES.—

13 (1) IMPOSITION OF TAX.—In the case of gaso14 line, diesel fuel, and aviation fuel on which tax was

15 imposed under section 4081 or 4091 of the Internal

16 Revenue Code of 1986 before October 1, 1993, and

17 which is held on such date by any person, there is

18 hereby imposed a floor stocks tax of 4.3 cents per

19 gallon on such gasoline, diesel fuel, and aviation

20 fuel.

21 (2) LIABILITY FOR TAX AND METHOD OF PAY22 MENT.—

23 (A) LIABILITY FOR TAX.—A person hold24 ing gasoline, diesel fuel, or aviation fuel on Oc25 tober 1, 1993, to which the tax imposed by
622

•S 1134 PCS

1 paragraph (1) applies shall be liable for such

2 tax.

3 (B) METHOD OF PAYMENT.—The tax im4 posed by paragraph (1) shall be paid in such

5 manner as the Secretary shall prescribe.

6 (C) TIME FOR PAYMENT.—The tax im7 posed by paragraph (1) shall be paid on or be8 fore November 30, 1993.

9 (3) DEFINITIONS.—For purposes of this sub10 section—

11 (A) HELD BY A PERSON.—Gasoline, diesel

12 fuel, and aviation fuel shall be considered as

13 ‘‘held by a person’’ if title thereto has passed

14 to such person (whether or not delivery to the

15 person has been made).

16 (B) GASOLINE.—The term ‘‘gasoline’’ has

17 the meaning given such term by section 4082 of

18 such Code.

19 (C) DIESEL FUEL.—The term ‘‘diesel fuel’’

20 has the meaning given such term by section

21 4092 of such Code.

22 (D) AVIATION FUEL.—The term ‘‘aviation

23 fuel’’ has the meaning given such term by sec24 tion 4092 of such Code.
623

•S 1134 PCS

1 (E) SECRETARY.—The term ‘‘Secretary’’

2 means the Secretary of the Treasury or his del3 egate.

4 (4) EXCEPTION FOR EXEMPT USES.—The tax

5 imposed by paragraph (1) shall not apply to gaso6 line, diesel fuel, or aviation fuel held by any person

7 exclusively for any use to the extent a credit or re8 fund of the tax imposed by section 4081 or 4091 of

9 such Code, as the case may be, is allowable for such

10 use.

11 (5) EXCEPTION FOR FUEL HELD IN VEHICLE

12 TAX.—No tax shall be imposed by paragraph (1) on

13 gasoline or diesel fuel held in the tank of a motor

14 vehicle or motorboat.

15 (6) EXCEPTION FOR CERTAIN AMOUNTS OF

16 FUEL.—

17 (A) IN GENERAL.—No tax shall be im18 posed by paragraph (1)—

19 (i) on gasoline held on October 1,

20 1993, by any person if the aggregate

21 amount of gasoline held by such person on

22 such date does not exceed 4,000 gallons,

23 and

24 (ii) on diesel fuel or aviation fuel held

25 on October 1, 1993, by any person if the
624

•S 1134 PCS

1 aggregate amount of diesel fuel or aviation

2 fuel held by such person on such date does

3 not exceed 2,000 gallons.

4 The preceding sentence shall apply only if such

5 person submits to the Secretary (at the time

6 and in the manner required by the Secretary)

7 such information as the Secretary shall require

8 for purposes of this paragraph.

9 (B) EXEMPT FUEL.—For purposes of sub10 paragraph (A), there shall not be taken into ac11 count fuel held by any person which is exempt

12 from the tax imposed by paragraph (1) by rea13 son of paragraph (4) or (5).

14 (C) CONTROLLED GROUPS.—For purposes

15 of this paragraph—

16 (i) CORPORATIONS.—

17 (I) IN GENERAL.—All persons

18 treated as a controlled group shall be

19 treated as 1 person.

20 (II) CONTROLLED GROUP.—The

21 term ‘‘controlled group’’ has the

22 meaning given to such term by sub23 section (a) of section 1563 of such

24 Code; except that for such purposes

25 the phrase ‘‘more than 50 percent’’
625

•S 1134 PCS

1 shall be substituted for the phrase ‘‘at

2 least 80 percent’’ each place it ap3 pears in such subsection.

4 (ii) NONINCORPORATED PERSONS

5 UNDER COMMON CONTROL.—Under regula6 tions prescribed by the Secretary, prin7 ciples similar to the principles of clause (i)

8 shall apply to a group of persons under

9 common control where 1 or more of such

10 persons is not a corporation.

11 (7) OTHER LAW APPLICABLE.—All provisions of

12 law, including penalties, applicable with respect to

13 the taxes imposed by section 4081 of such Code in

14 the case of gasoline and section 4091 of such Code

15 in the case of diesel fuel shall, insofar as applicable

16 and not inconsistent with the provisions of this sub17 section, apply with respect to the floor stock taxes

18 imposed by paragraph (1) to the same extent as if

19 such taxes were imposed by such section 4081 or

20 4091.

21 Subpart B—Modifications to Tax on Diesel Fuel

22 SEC. 8242. MODIFICATIONS TO TAX ON DIESEL FUEL.

23 (a) IN GENERAL.—Subparts A and B of part III of

24 subchapter A of chapter 32 (relating to manufacturers ex-
626

•S 1134 PCS

1 cise taxes), as amended by subpart A, are amended to read

2 as follows:

3 ‘‘Subpart A—Gasoline and Diesel Fuel

‘‘Sec. 4081. Imposition of tax.

‘‘Sec. 4082. Exemptions for diesel fuel.

‘‘Sec. 4083. Definitions and special rule.

‘‘Sec. 4084. Cross references.

4 ‘‘SEC. 4081. IMPOSITION OF TAX.

5 ‘‘(a) TAX IMPOSED.—

6 ‘‘(1) TAX ON REMOVAL, ENTRY, OR SALE.—

7 ‘‘(A) IN GENERAL.—There is hereby im8 posed a tax at the rate specified in paragraph

9 (2) on—

10 ‘‘(i) the removal of a taxable fuel from

11 any refinery,

12 ‘‘(ii) the removal of a taxable fuel

13 from any terminal,

14 ‘‘(iii) the entry into the United States

15 of any taxable fuel for consumption, use,

16 or warehousing, and

17 ‘‘(iv) the sale of a taxable fuel to any

18 person who is not registered under section

19 4101 unless there was a prior taxable re20 moval or entry of such fuel under clause

21 (i), (ii), or (iii).

22 ‘‘(B) EXEMPTION FOR BULK TRANSFERS

23 TO REGISTERED TERMINALS OR REFINERIES.—
627

•S 1134 PCS

1 The tax imposed by this paragraph shall not

2 apply to any removal or entry of a taxable fuel

3 transferred in bulk to a terminal or refinery if

4 the person removing or entering the taxable fuel

5 and the operator of such terminal or refinery

6 are registered under section 4101.

7 ‘‘(2) RATES OF TAX.—

8 ‘‘(A) IN GENERAL.—The rate of the tax

9 imposed by this section is the sum of—

10 ‘‘(i) the Highway Trust Fund financ11 ing rate,

12 ‘‘(ii) the Leaking Underground Stor13 age Tank Trust Fund financing rate, and

14 ‘‘(iii) the deficit reduction rate.

15 ‘‘(B) RATES.—For purposes of subpara16 graph (A)—

17 ‘‘(i) the Highway Trust Fund financ18 ing rate is—

19 ‘‘(I) 11.5 cents per gallon in the

20 case of gasoline, and

21 ‘‘(II) 17.5 cents per gallon in the

22 case of diesel fuel,

23 ‘‘(ii) the Leaking Underground Stor24 age Tank Trust Fund financing rate is 0.1

25 cent per gallon, and
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•S 1134 PCS

1 ‘‘(iii) the deficit reduction rate is 6.8

2 cents per gallon (4.3 cents per gallon on

3 and after October 1, 1995).

4 ‘‘(b) TREATMENT OF REMOVAL OR SUBSEQUENT

5 SALE BY BLENDER.—

6 ‘‘(1) IN GENERAL.—There is hereby imposed a

7 tax at the rate specified in subsection (a) on taxable

8 fuel removed or sold by the blender thereof.

9 ‘‘(2) CREDIT FOR TAX PREVIOUSLY PAID.—If—

10 ‘‘(A) tax is imposed on the removal or sale

11 of a taxable fuel by reason of paragraph (1),

12 and

13 ‘‘(B) the blender establishes the amount of

14 the tax paid with respect to such fuel by reason

15 of subsection (a),

16 the amount of the tax so paid shall be allowed as a

17 credit against the tax imposed by reason of para18 graph (1).

19 ‘‘(c) TAXABLE FUELS MIXED WITH ALCOHOL AT

20 REFINERY, ETC.—

21 ‘‘(1) REDUCED RATES.—

22 ‘‘(A) IN GENERAL.—Under regulations

23 prescribed by the Secretary, subsection (a) shall

24 be applied by substituting rates which are the

25 applicable fraction of the otherwise applicable
629

•S 1134 PCS

1 rates in the case of the removal or entry of any

2 taxable fuel for use in producing at the time of

3 such removal or entry a qualified alcohol mix4 ture. Subject to such terms and conditions as

5 the Secretary may prescribe (including the ap6 plication of section 4101), the treatment under

7 the preceding sentence also shall apply to use in

8 producing such a mixture after the time of such

9 removal or entry.

10 ‘‘(B) APPLICABLE FRACTION.—For pur11 poses of subparagraph (A), the applicable frac12 tion is—

13 ‘‘(i) in the case of a qualified alcohol

14 mixture which contains gasoline, the frac15 tion the numerator of which is 10 and the

16 denominator of which is—

17 ‘‘(I) 9 in the case of 10 percent

18 gasohol,

19 ‘‘(II) 9.23 in the case of 7.7 per20 cent gasohol, and

21 ‘‘(III) 9.43 in the case of 5.7 per22 cent gasohol, and

23 ‘‘(ii) in the case of a qualified alcohol

24 mixture which does not contain gasoline,

10 25 ⁄9.
630

•S 1134 PCS

1 ‘‘(2) LATER SEPARATION OF FUEL FROM

2 QUALIFIED ALCOHOL MIXTURE.—If any person sep3 arates the taxable fuel from a qualified alcohol mix4 ture on which tax was imposed under subsection (a)

5 at the otherwise applicable Highway Trust Fund fi6 nancing rate (or its equivalent) by reason of this

7 subsection (or with respect to which a credit or pay8 ment was allowed or made by reason of section

9 6427(f)(1)), such person shall be treated as the re10 finer of such taxable fuel. The amount of tax im11 posed on any removal of such fuel by such person

12 shall be reduced by the amount of tax imposed (and

13 not credited or refunded) on any prior removal or

14 entry of such fuel.

15 ‘‘(3) ALCOHOL; QUALIFIED ALCOHOL MIX16 TURE.—For purposes of this subsection—

17 ‘‘(A) ALCOHOL.—The term ‘alcohol’ in18 cludes methanol and ethanol but does not in19 clude alcohol produced from petroleum, natural

20 gas, or coal (including peat). Such term does

21 not include alcohol with a proof of less than

22 190 (determined without regard to any added

23 denaturants).

24 ‘‘(B) QUALIFIED ALCOHOL MIXTURE.—

25 The term ‘qualified alcohol mixture’ means—
631

•S 1134 PCS

1 ‘‘(i) any mixture of gasoline with alco2 hol if at least 5.7 percent of such mixture

3 is alcohol, and

4 ‘‘(ii) any mixture of diesel fuel with

5 alcohol if at least 10 percent of such mix6 ture is alcohol.

7 ‘‘(4) OTHERWISE APPLICABLE RATES FOR GAS8 OLINE MIXTURES.—For purposes of this sub9 section—

10 ‘‘(A) IN GENERAL.—In the case of the

11 Highway Trust Fund financing rate, the other12 wise applicable rate for gasoline in a qualified

13 alcohol mixture is—

14 ‘‘(i) 6.1 cents a gallon for 10 percent

15 gasohol,

16 ‘‘(ii) 7.342 cents a gallon for 7.7 per17 cent gasohol, and

18 ‘‘(iii) 8.422 cents a gallon for 5.7 per19 cent gasohol.

20 In the case of a mixture none of the alcohol in

21 which consists of ethanol, clauses (i), (ii), and

22 (iii) shall be applied by substituting ‘5.5 cents’

23 for ‘6.1 cents’, ‘6.88 cents’ for ‘7.342 cents’,

24 and ‘8.08 cents’ for ‘8.422 cents’.
632

•S 1134 PCS

1 ‘‘(B) 10 PERCENT GASOHOL.—The term

2 ‘10 percent gasohol’ means any mixture of gas3 oline with alcohol if at least 10 percent of such

4 mixture is alcohol.

5 ‘‘(C) 7.7 PERCENT GASOHOL.—The term

6 ‘7.7 percent gasohol’ means any mixture of gas7 oline with alcohol if at least 7.7 percent, but

8 not 10 percent or more, of such mixture is

9 alcohol.

10 ‘‘(D) 5.7 PERCENT GASOHOL.—The term

11 ‘5.7 percent gasohol’ means any mixture of gas12 oline with alcohol if at least 5.7 percent, but

13 not 7.7 percent or more, of such mixture is al14 cohol.

15 ‘‘(5) OTHERWISE APPLICABLE RATES FOR DIE16 SEL FUEL MIXTURES.—For purposes of this sub17 section, in the case of the Highway Trust Fund fi18 nancing rate, the otherwise applicable rate for diesel

19 fuel in a qualified alcohol mixture is 12.1 cents per

20 gallon (11.5 cents per gallon in the case of a quali21 fied alcohol mixture none of the alcohol in which

22 consists of ethanol).

23 ‘‘(6) TERMINATION.—Paragraph (1) shall not

24 apply to any removal or sale after September 30,

25 2000.
633

•S 1134 PCS

1 ‘‘(d) TERMINATION.—

2 ‘‘(1) HIGHWAY TRUST FUND FINANCING

3 RATE.—On and after October 1, 1999, the Highway

4 Trust Fund financing rate under subsection (a)(2)

5 shall not apply.

6 ‘‘(2) LEAKING UNDERGROUND STORAGE TANK

7 TRUST FUND FINANCING RATE.—The Leaking Un8 derground Storage Tank Trust Fund financing rate

9 under subsection (a)(2) shall not apply after Decem10 ber 31, 1995.

11 ‘‘(e) REFUNDS IN CERTAIN CASES.—Under regula12 tions prescribed by the Secretary, if any person who paid

13 the tax imposed by this section with respect to any taxable

14 fuel establishes to the satisfaction of the Secretary that

15 a prior tax was paid (and not credited or refunded) with

16 respect to such taxable fuel, then an amount equal to the

17 tax paid by such person shall be allowed as a refund (with18 out interest) to such person in the same manner as if it

19 were an overpayment of tax imposed by this section.

20 ‘‘SEC. 4082. EXEMPTIONS FOR DIESEL FUEL.

21 ‘‘(a) IN GENERAL.—Except as provided in subsection

22 (d), the tax imposed by section 4081 shall not apply to

23 diesel fuel—

24 ‘‘(1) which the Secretary determines is destined

25 for a nontaxable use, and
634

•S 1134 PCS

1 ‘‘(2) which is indelibly dyed in accordance with

2 regulations which the Secretary shall prescribe.

3 Such regulations shall allow an individual choice of dye

4 color approved by the Secretary or chosen from any list

5 of approved dye colors that the Secretary may publish.

6 ‘‘(b) NONTAXABLE USE.—For purposes of this sec7 tion, the term ‘nontaxable use’ means—

8 ‘‘(1) any use which is exempt from the tax im9 posed by section 4041(a)(1) other than by reason of

10 the imposition of tax on any sale thereof,

11 ‘‘(2) any use in a train, and

12 ‘‘(3) any use described in section 6427(b)(1).

13 ‘‘(c) REGULATIONS.—The Secretary shall prescribe

14 such regulations as may be necessary to carry out this

15 section, including regulations requiring the conspicuous la16 beling of retail diesel fuel pumps and other delivery facili17 ties to assure that persons are aware of which fuel is avail18 able only for nontaxable uses.

19 ‘‘(d) CROSS REFERENCE.—

‘‘For tax on train, motorboat, and certain bus uses

of fuel purchased tax-free, see section 4041(a)(1).

20 ‘‘SEC. 4083. DEFINITIONS AND SPECIAL RULE.

21 ‘‘(a) TAXABLE FUEL.—For purposes of this sub22 part—

23 ‘‘(1) IN GENERAL.—The term ‘taxable fuel’

24 means—
635

•S 1134 PCS

1 ‘‘(A) gasoline, and

2 ‘‘(B) diesel fuel.

3 ‘‘(2) GASOLINE.—The term ‘gasoline’ includes,

4 to the extent prescribed in regulations—

5 ‘‘(A) gasoline blend stocks, and

6 ‘‘(B) products commonly used as additives

7 in gasoline.

8 For purposes of subparagraph (A), the term ‘gaso9 line blend stock’ means any petroleum product com10 ponent of gasoline.

11 ‘‘(3) DIESEL FUEL.—The term ‘diesel fuel’

12 means any liquid (other than gasoline) which is suit13 able for use as a fuel in a diesel-powered highway

14 vehicle, a diesel-powered train, or a diesel-powered

15 boat.

16 ‘‘(b) CERTAIN USES DEFINED AS REMOVAL.—If any

17 person uses taxable fuel (other than in the production of

18 gasoline, diesel fuel, or special fuels referred to in section

19 4041), such use shall for the purposes of this chapter be

20 considered a removal.
636

•S 1134 PCS

1 ‘‘SEC. 4084. CROSS REFERENCES.

‘‘(1) For provisions to relieve farmers from excise

tax in the case of gasoline used on the farm for

farming purposes, see section 6420.

‘‘(2) For provisions to relieve purchasers of gasoline from excise tax in the case of gasoline used for

certain nonhighway purposes, used by local transit

systems, or sold for certain exempt purposes, see

section 6421.

‘‘(3) For provisions to relieve purchasers from excise tax in the case of taxable fuel not used for taxable purposes, see section 6427.

2 ‘‘Subpart B—Aviation Fuel

‘‘Sec. 4091. Imposition of tax.

‘‘Sec. 4092. Exemptions.

‘‘Sec. 4093. Definitions.

3 ‘‘SEC. 4091. IMPOSITION OF TAX.

4 ‘‘(a) TAX ON SALE.—

5 ‘‘(1) IN GENERAL.—There is hereby imposed a

6 tax on the sale of aviation fuel by the producer or

7 the importer thereof or by any producer of aviation

8 fuel.

9 ‘‘(2) USE TREATED AS SALE.—For purposes of

10 paragraph (1), if any producer uses aviation fuel

11 (other than for a nontaxable use as defined in sec12 tion 6427(l)(2)(B)) on which no tax has been im13 posed under such paragraph, then such use shall be

14 considered a sale.

15 ‘‘(b) RATE OF TAX.—

16 ‘‘(1) IN GENERAL.—The rate of the tax im17 posed by subsection (a) shall be the sum of—
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1 ‘‘(A) the Airport and Airway Trust Fund

2 financing rate,

3 ‘‘(B) the Leaking Underground Storage

4 Tank Trust Fund financing rate, and

5 ‘‘(C) the deficit reduction rate.

6 ‘‘(2) AIRPORT AND AIRWAY TRUST FUND FI7 NANCING RATE.—For purposes of paragraph (1),

8 the Airport and Airway Trust Fund financing rate

9 is 17.5 cents per gallon.

10 ‘‘(3) LEAKING UNDERGROUND STORAGE TANK

11 TRUST FUND FINANCING RATE.—For purposes of

12 paragraph (1), the Leaking Underground Storage

13 Tank Trust Fund financing rate is 0.1 cent per

14 gallon.

15 ‘‘(4) DEFICIT REDUCTION RATE.—For purposes

16 of paragraph (1), the deficit reduction rate is 4.3

17 cents per gallon.

18 ‘‘(5) TERMINATION OF RATES.—

19 ‘‘(A) The Airport and Airway Trust Fund

20 financing rate shall not apply on and after Jan21 uary 1, 1996.

22 ‘‘(B) The Leaking Underground Storage

23 Tank Fund financing rate shall not apply dur24 ing any period during which the Leaking Un-
638

•S 1134 PCS

1 derground Storage Tank Trust Fund financing

2 rate under section 4081 does not apply.

3 ‘‘(c) REDUCED RATE OF TAX FOR AVIATION FUEL

4 IN ALCOHOL MIXTURE, ETC.—

5 ‘‘(1) IN GENERAL.—The Airport and Airway

6 Trust Fund financing rate shall be—

7 ‘‘(A) 4.1 cents per gallon in the case of the

8 sale of any mixture of aviation fuel if—

9 ‘‘(i) at least 10 percent of such mix10 ture consists of alcohol (as defined in sec11 tion 4081(c)(3)), and

12 ‘‘(ii) the aviation fuel in such mixture

13 was not taxed under subparagraph (B),

14 and

15 ‘‘(B) 4.56 cents per gallon in the case of

16 the sale of aviation fuel for use (at the time of

17 such sale) in producing a mixture described in

18 subparagraph (A).

19 In the case of a sale described in subparagraph (B),

20 the Leaking Underground Storage Tank Trust Fund

financing rate shall be 1 21 ⁄9 cent per gallon and the

deficit reduction rate shall be 10 22 ⁄9 of such rate.

23 ‘‘(2) LATER SEPARATION.—If any person sepa24 rates the aviation fuel from a mixture of the aviation

25 fuel and alcohol on which tax was imposed under
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•S 1134 PCS

1 subsection (a) at the Airport and Airway Trust

2 Fund financing rate equivalent to 4.1 cents per gal3 lon by reason of this subsection (or with respect to

4 which a credit or payment was allowed or made by

5 reason of section 6427(f)(1)), such person shall be

6 treated as the producer of such aviation fuel. The

7 amount of tax imposed on any sale of such aviation

8 fuel by such person shall be reduced by the amount

9 of tax imposed (and not credited or refunded) on

10 any prior sale of such fuel.

11 ‘‘(3) TERMINATION.—Paragraph (1) shall not

12 apply to any sale after September 30, 2000.

13 ‘‘(d) LOWER RATES OF TAX ON ALCOHOL MIXTURES

14 NOT MADE FROM ETHANOL.—In the case of a mixture

15 described in subsection (c)(1)(A)(i) none of the alcohol in

16 which is ethanol—

17 ‘‘(1) subsections (c)(1)(A) and (c)(2) shall each

18 be applied by substituting rates which are 0.6 cents

19 less than the rates contained therein, and

20 ‘‘(2) subsection (c)(1)(B) shall be applied by

substituting rates which are 10 21 ⁄9 of the rates deter22 mined under paragraph (1).

23 ‘‘SEC. 4092. EXEMPTIONS.

24 ‘‘(a) NONTAXABLE USES.—The Airport and Airway

25 Trust Fund financing rate under section 4091 shall not
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•S 1134 PCS

1 apply to aviation fuel sold by a producer or importer for

2 use by the purchaser in a nontaxable use (as defined in

3 section 6427(l)(2)(B)).

4 ‘‘(b) SALES TO PRODUCER.—Under regulations pre5 scribed by the Secretary, the tax imposed by section 4091

6 shall not apply to aviation fuel sold to a producer of such

7 fuel.

8 ‘‘(c) SUPPLIES FOR VESSELS AND AIRCRAFT.—The

9 Leaking Underground Storage Tank Trust Fund financ10 ing rate and the deficit reduction rate under section 4091

11 shall not apply to aviation fuel sold for use or used as

12 supplies for vessels or aircraft (within the meaning of sec13 tion 4221(d)(3)).

14 ‘‘SEC. 4093. DEFINITIONS.

15 ‘‘(a) AVIATION FUEL.—For purposes of this subpart,

16 the term ‘aviation fuel’ means any liquid (other than any

17 product taxable under section 4081) which is suitable for

18 use as a fuel in an aircraft.

19 ‘‘(b) PRODUCER.—For purposes of this subpart—

20 ‘‘(1) CERTAIN PERSONS TREATED AS PRODUC21 ERS.—

22 ‘‘(A) IN GENERAL.—The term ‘producer’

23 includes any person described in subparagraph

24 (B) and registered under section 4101 with re25 spect to the tax imposed by section 4091.
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•S 1134 PCS

1 ‘‘(B) PERSONS DESCRIBED.—A person is

2 described in this subparagraph if such person

3 is—

4 ‘‘(i) a refiner, blender, or wholesale

5 distributor of aviation fuel, or

6 ‘‘(ii) a dealer selling aviation fuel ex7 clusively to producers of aviation fuel.

8 ‘‘(C) REDUCED RATE PURCHASERS TREAT9 ED AS PRODUCERS.—Any person to whom avia10 tion fuel is sold at a reduced rate under this

11 subpart shall be treated as the producer of such

12 fuel.

13 ‘‘(2) WHOLESALE DISTRIBUTOR.—For purposes

14 of paragraph (1), the term ‘wholesale distributor’ in15 cludes any person who sells aviation fuel to produc16 ers, retailers, or to users who purchase in bulk quan17 tities and deliver into bulk storage tanks. Such term

18 does not include any person who (excluding the term

19 ‘wholesale distributor’ from paragraph (1)) is a pro20 ducer or importer.’’

21 (b) CIVIL PENALTY FOR USING REDUCED-RATE

22 FUEL FOR TAXABLE USE.—

23 (1) IN GENERAL.—Part I of subchapter B of

24 chapter 68 (relating to assessable penalties) is
642

•S 1134 PCS

1 amended by adding at the end thereof the following

2 new section:

3 ‘‘SEC. 6714. DYED FUEL SOLD FOR USE OR USED IN TAX4 ABLE USE.

5 ‘‘(a) IMPOSITION OF PENALTY.—If any dyed fuel—

6 ‘‘(1) is sold or held for sale by any person for

7 any use which such person knows or has reason to

8 know is not a reduced-tax use of such fuel, or

9 ‘‘(2) is used by any person for a use other than

10 a reduced-tax use and such person knew, or had rea11 son to know, that such fuel was so dyed,

12 then, in addition to the tax, such person shall pay a pen13 alty on such sale or use.

14 ‘‘(b) AMOUNT OF PENALTY.—The amount of the

15 penalty under subsection (a) on any sale or use shall be

16 the greater of—

17 ‘‘(1) $1,000, or

18 ‘‘(2) an amount equal to twice the excess of the

19 aggregate taxes which should have been imposed

20 under section 4081 on the fuel so sold or used over

21 the prior taxes (if any) imposed on such fuel under

22 such section which have not been credited or re23 funded.

24 ‘‘(c) DEFINITIONS.—For purposes of this section—
643

•S 1134 PCS

1 ‘‘(1) DYED FUEL.—The term ‘dyed fuel’ means

2 diesel fuel dyed in accordance with section 4082.

3 ‘‘(2) REDUCED-TAX USE.—The term ‘reduced4 tax use’ means, with respect to any fuel, the use for

5 which such fuel was dyed.’’

6 (2) CLERICAL AMENDMENT.—The table of sec7 tions for such part I is amended by adding at the

8 end thereof the following new item:

‘‘Sec. 6714. Dyed fuel sold for use or used in taxable use.’’

9 (c) REGISTERED VENDORS TO ADMINISTER CLAIMS

10 FOR REFUND OF DIESEL FUEL.—Section 6427(l) (relat11 ing to nontaxable uses of diesel fuel and aviation fuel) is

12 amended by adding at the end the following new para13 graph:

14 ‘‘(5) REGISTERED VENDORS TO ADMINISTER

15 CLAIMS FOR REFUND OF DIESEL FUEL SOLD TO

16 FARMERS AND STATE AND LOCAL GOVERNMENTS.—

17 ‘‘(A) IN GENERAL.—Paragraph (1) shall

18 not apply to the ultimate purchaser of undyed

19 diesel fuel used on a farm for farming purposes

20 (within the meaning of section 6420(c)) or for

21 the exclusive use of a State or local govern22 ment.

23 ‘‘(B) PAYMENT TO ULTIMATE, REG24 ISTERED VENDOR.—The amount which would

25 have otherwise been paid under paragraph (1)
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•S 1134 PCS

1 (without regard to subparagraph (A)) shall be

2 paid to the ultimate vendor of such fuel, if such

3 vendor—

4 ‘‘(i) is registered under section 4101,

5 and

6 ‘‘(ii) meets the requirements of sec7 tion 6416(a).’’

8 (d) TECHNICAL AND CONFORMING AMENDMENTS.—

9 (1) Subsection (c) of section 40 is amended by

10 striking ‘‘, section 4081(c), or section 4091(c)’’ and

11 inserting ‘‘or section 4081(c)’’.

12 (2) Subsection (a) of section 4101 is amended

13 by striking ‘‘4081’’ and inserting ‘‘4041(a)(1),

14 4081,’’.

15 (3) Section 4102 is amended by striking ‘‘gaso16 line’’ and inserting ‘‘any taxable fuel (as defined in

17 section 4083)’’.

18 (4) Paragraph (1) of section 4041(a), as

19 amended by subtitle A, is amended to read as fol20 lows:

21 ‘‘(1) TAX ON DIESEL FUEL IN CERTAIN

22 CASES.—

23 ‘‘(A) IN GENERAL.—There is hereby im24 posed a tax on any liquid other than gasoline

25 (as defined in section 4083)—
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•S 1134 PCS

1 ‘‘(i) sold by any person to an owner,

2 lessee, or other operator of a diesel-pow3 ered highway vehicle, a diesel-powered

4 train, or a diesel-powered boat for use as

5 a fuel in such vehicle, train, or boat, or

6 ‘‘(ii) used by any person as a fuel in

7 a diesel-powered highway vehicle, a diesel8 powered train, or a diesel-powered boat un9 less there was a taxable sale of such fuel

10 under clause (i).

11 ‘‘(B) EXEMPTION FOR PREVIOUSLY TAXED

12 FUEL.—No tax shall be imposed by this para13 graph on the sale or use of diesel fuel if there

14 was a taxable removal of such fuel under sec15 tion 4081 and the tax thereon was not credited

16 or refunded.

17 ‘‘(C) RATE OF TAX.—

18 ‘‘(i) IN GENERAL.—Except as other19 wise provided in this subparagraph, the

20 rate of the tax imposed by this paragraph

21 shall be the sum of the Highway Trust

22 Fund financing rate on diesel fuel and the

23 deficit reduction rate in effect under sec24 tion 4081 at the time of such sale or use.
646

•S 1134 PCS

1 ‘‘(ii) CERTAIN RATES NOT TO APPLY

2 TO TRAINS.—

3 ‘‘(I) HIGHWAY TRUST FUND FI4 NANCING RATE.—The Highway Trust

5 Fund financing rate shall not apply to

6 any sale for use, or use, of fuel in a

7 train.

8 ‘‘(II) DEFICIT REDUCTION

9 RATE.—The deficit reduction rate

10 shall not apply to any sale for use, or

11 use, of fuel in a train if such fuel is

12 used by a State or any political sub13 division thereof

14 ‘‘(iii) CERTAIN BUS USES.—If the lim15 itation in section 6427(b)(2)(A) applies to

16 fuel sold for use or used in an automobile

17 bus, the Highway Trust Fund financing

18 rate shall be 3 cents per gallon and so

19 much of the deficit reduction rate as ex20 ceeds 4.3 cents per gallon shall not apply.’’

21 (5) Paragraph (2) of section 4041(a), as

22 amended by subtitle A, is amended by striking ‘‘or

23 paragraph (1) of this subsection’’ and by inserting

24 ‘‘on gasoline’’ after ‘‘Highway Trust Fund financing

25 rate’’.
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•S 1134 PCS

1 (6) Paragraph (1) of section 4041(c), as

2 amended by subpart A, is amended by striking ‘‘the

3 aviation fuel deficit reduction rate’’ and inserting

4 ‘‘the deficit reduction rate imposed under section

5 4091 on’’.

6 (7) Paragraph (2) of section 4041(c) is amend7 ed by striking ‘‘any product taxable under section

8 4081’’ and inserting ‘‘gasoline (as defined in section

9 4083)’’.

10 (8) Paragraph (2) of section 4041(d) is amend11 ed—

12 (A) by striking ‘‘(other than a product tax13 able under section 4081)’’ and inserting ‘‘(other

14 than gasoline (as defined in section 4083))’’,

15 and

16 (B) by striking ‘‘section 4091’’ and insert17 ing ‘‘section 4081’’.

18 (9) Paragraph (3) of section 4041(d) is amend19 ed by striking ‘‘(other than any product taxable

20 under section 4081)’’ and inserting ‘‘(other than

21 gasoline (as defined in section 4083))’’.

22 (10) Subparagraph (A) of section 4041(k)(1) is

23 amended by striking ‘‘sections 4081(c) and 4091(c),

24 as the case may be’’ and inserting ‘‘section

25 4081(c)’’.
648

•S 1134 PCS

1 (11) Subparagraph (B) of section 4041(m)(1)

2 is amended by striking ‘‘section 4091(d)(1)’’ and in3 serting ‘‘section 4091(c)(1)’’.

4 (12) Section 6206 is amended by striking

5 ‘‘4041 or 4091’’ and inserting ‘‘4041, 4081, or

6 4091’’.

7 (13) The heading for subsection (f) of section

8 6302 is amended by inserting ‘‘AND DIESEL FUEL’’

9 after ‘‘GASOLINE’’.

10 (14) Paragraph (1) of section 6412(a) is

11 amended by striking ‘‘gasoline’’ each place it ap12 pears (including the heading) and inserting ‘‘taxable

13 fuel’’.

14 (15)(A) Subparagraph (A) of section

15 6416(a)(4) is amended by striking ‘‘product’’ each

16 place it appears and inserting ‘‘gasoline’’.

17 (B) Subparagraph (B) of section 6416(a)(4) is

18 amended by striking all that follows ‘‘substituting’’

19 and inserting ‘‘ ‘any gasoline taxable under section

20 4081’ for ‘aviation fuel’ therein).’’

21 (16) The third sentence of section 6416(b)(2) is

22 amended by inserting ‘‘any tax imposed under sec23 tion 4081 on diesel fuel and’’ after ‘‘in the case of’’.
649

•S 1134 PCS

1 (17) Sections 6420(c)(5) and 6421(e)(1) are

2 each amended by striking ‘‘section 4082(b)’’ and in3 serting ‘‘section 4083(a)’’.

4 (18) Section 6421(e)(2)(B)(iv), as added in

5 subtitle A, is amended

6 (A) by striking ‘‘4091’’ both places it ap7 pears and inserting ‘‘4081’’, and

8 (B) by striking ‘‘diesel fuel deficit’’ in

9 subclause (I) and inserting ‘‘deficit’’.

10 (19) Subsection (b) of section 6427 is amend11 ed—

12 (A) by striking ‘‘if any fuel’’ in paragraph

13 (1) and inserting ‘‘if any fuel other than gaso14 line (as defined in section 4083(a))’’, and

15 (B) by striking ‘‘4091’’ each place it ap16 pears and inserting ‘‘4081’’.

17 (20)(A) Paragraph (1) of section 6427(f) is

18 amended by striking ‘‘, 4091(c)(1)(A), or

19 4091(d)(1)(A)’’ and inserting ‘‘or 4091(c)(1)(A)’’.

20 (B) Paragraph (2) of section 6427(f) is amend21 ed to read as follows:

22 ‘‘(2) DEFINITIONS.—For purposes of paragraph

23 (1)—

24 ‘‘(A) REGULAR TAX RATE.—The term ‘reg25 ular tax rate’ means—
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•S 1134 PCS

1 ‘‘(i) in the case of gasoline or diesel

2 fuel, the aggregate rate of tax imposed by

3 section 4081 determined without regard to

4 subsection (c) thereof, and

5 ‘‘(ii) in the case of aviation fuel, the

6 aggregate rate of tax imposed by section

7 4091 determined without regard to sub8 section (c) thereof.

9 ‘‘(B) INCENTIVE TAX RATE.—The term

10 ‘incentive tax rate’ means—

11 ‘‘(i) in the case of gasoline or diesel

12 fuel, the aggregate rate of tax imposed by

13 section 4081 with respect to fuel described

14 in subsection (c)(1) thereof, and

15 ‘‘(ii) in the case of aviation fuel, the

16 aggregate rate of tax imposed by section

17 4091 with respect to fuel described in sub18 section (c)(1)(B) thereof.’’

19 (21) Subsection (h) of section 6427 is amended

20 by striking ‘‘section 4082(b)’’ and inserting ‘‘section

21 4083(a)(2)’’.

22 (22) Paragraph (3) of section 6427(i) is amend23 ed—

24 (A) by striking ‘‘GASOHOL’’ in the heading

25 and inserting ‘‘ALCOHOL MIXTURE’’, and
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•S 1134 PCS

1 (B) by striking ‘‘gasoline used to produce

2 gasohol (as defined in section 4081(c)(1))’’ in

3 subparagraph (A) and inserting ‘‘gasoline or

4 diesel fuel used to produce a qualified alcohol

5 mixture (as defined in section 4081(c)(3))’’.

6 (23) The heading of paragraph (4) of section

7 6427(i) is amended by inserting ‘‘4081 OR’’ before

8 ‘‘4091’’.

9 (24) Subsection (l) of section 6427, as amended

10 by subpart A, is amended to read as follows:

11 ‘‘(l) NONTAXABLE USES OF DIESEL FUEL AND AVIA12 TION FUEL.—

13 ‘‘(1) IN GENERAL.—Except as provided in sub14 section (k) and in paragraphs (3) and (4) of this

15 subsection, if—

16 ‘‘(A) any diesel fuel on which tax has been

17 imposed by section 4081, or

18 ‘‘(B) any aviation fuel on which tax has

19 been imposed by section 4091,

20 is used by any person in a nontaxable use, the Sec21 retary shall pay (without interest) to the ultimate

22 purchaser of such fuel an amount equal to the ag23 gregate amount of tax imposed on such fuel under

24 section 4081 or 4091, as the case may be.
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•S 1134 PCS

1 ‘‘(2) NONTAXABLE USE.—For purposes of this

2 subsection, the term ‘nontaxable use’ means—

3 ‘‘(A) in the case of diesel fuel, any use

4 which is exempt from the tax imposed by sec5 tion 4041(a)(1) other than by reason of the im6 position of tax on any sale thereof, and

7 ‘‘(B) in the case of aviation fuel, any use

8 which is exempt from the tax imposed by sec9 tion 4041(c)(1) other than by reason of the im10 position of tax on any sale thereof.

11 ‘‘(3) NO REFUND OF CERTAIN TAXES ON FUEL

12 USED IN DIESEL-POWERED TRAINS.—Fuel used in a

13 diesel-powered train shall be treated as a nontaxable

14 use for purposes of this section, except that para15 graph (1) shall not apply to so much of the tax im16 posed by section 4081 as is attributable to the Leak17 ing Underground Storage Tank Trust Fund financ18 ing rate and the deficit reduction rate imposed by

19 such section, unless such fuel was used by a State

20 or any political subdivision thereof.

21 ‘‘(4) NO REFUND OF CERTAIN TAXES ON FUELS

22 USED IN AIRCRAFT.—In the case of fuel used in any

23 aircraft (other than as supplies for vessels or air24 craft, within the meaning of section 4221(d)(3)),

25 paragraph (1) also shall not apply to so much of the
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•S 1134 PCS

1 tax imposed by section 4091 as is attributable to the

2 Leaking Underground Storage Tank Trust Fund fi3 nancing rate and the deficit reduction rate imposed

4 by such section. The preceding sentence shall not

5 apply if such fuel was used by a State or any politi6 cal subdivision thereof.’’

7 (25) Paragraph (1) of section 9503(b) is

8 amended—

9 (A) by striking ‘‘gasoline),’’ in subpara10 graph (E) and inserting ‘‘gasoline and diesel

11 fuel), and’’,

12 (B) by striking subparagraph (F), and

13 (C) by redesignating subparagraph (G) as

14 subparagraph (F).

15 (26)(A) Subparagraph (B) of section

16 9503(b)(4) is amended by striking ‘‘, 4081, and

17 4091’’ and inserting ‘‘and 4081’’.

18 (B) Subparagraph (C) of section 9503(b)(4), as

19 amended by subtitle A, is amended by striking

20 ‘‘4091’’ and inserting ‘‘4081’’.

21 (27) Subparagraph (D) of section 9503(c)(6) is

22 amended by striking ‘‘, 4081, and 4091’’ and insert23 ing ‘‘and 4081’’.

24 (28) Paragraph (2) of section 9503(e) is

25 amended—
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•S 1134 PCS

1 (A) by striking ‘‘, 4081, and 4091’’ and in2 serting ‘‘and 4081’’, and

3 (B) by striking ‘‘, 4081, or 4091’’ and in4 serting ‘‘or 4081’’.

5 (29) Subsection (b) of section 9508 is amend6 ed—

7 (A) by inserting ‘‘and diesel fuel’’ after

8 ‘‘gasoline’’ in paragraph (2),

9 (B) by striking ‘‘diesel fuel and’’ in para10 graph (3), and

11 (C) by striking ‘‘4091’’ in the last sen12 tence, as added by subtitle A, and inserting

13 ‘‘4081’’.

14 (30) The table of subparts for part III of sub15 chapter A of chapter 32 is amended by striking the

16 items relating to subparts A and B and inserting the

17 following new items:

‘‘Subpart A. Gasoline and diesel fuel.

‘‘Subpart B. Aviation fuel.’’

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

19 this section shall take effect on January 1, 1994.

20 SEC. 8243. FLOOR STOCKS TAX.

21 (a) IN GENERAL.—There is hereby imposed a floor

22 stocks tax on diesel fuel held by any person on January

23 1, 1994, if—
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•S 1134 PCS

1 (1) no tax was imposed on such fuel under sec2 tion 4041(a) or 4091 of the Internal Revenue Code

3 of 1986 as in effect on the day before the date of

4 the enactment of this Act, and

5 (2) tax would have been imposed by section

6 4081 of such Code, as amended by this Act, on any

7 prior removal, entry, or sale of such fuel had such

8 section 4081 applied to such fuel for periods before

9 such date of enactment.

10 (b) RATE OF TAX.—The rate of the tax imposed by

11 subsection (a) shall be the amount of tax which would be

12 imposed under section 4081 of the Internal Revenue Code

13 of 1986 if there were a taxable sale of such fuel on such

14 date.

15 (c) LIABILITY AND PAYMENT OF TAX.—

16 (1) LIABILITY FOR TAX.—A person holding the

17 diesel fuel on January 1, 1994, to which the tax im18 posed by this section applies shall be liable for such

19 tax.

20 (2) METHOD OF PAYMENT.—The tax imposed

21 by this section shall be paid in such manner as the

22 Secretary shall prescribe.

23 (3) TIME FOR PAYMENT.—The tax imposed by

24 this section shall be paid on or before July 31, 1994.

25 (d) DEFINITIONS.—For purposes of this section—
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•S 1134 PCS

1 (1) DIESEL FUEL.—The term ‘‘diesel fuel’’ has

2 the meaning given such term by section 4083(a) of

3 such Code.

4 (2) SECRETARY.—The term ‘‘Secretary’’ means

5 the Secretary of the Treasury or his delegate.

6 (e) EXCEPTIONS.—

7 (1) PERSONS ENTITLED TO CREDIT OR RE8 FUND.—The tax imposed by this section shall not

9 apply to fuel held by any person exclusively for any

10 use to the extent a credit or refund of the tax im11 posed by section 4081 is allowable for such use.

12 (2) COMPLIANCE WITH DYEING REQUIRED.—

13 Paragraph (1) shall not apply to the holder of any

14 fuel if the holder of such fuel fails to comply with

15 any requirement imposed by the Secretary with re16 spect to dyeing.

17 (f) OTHER LAWS APPLICABLE.—All provisions of

18 law, including penalties, applicable with respect to the

19 taxes imposed by section 4081 of such Code shall, insofar

20 as applicable and not inconsistent with the provisions of

21 this section, apply with respect to the floor stock taxes

22 imposed by this section to the same extent as if such taxes

23 were imposed by such section 4081.
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•S 1134 PCS

1 Subpart C—Extension of Motor Fuel Tax Rates;

2 Increased Deposits Into Highway Trust Fund

3 SEC. 8244. EXTENSION OF MOTOR FUEL TAX RATES; IN4 CREASED DEPOSITS INTO HIGHWAY TRUST

5 FUND.

6 (a) IN GENERAL.—Clause (i) of section

7 4081(a)(2)(B), as amended by subpart B, is amended—

8 (1) by striking ‘‘11.5 cents’’ and inserting ‘‘14

9 cents’’, and

10 (2) by striking ‘‘17.5 cents’’ and inserting ‘‘20

11 cents’’.

12 (b) CONFORMING AMENDMENTS.—

13 (1) Subparagraph (A) of section 4081(c)(4), as

14 so amended, is amended to read as follows:

15 ‘‘(A) IN GENERAL.—In the case of the

16 Highway Trust Fund financing rate, the other17 wise applicable rate for gasoline in a qualified

18 alcohol mixture is—

19 ‘‘(i) 8.6 cents a gallon for 10 percent

20 gasohol,

21 ‘‘(ii) 9.842 cents a gallon for 7.7 per22 cent gasohol, and

23 ‘‘(iii) 10.922 cents a gallon for 5.7

24 percent gasohol.

25 In the case of a mixture none of the alcohol in which

26 consists of ethanol, clauses (i), (ii), and (iii) shall be
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•S 1134 PCS

1 applied by substituting ‘8.0 cents’ for ‘8.6 cents’,

2 ‘9.38 cents’ for ‘9.842 cents’, and ‘10.58 cents’ for

3 ‘10.922’.’’

4 (2) Paragraph (5) of section 4081(c), as so

5 amended, is amended—

6 (A) by striking ‘‘12.1 cents’’ and inserting

7 ‘‘14.6 cents’’, and

8 (B) by striking ‘‘11.5 cents’’ and inserting

9 ‘‘14.0’’.

10 (3) Subparagraph (A) of section 4041(m)(1), as

11 amended by subpart A, is amended to read as fol12 lows:

13 ‘‘(A) under subsection (a)(2) the Highway

14 Trust Fund financing shall be 7 cents per gal15 lon and the deficit reduction rate shall be 4.3

16 cents per gallon, and’’.

17 (4) Clause (ii) of section 4041(a)(1)(C), as so

18 amended, is amended—

19 (A) by striking ‘‘The Highway Trust Fund

20 financing rate’’ and inserting ‘‘So much of the

21 Highway Trust Fund financing rate as exceeds

22 2.5 cents per gallon’’, and

23 (B) by striking ‘‘HIGHWAY RATE’’ in the

24 heading and inserting ‘‘PORTION OF HIGHWAY

25 RATE’’.
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•S 1134 PCS

1 (5) Paragraph (4) of section 6427(l), as amend2 ed by subpart B, is amended—

3 (A) by inserting ‘‘2.5 cents per gallon of

4 the Highway Trust Fund financing rate and’’

5 after ‘‘attributable to’’, and

6 (B) by striking ‘‘DEFICIT REDUCTION

7 TAX’’ in the heading and inserting ‘‘PORTION

8 OF TAX’’.

9 (6) Subsection (b) of section 9503 is amended

10 by adding at the end thereof the following new para11 graph:

12 ‘‘(6) RETENTION OF CERTAIN TAXES IN GEN13 ERAL FUND.—

14 ‘‘(A) IN GENERAL.—There shall not be

15 taken into account under paragraphs (1) and

16 (2)—

17 ‘‘(i) the tax imposed by section 4081

18 on diesel fuel used in any train, and

19 ‘‘(ii) so much of the following taxes as

20 are attributable to 2.5 cents of the High21 way Trust Fund financing rate:

22 ‘‘(I) Motorboat fuel taxes (as de23 fined in subsection (c)(4)(D)).

24 ‘‘(II) Small-engine fuel taxes (as

25 defined in subsection (c)(5)(B)).
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•S 1134 PCS

1 ‘‘(III) Nonhighway recreational

2 fuel taxes (as defined in subsection

3 (c)(6)(D)).

4 ‘‘(B) TRANSFERS FROM HIGHWAY TRUST

5 FUND.—For purposes of determining the

6 amount paid from the Highway Trust Fund

7 under paragraphs (4), (5), and (6) of sub8 section (c), the Highway Trust Fund financing

9 rates shall be treated as being 2.5 cents less

10 than the otherwise applicable rates.’’

11 (c) INCREASE IN DEPOSITS IN MASS TRANSIT AC12 COUNT.—Paragraph (2) of section 9503(e) is amended by

13 striking ‘‘1.5 cents’’ and inserting ‘‘2 cents’’.

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

15 this section shall take effect October 1, 1995, but the

16 amendment made by subsection (c) shall apply only to

17 amounts attributable to taxes imposed on or after such

18 date.

19 PART V—COMPLIANCE PROVISIONS

20 SEC. 8251. REPORTING REQUIRED FOR CERTAIN PAY21 MENTS TO CORPORATIONS.

22 (a) SECTION 6041.—Section 6041 (relating to infor23 mation at source) is amended by adding at the end thereof

24 the following new subsection:
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•S 1134 PCS

1 ‘‘(f) SPECIAL RULES FOR PAYMENTS FOR SERV2 ICES.—No payment for the performance of services shall

3 be exempt from the requirements of this section merely

4 because it is a payment to a corporation.’’

5 (b) SECTION 6041A(a).—Subsection (a) of section

6 6041A is amended by adding at the end thereof the follow7 ing new sentence: ‘‘A payment shall not be exempt from

8 the requirements of this subsection merely because it is

9 a payment to a corporation.’’.

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

11 this section shall apply to payments made after December

12 31, 1993.

13 SEC. 8252. MODIFICATIONS TO SUBSTANTIAL UNDERSTATE14 MENT AND RETURN-PREPARER PENALTIES.

15 (a) REASONABLE BASIS REQUIRED.—

16 (1) SUBSTANTIAL UNDERSTATEMENT PEN17 ALTY.—Clause (ii) of section 6662(d)(2)(B) (relat18 ing to reduction for understatement due to position

19 of taxpayer or disclosed item) is amended to read as

20 follows:

21 ‘‘(ii) any item if—

22 ‘‘(I) the relevant facts affecting

23 the item’s tax treatment are ade24 quately disclosed in the return or in a

25 statement attached to the return, and
662

•S 1134 PCS

1 ‘‘(II) there is a reasonable basis

2 for the tax treatment of such item by

3 the taxpayer.’’

4 (2) RETURN PREPARER PENALTY.—Paragraph

5 (3) of section 6694(a) (relating to understatement of

6 taxpayer’s liability by income tax return preparer) is

7 amended to read as follows:

8 ‘‘(3) the requirements of subclauses (I) and (II)

9 of section 6662(d)(2)(B)(ii) are not satisfied with

10 respect to such position,’’.

11 (b) SPECIAL TAX SHELTER RULE.—Subclause (II)

12 of section 6662(d)(2)(C)(i) (relating to special rules for

13 tax shelters) is amended by inserting before the period at

14 the end thereof the following: ‘‘and the reasonably antici15 pated after-tax benefits from the taxpayer’s investment in

16 such shelter do not significantly exceed the reasonably an17 ticipated pre-tax economic profit or loss from such invest18 ment’’.

19 (c) REASONABLE CAUSE EXCEPTION.—Paragraph

20 (1) of section 6664(c) is amended by striking ‘‘this part’’

21 and inserting ‘‘section 6662’’.

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

23 this section shall apply to returns the due dates for which

24 (determined without regard to extensions) are after De25 cember 31, 1993.
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•S 1134 PCS

1 SEC. 8253. RETURNS RELATING TO THE CANCELLATION OF

2 INDEBTEDNESS BY CERTAIN FINANCIAL EN3 TITIES.

4 (a) IN GENERAL.—Subpart B of part III of sub5 chapter A of chapter 61 (relating to information concern6 ing transactions with other persons) is amended by adding

7 at the end thereof the following new section:

8 ‘‘SEC. 6050P. RETURNS RELATING TO THE CANCELLATION

9 OF INDEBTEDNESS BY CERTAIN FINANCIAL

10 ENTITIES.

11 ‘‘(a) IN GENERAL.—Any applicable financial entity

12 which discharges (in whole or in part) the indebtedness

13 of any person during any calendar year shall make a re14 turn (at such time and in such form as the Secretary may

15 by regulations prescribe) setting forth—

16 ‘‘(1) the name, address, and TIN of each per17 son whose indebtedness was discharged during such

18 calendar year,

19 ‘‘(2) the date of the discharge and the amount

20 of the indebtedness discharged, and

21 ‘‘(3) such other information as the Secretary

22 may prescribe.

23 ‘‘(b) EXCEPTION.—Subsection (a) shall not apply to

24 any discharge of less than $600.

25 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur26 poses of this section—
664

•S 1134 PCS

1 ‘‘(1) APPLICABLE FINANCIAL ENTITY.—The

2 term ‘applicable financial entity’ means—

3 ‘‘(A) any financial institution described in

4 section 581 or 591(a) and any credit union,

5 ‘‘(B) the Federal Deposit Insurance Cor6 poration, the Resolution Trust Corporation, the

7 National Credit Union Administration, and any

8 other Federal executive agency (as defined in

9 section 6050M), and any successor or subunit

10 of any of the foregoing, and

11 ‘‘(C) any other corporation which is a di12 rect or indirect subsidiary of an entity referred

13 to in subparagraph (A) but only if, by virtue of

14 being affiliated with such entity, such other cor15 poration is subject to supervision and examina16 tion by a Federal or State agency which regu17 lates entities referred to in subparagraph (A).

18 ‘‘(2) GOVERNMENTAL UNITS.—In the case of

19 an entity described in paragraph (1)(B), any return

20 under this section shall be made by the officer or

21 employee appropriately designated for the purpose of

22 making such return.

23 ‘‘(d) STATEMENTS TO BE FURNISHED TO PERSONS

24 WITH RESPECT TO WHOM INFORMATION IS REQUIRED

25 TO BE FURNISHED.—Every applicable financial entity re-
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•S 1134 PCS

1 quired to make a return under subsection (a) shall furnish

2 to each person whose name is required to be set forth in

3 such return a written statement showing—

4 ‘‘(1) the name and address of the entity re5 quired to make such return, and

6 ‘‘(2) the information required to be shown on

7 the return with respect to such person.

8 The written statement required under the preceding sen9 tence shall be furnished to the person on or before Janu10 ary 31 of the year following the calendar year for which

11 the return under subsection (a) was made.’’

12 (b) PENALTIES.—

13 (1) RETURNS.—Subparagraph (B) of section

14 6724(d)(1) is amended by redesignating clauses

15 (viii) through (xv) as clauses (ix) through (xvi), re16 spectively, and by inserting after clause (vii) the fol17 lowing new clause:

18 ‘‘(viii) section 6050P (relating to re19 turns relating to the cancellation of indebt20 edness by certain financial entities),’’.

21 (2) STATEMENTS.—Paragraph (2) of section

22 6724(d) is amended by redesignating subparagraphs

23 (P) through (S) as subparagraphs (Q) through (T),

24 respectively, and by inserting after subparagraph

25 (O) the following new subparagraph:
666

•S 1134 PCS

1 ‘‘(P) section 6050P(d) (relating to returns

2 relating to the cancellation of indebtedness by

3 certain financial entities),’’.

4 (c) CLERICAL AMENDMENT.—The table of sections

5 for subpart B of part III of subchapter A of chapter 61

6 is amended by adding at the end thereof the following new

7 item:

‘‘Sec. 6050P. Returns relating to the cancellation of indebtedness

by certain financial entities.’’

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

9 this section shall apply to discharges of indebtedness after

10 the date of the enactment of this Act.

11 PART VI—TREATMENT OF INTANGIBLES

12 SEC. 8261. AMORTIZATION OF GOODWILL AND CERTAIN

13 OTHER INTANGIBLES.

14 (a) GENERAL RULE.—Part VI of subchapter B of

15 chapter 1 (relating to itemized deductions for individuals

16 and corporations) is amended by adding at the end thereof

17 the following new section:

18 ‘‘SEC. 197. AMORTIZATION OF GOODWILL AND CERTAIN

19 OTHER INTANGIBLES.

20 ‘‘(a) GENERAL RULE.—A taxpayer shall be entitled

21 to an amortization deduction with respect to any amortiz22 able section 197 intangible. The amount of such deduction

23 shall be determined by amortizing 75 percent of the ad24 justed basis (for purposes of determining gain) of such
667

•S 1134 PCS

1 intangible ratably over the 14-year period beginning with

2 the month in which such intangible was acquired.

3 ‘‘(b) NO OTHER DEPRECIATION OR AMORTIZATION

4 DEDUCTION ALLOWABLE.—Except as provided in sub5 section (a), no depreciation or amortization deduction

6 shall be allowable with respect to any amortizable section

7 197 intangible.

8 ‘‘(c) AMORTIZABLE SECTION 197 INTANGIBLE.—For

9 purposes of this section—

10 ‘‘(1) IN GENERAL.—Except as otherwise pro11 vided in this section, the term ‘amortizable section

12 197 intangible’ means any section 197 intangible—

13 ‘‘(A) which is acquired by the taxpayer

14 after the date of the enactment of this section,

15 and

16 ‘‘(B) which is held in connection with the

17 conduct of a trade or business or an activity de18 scribed in section 212.

19 ‘‘(2) EXCLUSION OF SELF-CREATED INTANGI20 BLES, ETC.—The term ‘amortizable section 197 in21 tangible’ shall not include any section 197 intangi22 ble—

23 ‘‘(A) which is not described in subpara24 graph (D), (E), or (F) of subsection (d)(1), and

25 ‘‘(B) which is created by the taxpayer.
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•S 1134 PCS

1 This paragraph shall not apply if the intangible is

2 created in connection with a transaction (or series of

3 related transactions) involving the acquisition of as4 sets constituting a trade or business or substantial

5 portion thereof.

6 ‘‘(3) ANTI-CHURNING RULES.—

‘‘For exclusion of intangibles acquired in certain

transactions, see subsection (f)(9).

7 ‘‘(d) SECTION 197 INTANGIBLE.—For purposes of

8 this section—

9 ‘‘(1) IN GENERAL.—Except as otherwise pro10 vided in this section, the term ‘section 197 intangi11 ble’ means—

12 ‘‘(A) goodwill,

13 ‘‘(B) going concern value,

14 ‘‘(C) any of the following intangible items:

15 ‘‘(i) workforce in place including its

16 composition and terms and conditions

17 (contractual or otherwise) of its employ18 ment,

19 ‘‘(ii) business books and records, oper20 ating systems, or any other information

21 base (including lists or other information

22 with respect to current or prospective cus23 tomers),
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•S 1134 PCS

1 ‘‘(iii) any patent, copyright, formula,

2 process, design, pattern, knowhow, format,

3 or other similar item,

4 ‘‘(iv) any customer-based intangible,

5 ‘‘(v) any supplier-based intangible,

6 and

7 ‘‘(vi) any other similar item,

8 ‘‘(D) any license, permit, or other right

9 granted by a governmental unit or an agency or

10 instrumentality thereof,

11 ‘‘(E) any covenant not to compete (or

12 other arrangement to the extent such arrange13 ment has substantially the same effect as a cov14 enant not to compete) entered into in connec15 tion with an acquisition (directly or indirectly)

16 of an interest in a trade or business or substan17 tial portion thereof, and

18 ‘‘(F) any franchise, trademark, or trade

19 name.

20 ‘‘(2) CUSTOMER-BASED INTANGIBLE.—

21 ‘‘(A) IN GENERAL.—The term ‘customer22 based intangible’ means—

23 ‘‘(i) composition of market,

24 ‘‘(ii) market share, and
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•S 1134 PCS

1 ‘‘(iii) any other value resulting from

2 future provision of goods or services pursu3 ant to relationships (contractual or other4 wise) in the ordinary course of business

5 with customers.

6 ‘‘(B) SPECIAL RULE FOR FINANCIAL INSTI7 TUTIONS.—In the case of a financial institu8 tion, the term ‘customer-based intangible’ in9 cludes deposit base and similar items.

10 ‘‘(3) SUPPLIER-BASED INTANGIBLE.—The term

11 ‘supplier-based intangible’ means any value resulting

12 from future acquisitions of goods or services pursu13 ant to relationships (contractual or otherwise) in the

14 ordinary course of business with suppliers of goods

15 or services to be used or sold by the taxpayer.

16 ‘‘(e) EXCEPTIONS.—For purposes of this section, the

17 term ‘section 197 intangible’ shall not include any of the

18 following:

19 ‘‘(1) FINANCIAL INTERESTS.—Any interest—

20 ‘‘(A) in a corporation, partnership, trust,

21 or estate, or

22 ‘‘(B) under an existing futures contract,

23 foreign currency contract, notional principal

24 contract, or other similar financial contract.

25 ‘‘(2) LAND.—Any interest in land.
671

•S 1134 PCS

1 ‘‘(3) COMPUTER SOFTWARE.—

2 ‘‘(A) IN GENERAL.—Any—

3 ‘‘(i) computer software which is read4 ily available for purchase by the general

5 public, is subject to a nonexclusive license,

6 and has not been substantially modified,

7 and

8 ‘‘(ii) other computer software which is

9 not acquired in a transaction (or series of

10 related transactions) involving the acquisi11 tion of assets constituting a trade or busi12 ness or substantial portion thereof.

13 ‘‘(B) COMPUTER SOFTWARE DEFINED.—

14 For purposes of subparagraph (A), the term

15 ‘computer software’ means any program de16 signed to cause a computer to perform a de17 sired function. Such term shall not include any

18 data base or similar item unless the data base

19 or item is in the public domain and is incidental

20 to the operation of otherwise qualifying com21 puter software.

22 ‘‘(4) CERTAIN INTERESTS OR RIGHTS AC23 QUIRED SEPARATELY.—Any of the following not ac24 quired in a transaction (or series of related trans-
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•S 1134 PCS

1 actions) involving the acquisition of assets constitut2 ing a trade business or substantial portion thereof:

3 ‘‘(A) Any interest in a film, sound record4 ing, video tape, book, or similar property.

5 ‘‘(B) Any right to receive tangible property

6 or services under a contract or granted by a

7 governmental unit or agency or instrumentality

8 thereof.

9 ‘‘(C) Any interest in a patent or copyright.

10 ‘‘(D) To the extent provided in regulations,

11 any right under a contract (or granted by a

12 governmental unit or an agency or instrumen13 tality thereof) if such right—

14 ‘‘(i) has a fixed duration of less than

15 14 years, or

16 ‘‘(ii) is fixed as to amount and, with17 out regard to this section, would be recov18 erable under a method similar to the unit19 of-production method.

20 ‘‘(5) INTERESTS UNDER LEASES AND DEBT IN21 STRUMENTS.—Any interest under—

22 ‘‘(A) an existing lease of tangible property,

23 or

24 ‘‘(B) except as provided in subsection

25 (d)(2)(B), any existing indebtedness.
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•S 1134 PCS

1 ‘‘(6) TREATMENT OF SPORTS FRANCHISES.—A

2 franchise to engage in professional football, basket3 ball, baseball, or other professional sport, and any

4 item acquired in connection with such a franchise.

5 ‘‘(7) MORTGAGE SERVICING.—Any right to

6 service indebtedness which is secured by residential

7 real property unless such right is acquired in a

8 transaction (or series of related transactions) involv9 ing the acquisition of assets (other than rights de10 scribed in this paragraph) constituting a trade or

11 business or substantial portion thereof.

12 ‘‘(8) CERTAIN TRANSACTION COSTS.—Any fees

13 for professional services, and any transaction costs,

14 incurred by parties to a transaction with respect to

15 which any portion of the gain or loss is not recog16 nized under part III of subchapter C.

17 ‘‘(f) SPECIAL RULES.—

18 ‘‘(1) TREATMENT OF CERTAIN DISPOSITIONS,

19 ETC.—If there is a disposition of any amortizable

20 section 197 intangible acquired in a transaction or

21 series of related transactions (or any such intangible

22 becomes worthless) and one or more other amortiz23 able section 197 intangibles acquired in such trans24 action or series of related transactions are re25 tained—
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•S 1134 PCS

1 ‘‘(A) no loss shall be recognized by reason

2 of such disposition (or such worthlessness), and

3 ‘‘(B) appropriate adjustments to the ad4 justed bases of such retained intangibles shall

5 be made for any loss not recognized under sub6 paragraph (A).

7 All persons treated as a single taxpayer under sec8 tion 41(f)(1) shall be so treated for purposes of the

9 preceding sentence.

10 ‘‘(2) TREATMENT OF CERTAIN TRANSFERS.—

11 ‘‘(A) IN GENERAL.—In the case of any sec12 tion 197 intangible transferred in a transaction

13 described in subparagraph (B), the transferee

14 shall be treated as the transferor for purposes

15 of applying this section with respect to so much

16 of the adjusted basis in the hands of the trans17 feree as does not exceed the adjusted basis in

18 the hands of the transferor.

19 ‘‘(B) TRANSACTIONS COVERED.—The

20 transactions described in this subparagraph

21 are—

22 ‘‘(i) any transaction described in sec23 tion 332, 351, 361, 721, 731, 1031, or

24 1033, and
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•S 1134 PCS

1 ‘‘(ii) any transaction between mem2 bers of the same affiliated group during

3 any taxable year for which a consolidated

4 return is made by such group.

5 ‘‘(3) TREATMENT OF AMOUNTS PAID PURSUANT

6 TO COVENANTS NOT TO COMPETE, ETC.—Any

7 amount paid or incurred pursuant to a covenant or

8 arrangement referred to in subsection (d)(1)(E)

9 shall be treated as an amount chargeable to capital

10 account.

11 ‘‘(4) TREATMENT OF FRANCHISES, ETC.—

12 ‘‘(A) FRANCHISE.—The term ‘franchise’

13 has the meaning given to such term by section

14 1253(b)(1).

15 ‘‘(B) TREATMENT OF RENEWALS.—Any

16 renewal of a franchise, trademark, or trade

17 name (or of a license, a permit, or other right

18 referred to in subsection (d)(1)(D)) shall be

19 treated as an acquisition. The preceding sen20 tence shall only apply with respect to costs in21 curred in connection with such renewal.

22 ‘‘(C) CERTAIN AMOUNTS NOT TAKEN INTO

23 ACCOUNT.—Any amount to which section

24 1253(d)(1) applies shall not be taken into ac25 count under this section.
676

•S 1134 PCS

1 ‘‘(5) TREATMENT OF CERTAIN REINSURANCE

2 TRANSACTIONS.—In the case of any amortizable sec3 tion 197 intangible resulting from an assumption re4 insurance transaction, the amount taken into ac5 count as the adjusted basis of such intangible under

6 this section shall be the excess of—

7 ‘‘(A) the amount paid or incurred by the

8 acquirer under the assumption reinsurance

9 transaction, over

10 ‘‘(B) the amount required to be capitalized

11 under section 848 in connection with such

12 transaction.

13 Subsection (b) shall not apply to any amount re14 quired to be capitalized under section 848.

15 ‘‘(6) TREATMENT OF CERTAIN SUBLEASES.—

16 For purposes of this section, a sublease shall be

17 treated in the same manner as a lease of the under18 lying property involved.

19 ‘‘(7) TREATMENT AS DEPRECIABLE.—For pur20 poses of this chapter, any amortizable section 197

21 intangible shall be treated as property which is of a

22 character subject to the allowance for depreciation

23 provided in section 167.

24 ‘‘(8) TREATMENT OF CERTAIN INCREMENTS IN

25 VALUE.—This section shall not apply to any incre-
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•S 1134 PCS

1 ment in value if, without regard to this section, such

2 increment is properly taken into account in deter3 mining the cost of property which is not a section

4 197 intangible.

5 ‘‘(9) ANTI-CHURNING RULES.—For purposes of

6 this section—

7 ‘‘(A) IN GENERAL.—The term ‘amortizable

8 section 197 intangible’ shall not include any

9 section 197 intangible which is described in

10 subparagraph (A) or (B) of subsection (d)(1)

11 (or for which depreciation or amortization

12 would not have been allowable but for this sec13 tion) and which is acquired by the taxpayer

14 after the date of the enactment of this section,

15 if—

16 ‘‘(i) the intangible was held or used at

17 any time on or after July 25, 1991, and on

18 or before such date of enactment by the

19 taxpayer or a related person,

20 ‘‘(ii) the intangible was acquired from

21 a person who held such intangible at any

22 time on or after July 25, 1991, and on or

23 before such date of enactment, and, as

24 part of the transaction, the user of such

25 intangible does not change, or
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•S 1134 PCS

1 ‘‘(iii) the taxpayer grants the right to

2 use such intangible to a person (or a per3 son related to such person) who held or

4 used such intangible at any time on or

5 after July 25, 1991, and on or before such

6 date of enactment.

7 For purposes of this subparagraph, the deter8 mination of whether the user of property

9 changes as part of a transaction shall be deter10 mined in accordance with regulations prescribed

11 by the Secretary. For purposes of this subpara12 graph, deductions allowable under section

13 1253(d) shall be treated as deductions allowable

14 for amortization.

15 ‘‘(B) EXCEPTION WHERE GAIN RECOG16 NIZED.—If—

17 ‘‘(i) subparagraph (A) would not

18 apply to an intangible acquired by the tax19 payer but for the last sentence of subpara20 graph (C)(i), and

21 ‘‘(ii) the person from whom the tax22 payer acquired the intangible elects, not23 withstanding any other provision of this

24 title—
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•S 1134 PCS

1 ‘‘(I) to recognize gain on the dis2 position of the intangible, and

3 ‘‘(II) to pay a tax on such gain

4 which, when added to any other in5 come tax on such gain under this title,

6 equals such gain multiplied by the

7 highest rate of income tax applicable

8 to such person under this title,

9 then subparagraph (A) shall apply to the

10 intangible only to the extent that the tax11 payer’s adjusted basis in the intangible ex12 ceeds the gain recognized under clause

13 (ii)(I).

14 ‘‘(C) RELATED PERSON DEFINED.—For

15 purposes of this paragraph—

16 ‘‘(i) RELATED PERSON.—A person

17 (hereinafter in this paragraph referred to

18 as the ‘related person’) is related to any

19 person if—

20 ‘‘(I) the related person bears a

21 relationship to such person specified

22 in section 267(b) or section 707(b)(1),

23 or

24 ‘‘(II) the related person and such

25 person are engaged in trades or busi-
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•S 1134 PCS

1 nesses under common control (within

2 the meaning of subparagraphs (A)

3 and (B) of section 41(f)(1)).

4 For purposes of subclause (I), in applying

5 section 267(b) or 707(b)(1), ‘20 percent’

6 shall be substituted for ‘50 percent’.

7 ‘‘(ii) TIME FOR MAKING DETERMINA8 TION.—A person shall be treated as related

9 to another person if such relationship ex10 ists immediately before or immediately

11 after the acquisition of the intangible in12 volved.

13 ‘‘(D) ACQUISITIONS BY REASON OF

14 DEATH.—Subparagraph (A) shall not apply to

15 the acquisition of any property by the taxpayer

16 if the basis of the property in the hands of the

17 taxpayer is determined under section 1014(a).

18 ‘‘(E) SPECIAL RULE FOR PARTNER19 SHIPS.—With respect to any increase in the

20 basis of partnership property under section 732,

21 734, or 743, determinations under this para22 graph shall be made at the partner level and

23 each partner shall be treated as having owned

24 and used such partner’s proportionate share of

25 the partnership assets.
681

•S 1134 PCS

1 ‘‘(F) ANTI-ABUSE RULES.—The term ‘am2 ortizable section 197 intangible’ does not in3 clude any section 197 intangible acquired in a

4 transaction, one of the principal purposes of

5 which is to avoid the requirement of subsection

6 (c)(1) that the intangible be acquired after the

7 date of the enactment of this section or to avoid

8 the provisions of subparagraph (A).

9 ‘‘(g) SPECIAL RULES FOR ACQUISITION OF CERTAIN

10 COMPUTER SOFTWARE BUSINESSES.—

11 ‘‘(1) IN GENERAL.—In the case of any section

12 197 intangible acquired in a transaction to which

13 this subsection applies, subsection (a) shall be ap14 plied with respect to one-half of the 75 percent of

15 its adjusted basis which is amortizable under sub16 section (a) by substituting ‘5-year period’ for ‘14-

17 year period’.

18 ‘‘(2) TRANSACTIONS TO WHICH SUBSECTION

19 APPLIES.—

20 ‘‘(A) IN GENERAL.—This subsection shall

21 apply to a transaction (or series of related

22 transactions) involving the acquisition of assets

23 constituting a trade or business or substantial

24 portion thereof if—
682

•S 1134 PCS

1 ‘‘(i) the principal business activity of

2 the trade or business (or portion) is com3 puter software development, computer

4 sales, licensing, or leasing, the provision of

5 computer software services, or a combina6 tion thereof, and

7 ‘‘(ii) during the testing period, the ag8 gregate computer software development

9 costs of such trade or business (or portion)

10 are not less than 17 percent of the greater

11 of—

12 ‘‘(I) the aggregate gross receipts

13 of such trade or business (or portion),

14 or

15 ‘‘(II) the aggregate gross expend16 itures of such trade or business (or

17 portion).

18 ‘‘(B) COMPUTER SOFTWARE DEVELOP19 MENT COSTS.—For purposes of subparagraph

20 (A), the term ‘computer software development

21 costs’ means the sum of—

22 ‘‘(i) the computer software develop23 ment costs which qualify as research and

24 experimentation expenditures under section

25 174, plus
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•S 1134 PCS

1 ‘‘(ii) the amortization deductions of

2 the trade or business with respect to com3 puter software not acquired in a trans4 action (or series of related transactions)

5 involving the acquisition of assets con6 stituting a trade or business or substantial

7 portion thereof.

8 ‘‘(C) TESTING PERIOD.—For purposes of

9 subparagraph (A), the term ‘testing period’

10 means the 5-year period ending on the date of

11 the last transaction described in subparagraph

12 (A) pursuant to which the section 197 intangi13 ble was acquired (or, if shorter, the entire pe14 riod of existence of the trade or business (or

15 portion) before such date).

16 ‘‘(h) REGULATIONS.—The Secretary shall prescribe

17 such regulations as may be appropriate to carry out the

18 purposes of this section, including such regulations as may

19 be appropriate to prevent avoidance of the purposes of this

20 section through related persons or otherwise.’’

21 (b) MODIFICATIONS TO DEPRECIATION RULES.—

22 (1) TREATMENT OF CERTAIN PROPERTY EX23 CLUDED FROM SECTION 197.—Section 167 (relating

24 to depreciation deduction) is amended by redesignat-
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•S 1134 PCS

1 ing subsection (f) as subsection (g) and by inserting

2 after subsection (e) the following new subsection:

3 ‘‘(f) TREATMENT OF CERTAIN PROPERTY EXCLUDED

4 FROM SECTION 197.—

5 ‘‘(1) COMPUTER SOFTWARE.—

6 ‘‘(A) IN GENERAL.—If a depreciation de7 duction is allowable under subsection (a) with

8 respect to any computer software, such deduc9 tion shall be computed by using the straight

10 line method and a useful life of 36 months.

11 ‘‘(B) COMPUTER SOFTWARE.—For pur12 poses of this section, the term ‘computer soft13 ware’ has the meaning given to such term by

14 section 197(e)(3)(B); except that such term

15 shall not include any such software which is an

16 amortizable section 197 intangible.

17 ‘‘(2) CERTAIN INTERESTS OR RIGHTS AC18 QUIRED SEPARATELY.—If a depreciation deduction

19 is allowable under subsection (a) with respect to any

20 property described in subparagraph (B), (C), or (D)

21 of section 197(e)(4), such deduction shall be com22 puted in accordance with regulations prescribed by

23 the Secretary.

24 ‘‘(3) MORTGAGE SERVICING RIGHTS.—If a de25 preciation deduction is allowable under subsection
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1 (a) with respect to any right described in section

2 197(e)(7), such deduction shall be computed by

3 using the straight line method and a useful life of

4 108 months.’’

5 (2) ALLOCATION OF BASIS IN CASE OF LEASED

6 PROPERTY.—Subsection (c) of section 167 is amend7 ed to read as follows:

8 ‘‘(c) BASIS FOR DEPRECIATION.—

9 ‘‘(1) IN GENERAL.—The basis on which exhaus10 tion, wear and tear, and obsolescence are to be al11 lowed in respect of any property shall be the ad12 justed basis provided in section 1011, for the pur13 pose of determining the gain on the sale or other

14 disposition of such property.

15 ‘‘(2) SPECIAL RULE FOR PROPERTY SUBJECT

16 TO LEASE.—If any property is acquired subject to a

17 lease—

18 ‘‘(A) no portion of the adjusted basis shall

19 be allocated to the leasehold interest, and

20 ‘‘(B) the entire adjusted basis shall be

21 taken into account in determining the deprecia22 tion deduction (if any) with respect to the prop23 erty subject to the lease.’’
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1 (c) AMENDMENTS TO SECTION 1253.—Subsection

2 (d) of section 1253 is amended by striking paragraphs (2),

3 (3), (4), and (5) and inserting the following:

4 ‘‘(2) OTHER PAYMENTS.—Any amount paid or

5 incurred on account of a transfer, sale, or other dis6 position of a franchise, trademark, or trade name to

7 which paragraph (1) does not apply shall be treated

8 as an amount chargeable to capital account.

9 ‘‘(3) RENEWALS, ETC.—For purposes of deter10 mining the term of a transfer agreement under this

11 section, there shall be taken into account all renewal

12 options (and any other period for which the parties

13 reasonably expect the agreement to be renewed).’’

14 (d) AMENDMENT TO SECTION 848.—Subsection (g)

15 of section 848 is amended by striking ‘‘this section’’ and

16 inserting ‘‘this section or section 197’’.

17 (e) AMENDMENTS TO SECTION 1060.—

18 (1) Paragraph (1) of section 1060(b) is amend19 ed by striking ‘‘goodwill or going concern value’’ and

20 inserting ‘‘section 197 intangibles’’.

21 (2) Paragraph (1) of section 1060(d) is amend22 ed by striking ‘‘goodwill or going concern value (or

23 similar items)’’ and inserting ‘‘section 197 intangi24 bles’’.

25 (f) TECHNICAL AND CONFORMING AMENDMENTS.—
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1 (1) Subsection (g) of section 167 (as redesig2 nated by subsection (b)) is amended to read as fol3 lows:

4 ‘‘(g) CROSS REFERENCES.—

‘‘(1) For additional rule applicable to depreciation

of improvements in the case of mines, oil and gas

wells, other natural deposits, and timber, see section 611.

‘‘(2) For amortization of goodwill and certain

other intangibles, see section 197.’’

5 (2) Subsection (f) of section 642 is amended by

6 striking ‘‘section 169’’ and inserting ‘‘sections 169

7 and 197’’.

8 (3) Subsection (a) of section 1016 is amended

9 by striking paragraph (19) and by redesignating the

10 following paragraphs accordingly.

11 (4) Subparagraph (C) of section 1245(a)(2) is

12 amended by striking ‘‘193, or 1253(d) (2) or (3)’’

13 and inserting ‘‘or 193’’.

14 (5) Paragraph (3) of section 1245(a) is amend15 ed by striking ‘‘section 185 or 1253(d) (2) or (3)’’.

16 (6) The table of sections for part VI of sub17 chapter B of chapter 1 is amended by adding at the

18 end thereof the following new item:

‘‘Sec. 197. Amortization of goodwill and certain other intangibles.’’.

19 (g) EFFECTIVE DATE.—

20 (1) IN GENERAL.—Except as otherwise pro21 vided in this subsection, the amendments made by
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1 this section shall apply with respect to property ac2 quired after the date of the enactment of this Act.

3 (2) ELECTION TO HAVE AMENDMENTS APPLY

4 TO PROPERTY ACQUIRED AFTER JULY 25, 1991.—

5 (A) IN GENERAL.—If an election under

6 this paragraph applies to the taxpayer—

7 (i) the amendments made by this sec8 tion shall apply to property acquired by the

9 taxpayer after July 25, 1991,

10 (ii) subsection (c)(1)(A) of section

11 197 of the Internal Revenue Code of 1986

12 (as added by this section) (and so much of

13 subsection (f)(9)(A) of such section 197 as

14 precedes clause (i) thereof) shall be applied

15 with respect to the taxpayer by treating

16 July 25, 1991, as the date of the enact17 ment of such section, and

18 (iii) in applying subsection (f)(9) of

19 such section, with respect to any property

20 acquired by the taxpayer on or before the

21 date of the enactment of this Act, only

22 holding or use on July 25, 1991, shall be

23 taken into account.

24 (B) ELECTION.—An election under this

25 paragraph shall be made at such time and in
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1 such manner as the Secretary of the Treasury

2 or his delegate may prescribe. Such an election

3 by any taxpayer, once made—

4 (i) may be revoked only with the con5 sent of the Secretary, and

6 (ii) shall apply to the taxpayer making

7 such election and any other taxpayer under

8 common control with the taxpayer (within

9 the meaning of subparagraphs (A) and (B)

10 of section 41(f)(1) of such Code) at any

11 time after November 22, 1991, and on or

12 before the date on which such election is

13 made.

14 (3) ELECTIVE BINDING CONTRACT EXCEP15 TION.—

16 (A) IN GENERAL.—The amendments made

17 by this section shall not apply to any acquisi18 tion of property by the taxpayer if—

19 (i) such acquisition is pursuant to a

20 written binding contract in effect on the

21 date of the enactment of this Act and at

22 all times thereafter before such acquisition,

23 (ii) an election under paragraph (2)

24 does not apply to the taxpayer, and
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1 (iii) the taxpayer makes an election

2 under this paragraph with respect to such

3 contract.

4 (B) ELECTION.—An election under this

5 paragraph shall be made at such time and in

6 such manner as the Secretary of the Treasury

7 or his delegate shall prescribe. Such an election,

8 once made—

9 (i) may be revoked only with the con10 sent of the Secretary, and

11 (ii) shall apply to all property ac12 quired pursuant to the contract with re13 spect to which such election was made.

14 SEC. 8262. TREATMENT OF CERTAIN PAYMENTS TO RE15 TIRED OR DECEASED PARTNER.

16 (a) SECTION 736(b) NOT TO APPLY IN CERTAIN

17 CASES.—Subsection (b) of section 736 (relating to pay18 ments for interest in partnership) is amended by adding

19 at the end thereof the following new paragraph:

20 ‘‘(3) LIMITATION ON APPLICATION OF PARA21 GRAPH (2).—Paragraph (2) shall apply only if—

22 ‘‘(A) capital is not a material income-pro23 ducing factor for the partnership, and

24 ‘‘(B) the retiring or deceased partner was

25 a general partner in the partnership.’’
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1 (b) LIMITATION ON DEFINITION OF UNREALIZED

2 RECEIVABLES.—

3 (1) IN GENERAL.—Subsection (c) of section

4 751 (defining unrealized receivables) is amended—

5 (A) by striking ‘‘sections 731, 736, and

6 741’’ each place they appear and inserting ‘‘,

7 sections 731 and 741 (but not for purposes of

8 section 736)’’, and

9 (B) by striking ‘‘section 731, 736, or 741’’

10 each place it appears and inserting ‘‘section

11 731 or 741’’.

12 (2) TECHNICAL AMENDMENTS.—

13 (A) Subsection (e) of section 751 is

14 amended by striking ‘‘sections 731, 736, and

15 741’’ and inserting ‘‘sections 731 and 741’’.

16 (B) Section 736 is amended by striking

17 subsection (c).

18 (c) EFFECTIVE DATE.—

19 (1) IN GENERAL.—The amendments made by

20 this section shall apply in the case of partners retir21 ing or dying on or after January 5, 1993.

22 (2) BINDING CONTRACT EXCEPTION.—The

23 amendments made by this section shall not apply to

24 any partner retiring on or after January 5, 1993, if

25 a written contract to purchase such partner’s inter-
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1 est in the partnership was binding on January 4,

2 1993, and at all times thereafter before such pur3 chase.

4 PART VII—MISCELLANEOUS PROVISIONS

5 SEC. 8271. DENIAL OF DEDUCTION RELATING TO TRAVEL

6 EXPENSES.

7 (a) IN GENERAL.—Section 274(m) (relating to addi8 tional limitations on travel expenses) is amended by add9 ing at the end thereof the following new paragraph:

10 ‘‘(3) TRAVEL EXPENSES OF SPOUSE, DEPEND11 ENT, OR OTHERS.—No deduction shall be allowed

12 under this chapter (other than section 217) for trav13 el expenses paid or incurred with respect to a

14 spouse, dependent, or other individual accompanying

15 the taxpayer (or an officer or employee of the tax16 payer) on business travel, unless—

17 ‘‘(A) the spouse, dependent, or other indi18 vidual is an employee of the taxpayer,

19 ‘‘(B) the travel of the spouse, dependent,

20 or other individual is for a bona fide business

21 purpose, and

22 ‘‘(C) such expenses would otherwise be de23 ductible by the spouse, dependent, or other indi24 vidual.’’
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to amounts paid or incurred after

3 December 31, 1993.

4 SEC. 8272. INCREASE IN WITHHOLDING FROM SUPPLE5 MENTAL WAGE PAYMENTS.

6 If an employer elects under Treasury Regulation

7 31.3402(g)–1 to determine the amount to be deducted

8 and withheld from any supplemental wage payment by

9 using a flat percentage rate, the rate to be used in deter10 mining the amount to be so deducted and withheld shall

11 not be less than 28 percent. The preceding sentence shall

12 apply to payments made after December 31, 1993.

13 SEC. 8273. EXCISE TAX ON CERTAIN VACCINES MADE PER14 MANENT.

15 (a) TAX.—Subsection (c) of section 4131 (relating to

16 tax on certain vaccines) is amended to read as follows:

17 ‘‘(c) APPLICATION OF SECTION.—The tax imposed by

18 this section shall apply—

19 ‘‘(1) after December 31, 1987, and before Jan20 uary 1, 1993, and

21 ‘‘(2) during periods after the date of the enact22 ment of the Omnibus Budget Reconciliation Act of

23 1993.’’

24 (b) TRUST FUND.—Paragraph (1) of section 9510(c)

25 (relating to expenditures from Vaccine Injury Compensa-
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1 tion Trust Fund) is amended by striking ‘‘and before Oc2 tober 1, 1992,’’.

3 (c) FLOOR STOCKS TAX.—

4 (1) IMPOSITION OF TAX.—On any taxable vac5 cine—

6 (A) which was sold by the manufacturer,

7 producer, or importer before the date of the en8 actment of this Act,

9 (B) on which no tax was imposed by sec10 tion 4131 of the Internal Revenue Code of 1986

11 (or, if such tax was imposed, was credited or re12 funded), and

13 (C) which is held on such date by any per14 son for sale or use,

15 there is hereby imposed a tax in the amount deter16 mined under section 4131(b) of such Code.

17 (2) LIABILITY FOR TAX AND METHOD OF PAY18 MENT.—

19 (A) LIABILITY FOR TAX.—The person

20 holding any taxable vaccine to which the tax

21 imposed by paragraph (1) applies shall be liable

22 for such tax.

23 (B) METHOD OF PAYMENT.—The tax im24 posed by paragraph (1) shall be paid in such
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1 manner as the Secretary shall prescribe by reg2 ulations.

3 (C) TIME FOR PAYMENT.—The tax im4 posed by paragraph (1) shall be paid on or be5 fore the last day of the 6th month beginning

6 after the date of the enactment of this Act.

7 (3) DEFINITIONS.—For purposes of this sub8 section, terms used in this subsection which are also

9 used in section 4131 of such Code shall have the re10 spective meanings such terms have in such section.

11 (4) OTHER LAWS APPLICABLE.—All provisions

12 of law, including penalties, applicable with respect to

13 the taxes imposed by section 4131 of such Code

14 shall, insofar as applicable and not inconsistent with

15 the provisions of this subsection, apply to the floor

16 stocks taxes imposed by paragraph (1), to the same

17 extent as if such taxes were imposed by such section

18 4131.

19 TITLE IX—COMMITTEE ON

20 FOREIGN RELATIONS

21 SEC. 9001. DELAY IN COST-OF-LIVING ADJUSTMENTS IN

22 FOREIGN SERVICE RETIREMENT BENEFITS

23 DURING FISCAL YEARS 1994, 1995, AND 1996.

24 (a) APPLICABILITY.—This section shall apply with

25 respect to any cost-of-living increase scheduled to take ef-
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1 fect under section 826 or 858 of the Foreign Service Act

2 of 1980 during fiscal year 1994, 1995, or 1996.

3 (b) DELAY IN EFFECTIVE DATE OF ADJUST4 MENTS.—A cost-of-living increase described in subsection

5 (a) shall not take effect until the first day of the third

6 calendar month after the date such increase would take

7 effect but for this subsection.

8 (c) RULE OF CONSTRUCTION.—

9 (1) SIZE OF COST-OF-LIVING ADJUSTMENT.—

10 Nothing in this section shall be considered to affect

11 the size of the cost-of-living adjustment under sec12 tion 8340(b) or section 8462(b) of title 5, United

13 States Code, in the same fiscal year as a cost-of-liv14 ing increase described in subsection (a).

15 (2) DETERMINATIONS OF ELIGIBILITY.—The

16 delay in the effective date of cost-of-living adjust17 ments under subsection (b) shall not affect any de18 termination relating to eligibility for an annuity in19 crease or the amount of the first increase in an an20 nuity under section 826 or 858 of the Foreign

21 Service Act of 1980.
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1 SEC. 9002. ELIMINATION OF THE ALTERNATIVE-FORM-OF2 ANNUITY OPTION UNDER THE FOREIGN

3 SERVICE RETIREMENT AND DISABILITY SYS4 TEM EXCEPT FOR INDIVIDUALS WITH CRITI5 CAL MEDICAL CONDITIONS.

6 (a) IN GENERAL.—Section 807(e)(1) of the Foreign

7 Service Act of 1980 (22 U.S.C. 4047(e)(1)) is amended

8 by striking ‘‘a participant may,’’ and inserting ‘‘any par9 ticipant who has a life-threatening affliction or other criti10 cal medical condition may,’’.

11 (b) EFFECTIVE DATE.—The amendment made by

12 subsection (a) shall take effect January 1, 1994.

13 TITLE X—COMMITTEE ON

14 GOVERNMENTAL AFFAIRS

15 Subtitle A—Civil Service

16 SEC. 10001. DELAY IN COST-OF-LIVING ADJUSTMENTS IN

17 FEDERAL EMPLOYEE RETIREMENT BENEFITS

18 DURING FISCAL YEARS 1994, 1995, AND 1996.

19 (a) APPLICABILITY.—This section shall apply with

20 respect to any cost-of-living increase scheduled to take

21 effect, during fiscal year 1994, 1995, or 1996, under—

22 (1) section 8340(b) or 8462(b) of title 5,

23 United States Code; or

24 (2) section 291 of the Central Intelligence

25 Agency Retirement Act (50 U.S.C. 2131), as set

26 forth in section 802 of the CIARDS Technical Cor-
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1 rections Act of 1992 (Public Law 102–496; 106

2 Stat. 3196).

3 (b) DELAY IN EFFECTIVE DATE OF ADJUST4 MENTS.—A cost-of-living increase described in subsection

5 (a) shall not take effect until the first day of the third

6 calendar month after the date such increase would other7 wise take effect.

8 (c) RULE OF CONSTRUCTION.—Nothing in this sec9 tion shall be considered to affect any determination relat10 ing to eligibility for an annuity increase or the amount

11 of the first increase in an annuity under section 8340(b)

12 or (c) or section 8462 (b) or (c) of title 5, United States

13 Code, or comparable provisions of law.

14 SEC. 10002. PERMANENT ELIMINATION OF THE ALTER15 NATIVE-FORM-OF-ANNUITY OPTION EXCEPT

16 FOR INDIVIDUALS WITH A CRITICAL MEDI17 CAL CONDITION.

18 (a) CIVIL SERVICE RETIREMENT SYSTEM; FEDERAL

19 EMPLOYEES’ RETIREMENT SYSTEM.—Sections 8343a and

20 8420a of title 5, United States Code, are each amended—

21 (1) in subsection (a) by striking ‘‘an employee

22 or Member may,’’ and inserting ‘‘any employee or

23 Member who has a life-threatening affliction or

24 other critical medical condition may,’’; and

25 (2) by striking subsection (f).
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1 (b) CENTRAL INTELLIGENCE AGENCY RETIREMENT

2 AND DISABILITY SYSTEM.—Section 294(a) of the Central

3 Intelligence Agency Retirement Act (50 U.S.C. 2143(a)),

4 as set forth in section 802 of the CIARDS Technical Cor5 rections Act of 1992 (Public Law 102–496; 106 Stat.

6 3196), is amended by striking ‘‘a participant may,’’ and

7 inserting ‘‘any participant who has a life-threatening

8 affliction or other critical medical condition may,’’.

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

10 this section shall become effective on October 1, 1995, and

11 shall apply with respect to any annuity commencing on

12 or after that date.

13 SEC. 10003. DISTRICT OF COLUMBIA GOVERNMENT CON14 TRIBUTIONS FOR CERTAIN EMPLOYEE AND

15 ANNUITANT HEALTH BENEFITS.

16 (a) CONTRIBUTIONS AFTER 1993.—

17 (1) IN GENERAL.—Section 8906(g) of title 5,

18 United States Code, is amended by adding at the

19 end thereof the following new paragraph:

20 ‘‘(3) The Government contributions authorized

21 by this section for health benefits for an annuitant

22 shall be paid by the government of the District of

23 Columbia, in the case of an annuitant whose eligi24 bility for an annuity is based on a separation from

25 service with such government, or who is a survivor
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1 of such an annuitant or a survivor of an employee

2 who died while employed by such government.’’.

3 (2) EFFECTIVE DATE.—The amendment made

4 by paragraph (1) shall take effect on October 1,

5 1993, and shall apply with respect to amounts pay6 able for periods beginning on or after that date.

7 (b) CONTRIBUTIONS FOR PERIOD BETWEEN 1975

8 AND 1993.—

9 (1) IN GENERAL.—The government of the Dis10 trict of Columbia shall pay into the Employees

11 Health Benefit Fund, as payment for any amounts

12 which would, for the period beginning on January 1,

13 1975 through September 30, 1993, have been pay14 able under the provisions of section 8906(g)(3) of

15 title 5, United States Code (as added by subsection

16 (a)(1) of this section) if such provision had been in

17 effect as of January 1, 1975, of which—

18 (A) at least 25 percent of the total of such

19 amounts shall be paid no later than January 1,

20 1994;

21 (B) at least 25 percent of the total of such

22 amounts shall be paid no later than January 1,

23 1995;
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1 (C) at least 25 percent of the total of such

2 amounts shall be paid no later than January 1,

3 1996; and

4 (D) any remaining balance shall be paid no

5 later than January 1, 1997.

6 (2) PRORATED PAYMENTS.—In determining any

7 amount for which the government of the District of

8 Columbia is liable under paragraph (1), the amount

9 of the liability shall be prorated to reflect only that

10 portion of total service which is attributable to civil11 ian service performed (by the former employee of the

12 government of the District of Columbia or by the de13 ceased individual referred to under section 8906

14 (g)(3) of title 5, United States Code, as the case

15 may be) during the period beginning on January 1,

16 1975, through September 30, 1993, as estimated by

17 the Office of Personnel Management.

18 Subtitle B—Postal Service

19 SEC. 10101. PAYMENTS TO BE MADE BY THE UNITED

20 STATES POSTAL SERVICE.

21 (a) RELATING TO CORRECTED CALCULATIONS FOR

22 PAST RETIREMENT COLAS.—In addition to any other

23 payments required under section 8348(m) of title 5, Unit24 ed States Code, or any other provision of law, the United

25 States Postal Service shall pay into the Civil Service Re-
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1 tirement and Disability Fund a total of $693,000,000, of

2 which—

3 (1) at least one-third shall be paid not later

4 than September 30, 1996;

5 (2) at least two-thirds shall be paid not later

6 than September 30, 1997; and

7 (3) any remaining balance shall be paid not

8 later than September 30, 1998.

9 (b) RELATING TO CORRECTED CALCULATIONS FOR

10 PAST HEALTH BENEFITS.—In addition to any other pay11 ments required under section 8906(g)(2) of title 5, United

12 States Code, or any other provision of law, the United

13 States Postal Service shall pay into the Employees Health

14 Benefits Fund a total of $348,000,000, of which—

15 (1) at least one-third shall be paid not later

16 than September 30, 1996;

17 (2) at least two-thirds shall be paid not later

18 than September 30, 1997; and

19 (3) any remaining balance shall be paid not

20 later than September 30, 1998.

21 Subtitle C—Miscellaneous

22 SEC. 10201. FEDERAL EMPLOYEES’ SURVIVOR ANNUITY IM23 PROVEMENTS.

24 (a) CIVIL SERVICE RETIREMENT SYSTEM.—
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1 (1) REDUCTION FOR SPOUSAL ANNUITY.—Sec2 tion 8339(j) of title 5, United States Code, is

3 amended—

4 (A) in paragraph (3)—

5 (i) in the second sentence, by striking

6 out ‘‘, within such 2-year period,’’; and

7 (ii) by striking out the fourth sentence

8 and inserting in lieu thereof the following:

9 ‘‘The Office shall, by regulation, provide

10 for payment of the deposit required under

11 this paragraph by a reduction in the annu12 ity of the employee or Member. The reduc13 tion shall, to the extent practicable, be de14 signed so that the present value of the fu15 ture reduction is actuarially equivalent to

16 the deposit required under this paragraph,

17 except that the total reductions in the an18 nuity of an employee or Member to pay de19 posits required by the provisions of this

20 paragraph, paragraph (5), or subsection

21 (k)(2) shall not exceed 25 percent of the

22 annuity computed under subsections (a)

23 through (i), (n), and (q), including adjust24 ments under section 8340. The reduction,

25 which shall be effective on the same date
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1 as the election under this paragraph, shall

2 be permanent and unaffected by any fu3 ture termination of the entitlement of the

4 former spouse. Such reduction shall be

5 independent of and in addition to the re6 duction required under the first sentence

7 of this paragraph.’’; and

8 (B) in paragraph (5)(C)—

9 (i) in clause (ii), by striking out ‘‘,

10 within 2 years after the date of the remar11 riage or, if later, the death or remarriage

12 of the former spouse (or of the last such

13 surviving former spouse),’’; and

14 (ii) by amending clause (iii) to read as

15 follows:

16 ‘‘(iii) The Office shall, by regulation, pro17 vide for payment of the deposit required under

18 clause (ii) by a reduction in the annuity of the

19 employee or Member. The reduction shall, to

20 the extent practicable, be designed so that the

21 present value of the future reduction is actuari22 ally equivalent to the deposit required under

23 clause (ii), except that total reductions in the

24 annuity of an employee or Member to pay de25 posits required by the provisions of this para-
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•S 1134 PCS

1 graph or paragraph (3) shall not exceed 25 per2 cent of the annuity computed under subsections

3 (a) through (i), (n), and (q), including adjust4 ments under section 8340. The reduction re5 quired by this clause, which shall be effective on

6 the same date as the election under clause (i),

7 shall be permanent and unaffected by any fu8 ture termination of the marriage. Such reduc9 tion shall be independent of and in addition to

10 the reduction required under clause (i).’’.

11 (2) REDUCTION RELATING TO FORMER

12 SPOUSE.—Section 8339(k)(2) of title 5, United

13 States Code, is amended—

14 (A) in subparagraph (B)(ii), by striking

15 out ‘‘Within 2 years after the date of the mar16 riage, the’’ and inserting in lieu thereof ‘‘The’’;

17 and

18 (B) by amending subparagraph (C) to read

19 as follows:

20 ‘‘(C) The Office shall, by regulation, provide for

21 payment of the deposit required under subparagraph

22 (B)(ii) by a reduction in the annuity of the employee

23 or Member. The reduction shall, to the extent prac24 ticable, be designed so that the present value of the

25 future reduction is actuarially equivalent to the de-
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1 posit required under subparagraph (B)(ii), except

2 that total reductions in the annuity of an employee

3 or Member to pay deposits required by this sub4 section or subsection (j)(3) shall not exceed 25 per5 cent of the annuity computed under subsections (a)

6 through (i), (n), and (q), including adjustments

7 under section 8340. The reduction required by this

8 subparagraph, which shall be effective on the same

9 date as the election under subparagraph (A), shall

10 be permanent and unaffected by any future termi11 nation of the marriage. Such reduction shall be inde12 pendent of and in addition to the reduction required

13 under subparagraph (A).’’.

14 (3) DEPOSITS.—Section 8334(h) of title 5,

15 United States Code, is amended by striking out

16 ‘‘and by section 8339(j)(5)(C) and the last sentence

17 of section 8339(k)(2) of this title’’.

18 (b) FEDERAL EMPLOYEES RETIREMENT SYSTEM.—

19 Section 8418 of title 5, United States Code, is amended—

20 (1) in subsection (a)(1), by striking out ‘‘, be21 fore the expiration of the 2-year period involved,’’;

22 and

23 (2) by amending subsection (b) to read as fol24 lows:
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•S 1134 PCS

1 ‘‘(b) The Office shall, by regulation, provide for pay2 ment of the deposit required under subsection (a) by a

3 reduction in the annuity of the employee or Member. The

4 reduction shall, to the extent practicable, be designed so

5 that the present value of the future reduction is actuarially

6 equivalent to the deposit required under subsection (a),

7 except that the total reductions in the annuity of an em8 ployee or Member to pay deposits required by this section

9 shall not exceed 25 percent of the annuity computed under

10 section 8415 or section 8452, including adjustments under

11 section 8462. The reduction required by this subsection,

12 which shall be effective at the same time as the election

13 under section 8416 (b) and (c) or section 8417(b), shall

14 be permanent and unaffected by any future termination

15 of the marriage or the entitlement of the former spouse.

16 Such reduction shall be independent of and in addition

17 to the reduction required under section 8416 (b) and (c)

18 or section 8417(b).’’.

19 (c) EFFECTIVE DATE.—

20 (1) IN GENERAL.—The amendments made by

21 this section shall take effect on the first day of the

22 first month beginning 30 days after the date of the

23 enactment of this Act and shall apply to all deposits

24 required under section 8339(j) (3) and (5),

25 8339(k)(2), or 8418 of title 5, United States Code,
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1 on which no payment has been made prior to such

2 effective date.

3 (2) PARTIAL DEPOSIT.—For any deposit re4 quired under section 8339(j) (3) and (5),

5 8339(k)(2), or 8418 of title 5, United States Code,

6 or section 4 (b) and (c) of the Civil Service Retire7 ment Spouse Equity Act of 1984 that has been par8 tially, but not fully, paid before the effective date of

9 this Act, the Office shall by regulation provide for

10 determining the remaining portion of the deposit

11 and for payment of the remaining portion of the de12 posit by a prospective reduction in the annuity of the

13 employee or Member. The reduction shall be similar

14 to the reductions provided pursuant to the amend15 ments made under this section.

16 TITLE XI—JUDICIARY

17 SEC. 1101. PATENT AND TRADEMARK FEES.

18 Section 10101 of the Omnibus Budget Reconciliation

19 Act of 1990 (35 U.S.C. 41 note) is amended—

20 (1) in subsection (a) by striking ‘‘1995’’ and in21 serting ‘‘1998’’;

22 (2) in subsection (b)(2) by striking ‘‘1995’’ and

23 inserting ‘‘1998’’; and

24 (3) in subsection (c)—
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1 (A) by striking ‘‘through 1995’’ and insert2 ing ‘‘through 1998’’; and

3 (B) by adding at the end the following:

4 ‘‘(6) $111,000,000 in fiscal year 1996.

5 ‘‘(7) $115,000,000 in fiscal year 1997.

6 ‘‘(8) $119,000,000 in fiscal year 1998.’’.

7 TITLE XII—COMMITTEE ON

8 LABOR AND HUMAN RESOURCES

9 Subtitle A—Student Loan

10 Provisions

11 SEC. 12001. SHORT TITLE; REFERENCES.

12 (a) SHORT TITLE.—This subtitle may be cited as the

13 ‘‘Student Loan Reform Act of 1993’’.

14 (b) REFERENCES.—References in this subtitle to

15 ‘‘the Act’’ are references to the Higher Education Act of

16 1965 (20 U.S.C. 1001 et seq.).

17 CHAPTER 1—FEDERAL DIRECT STUDENT

18 LOAN PROGRAM

19 SEC. 12011. FEDERAL DIRECT STUDENT LOAN PROGRAM.

20 Part D of title IV (20 U.S.C. 1087a) is amended to

21 read as follows:

22 ‘‘PART D—FEDERAL DIRECT STUDENT

23 LOAN PROGRAM

24 ‘‘SEC. 451. PURPOSE; PROGRAM AUTHORIZATION.

25 ‘‘(a) PURPOSE.—It is the purpose of this part—
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1 ‘‘(1) to simplify the delivery of student loans to

2 borrowers and eliminate borrower confusion;

3 ‘‘(2) to provide a variety of repayment plans,

4 including income contingent repayment, to borrowers

5 so that borrowers have flexibility in managing their

6 student loan repayment obligations, and so that

7 those obligations do not foreclose careers in commu8 nity or public service for those borrowers;

9 ‘‘(3) to replace, through an orderly transition,

10 the Federal Family Education Loan Program under

11 part B of this title with the Federal Direct Student

12 Loan Program under this part;

13 ‘‘(4) to avoid the unnecessary cost, to taxpayers

14 and borrowers, and administrative complexity associ15 ated with the Federal Family Education Loan Pro16 gram under part B of this title through the use of

17 a direct student loan program; and

18 ‘‘(5) to create a more streamlined student loan

19 program that can be managed more effectively at

20 the Federal level.

21 ‘‘(b) PROGRAM AUTHORITY.—There are hereby made

22 available, in accordance with the provisions of this part,

23 such sums as may be necessary to make loans to all eligi24 ble students in attendance at participating institutions of

25 higher education selected by the Secretary (and the eligi-
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1 ble parents of such students), to enable such students to

2 pursue their courses of study at such institutions during

3 the period beginning July 1, 1994. Such loans shall be

4 made by participating institutions, or consortia thereof,

5 that have agreements with the Secretary to originate

6 loans, or by alternative originators designated by the Sec7 retary to make loans for students in attendance at partici8 pating institutions (and their parents).

9 ‘‘SEC. 452. FUNDS FOR ORIGINATION OF DIRECT STUDENT

10 LOANS.

11 ‘‘(a) IN GENERAL.—The Secretary shall provide

12 funds for student and parent loans under this part—

13 ‘‘(1) directly to an institution of higher edu14 cation that has an agreement with the Secretary

15 under section 454(a) to participate in the direct stu16 dent loan program under this part and that also has

17 an agreement with the Secretary under section

18 454(b) to originate loans under this part; or

19 ‘‘(2) through an alternative originator des20 ignated by the Secretary, on the basis of the need

21 and the eligibility of students at each participating

22 institution, and parents of such students, for such

23 loans.

24 ‘‘(b) FEES FOR ORIGINATION SERVICES.—
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1 ‘‘(1) FEES FOR INSTITUTIONS.—The Secretary

2 shall pay fees to institutions of higher education or

3 consortia thereof having agreements under section

4 454(b), in an amount established by the Secretary,

5 to assist in meeting the costs of loan origination.

6 Such fees—

7 ‘‘(A) shall be paid by the Secretary based

8 on all the loans made under this part to a par9 ticular borrower in the same academic year;

10 ‘‘(B) shall be subject to a sliding scale that

11 decreases the amount of such fees as the num12 ber of borrowers increases; and

13 ‘‘(C)(i) for academic year 1994–1995, shall

14 not exceed a program-wide average of $10 per

15 borrower for all the loans made under this part

16 to such borrower in the same academic year;

17 and

18 ‘‘(ii) for succeeding academic years, the

19 Secretary shall establish such average fee pur20 suant to regulations.

21 ‘‘(2) FEES FOR ALTERNATIVE ORIGINATORS.—

22 The Secretary shall pay fees for loan origination

23 services to alternative originators of loans made

24 under this part in an amount established by the Sec25 retary in accordance with the terms of the contract
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1 described in section 456(b) between the Secretary

2 and each such alternative originator.

3 ‘‘(c) NO ENTITLEMENT TO PARTICIPATE OR ORIGI4 NATE.—No institution of higher education shall have a

5 right to participate in the program authorized by this part,

6 originate loans, or perform any program function under

7 this part. Nothing in this subsection shall be construed

8 so as to limit the entitlement of an eligible student attend9 ing a participating institution (or the eligible parent of

10 such student) to borrow under this part nor limit the bor11 rower’s contractual right against the United States to re12 ceive any loan for which the student (or parent) is eligible.

13 ‘‘(d) DELIVERY OF LOAN FUNDS.—Loan funds shall

14 be paid and delivered to an institution by the Secretary

15 prior to the beginning of the payment period established

16 by the Secretary in a manner that is consistent with pay17 ment and delivery of basic grants under subpart 1 of part

18 A.

19 ‘‘SEC. 453. SELECTION OF INSTITUTIONS FOR PARTICIPA20 TION AND ORIGINATION.

21 ‘‘(a) PHASE-IN OF PROGRAM.—

22 ‘‘(1) GENERAL AUTHORITY.—The Secretary

23 shall enter into agreements pursuant to section

24 454(a) with institutions of higher education to par25 ticipate in the direct student loan program under
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1 this part, and agreements pursuant to section

2 454(b) with institutions of higher education, or con3 sortia thereof, to originate loans in such program,

4 for academic years beginning on or after July 1,

5 1994. Alternative origination services, through which

6 an entity other than the participating institution at

7 which the student is in attendance originates the

8 loan, shall be provided by the Secretary, through 1

9 or more contracts under section 456(b) or such

10 other means as the Secretary may provide, for stu11 dents attending participating institutions that do not

12 originate direct student loans under this part. Such

13 agreements for the academic year 1994–1995 shall,

14 to the extent feasible, be entered into not later than

15 January 1, 1994.

16 ‘‘(2) TRANSITION PROVISIONS.—In order to en17 sure an expeditious but orderly transition from the

18 loan programs under part B of this title to the di19 rect student loan program under this part, the Sec20 retary shall, in the exercise of the Secretary’s discre21 tion, determine the number of institutions with

22 which the Secretary whall enter into agreements

23 under subsections (a) and (b) of section 454 for any

24 academic year, except that the Secretary shall exer-
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•S 1134 PCS

1 cise such discretion so as to achieve the following

2 goals:

3 ‘‘(A) For academic year 1994–1995, loans

4 made under this part shall represent 5 percent

5 of the new student loan volume for such year.

6 ‘‘(B) For academic year 1995–1996, loans

7 made under this part shall represent 30 percent

8 of the new student loan volume for such year.

9 ‘‘(C) For academic year 1996–1997, loans

10 made under this part shall represent 40 percent

11 of the new student loan volume for such year.

12 ‘‘(D) For academic year 1997–1998 and

13 fiscal year 1998, loans made under this part

14 shall represent 50 percent of the new student

15 loan volume for such years.

16 ‘‘(3) NEW STUDENT LOAN VOLUME.—For the

17 purpose of this part, the term ‘new student loan vol18 ume’ means the estimated sum of all loans that will

19 be made, insured or guaranteed under this part and

20 part B in the year for which the determination is

21 made. The Secretary shall base the estimate de22 scribed in the preceding sentence on the most recent

23 program data available.

24 ‘‘(4) CASH MANAGEMENT.—The requirements

25 of sections 3335, 6501, and 6503 of title 31, United
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1 States Code (the Cash Management Improvement

2 Act of 1990) shall apply to the program under this

3 part only to the extent specified in a schedule estab4 lished by the Secretaries of Education and the

5 Treasury, except that such schedule shall provide for

6 the application of all such requirements not later

7 than July 1, 1998.

8 ‘‘(b) SELECTION CRITERIA.—

9 ‘‘(1) APPLICATION.—Each institution of higher

10 education desiring to participate in the direct stu11 dent loan program under this part shall submit an

12 application satisfactory to the Secretary containing

13 such information and assurances as the Secretary

14 may require.

15 ‘‘(2) SELECTION CRITERIA.—The Secretary

16 shall select institutions for participation in the direct

17 student loan program under this part, and shall

18 enter into agreements with such institutions under

19 section 454(a), from among those institutions that

20 submit the applications described in paragraph (1),

21 and meet such other eligibility requirements as the

22 Secretary shall prescribe, by, to the extent pos23 sible—

24 ‘‘(A)(i) categorizing such institutions ac25 cording to anticipated loan volume, length of
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•S 1134 PCS

1 academic program, control of the institution,

2 highest degree offered, size of student enroll3 ment, percentage of students borrowing under

4 part B, geographic location, annual loan vol5 ume, default experience and composition of the

6 student body; and

7 ‘‘(ii) beginning in academic year 1995–

8 1996 selecting institutions that are reasonably

9 representative of each of the categories de10 scribed pursuant to clause (i); and

11 ‘‘(B) if the Secretary determines it nec12 essary to carry out the purposes of this part,

13 selecting additional institutions.

14 ‘‘(c) SELECTION CRITERIA FOR ORIGINATION.—

15 ‘‘(1) IN GENERAL.—The Secretary may enter

16 into a supplemental agreement with an institution

17 (or a consortium of such institutions) that—

18 ‘‘(A) has an agreement under subsection

19 454(a);

20 ‘‘(B) desires to originate loans under this

21 part; and

22 ‘‘(C) meets the criteria described in para23 graph (2).

24 ‘‘(2) TRANSITION SELECTION CRITERIA.—For

25 academic year 1994–1995, the Secretary may ap-
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•S 1134 PCS

1 prove an institution to originate loans only if such

2 institution—

3 ‘‘(A) made loans under part E of this title

4 in academic year 1993–1994 and did not exceed

5 the applicable maximum default rate under sec6 tion 462(g) for the most recent fiscal year for

7 which data are available;

8 ‘‘(B) is not on the reimbursement system

9 of payment for any of the programs under sub10 part 1 or 3 of part A, part C, or part E;

11 ‘‘(C) is not overdue on program or finan12 cial reports or audits required under this title;

13 ‘‘(D) is not subject to an emergency ac14 tion, or a limitation, suspension, or termination

15 under section 428(b)(1)(T), 432(h), or 487(c);

16 ‘‘(E) in the opinion of the Secretary, has

17 not had significant deficiencies identified by a

18 State postsecondary review entity under subpart

19 1 of part H of this title;

20 ‘‘(F) in the opinion of the Secretary, has

21 not had severe performance deficiencies for any

22 of the programs under this title, including such

23 deficiencies demonstrated by audits or program

24 reviews submitted or conducted during the 5
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1 calendar years immediately preceding the date

2 of application;

3 ‘‘(G) provides an assurance that such insti4 tution has no delinquent outstanding debts to

5 the Federal Government, unless such debts are

6 being repaid under or in accordance with a re7 payment arrangement satisfactory to the Fed8 eral Government, or the Secretary in the Sec9 retary’s discretion determines that the existence

10 or amount of such debts has not been finally

11 determined by the cognizant Federal agency;

12 and

13 ‘‘(H) meets such other criteria as the Sec14 retary may establish to protect the financial in15 terest of the United States and to promote the

16 purposes of this part.

17 ‘‘(3) REGULATIONS GOVERNING APPROVAL

18 AFTER TRANSACTION.—For academic year 1995–

19 1996 and subsequent academic years, the Secretary

20 shall promulgate and publish in the Federal Register

21 regulations governing the approval of institutions to

22 originate loans under this part in accordance with

23 section 458(a)(2).

24 ‘‘(d) CONSORTIA.—Subject to such requirements as

25 the Secretary may prescribe, eligible institutions of higher
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1 education with agreements under section 454(a) may

2 apply to the Secretary as consortia to originate loans

3 under this part for students in attendance at such institu4 tions. Such institutions shall each be required to meet the

5 requirements of subsection (c) with respect to loan origi6 nation.

7 ‘‘SEC. 454. AGREEMENTS WITH INSTITUTIONS.

8 ‘‘(a) PARTICIPATION AGREEMENTS.—An agreement

9 with any institution of higher education for participation

10 in the direct student loan program under this part shall—

11 ‘‘(1) provide for the establishment and mainte12 nance of a direct student loan program at the insti13 tution under which the institution will—

14 ‘‘(A) identify eligible students who seek

15 student financial assistance at such institution

16 in accordance with section 484;

17 ‘‘(B) estimate the need of each such stu18 dent as required by part F of this title for an

19 academic year, except that, any loan obtained

20 by a student under this part with the same

21 terms as loans made under section 428H (ex22 cept as otherwise provided in this part), or a

23 loan obtained by a parent under this part with

24 the same terms as loans made under section

25 428B (except as otherwise provided in this
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1 part), or obtained under any State-sponsored or

2 private loan program, may be used to offset the

3 expected family contribution of the student for

4 that year;

5 ‘‘(C) provide a statement that certifies the

6 eligibility of any student to receive a loan under

7 this part that is not in excess of the annual or

8 aggregate limit applicable to such loan, except

9 that the institution may, in exceptional cir10 cumstances identified by the Secretary, refuse

11 to certify a statement that permits a student to

12 receive a loan under this part, or certify a loan

13 amount that is less than the student’s deter14 mination of need (as determined under part F

15 of this title), if the reason for such action is

16 documented and provided in written form to

17 such student;

18 ‘‘(D) set forth a schedule for disbursement

19 of the proceeds of the loan in installments, con20 sistent with the requirements of section 428G

21 (other than subsection (b)(1) of such section);

22 and

23 ‘‘(E) provide timely and accurate informa24 tion—
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1 ‘‘(i) concerning the status of student

2 borrowers (and students on whose behalf

3 parents borrow under this part) while such

4 students are in attendance at the institu5 tion and concerning any new information

6 of which the institution becomes aware for

7 such students (or their parents) after such

8 borrowers leave the institution, to the Sec9 retary for the servicing and collecting of

10 loans made under this part; and

11 ‘‘(ii) if the institution does not have

12 an agreement with the Secretary under

13 subsection (b), concerning student eligi14 bility and need, as determined under sub15 paragraphs (A) and (B), to the Secretary

16 as needed for the alternative origination of

17 loans to eligible students and parents in

18 accordance with this part;

19 ‘‘(2) provide assurances that the institution will

20 comply with requirements established by the Sec21 retary relating to student loan information with re22 spect to loans made under this part;

23 ‘‘(3) provide that the institution accepts respon24 sibility and financial liability stemming from its fail-
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1 ure to perform its functions pursuant to the agree2 ment;

3 ‘‘(4) provide that students at the institution

4 and their parents (with respect to such students)

5 will be eligible to participate in the programs under

6 part B of this title at the discretion of the Secretary

7 for the period during which such institution partici8 pates in the direct student loan program under this

9 part;

10 ‘‘(5) provide for the implementation of a quality

11 assurance system, as established by the Secretary

12 and developed in consultation with institutions of

13 higher education, to ensure that the institution is

14 complying with program requirements and meeting

15 program objectives;

16 ‘‘(6) provide that the institution will not charge

17 any fees of any kind, however described, to student

18 or parent borrowers for origination activities or the

19 provision of any information necessary for a student

20 or parent to receive a loan under this part, or any

21 benefits associated with such loan; and

22 ‘‘(7) include such other provisions as the Sec23 retary determines are necessary to protect the inter24 ests of the United States and to promote the pur25 poses of this part.
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1 ‘‘(b) ORIGINATION.—An agreement with any institu2 tion of higher education, or consortia thereof, for the origi3 nation of loans under this part shall—

4 ‘‘(1) supplement the agreement entered into in

5 accordance with subsection (a);

6 ‘‘(2) include provisions established by the Sec7 retary that are similar to the participation agree8 ment provisions described in paragraphs (1)(E)(ii),

9 (2), (3), (4), (5), (6), and (7) of subsection (a), as

10 modified to relate to the origination of loans by the

11 institution or consortium;

12 ‘‘(3) provide that the institution or consortium

13 will originate loans to eligible students and parents

14 in accordance with this part; and

15 ‘‘(4) provide that the note or evidence of obliga16 tion on the loan shall be the property of the Sec17 retary.

18 ‘‘(c) WITHDRAWAL AND TERMINATION PROCE19 DURES.—The Secretary shall establish procedures by

20 which institutions or consortia may withdraw or be termi21 nated from the program under this part.

22 ‘‘SEC. 455. TERMS AND CONDITIONS OF LOANS.

23 ‘‘(a) IN GENERAL.—

24 ‘‘(1) PARALLEL TERMS, CONDITIONS, BENE25 FITS, AND AMOUNTS.—Unless otherwise specified in
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1 this part, loans made to borrowers under this part

2 shall have the same terms, conditions, and benefits

3 as loans made to borrowers under sections 428,

4 428B, and 428H of this title.

5 ‘‘(2) DESIGNATION OF LOANS.—Loans made to

6 borrowers under this part that, except as otherwise

7 specified in this part, have the same terms, condi8 tions, and benefits as loans made to borrowers

9 under—

10 ‘‘(A) section 428 shall be known as ‘Fed11 eral Direct Stafford Loans’;

12 ‘‘(B) section 428B shall be known as ‘Fed13 eral Direct PLUS Loans’; and

14 ‘‘(C) section 428H shall be known as ‘Fed15 eral Direct Unsubsidized Stafford Loans’.

16 ‘‘(b) INTEREST RATE.—

17 ‘‘(1) RATES FOR FDSL AND FDUSL.—(A) For

18 Federal Direct Stafford Loans and Federal Direct

19 Unsubsidized Stafford Loans for which the first dis20 bursement is made on or after July 1, 1994, the ap21 plicable rate of interest shall, during any 12-month

22 period beginning on July 1 and ending on June 30,

23 be determined on the preceding June 1 and be equal

24 to—
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1 ‘‘(i) the bond equivalent rate of 91-day

2 Treasury bills auctioned at the final auction

3 held prior to such June 1; plus

4 ‘‘(ii) 3.1 percent,

5 except that such rate shall not exceed 8.25 percent.

6 ‘‘(B)(i) Notwithstanding the provisions of sub7 paragraph (A), with respect to any Federal Direct

8 Stafford Loan or Federal Direct Unsubsidized Staf9 ford Loan for which the first disbursement is made

10 on or after July 1, 1994, the applicable rate of inter11 est for interest which accrues—

12 ‘‘(I) prior to the beginning of the repay13 ment period of the loan; or

14 ‘‘(II) during the period in which principal

15 need not be paid (whether or not such principal

16 is in fact paid) by reason of a provision de17 scribed in section 428(b)(1)(M) or

18 427(a)(2)(C),

19 shall not exceed the rate determined under clause

20 (ii).

21 ‘‘(ii) For purposes of clause (i) the rate deter22 mined under this clause shall, during any 12-month

23 period beginning on July 1 and ending on June 30,

24 be determined on the preceding June 1 and be equal

25 to—
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•S 1134 PCS

1 ‘‘(I) the bond equivalent rate of 91-day

2 Treasury bills auctioned at the final auction

3 prior to such June 1; plus

4 ‘‘(II) 2.5 percent,

5 except that such rate shall not exceed 8.25 percent.

6 ‘‘(2) RATES FOR FDPLUS.—For Federal Direct

7 PLUS Loans for which the first disbursement is

8 made on or after July 1, 1994, the applicable rate

9 of interest shall, during any 12-month period begin10 ning on July 1 and ending on June 30, be deter11 mined on the preceding June 1 and be equal to—

12 ‘‘(A) the bond equivalent rate of 52-week

13 Treasury bills auctioned at final auction held

14 prior to such June 1; plus

15 ‘‘(B) 3.1 percent,

16 except that such rate shall not exceed 9 percent.

17 ‘‘(3) PUBLICATION.—The Secretary shall deter18 mine the applicable rates of interest under this sub19 section after consultation with the Secretary of

20 Treasury and shall publish such rate in the Federal

21 Register as soon as practicable after the date of de22 termination.

23 ‘‘(c) ORIGINATION FEE.—The Secretary shall charge

24 the borrower of a loan made under this part an origination

25 fee of 4.0 percent of the principal amount of the loan.
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•S 1134 PCS

1 ‘‘(d) REPAYMENT PLANS.—

2 ‘‘(1) DESIGN AND SELECTION.—Consistent with

3 criteria established by the Secretary, the Secretary

4 shall offer a borrower of a loan made under this part

5 a variety of plans for repayment of such loan, in6 cluding principal and interest on the loan. The bor7 rower shall be entitled to accelerate, without penalty,

8 repayment on the borrowers loans under this part.

9 The borrower may choose—

10 ‘‘(A) a standard repayment plan, with a

11 fixed annual repayment amount paid over a

12 fixed period of time;

13 ‘‘(B) an extended repayment plan, with a

14 fixed annual repayment amount paid over an

15 extended period of time, except that the bor16 rower shall annually repay a minimum amount

17 determined by the Secretary in accordance with

18 section 428(b)(1)(L);

19 ‘‘(C) a graduated repayment plan, with an20 nual repayment amounts established at 2 or

21 more graduated levels and paid over a fixed or

22 extended period of time, except that the borrow23 er’s scheduled payments shall not be less than

24 50 percent, nor more than 150 percent, of what

25 the amortized payment on the amount owed
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•S 1134 PCS

1 would be if the loan were repaid under the

2 standard repayment plan; and

3 ‘‘(D) an income contingent repayment

4 plan, with varying annual repayment amounts

5 based on the income of the borrower, paid over

6 an extended period of time, not to exceed 20

7 years, except that the plan described in this

8 subparagraph shall not be available to the bor9 rower of a Federal Direct PLUS loan.

10 ‘‘(2) SELECTION BY SECRETARY.—If a bor11 rower of a loan made under this part does not select

12 a repayment plan described in paragraph (1), the

13 Secretary may provide the borrower with a repay14 ment plan described in subparagraph (A), (B), or

15 (C) of paragraph (1).

16 ‘‘(3) CHANGES IN SELECTIONS.—The borrower

17 of a loan made under this part may change the bor18 rower’s selection of a repayment plan under para19 graph (1), or the Secretary’s selection of a plan for

20 the borrower under paragraph (2), as the case may

21 be, under such terms and conditions as may be es22 tablished by the Secretary.

23 ‘‘(4) ALTERNATIVE REPAYMENT PLANS.—The

24 Secretary may provide, on a case by case basis, an

25 alternative repayment plan to a borrower of a loan
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•S 1134 PCS

1 made under this part who demonstrates to the satis2 faction of the Secretary that the terms and condi3 tions of the repayment plans available under para4 graph (1) are not adequate to accommodate the bor5 rower’s exceptional circumstances. In designing such

6 alternative repayment plans, the Secretary shall en7 sure that such plans do not exceed the cost to the

8 Federal Government, as determined on the basis of

9 the present value of future payments by such bor10 rowers, of loans made using the plans available

11 under paragraph (1).

12 ‘‘(5) REPAYMENT AFTER DEFAULT.—The Sec13 retary may require any borrower who has defaulted

14 on a loan made under this part to—

15 ‘‘(A) pay all reasonable collection costs as16 sociated with such loan; and

17 ‘‘(B) repay the loan pursuant to an income

18 contingent repayment plan.

19 ‘‘(e) INCOME CONTINGENT REPAYMENT.—

20 ‘‘(1) INFORMATION AND PROCEDURES.—The

21 Secretary may obtain such information as is reason22 ably necessary regarding the income of a borrower

23 (and the borrower’s spouse, if applicable) of a loan

24 made under this part that is, or may be, repaid pur25 suant to income contingent repayment, for the pur-
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•S 1134 PCS

1 pose of determining the annual repayment obligation

2 of the borrower. Return and return information (as

3 defined in section 6103 of the Internal Revenue

4 Code of 1986) may be obtained under the preceding

5 sentence only to the extent authorized by section

6 6103(l)(13) of such Code. The Secretary shall estab7 lish procedures for determining the borrower’s re8 payment obligation on that loan for such year, and

9 such other procedures as are necessary to implement

10 effectively income contingent repayment.

11 ‘‘(2) REPAYMENT BASED ON ADJUSTED GROSS

12 INCOME.—A repayment schedule for a loan made

13 under this part and repaid pursuant to income con14 tingent repayment shall be based on the adjusted

15 gross income (as defined in section 62 of the Inter16 nal Revenue Code of 1986) of the borrower or, if the

17 borrower is married and files a Federal income tax

18 return jointly with the borrower’s spouse, on the ad19 justed gross income of the borrower and the borrow20 er’s spouse.

21 ‘‘(3) ADDITIONAL DOCUMENTS.—A borrower

22 who chooses, or is required, to repay a loan made

23 under this part pursuant to income contingent re24 payment, and for whom adjusted gross income is un25 available or does not reasonably reflect the borrow-
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•S 1134 PCS

1 er’s current income, shall provide to the Secretary

2 other documentation of income satisfactory to the

3 Secretary, which documentation the Secretary may

4 use to determine an appropriate repayment schedule.

5 ‘‘(4) REPAYMENT SCHEDULES.—Income contin6 gent repayment schedules shall be established by

7 regulations promulgated by the Secretary and shall

8 require payments that vary in relation to the appro9 priate portion of the annual income of the borrower

10 (and the borrower’s spouse, if applicable) as deter11 mined by the Secretary.

12 ‘‘(5) CALCULATION OF BALANCE DUE.—The

13 balance due on a loan made under this part that is

14 repaid pursuant to income contingent repayment

15 shall equal the unpaid principal amount of the loan,

16 any accrued interest, and any fees, such as late

17 charges, assessed on such loan. The Secretary may

18 promulgate regulations limiting the amount of inter19 est that may be capitalized on such loan, and the

20 timing of any such capitalization.

21 ‘‘(6) NOTIFICATION TO BORROWERS.—The Sec22 retary shall establish procedures under which a bor23 rower of a loan made under this part who chooses

24 or is required to repay such loan pursuant to income

25 contingent repayment is notified of the terms and
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1 conditions of such plan, including notification of

2 such borrower—

3 ‘‘(A) that the Internal Revenue Service will

4 disclose to the Secretary tax return information

5 as authorized under section 6103(l)(13) of the

6 Internal Revenue Code of 1986; and

7 ‘‘(B) that if a borrower considers that spe8 cial circumstances, such as a loss of employ9 ment by the borrower or the borrower’s spouse,

10 warrant an adjustment in the borrower’s loan

11 repayment as determined using the information

12 described in subparagraph (A), or the alter13 native documentation described in paragraph

14 (3), the borrower may contact the Secretary,

15 who shall determine whether such adjustment is

16 appropriate, in accordance with criteria estab17 lished by the Secretary.

18 ‘‘(f) DEFERMENT.—

19 ‘‘(1) EFFECT ON PRINCIPAL AND INTEREST.—

20 A borrower of a loan made under this part who

21 meets the requirements described in paragraph (2)

22 shall be eligible for a deferment, during which peri23 odic installments of principal need not be paid, and

24 interest—
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1 ‘‘(A) shall not accrue, in the case of a Fed2 eral Direct Stafford Loan or a Federal Direct

3 Consolidation Loan that consolidated only Fed4 eral Direct Stafford Loans, or a combination of

5 such loans and Federal Stafford Loans for

6 which the student borrower received an interest

7 subsidy under section 428; or

8 ‘‘(B) shall accrue and be capitalized or

9 paid by the borrower, in the case of a Federal

10 Direct PLUS Loan, a Federal Direct

11 Unsubsidized Stafford Loan, or a Federal Di12 rect Consolidation Loan other than loans de13 scribed in subparagraph (A).

14 ‘‘(2) ELIGIBILITY.—A borrower of a loan made

15 under this part shall be eligible for a deferment dur16 ing any period—

17 ‘‘(A) during which the borrower—

18 ‘‘(i) is carrying at least one-half the

19 normal full-time work load for the course

20 of study that the borrower is pursuing, as

21 determined by the eligible institution (as

22 such term is defined in section 435) the

23 borrower is attending; or

24 ‘‘(ii) is pursuing a course of study

25 pursuant to a graduate fellowship program
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1 approved by the Secretary, or pursuant to

2 a rehabilitation training program for indi3 viduals with disabilities approved by the

4 Secretary,

5 except that no borrower shall be eligible for a

6 deferment under this subparagraph, or a loan

7 made under this part (other than a Federal Di8 rect PLUS Loan or a Federal Direct Consolida9 tion Loan), while serving in a medical intern10 ship or residency program;

11 ‘‘(B) not in excess of 3 years during which

12 the borrower is seeking and unable to find full13 time employment;

14 ‘‘(C) not in excess of 3 years during which

15 the Secretary determines, in accordance with

16 regulations prescribed under section 435(o),

17 that the borrower has experienced or will expe18 rience an economic hardship, regardless of the

19 reason for such hardship.

20 ‘‘(g) FEDERAL DIRECT CONSOLIDATION LOANS.—A

21 borrower of a loan made under this part may consolidate

22 such loan with the loans described in section 428C(a)(4)

23 and section 428C(d)(1)(C) only under such terms and con24 ditions as the Secretary shall establish pursuant to regula25 tions promulgated under this part. Loans made under this
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•S 1134 PCS

1 subsection shall be known as ‘Federal Direct Consolida2 tion Loans’.

3 ‘‘(h) BORROWER DEFENSES.—Notwithstanding any

4 other provision of law, the Secretary shall specify in regu5 lations (except as authorized under section 458(a)), which

6 acts or omissions of an institution of higher education a

7 borrower may assert as a defense to repayment of a loan

8 made under this part, except that in no event may a bor9 rower recover from the Secretary, in any action arising

10 from or relating to a loan made under this part, an

11 amount in excess of the amount such borrower has repaid

12 on such loan.

13 ‘‘(i) OPTICALLY IMAGED DOCUMENTS.—Records

14 maintained in accordance with section 484A(c) may be

15 used in any proceeding, as permitted pursuant to section

16 484A(c), with respect to a loan made under this part.

17 ‘‘(j) NONDISCHARGEABILITY IN BANKRUPTCY.—Not18 withstanding any other provision of law, a loan made

19 under this part shall not be dischargeable in any Federal

20 or State bankruptcy proceeding.

21 ‘‘(k) LOAN APPLICATION AND PROMISSORY NOTE.—

22 The common financial reporting form required in

23 483(a)(1) shall constitute the application for loans made

24 under this part. The Secretary shall develop, print, and
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•S 1134 PCS

1 distribute to participating institutions a standard promis2 sory note and loan disclosure form.

3 ‘‘(l) LOAN DISBURSEMENT.—

4 ‘‘(1) IN GENERAL.—Payments of loan proceeds

5 to students under this part shall be made by credit6 ing the student’s account for tuition and fees, and,

7 in the case of institutionally owned housing, room

8 and board. The student may elect to have the insti9 tution provide other such goods and services by cred10 iting the student’s account. Loan proceeds that re11 main after the application of the previous sentences

12 shall be delivered to the borrower in accordance with

13 section 427(a)(3).

14 ‘‘(2) PAYMENT PERIODS.—The Secretary shall

15 establish periods for the payments described in para16 graph (2) in a manner that is consistent with pay17 ment of basic grants under subpart 1 of part A.

18 ‘‘(m) FISCAL CONTROL AND FUND ACCOUNTABIL19 ITY.—

20 ‘‘(1) IN GENERAL.—(A) An institution shall

21 maintain financial records in a manner consistent

22 with records maintained for other programs under

23 title IV.
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1 ‘‘(B) An institution may maintain loan funds

2 under this part in the same account as other Fed3 eral student financial assistance.

4 ‘‘(2) PAYMENTS; REFUNDS; ENROLLMENT STA5 TUS.—Payments, refunds and enrollment status

6 shall be reconciled in a manner and schedule that is

7 consistent with the manner and schedule set forth

8 for the quarterly submission of a payment summary

9 report required of institutions participating in the

10 program assisted under subpart 1 of part A.

11 ‘‘(3) TRANSACTION HISTORIES.—All transaction

12 histories under this part shall be maintained using

13 the same system designated by the Secretary for the

14 provision of basic grants under subpart 1 of part A.

15 ‘‘(n) ENTITLEMENT PROVISION.—Except as provided

16 in section 454(a)(1)(C), an eligible student in attendance

17 at a participating institution (or a parent borrower) shall

18 have a contractual right against the United States to re19 ceive any loan under this part for which such student (or

20 parent) is eligible.

21 ‘‘SEC. 456. CONTRACTS.

22 ‘‘(a) CONTRACTS FOR SUPPLIES AND SERVICES.—

23 ‘‘(1) IN GENERAL.—The Secretary may award

24 1 or more contracts for services and supplies de25 scribed in subsection (b). The entities with which the
739

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1 Secretary may enter into such contracts shall in2 clude entities which the Secretary determines are

3 qualified to provide such services and supplies and

4 will comply with the procedures applicable to the

5 award of such contracts. In the case of awarding

6 contracts for the servicing of loans under this part,

7 the Secretary shall only enter into contracts with en8 tities that have extensive experience and a dem9 onstrated record in loan servicing and collection.

10 ‘‘(2) EXEMPTION.—The Secretary may award,

11 through June 30, 1998, contracts under this section

12 without regard to the requirements in section 303 of

13 the Federal Property and Administrative Services

14 Act of 1949, section 18 of the Office of Federal Pro15 curement Policy Act, and section 8(e) of the Small

16 Business Act, and the corresponding requirements of

17 the Federal Acquisition Regulations, if the Secretary

18 determines, on a case-by-case basis, that exemption

19 from such requirements is in the public interest and

20 necessary for the orderly transition from the loan

21 programs under part B to the direct student loan

22 program under this part.

23 ‘‘(3) APPLICATION OF REQUIREMENTS.—On

24 and after July 1, 1998, all statutory and regulatory
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•S 1134 PCS

1 requirements described in paragraph (2) shall apply

2 to the award of a contract under this section.

3 ‘‘(b) CONTRACTS FOR ORIGINATION, SERVICING, AND

4 DATA SYSTEMS.—The Secretary may enter into 1 or more

5 contracts for—

6 ‘‘(1) the alternative origination of loans to stu7 dents attending institutions with agreements to par8 ticipate in the program under this part (or their par9 ents), if such institutions do not have agreements

10 with the Secretary under section 454(b);

11 ‘‘(2) the servicing and collection of loans made

12 under this part;

13 ‘‘(3) the establishment and operation of 1 or

14 more data systems for the maintenance of records

15 on all loans made under this part;

16 ‘‘(4) services to assist in the orderly transition

17 from the loan programs under part B to the direct

18 student loan program under this part; and

19 ‘‘(5) such other aspects of the direct student

20 loan program as the Secretary determines are nec21 essary to ensure the successful operation of the pro22 gram.
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1 ‘‘SEC. 457. PLAN FOR IRS PARTICIPATION AND OTHER RE2 PAYMENT OPTIONS.

3 ‘‘(a) IN GENERAL.—The Secretaries of Education

4 and the Treasury shall, within 6 months of the date of

5 enactment of this part, submit a plan to the President

6 that—

7 ‘‘(1) provides for—

8 ‘‘(A) repayment of loans made under this

9 part through wage withholding by the Internal

10 Revenue Service;

11 ‘‘(B) procedures for the resolution of dis12 putes through the Secretary of Education; and

13 ‘‘(C) an alternate system of fees and pen14 alties, which shall not include the seizure of real

15 property, by the Internal Revenue Service for

16 the nonpayment of amounts due; and

17 ‘‘(2) evaluates the feasibility of other wage18 withholding repayment options for such loans.

19 ‘‘(b) PRESIDENTIAL DETERMINATION.—If the Presi20 dent determines that the implementation of 1 or more re21 payment options contained in the plan described in sub22 section (a) would further the purposes of this part, the

23 Secretaries of Education and the Treasury shall be au24 thorized to take such actions as are reasonable and nec25 essary to implement such repayment options, including en-
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•S 1134 PCS

1 tering into an agreement pursuant to section 6306 of the

2 Internal Revenue Code of 1986.

3 ‘‘(c) FUNDING.—The Secretary of Education may

4 use such amounts as the Secretary of Education deter5 mines necessary from the funds made available under sec6 tion 460 to implement the repayment options selected by

7 the President under subsection (b) and shall make avail8 able to the Secretary of the Treasury such amounts from

9 the funds made available under section 460 as the Sec10 retaries determine to be necessary to implement the repay11 ment options carried out by the Internal Revenue Service.

12 ‘‘SEC. 458. SECRETARIAL ACTIVITIES.

13 ‘‘(a) REGULATORY ACTIVITIES.—

14 ‘‘(1) NOTICE IN LIEU OF REGULATIONS FOR

15 FIRST YEAR OF PROGRAM.—The Secretary shall

16 publish in the Federal Register whatever standards,

17 criteria, and procedures, consistent with the provi18 sions of this part, that the Secretary, in consultation

19 with members of the higher education community,

20 determine are reasonable and necessary to the suc21 cessful implementation of the direct student loan

22 program under this part in academic year 1994–

23 1995. Section 431 of the General Education Provi24 sions Act shall not apply to the publication of such

25 standards, criteria, and procedures.
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1 ‘‘(2) NEGOTIATED RULEMAKING.—Beginning

2 with academic year 1995–1996, all standards, cri3 teria, procedures and regulations implementing this

4 part shall be subject to negotiated rulemaking, in5 cluding all such standards, criteria, procedures and

6 regulations promulgated from the date of enactment

7 of this part.

8 ‘‘(b) CLOSING DATE FOR APPLICATIONS FROM IN9 STITUTIONS.—The Secretary shall establish a date not

10 later than October 1, 1993, as the closing date for receiv11 ing applications from institutions of higher education de12 siring to participate in the direct loan program under this

13 part in academic year 1994–1995.

14 ‘‘(c) PUBLICATION OF LIST OF PARTICIPATING IN15 STITUTIONS AND CONTROL GROUP.—Not later than Jan16 uary 1, 1994, the Secretary shall publish in the Federal

17 Register a list of the institutions of higher education se18 lected to participate in the direct loan program under this

19 part in academic year 1994–1995.

20 ‘‘SEC. 459. REPORTS.

21 ‘‘(a) ANNUAL REPORTS.—The Secretary shall submit

22 to the Congress not later than July 1, 1994, and each

23 July 1 for the 4 succeeding years an annual report de24 scribing the progress and status of the direct loan pro25 gram.
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1 ‘‘(b) RESEARCH, DEMONSTRATION, AND EVALUA2 TION.—The Secretary may use a portion of the funds

3 made available pursuant to section 460 for research on,

4 or the demonstration or evaluation of, any aspects of the

5 program authorized by this part, including flexible repay6 ment plans.

7 ‘‘(c) GAO INTERIM FINAL REPORT.—The Comptrol8 ler General shall submit to the Congress not later than

9 January 1, 1997, an interim final report evaluating the

10 experience of the Department of Education, the participat11 ing institutions of higher education, students, and parents

12 with respect to the direct student loan program. The re13 port shall include—

14 ‘‘(1) the administrative costs, including costs

15 per loan, incurred by participating institutions of

16 higher education in administering the direct student

17 loan program;

18 ‘‘(2) the administrative costs, including costs

19 per loan, incurred by the Department of Education

20 and its contractors in carrying out its responsibil21 ities, including the costs of origination, data sys22 tems, servicing, and collection;

23 ‘‘(3) an evaluation of the effectiveness of the di24 rect student loan program in providing services to

25 students and parents, including loan application,
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•S 1134 PCS

1 loan origination, student financial aid packaging,

2 tracking of student status, responsiveness to student

3 inquiries and processing of deferments, forbearances,

4 and repayments;

5 ‘‘(4) the frequency and cost of borrower delin6 quency and default under the direct student loan

7 program and losses incurred by institutions of high8 er education and servicers, including losses caused

9 by improper origination or servicing of loans;

10 ‘‘(5) the timeliness of capital availability to in11 stitutions of higher education and of loans to stu12 dents and parents and the cost of loan capital;

13 ‘‘(6) an evaluation of the effectiveness of the in14 come contingent repayment option;

15 ‘‘(7) a comparison of the experience of institu16 tions of higher education, students, and parents par17 ticipating in direct student loan program with the

18 experience of institutions, students, and parents in

19 the control group described in subsection (e) with re20 spect to the subjects indicated in paragraphs (1)

21 through (6) of this subsection;

22 ‘‘(8) an evaluation of the administrative per23 formance of the Department;

24 ‘‘(9) an analysis of the reasons institutions se25 lected by the Secretary to participate in the direct
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•S 1134 PCS

1 student loan program chose not to participate and

2 the reasons institutions withdrew or were terminated

3 from such program;

4 ‘‘(10) an analysis of the experience of borrowers

5 with loans under both this part and part B and rec6 ommendations for the most effective repayment pro7 cedures for such borrowers;

8 ‘‘(11) a comparison of the cost of loan capital

9 for loans for the direct student loan program with

10 the cost of loan capital for the comparable programs

11 in part B of this title;

12 ‘‘(12) an analysis, where practicable, of the ex13 perience of institutions which participate as part of

14 a consortia; and

15 ‘‘(13) recommendations for modifications, con16 tinuation, expansion, suspension, or termination of

17 the direct student loan program or replacement of

18 all or some of the programs authorized by part B.

19 ‘‘(d) GAO FINAL REPORT.—The Comptroller Gen20 eral shall submit to the Congress not later than May 1,

21 1998, a final report evaluating the experience of the De22 partment of Education, the participating institutions of

23 higher education, and students with respect to the direct

24 student loan program. The report shall include the same

25 matters provided for in subsection (c) of this section.
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1 ‘‘(e) CONTROL GROUP.—To assist the Comptroller

2 General in preparing the reports required by subsections

3 (c) and (d) of this section, the Secretary shall select a con4 trol group of institutions of higher education, which rep5 resent a cross-section of all institutions of higher edu6 cation participating in part B of this title and which is

7 comparable to the cross-section of institutions of higher

8 education selected for participating in the direct student

9 loan program. The Secretary shall select the control

10 groups in the same manner that the institutions of higher

11 education are selected to participate in the direct student

12 loan program.

13 ‘‘(f) TREATMENT OF COSTS.—In reporting with re14 spect to costs in the reports required by subsections (c)

15 and (d) of this section, the Comptroller General shall re16 port separately the nonrecurrent costs such as start-up

17 costs associated with the direct student loan program, the

18 administrative costs incurred by institutions of higher edu19 cation in providing information to enable the Comptroller

20 General to prepare the reports required by subsections (c)

21 and (d) of this section and the normal costs of operating

22 the direct student loan program.

23 ‘‘SEC. 460. FUNDS FOR ADMINISTRATIVE EXPENSES.

24 ‘‘(a) IN GENERAL.—In each fiscal year beginning

25 with fiscal year 1994, there shall be available to the Sec-
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1 retary of Education from funds not otherwise appro2 priated, funds to be obligated for administrative costs

3 under this part, including the costs of the transition from

4 the loan programs under part B to the direct student loan

5 program under this part and transition support for the

6 expenses of guaranty agencies in servicing outstanding

7 loans in their portfolios and in guaranteeing new loans,

8 not to exceed $20,000,000 in fiscal year 1994,

9 $70,000,000 in fiscal year 1995, $170,000,000 in fiscal

10 year 1996, $305,000,000 in fiscal year 1997, and

11 $480,000,000 in fiscal year 1998. If in any fiscal year,

12 the Secretary determines that additional funds for admin13 istrative expenses are needed as a result of such transi14 tion, or the expansion of the direct student loan program

15 under this part, the Secretary is authorized to use funds

16 available under this section for any succeeding fiscal year

17 for such expenses, except that the total expenditures by

18 the Secretary shall not exceed $1,045,000,000 in fiscal

19 years 1994 through 1998.

20 ‘‘(b) AVAILABILITY.—Funds made available under

21 subsection (a) shall remain available until expended.

22 ‘‘(c) BUDGET JUSTIFICATION.—The Secretary shall

23 include in the Department of Education’s annual budget

24 justification to Congress a detailed description of the spe25 cific activities for which the funds made available by this
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1 section have been used in the prior and current years (if

2 applicable), the activities and costs planned for the budget

3 year, and the projection of activities and costs for each

4 remaining year for which administrative expenses under

5 this section are made available.

6 ‘‘(d) NOTIFICATION.—In the event the Secretary

7 finds it necessary to use the authority provided to the Sec8 retary under subsection (a) to draw funds for administra9 tive expenses from a future year’s funds, the Secretary

10 shall immediately notify the Committees on Appropria11 tions of the Senate and of the House of Representatives,

12 and the Labor and Human Resources Committee of the

13 Senate and the Education and Labor Committee of the

14 House of Representatives, of such action and explain the

15 reasons for such action.

16 ‘‘SEC. 460A. NATIONAL STUDENT LOAN REFORM COMMIS17 SION.

18 ‘‘(a) ESTABLISHMENT.—There is hereby established

19 a bipartisan commission to be known as the National Stu20 dent Loan Reform Commission (hereafter in this section

21 referred to as the ‘Commission’).

22 ‘‘(b) MEMBERSHIP.—

23 ‘‘(1) IN GENERAL.—The Commission shall be

24 composed of 15 members appointed by the President

25 with the advice and consent of the Senate who are
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1 representative of a broad combination of types of in2 stitutions of higher education, of whom at least 8

3 members shall be financial aid administrators.

4 ‘‘(2) PERIOD OF APPOINTMENT; VACANCIES.—

5 Members shall be appointed for the life of the Com6 mission. Any vacancy in the Commission shall not

7 affect its powers, but shall be filled in the same

8 manner as the original appointment.

9 ‘‘(3) INITIAL MEETING.—Not later than 30

10 days after the date on which all members of the

11 Commission have been appointed, the Commission

12 shall hold its first meeting.

13 ‘‘(4) MEETINGS.—The Commission shall meet

14 at the call of the Chairman.

15 ‘‘(5) QUORUM.—A majority of the members of

16 the Commission shall constitute a quorum, but a

17 lesser number of members may hold hearings.

18 ‘‘(6) CHAIRMAN AND VICE CHAIRMAN.—The

19 Commission shall select a Chairman and Vice Chair20 man from among its members.

21 ‘‘(c) DUTIES.—The Commission shall—

22 ‘‘(1) advise the President and the Congress on

23 the operation of the Federal Direct Student Loan

24 Program and the Federal Family Education Loan

25 Program;
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•S 1134 PCS

1 ‘‘(2) evaluate and report to the Congress re2 garding such programs on not less than an annual

3 basis; and

4 ‘‘(3) not later than January 1, 1997, report to

5 the President and the Congress with final rec6 ommendations on the advisability of replacing the

7 Federal Family Education Loan Program with di8 rect lending.

9 ‘‘(d) POWERS OF THE COMMISSION.—

10 ‘‘(1) HEARINGS.—The Commission may hold

11 such hearings, sit and act at such times and places,

12 take such testimony, and receive such evidence as

13 the Commission considers advisable to carry out the

14 purposes of this section.

15 ‘‘(2) INFORMATION FROM FEDERAL AGEN16 CIES.—The Commission may secure directly from

17 any Federal department or agency such information

18 as the Commission considers necessary to carry out

19 the provisions of this section. Upon request of the

20 Chairman of the Commission, the head of such de21 partment or agency shall furnish such information to

22 the Commission.

23 ‘‘(3) POSTAL SERVICES.—The Commission may

24 use the United States mails in the same manner and
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1 under the same conditions as other departments and

2 agencies of the Federal Government.

3 ‘‘(4) GIFTS.—The Commission may accept, use,

4 and dispose of gifts or donations of services or prop5 erty.

6 ‘‘(e) COMMISSION PERSONNEL MATTERS.—

7 ‘‘(1) COMPENSATION OF MEMBERS.—Each

8 member of the Commission who is not an officer or

9 employee of the Federal Government shall be com10 pensated at a rate equal to the daily equivalent of

11 the annual rate of basic pay prescribed for level IV

12 of the Executive Schedule under section 5315 of title

13 5, United States Code, for each day (including travel

14 time) during which such member is engaged in the

15 performance of the duties of the Commission. All

16 members of the Commission who are officers or em17 ployees of the United States shall serve without com18 pensation in addition to that received for their serv19 ices as officers or employees of the United States.

20 ‘‘(2) TRAVEL EXPENSES.—The members of the

21 Commission shall be allowed travel expenses, includ22 ing per diem in lieu of subsistence, at rates author23 ized for employees of agencies under subchapter I of

24 chapter 57 of title 5, United States Code, while
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•S 1134 PCS

1 away from their homes or regular places of business

2 in the performance of services for the Commission.

3 ‘‘(3) STAFF.—

4 ‘‘(A) IN GENERAL.—The Chairman of the

5 Commission may, without regard to the civil

6 service laws and regulations, appoint and termi7 nate an executive director and such other addi8 tional personnel as may be necessary to enable

9 the Commission to perform its duties. The em10 ployment of an executive director shall be sub11 ject to confirmation by the Commission.

12 ‘‘(B) COMPENSATION.—The Chairman of

13 the Commission may fix the compensation of

14 the executive director and other personnel with15 out regard to the provisions of chapter 51 and

16 subchapter III of chapter 53 of title 5, United

17 States Code, relating to classification of posi18 tions and General Schedule pay rates, except

19 that the rate of pay for the executive director

20 and other personnel may not exceed the rate

21 payable for level V of the Executive Schedule

22 under section 5316 of such title.

23 ‘‘(4) DETAIL OF GOVERNMENT EMPLOYEES.—

24 Any Federal Government employee may be detailed

25 to the Commission without reimbursement, and such
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1 detail shall be without interruption or loss of civil

2 service status or privilege.

3 ‘‘(5) PROCUREMENT OF TEMPORARY AND

4 INTERMITTENT SERVICES.—The Chairman of the

5 Commission may procure temporary and intermit6 tent services under section 3109(b) of title 5, United

7 States Code, at rates for individuals which do not

8 exceed the daily equivalent of the annual rate of

9 basic pay prescribed for level V of the Executive

10 Schedule under section 5316 of such title.

11 ‘‘(6) AUTHORITY TO CONTRACT.—Subject to

12 the Federal Property and Administrative Services

13 Act of 1949, the Commission is authorized to enter

14 into contracts with Federal and State agencies, pri15 vate firms, institutions and individuals for the con16 duct of activities necessary to the discharge of its

17 duties and responsibilities.

18 ‘‘(7) SOURCE OF ADMINISTRATIVE SUPPORT.—

19 Financial and administrative support services (in20 cluding those related to budget and accounting, fi21 nancial reporting, payroll, and personnel) shall be

22 provided to the Commission by the General Services

23 Administration (or other organization the Commis24 sion determines appropriate) for which payment

25 shall be made in advance or by reimbursement, from
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1 funds of the Commission, in such amounts as may

2 be agreed by the Chairman of the Commission and

3 the Administrator of General Services (or head of

4 another organization the Commission determines ap5 propriate).

6 ‘‘(f) TERMINATION OF THE COMMISSION.—The Com7 mission shall terminate 18 months after the date on which

8 the Commission submits its report under subsection

9 (c)(3).

10 ‘‘(g) FUNDS FOR EXPENSES OF THE COMMISSION.—

11 In each fiscal year beginning with fiscal year 1994, there

12 shall be available to the Secretary from funds not other13 wise appropriated, funds to be obligated for the costs of

14 activities assisted under this section, not to exceed

15 $2,000,000 in each of the fiscal years 1994, 1995, 1996,

16 1997 and 1998.’’.

17 CHAPTER 2—STUDENT LOAN SAVINGS

18 SEC. 12021. SECRETARY’S EQUITABLE SHARE.

19 Section 428(c)(6)(A)(ii) of the Act (20 U.S.C.

20 1078(c)(6)(A)(ii)) is amended by striking ‘‘30 percent’’

21 and inserting ‘‘27 percent’’.

22 SEC. 12022. INTEREST RATES.

23 Section 427A of the Higher Education Act of 1965

24 (20 U.S.C. 1077a) is amended—
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1 (1) in subsection (c)(4), by adding at the end

2 the following new subparagraph:

3 ‘‘(E) Notwithstanding subparagraphs (A)

4 and (D) for any loan made pursuant to section

5 428B for which the first disbursement is made

6 on or after July 1, 1994—

7 ‘‘(i) subparagraph (B) shall be applied

8 by substituting ‘‘3.1’’ for ‘‘3.25’’; and

9 ‘‘(ii) the interest rate shall not exceed

10 9 percent.’’;

11 (2) by redesignating subsections (f), (g) and (h)

12 as subsections (g), (h) and (j), respectively;

13 (3) by adding after subsection (e) the following

14 new subsection:

15 ‘‘(f) INTEREST RATES FOR NEW LOANS AFTER JULY

16 1, 1994.—

17 ‘‘(1) IN GENERAL.—Notwithstanding sub18 sections (a), (b), (d) and (e) of this section, with re19 spect to any loan made, insured, or guaranteed

20 under this part (other than a loan made pursuant to

21 sections 428B and 428C) for which the first dis22 bursement is made on or after July 1, 1994, the ap23 plicable rate of interest shall, during any 12-month

24 period beginning on July 1 and ending on June 30,
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1 be determined on the preceding June 1 and be equal

2 to—

3 ‘‘(A) the bond equivalent rate of 91-day

4 Treasury bills auctioned at the final auction

5 held prior to such June 1; plus

6 ‘‘(B) 3.10 percent,

7 except that such rate shall not exceed 8.25 percent.

8 ‘‘(2) CONSULTATION.—The Secretary shall de9 termine the applicable rate of interest under para10 graph (1) after consultation with the Secretary of

11 the Treasury and shall publish such rate in the Fed12 eral Register as soon as practicable after the date of

13 determination.’’; and

14 (4) by inserting after subsection (h) (as redesig15 nated in paragraph (2)) the following new sub16 section:

17 ‘‘(i) IN-SCHOOL AND GRACE PERIOD INTEREST

18 RATES.—

19 ‘‘(1) APPLICABLE RATE.—Notwithstanding any

20 other provision of this section, with respect to any

21 loan for which the first disbursement is made on or

22 after October 1, 1993, the applicable rate of interest

23 for interest which accrues—

24 ‘‘(A) prior to the beginning of the repay25 ment period of the loan; or
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1 ‘‘(B) during the period in which principal

2 need not be paid (whether or not such principal

3 is in fact paid) by reason of a provision de4 scribed in section 428(b)(1)(M) or

5 427(a)(2)(C),

6 shall not exceed the rate determined under para7 graph (2).

8 ‘‘(2) METHOD OF CALCULATION.—For purposes

9 of paragraph (1) the rate determined under this

10 paragraph shall, during any 12-month period begin11 ning on July 1 and ending on June 30, be deter12 mined on the preceding June 1 and be equal to—

13 ‘‘(A) the bond equivalent rate of 91-day

14 Treasury bills auctioned at the final auction

15 prior to such June 1; plus

16 ‘‘(B) 2.5 percent,

17 except that such rate shall not exceed 8.25 per18 cent.’’.

19 SEC. 12023. LENDER AND STUDENT LOAN FEES.

20 Section 438 of the Act (20 U.S.C. 1087–1) is amend21 ed—

22 (1) in the heading of subsection (c) by inserting

23 ‘‘FROM STUDENTS’’ after ‘‘ORIGINATION FEES’’;

24 (2) in subsection (c)—

25 (A) in paragraph (2)—
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1 (i) by striking ‘‘428B,’’;

2 (ii) by inserting ‘‘, and part D’’ after

3 ‘‘439(o)’’; and

4 (iii) by striking ‘‘5 percent’’ and in5 serting ‘‘3.0 percent’’;

6 (B) in paragraph (6), by striking ‘‘5 per7 cent’’ and inserting ‘‘3.0 percent’’;

8 (3) by redesignating subsections (d) and (e) as

9 subsections (e) and (f), respectively; and

10 (4) by inserting after subsection (c) the follow11 ing new subsection:

12 ‘‘(d) LOAN FEES FROM LENDERS.—

13 ‘‘(1) DEDUCTION FROM INTEREST AND SPECIAL

14 ALLOWANCE SUBSIDIES.—Notwithstanding sub15 section (b), the total amount of interest and special

16 allowance payable under section 428(a)(3)(A) and

17 subsection (b) of this section, respectively, to any

18 holder shall be reduced by the Secretary by a loan

19 fee in an amount determined in accordance with

20 paragraph (2) of this subsection. If the total amount

21 of interest and special allowance payable under sec22 tion 428(a)(3)(A) and subsection (b) of this section,

23 respectively, is less than the amount of such loan

24 fee, then the Secretary shall deduct such excess
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1 amount from subsequent quarters’ payments until

2 the total amount has been deducted.

3 ‘‘(2) AMOUNT OF LOAN FEES.—With respect to

4 any loan under this part (other than loans made

5 under sections 428B, 428C and 439(o)) for which a

6 note or other written evidence of the loan was sent

7 or delivered to the borrower for signing on or after

8 October 1, 1993, the amount of the loan fee which

9 shall be deducted under paragraph (1) shall be equal

10 to .50 percent of the principal amount of the loan.

11 ‘‘(3) PLUS, CONSOLIDATION, SLMA LOANS.—

12 With respect to any loans made under section 428B,

13 428C, and 439 on or after October 1, 1993, each eli14 gible lender under this part shall pay to the Sec15 retary a loan fee of .50 percent of the principal

16 amount of the loan.

17 ‘‘(4) DISTRIBUTION OF LOAN FEES.—The Sec18 retary shall deposit all fees collected pursuant to

19 paragraph (3) into the insurance fund established in

20 section 431.’’.

21 SEC. 12024. OFFSET FEE.

22 Subsection (h) of section 439 of the Act (20 U.S.C.

23 1087–2(h)) is amended by adding at the end the following

24 new paragraph:
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1 ‘‘(6) OFFSET FEE.—(A) The Association shall

2 pay to the Secretary, on a monthly basis, an offset

3 fee calculated on an annual basis in an amount

4 equal to 0.30 percent of the principal amount of

5 each loan made, insured or guaranteed under this

6 part which the Association holds on or after the date

7 of enactment of this paragraph.

8 ‘‘(B) The Secretary shall deposit all fees col9 lected pursuant to subparagraph (A) into the insur10 ance fund established in section 431.’’.

11 SEC. 12025. ELIMINATION OF TAX EXEMPT FLOOR.

12 Section 438(b)(2)(B) of the Act (20 U.S.C. 1087–

13 1(b)(2)(B)) is amended by adding at the end the following

14 new clause:

15 ‘‘(iv) Notwithstanding clauses (i) and (ii), the

16 quarterly rate of the special allowance for holders of

17 loans which are financed with funds obtained by the

18 holder from the issuance of obligations originally is19 sued on or after October 1, 1993, the income from

20 which is excluded from gross income under the In21 ternal Revenue Code of 1986, shall be 85 percent of

22 the quarterly rate of the special allowance estab23 lished under subparagraph (A). Such rate shall also

24 apply to holders of loans which were made or pur25 chased with funds obtained by the holder from col-
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1 lections or default reimbursements on, or interests

2 or other income pertaining to, eligible loans made or

3 purchased with funds described in the preceding sen4 tence of this subparagraph or from income on the

5 investment of such funds.’’.

6 SEC. 12026. REDUCTION IN INTEREST RATE FOR CONSOLI7 DATION LOANS; REBATE FEE.

8 (a) AMENDMENT.—Section 428C of the Act (20

9 U.S.C. 1078–3) is amended—

10 (1) in paragraph (1) of subsection (c)—

11 (A) in subparagraph (A), by striking ‘‘or

12 (C)’’;

13 (B) by amending subparagraph (B) to read

14 as follows:

15 ‘‘(B) A consolidation loan made on or after

16 October 1, 1993, shall bear interest on the un17 paid principal balance of the loan, during any

18 12-month period beginning on July 1 and end19 ing on June 30, determined on the preceding

20 June 1, which interest shall be equal to—

21 ‘‘(i) the bond equivalent rate of 91-

22 day Treasury bills auctioned at the final

23 auction held prior to such June 1; plus

24 ‘‘(ii) 3.10 percent,
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1 except that such rate shall not exceed 9 per2 cent.’’; and

3 (C) by striking subparagraph (C); and

4 (2) by adding at the end the following new sub5 section:

6 ‘‘(f) INTEREST PAYMENT REBATE FEE.—

7 ‘‘(1) IN GENERAL.—Each holder of a consolida8 tion loan under this section shall pay to the Sec9 retary, on a monthly basis and in such manner as

10 the Secretary shall prescribe, a rebate fee calculated

11 on an annual basis equal to 0.70 percent of the prin12 cipal plus accrued unpaid interest on such loan.

13 ‘‘(2) DEPOSIT.—The Secretary shall deposit all

14 fees collected pursuant to subsection (a) into the in15 surance fund established in section 431.’’.

16 (b) ENFORCEMENT.—Subsection (d) of section 435

17 of the Act (20 U.S.C. 1085(d)) is amended—

18 (1) in the matter preceding subparagraph (A)

19 of paragraph (1), by striking ‘‘(5)’’ and inserting

20 ‘‘(6)’’; and

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

22 paragraph:

23 ‘‘(6) REBATE FEE REQUIREMENT.—To be an

24 eligible lender under this part, an eligible lender
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1 shall pay rebate fees in accordance with section

2 428C(f).’’.

3 SEC. 12027. INSURANCE PREMIUM.

4 (a) INSURANCE PREMIUM.—Section 428(b)(1)(H) of

5 the Act (20 U.S.C. 1078(b)(1)(H)) is amended by striking

6 ‘‘3 percent’’ and inserting ‘‘1 percent’’.

7 (b) REINSURANCE FEES.—Section 428(c) of the Act

8 is amended—

9 (1) by striking paragraph (9); and

10 (2) by redesignating paragraph (10) as para11 graph (9).

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

13 this section shall be effective on July 1, 1994.

14 SEC. 12028. LOAN TRANSFER FEE.

15 Section 428(b)(2) of the Act (20 U.S.C. 1078(b)(2))

16 is amended—

17 (1) by striking ‘‘and’’ at the end of subpara18 graph (E);

19 (2) by striking the period at the end of sub20 paragraph (F) and inserting ‘‘; and’’; and

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

22 new subparagraph:

23 ‘‘(G) provide that, if a lender or holder, on

24 or after October 1, 1993, sells, transfers, or as25 signs a loan under this part, then the transferee
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1 shall pay to the Secretary a transfer fee in an

2 amount equal to 0.25 percent the principal and

3 accrued unpaid interest of the loan, which

4 transfer fee shall be deposited into the insur5 ance fund established in section 431, except

6 that the provisions of this subparagraph shall

7 not apply to any such sale, transfer or assign8 ment by a lender or holder to such lender’s or

9 holder’s affiliate or pursuant to—

10 ‘‘(i) a merger or other consolidation

11 transaction; or

12 ‘‘(ii) a sale or other transfer of all or

13 any substantial portion of such lender’s or

14 holder’s business or student lending busi15 ness.’’.

16 SEC. 12029. RISK SHARING.

17 (a) GUARANTY AGENCY REINSURANCE PERCENT18 AGE.—Section 428(c)(1) of the Act (20 U.S.C.

19 1078(c)(1)) is amended—

20 (1) in subparagraph (A), by striking ‘‘100 per21 cent’’ and inserting ‘‘98 percent’’;

22 (2) in subparagraph (B)(i), by striking ‘‘90 per23 cent’’ and inserting ‘‘88 percent’’;

24 (3) in subparagraph (B)(ii), by striking ‘‘80

25 percent’’ and inserting ‘‘78 percent’’; and
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1 (4) by adding at the end the following new sub2 paragraphs:

3 ‘‘(E) Notwithstanding any other provisions

4 of this section, in the case of a loan made pur5 suant to a lender of last resort program, the

6 Secretary shall apply the provisions of—

7 ‘‘(i) the fourth sentence of subpara8 graph (A) by substituting ‘100 percent’ for

9 ‘98 percent’;

10 ‘‘(ii) subparagraph (B)(i) by sub11 stituting ‘100 percent’ for ‘88 percent’;

12 and

13 ‘‘(iii) subparagraph (B)(ii) by sub14 stituting ‘100 percent’ for ‘78 percent’.

15 ‘‘(F) Notwithstanding any other provisions

16 of this section, in the case of an outstanding

17 loan transferred to a guaranty agency from an18 other guaranty agency pursuant to a plan ap19 proved by the Secretary in response to the in20 solvency of the latter such guarantee agency,

21 the Secretary shall apply the provision of—

22 ‘‘(i) the fourth sentence of subpara23 graph (A) by substituting ‘100 percent’ for

24 ‘98 percent’;
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1 ‘‘(ii) subparagraph (B)(i) by sub2 stituting ‘90 percent’ for ‘88 percent’; and

3 ‘‘(iii) subparagraph (B)(ii) by sub4 stituting ‘80 percent’ for ‘78 percent’.’’.

5 (b) RISK SHARING BY THE STUDENT LOAN MARKET6 ING ASSOCIATION.—Section 428(b)(1)(G) of the Act (20

7 U.S.C. 1078(b)(1)(G)) is amended by inserting before the

8 semicolon at the end thereof the following: ‘‘, except that

9 for loans held by the Student Loan Marketing Association

10 (other than loans made with advances to guaranty agen11 cies pursuant to section 439(p)) such percentage shall be

12 95 percent’’.

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

14 this section shall apply to any loan made on or after Octo15 ber 1, 1993.

16 SEC. 12030. PLUS LOAN AMOUNTS AND DISBURSEMENTS.

17 (a) LOAN AMOUNTS.—

18 (1) AMENDMENT.—Section 428B(b) of the Act

19 (20 U.S.C. 1078–2(b)) is amended to read as fol20 lows:

21 ‘‘(b) LIMITATIONS ON AMOUNTS OF LOANS.—

22 ‘‘(1) ANNUAL LIMIT.—Subject to paragraph

23 (2), the maximum amount parents may borrow for

24 one student in any academic year or its equivalent
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1 (as defined by regulation of the Secretary) is

2 $10,000.

3 ‘‘(2) LIMITATION BASED ON NEED.—Any loan

4 under this section may be counted as part of the ex5 pected family contribution in the determination of

6 need under this title, but no loan may be made to

7 any parent under this section for any academic year

8 in excess of (A) the student’s estimated cost of at9 tendance, minus (B) other financial aid as certified

10 by the eligible institution under section

11 428(a)(2)(A). The annual insurable limit on account

12 of any student shall not be deemed to be exceeded

13 by a line of credit under which actual payments to

14 the borrower will not be made in any year in excess

15 of the annual limit.’’.

16 (2) EFFECTIVE DATE.—The amendment made

17 by paragraph (1) shall be effective for loans made on

18 or after July 1, 1994.

19 (b) MULTIPLE DISBURSEMENT REQUIRED.—

20 (1) AMENDMENT.—The matter preceding para21 graph (1) of section 428B(c) of the Act (20 U.S.C.

22 1078–2(c)) is amended by inserting ‘‘shall be dis23 bursed in accordance with the requirements of sec24 tion 428G and’’ after ‘‘under this section’’.
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1 (2) CONFORMING AMENDMENTS.—Section

2 428G(e) of the Act (20 U.S.C. 1078–7(e) is amend3 ed—

4 (A) by striking ‘‘PLUS, CONSOLIDATION,’’

5 and inserting ‘‘CONSOLIDATION’’; and

6 (B) by striking ‘‘section 428B or 428C’’

7 and inserting ‘‘section 428C’’.

8 CHAPTER 3—CONFORMING AMENDMENTS

9 Subchapter A—Conforming Amendments to

10 the Higher Education Act of 1965

11 SEC. 12041. PRESERVING LOAN ACCESS.

12 (a) PURPOSE.—It is the purpose of the amendments

13 made by this section to provide the Secretary with flexible

14 authority as needed to preserve access to student and par15 ent loans under part B of title IV of the Act during the

16 transition from the Federal Family Education Loan Pro17 gram under such part to the Federal Direct Student Loan

18 Program under part D of such title.

19 (b) ADVANCES TO GUARANTY AGENCIES FOR LEND20 ER-OF-LAST-RESORT SERVICES.—

21 (1) AMENDMENT.—Section 428(j) of the Act

22 (20 U.S.C. 1078(j)) is amended by adding at the

23 end the following new paragraph:

24 ‘‘(4) ADVANCES TO GUARANTY AGENCIES FOR LEND25 ER-OF-LAST-RESORT SERVICES DURING TRANSITION TO
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1 DIRECT LENDING.—(A) In order to ensure the availability

2 of loan capital during the transition from the Federal

3 Family Education Loan Program under this part to the

4 Federal Direct Student Loan Program under part D of

5 this title, the Secretary is authorized to provide a guaranty

6 agency with additional advance funds in accordance with

7 section 422(c)(7), with such restrictions on the use of such

8 funds as are determined appropriate by the Secretary, in

9 order to ensure that the guaranty agency will make loans

10 as the lender-of-last-resort. Such agency shall make such

11 loans in accordance with this subsection and the require12 ments of the Secretary.

13 ‘‘(B) Notwithstanding any other provision in this

14 part, a guaranty agency serving as a lender-of-last-resort

15 under this paragraph shall be paid a fee, established by

16 the Secretary, for making such loans in lieu of interest

17 and special allowance subsidies, and shall be required to

18 assign such loans to the Secretary on demand. Upon such

19 assignment, the portion of the advance represented by the

20 loans assigned shall be considered repaid by such guaranty

21 agency.’’.

22 (2) CONFORMING AMENDMENT.—Section

23 422(c)(7) of the Act (20 U.S.C. 1072(c)(7)) is

24 amended by striking all beginning with ‘‘to a guar-
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1 anty agency’’ through the period and inserting ‘‘to

2 a guaranty agency—

3 ‘‘(A) in accordance with section 428(j), in order

4 to ensure that the guaranty agency shall make loans

5 as the lender-of-last-resort during the transition

6 from the Federal Family Education Loan Program

7 under this part to the Federal Direct Student Loan

8 Program under part D of this title; or

9 ‘‘(B) if the Secretary is seeking to terminate

10 the guaranty agency’s agreement, or assuming the

11 guaranty agency’s functions, in accordance with sec12 tion 428(c)(10)(F)(v), in order to assist the agency

13 in meeting its immediate cash needs, ensure the un14 interrupted payment of claims, or ensure that the

15 guaranty agency shall make loans as described in

16 subparagraph (A);’’.

17 (c) LENDER REFERRAL SERVICES.—Section 428(e)

18 of the Act (20 U.S.C. 1078(e)) is amended—

19 (1) in paragraph (1)—

20 (A) by amending the paragraph heading to

21 read as follows: ‘‘IN GENERAL; AGREEMENTS

22 WITH GUARANTY AGENCIES.—’’;

23 (B) by inserting the subparagraph designa24 tion ‘‘(A)’’ immediately before ‘‘The Secretary’’;
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1 (C) by striking ‘‘in any State’’ and insert2 ing ‘‘with which the Secretary has an agree3 ment under subparagraph (B)’’; and

4 (D) by adding at the end the following new

5 subparagraph:

6 ‘‘(B)(i) The Secretary may enter into

7 agreements with guaranty agencies that meet

8 standards established by the Secretary to pro9 vide lender referral services in geographic areas

10 specified by the Secretary. Such guaranty agen11 cies shall be paid in accordance with paragraph

12 (3) for such services.

13 ‘‘(ii) The Secretary shall publish in the

14 Federal Register whatever standards, criteria,

15 and procedures, consistent with the provisions

16 of this part and part D of this title, the Sec17 retary determines are reasonable and necessary

18 to provide lender referral services under this

19 subsection and ensure loan access to student

20 and parent borrowers during the transition

21 from the loan programs under this part to the

22 direct student loan programs under part D of

23 this title. Section 431 of the General Education

24 Provisions Act shall not apply to the publication

25 of such standards, criteria, and procedures.’’;
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1 (2) in paragraph (2)—

2 (A) in the matter preceding subparagraph

3 (A), by striking ‘‘in a State’’ and inserting

4 ‘‘with which the Secretary has an agreement

5 under paragraph (1)(B)’’;

6 (B) by amending subparagraph (A) to read

7 as follows:

8 ‘‘(A)(i) such student is either a resident of,

9 or is accepted for enrollment in, or is attending,

10 an eligible institution located in a geographic

11 area for which the Secretary (I) determines

12 that loans are not available to all eligible stu13 dents, and (II) has entered into an agreement

14 with a guaranty agency under paragraph (1)(B)

15 to provide lender referral services; and’’;

16 (3) in paragraph (3), by striking ‘‘The’’ and in17 serting ‘‘From funds available for costs of transition

18 under section 460 of the Act, the’’; and

19 (4) by striking paragraph (5).

20 (d) STUDENT LOAN MARKETING ASSOCIATION.—

21 Section 439(q) of the Act (20 U.S.C. 1087–2(q)) is

22 amended—

23 (1) in paragraph (1)(A)—

24 (A) in the first sentence, by striking ‘‘the

25 Association or its designated agent may begin
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1 making loans’’ and inserting ‘‘the Association

2 or its designated agent shall, not later than

3 July 1, 1994, begin making loans to such eligi4 ble borrowers’’; and

5 (B) by striking the second sentence;

6 (2) in paragraph (2)(A), by striking ‘‘the Asso7 ciation or its designated agent may’’ and inserting

8 ‘‘the Association or its designated agent shall, not

9 later than July 1, 1994,’’; and

10 (3) in paragraph (3), by striking all beginning

11 with ‘‘that—’’ through the period at the end of sub12 paragraph (B) and inserting ‘‘that the conditions

13 that caused the implementation of this subsection

14 have ceased to exist.’’.

15 SEC. 12042. GUARANTY AGENCY RESERVES.

16 Section 422 of the Act (20 U.S.C. 1072) is amended

17 by adding at the end the following new subsection:

18 ‘‘(g) PRESERVATION OF GUARANTY AGENCY RE19 SERVES.—

20 ‘‘(1) AUTHORITY TO RECOVER FUNDS.—Not21 withstanding any other provision of law, the reserve

22 funds of the guaranty agencies, and any assets pur23 chased with such reserve funds, regardless of who

24 holds or controls the reserves or assets, shall be con25 sidered to be the property of the United States to
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1 be used in the operation of the program authorized

2 by this part or the program authorized by part D of

3 this title. However, the Secretary may not require

4 the return of all reserve funds of a guaranty agency

5 to the Secretary unless the Secretary determines

6 that such return is in the best interest of the oper7 ation of the program authorized by this part or the

8 program authorized by part D of this title, or to en9 sure the proper maintenance of such agency’s funds

10 or assets or the orderly termination of the guaranty

11 agency’s operations and the liquidation of its assets.

12 The reserves shall be maintained by each guaranty

13 agency to pay program expenses and contingent li14 abilities, as authorized by the Secretary, except that

15 the Secretary may—

16 ‘‘(A) direct a guaranty agency to return to

17 the Secretary a portion of its reserve fund

18 which the Secretary determines is unnecessary

19 to pay the program expenses and contingent li20 abilities of the guaranty agency;

21 ‘‘(B) direct the guaranty agency to require

22 the return, to the guaranty agency or to the

23 Secretary, of any reserve funds or assets held

24 by, or under the control of, any other entity,

25 which the Secretary determines are necessary to
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1 pay the program expenses and contingent liabil2 ities of the guaranty agency, or which are re3 quired for the orderly termination of the guar4 anty agency’s operations and the liquidation of

5 its assets; and

6 ‘‘(C) direct a guaranty agency, or such

7 agency’s officers or directors, to cease any ac8 tivities involving expenditure, use or transfer of

9 the guaranty agency’s reserve funds or assets

10 which the Secretary determines is a

11 misapplication, misuse, or improper expenditure

12 of such funds or assets.

13 ‘‘(2) TERMINATION PROVISIONS IN CON14 TRACTS.—(A) To ensure that the funds and assets

15 of the guaranty agency are preserved, any contract

16 with respect to the administration of a guaranty

17 agency’s reserve funds, or the administration of any

18 assets purchased or acquired with the reserve funds

19 of the guaranty agency, that is entered into or ex20 tended by the guaranty agency, or any other party

21 on behalf of or with the concurrence of the guaranty

22 agency, after the date of enactment of this sub23 section shall provide that the contract is terminable

24 by the Secretary upon 30 days notice to the con25 tracting parties if the Secretary determines that
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1 such contract includes an impermissible transfer of

2 the reserve funds or assets, or is otherwise inconsist3 ent with the terms or purposes of this section.

4 ‘‘(B) The Secretary may direct a guaranty

5 agency to suspend or cease activities under any con6 tract entered into by or on behalf of such agency

7 after January 1, 1993, if the Secretary determines

8 that the misuse or improper expenditure of such

9 guaranty agency’s funds or assets or such contract

10 provides unnecessary or improper benefits to such

11 agency’s officers or directors.

12 ‘‘(3) PENALTIES.—Violation of any direction is13 sued by the Secretary under this subsection may be

14 subject to the penalties described in section 490 of

15 this Act.’’.

16 SEC. 12043. TERMS OF LOANS.

17 (a) AMENDMENT.—Section 428 of the Act (20 U.S.C.

18 1078) is amended—

19 (1) in subsection (b)(1)(D), by striking ‘‘be

20 subject to’’ through the semicolon and inserting ‘‘be

21 subject to income contingent repayment in accord22 ance with subsection (m);’’; and

23 (2) in subsection (m)—

24 (A) by amending paragraph (1) to read as

25 follows:
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1 ‘‘(1) AUTHORITY OF SECRETARY TO RE2 QUIRE.—The Secretary may require any borrower

3 who has defaulted on a loan made under this part

4 that is assigned to the Secretary under subsection

5 (c)(8) to repay that loan under an income contingent

6 repayment plan, the terms and conditions of which

7 shall be established by the Secretary and the same

8 as, or similar to, an income contingent repayment

9 plan established for purposes of part D of this

10 title.’’; and

11 (B) by striking paragraphs (2), (3), and

12 (4) and inserting the following new paragraph:

13 ‘‘(2) LOANS FOR WHICH INCOME CONTINGENT

14 REPAYMENT MAY BE REQUIRED.—A loan made

15 under this part may be required to be repaid under

16 this subsection if the note or other evidence of the

17 loan has been assigned to the Secretary pursuant to

18 subsection (c)(8).’’.

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

20 this section shall be effective for loans made in accordance

21 with section 428 for periods of instruction beginning on

22 or after July 1, 1993, or made on or after July 1, 1993,

23 in the case of loans made in accordance with section 428B

24 or 428C of the Act.
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1 SEC. 12044. ASSIGNMENT OF LOANS.

2 Section 428(c)(8) of the Act (20 U.S.C. 1078(c)(8))

3 is amended—

4 (1) in the first sentence, by inserting the sub5 paragraph designation ‘‘(A)’’ before ‘‘If the’’;

6 (2) by striking the second and third sentences;

7 and

8 (3) by adding at the end the following new sub9 paragraph:

10 ‘‘(B) An orderly transition from the Fed11 eral Family Education Loan Program under

12 this part to the Federal Direct Student Loan

13 Program under part D of this title shall be

14 deemed to be in the Federal fiscal interest, and

15 a guaranty agency shall promptly assign loans

16 to the Secretary under this paragraph upon the

17 Secretary’s request.’’.

18 SEC. 12045. TERMINATION OF GUARANTY AGENCY AGREE19 MENTS; ASSUMPTION OF GUARANTY AGENCY

20 FUNCTIONS BY THE SECRETARY.

21 Section 428(c)(9) of the Act (as redesignated by sec22 tion 12027(b)(2)) (20 U.S.C. 1078(c)(10)) is amended—

23 (1) in subparagraph (C), by inserting ‘‘, as ap24 propriate,’’ after ‘‘the Secretary shall require’’;

25 (2) in subparagraph (D)—
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1 (A) by inserting the clause designation

2 ‘‘(i)’’ before ‘‘Each’’;

3 (B) by striking ‘‘Each’’ and inserting ‘‘If

4 the Secretary is not seeking to terminate the

5 guaranty agency’s agreement under subpara6 graph (E), or assuming the guaranty agency’s

7 functions under subparagraph (F), a’’;

8 (C) by adding at the end the following new

9 clause:

10 ‘‘(ii) If the Secretary is seeking to ter11 minate the guaranty agency’s agreement

12 under subparagraph (E), or assuming the

13 guaranty agency’s functions under sub14 paragraph (F), a management plan de15 scribed in subparagraph (C) shall include

16 the means by which the Secretary and the

17 guaranty agency shall work together to en18 sure the orderly termination of the oper19 ations, and liquidation of the assets, of the

20 guaranty agency.’’;

21 (3) in subparagraph (E)—

22 (A) in clause (ii), by striking ‘‘or’’ after

23 the semicolon;

24 (B) in clause (iii), by striking the period

25 and inserting a semicolon; and
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1 (C) by adding at the end the following new

2 clauses:

3 ‘‘(iv) the Secretary determines that

4 such action is necessary to protect the

5 Federal fiscal interest;

6 ‘‘(v) the Secretary determines that

7 such action is necessary to ensure the con8 tinued availability of loans to student or

9 parent borrowers; or

10 ‘‘(vi) the Secretary determines that

11 such action is necessary to ensure an or12 derly transition from the loan programs

13 under this part to the direct student loan

14 programs under part D of this title.’’;

15 (4) in subparagraph (F)—

16 (A) in the matter preceding clause (i), by

17 striking ‘‘Except as provided in subparagraph

18 (G), if’’ and inserting ‘‘If’’;

19 (B) by amending clause (v) to read as fol20 lows:

21 ‘‘(v) provide the guaranty agency with

22 additional advance funds in accordance

23 with section 422(c)(7), with such restric24 tions on the use of such funds as is deter-
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1 mined appropriate by the Secretary, in

2 order to—

3 ‘‘(I) meet the immediate cash

4 needs of the guaranty agency;

5 ‘‘(II) ensure the uninterrupted

6 payment of claims; or

7 ‘‘(III) ensure that the guaranty

8 agency will make loans as the lender9 of-last-resort, in accordance with sub10 section (j)(4);’’;

11 (C) in clause (vi)—

12 (i) by striking ‘‘and to avoid’’ and in13 serting ‘‘, to avoid’’;

14 (ii) by striking the period and insert15 ing a comma and ‘‘and to ensure an or16 derly transition from the loan programs

17 under this part to the direct student loan

18 programs under part D of this title.’’; and

19 (iii) by redesignating such clause as

20 clause (vii); and

21 (D) by inserting after clause (v) the follow22 ing new clause:

23 ‘‘(vi) use all funds and assets of the

24 guaranty agency to assist in the activities

25 undertaken in accordance with this sub-
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1 paragraph and take appropriate action to

2 require the return, to the guaranty agency

3 or the Secretary, of any funds or assets

4 provided by the guaranty agency, under

5 contract or otherwise, to any person or or6 ganization; or’’;

7 (5) by striking subparagraph (G);

8 (6) by redesignating subparagraphs (H), (I),

9 and (J) as subparagraphs (I), (J), and (K), respec10 tively;

11 (7) by inserting after subparagraph (F) the fol12 lowing new subparagraphs:

13 ‘‘(G) Notwithstanding any other provision

14 of law, if the Secretary has terminated or is

15 seeking to terminate a guaranty agency’s agree16 ment under subparagraph (E), or has assumed

17 a guaranty agency’s functions under subpara18 graph (F)—

19 ‘‘(i) such guaranty agency may not

20 file for bankruptcy;

21 ‘‘(ii) no State court may issue any

22 order affecting the Secretary’s actions with

23 respect to such guaranty agency;

24 ‘‘(iii) any contract with respect to the

25 administration of a guaranty agency’s re-
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1 serve funds, or the administration of any

2 assets purchased or acquired with the re3 serve funds of the guaranty agency, that is

4 entered into or extended by the guaranty

5 agency, or any other party on behalf of or

6 with the concurrence of the guaranty agen7 cy, after the date of enactment of this sub8 paragraph shall provide that the contract

9 is terminable by the Secretary upon 30

10 days notice to the contracting parties if the

11 Secretary determines that such contract in12 cludes an impermissible transfer of the re13 serve funds or assets, or is otherwise in14 consistent with the terms or purposes of

15 this section; and

16 ‘‘(iv) no provision of State law shall

17 apply to the actions of the Secretary in

18 terminating the operations of a guaranty

19 agency;

20 ‘‘(H) Notwithstanding any other provision

21 of law, the Secretary’s liability for any out22 standing liabilities of a guaranty agency (other

23 than outstanding student loan guarantees under

24 this part), the functions of which the Secretary

25 has assumed, shall not exceed the fair market
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•S 1134 PCS

1 value of the reserves of the guaranty agency,

2 minus any necessary liquidation or other ad3 ministrative costs.’’; and

4 (8) in subparagraph (K) (as redesignated by

5 paragraph (5)), by striking all beginning with ‘‘sys6 tem, together’’ through the period and inserting

7 ‘‘system and the progress of the transition from the

8 loan programs under this part to the direct student

9 loan programs under part D of this title.’’.

10 SEC. 12046. CONSOLIDATION LOANS.

11 (a) AMENDMENT.—Section 428C of the Act (20

12 U.S.C. 1078–3) is amended—

13 (1) in subsection (a)(3)(A), by striking all be14 ginning with ‘‘(A)’’ through the period at the end of

15 clause (ii) and inserting ‘‘(A) For the purpose of

16 this section, the term ‘eligible borrower’ means a

17 borrower who, at the time of application for a con18 solidation loan is in repayment status, or in a grace

19 period preceding repayment, or is a delinquent or

20 defaulted borrower who will reenter repayment

21 through loan consolidation.’’;

22 (2) in subsection (b)—

23 (A) in paragraph (1)—
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1 (i) in subparagraph (A)(ii), by insert2 ing ‘‘with income-sensitive repayment

3 terms’’ after ‘‘obtain a consolidation loan’’;

4 (ii) by redesignating subparagraph

5 (E) as subparagraph (F); and

6 (iii) by inserting after subparagraph

7 (D) the following new subparagraph:

8 ‘‘(E) that the lender shall offer an income9 sensitive repayment schedule, established by the

10 lender in accordance with the regulations pro11 mulgated by the Secretary, to the borrower of

12 any consolidation loan made by the lender on or

13 after July 1, 1994; and’’;

14 (B) in paragraph (4), by amending sub15 paragraph (C) to read as follows:

16 ‘‘(C)(i) provides that periodic installments

17 of principal need not be paid, but interest shall

18 accrue and be paid in accordance with clause

19 (ii), during any period for which the borrower

20 would be eligible for a deferral under section

21 428(b)(1)(M), and that any such period shall

22 not be included in determining the repayment

23 schedule pursuant to subsection (c)(2) of this

24 section; and
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1 ‘‘(ii) provides that interest shall accrue and

2 be paid—

3 ‘‘(I) by the Secretary, in the case of

4 a consolidation loan that consolidated only

5 Federal Stafford Loans for which the stu6 dent borrower received an interest subsidy

7 under section 428: or

8 ‘‘(II) by the borrower, or capitalized,

9 in the case of a consolidation loan other

10 than a loan described in subclause (I);’’;

11 and

12 (C) by adding at the end the following new

13 paragraph:

14 ‘‘(5) DIRECT LOANS.—In the event that a bor15 rower is unable to obtain a consolidation loan from

16 a lender with an agreement under subsection (a)(1),

17 the Secretary shall offer any such borrower who ap18 plies for it, a direct consolidation loan to be repaid

19 pursuant to income contingent repayment under

20 part D of this title or pursuant to any other repay21 ment provision under this section, except that the

22 Secretary shall not offer such loans if, in the Sec23 retary’s judgment, the Department of Education

24 does not have the necessary origination and servicing

25 arrangements in place for such loans.’’; and
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1 (3) in subsection (c)—

2 (A) in paragraph (2)—

3 (i) in subparagraph (A)—

4 (I) in the matter preceding clause

5 (i), by striking ‘‘income sensitive re6 payment schedules. Such repayment

7 terms’’ and inserting ‘‘income sen8 sitive repayment schedules, estab9 lished by the lender in accordance

10 with the regulations of the Secretary.

11 Except as required by such income

12 sensitive repayment schedules, or by

13 the terms of repayment pursuant to

14 income contingent repayment offered

15 by the Secretary under subsection

16 (b)(5), such repayment terms’’;

17 (II) by redesignating clauses (i),

18 (ii), (iii), (iv), and (v) as clauses (ii),

19 (iii), (iv), (v), and (vi), respectively;

20 and

21 (III) by inserting before clause

22 (ii) (as redesignated by subclause (II))

23 the following new clause:
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1 ‘‘(i) is less than $7,500, then such

2 consolidation loan shall be repaid in not

3 more than 10 years;’’;

4 (ii) by striking subparagraph (B); and

5 (iii) by redesignating subparagraph

6 (C) as subparagraph (B); and

7 (B) in paragraph (3)(A), by inserting ‘‘ex8 cept as required by the terms of repayment pur9 suant to income contingent repayment offered

10 by the Secretary under subsection (b)(5),’’ be11 fore ‘‘the lender’’.

12 (b) EFFECTIVE DATE.—The amendments made by

13 this section shall be effective for loans made on or after

14 July 1, 1994.

15 SEC. 12047. AUTHORITY TO USE OPTICALLY IMAGED DOCU16 MENTS.

17 (a) GENERAL AUTHORITY.—Section 484A of the Act

18 (20 U.S.C. 1091a) is amended—

19 (1) in the section heading, by inserting ‘‘; OP20 TICALLY IMAGED DOCUMENTS’’ after ‘‘LIMITA21 TIONS’’; and

22 (2) by adding at the end the following new sub23 section:

24 ‘‘(c) OPTICALLY IMAGED DOCUMENTS.—
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1 ‘‘(1) PURPOSE.—It is the purpose of this sub2 section to—

3 ‘‘(A) allow the Secretary to use optical im4 aging technology to store and retrieve docu5 ments and records, including promissory notes

6 and repayment agreements, required for the ad7 ministration of the programs authorized under

8 part D of this title, or for the administration of

9 loans made under part B of this title that have

10 been assigned to the Secretary;

11 ‘‘(B) permit the Secretary to destroy origi12 nals of such documents and records, including

13 promissory notes and repayment agreements,

14 after such documents and records have been op15 tically imaged, thereby achieving significant

16 savings in storage and retrieval costs; and

17 ‘‘(C) ensure that the Secretary may intro18 duce as evidence in any proceeding with respect

19 to the programs or loans described in subpara20 graph (A) optically imaged documents and

21 records, including promissory notes and repay22 ment agreements.

23 ‘‘(2) EVIDENCE.—Notwithstanding any other

24 provision of law, an optically imaged copy of any

25 document or record, including a promissory note or
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1 repayment agreement, may be introduced as evi2 dence in any proceeding with respect to the pro3 grams or loans described in paragraph (1)(A) in any

4 Federal or State court, or other tribunal, and such

5 optically imaged copy shall be admissible in any

6 court or tribunal of the United States or any State

7 as if such copy were the original document or record

8 and have the same force and effect as the original.

9 ‘‘(3) CONSTRUCTION.—(A) Nothing in this sub10 section shall be interpreted to preclude the admissi11 bility of a duplicate of a document or record re12 quired for the administration of the programs or

13 loans described in paragraph (1)(A) made by a tech14 nology other than optical imaging consistent with

15 the Federal Rules of Evidence and section 1732 of

16 title 28, United States Code, or applicable State law.

17 ‘‘(B) Nothing in this subsection shall be inter18 preted to preclude the admissibility of an optically

19 imaged copy of any document or record in a pro20 ceeding outside the scope of this subsection consist21 ent with the Federal Rules of Evidence and section

22 1732 of title 28 of the United States Code, or appli23 cable State law.’’.
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1 (b) OPTICALLY IMAGED DOCUMENTS.—Section 432

2 of the Act (20 U.S.C. 1082) is amended by adding at the

3 end the following new subsection:

4 ‘‘(q) OPTICALLY IMAGED DOCUMENTS.—Records

5 maintained in accordance with section 484A(c) may be

6 used in any proceeding, as permitted by section 484A(c),

7 with respect to a loan that was made under this part and

8 has been assigned to the Secretary.’’.

9 (c) CONFORMING AMENDMENT.—Section 487 of the

10 Act (20 U.S.C. 1094) is amended by adding at the end

11 the following new subsection:

12 ‘‘(f) USE OF OPTICALLY IMAGED DOCUMENTS.—In

13 any proceeding with respect to a program or activity under

14 part D of this title, or with respect to a loan made under

15 part B of this title that has been assigned to the Sec16 retary, records maintained in accordance with section

17 484A may be used as provided in that section.’’.

18 SEC. 12048. CONSOLIDATION OF PROGRAMS.

19 (a) IN GENERAL.—Section 428H of the Act (20

20 U.S.C. 1078–9) is amended—

21 (1) in the matter preceding paragraph (1) of

22 subsection (b), by inserting ‘‘(including graduate

23 and professional students as defined in regulations

24 promulgated by the Secretary)’’ after ‘‘484’’;
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1 (2) in subsection (d), by inserting ‘‘, except

2 that—

3 ‘‘(1) the maximum annual amount of loans

4 under this section an independent student (or a stu5 dent whose parents are unable to borrow under the

6 Federal Direct PLUS Loan Program) may borrow

7 in any academic year or its equivalent or in any pe8 riod of 7 consecutive months, whichever is longer,

9 shall be as follows:

10 ‘‘(A) In the case of such a student attend11 ing an eligible institution who has not com12 pleted such student’s first 2 years of under13 graduate study, the amount determined in ac14 cordance with section 428(b)(1), plus—

15 ‘‘(i) $4,000, if such student is enrolled

16 in a program whose length is at least one

17 academic year in length (as determined

18 under section 481);

19 ‘‘(ii) $2,500, if such student is en20 rolled in a program whose length is less

than one academic year, but at least 2 21 ⁄3 of

22 such an academic year; and

23 ‘‘(iii) $1,500, if such student is en24 rolled in a program whose length is less
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than 2⁄3, but at least 1 1 ⁄3, of such an aca2 demic year.

3 ‘‘(B) In the case of such a student attend4 ing an eligible institution who has completed

5 the first 2 years of undergraduate study but

6 who has not completed the remainder of a pro7 gram of undergraduate study, the amount de8 termined in accordance with section 428(b)(1),

9 plus—

10 ‘‘(i) $5,000, if such student is enrolled

11 in a program whose length is at least one

12 academic year in length (as determined

13 under section 481);

14 ‘‘(ii) $3,325, if such student is en15 rolled in a program whose length is less

than one academic year, but at least 2 16 ⁄3 of

17 such an academic year; and

18 ‘‘(iii) $1,675, if such student is en19 rolled in a program whose length is less

than 2⁄3, but at least 1 20 ⁄3, of such an aca21 demic year.

22 ‘‘(C) In the case of such a student who is

23 a graduate or professional student attending an

24 eligible institution, the amount determined in
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1 accordance with section 428(b)(1), plus

2 $10,000; and

3 ‘‘(2) the maximum aggregate amount of such

4 loans such student may borrow shall be adjusted to

5 reflect the increased annual limits described in para6 graph (1)’’ before the period;

7 (3) in subsection (e), by adding at the end the

8 following new paragraphs:

9 ‘‘(5) AMORTIZATION.—The amount of the peri10 odic payment and the repayment schedule for any

11 loan made pursuant to this section shall be estab12 lished by assuming an interest rate equal to the ap13 plicable rate of interest at the time the repayment

14 of the principal amount of the loan commences. At

15 the option of the lender, the note or other written

16 evidence of the loan may require that—

17 ‘‘(A) the amount of the periodic payment

18 will be adjusted annually; or

19 ‘‘(B) the period of repayment of principal

20 will be lengthened or shortened,

21 in order to reflect adjustments in interest rates oc22 curring as a consequence of section 427A(c)(4).

23 ‘‘(6) REPAYMENT PERIOD.—For purposes of

24 calculating the 10-year repayment period under sec25 tion 428(b)(1)(D), such period shall commence at
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1 the time the first payment of principal is due from

2 the borrower.’’; and

3 (4) by adding at the end the following new sub4 section:

5 ‘‘(h) REFINANCING.—

6 ‘‘(1) REFINANCING TO SECURE COMBINED PAY7 MENT.—An eligible lender may at any time consoli8 date loans held by such lender which are made

9 under this section to a borrower, including loans

10 which were made under sections 428A and 428B as

11 such sections were in effect prior to the date of en12 actment of the Higher Education Amendments of

13 1986, under a single repayment schedule which pro14 vides for a single principal payment and a single

15 payment of interest, and shall calculate the repay16 ment period for each included loan from the date of

17 the commencement of repayment of the most recent

18 included loan. Unless the consolidated loan is ob19 tained by a borrower who is electing to obtain vari20 able interest under paragraph (2) or (3), such con21 solidated loan shall bear interest at the weighted av22 erage of the rates of all included loans rounded to

23 the nearest whole percent. The extension of any re24 payment period of an included loan pursuant to this

25 paragraph shall be reported (if required by such
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1 loan) to the Secretary or guaranty agency insuring

2 the loan, as the case may be, but no additional in3 surance premiums shall be payable with respect to

4 any such extension. The extension of the repayment

5 period of any included loan shall not require the for6 mal extension of the promissory note evidencing the

7 included loan or the execution of a new promissory

8 note, but shall be treated as an administrative for9 bearance of the repayment terms of the included

10 loan.

11 ‘‘(2) REFINANCING TO SECURE VARIABLE IN12 TEREST RATE.—An eligible lender may reissue a

13 loan which was made under this section before July

14 1, 1987, or under sections 428A and 428B as such

15 sections were in effect prior to the date of enactment

16 of the Higher Education Amendments of 1986 in

17 order to permit the borrower to obtain the interest

18 rate provided under section 427A(c)(4). A lender of19 fering to reissue a loan or loans for such purpose

20 may charge a borrower an amount not to exceed

21 $100 to cover the administrative costs of reissuing

22 such loan or loans, not more than one-half of which

23 shall be paid to the guarantor of the loan being re24 issued to recover costs of reissuance. Reissuance of

25 a loan under this paragraph shall not affect any in-
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1 surance applicable with respect to the loan, and no

2 additional insurance fee may be charged to the bor3 rower with respect to the loan.

4 ‘‘(3) REFINANCING BY DISCHARGE OF PRE5 VIOUS LOAN.—A borrower who has applied to an

6 original lender for reissuance of a loan under para7 graph (2) and who is denied such reissuance may

8 obtain a loan from another lender for the purpose of

9 discharging the loan from such original lender. A

10 loan made for such purpose—

11 ‘‘(A) shall bear interest at the applicable

12 rate of interest provided under section

13 427A(c)(4);

14 ‘‘(B) shall not result in the extension of

15 the duration of the note (other than as per16 mitted under subsection (e)(5)(B));

17 ‘‘(C) may be subject to an additional insur18 ance fee but shall not be subject to the adminis19 trative cost charge permitted by paragraph (2)

20 of this subsection; and

21 ‘‘(D) shall be applied to discharge the bor22 rower from any remaining obligation to the

23 original lender with respect to the original loan.

24 ‘‘(4) CERTIFICATION IN LIEU OF PROMISSORY

25 NOTE PRESENTATION.—Each new lender may accept
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1 certification from the original lender of the borrow2 er’s original loan in lieu of presentation of the origi3 nal promissory note.

4 ‘‘(5) NOTIFICATION TO BORROWERS OF AVAIL5 ABILITY OF REFINANCING OPTIONS.—Each holder of

6 a loan made under this section or under section

7 428B as in effect prior to the date of enactment of

8 this Act shall, not later than October 1, 1993, in the

9 case of loans made before the date of enactment of

10 this paragraph, notify the borrower of such loan—

11 ‘‘(A) of the refinancing options for which

12 the borrower is eligible under this subsection;

13 ‘‘(B) of those options which will be made

14 available by the holder and of the practical con15 sequences of such options in terms of interest

16 rates and monthly and total payments for a set

17 of loan examples; and

18 ‘‘(C) that, with respect to any option that

19 the holder will not make available, the holder

20 will, to the extent practicable, refer the bor21 rower to an eligible lender offering such op22 tion.’’.

23 (b) REPEAL.—

24 (1) REPEALER.—Section 428A of the Act is re25 pealed.
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1 (2) EFFECTIVE DATE.—The amendment made

2 by paragraph (1) shall be effective on July 1, 1994.

3 (c) TERMS, CONDITIONS AND BENEFITS.—Notwith4 standing the amendments made by this section, with re5 spect to loans provided under sections 428A and 428H

6 of the Higher Education Act of 1965 (as such sections

7 existed on the date preceding the date of enactment of

8 this Act) the terms, conditions and benefits applicable to

9 such loans under such sections shall continue to apply to

10 such loans after the date of enactment of this Act.

11 SEC. 12049. ORIGINATION FEE; INSURANCE PREMIUM.

12 Section 428H of the Act (20 U.S.C. 1078–8) is

13 amended—

14 (1) in subsection (f)—

15 (A) in the subsection heading, by striking

16 ‘‘INSURANCE PREMIUM’’ and inserting ‘‘ORIGI17 NATION FEE’’;

18 (B) in the heading of paragraph (1), by

19 striking ‘‘/INSURANCE PREMIUM’’;

20 (C) in paragraph (1)—

21 (i) by striking ‘‘a combined origina22 tion fee and insurance premium in the

23 amount of 6.5 percent’’ and inserting ‘‘an

24 origination fee in the amount of 3.0 per25 cent’’; and
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1 (ii) by striking the second sentence;

2 (D) in paragraph (2), by striking ‘‘com3 bined fee and premium’’ and inserting ‘‘origina4 tion fee’’;

5 (E) in paragraph (3), by striking ‘‘com6 bined origination fee and insurance premium’’

7 and inserting ‘‘origination fee’’;

8 (F) in paragraph (4)—

9 (i) in the heading, by striking ‘‘INSUR10 ANCE PREMIUM’’ and inserting ‘‘ORIGINA11 TION FEE’’;

12 (ii) by striking ‘‘combined origination

13 fee and insurance premiums’’ and inserting

14 ‘‘origination fees’’; and

15 (iii) by striking ‘‘and premiums to

16 pay’’ and inserting ‘‘to pay’’; and

17 (G) in paragraph (5)—

18 (i) in the heading, by inserting

19 ‘‘ORIGINATION FEE AND’’ before ‘‘INSUR20 ANCE’’; and

21 (ii) in the second sentence—

22 (I) by striking ‘‘6.5 percent in23 surance premium’’ and inserting

24 ‘‘combined origination fee under this
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1 subsection and the insurance premium

2 under subsection (h)’’; and

3 (II) by inserting ‘‘origination fee

4 and’’ before ‘‘insurance’’; and

5 (2) by adding at the end the following new sub6 section:

7 ‘‘(h) INSURANCE PREMIUM.—Each State or non8 profit private institution or organization having an agree9 ment with the Secretary under section 428(b)(1) may

10 charge a borrower under this section an insurance pre11 mium equal to not more than 1 percent of the principal

12 amount of the loan, if such premium will not be used for

13 incentive payments to lenders.’’

14 SEC. 12050. DISBURSEMENTS FOR FIRST YEAR STUDENTS.

15 Section 428(G) of the Act (20 U.S.C. 1078–7) is

16 amended—

17 (1) in the heading for subsection (b), by strik18 ing ‘‘AND ENDORSEMENT’’; and

19 (2) in subsection (b)—

20 (A) by striking paragraph (1);

21 (B) in paragraph (2)—

22 (i) by striking ‘‘other than a student

23 described in paragraph (1)’’; and

24 (ii) by striking ‘‘(2) OTHER STU25 DENTS.—’’.
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1 Subchapter B—Amendments to Other Laws

2 SEC. 12055. DISCLOSURE OF TAX RETURN INFORMATION.

3 (a) RETURNS AND RETURN INFORMATION.—Section

4 6103(a)(3) of the Internal Revenue Code of 1986 (here5 after referred to in this part as ‘‘the Code’’) is amended

6 by striking ‘‘(l)(12)’’ and inserting ‘‘(l)(10), (12), or

7 (13)’’.

8 (b) INCOME CONTINGENT REPAYMENT OF STUDENT

9 LOANS.—Section 6103(l) of the Code is amended—

10 (1) in paragraph (10)(B), by striking ‘‘officers

11 and employees of an agency receiving return infor12 mation under subparagraph (A) shall use such infor13 mation’’ and inserting ‘‘return information disclosed

14 under subparagraph (A) may be used by officers and

15 employees of an agency, and by officers, employees,

16 and agents of the Department of Education,’’; and

17 (2) at the end, by adding a new paragraph to

18 read as follows:

19 ‘‘(13) DISCLOSURE OF RETURN INFORMATION

20 TO CARRY OUT INCOME CONTINGENT REPAYMENT

21 OF STUDENT LOANS.—

22 ‘‘(A) IN GENERAL.—The Secretary may,

23 upon written request from the Secretary of

24 Education, disclose to officers and employees of

25 the Department of Education return informa-
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1 tion with respect to a taxpayer who has received

2 a Federal loan under a student loan program

3 and whose loan repayment amounts are based

4 in whole or in part on the taxpayer’s income.

5 Such return information shall be limited to—

6 ‘‘(i) taxpayer identity information

7 with respect to such taxpayer;

8 ‘‘(ii) the filing status of such tax9 payer; and

10 ‘‘(iii) the adjusted gross income of

11 such taxpayer (as defined in section 62).

12 ‘‘(B) RESTRICTION ON USE OF DISCLOSED

13 INFORMATION.—Return information disclosed

14 under subparagraph (A) may be used by offi15 cers, employees, and agents of the Department

16 of Education only for the purposes of, and to

17 the extent necessary in, establishing an appro18 priate income contingent repayment level under

19 a student loan program.

20 ‘‘(C) DEFINITIONS.—For purposes of this

21 paragraph, the term ‘student loan program’

22 means the program authorized under part D of

23 title IV of the Higher Education Act of 1965

24 and includes loans under parts B and E of title

25 IV the Higher Education Act of 1965 that are
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1 in default and have been assigned to the De2 partment of Education.’’.

3 (c) DISCLOSURE OF TAXPAYER IDENTITY INFORMA4 TION.—Section 6103(m)(4) of the Code is amended—

5 (1) in the heading, by inserting ‘‘OWE AN

6 OVERPAYMENT ON FEDERAL PELL GRANTS

7 OR’’ immediately after ‘‘INDIVIDUALS WHO’’;

8 (2) in subparagraph (A)—

9 (A) by redesignating clauses (i) and (ii) as

10 subclauses (I) and (II); and

11 (B) by striking ‘‘of any taxpayer who has

12 defaulted on a loan—’’ and inserting ‘‘of any

13 taxpayer—

14 ‘‘(i) who owes an overpayment of a

15 grant awarded to that taxpayer under sub16 part 1 of part A of title IV of the Higher

17 Education Act of 1965, or

18 ‘‘(ii) who has defaulted on a loan—’’;

19 (3) in subparagraph (B)—

20 (A) in clause (i), by striking ‘‘under part

21 B’’ and inserting ‘‘under part B or D’’; and

22 (B) in clause (ii), by striking ‘‘under part

23 E’’ and inserting ‘‘under subpart 1 of part A,

24 part D, or part E’’;
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1 (d) PROCEDURE AND RECORDKEEPING.—Section

2 6103(p) of the Code is amended—

3 (1) in paragraph (3)(A), by striking ‘‘(11), or

4 (12), (m)’’ and inserting ‘‘(11), (12), or (13), (m)’’;

5 (2) in paragraph (4)—

6 (A) in the matter preceding subparagraph

7 (A), by striking ‘‘(10), or (11),’’ and inserting

8 ‘‘(10), (11), or (13),’’;

9 (B) in subparagraph (F)(ii), by striking

10 ‘‘(11), or (12),’’ and inserting ‘‘(11), (12), or

11 (13),’’; and

12 (C) in the flush left material after sub13 paragraph (F), by striking ‘‘under subsection

14 (l)(12)(B)’’ and inserting ‘‘under paragraph

15 (10), (12)(B), or (13) of subsection (l)’’.

16 (e) COLLECTION OF PAYMENTS.—(1) Subchapter A

17 of chapter 64 of the Code is amended by adding at the

18 end the following new section:

19 ‘‘SEC. 6306. COLLECTION OF PAYMENTS ON FEDERAL DI20 RECT STUDENT LOANS.

21 ‘‘Upon a determination by the President under sec22 tion 457(b) of the Higher Education Act of 1965 concern23 ing the implementation of a plan for the repayment of

24 Federal Direct Stafford Loans through wage withholding

25 or other means by the Internal Revenue Service, the Sec-
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1 retary of the Treasury may enter into an agreement with

2 the Secretary of Education to provide for the collection

3 of payments on loans made pursuant to part D of title

4 IV of such Act. The Secretary of the Treasury may assess

5 and collect such payments as though they were additional

6 income taxes due, and shall establish such procedures and

7 conventions as are necessary under such agreement, in8 cluding—

9 ‘‘(1) procedures for the resolution of disputes

10 through the Secretary of Education;

11 ‘‘(2) an alternate system of fees and penalties,

12 which system shall not include the seizure of real

13 property by the Internal Revenue Service, for the

14 nonpayment of amounts due; and

15 ‘‘(3) provisions related to withholding, payment

16 of estimated tax and allocation of payments.’’.

17 (2) The table of sections for subchapter A of chapter

18 64 of the Code is amended by adding at the end the follow19 ing new item:

‘‘Sec. 6306. Collection of payments on Federal direct Stafford loans.’’.

20 (f) UNAUTHORIZED DISCLOSURE.—Section

21 7213(a)(2) of the Code is amended by striking ‘‘(10) or

22 (12)’’ and inserting ‘‘(10), (12), or (13),’’.

23 (g) EFFECTIVE DATE.—The amendments made by

24 this section shall be effective during the period beginning
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1 on the date of enactment of this Act and ending on De2 cember 30, 1998.

3 CHAPTER 4—COST SHARING BY STATES

4 SEC. 12061. COST SHARING BY STATES.

5 (a) AMENDMENT.—Section 428 of the Higher Edu6 cation Act of 1965 (20 U.S.C. 1078) is amended by add7 ing at the end the following new subsection:

8 ‘‘(n) STATE SHARE OF DEFAULT COSTS.—

9 ‘‘(1) IN GENERAL.—In the case of any State in

10 which there are located any institutions of higher

11 education with cohort default rates that exceed 20

12 percent, such State shall pay to the Secretary an

13 amount equal to—

14 ‘‘(A) the new loan volume attributable to

15 all institutions in the State for the current fis16 cal year; multiplied by

17 ‘‘(B) the percentage specified in paragraph

18 (2); multiplied by

19 ‘‘(C) the quotient of—

20 ‘‘(i) the sum of the amounts cal21 culated under paragraph (3) for each such

22 institution in the State; divided by

23 ‘‘(ii) the total amount of loan volume

24 attributable to current and former stu25 dents of institutions located in that State
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1 entering repayment in the period used to

2 calculate the cohort default rate.

3 ‘‘(2) PERCENTAGE.—For purposes of para4 graph (1)(B), the percentage used shall be—

5 ‘‘(A) 12.5 percent for fiscal year 1995;

6 ‘‘(B) 20 percent for fiscal year 1996; and

7 ‘‘(C) 50 percent for fiscal year 1997 and

8 succeeding fiscal years.

9 ‘‘(3) CALCULATION.—For purposes of para10 graph (1)(C)(i), the amount shall be determined by

11 calculating for each institution the amount by

12 which—

13 ‘‘(A) the amount of the loans received for

14 attendance by such institution’s current and

15 former students who (i) enter repayment during

16 the fiscal year used for the calculation of the

17 cohort default rate, and (ii) default before the

18 end of the following fiscal year; exceeds

19 ‘‘(B) 20 percent of the loans received for

20 attendance by all the current and former stu21 dents who enter repayment during the fiscal

22 year used for the calculation of the cohort de23 fault rate.

24 ‘‘(4) FEE.—A State may charge a fee to an in25 stitution of higher education that participates in the
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1 program under this part and is located in that State

2 according to a fee structure, approved by the Sec3 retary, that is based on the institution’s cohort de4 fault rate and the State’s risk of loss under this sub5 section. Such fee structure shall include a process by

6 which an institution with a high cohort default rate

7 is exempt from any fees under this paragraph if

8 such institution demonstrates to the satisfaction of

9 the State that exceptional mitigating circumstances,

10 as determined by the State and approved by the Sec11 retary, contributed to its cohort default rate.’’.

12 (b) EFFECTIVE DATE.—The amendment made by

13 this section shall be effective on October 1, 1994.

14 CHAPTER 5—GENERAL EFFECTIVE DATE

15 SEC. 12071. GENERAL EFFECTIVE DATE.

16 Except as otherwise provided in this subtitle, this

17 subtitle and the amendments made by this subtitle shall

18 be effective on October 1, 1993.

19 Subtitle B—Public Health Service

20 Act Provisions

21 SEC. 12101. HEALTH COVERAGE CLEARINGHOUSE.

22 (a) IN GENERAL.—The Public Health Service Act is

23 amended—

24 (1) by redesignating title XXVII (42 U.S.C.

25 300cc et seq.) as title XXVIII; and
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1 (2) by inserting after title XXVI the following

2 new title:

3 ‘‘TITLE XXVII—HEALTH

4 COVERAGE CLEARINGHOUSE

5 ‘‘SEC. 2701. ESTABLISHMENT OF CLEARINGHOUSE.

6 ‘‘(a) IN GENERAL.—The Secretary shall establish

7 and operate a Health Coverage Clearinghouse (in this title

8 referred to as the ‘Clearinghouse’) for the purpose of iden9 tifying, for beneficiaries under a covered health program

10 (as defined in subsection (c)), third parties (which may

11 include a covered health program) which may be liable for

12 payment for health care items and services furnished to

13 such beneficiaries under such program.

14 ‘‘(b) DIRECTOR.—The Clearinghouse shall be headed

15 by a Director (in this title referred to as the ‘Director’)

16 appointed by the Secretary.

17 ‘‘(c) COVERED HEALTH PROGRAM DEFINED.—As

18 used in this title, the term ‘covered health program’ means

19 any of the following under which health care items or serv20 ices are furnished to a beneficiary—

21 ‘‘(1) a migrant health center receiving assist22 ance under section 329;

23 ‘‘(2) a community health center receiving assist24 ance under section 330;
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1 ‘‘(3) an entity receiving assistance under sec2 tion 340;

3 ‘‘(4) an alcohol or drug treatment entity or

4 mental health entity receiving assistance under title

5 V or title XIX;

6 ‘‘(5) a family planning project described in sec7 tion 1001;

8 ‘‘(6) an entity receiving assistance under title

9 XXVI;

10 ‘‘(7) a black lung clinic authorized under this

11 Act;

12 ‘‘(8) a clinic that treats sexually transmitted

13 diseases and is authorized under section 318;

14 ‘‘(9) an entity receiving funds to provide pri15 mary health services to residents of public housing

16 under section 340A;

17 ‘‘(10) a non-Federal entity authorized under

18 the Indian Self-Determination Act;

19 ‘‘(11) a tuberculosis clinic receiving assistance

20 under section 317(j)(2) or 317(k)(2); or

21 ‘‘(12) any other Federally funded program that

22 provides payments for medical services provided to

23 an individual which are or may be covered under a

24 private health insurance policy.

25 ‘‘(d) OTHER DEFINITIONS.—As used in this title:
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1 ‘‘(1) ADMINISTRATOR.—The term ‘adminis2 trator’ means, with respect to a covered health pro3 gram described in paragraphs (1) through (12) of

4 subsection (c), the individual responsible for the

5 overall administration of the program under which

6 an entity described in such paragraphs receives Fed7 eral funds.

8 ‘‘(2) GROUP HEALTH PLAN.—The term ‘group

9 health plan’ has the same meaning given the term

10 ‘employee welfare benefit plan’ in section 3(1) of the

11 Employee Retirement Income Security Act of 1974

12 (29 U.S.C. 1002(1)).

13 ‘‘(3) QUALIFIED EMPLOYER.—The term ‘quali14 fied employer’ has the same meaning given the term

15 ‘employer’ in section 3(5) of the Employee Retire16 ment Income Security Act of 1974 (29 U.S.C.

17 1002(1)).

18 ‘‘SEC. 2702. PROVISION OF INFORMATION

19 ‘‘(a) REQUEST FOR INFORMATION.—An adminis20 trator of a covered health program may request from the

21 Director information concerning the employment and

22 group health coverage of a program beneficiary, the bene23 ficiary’s spouse, and (if the beneficiary is a dependent

24 child) the beneficiary’s parents. The Director shall provide

25 such information if the request—
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1 ‘‘(1) is in such form and manner and at such

2 a time as the Director may require, and

3 ‘‘(2) specifies the name and tax identification

4 number of the beneficiary.

5 ‘‘(b) DATA MATCHING PROGRAM.—

6 ‘‘(1) REQUEST BY DIRECTOR.—The Director

7 shall, at such intervals as the Director finds appro8 priate, transmit to the Secretary of the Treasury the

9 names and tax identification numbers of bene10 ficiaries with respect to whom a request has been

11 made pursuant to subsection (a), and request that

12 such Secretary disclose to the Secretary of Health

13 and Human Services the following information:

14 ‘‘(A) Whether the beneficiary is married

15 and, if so, the name of the spouse and such

16 spouse’s tax identification number.

17 ‘‘(B) If the beneficiary is a dependent

18 child, the name of and tax identification num19 bers of the beneficiary’s parents.

20 ‘‘(2) INFORMATION FROM SECRETARY.—The

21 Secretary shall, upon written request from the Di22 rector, disclose to the Director, the following infor23 mation:

24 ‘‘(A) For each individual who is identified

25 as having received wages (as defined in section
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1 3401(a) of the Internal Revenue Code of 1986)

2 from an employer in a previous year—

3 ‘‘(i) the name and taxpayer identifica4 tion number of the individual; and

5 ‘‘(ii) the name, address, and taxpayer

6 identification number of the employer, and

7 whether such employer is a qualified em8 ployer.

9 ‘‘(B) For each individual who is identified

10 as married and whose spouse is identified as

11 having received wages (as defined in section

12 3401(a) of the Internal Revenue Code of 1986)

13 from an employer in a previous year—

14 ‘‘(i) the name and taxpayer identifica15 tion number of the individual and of the

16 individual’s spouse; and

17 ‘‘(ii) the name, address, and taxpayer

18 identification number of the spouse’s em19 ployer, and whether such employer is a

20 qualified employer.

21 ‘‘(C) For each individual who is identified

22 as a dependent child and whose parent is iden23 tified as having received wages (as defined in

24 section 3401(a) of the Internal Revenue Code

25 of 1986) from an employer in a previous year—
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1 ‘‘(i) the name and taxpayer identifica2 tion number of the individual and of the

3 individual’s parent; and

4 ‘‘(ii) the name, address, and taxpayer

5 identification number of the parent’s em6 ployer, and whether such employer is a

7 qualified employer.

8 ‘‘(3) INFORMATION FROM EMPLOYERS.—The

9 Director shall—

10 ‘‘(A) request, from the employer of each

11 individual (including each spouse) with respect

12 to whom information was received from the

13 Secretary pursuant to paragraph (2), informa14 tion concerning coverage of such individual (and

15 of the individual’s spouse and dependent chil16 dren) under the employer’s group health plan,

17 specifically the period and nature of the cov18 erage, and the name, address, and identifying

19 number of the plan, and

20 ‘‘(B) furnish the information received in

21 response to such request with respect to an in22 dividual (or such individual’s spouse or depend23 ent children) to the administrator requesting

24 such information pursuant to subsection (a).
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1 Under no circumstances shall the information re2 quested pertain in any way to the health status of

3 the individual, spouse or dependent children, to the

4 cost of such coverage, or to the beneficiary-specific

5 limitations on such coverage.

6 ‘‘SEC. 2703. REQUIREMENT THAT EMPLOYERS FURNISH IN7 FORMATION.

8 ‘‘(a) IN GENERAL.—An employer shall furnish to the

9 Director the information requested pursuant to section

10 2702(b)(3) within 90 days after receipt of such a request.

11 ‘‘(b) CIVIL MONEY PENALTY FOR FAILURE TO CO12 OPERATE.—

13 ‘‘(1) IN GENERAL.—An employer (other than a

14 Federal or other governmental entity) who willfully

15 or repeatedly fails to provide timely and accurate re16 sponse to a request for information pursuant to sec17 tion 2702(b)(3) shall be subject, in addition to any

18 other penalties that may be prescribed by law, to a

19 civil money penalty of not to exceed $500 for each

20 individual with respect to whom such a request is

21 made.

22 ‘‘(2) ENFORCEMENT AUTHORITY.—In cases of

23 failure to respond to the Director in accordance with

24 subsection (a) to inquiries relating to requests pur25 suant to section 2702, the provisions of section
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1 353(h)(3), regarding procedures for the imposition

2 of civil money penalties developed by the Secretary,

3 shall apply in the same manner as such provisions

4 apply to penalties or proceedings under section 353.

5 ‘‘SEC. 2704. DATA BANK.

6 ‘‘(a) MAINTENANCE OF INFORMATION.—The Clear7 inghouse shall maintain a data bank, containing informa8 tion on individuals obtained pursuant to this title. Individ9 ual information in the data bank shall be retained for not

10 less than one year after the date the information was ob11 tained.

12 ‘‘(b) DISCLOSURE OF INFORMATION IN DATA

13 BANK.—

14 ‘‘(1) IN GENERAL.—The Director is authorized

15 (subject to paragraph (2)) to disclose any informa16 tion in the data bank established pursuant to sub17 section (a) with respect to an individual (or an indi18 vidual’s spouse or parent)—

19 ‘‘(A) to the Secretary, administrators, em20 ployers, and insurers, to the extent necessary to

21 assist such administrators;

22 ‘‘(B) to Federal and State law enforcement

23 officials responsible for enforcement of civil or

24 criminal laws, in connection with investigations

25 or administrative or judicial law enforcement
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1 proceedings relating to a covered health pro2 gram; and

3 ‘‘(C) for research or statistical purposes.

4 ‘‘(2) RESTRICTIONS ON DISCLOSURE.—Informa5 tion in the data bank may be disclosed under this

6 subsection only for purposes of, and to the extent

7 necessary in, determining the extent to which an in8 dividual is covered under any group health plan.

9 ‘‘(c) USE OF CONTRACTORS.—The responsibilities of

10 the Clearinghouse under this section may be carried out

11 by contract.

12 ‘‘(d) FEES.—The Clearinghouse shall—

13 ‘‘(1) establish fees for services under this sec14 tion designed to cover the full costs to the Clearing15 house of providing such services, and

16 ‘‘(2) require the payment of such fees to pro17 vide such services.’’.

18 (b) CONFORMING AMENDMENTS.—

19 (1) Sections 2701 through 2714 of the Public

20 Health Service Act (42 U.S.C. 300cc through

21 300cc–15) are redesignated as sections 2801

22 through 2814, respectively.

23 (2) Sections 465(f) and 497 of such Act (42

24 U.S.C. 286(f) and 289(f)) are amended by striking
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1 out ‘‘2701’’ each place that such appears and insert2 ing in lieu thereof ‘‘2801’’.

3 (c) ERISA AMENDMENT.—Section 101 of the Em4 ployee Retirement Income Security Act of 1974 (29

5 U.S.C. 1021) is amended by adding at the end thereof

6 the following new subsection:

7 ‘‘(g) COMPLIANCE WITH HEALTH COVERAGE CLEAR8 INGHOUSE REQUIREMENTS.—In addition to providing the

9 information required under this section, the administrator

10 of each employee benefit plan shall comply with the re11 quirements of section 2703(a) of the Public Health Service

12 Act. The enforcement provisions of this Act shall apply

13 to an administrator that fails to comply with this sub14 section in the same manner as such provisions otherwise

15 apply to such administrators under this section.’’.

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

17 subsections (a), (b), and (c) shall take effect on April 1,

18 1995.

19 SEC. 12102. PHYSICIAN OWNERSHIP STUDY.

20 (a) STUDY.—The Secretary of Health and Human

21 Services shall conduct a study concerning—

22 (1) the desirability of establishing a Federal

23 prohibition on the referral of a patient by a health

24 care provider to an entity in which the provider has
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1 a financial interest or from which the provider re2 ceives a financial benefit for such referral; and

3 (2) different options with respect to the scope

4 of any prohibition recommended under paragraph

5 (1), including options for the application of rules de6 fining prohibited activities that are similar to those

7 implemented under title XVIII of the Social Security

8 Act, and for the methods of enforcing such a prohi9 bition.

10 (b) LIMITATION.—The study conducted under sub11 section (a) shall be restricted to determining the desirabil12 ity of establishing a prohibition of the type described in

13 such subsection with respect to patients for whom the

14 health care services involved are not provided or paid for

15 under a Federal or State program.

16 (c) REPORT.—Not later than 6 months after the date

17 of enactment of this Act, the Secretary of Health and

18 Human Services shall prepare and submit to the President

19 and the appropriate committees of Congress a report con20 cerning the results of the study conducted under sub21 section (a).

22 SEC. 12103. DELAY IN COST-OF-LIVING ADJUSTMENTS IN

23 FEDERAL EMPLOYEE RETIREMENT BENEFITS

24 DURING FISCAL YEARS 1994, 1995, AND 1996.

25 (a) APPLICABILITY.—
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1 (1) IN GENERAL.—This section shall apply with

2 respect to any cost-of-living increase for any person

3 described under paragraph (2) scheduled to take

4 effect, during fiscal year 1994, 1995, or 1996, under

5 section 8340(b) or 8462(b) of title 5, United States

6 Code.

7 (2) ANNUITANTS.—The provisions of paragraph

8 (1) shall apply to any annuitant who on the date

9 preceding the date of retirement was a member of

10 the National Health Service Corps.

11 (b) DELAY IN EFFECTIVE DATE OF ADJUST12 MENTS.—A cost-of-living increase described in subsection

13 (a) shall not take effect until the first day of the third

14 calendar month after the date such increase would other15 wise take effect.

16 (c) RULE OF CONSTRUCTION.—Nothing in this sec17 tion shall be considered to affect any determination relat18 ing to eligibility for an annuity increase or the amount

19 of the first increase in an annuity under section 8340(b)

20 or (c) or section 8462 (b) or (c) of title 5, United States

21 Code, or comparable provisions of law.
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1 SEC. 12104. PERMANENT ELIMINATION OF THE ALTER2 NATIVE-FORM-OF-ANNUITY OPTION EXCEPT

3 FOR INDIVIDUALS WITH A CRITICAL MEDI4 CAL CONDITION.

5 (a) CIVIL SERVICE RETIREMENT SYSTEM; FEDERAL

6 EMPLOYEES’ RETIREMENT SYSTEM.—A member of the

7 National Health Service Corps who is covered under chap8 ter 83 or 84 of title 5, United States Code, and has a

9 life-threatening affliction or other critical medical condi10 tion may elect annuity benefits under section 8343a or

11 8420a of title 5, United States Code, as the case may be.

12 (b) EFFECTIVE DATE.—The amendments made by

13 this section shall become effective on October 1, 1995, and

14 shall apply with respect to any annuity commencing on

15 or after that date.

16 SEC. 12105. FEDERAL TORT CLAIMS AMENDMENTS.

17 (a) CLARIFICATION OF COVERAGE OF OFFICERS AND

18 EMPLOYEES OF CLINICS.—The first sentence of section

19 224(g)(1) of the Public Health Service Act (42 U.S.C.

20 233(g)(1)) is amended by striking ‘‘officer, employee, or

21 contractor’’ and inserting the following: ‘‘officer or em22 ployee of such an entity, and any contractor’’.

23 (b) COVERAGE FOR SERVICES FURNISHED TO INDI24 VIDUALS OTHER THAN PATIENTS OF CLINIC.—Section

25 224(g) of such Act (42 U.S.C. 233(g)(1)), as amended

26 by paragraph (1), is further amended—
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1 (1) in the first sentence of paragraph (1), by

2 inserting after ‘‘Service’’ the following: ‘‘with respect

3 to services provided to patients of the entity and

4 (subject to paragraph (7)) to certain other individ5 uals’’; and

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

7 paragraph:

8 ‘‘(7) For purposes of paragraph (1), an officer, em9 ployee, or contractor described in such paragraph may be

10 deemed to be an employee of the Public Health Service

11 with respect to services provided to individuals who are

12 not patients of an entity described in paragraph (4) only

13 if the Secretary determines—

14 ‘‘(A) that the provision of the services to such

15 individuals benefits health center patients and gen16 eral populations that could be served by the health

17 center through community-wide intervention efforts

18 within the communities served by such health center,

19 and facilitates the provision of services to health

20 center patients; or

21 ‘‘(B) that such services are otherwise required

22 to be provided to such individuals under an employ23 ment contract (or other similar arrangement) be24 tween the individual and the entity.’’.
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1 (c) DETERMINING COMPLIANCE OF ENTITY WITH

2 REQUIREMENTS FOR COVERAGE.—

3 (1) IN GENERAL.—Section 224(h) of such Act

4 (42 U.S.C. 233(h)), as added by section 2(b) of the

5 Federally Supported Health Centers Assistance Act

6 of 1992, is amended by striking ‘‘the entity—’’ and

7 inserting the following: ‘‘the Secretary, after receiv8 ing such assurances and conducting such investiga9 tion as the Secretary considers necessary, finds that

10 the entity—’’.

11 (2) FINDING.—Section 224 of such Act (42

12 U.S.C. 233) is amended by adding at the end there13 of the following new subsection:

14 ‘‘(i) With respect to subsection (h), the finding of the

15 Secretary that an entity meets all of the requirements

16 under such subsection shall apply for the period specified

17 by the Secretary, and shall be binding for all parties unless

18 the Secretary reverses such finding for good cause shown

19 at a later date.’’.

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

21 this section shall take effect as if included in the enact22 ment of the Federally Supported Health Centers Assist23 ance Act of 1992.
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1 Subtitle C—Improved Immuniza2 tion Delivery and Monitoring

3 SEC. 12201. SHORT TITLE, REFERENCES AND PURPOSE.

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

5 ‘‘Comprehensive Child Immunization Act of 1993’’.

6 (b) REFERENCES.—Except as otherwise expressly

7 provided, whenever in this subtitle an amendment or re8 peal is expressed in terms of an amendment to, or repeal

9 of, a section or other provision, the reference shall be con10 sidered to be made to a section or other provision of the

11 Public Health Service Act (42 U.S.C. 201 et seq.).

12 (c) PURPOSE.—It is the purpose of this subtitle to

13 ensure that children in the United States are appro14 priately immunized against vaccine preventable infectious

15 diseases at the earliest appropriate age.

16 SEC. 12202. MONITORING OF CHILDHOOD IMMUNIZATIONS.

17 Title XXI of the Public Health Service Act (42

18 U.S.C. 300aa–1 et seq.) is amended by adding at the end

19 thereof the following new subtitle:
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1 ‘‘Subtitle 3—Improved Immuniza2 tion Delivery and Monitoring

3 Systems

4 ‘‘Part A—List of Vaccines and Administration

5 ‘‘SEC. 2141. LIST OF PEDIATRIC VACCINES; SCHEDULE FOR

6 ADMINISTRATION.

7 ‘‘(a) RECOMMENDED PEDIATRIC VACCINES.—

8 ‘‘(1) IN GENERAL.—The Secretary shall estab9 lish a list of the vaccines that the Secretary rec10 ommends for administration to all children for the

11 purpose of immunizing the children, subject to such

12 contraindications for particular medical categories of

13 children as the Secretary may establish under sub14 section (b)(1)(D). The Secretary shall periodically

15 review the list, and shall revise the list as appro16 priate.

17 ‘‘(2) RULE OF CONSTRUCTION.—

18 ‘‘(A) The list of vaccines specified in sub19 paragraph (B) is deemed to be the list of vac20 cines maintained under paragraph (1).

21 ‘‘(B) The list of vaccines specified in this

22 subparagraph is the list of vaccines that, for

23 purposes of paragraph (1), is established (and

24 periodically reviewed and as appropriate re25 vised) by the Advisory Committee on Immuni-
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1 zation Practices, an advisory committee estab2 lished by the Secretary, acting through the Di3 rector of the Centers for Disease Control and

4 Prevention.

5 ‘‘(b) RECOMMENDED SCHEDULE FOR ADMINISTRA6 TION.—

7 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

8 in the case of a pediatric vaccine, the Secretary shall

9 establish (and periodically review and as appropriate

10 revise) a schedule of nonbinding recommendations

11 for the following:

12 ‘‘(A) The number of immunizations with

13 the vaccine that children should receive.

14 ‘‘(B) The ages at which children should re15 ceive the immunizations.

16 ‘‘(C) The dose of vaccine that should be

17 administered in the immunizations.

18 ‘‘(D) Any contraindications regarding ad19 ministration of the vaccine.

20 ‘‘(E) Such other guidelines as the Sec21 retary determines to be appropriate with re22 spect to administering the vaccine to children.

23 ‘‘(2) VARIATIONS IN MEDICAL PRACTICE.—In

24 establishing and revising a schedule under para25 graph (1), the Secretary shall ensure that, in the
829

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1 case of the pediatric vaccine involved, the schedule

2 provides for the full range of variations in medical

3 judgment regarding the administration of the vac4 cine, subject to remaining within medical norms.

5 ‘‘(3) RULE OF CONSTRUCTION.—

6 ‘‘(A) The schedule specified in subpara7 graph (B) is deemed to be the schedule main8 tained under paragraph (1).

9 ‘‘(B) The schedule specified in this

10 subparagraph is the schedule that, for purposes

11 of paragraph (1), is established (and periodi12 cally reviewed and as appropriate revised) by

13 the advisory committee specified in subsection

14 (a)(2)(B).

15 ‘‘(c) GENERALLY APPLICABLE RULES OF CONSTRUC16 TION.—This section does not supersede any State law or

17 requirements with respect to receiving immunizations (in18 cluding any such law relating to religious exemptions or

19 other exemptions under such State laws).

20 ‘‘(d) ISSUANCE OF LIST AND SCHEDULES.— Not

21 later than 180 days after the date of the enactment of

22 this section, the Secretary shall establish the initial list

23 required in subsection (a) and the schedule required in

24 subsection (b).
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1 ‘‘Part B—State Registry System for Immunization

2 Information

3 ‘‘SEC. 2145. PURPOSE.

4 ‘‘It is the purpose of this part to authorize the Sec5 retary, in consultation with State public health officials,

6 to establish State registry systems to monitor the immuni7 zation status of all children.

8 ‘‘SEC. 2146. GRANTS FOR IMMUNIZATION REGISTRIES.

9 ‘‘(a) IN GENERAL.—For the purpose described in sec10 tion 2145, the Secretary, acting through the Director of

11 the Centers for Disease Control and Prevention, shall

12 make an allotment each fiscal year for each State in an

13 amount determined in accordance with section 2151. The

14 Secretary shall make a grant to the State of the allotment

15 made for the State for the fiscal year if the State submits

16 to the Secretary an application in accordance with section

17 2150 on behalf of the chief executive officer of such State.

18 ‘‘(b) DESIGN OF STATE REGISTRIES.—To carry out

19 the purpose described in section 2145, a State registry es20 tablished under this part shall be designed to—

21 ‘‘(1) provide accurate and up to date surveil22 lance data regarding immunization rates at the

23 State and local levels;

24 ‘‘(2) assist in identifying localities with inad25 equate immunization rates to target for necessary

26 remedial assistance;
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1 ‘‘(3) assist in the effective administration and

2 management of immunization programs at State and

3 local levels by providing data to guide immunization

4 program efforts;

5 ‘‘(4) assist the State in providing and receiving

6 information on the immunization status of children

7 who move across geographic boundaries that are cov8 ered by different State or local registries; and

9 ‘‘(5) facilitate the linkage of vaccine dosage in10 formation to adverse events reported to the Centers

11 for Disease Control and Prevention under section

12 2125(b) and disease outbreak patterns, for the pur13 pose of monitoring vaccine safety and effectiveness.

14 ‘‘(c) ELIGIBLE USE OF FUNDS.—The Secretary may

15 make a grant under subsection (a) only if the State agrees

16 to expend the grant for the purpose of—

17 ‘‘(1) collecting the data described in section

18 2147;

19 ‘‘(2) operating registries to maintain the data

20 (and establishing such registries, in the case of a

21 State that is not operating such a registry);

22 ‘‘(3) utilizing the data to monitor the extent to

23 which children have received immunizations in ac24 cordance with the schedule established under section

25 2141;
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1 ‘‘(4) notifying parents, as appropriate, if chil2 dren have not received immunizations in accordance

3 with such schedule;

4 ‘‘(5) coordinating and exchanging information

5 with other State registries to allow the monitoring of

6 the immunization status of children changing State

7 of residence; and

8 ‘‘(6) such other activities as the Secretary may

9 authorize with respect to achieving the objectives es10 tablished by the Secretary for the year 2000 for the

11 immunization status of children in the United

12 States.

13 ‘‘(d) REQUIREMENT REGARDING STATE LAW.—

14 ‘‘(1) IN GENERAL.—The Secretary may make a

15 grant under subsection (a) only if the State in16 volved—

17 ‘‘(A) provides assurances satisfactory to

18 the Secretary that, not later than October 1,

19 1996, the State will be operating a registry in

20 accordance with this part, including having in

21 effect such laws and regulations as may be nec22 essary to so operate such a registry; and

23 ‘‘(B) agrees that, prior to such date, the

24 State will make such efforts to operate a reg-
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1 istry in accordance with this part as may be au2 thorized in the law and regulations of the State.

3 ‘‘(2) RULES OF CONSTRUCTION.—

4 ‘‘(A) With respect to the agreements made

5 by a State under this part, other than para6 graph (1)(B), the Secretary may require com7 pliance with the agreements only to the extent

8 consistent with such paragraph.

9 ‘‘(B) The provisions of this part do not au10 thorize the Secretary, as a condition of the re11 ceipt of a grant under subsection (a) by a

12 State, to prohibit the State from providing any

13 parent, upon the request of the parent, with an

14 exemption from the requirements established by

15 the State pursuant to this part for the collec16 tion of data regarding any child of the parent.

17 ‘‘SEC. 2147. REGISTRY DATA.

18 ‘‘(a) IN GENERAL.—For purposes of section

19 2146(c)(1), the data described in this section are the data

20 described in subsection (b) and the data described in sub21 section (c).

22 ‘‘(b) DATA REGARDING BIRTH OF CHILD.—With re23 spect to the birth of a child, the data described in this

24 subsection is as follows:
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1 ‘‘(1) The name of each child born in the State

2 involved after the date of the implementation of the

3 registry (in no event shall such date be later than

4 October 1, 1996).

5 ‘‘(2) Demographic data on the child.

6 ‘‘(3) The name of one or both of the parents of

7 the child. If the child has been given up for adop8 tion, any information regarding the identity of the

9 birth parent or parents of the child may not be en10 tered into the registry, or if entered, shall be deleted.

11 ‘‘(4) The address, as of the date of the birth of

12 the child, of each parent whose name is received in

13 the registry pursuant to paragraph (3).

14 ‘‘(c) DATA REGARDING INDIVIDUAL IMMUNIZA15 TIONS.—With respect to a child to whom a pediatric vac16 cine is administered in the State involved, the data de17 scribed in this subsection is as follows:

18 ‘‘(1) The name, age, and address of the child.

19 ‘‘(2) The date on which the vaccine was admin20 istered to the child.

21 ‘‘(3) The name and business address of the

22 health care provider that administered the vaccine.

23 ‘‘(4) The address of the facility at which the

24 vaccine was administered.
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1 ‘‘(5) The name and address of one or both par2 ents of the child as of the date on which the vaccine

3 was administered, if such information is available to

4 the health care provider.

5 ‘‘(6) The type of vaccine.

6 ‘‘(7) The lot number or other information iden7 tifying the particular manufacturing batch of the

8 vaccine.

9 ‘‘(8) The dose of vaccine that was administered.

10 ‘‘(9) A notation of the presence of any adverse

11 medical reactions that the child experienced in rela12 tion to the vaccine and of which the health care pro13 vider is aware, in accordance with section 2125.

14 ‘‘(10) The presence of contraindications noted

15 by the health care provider with respect to adminis16 tration of the vaccine to the child.

17 ‘‘(11) Such other data regarding immunizations

18 for the child, including identifying data, as the Sec19 retary, in consultation with State public health offi20 cials, may require consistent with applicable law (in21 cluding social security account numbers furnished

22 pursuant to section 205(c)(2)(E) of the Social Secu23 rity Act).

24 ‘‘(d) LIMITATION.—The Secretary may not establish

25 information reporting requirements in addition to those
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1 described in subsection (c) if such requirements are un2 duly burdensome.

3 ‘‘(e) DATE CERTAIN FOR SUBMISSION TO REG4 ISTRY.—The Secretary may make a grant under section

5 2146 only if the State involved agrees to ensure that, with

6 respect to a child—

7 ‘‘(1) the data described in subsection (b) are

8 submitted to the registry under such section as soon

9 as possible but in no event later than 8 weeks after

10 the date on which the child is born; and

11 ‘‘(2) the data described in subsection (c) with

12 respect to a vaccine are submitted to such registry

13 as soon as possible but in no event later than 4

14 weeks after the date on which the vaccine is admin15 istered to the child.

16 ‘‘(f) UNIFORMITY IN METHODOLOGIES.—The Sec17 retary shall, in consultation with State public health offi18 cials, establish standards regarding the methodologies

19 used in establishing and operating registries under section

20 2146, and may make a grant under such section only if

21 the State agrees to comply with the standards. The Sec22 retary shall provide maximum flexibility to the States

23 while also retaining a reasonable degree of uniformity

24 among the States in such methodologies for the purpose
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1 of ensuring the utility, comparability, and exchange of the

2 data maintained in such registries.

3 ‘‘(g) COORDINATION AMONG STATES.—The Sec4 retary may make a grant under section 2146 to a State

5 only if, with respect to the operation of the registry of

6 the State under such section, the State agrees to transfer

7 that information contained in the State registry pursuant

8 to section 2146 to other States upon the request of such

9 States for such information.

10 ‘‘SEC. 2148. FEDERAL STANDARDS ON CONFIDENTIALITY.

11 ‘‘(a) ESTABLISHMENT.—

12 ‘‘(1) IN GENERAL.—The Secretary, in consulta13 tion with the States, shall by regulation establish

14 standards providing for maintaining the confidential15 ity of the identity of individuals with respect to

16 whom data are maintained in registries under sec17 tion 2146. Such standards shall, with respect to a

18 State, provide that the State is to have in effect laws

19 or regulations regarding such confidentiality, includ20 ing appropriate penalties for violation of the laws.

21 The Secretary may make a grant under such section

22 only if the State involved agrees to comply with the

23 standards.

24 ‘‘(2) USE OF DISCLOSURE.—
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1 ‘‘(A) No personally identifiable information

2 relating to a child or to the parent or guardian

3 of such child that is collected or maintained by

4 the State registry may be used or disclosed by

5 any holder of such information except as per6 mitted for—

7 ‘‘(i) the monitoring of a child’s immu8 nization status;

9 ‘‘(ii) oversight, audit, and evaluation

10 of the immunization delivery and registry

11 systems;

12 ‘‘(iii) activities relating to establishing

13 and maintaining a safe and effective sup14 ply of recommended childhood vaccine;

15 ‘‘(iv) processing of insurance claims

16 for payment for vaccine administration

17 (but only to the extent necessary for proc18 essing claims); and

19 ‘‘(v) administration of the National

20 Vaccine Injury Compensation Program

21 under subtitle 2.

22 ‘‘(B) Information regarding immunizations

23 provided as described in subparagraph (A)(i)

24 may be used or disclosed only with the written
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•S 1134 PCS

1 authorization of the individual to whom it refers

2 or to the parent with custody of such individual.

3 ‘‘(b) USE OF SOCIAL SECURITY ACCOUNT NUM4 BERS.—Any usage or disclosure of data in registries under

5 section 2146 that consists of social security account num6 bers and related information which is otherwise permitted

7 under this part may be exercised only to the extent per8 mitted under section 205(c)(2)(E) of the Social Security

9 Act. For purposes of the preceding sentence, the term ‘re10 lated information’ has the meaning given such term in

11 clause (iv)(II) of such section.

12 ‘‘SEC. 2149. PROVIDER PARTICIPATION.

13 ‘‘(a) IN GENERAL.—The State shall monitor and en14 force compliance by health care providers with the require15 ments of sections 2147 and 2148 and section 2155(b) for

16 all doses of pediatric vaccine administered in the State.

17 The State shall establish procedures satisfactory to the

18 Secretary for discontinuing the distribution of federally

19 purchased or State purchased vaccine for any health care

20 provider who fails to comply with the requirements of sec21 tion 2147 and for reinstating such vaccine supply to such

22 provider upon receiving from such provider—

23 ‘‘(1) the reports necessary to make current and

24 complete the information that would have been fur-
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1 nished to the State registry between the dates of the

2 provider’s termination and reinstatement; and

3 ‘‘(2) satisfactory assurances regarding the pro4 vider’s future compliance.

5 ‘‘(b) REPORTS TO SECRETARY.—The Secretary may

6 make a grant under section 2146 only if the State involved

7 agrees to submit to the Secretary such reports as the Sec8 retary determines to be appropriate with respect to the

9 activities of the State under this part.

10 ‘‘SEC. 2150. APPLICATION FOR GRANT.

11 ‘‘An application by a State for a grant under section

12 2146 is in accordance with this section if the application—

13 ‘‘(1) is submitted not later than the date speci14 fied by the Secretary;

15 ‘‘(2) contains each agreement required in this

16 part;

17 ‘‘(3) contains any information required in this

18 part to be submitted to the Secretary; and

19 ‘‘(4) is in such form, is made in such manner,

20 and contains such agreements, assurances, and in21 formation as the Secretary determines to be nec22 essary to carry out this part.

23 ‘‘SEC. 2151. DETERMINATION OF AMOUNT OF ALLOTMENT.

24 ‘‘The Secretary shall determine the amount of the al25 lotments required in section 2146 for States for a fiscal
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1 year in accordance with a formula established by the Sec2 retary that allots the amounts appropriated under section

3 2152 for the fiscal year on the basis of the costs of the

4 States in establishing and operating registries under sec5 tion 2146.

6 ‘‘SEC. 2152. AUTHORIZATION OF APPROPRIATIONS.

7 ‘‘For the purpose of carrying out this part, other than

8 section 2153, there are authorized to be appropriated

9 $152,000,000 for fiscal year 1994, $125,000,000 for fis10 cal year 1995, and $35,000,000 for each of the fiscal years

11 1996 through 1999.

12 ‘‘SEC. 2153. NATIONAL IMMUNIZATION SURVEILLANCE PRO13 GRAM.

14 ‘‘(a) IN GENERAL.—The Secretary shall establish a

15 national immunization surveillance program for the pur16 pose of assessing the effects of the programs and activities

17 provided for in this subtitle towards appropriately immu18 nizing children and facilitating State immunization reg19 istries. The national immunization surveillance program

20 shall—

21 ‘‘(1) provide technical assistance to States for

22 the development of vaccination registries and mon23 itoring systems; and

24 ‘‘(2) receive aggregate epidemiologic data (that

25 is in a format that is not person specific) collected
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1 by States as provided for in section 2147 at inter2 vals determined appropriate by the Secretary for the

3 purpose of—

4 ‘‘(A) compiling accurate and up-to-date

5 surveillance data regarding immunization rates

6 at the State level in order to assess the progress

7 made towards achieving nationally established

8 immunization goals;

9 ‘‘(B) assisting in the effective administra10 tion and management of immunization pro11 grams at the State level by providing technical

12 assistance to guide immunization program ef13 forts at the request of the State;

14 ‘‘(C) providing technical assistance to

15 States and localities to facilitate monitoring the

16 immunization status of children who move

17 across geographic boundaries that are covered

18 by different State or local registries at the re19 quest of such States or localities; and

20 ‘‘(D) monitoring the safety and effective21 ness of vaccines by linking vaccine dosage infor22 mation with adverse events reporting under sec23 tion 2125(b) and disease outbreak patterns.

24 ‘‘(b) RULE OF CONSTRUCTION.—Nothing in this sub25 title shall be construed to authorize the release of person
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1 specific information to the Secretary for the purpose of

2 immunization surveillance.

3 ‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—There

4 are authorized to be appropriated such sums as may be

5 necessary to carry out this section in each of the fiscal

6 years 1994 through 1999.

7 ‘‘SEC. 2154. REPORT.

8 ‘‘Not later than January 1, 1995, and biennially

9 thereafter, the Secretary shall prepare and submit to the

10 appropriate committees of Congress a report concerning

11 the planning, development, operation and effectiveness of

12 the national immunization surveillance program and the

13 State immunization registries.

14 ‘‘Part C—Distribution of Vaccines, Public Outreach

15 and Education

16 ‘‘SEC. 2155. DISTRIBUTION OF VACCINES.

17 ‘‘(a) IN GENERAL.—

18 ‘‘(1) HEALTH CARE PROVIDERS.—The Sec19 retary shall provide for the distribution, without

20 charge, of recommended pediatric vaccines (in ac21 cordance with section 2141) purchased by the Sec22 retary to health care providers who serve children

23 and who—
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1 ‘‘(A) are members of a uniformed service,

2 or are officers or employees of the United

3 States;

4 ‘‘(B) are health centers (as defined in sec5 tion 2162(2)); or

6 ‘‘(C) provide services under section 503 of

7 the Indian Health Care Improvement Act or

8 pursuant to a contract under section 102 of the

9 Indian Self Determination Act.

10 ‘‘(2) STATES.—The Secretary shall provide for

11 the distribution, without charge, of those rec12 ommended pediatric vaccines that are purchased by

13 the Secretary and provided to States for the pur14 poses of immunizing medicaid-eligible children, and

15 additional vaccines that may be purchased by the

16 Secretary for children within those States.

17 ‘‘(b) DUTIES OF HEALTH CARE PROVIDERS.—

18 ‘‘(1) FREE PROVISION TO CHILDREN.—A health

19 care provider or entity receiving vaccine under this

20 section may use such vaccine only for administration

21 to children and may not impose a charge for such

22 vaccine. A provider or health care entity may impose

23 a fee that reflects actual regional costs as deter24 mined by the Secretary for the administration of

25 such vaccine, except that a provider may not deny
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1 a child a vaccination due to the inability of the

2 child’s parent to pay an administration fee.

3 ‘‘(2) REPORTING REQUIREMENTS.—A health

4 care provider receiving vaccine under this section

5 shall report the information required under section

6 2147 to the applicable State registry operated pur7 suant to a grant under section 2146 if such State

8 registry exists. The provider shall additionally report

9 to such State registry any occurrence reported to the

10 Secretary pursuant to section 2125(b). The provider

11 shall also provide regular and periodic estimates to

12 the State of the provider’s future dosage needs for

13 recommended childhood vaccines distributed under

14 this section. All reports shall be made with such fre15 quency and in such detail as the Secretary, in con16 sultation with State public health officials, may pre17 scribe.

18 ‘‘SEC. 2156. IMPROVED IMMUNIZATION DELIVERY, OUT19 REACH AND EDUCATION.

20 ‘‘(a) FEDERAL EFFORTS.—The Secretary, acting

21 through the Centers for Disease Control and Prevention

22 and in conjunction with State health officials and other

23 appropriate public and private organizations, shall conduct

24 the following activities to improve Federal, State and local
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1 vaccine delivery systems and immunization outreach and

2 education efforts:

3 ‘‘(1) NATIONAL PUBLIC AWARENESS CAM4 PAIGN.—

5 ‘‘(A) IN GENERAL.—The Secretary, in con6 junction with State health officials and other

7 appropriate public and private organizations,

8 shall develop and implement a National Immu9 nization Public Awareness Campaign to assist

10 families (through bilingual means if necessary)

11 of children under the age of 2 years, and ex12 pectant parents, in obtaining knowledge con13 cerning the importance of having their children

14 immunized and in identifying the vaccines,

15 schedules for immunization, and vaccine pro16 vider locations, appropriate with respect to their

17 children.

18 ‘‘(B) IMPLEMENTATION.—In implementing

19 the Campaign under subparagraph (A), the

20 Secretary shall ensure that—

21 ‘‘(i) new and innovative methods are

22 developed and utilized to publicly advertise

23 the need to have children immunized in a

24 timely manner;
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1 ‘‘(ii) print, radio and television media

2 are utilized to convey immunization infor3 mation to the public; and

4 ‘‘(iii) with respect to immunization in5 formation, efforts are made to target preg6 nant women and the parents of children

7 under the age of 2.

8 ‘‘(2) INTERAGENCY COMMITTEE ON IMMUNIZA9 TION.—The Secretary, in conjunction with the Sec10 retary of Agriculture, the Secretary of Housing and

11 Urban Development, and the Secretary of Edu12 cation, shall carry out activities through the Inter13 agency Committee on Immunization to incorporate

14 immunization status assessments and referral serv15 ices as an integral part of the process by which indi16 viduals apply for assistance under—

17 ‘‘(A) the food stamp program under the

18 Food Stamp Act of 1977;

19 ‘‘(B) section 17 of the Child Nutrition Act

20 of 1966;

21 ‘‘(C) the Head Start Act;

22 ‘‘(D) part A of title IV of the Social Secu23 rity Act;

24 ‘‘(E) title XIX of the Social Security Act;
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1 ‘‘(F) any of the housing assistance laws of

2 the United States; and

3 ‘‘(G) other programs determined appro4 priate by any of the Secretaries described in

5 this paragraph.

6 ‘‘(3) EXPANDED OPPORTUNITY FOR NATIONAL

7 SERVICE.—The Secretary, in conjunction with the

8 Commission on National and Community Service

9 and other independent agencies, is encouraged to de10 velop opportunities for participants in national and

11 community service programs to contribute to local

12 initiatives for the improvement of immunization

13 services, including public outreach and education ef14 forts.

15 ‘‘(b) GRANTS TO STATES.—

16 ‘‘(1) IN GENERAL.—

17 ‘‘(A) The Secretary may award grants to

18 States to enable such State to develop, revise

19 and implement immunization improvement

20 plans as described in paragraph (2).

21 ‘‘(B) To be eligible to receive a grant

22 under subparagraph (A), a State shall prepare

23 and submit to the Secretary an application at

24 such time, in such manner, and containing such

25 information as the Secretary may require.
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1 ‘‘(2) DESIGN.—A State immunization improve2 ment plan shall be designed to improve immuniza3 tion delivery, outreach, education and coordination

4 within the State. Such plan shall provide for the cre5 ation of—

6 ‘‘(A) a vaccine provider education cam7 paign and the distribution of any other mate8 rials determined to be appropriate by State

9 health officials—

10 ‘‘(i) to enable such providers to make

11 the best use of vaccination opportunities;

12 and

13 ‘‘(ii) to educate such providers con14 cerning their obligation to report immuni15 zation information with respect to their pa16 tients to State registries;

17 ‘‘(B) expanded capacity for the delivery of

18 immunizations through—

19 ‘‘(i) increasing the number or type of

20 facilities through which vaccines may be

21 made available and the capacity of such fa22 cilities to immunize more children;

23 ‘‘(ii) developing alternative methods of

24 delivering vaccines, such as mobile health

25 clinics;
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1 ‘‘(iii) increasing the number of hours

2 during which vaccines are made available

3 by providers within the State; or

4 ‘‘(iv) coordinating with federally quali5 fied health centers to reach and immunize

6 underserved children through education,

7 outreach, tracking, and the provision of

8 services;

9 except that, the Secretary may waive any spe10 cific requirement of this subparagraph if the

11 Secretary determines that State immunization

12 delivery efforts are sufficient without the impo13 sition of such requirement;

14 ‘‘(C) population-based assessment criteria

15 through which the State is able to assess the ef16 fectiveness of immunization activities in the

17 State, which may be fulfilled through the imple18 mentation of a State immunization registry

19 under section 2146;

20 ‘‘(D) a public awareness campaign, in con21 junction with the National Campaign estab22 lished under subsection (a)(1), to provide par23 ents with information about the importance of

24 immunization, the types and schedules for the
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1 administration of vaccines, and the locations of

2 vaccines providers;

3 ‘‘(E) coordinated community outreach ac4 tivities among public or private health pro5 grams, including local health departments and

6 health centers, and other public or private enti7 ties, to encourage and facilitate the ability of

8 parents to obtain immunization services for

9 their children; and

10 ‘‘(F) other activities that are not inconsist11 ent with the purposes of this subtitle, subject to

12 the approval of the Secretary.

13 ‘‘(3) IMMUNIZATION IMPROVEMENT PLAN AP14 PROVAL.—

15 ‘‘(A) GOALS.—As part of the immunization

16 improvement plan of a State, the State shall es17 tablish immunization rate goals for children re18 siding within the State.

19 ‘‘(B) APPROVAL.—The immunization im20 provement plan developed by a State under this

21 subsection shall be submitted to the Secretary

22 for approval prior to the distribution of grant

23 funds to the States under this subsection. The

24 Secretary shall periodically review the progress

25 that the State has made under such plan in
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1 achieving the goals established under subpara2 graph (A).

3 ‘‘(C) DISTRIBUTION OF GRANTS.—In

4 awarding grants under this section, the Sec5 retary shall ensure that grant awards will be

6 equitably distributed between rural and urban

7 areas. In determining such distribution, the

8 Secretary shall take into account the added

9 costs of supporting the health care delivery in10 frastructure in sparsely populated areas.

11 ‘‘(D) REPORTING.—A State shall annually

12 prepare and submit to the Director of the Cen13 ters for Disease Control and Prevention a re14 port concerning the implementation of the State

15 immunization improvement plan. If the Director

16 or the Secretary, in reviewing the reports sub17 mitted under this subparagraph determine that

18 the State has exceeded the goals established

19 under subparagraph (A), the Secretary may

20 award a bonus to the State in an amount not

21 to exceed 5 percent of the amount the State re22 ceived under the grant for the purposes of the

23 grant.

24 ‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—There

25 are authorized to be appropriated to carry out this section,
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1 $250,000,000 for fiscal year 1994, and such sums as may

2 be necessary for each of the fiscal years 1995 through

3 1999.

4 ‘‘Part D—General Provisions

5 ‘‘SEC. 2161. REPORT.

6 ‘‘Not later than October 1, 1995, and biennially

7 thereafter, the Secretary shall prepare and submit to the

8 appropriate committees of Congress a report concerning

9 the costs, efficiency, and effectiveness of procedures estab10 lished to deliver vaccine to health care providers.

11 ‘‘SEC. 2162. NATIONAL VACCINE PROGRAM.

12 ‘‘The Secretary shall authorize a report to be pre13 pared by the National Academy of Sciences concerning the

14 role of the National Vaccine Program established under

15 this title in achieving progress towards the nationally es16 tablished immunization goals for the year 2000, and rec17 ommendations with respect to the changes in such Pro18 gram that would facilitate greater progress towards

19 achieving such goals.

20 ‘‘SEC. 2163. DEFINITIONS.

21 ‘‘For purposes of this subtitle—

22 ‘‘(1) HEALTH CARE PROVIDER.—The term

23 ‘health care provider’, with respect to the adminis24 tration of vaccines to children, means an entity that

25 is licensed or otherwise authorized for such adminis-
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1 tration under the law of the State in which the en2 tity administers the vaccine, subject to section

3 333(e).

4 ‘‘(2) HEALTH CENTER.—The term ‘health cen5 ter’ means—

6 ‘‘(A) a federally-qualified health center, as

7 defined in section 1905(l)(2) of the Social Secu8 rity Act; or

9 ‘‘(B) a public or nonprofit private entity

10 receiving Federal funds under—

11 ‘‘(i) section 329, 330 or 340;

12 ‘‘(ii) section 340A (relating to grants

13 for health services for residents of public

14 housing); or

15 ‘‘(iii) section 501(a)(2) of the Social

16 Security Act (relating to special projects of

17 regional and national significance).

18 ‘‘(3) IMMUNIZATION.—The term ‘immunization’

19 means an immunization against a vaccine-prevent20 able disease.

21 ‘‘(4) PARENT.—The term ‘parent’, with respect

22 to a child, means a legal guardian of the child.

23 ‘‘(5) PEDIATRIC VACCINE.—The term ‘pediatric

24 vaccine’ means a vaccine included on the list estab25 lished under section 2141.
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1 ‘‘(6) STATE.—The term ‘State’ means the 50

2 States, the District of Columbia, the Commonwealth

3 of Puerto Rico, Guam, American Samoa, the U.S.

4 Virgin Islands, the Republic of the Marshall Islands,

5 Micronesia, the Northern Mariana Islands, and

6 Palau.’’.

7 SEC. 12203. NATIONAL VACCINE INJURY COMPENSATION

8 PROGRAM AMENDMENTS.

9 (a) AMENDMENT OF VACCINE INJURY TABLE.—

10 (1) ADDITION OF VACCINES.—Section 2114 (42

11 U.S.C. 300aa–14) is amended by adding at the end

12 thereof the following new subsection:

13 ‘‘(f) ADDITION OF VACCINES TO TABLE.—

14 ‘‘(1) IN GENERAL.—The Vaccine Injury table

15 contained in subsection (a) shall also include any

16 recommended childhood vaccine included in the list

17 promulgated by the Secretary under section 2141.

18 ‘‘(2) REVIEW OF INFORMATION AND REVI19 SION.—Not later than 2 years after the addition of

20 a new vaccine to the table contained in subsection

21 (a), and on a regular basis thereafter, the Secretary

22 shall review information obtained under sections

23 2125 and part B of subtitle 3, and based on such

24 review (and other relevant information) shall, as ap-
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1 propriate, develop with respect to such new vac2 cine—

3 ‘‘(A) revisions with respect to illnesses, dis4 abilities, injuries or conditions covered by such

5 table;

6 ‘‘(B) appropriate specifications of the time

7 period for the first symptom or manifestation of

8 onset or of significant aggravation of such ill9 nesses, disabilities, injuries or condition after

10 vaccine administration, for purposes of receiv11 ing compensation under the Program; and

12 ‘‘(C) recommendations as to the amount of

13 tax that should be imposed under section 4131

14 of the Internal Revenue Code of 1986 for each

15 dose of vaccine.

16 ‘‘(3) LIMITATION.—The Secretary may modify

17 the table contained in subsection (a) pursuant to

18 paragraphs (1) and (2) only in accordance with sub19 section (c).

20 ‘‘(4) REVISION.—For purposes of section

21 2116(b), the addition of vaccine to the table con22 tained in subsection (a) by operation of this sub23 section shall constitute a revision of the table.’’.
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1 (2) ATTORNEYS FEES.—Section 2115(e) (42

2 U.S.C. 300aa–15(e)) is amended by adding at the

3 end thereof the following new paragraph:

4 ‘‘(4) The special master may award reasonable

5 attorneys fees whether or not an election has been

6 made under section 2121(a) to file a civil action con7 cerning such petition.’’.

8 (3) CONSENT FOR ANNUITY.—Subparagraphs

9 (A) and (B) of section 2115(f)(4) are amended by

10 striking ‘‘, with the consent of the petitioner,’’ each

11 place that such appears.

12 (4) TIME PERIODS FOR FEES AND COSTS.—

13 (A) IN GENERAL.—Section 2115(e) (42

14 U.S.C. 300aa–15(e)) (as amended by paragraph

15 (3)) is further amended by adding at the end

16 thereof the following new paragraph:

17 ‘‘(5) With respect to a petitioners’ application

18 for attorneys’ fees and costs—

19 ‘‘(A) if the respondent enters no objection

20 to such application within 21 days of the date

21 on which the application was filed (unless such

22 time period is extended by the special master

23 with the consent of the petitioner) the special

24 master shall enter a decision on such applica25 tion within 30 days of such filing;
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1 ‘‘(B) if the respondent files an objection to

2 such application and the special master does

3 not enter a decision with respect to the applica4 tion within 60 days after the date on which the

5 objection is filed, the special master involved

6 shall, upon the written request of the petitioner,

7 enter a decision within 15 days after the filing

8 of such request; and

9 ‘‘(C) if the respondent files an objection to

10 such application and the petitioner moves to re11 duce costs and fees as provided for in the objec12 tion, the special master shall enter a decision

13 within 5 days after the receipt of the petition14 er’s motion.

15 The chief special master, upon the request of a spe16 cial master, may waive the time limitations applica17 ble to the special master under this paragraph if the

18 special master demonstrates that complicating fac19 tors exist with respect to the issues involved to

20 which the time limitation applies.’’.

21 (B) APPLICATION.—The amendment made

22 by subparagraph (A) shall apply to all petition23 ers’ applications for attorneys’ fees and costs

24 filed under section 2115(e) of the Public Health
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1 Service Act which are pending on the date of

2 enactment of this Act.

3 (5) AUTHORIZATION OF APPROPRIATIONS.—

4 Section 2115(j) (42 U.S.C. 300aa–15(j)) is amended

5 by striking ‘‘$80,000,000 for each succeeding fiscal

6 year’’ and inserting in lieu thereof ‘‘$110,000,000

7 for each succeeding fiscal year’’.

8 (6) LIMITATION OF ACTIONS.—Section 2116(b)

9 (42 U.S.C. 300aa–16(b)) is amended by striking

10 ‘‘such person may file’’ and inserting ‘‘or to signifi11 cantly increase the likelihood of obtaining compensa12 tion, such person may, notwithstanding section

13 2111(b)(2), file’’.

14 (b) EXTENSION OF TIME FOR DECISION.—

15 (1) JURISDICTION.—Section 2112(d)(3)(D) (42

16 U.S.C. 300aa–12(d)(3)(D)) is amended by striking

17 ‘‘540 days’’ and inserting ‘‘30 months (but for not

18 more than 6 months at a time)’’.

19 (2) REPORT ON COLLECTIONS.—Section 2117

20 (42 U.S.C. 300aa–17) is amended by adding at the

21 end thereof the following new subsection:

22 ‘‘(c) REPORT.—The Attorney General shall, on Janu23 ary 1 of each year, prepare and submit to the appropriate

24 committees of Congress a report concerning amounts col25 lected under this section.’’.
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1 (3) INCREASED RESPONSIBILITIES OF COMMIS2 SION.—Section 2119(f) (42 U.S.C. 300aa–19(f)) is

3 amended—

4 (A) by striking ‘‘and’’ at the end of para5 graph (4);

6 (B) by striking the period at the end of

7 paragraph (5) and inserting ‘‘, and’’; and

8 (C) by adding at the end thereof the fol9 lowing new paragraph:

10 ‘‘(6) monitor the balance of the Vaccine Injury

11 Trust Fund established by section 9510 of the Inter12 nal Revenue Code and, as appropriate, recommend

13 changes in the tax per dose of vaccine imposed

14 under section 4131 of such Code.’’.

15 (c) SIMPLIFICATION OF VACCINE INFORMATION MA16 TERIALS.—

17 (1) INFORMATION.—Section 2126(b) (42

18 U.S.C. 300aa–26(b)) is amended—

19 (A) by striking ‘‘by rule’’ in the matter

20 preceding paragraph (1);

21 (B) in paragraph (1), by striking ‘‘90’’ and

22 inserting ‘‘30’’; and

23 (C) in paragraph (2), by striking ‘‘, appro24 priate health care providers and parent organi25 zations’’.
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1 (2) REQUIREMENTS.—Section 2126(c) (42

2 U.S.C. 300aa–26(c)) is amended—

3 (A) in the matter preceding paragraph (1),

4 by inserting ‘‘shall be based on available data

5 and information,’’ after ‘‘such materials’’; and

6 (B) by striking out paragraphs (1) through

7 (10) and inserting in lieu thereof the following

8 new paragraphs:

9 ‘‘(1) a concise description of the benefits of the

10 vaccine;

11 ‘‘(2) a concise description of the risks associ12 ated with the vaccine;

13 ‘‘(3) a statement of the availability of the Na14 tional Vaccine Injury Compensation Program;

15 ‘‘(4) a statement of the availability from the

16 Secretary of more detailed written information con17 cerning the information required under paragraphs

18 (1), (2), and (3), that shall be made available to the

19 parent, legal guardian, or other responsible person

20 upon request; and

21 ‘‘(5) such other relevant information as deter22 mined appropriate by the Secretary.’’.

23 (3) OTHER INDIVIDUALS.—Subsections (a) and

24 (d) of section 2126 (42 U.S.C. 300aa–26(a) and

25 (d)) are amended by inserting ‘‘or to any other indi-
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1 vidual’’ immediately after ‘‘to the legal representa2 tive of any child’’ each place that such occurs.

3 (4) PROVIDER DUTIES.—Subsection (d) of sec4 tion 2126 (42 U.S.C. 300aa–26(d)) is amended—

5 (A) by striking all after ‘‘subsection (a),’’

6 the second place it appears in the first sentence

7 and inserting ‘‘supplemented with visual presen8 tations or oral explanations, in appropriate

9 cases.’’; and

10 (B) by striking ‘‘or other information’’ in

11 the last sentence.

12 (d) AUTHORIZATION OF APPROPRIATIONS.—Part A

13 of subtitle 2 of title XXI (42 U.S.C. 300aa–10 et seq.)

14 is amended by adding at the end thereof the following new

15 section:

16 ‘‘AUTHORIZATION OF APPROPRIATIONS

17 ‘‘SEC. 2120. (a) SECRETARY.—For purposes of ad18 ministering this part, there are authorized to be appro19 priated from the Vaccine Injury Compensation Trust

20 Fund established under section 9510(c) of the Internal

21 Revenue Code of 1986, to the Secretary, $3,000,000 for

22 each of the fiscal years 1994, 1995 and 1996.

23 ‘‘(b) ATTORNEY GENERAL.—For purposes of admin24 istering this part, there are authorized to be appropriated

25 from the Vaccine Injury Compensation Trust Fund de26 scribed in subsection (a), to the Attorney General,
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1 $3,000,000 for each of the fiscal years 1994, 1995 and

2 1996.

3 ‘‘(c) COURT OF FEDERAL CLAIMS.—For purposes of

4 administering this part, there are authorized to be appro5 priated from the Vaccine Injury Compensation Trust

6 Fund described in subsection (a), to the Court of Federal

7 Claims, $3,000,000 for each of the fiscal years 1994, 1995

8 and 1996.’’.

9 SEC. 12204. MISCELLANEOUS PROVISIONS.

10 Section 317(k) (42 U.S.C. 247b(k)) is amended—

11 (1) by striking out paragraph (1); and

12 (2) by redesignating paragraphs (2) through

13 (5) as paragraphs (1) and (4), respectively.

14 Subtitle D—ERISA Amendments

15 CHAPTER 1—GROUP HEALTH AMENDMENTS

16 SEC. 12301. COORDINATION OF ERISA PREEMPTION RULES

17 WITH SOCIAL SECURITY ACT PROVISIONS

18 PROVIDING FOR LIABILITY OF THIRD PAR19 TIES AND CHILD HEALTH INSURANCE SUP20 PORT ENFORCEMENT.

21 (a) IN GENERAL.—Paragraph (8) of section 514(b)

22 of the Employee Retirement Income Security Act of 1974

23 (29 U.S.C. 1144(b)(8)) is amended to read as follows:

24 ‘‘(8)(A) Subsection (a) of this section shall not apply

25 to any State law to the extent necessary to permit the
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1 State to comply with the following requirements for the

2 receipt of Federal financial assistance under title XIX of

3 the Social Security Act:

4 ‘‘(i) subparagraphs (A), (B), and (I) of section

5 1902(a)(25) of such Act (relating to third-party li6 ability) and section 1903(o) of such Act (relating to

7 medicaid as secondary payor), as in effect on Octo8 ber 1, 1993; and

9 ‘‘(ii) sections 1902(a)(60) and 1908 of such Act

10 (relating to assignment of rights of payment and

11 child health insurance support), as in effect on the

12 date of the enactment of the Omnibus Budget Rec13 onciliation Act of 1993.

14 ‘‘(B) Paragraph (2)(B) shall not apply to any State

15 law to the extent necessary to permit the compliance of

16 the State with any of the requirements described in sub17 paragraph (A).’’.

18 (b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall take effect October 1, 1993.

20 SEC. 12302. CONTINUED COVERAGE OF COSTS OF A PEDI21 ATRIC VACCINE UNDER GROUP HEALTH

22 PLANS.

23 (a) IN GENERAL.—Part 6 of subtitle B of title I of

24 the Employee Retirement Income Security Act of 1974
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1 (29 U.S.C. 1161 et seq.) is amended by adding at the end

2 the following new section:

3 ‘‘SEC. 609. CONTINUED COVERAGE OF COSTS OF A PEDI4 ATRIC VACCINE UNDER GROUP HEALTH

5 PLANS.

6 ‘‘A group health plan may not reduce its coverage of

7 the costs of pediatric vaccines (as defined under section

8 2162 of the Public Health Service Act) below the coverage

9 it provided as of May 1, 1993.’’.

10 (b) CONFORMING AMENDMENT.—The table of con11 tents in section 1 of such Act is amended by adding after

12 the item relating to section 608 the following new item:

‘‘Sec. 609. Continued coverage of costs of a pediatric vaccine under group

health plans.’’.

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

14 this section shall apply with respect to plan years begin15 ning after the date of the enactment of this Act.

16 CHAPTER 2—LIABILITIES AND PENALTIES

17 SEC. 12311. LIABILITY FOR KNOWING PARTICIPATION IN A

18 BREACH OF FIDUCIARY DUTY.

19 Section 409 of the Employee Retirement Income Se20 curity Act of 1974 (29 U.S.C. 1109) is amended by adding

21 at the end the following new subsection:

22 ‘‘(c) If any person who is not a fiduciary of a plan

23 knowingly participates in an act or omission of a fiduciary

24 knowing that the act or omission was a breach of fiduciary
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1 responsibility of the fiduciary, such person shall be jointly

2 and severally liable—

3 ‘‘(1) to make good any losses (including lost

4 profits) to the plan resulting from the breach,

5 ‘‘(2) to restore to the plan any profits of such

6 person which have been made as a result of the

7 breach, and

8 ‘‘(3) to provide other relief available under sec9 tions 502(a)(3) and (a)(5) by reason of the breach.’’

10 SEC. 12312. CIVIL ENFORCEMENT OF ERISA.

11 (a) SUITS BY PARTICIPANTS, ETC.—Paragraph (3)

12 of section 502(a) of the Employee Retirement Income Se13 curity Act of 1974 (29 U.S.C. 1132(a)) is amended to

14 read as follows:

15 ‘‘(3) by a participant, beneficiary, or fidu16 ciary—

17 ‘‘(A) to enjoin any act or practice which

18 violates any provision of this title or the terms

19 of the plan,

20 ‘‘(B) to provide participants and bene21 ficiaries the full economic value of any benefits

22 they would have received absent such violations,

23 or

24 ‘‘(C) to obtain any other appropriate equi25 table relief (including back pay)—
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1 ‘‘(i) to redress such violations, or

2 ‘‘(ii) to enforce any provision of this

3 title or the terms of the plan;

4 and any amounts recovered under this paragraph

5 shall be subject to a civil penalty as provided under

6 subsection (l);’’.

7 (b) ACTIONS BY SECRETARY.—Paragraph (5) of sec8 tion 502(a) of such Act (29 U.S.C. 1132(a)) is amended

9 to read as follow:

10 ‘‘(5) except as otherwise provided in subsection

11 (b), by the Secretary—

12 ‘‘(A) to enjoin any act or practice which

13 violates any provision of this title,

14 ‘‘(B) to provide participants and bene15 ficiaries the full economic value of any benefits

16 they would have received absent such violations,

17 or

18 ‘‘(C) to obtain any other appropriate equi19 table relief (including back pay)—

20 ‘‘(i) to redress such violations, or

21 ‘‘(ii) to enforce any provision of this

22 title;

23 and any amounts recovered under this paragraph

24 shall be subject to a civil penalty as provided under

25 subsection (l); or’’.
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1 (c) LIMITATION ON JUDGMENTS.—Section 502(a) of

2 such Act (29 U.S.C. 1132(a)) is amended by adding at

3 the end the following new sentences:

4 ‘‘A court shall not award punitive damages, nor shall a

5 court award monetary relief against a plan to the extent

6 such monetary relief would exceed the sum of the benefit

7 payments which would have been made but for the viola8 tions of this title or the terms of the plan plus reasonable

9 prejudgment interest thereon. For purposes of this sub10 section, the terms ‘participant’ and ‘beneficiary’ shall in11 clude any individual who was a participant or beneficiary

12 at the time of the alleged violation.’’

13 SEC. 12313. CIVIL PENALTY.

14 (a) IN GENERAL.—Paragraph (1) of section 502(l)

15 of the Employee Retirement Income Security Act of 1974

16 (29 U.S.C. 1132(l)) is amended to read as follows:

17 ‘‘(1) In the case of—

18 ‘‘(A) any breach of fiduciary responsibility

19 or other violation of title I by any person,

20 ‘‘(B) any participation by a party in inter21 est in a transaction prohibited by section 406 or

22 407, or

23 ‘‘(C) any knowing participation in a fidu24 ciary’s breach or violation by any other person,

25 including any person who is not a fiduciary,
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1 the Secretary shall assess a civil penalty against

2 such fiduciary, party in interest, or other person in

3 an amount equal to the greater of 20 percent of the

4 applicable recovery amount or $1,000.’’

5 (b) PENALTIES RELATING TO MONETARY RELIEF.—

6 (1) IN GENERAL.—Section 502(l) of such Act

7 (29 U.S.C. 1132(l)) is amended by redesignating

8 paragraphs (3) and (4) as paragraphs (4) and (5)

9 and by inserting after paragraph (2) the following

10 new paragraph:

11 ‘‘(3)(A) In the case of a final judgment entered

12 into by a court in an action brought by a partici13 pant, beneficiary, or fiduciary under subsection

14 (a)(2) or in an action brought under subsection

15 (a)(3) which requires a person to pay monetary re16 lief (other than benefits payable to participants or

17 beneficiaries under the plan or attorney’s fees or

18 costs under subsection (g))—

19 ‘‘(i) such persons shall, within 60

20 days after the judgment becomes final,

21 provide the Secretary with a copy of the

22 judgment, and

23 ‘‘(ii) the Secretary shall, upon receipt

24 of the judgment, assess a civil penalty

25 against such person in an amount equal to
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1 the greater of 5 percent of such monetary

2 relief or $1,000.

3 ‘‘(B) If a person fails to timely provide a copy

4 of a judgment under subparagraph (A)(i), the Sec5 retary may assess a civil penalty against the person

6 of up to $1,000 for each day the failure continues

7 after the 60th day after the judgment.’’

8 (2) CONFORMING AMENDMENTS.—

9 (A) Section 502(l)(4) of such Act (29

10 U.S.C. 1132(l)(4)), as so redesignated by para11 graph (1), is amended by striking ‘‘paragraph

12 (1)’’ and inserting ‘‘this subsection’’.

13 (B) Section 502(l)(4)(B) of such Act (29

14 U.S.C. 1132(l)(4)(B)), as so redesignated, is

15 amended by inserting ‘‘, participants, or bene16 ficiaries’’ after ‘‘plan’’.

17 (C) Section 502(l)(5) of such Act (29

18 U.S.C. 1132(l)(5), as so redesignated, is

19 amended by striking ‘‘section 4975’’ and insert20 ing ‘‘section 4971 or 4975’’.

21 SEC. 12314. EFFECTIVE DATE.

22 The amendments made by this part shall apply to any

23 legal proceeding pending, or brought, on or after the date

24 of the enactment of this Act.
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1 CHAPTER 3—PUBLIC HEALTH SERVICE ACT

2 SEC. 12321. PROHIBITION ON REDUCTION IN COVERAGE OF

3 PEDIATRIC VACCINE.

4 Part D of subtitle 2 of title XXI of the Public Health

5 Service Act (42 U.S.C. 300aa–31 et seq.) is amended by

6 adding at the end thereof the following new section:

7 ‘‘SEC. 2135. PROHIBITION ON REDUCTION IN COVERAGE OF

8 PEDIATRIC VACCINE.

9 ‘‘(a) IN GENERAL.—Notwithstanding any other pro10 vision of law, a health insurance policy in effect prior to

11 May 1, 1993, may not reduce the level of coverage for

12 the costs of pediatric vaccines below the level of coverage

13 provided on the date of enactment of this section.

14 ‘‘(b) CIVIL MONEY PENALTY.—

15 ‘‘(1) IN GENERAL.—An entity that fails to com16 ply with subsection (a) shall be subject, in addition

17 to any other penalties that may be prescribed by

18 law, to a civil money penalty of not to exceed $1,000

19 for each individual with respect to whom such a fail20 ure occurs.

21 ‘‘(2) ENFORCEMENT.—With respect to an en22 tity that offers a health insurance policy in violation

23 of subsection (a), the provisions of section

24 353(h)(3), regarding procedures for the imposition

25 of civil money penalties developed by the Secretary,
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1 shall apply in the same manner as such provisions

2 apply to penalties or proceedings under section 353.

3 ‘‘(c) DEFINITIONS.—As used in this section:

4 ‘‘(1) HEALTH INSURANCE POLICY.—The term

5 ‘health insurance policy’ has the same meaning given

6 the term ‘employee welfare benefit plan’ in section

7 3(1) of the Employee Retirement Income Security

8 Act of 1974 (29 U.S.C. 1002(1)) and includes any

9 other policy or plan which provides coverage for the

10 provision of health care services (including a health

11 maintenance organization agreement).

12 ‘‘(2) PEDIATRIC VACCINES.—The term ‘pedi13 atric vaccines’ has the same meaning given such

14 term in section 2163.’’.

15 TITLE XIII—VETERANS’

16 PROGRAMS

17 SEC. 13001. PERMANENT EXTENSION OF LIMITATION ON

18 PENSION FOR CERTAIN RECIPIENTS OF MED19 ICAID-COVERED NURSING HOME CARE.

20 Section 5503(f) of title 38, United States Code, is

21 amended by striking out paragraph (7).

22 SEC. 13002. POLICY REGARDING COST-OF-LIVING ADJUST23 MENT IN COMPENSATION RATES.

24 The fiscal year 1994 cost-of-living adjustments in the

25 rates of and limitations for compensation payable under
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1 chapter 11 of title 38, United States Code, and of depend2 ency and indemnity compensation payable under chapter

3 13 of such title will be no more than a percentage equal

4 to the percentage by which benefit amounts payable under

5 title II of the Social Security Act (42 U.S.C. 401 et seq.)

6 are increased effective December 1, 1993, as a result of

7 a determination under section 215(i) of such Act (42

8 U.S.C. 415(i)), with all increased monthly rates and limi9 tations (other than increased rates or limitations equal to

10 a whole dollar amount) rounded down to the next lower

11 dollar. The effective date of such adjustments shall not

12 be earlier than December 4, 1993.

13 SEC. 13003. REDUCTION IN BASIC PAY AND INCENTIVES OF

14 MONTGOMERY GI BILL PARTICIPANTS.

15 (a) ACTIVE DUTY.—Section 3011(b) of title 38,

16 United States Code, is amended—

17 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’;

18 (2) by designating the second sentence as para19 graph (2); and

20 (3) in paragraph (1), as so designated, by strik21 ing out ‘‘shall be reduced by’’ and all that follows

22 through the period and inserting in lieu thereof

23 ‘‘shall be reduced by—

24 ‘‘(A) in the case of an individual who first en25 ters on active duty before October 1, 1993, $100 for
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1 each of the first 12 months that such individual is

2 entitled to such pay;

3 ‘‘(B) in the case of an individual who first en4 ters on active duty during the fiscal year beginning

5 on October 1, 1993, $137 for each of the first 12

6 months that such individual is entitled to such pay;

7 and

8 ‘‘(C) in the case of an individual who first en9 ters on active duty during any fiscal year beginning

10 after September 30, 1994, an amount for each of

11 the first 12 months that such individual is entitled

12 to such pay that is equal to the amount of the

13 monthly pay reduction of an individual under this

14 paragraph during the previous fiscal year increased

15 by the same percentage, if any, as the percentage by

16 which monthly rates of educational assistance are in17 creased for such fiscal year under section 3015(g)(3)

18 of this title.’’.

19 (b) SELECTED RESERVE.—Section 3012(c) of such

20 title is amended—

21 (1) by inserting ‘‘(1)’’ after ‘‘(c)’’;

22 (2) by designating the second sentence as para23 graph (2); and

24 (3) in paragraph (1), as so designated, by strik25 ing out ‘‘shall be reduced by’’ and all that follows
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1 through the period and inserting in lieu thereof

2 ‘‘shall be reduced by—

3 ‘‘(A) in the case of an individual who first en4 ters on active duty before October 1, 1993, $100 for

5 each of the first 12 months that such individual is

6 entitled to such pay;

7 ‘‘(B) in the case of an individual who first en8 ters on active duty during the fiscal year beginning

9 on October 1, 1993, $137 for each of the first 12

10 months that such individual is entitled to such pay;

11 and

12 ‘‘(C) in the case of an individual who first en13 ters on active duty during any fiscal year beginning

14 after September 30, 1994, an amount for each of

15 the first 12 months that such individual is entitled

16 to such pay that is equal to the amount of the

17 monthly pay reduction of an individual under this

18 paragraph during the previous fiscal year increased

19 by the same percentage, if any, as the percentage by

20 which monthly rates of educational assistance are in21 creased for such fiscal year under section 3015(g)(3)

22 of this title.’’.

23 (c) ENROLLMENT BEFORE INVOLUNTARY SEPARA24 TION.—Section 3018A(b) of such title is amended by

25 striking out ‘‘$1,200’’ and inserting in lieu thereof ‘‘an
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1 amount equal to 12 times the amount of the monthly pay

2 reduction determined for the individual in accordance with

3 section 3011(b)(1) or section 3012(c)(1) of this title. For

4 the purposes of such determination, the date of the indi5 vidual’s election to receive assistance under subsection

6 (a)(5) shall be considered the date that the individual first

7 enters on active duty.’’.

8 (d) ENROLLMENT BY VOLUNTARY SEPARATION IN9 CENTIVE RECIPIENTS.—Section 3018B(b)(1) of such title

10 is amended by striking out ‘‘$1,200’’ and inserting in lieu

11 thereof ‘‘an amount equal to 12 times the amount of the

12 monthly pay reduction determined for the individual in ac13 cordance with section 3011(b)(1) or section 3012(c)(1) of

14 this title. For the purposes of such determination, the date

15 of the individual’s election to receive assistance under sub16 section (a)(1)(E) shall be considered the date that the in17 dividual first enters on active duty.’’.

18 SEC. 13004. PERMANENT EXTENSION OF PROCEDURES AP19 PLICABLE TO LIQUIDATION SALES UPON DE20 FAULT OF HOME LOANS GUARANTEED BY

21 THE DEPARTMENT OF VETERANS AFFAIRS.

22 (a) INCLUSION OF RESALE LOSSES IN NET-VALUE

23 CALCULATION.—Paragraph (1)(C) of section 3732(c) of

24 title 38, United States Code, is amended by inserting ‘‘(in-
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1 cluding losses sustained on the resale of the property)’’

2 after ‘‘resale’’.

3 (b) PERMANENT EXTENSION OF AUTHORITY.—Para4 graph (11) of such section is repealed.

5 SEC. 13005. INCREASE IN CERTAIN LOAN FEES.

6 (a) FEE INCREASE.—Paragraph (2) of section

7 3729(a) of title 38, United States Code, is amended—

8 (1) in the matter above subparagraph (A), by

9 striking out ‘‘1.25 percent’’ and inserting in lieu

10 thereof ‘‘2 percent’’;

11 (2) in subparagraph (A), by striking out ‘‘one

12 percent’’ and inserting in lieu thereof ‘‘1 percent’’;

13 (3) in subparagraph (B), by striking out ‘‘0.75

14 percent’’ and inserting in lieu thereof ‘‘1.50 per15 cent’’;

16 (4) in subparagraph (C), by striking out ‘‘0.50

17 percent’’ and inserting in lieu thereof ‘‘1.25 per18 cent’’; and

19 (5) in subparagraph (D)—

20 (i) by striking out ‘‘two percent’’ in clause

21 (i) and inserting in lieu thereof ‘‘2.75 percent’’;

22 (ii) by striking out ‘‘one percent’’ in clause

23 (ii) and inserting in lieu thereof ‘‘1 percent’’;
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1 (iii) by striking out ‘‘1.50 percent’’ in

2 clause (iii)(I) and inserting in lieu thereof ‘‘2.25

3 percent’’; and

4 (iv) by striking out ‘‘1.25 percent’’ in

5 clause (iii)(II) and inserting in lieu thereof ‘‘2

6 percent’’.

7 (b) FEE FOR MANUFACTURED HOMES.—Such para8 graph is further amended—

9 (1) in subparagraph (A), by striking out ‘‘or for

10 any purpose specified in section 3712 of this title

11 (other than section 3712(a)(1)(F))’’;

12 (2) by striking out ‘‘and’’ at the end of sub13 paragraph (D);

14 (3) by striking out the period at the end of sub15 paragraph (E) and inserting in lieu thereof ‘‘; and’’;

16 and

17 (4) by adding at the end the following:

18 ‘‘(F) in the case of a loan made for any purpose

19 specified in section 3712 of this title (other than

20 subsection (a)(1)(F) of such section), the amount of

21 such fee shall be one percent of the total loan

22 amount.’’.

23 (c) REPEAL OF TEMPORARY INCREASE IN FEES.—

24 Such section is further amended—
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1 (1) in paragraph (2), by striking out ‘‘Except

2 as provided in paragraph (6) of this subsection, the’’

3 in the matter above subparagraph (A) and inserting

4 in lieu thereof ‘‘The’’; and

5 (2) by striking out paragraph (6).

6 SEC. 13006. PERMANENT EXTENSION OF MEDICAL CARE

7 COST RECOVERY AUTHORITY.

8 Section 1729(a)(2)(E) of title 38, United States

9 Code, is amended by striking out ‘‘before August 1,

10 1994,’’.

11 SEC. 13007. PERMANENT EXTENSION OF REQUIREMENT

12 THAT CERTAIN VETERANS MAKE

13 COPAYMENTS FOR HEALTH-CARE SERVICES.

14 (a) MEDICATION COPAYMENT REQUIREMENT.—Sec15 tion 1722A of title 38, United States Code, is amended

16 by striking out subsection (c).

17 (b) HEALTH-CARE CATEGORIES AND

18 COPAYMENTS.—Section 8013 of the Omnibus Budget

19 Reconciliation Act of 1990 (38 U.S.C. 1710 note) is

20 amended by striking out subsection (e).

21 SEC. 13008. PERMANENT AUTHORITY TO VERIFY INCOME

22 ELIGIBILITY FOR NEED-BASED BENEFITS.

23 (a) AUTHORITY FOR SECRETARY OF VETERANS AF24 FAIRS TO OBTAIN INFORMATION.—Section 5317 of title
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1 38, United States Code, is amended by striking out sub2 section (g).

3 (b) AUTHORITY FOR SECRETARY OF TREASURY TO

4 PROVIDE INFORMATION.—Section 6103(l)(7)(D) of the

5 Internal Revenue Code of 1986 is amended by striking out

6 the last sentence.

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S 1134 PCS——55

S 1134 PCS——56

S 1134 PCS——57

S 1134 PCS——58

S 1134 PCS——59

S 1134 PCS——60