II

104TH CONGRESS

2D SESSION S. 1533

To provide an opportunity for community renewal and economic growth in

empowerment zones and enterprise communities, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 26, 1996

Mr. MCCAIN introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To provide an opportunity for community renewal and economic growth in empowerment zones and enterprise communities, and for other purposes.

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; TABLE OF CONTENTS; BUDGET

4 EFFECT.

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

6 ‘‘Community Renewal and Economic Opportunity Act’’.

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

8 this Act is as follows:

Sec. 1. Short title; table of contents; budget effect.

TITLE I—ECONOMIC OPPORTUNITY
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Subtitle A—Tax Incentives

Sec. 101. General tax credit for businesses in empowerment zones and enterprise communities.

Sec. 102. Election of flat tax option for zone and community businesses.

Sec. 103. Exclusion for capital gains on certain investments within zones and

communities.

Sec. 104. Increase in expensing under section 179 for businesses in zones and

communities.

Sec. 105. Tax-free dividends received from enterprise zone businesses.

Sec. 106. Work opportunity tax credit.

Subtitle B—Contracting Set-Aside Reform

Sec. 111. Amendments to the Small Business Act.

Sec. 112. Technical and conforming amendments in other law.

Sec. 113. Savings provision.

Sec. 114. Additional technical and conforming amendments.

Subtitle C—Small Business Mentor Program

Sec. 121. Establishment of mentor program.

TITLE II—COMMUNITY INFRASTRUCTURE

Sec. 201. Limitation on the application of the Davis-Bacon requirements to

empowerment zones, enterprise communities, and enterprise

zones.

Sec. 202. Reform of community development block grant program.

TITLE III—SAFE STREETS

Subtitle A—Mandatory Restitution

Sec. 301. Order of restitution.

Sec. 302. Conditions of probation.

Sec. 303. Mandatory restitution.

Sec. 304. Order of restitution to victims of other crimes.

Sec. 305. Procedure for issuance and enforcement of restitution order.

Sec. 306. Procedure.

Sec. 307. Instruction to Sentencing Commission.

Sec. 308. Justice Department regulations.

Sec. 309. Special assessments on convicted persons.

Sec. 310. Crime victims fund.

Sec. 311. Victims of terrorism act.

Sec. 312. Severability.

Sec. 313. Study and report.

Sec. 314. Effective date.

Subtitle B—Asset Forfeiture Assistance

Sec. 321. Forfeitures under the Controlled Substances Act.

TITLE IV—EDUCATIONAL OPPORTUNITY

Sec. 401. Purpose.

Sec. 402. Definitions.

Sec. 403. Funding.
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Sec. 404. Program authorized.

Sec. 405. Authorized projects.

Sec. 406. Applications.

Sec. 407. Education certificates.

Sec. 408. Effect on other programs; use of school lunch data.

Sec. 409. Parental notification.

Sec. 410. Evaluation and report.

TITLE V—FAMILY OPPORTUNITY

Sec. 501. Findings and purpose.

Sec. 502. Removal of barriers to interracial and interethnic adoptions.

Sec. 503. Repeal.

Sec. 504. Effective date.

TITLE VI—VOLUNTEER PROTECTION

Sec. 601. Findings and purpose.

Sec. 602. Definitions.

Sec. 603. No preemption of State tort law.

Sec. 604. Limitation on liability for volunteers.

Sec. 605. Certification requirement and adjustment of social services block

grant allotments.

TITLE VII—SPECTRUM AUCTION

Sec. 701. Auction of electromagnetic spectrum.

1 (c) SENSE OF THE SENATE REGARDING BUDGET

2 NEUTRALITY.—It is the sense of the Senate that appro3 priate reductions in Federal budget spending levels should

4 be made in order to enact in a budget neutral manner

5 the provisions of, and amendments made by, this Act.

6 TITLE I—ECONOMIC

7 OPPORTUNITY

8 Subtitle A—Tax Incentives

9 SEC. 101. GENERAL TAX CREDIT FOR BUSINESSES IN

10 EMPOWERMENT ZONES AND ENTERPRISE

11 COMMUNITIES.

12 (a) IN GENERAL.—Part II of subchapter U of chap13 ter 1 of the Internal Revenue Code of 1986 (relating to
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1 designation and treatment of empowerment zones, enter2 prise communities, and rural development investment

3 areas) is amended by adding at the end the following new

4 section:

5 ‘‘SEC. 1395. GENERAL TAX CREDIT.

6 ‘‘(a) IN GENERAL.—In the case of an enterprise zone

7 business, there shall be allowed as a credit against the tax

8 imposed by this chapter for the taxable year an amount

9 equal to 10 percent of such tax (determined without re10 gard to this section).

11 ‘‘(b) ENTERPRISE ZONE BUSINESS.—For purposes

12 of this section, the term ‘enterprise zone business’ has the

13 meaning given to such term by section 1394(b)(3), except

14 that in the case of empowerment zones, subsections (b)(6)

15 and (c)(5) of section 1397B shall be applied by substitut16 ing ‘50 percent’ for ‘35 percent’.

17 ‘‘(c) DESIGNATION OF ADDITIONAL ENTERPRISE

18 COMMUNITIES FOR TAX CREDIT AND FLAT TAX OP19 TION.—For purposes of the credit allowed under this sec20 tion and the flat tax option under section 1395A only, and

21 notwithstanding subsections (b)(1) and (c) of section

22 1391(b)(1), the Secretary of Housing and Urban Develop23 ment may designate 90 additional enterprise communities

24 in urban areas under section 1391.’’.

25 (b) CONFORMING AMENDMENTS.—
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1 (1) Part II of subchapter U of chapter 1 of the

2 Internal Revenue Code of 1986 is amended to read

3 as follows:

4 ‘‘PART II—INCENTIVES FOR EMPOWERMENT

5 ZONES AND ENTERPRISE COMMUNITIES.’’.

6 (2) The table of parts of subchapter U of chap7 ter 1 of such Code is amended to read as follows:

‘‘Part II. Incentives for empowerment zones and enterprise communities.’’.

8 (3) The table of sections of part II of sub9 chapter U of chapter 1 of such Code is amended by

10 adding at the end the following new item:

‘‘Sec. 1395. General tax credit.’’.

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

12 this section shall apply to taxable years beginning after

13 December 31, 1996.

14 SEC. 102. ELECTION OF FLAT TAX OPTION FOR ZONE AND

15 COMMUNITY BUSINESSES.

16 (a) IN GENERAL.—Part II of subchapter U of chap17 ter 1 of the Internal Revenue Code of 1986, as amended

18 by section 101, is amended by adding at the end the fol19 lowing new section:

20 ‘‘SEC. 1395A. FLAT TAX OPTION.

21 ‘‘(a) IN GENERAL.—An enterprise zone business may

22 elect for any taxable year the flat tax option.
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1 ‘‘(b) FLAT TAX OPTION.—For purposes of this sec2 tion, the term ‘flat tax option’ means, with respect to any

3 taxable year—

4 ‘‘(1) no credit otherwise allowable to the tax5 payer under this subchapter or part IV of sub6 chapter A shall be allowed,

7 ‘‘(2) part VI of subchapter A (relating to the

8 alternative minimum tax) shall not apply to the tax9 payer, and

10 ‘‘(3) section 11 shall apply to the taxpayer as

11 if amended to read as follows:

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

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

14 every person engaged in a business activity a tax equal

15 to 10 percent of the business taxable income of such per16 son.

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

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

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

20 corporation, or otherwise.

21 ‘‘ ‘(c) BUSINESS TAXABLE INCOME.—For purposes of

22 this section—

23 ‘‘ ‘(1) IN GENERAL.—The term ‘‘business tax24 able income’’ means gross active income reduced by

25 the deductions specified in subsection (d).
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1 ‘‘ ‘(2) GROSS ACTIVE INCOME.—

2 ‘‘ ‘(A) IN GENERAL.—For purposes of

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

4 means gross receipts from—

5 ‘‘ ‘(i) the sale or exchange of property

6 or services in the United States by any

7 person in connection with a business activ8 ity, and

9 ‘‘ ‘(ii) the export of property or serv10 ices from the United States in connection

11 with a business activity.

12 ‘‘ ‘(B) EXCHANGES.—For purposes of this

13 section, the amount treated as gross receipts

14 from the exchange of property or services is the

15 fair market value of the property or services re16 ceived, plus any money received.

17 ‘‘ ‘(C) COORDINATION WITH SPECIAL

18 RULES FOR FINANCIAL SERVICES, ETC.—Except

19 as provided in subsection (e)—

20 ‘‘ ‘(i) the term ‘‘property’’ does not in21 clude money or any financial instrument,

22 and

23 ‘‘ ‘(ii) the term ‘‘services’’ does not in24 clude financial services.
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1 ‘‘ ‘(3) EXEMPTION FROM TAX FOR ACTIVITIES

2 OF GOVERNMENTAL ENTITIES AND TAX-EXEMPT OR3 GANIZATIONS.—For purposes of this section, the

4 term ‘‘business activity’’ does not include any activ5 ity of a governmental entity or of any other organi6 zation which is exempt from tax under this chapter.

7 ‘‘ ‘(d) DEDUCTIONS.—

8 ‘‘ ‘(1) IN GENERAL.—The deductions specified

9 in this subsection are—

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

11 business activity,

12 ‘‘ ‘(B) wages (as defined in section 3121(a)

13 without regard to paragraph (1) thereof) which

14 are paid in cash for services performed in the

15 United States as an employee, and

16 ‘‘ ‘(C) retirement contributions to or under

17 any plan or arrangement which makes retire18 ment distributions (as defined in section 63(c))

19 for the benefit of such employees to the extent

20 such contributions are allowed as a deduction

21 under section 404.

22 ‘‘ ‘(2) BUSINESS INPUTS.—

23 ‘‘ ‘(A) IN GENERAL.—For purposes of

24 paragraph (1), the term ‘‘cost of business in25 puts’’ means—
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1 ‘‘ ‘(i) the amount paid for property

2 sold or used in connection with a business

3 activity,

4 ‘‘ ‘(ii) the amount paid for services

5 (other than for the services of employees,

6 including fringe benefits paid by reason of

7 such services) in connection with a busi8 ness activity, and

9 ‘‘ ‘(iii) any excise tax, sales tax, cus10 toms duty, or other separately stated levy

11 imposed by a Federal, State, or local gov12 ernment on the purchase of property or

13 services which are for use in connection

14 with a business activity.

15 Such term shall not include any tax imposed by

16 chapter 2 or 21.

17 ‘‘ ‘(B) EXCEPTIONS.—Such term shall not

18 include—

19 ‘‘ ‘(i) items described in subpara20 graphs (B) and (C) of paragraph (1), and

21 ‘‘ ‘(ii) items for personal use not in

22 connection with any business activity.

23 ‘‘ ‘(C) EXCHANGES.—For purposes of this

24 section, the amount treated as paid in connec25 tion with the exchange of property or services
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1 is the fair market value of the property or serv2 ices exchanged, plus any money paid.

3 ‘‘ ‘(e) SPECIAL RULES FOR FINANCIAL

4 INTERMEDIATION SERVICE ACTIVITIES.—In the case of

5 the business activity of providing financial intermediation

6 services, the taxable income from such activity shall be

7 equal to the value of the intermediation services provided

8 in such activity.

9 ‘‘ ‘(f) EXCEPTION FOR SERVICES PERFORMED AS

10 EMPLOYEE.—For purposes of this section, the term ‘‘busi11 ness activity’’ does not include the performance of services

12 by an employee for the employee’s employer.

13 ‘‘ ‘(g) CARRYOVER OF EXCESS DEDUCTIONS.—

14 ‘‘ ‘(1) IN GENERAL.—If the aggregate deduc15 tions for any taxable year exceed the gross active in16 come for such taxable year, the amount of the de17 ductions specified in subsection (d) for the succeed18 ing taxable year (determined without regard to this

19 subsection) shall be increased by the sum of—

20 ‘‘ ‘(A) such excess, plus

21 ‘‘ ‘(B) the product of such excess and the

22 3-month Treasury rate for the last month of

23 such taxable year.

24 ‘‘ ‘(2) 3-MONTH TREASURY RATE.—For pur25 poses of paragraph (1), the 3-month Treasury rate
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1 is the rate determined by the Secretary based on the

2 average market yield (during any 1-month period se3 lected by the Secretary and ending in the calendar

4 month in which the determination is made) on out5 standing marketable obligations of the United States

6 with remaining periods to maturity of 3 months or

7 less.’

8 ‘‘(c) ENTERPRISE ZONE BUSINESS.—For purposes of

9 this section, the term ‘enterprise zone business’ has the

10 meaning given to such term by section 1394(b)(3), except

11 that subsections (b)(6) and (c)(5) of section 1397B shall

12 be applied by substituting ‘50 percent’ for ‘35 percent’.’’.

13 (b) CONFORMING AMENDMENT.—The table of sec14 tions of part II of subchapter U of chapter 1 of such Code,

15 as amended by section 101, is amended by adding at the

16 end the following new item:

‘‘Sec. 1395A. Flat tax option.’’.

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

18 this section shall apply to taxable years beginning after

19 December 31, 1996.

20 SEC. 103. EXCLUSION FOR CAPITAL GAINS ON CERTAIN IN21 VESTMENTS WITHIN ZONES AND COMMU22 NITIES.

23 (a) IN GENERAL.—Part II of subchapter U of chap24 ter 1 of the Internal Revenue Code of 1986, as amended
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1 by sections 101 and 102, is amended by adding at the

2 end the following new section:

3 ‘‘SEC. 1395B. EXCLUSION FOR GAIN FROM ZONE OR COM4 MUNITY INVESTMENTS.

5 ‘‘(a) GENERAL RULE.—In the case of an individual,

6 gross income shall not include any qualified capital gain

7 recognized on the sale or exchange of a qualified zone

8 asset held for more than 5 years.

9 ‘‘(b) QUALIFIED ZONE ASSET.—For purposes of this

10 section—

11 ‘‘(1) IN GENERAL.—The term ‘qualified zone

12 asset’ means—

13 ‘‘(A) any qualified zone stock,

14 ‘‘(B) any qualified zone property, and

15 ‘‘(C) any qualified zone partnership inter16 est.

17 ‘‘(2) QUALIFIED ZONE STOCK.—

18 ‘‘(A) IN GENERAL.—Except as provided in

19 subparagraph (B), the term ‘qualified zone

20 stock’ means any stock in a domestic corpora21 tion if—

22 ‘‘(i) such stock is acquired by the tax23 payer on original issue from the corpora24 tion solely in exchange for cash,
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1 ‘‘(ii) as of the time such stock was is2 sued, such corporation was an enterprise

3 zone business (or, in the case of a new cor4 poration, such corporation was being orga5 nized for purposes of being an enterprise

6 zone business), and

7 ‘‘(iii) during substantially all of the

8 taxpayer’s holding period for such stock,

9 such corporation qualified as an enterprise

10 zone business.

11 ‘‘(B) REDEMPTIONS.—The term ‘qualified

12 zone stock’ shall not include any stock acquired

13 from a corporation which made a substantial

14 stock redemption or distribution (without a

15 bona fide business purpose therefor) in an at16 tempt to avoid the purposes of this section.

17 ‘‘(3) QUALIFIED ZONE PROPERTY.—

18 ‘‘(A) IN GENERAL.—The term ‘qualified

19 zone property’ has the meaning given to such

20 term by section 1397C, except that references

21 to empowerment zones shall be treated as in22 cluding references to enterprise communities.

23 ‘‘(4) QUALIFIED ZONE PARTNERSHIP INTER24 EST.—The term ‘qualified zone partnership interest’

25 means any interest in a partnership if—
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1 ‘‘(A) such interest is acquired by the tax2 payer from the partnership solely in exchange

3 for cash,

4 ‘‘(B) as of the time such interest was ac5 quired, such partnership was an enterprise zone

6 business (or, in the case of a new partnership,

7 such partnership was being organized for pur8 poses of being an enterprise zone business), and

9 ‘‘(C) during substantially all of the tax10 payer’s holding period for such interest, such

11 partnership qualified as an enterprise zone

12 business.

13 A rule similar to the rule of paragraph (2)(B) shall

14 apply for purposes of this paragraph.

15 ‘‘(5) TREATMENT OF SUBSEQUENT PUR16 CHASERS.—The term ‘qualified zone asset’ includes

17 any property which would be a qualified zone asset

18 but for paragraph (2)(A)(i), section 1397(a)(1)(B),

19 or paragraph (4)(A) in the hands of the taxpayer if

20 such property was a qualified zone asset in the

21 hands of any prior holder.

22 ‘‘(6) 10-YEAR SAFE HARBOR.—If any property

23 ceases to be a qualified zone asset by reason of para24 graph (2)(A)(iii), section 1397(a)(1)(C), or para25 graph (4)(C) after the 10-year period beginning on
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1 the date the taxpayer acquired such property, such

2 property shall continue to be treated as meeting the

3 requirements of such paragraph; except that the

4 amount of gain to which subsection (a) applies on

5 any sale or exchange of such property shall not ex6 ceed the amount which would be qualified capital

7 gain had such property been sold on the date of such

8 cessation.

9 ‘‘(7) TREATMENT OF ZONE OR COMMUNITY

10 TERMINATIONS.—The termination of any designa11 tion of an area as an empowerment zone or enter12 prise community shall be disregarded for purposes of

13 determining whether any property is a qualified zone

14 asset.

15 ‘‘(c) OTHER DEFINITIONS AND SPECIAL RULES.—

16 For purposes of this section—

17 ‘‘(1) ENTERPRISE ZONE BUSINESS.—For pur18 poses of this section, the term ‘enterprise zone busi19 ness’ has the meaning given to such term by section

20 1394(b)(3).’’.

21 ‘‘(2) QUALIFIED CAPITAL GAIN.—Except as

22 otherwise provided in this subsection, the term

23 ‘qualified capital gain’ means any long-term capital

24 gain.
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1 ‘‘(3) CERTAIN GAIN ON REAL PROPERTY NOT

2 QUALIFIED.—The term ‘qualified capital gain’ shall

3 not include any gain which would be treated as ordi4 nary income under section 1250 if section 1250 ap5 plied to all depreciation rather than the additional

6 depreciation.

7 ‘‘(4) GAIN ATTRIBUTABLE TO PERIODS AFTER

8 TERMINATION OF ZONE OR COMMUNITY DESIGNA9 TION NOT QUALIFIED.—The term ‘qualified capital

10 gain’ shall not include any gain attributable to peri11 ods after the termination of any designation of an

12 area as an empowerment zone or enterprise commu13 nity.

14 ‘‘(d) TREATMENT OF PASS-THRU ENTITIES.—

15 ‘‘(1) SALES AND EXCHANGES.—Gain on the

16 sale or exchange of an interest in a pass-thru entity

17 held by the taxpayer (other than an interest in an

18 entity which was an enterprise zone business during

19 substantially all of the period the taxpayer held such

20 interest) for more than 5 years shall be treated as

21 gain described in subsection (a) to the extent such

22 gain is attributable to amounts which would be

23 qualified capital gain on qualified zone assets (deter24 mined as if such assets had been sold on the date

25 of the sale or exchange) held by such entity for more
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1 than 5 years and throughout the period the taxpayer

2 held such interest. A rule similar to the rule of para3 graph (2)(B) shall apply for purposes of the preced4 ing sentence.

5 ‘‘(2) DISTRIBUTIONS.—

6 ‘‘(A) IN GENERAL.—Any amount included

7 in income by reason of holding an interest in a

8 pass-thru entity (other than an entity which

9 was an enterprise zone business during substan10 tially all of the period the taxpayer held the in11 terest to which such inclusion relates) shall be

12 treated as gain described in subsection (a) if

13 such amount meets the requirements of sub14 paragraph (B).

15 ‘‘(B) REQUIREMENTS.—An amount meets

16 the requirements of this subparagraph if—

17 ‘‘(i) such amount is attributable to

18 gain on the sale or exchange by the pass19 thru entity of property which is a qualified

20 zone asset in the hands of such entity and

21 which was held by such entity for the pe22 riod required under subsection (a), and

23 ‘‘(ii) such amount is includible in the

24 gross income of the taxpayer by reason of

25 the holding of an interest in such entity
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1 which was held by the taxpayer on the date

2 on which such pass-thru entity acquired

3 such asset and at all times thereafter be4 fore the disposition of such asset by such

5 pass-thru entity.

6 ‘‘(C) LIMITATION BASED ON INTEREST

7 ORIGINALLY HELD BY TAXPAYER.—Subpara8 graph (A) shall not apply to any amount to the

9 extent such amount exceeds the amount to

10 which subparagraph (A) would have applied if

11 such amount were determined by reference to

12 the interest the taxpayer held in the pass-thru

13 entity on the date the qualified zone asset was

14 acquired.

15 ‘‘(3) PASS-THRU ENTITY.—For purposes of this

16 subsection, the term ‘pass-thru entity’ means—

17 ‘‘(A) any partnership,

18 ‘‘(B) any S corporation,

19 ‘‘(C) any regulated investment company,

20 and

21 ‘‘(D) any common trust fund.

22 ‘‘(e) SALES AND EXCHANGES OF INTERESTS IN

23 PARTNERSHIPS AND S CORPORATIONS WHICH ARE

24 QUALIFIED ZONE BUSINESSES.—In the case of the sale

25 or exchange of an interest in a partnership, or of stock
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1 in an S Corporation, which was an enterprise zone busi2 ness during substantially all of the period the taxpayer

3 held such interest or stock) is an enterprise zone business,

4 the amount of qualified capital gain shall be determined

5 without regard to—

6 ‘‘(1) any intangible, and any land, which is not

7 an integral part of any qualified business (as defined

8 in section 1397B(d)), and

9 ‘‘(2) gain attributable to periods before the des10 ignation of an area as an empowerment zone or en11 terprise community.

12 ‘‘(f) CERTAIN TAX-FREE AND OTHER TRANSFERS.—

13 For purposes of this section—

14 ‘‘(1) IN GENERAL.—In the case of a transfer of

15 a qualified zone asset to which this subsection ap16 plies, the transferee shall be treated as—

17 ‘‘(A) having acquired such asset in the

18 same manner as the transferor, and

19 ‘‘(B) having held such asset during any

20 continuous period immediately preceding the

21 transfer during which it was held (or treated as

22 held under this subsection) by the transferor.

23 ‘‘(2) TRANSFERS TO WHICH SUBSECTION AP24 PLIES.—This subsection shall apply to any trans25 fer—
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1 ‘‘(A) by gift,

2 ‘‘(B) at death, or

3 ‘‘(C) from a partnership to a partner

4 thereof of a qualified zone asset with respect to

5 which the requirements of subsection (d)(2) are

6 met at the time of the transfer (without regard

7 to the 5-year holding requirement).

8 ‘‘(3) CERTAIN RULES MADE APPLICABLE.—

9 Rules similar to the rules of section 1244(d)(2) shall

10 apply for purposes of this section.’’.

11 (b) CONFORMING AMENDMENTS.—

12 (1) Section 172(d)(2)(B) of the Internal Reve13 nue Code of 1986 (relating to modifications with re14 spect to net operating loss deduction) is amended by

15 striking ‘‘section 1202’’ and inserting ‘‘sections

16 1202 and 1395B’’.

17 (2) Paragraph (4) of section 642(c) of such

18 Code (relating to adjustments) is amended by insert19 ing ‘‘or 1395B(a)’’ after ‘‘section 1202(a)’’ and by

20 inserting ‘‘or 1395B’’ after ‘‘section 1202’’.

21 (3) Paragraph (3) of section 643(a) of such

22 Code (defining distributable net income) is amended

23 by striking ‘‘section 1202’’ and inserting ‘‘sections

24 1202 and 1395B’’.
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1 (4) Paragraph (4) of section 691(c) of such

2 Code (relating to coordination with capital gain pro3 visions) is amended by striking ‘‘1202, and 1211’’

4 and inserting ‘‘1202, 1395B, and 1211’’.

5 (5) The second sentence of paragraph (2) of

6 section 871(a) of such Code (relating to capital

7 gains of aliens present in the United States 183

8 days or more) is amended by inserting ‘‘or 1395B’’

9 after ‘‘section 1202’’.

10 (6) The table of sections of part II of sub11 chapter U of chapter 1 of such Code, as amended

12 by sections 101 and 102, is amended by adding at

13 the end the following new item:

‘‘Sec. 1395B. Exclusion for gain from zone or community investments.’’.

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

15 this section shall apply to taxable years beginning after

16 December 31, 1996.

17 SEC. 104. INCREASE IN EXPENSING UNDER SECTION 179

18 FOR BUSINESSES IN ZONES AND COMMU19 NITIES.

20 (a) IN GENERAL.—Part II of subchapter U of chap21 ter 1 of the Internal Revenue Code of 1986, as amended

22 by sections 101, 102, and 103, is amended by adding at

23 the end the following new section:
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1 ‘‘SEC. 1395C. INCREASE IN EXPENSING UNDER SECTION 179.

2 ‘‘(a) GENERAL RULE.—In the case of an enterprise

3 zone business, for purposes of section 179—

4 ‘‘(1) the limitation under section 179(b)(1)

5 shall be increased by the lesser of—

6 ‘‘(A) $35,000, or

7 ‘‘(B) the cost of section 179 property

8 which is qualified zone property placed in serv9 ice during the taxable year, and

10 ‘‘(2) the amount taken into account under sec11 tion 179(b)(2) with respect to any section 179 prop12 erty which is qualified zone property shall be 50 per13 cent of the cost thereof.

14 ‘‘(b) RECAPTURE.—Rules similar to the rules under

15 section 179(d)(10) shall apply with respect to any quali16 fied zone property which ceases to be used in an

17 empowerment zone or enterprise community by an enter18 prise zone business.

19 ‘‘(c) ENTERPRISE ZONE BUSINESS.—For purposes of

20 this section, the term ‘enterprise zone business’ has the

21 meaning given to such term by section 1394(b)(3).’’.

22 (b) CONFORMING AMENDMENTS.—

23 (1) The table of sections of part II of sub24 chapter U of chapter 1 of the Internal Revenue Code

25 of 1986, as amended by sections 101, 102, and 103,
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1 is amended by adding at the end the following new

2 item:

‘‘Sec. 1395C. Increase in expensing under section 179.’’.

3 (2) Part III of subchapter U of chapter 1 of

4 such Code is amended by striking subpart B and by

5 redesignating subpart C as subpart B.

6 (3) The table of subparts of part III of such

7 subchapter is amended by striking the item relating

8 to subpart B and by redesignating the item relating

9 to subpart C as subpart B.

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

11 this section shall apply to taxable years beginning after

12 December 31, 1996.

13 SEC. 105. TAX-FREE DIVIDENDS RECEIVED FROM ENTER14 PRISE ZONE BUSINESSES.

15 (a) CORPORATIONS.—Section 243(a) of the Internal

16 Revenue Code of 1986 (relating to dividends received by

17 corporations) is amended—

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

19 (2),

20 (2) by striking the period at the end of para21 graph (3) and inserting ‘‘; and’’, and

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

23 paragraph:

24 ‘‘(4) 100 percent in the case of dividends re25 ceived from an enterprise zone business.’’.
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1 (b) TAXPAYERS OTHER THAN CORPORATIONS.—

2 (1) IN GENERAL.—Part III of subchapter B of

3 chapter 1 of the Internal Revenue Code of 1986 (re4 lating to items specifically excluded for gross in5 come) is amended by redesignating section 137 as

6 section 138 and by inserting after section 136 the

7 following new section:

8 ‘‘SEC. 137. EXCLUSION OF CERTAIN DIVIDENDS RECEIVED

9 BY INDIVIDUALS.

10 ‘‘(a) EXCLUSION FROM GROSS INCOME.—Gross in11 come does not include amounts received by an individual

12 as dividends from enterprise zone businesses.

13 ‘‘(b) CERTAIN DIVIDENDS EXCLUDED.—Subsection

14 (a) shall not apply to any dividend from—

15 ‘‘(1) a corporation which, for the taxable year

16 of the corporation in which the distribution is made,

17 or for the next preceding taxable year of the cor18 poration, is a corporation exempt from tax under

19 section 501 (relating to certain charitable, etc., orga20 nizations) or section 521 (relating to farmers’ coop21 erative associations); or

22 ‘‘(2) a real estate investment trust which, for

23 the taxable year of the trust in which the dividend

24 is paid, qualifies under part II of subchapter M (sec.

25 856 and following).
25

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1 ‘‘(c) SPECIAL RULES FOR CERTAIN DISTRIBU2 TIONS.—For purposes of subsection (a)—

3 ‘‘(1) Any amount allowed as a deduction under

4 section 591 (relating to deduction for dividends paid

5 by mutual savings banks, etc.) shall not be treated

6 as a dividend.

7 ‘‘(2) A dividend received from a regulated in8 vestment company shall be subject to the limitations

9 prescribed in section 854.

10 ‘‘(3) The amount of dividends properly allocable

11 to a beneficiary under section 652 or 662 shall be

12 deemed to have been received by the beneficiary rat13 ably on the same date that the dividends were re14 ceived by the estate or trust.’’.

15 (2) CONFORMING AMENDMENT.—The table of

16 sections for such part III is amended by striking the

17 item relating to section 137 and inserting the follow18 ing new items:

‘‘Sec. 137. Exclusion of certain dividends received by individuals.

‘‘Sec. 138. Cross reference to other Acts.’’.

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

20 this section shall apply to taxable years beginning after

21 December 31, 1996.

22 SEC. 106. WORK OPPORTUNITY TAX CREDIT.

23 (a) AMOUNT OF CREDIT.—Subsection (a) of section

24 51 of the Internal Revenue Code of 1986 (relating to
26

•S 1533 IS

1 amount of credit) is amended by striking ‘‘40 percent’’

2 and inserting ‘‘35 percent’’.

3 (b) QUALIFIED WAGES.—Paragraph (3) of section

4 51(b) of the Internal Revenue Code of 1986 (defining

5 qualified wages) is amended by striking ‘‘$6,000’’ both

6 places it appears and inserting ‘‘$12,000’’.

7 (c) MEMBERS OF TARGETED GROUPS.—Subsection

8 (d) of section 51 of the Internal Revenue Code of 1986

9 is amended to read as follows:

10 ‘‘(d) MEMBERS OF TARGETED GROUPS.—For pur11 poses of this subpart—

12 ‘‘(1) IN GENERAL.—An individual is a member

13 of a targeted group if such individual is—

14 ‘‘(A) a qualified IV–A recipient,

15 ‘‘(B) a qualified veteran,

16 ‘‘(C) a high-risk youth,

17 ‘‘(D) a vocational rehabilitation referral, or

18 ‘‘(E) a qualified summer youth employee.

19 ‘‘(2) QUALIFIED IV–A RECIPIENT.—

20 ‘‘(A) IN GENERAL.—The term ‘qualified

21 IV–A recipient’ means any individual who is

22 certified by the designated local agency as being

23 a member of a family receiving assistance under

24 a IV–A program for at least a 9-month period
27

•S 1533 IS

1 ending during the 9-month period ending on the

2 hiring date.

3 ‘‘(B) IV–A PROGRAM.—For purposes of

4 this paragraph, the term ‘IV–A program’ means

5 any program providing assistance under a State

6 plan approved under part A of title IV of the

7 Social Security Act (relating to assistance for

8 needy families with minor children) and any

9 successor of such program.

10 ‘‘(3) QUALIFIED VETERAN.—

11 ‘‘(A) IN GENERAL.—The term ‘qualified

12 veteran’ means any veteran who is certified by

13 the designated local agency as being—

14 ‘‘(i) a member of a family receiving

15 assistance under a IV–A program (as de16 fined in paragraph (2)(B)) for at least a 9-

17 month period ending during the 12-month

18 period ending on the hiring date, or

19 ‘‘(ii) a member of a family receiving

20 assistance under a food stamp program

21 under the Food Stamp Act of 1977 for at

22 least a 3-month period ending during the

23 12-month period ending on the hiring date.

24 ‘‘(B) VETERAN.—For purposes of subpara25 graph (A), the term ‘veteran’ means any indi-
28

•S 1533 IS

1 vidual who is certified by the designated local

2 agency as—

3 ‘‘(i)(I) having served on active duty

4 (other than active duty for training) in the

5 Armed Forces of the United States for a

6 period of more than 180 days, or

7 ‘‘(II) having been discharged or re8 leased from active duty in the Armed

9 Forces of the United States for a service10 connected disability, and

11 ‘‘(ii) not having any day during the

12 60-day period ending on the hiring date

13 which was a day of extended active duty in

14 the Armed Forces of the United States.

15 For purposes of clause (ii), the term ‘extended

16 active duty’ means a period of more than 90

17 days during which the individual was on active

18 duty (other than active duty for training).

19 ‘‘(4) HIGH-RISK YOUTH.—

20 ‘‘(A) IN GENERAL.—The term ‘high-risk

21 youth’ means any individual who is certified by

22 the designated local agency—

23 ‘‘(i) as having attained age 18 but not

24 age 25 on the hiring date, and
29

•S 1533 IS

1 ‘‘(ii) as having his principal place of

2 abode within an empowerment zone or en3 terprise community.

4 ‘‘(B) YOUTH MUST CONTINUE TO RESIDE

5 IN ZONE.—In the case of a high-risk youth, the

6 term ‘qualified wages’ shall not include wages

7 paid or incurred for services performed while

8 such youth’s principal place of abode is outside

9 an empowerment zone or enterprise community.

10 ‘‘(5) VOCATIONAL REHABILITATION REFER11 RAL.—The term ‘vocational rehabilitation referral’

12 means any individual who is certified by the des13 ignated local agency as—

14 ‘‘(A) having a physical or mental disability

15 which, for such individual, constitutes or results

16 in a substantial handicap to employment, and

17 ‘‘(B) having been referred to the employer

18 upon completion of (or while receiving) rehabili19 tative services pursuant to—

20 ‘‘(i) an individualized written rehabili21 tation plan under a State plan for voca22 tional rehabilitation services approved

23 under the Rehabilitation Act of 1973, or
30

•S 1533 IS

1 ‘‘(ii) a program of vocational rehabili2 tation carried out under chapter 31 of title

3 38, United States Code.

4 ‘‘(6) QUALIFIED SUMMER YOUTH EMPLOYEE.—

5 ‘‘(A) IN GENERAL.—The term ‘qualified

6 summer youth employee’ means any individ7 ual—

8 ‘‘(i) who performs services for the em9 ployer between May 1 and September 15,

10 ‘‘(ii) who is certified by the designated

11 local agency as having attained age 16 but

12 not 18 on the hiring date (or if later, on

13 May 1 of the calendar year involved),

14 ‘‘(iii) who has not been an employee

15 of the employer during any period prior to

16 the 90-day period described in subpara17 graph (B)(i), and

18 ‘‘(iv) who is certified by the des19 ignated local agency as having his principal

20 place of abode within an empowerment

21 zone or enterprise community.

22 ‘‘(B) SPECIAL RULES FOR DETERMINING

23 AMOUNT OF CREDIT.—For purposes of applying

24 this subpart to wages paid or incurred to any

25 qualified summer youth employee—
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•S 1533 IS

1 ‘‘(i) subsection (b)(2) shall be applied

2 by substituting ‘any 90-day period between

3 May 1 and September 15’ for ‘the 1-year

4 period beginning with the day the individ5 ual begins work for the employer’, and

6 ‘‘(ii) subsection (b)(3) shall be applied

7 by substituting ‘$3,000’ for ‘$6,000’.

8 The preceding sentence shall not apply to an in9 dividual who, with respect to the same em10 ployer, is certified as a member of another tar11 geted group after such individual has been a

12 qualified summer youth employee.

13 ‘‘(C) YOUTH MUST CONTINUE TO RESIDE

14 IN ZONE.—Paragraph (4)(B) shall apply for

15 purposes of this paragraph.

16 ‘‘(7) HIRING DATE.—The term ‘hiring date’

17 means the day the individual is hired by the em18 ployer.

19 ‘‘(8) DESIGNATED LOCAL AGENCY.—The term

20 ‘designated local agency’ means a State employment

21 security agency established in accordance with the

22 Act of June 6, 1933, as amended (29 U.S.C. 49–

23 49n).

24 ‘‘(9) SPECIAL RULES FOR CERTIFICATIONS.—
32

•S 1533 IS

1 ‘‘(A) IN GENERAL.—An individual shall

2 not be treated as a member of a targeted group

3 unless—

4 ‘‘(i) on or before the day on which

5 such individual begins work for the em6 ployer, the employer has received a certifi7 cation from a designated local agency that

8 such individual is a member of a targeted

9 group, or

10 ‘‘(ii)(I) on or before the day the indi11 vidual is offered employment with the em12 ployer, a pre-screening notice is completed

13 by the employer with respect to such indi14 vidual, and

15 ‘‘(II) not later than the 14th day after

16 the individual begins work for the em17 ployer, the employer submits such notice,

18 signed by the employer and the individual

19 under penalties of perjury, to the des20 ignated local agency as part of a written

21 request for such a certification from such

22 agency.

23 For purposes of this paragraph, the term ‘pre24 screening notice’ means a document (in such

25 form as the Secretary shall prescribe) which
33

•S 1533 IS

1 contains information provided by the individual

2 on the basis of which the employer believes that

3 the individual is a member of a targeted group.

4 ‘‘(B) INCORRECT CERTIFICATIONS.—If—

5 ‘‘(i) an individual has been certified

6 by a designated local agency as a member

7 of a targeted group, and

8 ‘‘(ii) such certification is incorrect be9 cause it was based on false information

10 provided by such individual,

11 the certification shall be revoked and wages

12 paid by the employer after the date on which

13 notice of revocation is received by the employer

14 shall not be treated as qualified wages.

15 ‘‘(C) EXPLANATION OF DENIAL OF RE16 QUEST.—If a designated local agency denies a

17 request for certification of membership in a tar18 geted group, such agency shall provide to the

19 person making such request a written expla20 nation of the reasons for such denial.’’.

21 (d) MINIMUM EMPLOYMENT PERIOD.—Paragraph

22 (3) of section 51(i) of the Internal Revenue Code of 1986

23 (relating to certain individuals ineligible) is amended to

24 read as follows:
34

•S 1533 IS

1 ‘‘(3) INDIVIDUALS NOT MEETING MINIMUM EM2 PLOYMENT PERIOD.—No wages shall be taken into

3 account under subsection (a) with respect to any in4 dividual unless such individual either—

5 ‘‘(A) is employed by the employer at least

6 180 days (20 days in the case of a qualified

7 summer youth employee), or

8 ‘‘(B) has completed at least 500 hours

9 (120 hours in the case of a qualified summer

10 youth employee) of services performed for the

11 employer.’’.

12 (e) TERMINATION.—Paragraph (4) of section 51(c)

13 of the Internal Revenue Code of 1986 (relating to wages

14 defined) is amended to read as follows:

15 ‘‘(4) TERMINATION.—The term ‘wages’ shall

16 not include any amount paid or incurred to an indi17 vidual who begins work for the employer—

18 ‘‘(A) after December 31, 1994, and before

19 January 1, 1996, or

20 ‘‘(B) after December 31, 1996.’’.

21 (f) REDESIGNATION OF CREDIT.—

22 (1) Sections 38(b)(2) and 51(a) of the Internal

23 Revenue Code of 1986 are each amended by striking

24 ‘‘targeted jobs credit’’ and inserting ‘‘work oppor25 tunity credit’’.
35

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1 (2) The subpart heading for subpart F of part

2 IV of subchapter A of chapter 1 of such Code is

3 amended by striking ‘‘Targeted Jobs Credit’’

4 and inserting ‘‘Work Opportunity Credit’’.

5 (3) The table of subparts for such part IV is

6 amended by striking ‘‘targeted jobs credit’’ and in7 serting ‘‘work opportunity credit’’.

8 (4) The heading for paragraph (3) of section

9 1396(c) of such Code is amended by striking ‘‘TAR10 GETED JOBS CREDIT’’ and inserting ‘‘WORK OPPOR11 TUNITY CREDIT’’.

12 (f) TECHNICAL AMENDMENTS.—

13 (1) Paragraph (1) of section 51(c) of the Inter14 nal Revenue Code of 1986 is amended by striking ‘‘,

15 subsection (d)(8)(D),’’.

16 (2) Paragraph (3) of section 51(i) of such Code

17 is amended by striking ‘‘(d)(12)’’ each place it ap18 pears and inserting ‘‘(d)(6)’’.

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

20 this section shall apply to individuals who begin work for

21 the employer after December 31, 1996.
36

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1 Subtitle B—Contracting Set-Aside

2 Reform

3 SEC. 111. AMENDMENTS TO THE SMALL BUSINESS ACT.

4 (a) FINDINGS AND PURPOSES.—Section 2 of the

5 Small Business Act (15 U.S.C. 631) is amended—

6 (1) by striking subsection (f);

7 (2) by redesignating subsections (g) through (i)

8 as subsections (f) through (h), respectively; and

9 (3) in subsection (g)(1)(H), as redesignated, by

10 striking ‘‘socially and’’.

11 (b) DEFINITIONS.—Section 3 of the Small Business

12 Act (15 U.S.C. 632) is amended by adding at the end the

13 following new subsection:

14 ‘‘(o) ECONOMICALLY DISADVANTAGED.—For pur15 poses of this Act, the terms ‘economically disadvantaged

16 small business concern’ and ‘economically disadvantaged

17 individual’ have the same meanings as in section 8(a).’’.

18 (c) ADMINISTRATION OF PROGRAMS.—Section

19 4(b)(1) of the Small Business Act (15 U.S.C. 633(b)(1))

20 is amended by striking the sixth sentence.

21 (d) GUARANTEED LOAN PROGRAM.—Section

22 7(a)(20)(A) of the Small Business Act (15 U.S.C.

23 636(a)(20)(A)) is amended by striking ‘‘subsection (j)(10)

24 and’’.
37

•S 1533 IS

1 (e) FINANCIAL ASSISTANCE FOR PROJECTS PROVID2 ING TECHNICAL OR MANAGEMENT ASSISTANCE.—Section

3 7(j) of the Small Business Act (15 U.S.C. 636(j)) is

4 amended—

5 (1) in paragraph (1), by striking ‘‘sections 7(i),

6 7(j)(10), and’’ and inserting ‘‘subsection (i) of this

7 section and section’’;

8 (2) in paragraph (2)(C), by striking ‘‘sections

9 7(i), 7(j)(10) , and’’ and inserting ‘‘subsection (i) of

10 this section and section’’;

11 (3) by striking paragraph (4) and inserting the

12 following:

13 ‘‘(4) PREFERENCE.—In carrying out this sub14 section, the Administrator shall give preference to

15 projects that promote the training and hiring by

16 small business concerns of economically disadvan17 taged individuals.’’;

18 (4) by striking paragraph (10);

19 (5) by redesignating paragraph (11) as para20 graph (8) and inserting it immediately after para21 graph (7);

22 (6) in paragraph (8), as redesignated—

23 (A) in subparagraph (A)—

24 (i) by striking ‘‘(A)’’; and
38

•S 1533 IS

1 (ii) by striking ‘‘and small business

2 concerns’’ and all that follows before the

3 period; and

4 (B) by striking subparagraphs (B) through

5 (I); and

6 (7) by striking paragraphs (12) through (16).

7 (f) PROCUREMENT CONTRACTS.—Section 8(a) of the

8 Small Business Act (15 U.S.C. 637(a)) is amended—

9 (1) in paragraph (1)—

10 (A) in subparagraph (B), by striking ‘‘so11 cially and’’;

12 (B) in subparagraph (C)—

13 (i) by moving the margins 2 ems to

14 the left; and

15 (ii) by striking ‘‘a small business con16 cern owned and controlled by socially and

17 economically disadvantaged individuals’’

18 and inserting ‘‘an economically disadvan19 taged small business concern’’; and

20 (C) in subparagraph (D)(ii), by striking

21 ‘‘Associate Administrator for Minority Small

22 Business and Capital Ownership Development’’

23 and inserting ‘‘Administrator’’;

24 (2) by striking paragraphs (4) through (6) and

25 inserting the following:
39

•S 1533 IS

1 ‘‘(4) APPLICATIONS; REQUIRED CERTIFICATIONS.—

2 Each small business concern seeking assistance under this

3 subsection shall, for each contract with respect to which

4 such assistance is sought, submit an application to the Ad5 ministrator, which shall include—

6 ‘‘(A) a written certification that—

7 ‘‘(i) the small business concern meets the

8 requirements of paragraphs (5) and (6), and

9 expects to continue to meet those requirements

10 during the term of the contract at issue;

11 ‘‘(ii) not less than 30 percent of the con12 tract at issue will be performed by economically

13 disadvantaged individuals employed by the

14 small business concern; and

15 ‘‘(iii) during the term of the contract at

16 issue, the small business concern will not termi17 nate the employment of any economically dis18 advantaged individual employed by the small

19 business concern or any individual employed by

20 the small business concern who resides in any

21 area described in paragraph (5)(B)(i), except

22 for just cause; and

23 ‘‘(B) such documentation as the Administrator

24 may require, in order to verify the status of the
40

•S 1533 IS

1 small business concern as an economically disadvan2 taged small business concern, including—

3 ‘‘(i) relevant tax forms and information;

4 ‘‘(ii) a copy of the birth certificates of de5 pendent children of economically disadvantaged

6 individuals employed by the small business con7 cern; and

8 ‘‘(iii) sworn affidavits from economically

9 disadvantaged individuals employed by the

10 small business concern necessary to verify the

11 status of those individuals as economically dis12 advantaged individuals.

13 ‘‘(5) ECONOMICALLY DISADVANTAGED SMALL BUSI14 NESS CONCERN.—For purposes of this subsection, the

15 term ‘economically disadvantaged small business concern’

16 means—

17 ‘‘(A) a small business concern, if not less than

18 35 percent of the employees of the small business

19 concern, who are employed by the small business

20 concern as of the date on which the application is

21 submitted under paragraph (4), and who were hired

22 by the small business concern during the 5-year pe23 riod preceding the date on which the small business

24 concern submits an application for assistance under

25 this subsection, were economically disadvantaged in-
41

•S 1533 IS

1 dividuals, as of the date on which those employees

2 were hired by the small business concern; or

3 ‘‘(B) a small business concern, the operations

4 and facilities of which are predominately located in

5 an area nominated before the date of enactment of

6 the Community Renewal and Economic Opportunity

7 Act for designation—

8 ‘‘(i) under section 1391 of the Internal

9 Revenue Code of 1986 as an empowerment zone

10 or enterprise community (whether or not so

11 designated); or

12 ‘‘(ii) under section 701 of the Housing and

13 Community Development Act of 1987 as an en14 terprise zone (whether or not so designated).

15 ‘‘(6) ECONOMICALLY DISADVANTAGED INDIVID16 UAL.—

17 ‘‘(A) DEFINITION.—For purposes of this sub18 section, the term ‘economically disadvantaged indi19 vidual’ means an individual who is a United States

20 citizen, having a net financial worth of not more

21 than $2,000—

22 ‘‘(i) who, as of the date on which the indi23 vidual was hired by the small business con24 cern—
42

•S 1533 IS

1 ‘‘(I) was not claimed as a dependent

2 on any Federal or State income tax return

3 filed for the 4 taxable years preceding that

4 date; and

5 ‘‘(II) earned a net monthly income

6 that did not exceed 100 percent of the pov7 erty line (as that term is defined in section

8 673 of the Community Service Block

9 Grant Act (42 U.S.C. 9902)), both during

10 the 1-year period preceding that date, and

11 during not less than 3 of the 4 taxable

12 years immediately preceding that date; or

13 ‘‘(ii) who, as of the date on which the indi14 vidual was hired by the small business con15 cern—

16 ‘‘(I) was not claimed as a dependent

17 on any Federal or State income tax return

18 filed for the taxable year preceding that

19 date;

20 ‘‘(II) earned a net monthly income

21 that did not exceed 100 percent of the pov22 erty line (as that term is defined in section

23 673 of the Community Service Block

24 Grant Act (42 U.S.C. 9902)) during the 1-

25 year period preceding that date; and
43

•S 1533 IS

1 ‘‘(III) had one or more dependents

2 who were 18 years of age or younger.

3 ‘‘(B) CALCULATION OF NET FINANCIAL

4 WORTH.—In calculating the net financial worth of

5 an individual for purposes of subparagraph (A), the

6 administrator shall—

7 ‘‘(i) include the fair market value of any

8 checking or savings accounts, cash, stocks,

9 bonds, and any other personal property of the

10 individual;

11 ‘‘(ii) exclude any equity of the individual in

12 the primary personal residence of the individual

13 or in the furnishings of that residence; and

14 ‘‘(iii) establish procedures for calculating

15 the value of any motor vehicle owned by the in16 dividual.’’;

17 (3) by striking paragraph (8) and inserting the

18 following:

19 ‘‘(7) PREFERENCES.—In awarding contracts under

20 this subsection, the administrator shall establish a system

21 that gives preference to economically disadvantaged small

22 business concerns—

23 ‘‘(A) more than 35 percent of the employees of

24 which are economically disadvantaged individuals; or
44

•S 1533 IS

1 ‘‘(B) not less than 35 percent of the ownership

2 of which is vested in one or more individuals who re3 side in any area described in paragraph (5)(B)(i).’’;

4 (4) in paragraph (10), in the second sentence,

5 by striking ‘‘for certification’’;

6 (5) in paragraph (12)—

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

8 and redesignating subparagraphs (C) through

9 (F) as subparagraphs (A) through (D);

10 (B) in subparagraph (B), as redesignated,

11 by striking ‘‘subparagraph (C)’’ and inserting

12 ‘‘subparagraph (A)’’; and

13 (C) in subparagraph (C), as redesignated,

14 by striking ‘‘subparagraph (D)’’ and inserting

15 ‘‘subparagraph (B)’’;

16 (6) in paragraph (16)(A)—

17 (A) by striking ‘‘Program Participant’’

18 each place that term appears and inserting

19 ‘‘small business concern’’;

20 (B) in clause (i), by adding ‘‘and’’ at the

21 end;

22 (C) in clause (ii), by striking ‘‘; and’’ and

23 inserting a period; and

24 (D) by striking clause (iii);

25 (7) in paragraph (18)—
45

•S 1533 IS

1 (A) in subparagraph (A)—

2 (i) by striking ‘‘Program Participant’’

3 the second place that term appears and in4 serting ‘‘small business concern’’;

5 (ii) by striking ‘‘Program Participant’’

6 the first place that term appears and in7 serting ‘‘small business concern receiving

8 assistance under this subsection’’;

9 (iii) by striking ‘‘Program Partici10 pants’’ and inserting ‘‘small business con11 cerns’’; and

12 (iv) by striking ‘‘, section 7(j)(10),’’;

13 and

14 (B) in subparagraph (C)(ii)—

15 (i) by striking subclause (III), and re16 designating subclauses (IV) and (V) as

17 subclauses (III) and (IV), respectively; and

18 (ii) in subclause (III), as redesig19 nated, by striking ‘‘or section 7(j)(10)’’;

20 (8) in paragraph (21)—

21 (A) by striking ‘‘(A) Subject to the provi22 sions of subparagraph (B), a’’ and inserting

23 ‘‘Each’’; and
46

•S 1533 IS

1 (B) by striking ‘‘Notwithstanding the pro2 visions’’ and all that follows through the end of

3 the paragraph;

4 (9) by striking paragraph (9) and redesignating

5 paragraphs (10) through (12) as paragraphs (9)

6 through (11), respectively;

7 (10) by striking paragraph (13) and redesignat8 ing paragraph (14) as paragraph (12);

9 (11) by striking paragraph (15) and redesignat10 ing paragraphs (16) through (19) as paragraphs

11 (13) through (16), respectively;

12 (12) by striking paragraph (20) and redesignat13 ing paragraph (21) as paragraph (17); and

14 (13) by adding at the end the following new

15 paragraph:

16 ‘‘(18) ANNUAL REPORT.—The Administrator shall

17 annually submit a report to the Congress, which shall in18 clude the following with respect to the fiscal year imme19 diately preceding submission of the report:

20 ‘‘(A) COSTS AND BENEFITS.—A description and

21 estimate of the benefits and costs that have accrued

22 to the economy and the Federal Government during

23 that fiscal year due to the operations of those small

24 business concerns that were performing contracts
47

•S 1533 IS

1 awarded pursuant to this subsection during that fis2 cal year.

3 ‘‘(B) LIST OF PARTICIPANTS.—A list of all

4 small business concerns receiving assistance under

5 this subsection during that fiscal year identifying, by

6 State and by Region, the dollar amount of advance

7 payments received by each small business concern

8 pursuant to contracts awarded under this sub9 section, and a description including (if appropriate)

10 an estimate of the dollar value of all benefits re11 ceived by each small business concern pursuant to

12 section 7(a)(20) during that fiscal year.

13 ‘‘(C) TOTAL VALUE OF CONTRACTS AND OP14 TIONS AWARDED.—The total dollar value of con15 tracts and options awarded under this subsection

16 during that fiscal year, and such amount expressed

17 as a percentage of total sales of all small business

18 concerns receiving assistance under this subsection

19 during that fiscal year.

20 ‘‘(D) VALUE OF CONTRACTS AND OPTIONS

21 AWARDED BY STANDARD INDUSTRIAL CLASSIFICA22 TION CODE.—The total dollar value of contracts and

23 options awarded under this subsection during that

24 fiscal year, at such dollar increments as the Admin25 istrator deems appropriate, for each 4-digit standard
48

•S 1533 IS

1 industrial classification code under which such con2 tracts and options were classified.

3 ‘‘(E) ADDITIONAL RESOURCES.—A description

4 of such additional resources as may be required to

5 provide the types of services needed over the suc6 ceeding 2-year period to service the projected port7 folio of small business concerns receiving assistance

8 under this subsection.’’.

9 (g) PERFORMANCE OF CONTRACTS.—Section 8(d) of

10 the Small Business Act (15 U.S.C. 637(d)) is amended—

11 (1) in paragraph (1)—

12 (A) in the first sentence, by striking ‘‘,,

13 small business concerns owned and controlled

14 by socially and economically disadvantaged indi15 viduals, and small business concerns owned and

16 controlled by women,’’ and inserting ‘‘and eco17 nomically disadvantaged small business con18 cerns’’; and

19 (B) in the second sentence, by striking ‘‘,

20 small business concerns owned and controlled

21 by socially and economically disadvantaged indi22 viduals, and small business concerns owned and

23 controlled by women’’ and inserting ‘‘and eco24 nomically disadvantaged small business con25 cerns’’;
49

•S 1533 IS

1 (2) in paragraph (3)—

2 (A) in subparagraph (A), by striking ‘‘,

3 small business concerns owned and controlled

4 by socially and economically disadvantaged indi5 viduals, and small business concerns owned and

6 controlled by women’’ each place that term ap7 pears and inserting ‘‘and economically dis8 advantaged small business concerns’’;

9 (B) by striking subparagraphs (C) and (D)

10 and inserting the following:

11 ‘‘(C) For purposes of this contract, the terms

12 ‘small business concern’ and ‘economically disadvan13 taged small business concern’ have the same mean14 ings as in section 3 of the Small Business Act.’’;

15 (C) by redesignating subparagraph (E) as

16 subparagraph (D); and

17 (D) in subparagraph (D), as redesignated,

18 by striking ‘‘, a small business concern owned

19 and controlled by socially and economically dis20 advantaged individuals, or a small business con21 cern owned and controlled by women’’ and in22 serting ‘‘or an economically disadvantaged small

23 business concern’’;

24 (3) in paragraph (4)—
50

•S 1533 IS

1 (A) in subparagraph (D), by striking ‘‘,

2 small business concerns owned and controlled

3 by socially and economically disadvantaged indi4 viduals, and small business concerns owned and

5 controlled by women’’ and inserting ‘‘and eco6 nomically disadvantaged small business con7 cerns’’; and

8 (B) in subparagraph (E), by striking

9 ‘‘small business concerns owned and controlled

10 by socially and economically disadvantaged indi11 viduals’’ and all that follows through ‘‘women’’

12 and inserting ‘‘economically disadvantaged

13 small business concerns’’;

14 (4) in paragraph (6), by striking subparagraph

15 (A) and inserting the following:

16 ‘‘(A) percentage goals for the utilization as sub17 contractors of small business concerns and economi18 cally disadvantaged small business concerns;’’; and

19 (5) in paragraph (10)(B), by striking ‘‘, small

20 business concerns owned and controlled by socially

21 and economically disadvantaged individuals, and

22 small business concerns owned and controlled by

23 women’’ and inserting ‘‘and economically disadvan24 taged small business concerns’’.
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1 (h) POLICY DIRECTIVES.—Section 9(j)(2)(F) of the

2 Small Business Act (15 U.S.C. 638(j)(2)(F)) is amend3 ed—

4 (1) by striking ‘‘socially and’’; and

5 (2) by striking ‘‘, as defined in section

6 8(a)(4),’’.

7 (i) AWARDS OR CONTRACTS.—Section 15 of the

8 Small Business Act (15 U.S.C. 644) is amended—

9 (1) in subsection (g)(1)—

10 (A) by striking ‘‘, small business concerns

11 owned and controlled by socially and economi12 cally disadvantaged individuals, and small busi13 ness concerns owned and controlled by women’’

14 each place that term appears and inserting

15 ‘‘and economically disadvantaged small business

16 concerns’’;

17 (B) in the third sentence, by striking

18 ‘‘small business concerns owned and controlled

19 by socially and economically disadvantaged indi20 viduals’’ and inserting ‘‘economically disadvan21 taged small business concerns’’; and

22 (C) by striking the fourth sentence;

23 (2) in subsection (g)(2)—

24 (A) in the first sentence, by striking ‘‘,, by

25 small business concerns owned and controlled
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1 by socially and economically disadvantaged indi2 viduals, and by small business concerns owned

3 and controlled by women’’ and inserting ‘‘and

4 by economically disadvantaged small business

5 concerns’’;

6 (B) in the second sentence, by striking ‘‘,

7 small business concerns owned and controlled

8 by socially and economically disadvantaged indi9 viduals, and small business concerns owned and

10 controlled by women’’ and inserting ‘‘and eco11 nomically disadvantaged small business con12 cerns’’; and

13 (C) in the fourth sentence, by striking

14 ‘‘small business concerns owned and controlled

15 by socially and economically disadvantaged indi16 viduals and participation by small business con17 cerns owned and controlled by women’’ and in18 serting ‘‘economically disadvantaged small busi19 ness concerns’’; and

20 (3) in subsection (h)—

21 (A) by striking ‘‘, small business concerns

22 owned and controlled by socially and economi23 cally disadvantaged individuals, and small busi24 ness concerns owned and controlled by women’’

25 each place that term appears and inserting
53

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1 ‘‘and economically disadvantaged small business

2 concerns’’; and

3 (B) in paragraph (2)—

4 (i) in subparagraph (D)(ii), by strik5 ing ‘‘small business concerns owned and

6 controlled by socially and economically dis7 advantaged individuals’’ and inserting

8 ‘‘economically disadvantaged small busi9 ness concerns’’; and

10 (ii) by striking subparagraph (F).

11 (j) OFFENSES AND PENALTIES.—Section 16 of the

12 Small Business Act (15 U.S.C. 645) is amended—

13 (1) in subsection (d)(1)—

14 (A) by striking ‘‘, a ‘small business con15 cern owned and controlled by socially and eco16 nomically disadvantaged individuals’ ’’ and all

17 that follows through ‘‘women’ ’’ and inserting

18 ‘‘or an ‘economically disadvantaged small busi19 ness concern’ ’’; and

20 (B) in subparagraph (D), by striking ‘‘sec21 tion 8(d)’’ and inserting ‘‘subsection (a) or (d)

22 of section 8(a) of this Act’’;

23 (2) in subsection (e), by striking ‘‘, a ‘small

24 business concern owned and controlled by socially

25 and economically disadvantaged individuals’ ’’ and all
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1 that follows through ‘‘women’ ’’ and inserting ‘‘or an

2 ‘economically disadvantaged small business con3 cern’ ’’; and

4 (3) by striking subsection (f).

5 SEC. 112. TECHNICAL AND CONFORMING AMENDMENTS IN

6 OTHER LAW.

7 (a) TITLE 10, UNITED STATES CODE.—Section 2323

8 of title 10, United States Code, is amended—

9 (1) in subsection (a)(1), by striking subpara10 graph (A) and inserting the following:

11 ‘‘(A) economically disadvantaged small business

12 concerns, including mass media and advertising

13 firms;’’;

14 (2) in subsection (f), by striking ‘‘a small busi15 ness concern owned and controlled by a minority’’

16 and inserting ‘‘an economically disadvantaged small

17 business concern’’;

18 (3) in subsection (i)(3)—

19 (A) in subparagraph (B), by striking ‘‘not

20 owned and controlled by socially and economi21 cally disadvantaged individuals’’ and inserting

22 ‘‘that are not economically disadvantaged small

23 business concerns’’; and

24 (B) by striking subparagraph (C); and
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1 (4) in subsection (j), by adding at the end the

2 following new paragraph:

3 ‘‘(3) The term ‘economically disadvantaged

4 small business concern’ has the same meaning as in

5 section 8(a) of the Small Business Act.’’.

6 (b) FEDERAL HOME LOAN BANK ACT.—Section

7 21A(b)(13) of the Federal Home Loan Bank Act (12

8 U.S.C. 1441a(b)(13)) is amended by striking ‘‘small busi9 ness concerns owned and controlled by socially and eco10 nomically disadvantaged individuals’’ and inserting ‘‘eco11 nomically disadvantaged small business concerns (as that

12 term is defined in section 8(a) of the Small Business

13 Act)’’.

14 (c) SMALL BUSINESS ECONOMIC POLICY ACT OF

15 1980.—Section 303(e) of the Small Business Economic

16 Policy Act of 1980 (15 U.S.C. 631b(e)) is amended by

17 striking paragraph (1) and inserting the following:

18 ‘‘(1) economically disadvantaged small business

19 concerns (as that term is defined in section 8(a) of

20 the Small Business Act);’’.

21 (d) SMALL BUSINESS INVESTMENT ACT OF 1958.—

22 Section 411(c)(3)(B) of the Small Business Investment

23 Act of 1958 (15 U.S.C. 694b(c)(3)(B)) is amended by

24 striking ‘‘a small business concern owned’’ and all that

25 follows before the semicolon and inserting ‘‘an economi-
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1 cally disadvantaged small business concern (as that term

2 is defined in section 8(a) of the Small Business Act)’’.

3 (e) TITLE 31, UNITED STATES CODE.—Title 31,

4 United States Code, is amended—

5 (1) in section 3718(b)—

6 (A) in paragraph (1)(B), by striking ‘‘law

7 firms owned and controlled by socially and eco8 nomically disadvantaged individuals’’ and in9 serting ‘‘economically disadvantaged law firms’’;

10 and

11 (B) in paragraph (3), by striking ‘‘law

12 firms owned and controlled by socially and eco13 nomically disadvantaged individuals. For pur14 poses of’’ and all that follows through the end

15 of the paragraph, and inserting the following:

16 ‘‘economically disadvantaged law firms. For

17 purposes of this paragraph, the term ‘economi18 cally disadvantaged law firm’ means a law firm,

19 regardless of whether or not the law firm is a

20 small business concern (as that term is defined

21 in section 3 of the Small Business Act), that is

22 otherwise described in either section 8(a)(5)(A)

23 of the Small Business Act or clauses (i) and (ii)

24 of section 8(a)(5)(B) of the Small Business

25 Act.’’;
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1 (2) in section 6701(f)—

2 (A) in paragraph (1)(A), by striking

3 ‘‘small business concerns controlled by socially

4 and economically disadvantaged individuals and

5 women’’ and inserting ‘‘economically disadvan6 taged small business concerns’’; and

7 (B) by striking paragraph (3)(B) and in8 serting the following:

9 ‘‘(B) the term ‘economically disadvantaged

10 small business concern’ has the same meaning

11 as in section 8(a) of the Small Business Act.’’;

12 and

13 (3) in section 7505(c), by striking ‘‘business

14 concerns owned and controlled by socially and eco15 nomically disadvantaged individuals’’ and inserting

16 ‘‘economically disadvantaged small business concerns

17 (as that term is defined in section 8(a) of the Small

18 Business Act)’’.

19 (f) OFFICE OF FEDERAL PROCUREMENT POLICY

20 ACT.—

21 (1) ENUMERATION OF INCLUDED FUNC22 TIONS.—Section 6(d) of the Office of Federal Pro23 curement Policy Act (41 U.S.C. 405(d)) is amend24 ed—
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1 (A) in paragraph (5)(C), by striking

2 ‘‘small business concerns owned’’ and all that

3 follows through ‘‘minorities’’ and inserting

4 ‘‘economically disadvantaged small business

5 concerns (as that term is defined in section 8(a)

6 of the Small Business Act)’’;

7 (B) in paragraph (10), by striking ‘‘small

8 businesses,’’ and all that follows through

9 ‘‘women’’ and inserting ‘‘small business con10 cerns and economically disadvantaged small

11 business concerns (as those terms are defined in

12 section 3 of the Small Business Act)’’; and

13 (C) in paragraph (11), by striking ‘‘small

14 businesses,’’ and all that follows through

15 ‘‘women’’ and inserting ‘‘small business con16 cerns and economically disadvantaged small

17 business concerns (as those terms are defined in

18 section 3 of the Small Business Act)’’.

19 (2) PROCUREMENT DATA.—Section 19A of the

20 Office of Federal Procurement Policy Act (41 U.S.C.

21 417a) is amended—

22 (A) in subsection (a), by striking ‘‘small

23 businesses owned’’ and all that follows through

24 ‘‘gender,’’ and inserting ‘‘economically dis25 advantaged small business concerns’’; and
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1 (B) by striking subsection (b) and insert2 ing the following:

3 ‘‘(b) DEFINITION.—For purposes of this section, the

4 term ‘economically disadvantaged small business concern’

5 has the same meaning as in section 8(a) of the Small

6 Business Act.’’.

7 (g) ENERGY POLICY ACT OF 1992.—Section 3021 of

8 the Energy Policy Act of 1992 (42 U.S.C. 13556) is

9 amended—

10 (1) in subsection (a), by striking paragraph (1)

11 and inserting the following:

12 ‘‘(1) economically disadvantaged small business

13 concerns;’’; and

14 (2) in subsection (b), by striking paragraph (2)

15 and inserting the following:

16 ‘‘(2) The term ‘economically disadvantaged

17 small business concern’ has the same meaning as in

18 section 8(a) of the Small Business Act.’’.

19 (h) TITLE 49, UNITED STATES CODE.—Title 49,

20 United States Code, is amended—

21 (1) in section 47107(e)—

22 (A) in paragraph (1), by striking ‘‘small

23 business concerns’’ and all that follows before

24 the period and inserting ‘‘economically dis25 advantaged small business concerns (as that
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1 term is defined in section 8(a) of the Small

2 Business Act)’’;

3 (B) in paragraph (4)(B), by striking ‘‘a

4 small business concern owned and controlled by

5 a socially and economically disadvantaged indi6 vidual’’ and inserting ‘‘an economically dis7 advantaged small business concern (as that

8 term is defined in section 8(a) of the Small

9 Business Act)’’; and

10 (C) in paragraph (6), by striking ‘‘a small

11 business concern’’ and all that follows before

12 the period and inserting ‘‘an economically dis13 advantaged small business concern (as that

14 term is defined in section 8(a) of the Small

15 Business Act)’’; and

16 (2) in section 47113—

17 (A) by striking subsection (a) and insert18 ing the following:

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

20 ‘‘(1) the term ‘economically disadvantaged small

21 business concern’ has the same meaning as in sec22 tion 8(a) of the Small Business Act; and

23 ‘‘(2) the term ‘small business concern’ has the

24 same meaning as in section 3 of the Small Business

25 Act, except that the term does not include a small
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1 business concern that has average annual gross re2 ceipts during the most recent 3 fiscal years of more

3 than $16,015,000, as adjusted by the Secretary of

4 Transportation for inflation.’’; and

5 (B) in subsection (b), by striking ‘‘small

6 business concerns owned and controlled by so7 cially and economically disadvantaged individ8 uals’’ and inserting ‘‘economically disadvan9 taged small business concerns’’.

10 (i) DEFENSE PRODUCTION ACT OF 1950.—Section

11 702 of the Defense Production Act of 1950 (50 U.S.C.

12 2152) is amended—

13 (1) in paragraph (16), by striking ‘‘such busi14 ness concerns owned and controlled by socially and

15 economically disadvantaged individuals or by

16 women’’ and inserting ‘‘economically disadvantaged

17 small business concerns’’; and

18 (2) by striking paragraph (17) and inserting

19 the following:

20 ‘‘(17) ECONOMICALLY DISADVANTAGED SMALL

21 BUSINESS CONCERN.—The term ‘economically dis22 advantaged small business concern’ has the same

23 meaning as in section 8(a) of the Small Business

24 Act.’’.
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1 SEC. 113. SAVINGS PROVISION.

2 Nothing in this title or the amendments made by this

3 title shall affect the terms or conditions of any contract

4 entered into before the date of enactment of this Act.

5 SEC. 114. ADDITIONAL TECHNICAL AND CONFORMING

6 AMENDMENTS.

7 Not later than 1 year after the date of enactment

8 of this Act, the Administrator of the Small Business Ad9 ministration shall submit to the Congress any rec10 ommended technical and conforming legislative changes

11 necessary to carry out this title and the amendments made

12 by this title.

13 Subtitle C—Small Business Mentor

14 Program

15 SEC. 121. ESTABLISHMENT OF MENTOR PROGRAM.

16 (a) IN GENERAL.—Not later than 90 days after the

17 date of enactment of this Act, the Administrator shall es18 tablish and carry out a program, under which—

19 (1) the Administrator shall recruit qualified

20 mentors to provide assistance to eligible small busi21 ness concerns;

22 (2) to the maximum extent practicable, each eli23 gible small business concern shall be assigned a

24 qualified mentor from the same or similar industry

25 as the eligible small business concern; and
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1 (2) each qualified mentor assigned to an eligible

2 small business concern under paragraph (2) shall—

3 (A) provide assistance to the eligible small

4 business concern in the establishment and oper5 ation of that small business concern; and

6 (B) otherwise serve as a resource for infor7 mation, consultation, and assistance for that el8 igible small business concern.

9 (b) DEFINITIONS.—For purposes of this section—

10 (1) the term ‘‘Administrator’’ means the Ad11 ministrator of the Small Business Administration;

12 (2) the term ‘‘eligible small business concern’’

13 means a small business concern that—

14 (A) is a sole proprietorship; and

15 (B) is located in—

16 (i) an area designated—

17 (I) under section 1391 of the In18 ternal Revenue Code of 1986 as an

19 empowerment zone or enterprise com20 munity; or

21 (II) under section 701 of the

22 Housing and Community Development

23 Act of 1987 as an enterprise zone; or
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1 (ii) any other area determined by the

2 Administrator to be an area of high unem3 ployment;

4 (3) the term ‘‘financial institution’’ means any

5 bank or savings association (as those terms are de6 fined in section 3 of the Federal Deposit Insurance

7 Act);

8 (4) the term ‘‘qualified mentor’’ means a small

9 business concern or financial institution that is de10 termined by the Administrator to be qualified to pro11 vide assistance described in subsection (a) to eligible

12 small business concerns in the same or similar in13 dustry as the small business concern or financial in14 stitution; and

15 (5) the term ‘‘small business concern’’ has the

16 same meaning as in section 3 of the Small Business

17 Act.

18 (c) LIST OF QUALIFIED MENTORS.—In carrying out

19 this section, the Administrator shall establish and main20 tain a list of available qualified mentors.
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1 TITLE II—COMMUNITY

2 INFRASTRUCTURE

3 SEC. 201. LIMITATION ON THE APPLICATION OF THE DAVIS4 BACON REQUIREMENTS TO EMPOWERMENT

5 ZONES, ENTERPRISE COMMUNITIES, AND EN6 TERPRISE ZONES.

7 The provisions of the Act of March 3, 1931 (com8 monly known as the Davis-Bacon Act) (40 U.S.C. 276a

9 et seq.) shall not apply to a contract for construction, al10 teration, or repair of a facility in an area designated—

11 (1) under section 1391 of the Internal Revenue

12 Code of 1986 as an empowerment zone or enterprise

13 community; or

14 (2) under section 701 of the Housing and Com15 munity Development Act of 1987 (42 U.S.C. 11501)

16 as an enterprise zone.

17 SEC. 202. REFORM OF COMMUNITY DEVELOPMENT BLOCK

18 GRANT PROGRAM.

19 (a) INCREASED ASSISTANCE TO LOW- AND MOD20 ERATE-INCOME FAMILIES.—Section 104(b)(3) of the

21 Housing and Community Development Act of 1974 (42

22 U.S.C. 5304(b)(3)) is amended by striking ‘‘except that

23 (A)’’ and all that follows through ‘‘(B) a grantee’’ and

24 inserting the following: ‘‘except that—
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1 ‘‘(A) of funds received under section 106

2 and, if applicable, as a result of a guarantee or

3 a grant under section 108—

4 ‘‘(i) with respect to activities de5 scribed in paragraph (14), (15), and (17)

6 of section 105(a), during a period specified

7 by the grantee of not more than 3 years,

8 not less than 70 percent shall principally

9 benefit persons of low and moderate in10 come; and

11 ‘‘(ii) with respect to other activities

12 assisted with amounts made available

13 under this title, during a period specified

14 by the grantee of not more than 12

15 months, not less than 75 percent shall

16 principally benefit persons of low and mod17 erate income; and

18 ‘‘(B) a grantee’’.

19 (b) REDUCTION IN ADMINISTRATION AND PLANNING

20 COSTS.—Section 104(b) of the Housing and Community

21 Development Act of 1974 (42 U.S.C. 5304(b)) is amend22 ed—

23 (1) in paragraph (5), by striking ‘‘and’’ at the

24 end;
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1 (2) in paragraph (6), by striking the period at

2 the end and inserting ‘‘; and’’; and

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

4 paragraph:

5 ‘‘(7) not more than 12 percent of amounts re6 ceived by the grantee under this title in any fiscal

7 year will be used for administration and planning

8 costs associated with any activity funded in whole or

9 in part with assistance made available under this

10 title.’’.

11 (c) MATCHING FUND REQUIREMENT.—

12 (1) IN GENERAL.—Section 106(b) of the Hous13 ing and Community Development Act of 1974 (42

14 U.S.C. 5306(b)) is amended by adding at the end

15 the following new paragraph:

16 ‘‘(7) MATCHING FUND REQUIREMENT.—Not17 withstanding any other provision of law, in each fis18 cal year, the Secretary shall—

19 ‘‘(A) require each metropolitan city or

20 urban county that is among the wealthiest 10

21 percent (or such other percentage as the Sec22 retary may establish) of metropolitan cities and

23 urban counties receiving assistance under this

24 title in that fiscal year, to make available con25 tributions (from sources other than assistance
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1 made available under this title) in an amount

2 equal to a specified percentage of the amount

3 allocated under this subsection to that metro4 politan city or urban county, which percentage

5 shall be established by the Secretary;

6 ‘‘(B) reduce the amount allocated under

7 this subsection to that metropolitan city or

8 urban county by the amount of the contribu9 tions made available under subparagraph (A);

10 and

11 ‘‘(C) increase the total amount otherwise

12 available for allocation under this subsection to

13 metropolitan cities and urban counties that are

14 not described in subparagraph (A) by the ag15 gregate amount of the reductions under sub16 paragraph (B).’’.

17 (2) APPLICABILITY.—The amendment made by

18 paragraph (1) shall be effective with respect to fiscal

19 year 1997, and each fiscal year thereafter.

20 (d) INCREASED DAVIS-BACON THRESHOLD FOR

21 CONSTRUCTION PROJECTS.—Section 110 of the Housing

22 and Community Development Act of 1974 (42 U.S.C.

23 5310) is amended by adding at the end the following new

24 subsection:
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1 ‘‘(c) MINIMUM THRESHOLD.—Subsection (a) does

2 not apply to any individual engaged construction work if

3 the total cost of the activity assisted under this title to

4 which the construction work relates does not exceed

5 $250,000.’’.

6 (e) PENALTY FOR DEFAULT ON ECONOMIC DEVEL7 OPMENT LOAN.—Section 111 of the Housing and Commu8 nity Development Act of 1974 (42 U.S.C. 5311) is amend9 ed by adding at the end the following new subsection:

10 ‘‘(d) EXCESSIVE DEFAULTS ON ECONOMIC DEVEL11 OPMENT LOANS.—With respect to any recipient of assist12 ance under this title that the Secretary determines to have

13 an excessive rate of default on loans guaranteed under sec14 tion 108 and assisted under section 108(q), the Secretary

15 may reduce payments to the recipient under this title by

16 an amount equal to the sum of the outstanding balance

17 of that loan, including principal and interest.’’.

18 TITLE III—SAFE STREETS

19 Subtitle A—Mandatory Restitution

20 SEC. 301. ORDER OF RESTITUTION.

21 Section 3556 of title 18, United States Code, is

22 amended—

23 (1) by striking ‘‘may’’ and inserting ‘‘shall’’;

24 and
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1 (2) by striking ‘‘sections 3663 and 3664.’’ and

2 inserting ‘‘3663A, and may order restitution in ac3 cordance with section 3663. The procedures under

4 section 3664 shall apply to all orders of restitution

5 under this section.’’.

6 SEC. 302. CONDITIONS OF PROBATION.

7 Section 3563 of title 18, United States Code, is

8 amended—

9 (1) in subsection (a)—

10 (A) in paragraph (3), by striking ‘‘and’’ at

11 the end;

12 (B) in the first paragraph (4) (relating to

13 conditions of probation for a domestic crime of

14 violence), by striking the period and inserting a

15 semicolon;

16 (C) by redesignating the second paragraph

17 (4) (relating to conditions of probation concern18 ing drug use and testing) as paragraph (5);

19 (D) in paragraph (5), as redesignated, by

20 striking the period at the end and inserting a

21 semicolon; and

22 (E) by inserting after paragraph (5), as re23 designated, the following new paragraphs:

24 ‘‘(6) that the defendant—
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1 ‘‘(A) make restitution in accordance with

2 sections 2248, 2259, 2264, 2327, 3663, 3663A,

3 and 3664; and

4 ‘‘(B) pay the assessment imposed in ac5 cordance with section 3013; and

6 ‘‘(7) that the defendant will notify the court of

7 any material change in the defendant’s economic cir8 cumstances that might affect the defendant’s ability

9 to pay restitution, fines, or special assessments.’’;

10 and

11 (2) in subsection (b)—

12 (A) by striking paragraph (2);

13 (B) by redesignating paragraphs (3)

14 through (22) as paragraphs (2) through (21),

15 respectively; and

16 (C) by amending paragraph (2), as redes17 ignated, to read as follows:

18 ‘‘(2) make restitution to a victim of the offense

19 under section 3556 (but not subject to the limitation

20 of section 3663(a) or 3663A(c)(1)(A));’’.

21 SEC. 303. MANDATORY RESTITUTION.

22 (a) IN GENERAL.—Chapter 232 of title 18, United

23 States Code, is amended by inserting immediately after

24 section 3663 the following new section:
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1 ‘‘§ 3663A. Mandatory restitution to victims of certain

2 crimes

3 ‘‘(a)(1) Notwithstanding any other provision of law,

4 when sentencing a defendant convicted of an offense de5 scribed in subsection (c), the court shall order, in addition

6 to any other penalty authorized by law, that the defendant

7 make restitution to the victim of the offense, or, if the

8 victim is deceased, to the victim’s estate.

9 ‘‘(2) For the purposes of this section, the term ‘vic10 tim’ means a person directly and proximately harmed as

11 a result of the commission of an offense for which restitu12 tion may be ordered including, in the case of an offense

13 that involves as an element a scheme, conspiracy, or pat14 tern of criminal activity, any person directly harmed by

15 the defendant’s criminal conduct in the course of the

16 scheme, conspiracy, or pattern. In the case of a victim who

17 is under 18 years of age, incompetent, incapacitated, or

18 deceased, the legal guardian of the victim or representative

19 of the victim’s estate, another family member, or any other

20 person appointed as suitable by the court, may assume

21 the victim’s rights under this section, but in no event shall

22 the defendant be named as such representative or guard23 ian.

24 ‘‘(3) The court shall also order, if agreed to by the

25 parties in a plea agreement, restitution to persons other

26 than the victim of the offense.
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1 ‘‘(b) The order of restitution shall require that such

2 defendant—

3 ‘‘(1) in the case of an offense resulting in dam4 age to or loss or destruction of property of a victim

5 of the offense—

6 ‘‘(A) return the property to the owner of

7 the property or someone designated by the

8 owner; or

9 ‘‘(B) if return of the property under sub10 paragraph (A) is impossible, impracticable, or

11 inadequate, pay an amount equal to—

12 ‘‘(i) the greater of—

13 ‘‘(I) the value of the property on

14 the date of the damage, loss, or de15 struction; or

16 ‘‘(II) the value of the property on

17 the date of sentencing, less

18 ‘‘(ii) the value (as of the date the

19 property is returned) of any part of the

20 property that is returned;

21 ‘‘(2) in the case of an offense resulting in bodily

22 injury to a victim—

23 ‘‘(A) pay an amount equal to the cost of

24 necessary medical and related professional serv25 ices and devices relating to physical, psy-
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1 chiatric, and psychological care, including

2 nonmedical care and treatment rendered in ac3 cordance with a method of healing recognized

4 by the law of the place of treatment;

5 ‘‘(B) pay an amount equal to the cost of

6 necessary physical and occupational therapy

7 and rehabilitation; and

8 ‘‘(C) reimburse the victim for income lost

9 by such victim as a result of such offense;

10 ‘‘(3) in the case of an offense resulting in bodily

11 injury that results in the death of the victim, pay an

12 amount equal to the cost of necessary funeral and

13 related services; and

14 ‘‘(4) in any case, reimburse the victim for lost

15 income and necessary child care, transportation, and

16 other expenses incurred during participation in the

17 investigation or prosecution of the offense or attend18 ance at proceedings related to the offense.

19 ‘‘(c)(1) This section shall apply in all sentencing pro20 ceedings for convictions of, or plea agreements relating to

21 charges for, any offense—

22 ‘‘(A) that is—

23 ‘‘(i) a crime of violence, as defined in sec24 tion 16;
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1 ‘‘(ii) an offense against property under this

2 title, including any offense committed by fraud

3 or deceit; or

4 ‘‘(iii) an offense described in section 1365

5 (relating to tampering with consumer products);

6 and

7 ‘‘(B) in which an identifiable victim or victims

8 has suffered a physical injury or pecuniary loss.

9 ‘‘(2) In the case of a plea agreement that does not

10 result in a conviction for an offense described in para11 graph (1), this section shall apply only if the plea specifi12 cally states that an offense listed under such paragraph

13 gave rise to the plea agreement.

14 ‘‘(3) This section shall not apply if the court finds,

15 from facts on the record, that—

16 ‘‘(A) the number of identifiable victims is so

17 large as to make restitution impracticable; or

18 ‘‘(B) determining complex issues of fact related

19 to the cause or amount of the victim’s losses would

20 complicate or prolong the sentencing process to a de21 gree that the need to provide restitution to any vic22 tim is outweighed by the burden on the sentencing

23 process.

24 ‘‘(d) An order of restitution under this section shall

25 be issued and enforced in accordance with section 3664.’’.
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1 (b) CLERICAL AMENDMENT.—The analysis for chap2 ter 232 of title 18, United States Code, is amended by

3 inserting immediately after the matter relating to section

4 3663 the following:

‘‘3663A. Mandatory restitution to victims of certain crimes.’’.

5 SEC. 304. ORDER OF RESTITUTION TO VICTIMS OF OTHER

6 CRIMES.

7 (a) IN GENERAL.—Section 3663 of title 18, United

8 States Code, is amended—

9 (1) in subsection (a)(1)—

10 (A) by striking ‘‘(a)(1) The court’’ and in11 serting ‘‘(a)(1)(A) The court’’;

12 (B) by inserting ‘‘, section 401, 408(a),

13 409, 416, 420, or 422(a) of the Controlled Sub14 stances Act (21 U.S.C. 841, 848(a), 849, 856,

15 861, 863) (but in no case shall a participant in

16 an offense under such sections be considered a

17 victim of such offense under this section),’’ be18 fore ‘‘or section 46312,’’;

19 (C) by inserting ‘‘other than an offense de20 scribed in section 3663A(c),’’ after ‘‘title 49,’’;

21 (D) by inserting before the period at the

22 end the following: ‘‘, or if the victim is de23 ceased, to the victim’s estate’’;

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

25 subparagraph:
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•S 1533 IS

1 ‘‘(B)(i) The court, in determining whether to order

2 restitution under this section, shall consider—

3 ‘‘(I) the amount of the loss sustained by each

4 victim as a result of the offense; and

5 ‘‘(II) the financial resources of the defendant,

6 the financial needs and earning ability of the defend7 ant and the defendant’s dependents, and such other

8 factors as the court deems appropriate.

9 ‘‘(ii) To the extent that the court determines that the

10 complication and prolongation of the sentencing process

11 resulting from the fashioning of an order of restitution

12 under this section outweighs the need to provide restitu13 tion to any victims, the court may decline to make such

14 an order.’’; and

15 (F) by amending paragraph (2) to read as

16 follows:

17 ‘‘(2) For the purposes of this section, the term ‘vic18 tim’ means a person directly and proximately harmed as

19 a result of the commission of an offense for which restitu20 tion may be ordered including, in the case of an offense

21 that involves as an element a scheme, conspiracy, or pat22 tern of criminal activity, any person directly harmed by

23 the defendant’s criminal conduct in the course of the

24 scheme, conspiracy, or pattern. In the case of a victim who

25 is under 18 years of age, incompetent, incapacitated, or
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•S 1533 IS

1 deceased, the legal guardian of the victim or representative

2 of the victim’s estate, another family member, or any other

3 person appointed as suitable by the court, may assume

4 the victim’s rights under this section, but in no event shall

5 the defendant be named as such representative or guard6 ian.’’;

7 (2) by striking subsections (c) through (i); and

8 (3) by adding at the end the following new sub9 sections:

10 ‘‘(c)(1) Notwithstanding any other provision of law

11 (but subject to the provisions of subsections (a)(1)(B)

12 (i)(II) and (ii), when sentencing a defendant convicted of

13 an offense described in section 401, 408(a), 409, 416,

14 420, or 422(a) of the Controlled Substances Act (21

15 U.S.C. 841, 848(a), 849, 856, 861, 863), in which there

16 is no identifiable victim, the court may order that the de17 fendant make restitution in accordance with this sub18 section.

19 ‘‘(2)(A) An order of restitution under this subsection

20 shall be based on the amount of public harm caused by

21 the offense, as determined by the court in accordance with

22 guidelines promulgated by the United States Sentencing

23 Commission.
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1 ‘‘(B) In no case shall the amount of restitution or2 dered under this subsection exceed the amount of the fine

3 ordered for the offense charged in the case.

4 ‘‘(3) Restitution under this subsection shall be dis5 tributed as follows:

6 ‘‘(A) 65 percent of the total amount of restitu7 tion shall be paid to the Victim Assistance Adminis8 tration of the State in which the crime occurred.

9 ‘‘(B) 35 percent of the total amount of restitu10 tion shall be paid to the State entity designated to

11 receive Federal substance abuse block grant funds.

12 ‘‘(4) The court shall not make an award under this

13 subsection if it appears likely that such award would inter14 fere with a forfeiture under section 981 or 982.

15 ‘‘(5) Notwithstanding section 3612(c) or any other

16 provision of law, a penalty assessment under section 3013

17 or a fine under subchapter C of chapter 227 shall take

18 precedence over an order of restitution under this sub19 section.

20 ‘‘(6) Requests for community restitution under this

21 subsection shall be considered in all plea agreements nego22 tiated by the United States.

23 ‘‘(7)(A) The United States Sentencing Commission

24 shall promulgate guidelines to assist courts in determining
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•S 1533 IS

1 the amount of restitution that may be ordered under this

2 subsection.

3 ‘‘(B) No restitution shall be ordered under this sub4 section until such time as the Sentencing Commission pro5 mulgates guidelines pursuant to this paragraph.

6 ‘‘(d) An order of restitution made pursuant to this

7 section shall be issued and enforced in accordance with

8 section 3664.’’.

9 (b) SEXUAL ABUSE.—Section 2248 of title 18,

10 United States Code, is amended—

11 (1) in subsection (a), by inserting ‘‘or 3663A’’

12 after ‘‘3663’’;

13 (2) in subsection (b)—

14 (A) by amending paragraph (1) to read as

15 follows:

16 ‘‘(1) DIRECTIONS.—The order of restitution

17 under this section shall direct the defendant to pay

18 to the victim (through the appropriate court mecha19 nism) the full amount of the victim’s losses as deter20 mined by the court pursuant to paragraph (2).’’;

21 (B) by amending paragraph (2) to read as

22 follows:

23 ‘‘(2) ENFORCEMENT.—An order of restitution

24 under this section shall be issued and enforced in ac-
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•S 1533 IS

1 cordance with section 3664 in the same manner as

2 an order under section 3663A.’’;

3 (C) in paragraph (4), by striking subpara4 graphs (C) and (D); and

5 (D) by striking paragraphs (5) through

6 (10);

7 (3) by striking subsections (c) through (e); and

8 (4) by redesignating subsection (f) as sub9 section (c).

10 (c) SEXUAL EXPLOITATION AND OTHER ABUSE OF

11 CHILDREN.—Section 2259 of title 18, United States

12 Code, is amended—

13 (1) in subsection (a), by inserting ‘‘or 3663A’’

14 after ‘‘3663’’;

15 (2) in subsection (b)—

16 (A) by amending paragraph (1) to read as

17 follows:

18 ‘‘(1) DIRECTIONS.—The order of restitution

19 under this section shall direct the defendant to pay

20 the victim (through the appropriate court mecha21 nism) the full amount of the victim’s losses as deter22 mined by the court pursuant to paragraph (2).’’;

23 (B) by amending paragraph (2) to read as

24 follows:
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•S 1533 IS

1 ‘‘(2) ENFORCEMENT.—An order of restitution

2 under this section shall be issued and enforced in ac3 cordance with section 3664 in the same manner as

4 an order under section 3663A.’’;

5 (C) in paragraph (4), by striking subpara6 graphs (C) and (D); and

7 (D) by striking paragraphs (5) through

8 (10);

9 (3) by striking subsections (c) through (e); and

10 (4) by redesignating subsection (f) as sub11 section (e).

12 (d) DOMESTIC VIOLENCE.—Section 2264 of title 18,

13 United States Code, is amended—

14 (1) in subsection (a), by inserting ‘‘or 3663A’’

15 after ‘‘3663’’;

16 (2) in subsection (b)—

17 (A) by amending paragraph (1) to read as

18 follows:

19 ‘‘(1) DIRECTIONS.—The order of restitution

20 under this section shall direct the defendant to pay

21 the victim (through the appropriate court mecha22 nism) the full amount of the victim’s losses as deter23 mined by the court pursuant to paragraph (2).’’;

24 (B) by amending paragraph (2) to read as

25 follows:
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•S 1533 IS

1 ‘‘(2) ENFORCEMENT.—An order of restitution

2 under this section shall be issued and enforced in ac3 cordance with section 3664 in the same manner as

4 an order under section 3663A.’’;

5 (C) in paragraph (4), by striking subpara6 graphs (C) and (D); and

7 (D) by striking paragraphs (5) through

8 (10);

9 (3) by striking subsections (c) through (g); and

10 (4) by adding at the end the following new sub11 section (c):

12 ‘‘(c) VICTIM DEFINED.—For purposes of this section,

13 the term ‘victim’ means the individual harmed as a result

14 of a commission of a crime under this chapter, including,

15 in the case of a victim who is under 18 years of age, in16 competent, incapacitated, or deceased, the legal guardian

17 of the victim or representative of the victim’s estate, an18 other family member, or any other person appointed as

19 suitable by the court, but in no event shall the defendant

20 be named as such representative or guardian.’’.

21 (e) TELEMARKETING FRAUD.—Section 2327 of title

22 18, United States Code, is amended—

23 (1) in subsection (a), by inserting ‘‘or 3663A’’

24 after ‘‘3663’’;

25 (2) in subsection (b)—
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•S 1533 IS

1 (A) by amending paragraph (1) to read as

2 follows:

3 ‘‘(1) DIRECTIONS.—The order of restitution

4 under this section shall direct the defendant to pay

5 to the victim (through the appropriate court mecha6 nism) the full amount of the victim’s losses as deter7 mined by the court pursuant to paragraph (2).’’;

8 (B) by amending paragraph (2) to read as

9 follows:

10 ‘‘(2) ENFORCEMENT.—An order of restitution

11 under this section shall be issued and enforced in ac12 cordance with section 3664 in the same manner as

13 an order under section 3663A.’’;

14 (C) in paragraph (4), by striking subpara15 graphs (C) and (D); and

16 (D) by striking paragraphs (5) through

17 (10);

18 (3) by striking subsections (c) through (e); and

19 (4) by redesignating subsection (f) as sub20 section (c).

21 SEC. 305. PROCEDURE FOR ISSUANCE AND ENFORCEMENT

22 OF RESTITUTION ORDER.

23 (a) IN GENERAL.—Section 3664 of title 18, United

24 States Code, is amended to read as follows:
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•S 1533 IS

1 ‘‘§ 3664. Procedure for issuance and enforcement of

2 order of restitution

3 ‘‘(a) For orders of restitution under this title, the

4 court shall order the probation service of the court to ob5 tain and include in its presentence report, or in a separate

6 report, as the court directs, information sufficient for the

7 court to exercise its discretion in fashioning a restitution

8 order. The report shall include, to the extent practicable,

9 a complete accounting of the losses to each victim, any

10 restitution owed pursuant to a plea agreement, and infor11 mation relating to the economic circumstances of each de12 fendant. If the number or identity of victims cannot be

13 reasonably ascertained, or other circumstances exist that

14 make this requirement clearly impracticable, the probation

15 service shall so inform the court.

16 ‘‘(b) The court shall disclose to both the defendant

17 and the attorney for the Government all portions of the

18 presentence or other report pertaining to the matters de19 scribed in subsection (a) of this section.

20 ‘‘(c) The provisions of this chapter, chapter 227, and

21 Rule 32(c) of the Federal Rules of Criminal Procedure

22 shall be the only rules applicable to proceedings under this

23 section.

24 ‘‘(d)(1) Within 60 days after conviction and, in any

25 event, not later than 10 days prior to sentencing—
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•S 1533 IS

1 ‘‘(A)(i) the attorney for the Government, after

2 consulting with all identified victims, shall promptly

3 provide the probation service of the court with a list4 ing of the amounts subject to restitution;

5 ‘‘(ii) the attorney for the Government shall pro6 vide notice to all identified victims, informing the

7 victims of the offenses of which the defendant was

8 convicted, the listing of amounts subject to restitu9 tion submitted to the probation service, the victim’s

10 right to submit information to the probation service

11 concerning the amount of the victim’s losses, and

12 the scheduled date, time, and place of the sentencing

13 hearing; and

14 ‘‘(iii) if any victim objects to any of the infor15 mation provided to the probation service relating to

16 the amount of the victim’s losses subject to restitu17 tion, the attorney for the Government shall advise

18 the victim that the victim may file a separate affida19 vit and shall provide the victim with an affidavit

20 form which may be used to do so; and

21 ‘‘(B) each defendant shall prepare and file with

22 the probation service of the court an affidavit fully

23 describing the financial resources of the defendant,

24 including a complete listing of all assets owned or

25 controlled by the defendant as of the date on which
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•S 1533 IS

1 the defendant was arrested, the financial needs and

2 earning ability of the defendant and the defendant’s

3 dependents, and other information the court requires

4 relating to such other factors as the court deems ap5 propriate.

6 ‘‘(2) After reviewing the report of the probation serv7 ice of the court, the court may require additional docu8 mentation or hear testimony. The privacy of any records

9 filed, or testimony heard, pursuant to this section shall

10 be maintained to the greatest extent possible, and such

11 records may be filed or testimony heard in camera.

12 ‘‘(3) If the victim’s losses are not ascertainable by

13 the date that is 10 days prior to sentencing as provided

14 in paragraph (1), the attorney for the Government shall

15 so inform the court, and the court shall set a date for

16 the final determination of the victim’s losses, not to exceed

17 90 days after sentencing. If the victim subsequently dis18 covers further losses, the victim shall have 60 days after

19 discovery of those losses in which to petition the court for

20 an amended restitution order. Such order may be granted

21 only upon a showing of good cause for the failure to in22 clude such losses in the initial claim for restitutionary re23 lief.

24 ‘‘(4) The court may refer any issue arising in connec25 tion with a proposed order of restitution to a magistrate
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•S 1533 IS

1 or special master for proposed findings of fact and rec2 ommendations as to disposition, subject to a de novo de3 termination of the issue by the court.

4 ‘‘(e) Any dispute as to the proper amount or type

5 of restitution shall be resolved by the court by the prepon6 derance of the evidence. The burden of demonstrating the

7 amount of the loss sustained by a victim as a result of

8 the offense shall be on the attorney for the Government.

9 The burden of demonstrating the financial resources of

10 the defendant and the financial needs of the defendant

11 and such defendant’s dependents shall be on the defend12 ant. The burden of demonstrating such other matters as

13 the court deems appropriate shall be upon the party des14 ignated by the court as justice requires.

15 ‘‘(f)(1)(A) In each order of restitution, the court shall

16 order restitution to each victim in the full amount of each

17 victim’s losses as determined by the court and without

18 consideration of the economic circumstances of the defend19 ant.

20 ‘‘(B) In no case shall the fact that a victim has re21 ceived or is entitled to receive compensation with respect

22 to a loss from insurance or any other source be considered

23 in determining the amount of restitution.

24 ‘‘(2) Upon determination of the amount of restitution

25 owed to each victim, the court shall, pursuant to section
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•S 1533 IS

1 3572, specify in the restitution order the manner in which

2 and the schedule according to which the restitution is to

3 be paid, in consideration of—

4 ‘‘(A) the financial resources and other assets of

5 the defendant, including whether any of these assets

6 are jointly controlled;

7 ‘‘(B) projected earnings and other income of

8 the defendant; and

9 ‘‘(C) any financial obligations of the defendant;

10 including obligations to dependents.

11 ‘‘(3)(A) A restitution order may direct the defendant

12 to make a single, lump-sum payment, partial payment at

13 specified intervals, in-kind payments, or a combination of

14 payments at specified intervals and in-kind payments.

15 ‘‘(B) A restitution order may direct the defendant to

16 make nominal periodic payments if the court finds from

17 facts on the record that the economic circumstances of the

18 defendant do not allow the payment of any amount of a

19 restitution order, and do not allow for the payment of the

20 full amount of a restitution order in the foreseeable future

21 under any reasonable schedule of payments.

22 ‘‘(4) An in-kind payment described in paragraph (3)

23 may be in the form of—

24 ‘‘(A) return of property;

25 ‘‘(B) replacement of property; or
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•S 1533 IS

1 ‘‘(C) if the victim agrees, services rendered to

2 the victim or a person or organization other than the

3 victim.

4 ‘‘(g)(1) No victim shall be required to participate in

5 any phase of a restitution order.

6 ‘‘(2) A victim may at any time assign the victim’s

7 interest in restitution payments to the Crime Victims

8 Fund in the Treasury without in any way impairing the

9 obligation of the defendant to make such payments.

10 ‘‘(h) If the court finds that more than 1 defendant

11 has contributed to the loss of a victim, the court may make

12 each defendant liable for payment of the full amount of

13 restitution or may apportion liability among the defend14 ants to reflect the level of contribution to the victim’s loss

15 and economic circumstances of each defendant.

16 ‘‘(i) If the court finds that more than 1 victim has

17 sustained a loss requiring restitution by a defendant, the

18 court may issue an order of priority based on the type

19 and amount of each victim’s loss, accounting for the eco20 nomic circumstances of each victim. In any case in which

21 the United States is a victim, the court shall ensure that

22 all individual victims receive full restitution before the

23 United States receives any restitution.

24 ‘‘(j)(1) If a victim has received or is entitled to receive

25 compensation with respect to a loss from insurance or any
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•S 1533 IS

1 other source, the court shall order that restitution shall

2 be paid to the person who provided or is obligated to pro3 vide the compensation, but the restitution order shall pro4 vide that all restitution of victims required by the order

5 be paid to the victims before any restitution is paid to

6 such a provider of compensation.

7 ‘‘(2) Any amount paid to a victim under an order of

8 restitution shall be reduced by any amount later recovered

9 as compensatory damages for the same loss by the victim

10 in—

11 ‘‘(A) any Federal civil proceeding; and

12 ‘‘(B) any State civil proceeding, to the extent

13 provided by the law of the State.

14 ‘‘(k) A restitution order shall provide that the defend15 ant shall notify the court and the Attorney General of any

16 material change in the defendant’s economic cir17 cumstances that might affect the defendant’s ability to

18 pay restitution. The court may also accept notification of

19 a material change in the defendant’s economic cir20 cumstances from the United States or from the victim.

21 The Attorney General shall certify to the court that the

22 victim or victims owed restitution by the defendant have

23 been notified of the change in circumstances. Upon receipt

24 of the notification, the court may, on its own motion, or

25 the motion of any party, including the victim, adjust the
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•S 1533 IS

1 payment schedule, or require immediate payment in full,

2 as the interests of justice require.

3 ‘‘(l) A conviction of a defendant for an offense involv4 ing the act giving rise to an order of restitution shall estop

5 the defendant from denying the essential allegations of

6 that offense in any subsequent Federal civil proceeding or

7 State civil proceeding, to the extent consistent with State

8 law, brought by the victim.

9 ‘‘(m)(1)(A)(i) An order of restitution may be enforced

10 by the United States in the manner provided for in sub11 chapter C of chapter 227 and subchapter B of chapter

12 229 of this title; or (ii) by all other available and reason13 able means.

14 ‘‘(B) An order of restitution may also be enforced by

15 a victim named in the order to receive the restitution, in

16 the same manner as a judgment in a civil action.

17 ‘‘(2) An order of in-kind restitution in the form of

18 services shall be enforced by the probation service of the

19 court.

20 ‘‘(n) If a person obligated to provide restitution or

21 pay a fine receives substantial resources from any source,

22 including inheritance, settlement, or other judgment, dur23 ing a period of incarceration, such person shall be required

24 to apply the value of such resources to any restitution or

25 fine still owed.’’.
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1 (b) TECHNICAL AMENDMENT.—The item relating to

2 section 3664 in the analysis for chapter 232 of title 18,

3 United States Code, is amended to read as follows:

‘‘3664. Procedure for issuance and enforcement of order of restitution.’’.

4 SEC. 306. PROCEDURE.

5 (a) AMENDMENT OF FEDERAL RULES OF CRIMINAL

6 PROCEDURE.—Rule 32(b) of the Federal Rules of Crimi7 nal Procedure is amended—

8 (1) in paragraph (1), by adding at the end the

9 following: ‘‘Notwithstanding the preceding sentence,

10 a presentence investigation and report, or other re11 port containing information sufficient for the court

12 to enter an order of restitution, as the court directs,

13 shall be required in any case in which restitution is

14 required to be ordered.’’; and

15 (2) in paragraph (4)—

16 (A) by redesignating subparagraphs (F)

17 and (G) as subparagraphs (G) and (H), respec18 tively; and

19 (B) by inserting after subparagraph (E),

20 the following new subparagraph:

21 ‘‘(F) in appropriate cases, information suf22 ficient for the court to enter an order of restitu23 tion;’’.

24 (b) FINES.—Section 3572 of title 18, United States

25 Code, is amended—
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•S 1533 IS

1 (1) in subsection (b) by inserting ‘‘other than

2 the United States,’’ after ‘‘offense,’’;

3 (2) in subsection (d)—

4 (A) in the first sentence, by striking ‘‘A

5 person sentenced to pay a fine or other mone6 tary penalty’’ and inserting ‘‘(1) A person sen7 tenced to pay a fine or other monetary penalty,

8 including restitution,’’;

9 (B) by striking the third sentence; and

10 (C) by adding at the end the following:

11 ‘‘(2) If the judgment, or, in the case of a restitution

12 order, the order, permits other than immediate payment,

13 the length of time over which scheduled payments will be

14 made shall be set by the court, but shall be the shortest

15 time in which full payment can reasonably be made.

16 ‘‘(3) A judgment for a fine which permits payments

17 in installments shall include a requirement that the de18 fendant will notify the court of any material change in

19 the defendant’s economic circumstances that might affect

20 the defendant’s ability to pay the fine. Upon receipt of

21 such notice the court may, on its own motion or the mo22 tion of any party, adjust the payment schedule, or require

23 immediate payment in full, as the interests of justice re24 quire.’’;
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1 (3) in subsection (f), by inserting ‘‘restitution’’

2 after ‘‘special assessment,’’;

3 (4) in subsection (h), by inserting ‘‘or payment

4 of restitution’’ after ‘‘A fine’’; and

5 (5) in subsection (i)—

6 (A) in the first sentence, by inserting ‘‘or

7 payment of restitution’’ after ‘‘A fine’’; and

8 (B) by amending the second sentence to

9 read as follows: ‘‘Notwithstanding any install10 ment schedule, when a fine or payment of res11 titution is in default, the entire amount of the

12 fine or restitution is due within 30 days after

13 notification of the default, subject to the provi14 sions of section 3613A.’’.

15 (c) POSTSENTENCE ADMINISTRATION.—

16 (1) PAYMENT OF A FINE OR RESTITUTION.—

17 Section 3611 of title 18, United States Code, is

18 amended—

19 (A) by amending the heading to read as

20 follows:

21 ‘‘§ 3611. Payment of a fine or restitution’’;

22 and

23 (B) by striking ‘‘or assessment shall pay

24 the fine or assessment’’ and inserting ‘‘, assess-
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•S 1533 IS

1 ment, or restitution, shall pay the fine, assess2 ment, or restitution’’.

3 (2) COLLECTION.—Section 3612 of title 18,

4 United States, is amended—

5 (A) by amending the heading to read as

6 follows:

7 ‘‘§ 3612. Collection of unpaid fine or restitution’’;

8 (B) in subsection (b)(1)—

9 (i) in the matter preceding subpara10 graph (A), by inserting ‘‘or restitution

11 order’’ after ‘‘fine’’;

12 (ii) in subparagraph (C), by inserting

13 ‘‘or restitution order’’ after ‘‘fine’’;

14 (iii) in subparagraph (E), by striking

15 ‘‘and’’;

16 (iv) in subparagraph (F)—

17 (I) by inserting ‘‘or restitution

18 order’’ after ‘‘fine’’; and

19 (II) by striking the period at the

20 end and inserting ‘‘; and’’; and

21 (v) by adding at the end the following

22 new subparagraph:

23 ‘‘(G) in the case of a restitution order, in24 formation sufficient to identify each victim to

25 whom restitution is owed. It shall be the re-
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•S 1533 IS

1 sponsibility of each victim to notify the Attor2 ney General, or the appropriate entity of the

3 court, by means of a form to be provided by the

4 Attorney General or the court, of any change in

5 the victim’s mailing address while restitution is

6 still owed the victim. The confidentiality of any

7 information relating to a victim shall be main8 tained.’’;

9 (C) in subsection (c)—

10 (i) in the first sentence, by inserting

11 ‘‘or restitution’’ after ‘‘fine’’; and

12 (ii) by adding at the end the follow13 ing: ‘‘Any money received from a defend14 ant shall be disbursed so that each of the

15 following obligations is paid in full in the

16 following sequence:

17 ‘‘(1) A penalty assessment under section 3013

18 of title 18, United States Code.

19 ‘‘(2) Restitution of all victims.

20 ‘‘(3) All other fines, penalties, costs, and other

21 payments required under the sentence.’’;

22 (D) in subsection (d)—

23 (i) by inserting ‘‘or restitution’’ after

24 ‘‘fine’’; and
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1 (ii) by striking ‘‘is delinquent, to in2 form him that the fine is delinquent’’ and

3 inserting ‘‘or restitution is delinquent, to

4 inform the person of the delinquency’’;

5 (E) in subsection (e)—

6 (i) by inserting ‘‘or restitution’’ after

7 ‘‘fine’’; and

8 (ii) by striking ‘‘him that the fine is

9 in default’’ and inserting ‘‘the person that

10 the fine or restitution is in default’’;

11 (F) in subsection (f)—

12 (i) in the heading, by inserting ‘‘and

13 restitution’’ after ‘‘on fines’’; and

14 (ii) in paragraph (1), by inserting ‘‘or

15 restitution’’ after ‘‘any fine’’;

16 (G) in subsection (g), by inserting ‘‘or res17 titution’’ after ‘‘fine’’ each place it appears; and

18 (H) in subsection (i), by inserting ‘‘and

19 restitution’’ after ‘‘fines’’.

20 (3) CIVIL REMEDIES.—Section 3613 of title 18,

21 United States Code, is amended—

22 (A) in subsection (b), by amending para23 graph (1) to read as follows:

24 ‘‘(1) the later of 20 years after the entry of the

25 judgment or 20 years after the release from impris-
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1 onment of the person fined or ordered to pay restitu2 tion; or’’; and

3 (B) in subsection (e), by striking ‘‘, but in

4 no event’’ and all that follows through the end

5 of the subsection and inserting a period.

6 (4) DEFAULT.—Chapter 229 of title 18, United

7 States Code, is amended by inserting after section

8 3613 the following new section:

9 ‘‘§ 3613A. Effect of default

10 ‘‘(a)(1) Upon a finding that the defendant is in de11 fault on a payment of a fine or restitution, the court may,

12 pursuant to section 3565, revoke probation or a term of

13 supervised release or modify the terms or conditions of

14 probation on a term of supervised release, resentence a

15 defendant pursuant to section 3614, hold the defendant

16 in contempt of court, enter a restraining order or injunc17 tion, order the sale of property of the defendant, accept

18 a performance bond, enter or adjust a payment schedule,

19 or take any other action necessary to obtain compliance

20 with the order of a fine or restitution.

21 ‘‘(2) In determining what action to take, the court

22 shall consider the defendant’s employment status, earning

23 ability, financial resources, the willfulness in failing to

24 comply with the restitution order, and any other cir-
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1 cumstances that may have a bearing on the defendant’s

2 ability to comply with the order of a fine or restitution.

3 ‘‘(b)(1) Any hearing held pursuant to this section

4 may be conducted by a magistrate judge, subject to de

5 novo review by the court.

6 ‘‘(2) To the extent practicable, in a hearing held pur7 suant to this section involving a defendant who is confined

8 in any jail, prison, or other correctional facility, proceed9 ings in which the prisoner’s participation is required or

10 permitted shall be conducted by telephone, video con11 ference, or other communications technology without re12 moving the prisoner from the facility in which the prisoner

13 is confined.

14 ‘‘(3) Subject to the agreement of the official of the

15 Federal, State, or local unit of government with custody

16 over the prisoner, hearings may be conducted at the facil17 ity in which the prisoner is confined. To the extent prac18 ticable, the court shall allow counsel to participate by tele19 phone, video conference, or other communications tech20 nology in any hearing held at the facility.’’.

21 (5) RESENTENCING.—Section 3614 of title 18,

22 United States Code, is amended—

23 (A) in the heading, by inserting ‘‘or res24 titution’’ after ‘‘fine’’;
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1 (B) in subsection (a), by inserting ‘‘or res2 titution’’ after ‘‘fine’’; and

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

4 subsection:

5 ‘‘(c) EFFECT OF INDIGENCY.—In no event shall a de6 fendant be incarcerated under this section solely on the

7 basis of inability to make payments because the defendant

8 is indigent.’’.

9 (d) CONFORMING AMENDMENT.—The analysis for

10 subchapter B of chapter 229 of title 18, United States

11 Code, is amended to read as follows:

‘‘Sec.

‘‘3611. Payment of a fine or restitution.

‘‘3612. Collection of an unpaid fine or restitution.

‘‘3613. Civil remedies for collection of an unpaid fine or restitution.

‘‘3613A. Effect of default.

‘‘3614. Resentencing upon failure to pay a fine or restitution.

‘‘3615. Criminal default.’’.

12 SEC. 307. INSTRUCTION TO SENTENCING COMMISSION.

13 Pursuant to section 994 of title 28, United States

14 Code, the United States Sentencing Commission shall pro15 mulgate guidelines or amend existing guidelines to reflect

16 this subtitle and the amendments made by this subtitle.

17 SEC. 308. JUSTICE DEPARTMENT REGULATIONS.

18 Not later than 90 days after the date of enactment

19 of this Act, the Attorney General shall promulgate guide20 lines, or amend existing guidelines, to carry out this sub21 title and to ensure that—
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1 (1) in all plea agreements negotiated by the

2 United States, consideration is given to requesting

3 that the defendant provide full restitution to all vic4 tims of all charges contained in the indictment or in5 formation, without regard to the counts to which the

6 defendant actually pleaded; and

7 (2) orders of restitution made pursuant to the

8 amendments made by this subtitle are enforced to

9 the fullest extent of the law.

10 SEC. 309. SPECIAL ASSESSMENTS ON CONVICTED PERSONS.

11 Section 3013(a)(2) of title 18, United States Code,

12 is amended—

13 (1) in subparagraph (A), by striking ‘‘$50’’ and

14 inserting ‘‘not less than $100’’; and

15 (2) in subparagraph (B), by striking ‘‘$200’’

16 and inserting ‘‘not less than $400’’.

17 SEC. 310. CRIME VICTIMS FUND.

18 (a) PROHIBITION OF PAYMENTS TO DELINQUENT

19 CRIMINAL DEBTORS BY STATE CRIME VICTIM COM20 PENSATION PROGRAMS.—

21 (1) IN GENERAL.—Section 1403(b) of the Vic22 tims of Crime Act of 1984 (42 U.S.C. 10602(b)) is

23 amended—

24 (A) by striking ‘‘and’’ at the end of para25 graph (7);
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1 (B) by redesignating paragraph (8) as

2 paragraph (9); and

3 (C) by inserting after paragraph (7) the

4 following new paragraph:

5 ‘‘(8) such program does not provide compensa6 tion to any person who has been convicted of an of7 fense under Federal law with respect to any time pe8 riod during which the person is delinquent in paying

9 a fine or other monetary penalty imposed for the of10 fense; and’’.

11 (2) APPLICATION OF AMENDMENT.—The

12 amendment made by paragraph (1) shall not be ap13 plied to deny victims compensation to any person

14 until the date on which the Attorney General, in

15 consultation with the Director of the Administrative

16 Office of the United States Courts, issues a written

17 determination that a cost-effective, readily available

18 criminal debt payment tracking system operated by

19 the agency responsible for the collection of criminal

20 debt has established cost-effective, readily available

21 communications links with entities that administer

22 Federal victims compensation programs that are suf23 ficient to ensure that victims compensation is not

24 denied to any person except as authorized by law.
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1 (b) EXCLUSION FROM INCOME FOR PURPOSES OF

2 MEANS TESTS.—Section 1403 of the Victims of Crime

3 Act of 1984 (42 U.S.C. 10602) is amended by inserting

4 after subsection (b) the following new subsection:

5 ‘‘(c) EXCLUSION FROM INCOME FOR PURPOSES OF

6 MEANS TESTS.—Notwithstanding any other law, for the

7 purpose of any maximum allowed income eligibility re8 quirement in any Federal, State, or local government pro9 gram using Federal funds that provides medical or other

10 assistance (or payment or reimbursement of the cost of

11 such assistance) that becomes necessary to an applicant

12 for such assistance in full or in part because of the com13 mission of a crime against the applicant, as determined

14 by the Director, any amount of crime victim compensation

15 that the applicant receives through a crime victim com16 pensation program under this section shall not be included

17 in the income of the applicant until the total amount of

18 assistance that the applicant receives from all such pro19 grams is sufficient to fully compensate the applicant for

20 losses suffered as a result of the crime.’’.

21 SEC. 311. VICTIMS OF TERRORISM ACT.

22 (a) AUTHORITY TO PROVIDE ASSISTANCE AND COM23 PENSATION TO VICTIMS OF TERRORISM.—The Victims of

24 Crime Act of 1984 (42 U.S.C. 10601 et seq.) is amended

25 by inserting after section 1404A the following new section:
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1 ‘‘SEC. 1404B. COMPENSATION AND ASSISTANCE TO VICTIMS

2 OF TERRORISM OR MASS VIOLENCE.

3 ‘‘(a) VICTIMS OF ACTS OF TERRORISM OUTSIDE THE

4 UNITED STATES.—The Director may make supplemental

5 grants to States to provide compensation and assistance

6 to the residents of such States who, while outside the terri7 torial boundaries of the United States, are victims of a

8 terrorist act or mass violence and are not persons eligible

9 for compensation under title VIII of the Omnibus Diplo10 matic Security and Antiterrorism Act of 1986.

11 ‘‘(b) VICTIMS OF DOMESTIC TERRORISM.—The Di12 rector may make supplemental grants to States for eligible

13 crime victim compensation and assistance programs to

14 provide emergency relief, including crisis response efforts,

15 assistance, training, and technical assistance, for the bene16 fit of victims of terrorist acts or mass violence occurring

17 within the United States and may provide funding to

18 United States Attorney’s Offices for use in coordination

19 with State victims compensation and assistance efforts in

20 providing emergency relief.’’.

21 (b) FUNDING OF COMPENSATION AND ASSISTANCE

22 TO VICTIMS OF TERRORISM, MASS VIOLENCE, AND

23 CRIME.—Section 1402(d)(4) of the Victims of Crime Act

24 of 1984 (42 U.S.C. 10601(d)(4)) is amended to read as

25 follows:
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1 ‘‘(4)(A) If the sums available in the Fund are

2 sufficient to fully provide grants to the States pursu3 ant to section 1403(a)(1), the Director may retain

4 any portion of the Fund that was deposited during

5 a fiscal year that was in excess of 110 percent of the

6 total amount deposited in the Fund during the pre7 ceding fiscal year as an emergency reserve. Such re8 serve shall not exceed $50,000,000.

9 ‘‘(B) The emergency reserve may be used for

10 supplemental grants under section 1404B and to

11 supplement the funds available to provide grants to

12 States for compensation and assistance in accord13 ance with sections 1403 and 1404 in years in which

14 supplemental grants are needed.’’.

15 (c) CRIME VICTIMS FUND AMENDMENTS.—

16 (1) UNOBLIGATED FUNDS.—Section 1402 of

17 the Victims of Crime Act of 1984 (42 U.S.C. 10601)

18 is amended—

19 (A) in subsection (c), by striking ‘‘sub20 section’’ and inserting ‘‘chapter’’; and

21 (B) by amending subsection (e) to read as

22 follows:

23 ‘‘(e) AMOUNTS AWARDED AND UNSPENT.—Any

24 amount awarded as part of a grant under this chapter

25 that remains unspent at the end of a fiscal year in which
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1 the grant is made may be expended for the purpose for

2 which the grant is made at any time during the 2 succeed3 ing fiscal years, at the end of which period, any remaining

4 unobligated sums in excess of $500,000 shall be returned

5 to the Treasury. Any remaining unobligated sums in an

6 amount less than $500,000 shall be returned to the

7 Fund.’’.

8 (2) BASE AMOUNT.—Section 1404(a)(5) of such

9 Act (42 U.S.C. 10603(a)(5)) is amended to read as

10 follows:

11 ‘‘(5) As used in this subsection, the term ‘base

12 amount’ means—

13 ‘‘(A) except as provided in subparagraph

14 (B), $500,000; and

15 ‘‘(B) for the territories of the Northern

16 Mariana Islands, Guam, American Samoa, and

17 the Republic of Palau, $200,000, with the Re18 public of Palau’s share governed by the Com19 pact of Free Association between the United

20 States and the Republic of Palau.’’.

21 SEC. 312. SEVERABILITY.

22 If any provision of this subtitle, an amendment made

23 by this subtitle, or the application of such provision or

24 amendment to any person or circumstance is held to be

25 unconstitutional, the remainder of this subtitle, the
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1 amendments made by this subtitle, and the application of

2 the provisions of such to any person or circumstance shall

3 not be affected thereby.

4 SEC. 313. STUDY AND REPORT.

5 (a) STUDY.—The Attorney General, in cooperation

6 with the Director of the Administrative Office of the Unit7 ed States Courts, shall conduct a study of the funds paid

8 out of the Crime Victims Fund and the impact that the

9 amendments made by this subtitle have on funds available

10 in the Crime Victims Fund, including an assessment of

11 any reduction or increase in fines collected and deposited

12 into the Fund directly attributable to the amendments

13 made by this subtitle.

14 (b) REPORT.—The Attorney General and the Direc15 tor of the Administrative Office of the United States

16 Courts shall report interim findings to the Chairman and

17 ranking Member of the Committees on the Judiciary of

18 the Senate and House of Representatives 1 year after the

19 date of enactment of this Act, and annually thereafter

20 until issuing a final report, together with recommenda21 tions, not later than 4 years after the date of enactment

22 of this Act.

23 SEC. 314. EFFECTIVE DATE.

24 (a) IN GENERAL.—Except as provided in subsection

25 (b), the amendments made by this subtitle shall be effec-
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1 tive for sentencing proceedings in cases in which the de2 fendant is convicted on or after the date of enactment of

3 this Act.

4 (b) CRIME VICTIMS FUND.—The amendments made

5 by sections 310 and 311 shall take effect on the date of

6 enactment of this Act.

7 Subtitle B—Asset Forfeiture

8 Assistance

9 SEC. 321. FORFEITURES UNDER THE CONTROLLED SUB10 STANCES ACT.

11 (a) AMENDMENT TO CONTROLLED SUBSTANCES

12 ACT.—Section 513(e)(3) of the Controlled Substances Act

13 (21 U.S.C. 881(e)(3)) is amended to read as follows:

14 ‘‘(3)(A)(i) If the Attorney General transfers

15 forfeited property to a State or local law enforce16 ment agency under paragraph (1)(A), the Attorney

17 General shall transfer an amount equal to the value

18 of the property that bears a reasonable relationship

19 to the degree of direct participation of the State or

20 local agency in the law enforcement effort resulting

21 in the forfeiture, taking into account the total value

22 of all property forfeited and the total law enforce23 ment effort with respect to the violation of law on

24 which the forfeiture is based.
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1 ‘‘(ii) Amounts transferred under this subpara2 graph shall be used to encourage further cooperation

3 between the recipient State or local agency and the

4 Federal law enforcement agencies.

5 ‘‘(B)(i) The Attorney General shall transfer an

6 additional 20 percent of the amount remaining after

7 the operation of subparagraph (A) to any participat8 ing local law enforcement agency located within a

9 community disproportionately impacted by violent

10 crime. Funds transferred under this subparagraph

11 shall be used for the prevention of violent crime.

12 ‘‘(ii) For purposes of this subparagraph—

13 ‘‘(I) the term ‘violent crime’ means a crime

14 involving force or threat of force, including

15 murder, nonnegligent manslaughter, forcible

16 rape, robbery and aggravated assault; and

17 ‘‘(II) the term ‘community disproportion18 ately impacted by violent crime’ means any

19 metropolitan area, city outside of a metropoli20 tan area, or rural community having a violent

21 crime rate that is at least 2.5 times the na22 tional violent crime rate for metropolitan areas,

23 cities outside of metropolitan areas, or rural

24 communities, respectively, as reported to the
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1 Federal Bureau of Investigation for purposes of

2 the Uniform Crime Reports.’’.

3 (b) AMENDMENT TO TITLE 18.—Section 1963(g) of

4 title 18, United States Code, is amended—

5 (1) in paragraph (4), by striking ‘‘and’’;

6 (2) in paragraph (5), by striking the period at

7 the end and inserting ‘‘; and’’; and

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

9 paragraph:

10 ‘‘(6) transfer forfeited property to any State or

11 local law enforcement agency participating directly

12 or indirectly in the seizure or forfeiture of the prop13 erty.’’.

14 (c) AMENDMENT TO THE TARIFF ACT OF 1930.—

15 Section 616 of the Tariff Act of 1930 (19 U.S.C. 1616a)

16 is amended by adding at the end the following new sub17 section:

18 ‘‘(e) APPLICATION IN FORFEITURE CASES UNDER

19 RICO.—In the application of this section to asset forfeit20 ures under section 1963 of title 18, United States Code,

21 if the Attorney General transfers forfeited property to a

22 State or local law enforcement agency under subsection

23 (c)(1)(B), such property shall be distributed in accordance

24 with the equitable sharing provisions under section
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1 513(e)(3) of the Controlled Substances Act (21 U.S.C.

2 881(e)(3)).’’.

3 TITLE IV—EDUCATIONAL

4 OPPORTUNITY

5 SEC. 401. PURPOSE.

6 The purpose of this title is to provide education cer7 tificates to low-income families in areas of high poverty

8 to enable such families to select and pay for the choice

9 school their children will attend.

10 SEC. 402. DEFINITIONS.

11 As used in this title—

12 (1) the term ‘‘choice school’’ means any public

13 or private school, including a private sectarian

14 school or a public charter school, that is involved in

15 a demonstration project under this title;

16 (2) the term ‘‘eligible child’’ means a child in

17 grades 1 through 12 who is eligible for free or re18 duced price lunches under the National School

19 Lunch Act;

20 (3) the term ‘‘eligible entity’’ means a public

21 agency, institution, or organization, such as a State,

22 a State or local educational agency, a consortium of

23 public agencies, or a consortium of public and pri24 vate nonprofit organizations, that can demonstrate,

25 to the satisfaction of the Secretary, its ability to—
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1 (A) receive, disburse, and account for Fed2 eral funds; and

3 (B) carry out the activities described in its

4 application under this title;

5 (4) the term ‘‘evaluating agency’’ means any

6 academic institution, consortium of professionals, or

7 private or nonprofit organization, with demonstrated

8 experience in conducting evaluations, that is not an

9 agency or instrumentality of the Federal Govern10 ment;

11 (5) the term ‘‘local educational agency’’ has the

12 same meaning given such term in section 14101 of

13 the Elementary and Secondary Education Act of

14 1965;

15 (6) the term ‘‘parent’’ includes a legal guardian

16 or other individual acting in loco parentis;

17 (7) the term ‘‘school’’ means a school that pro18 vides elementary education or secondary education

19 (through grade 12), as determined under State law;

20 and

21 (8) the term ‘‘Secretary’’ means the Secretary

22 of Education.

23 SEC. 403. FUNDING.

24 The Secretary shall make available $25,000,000 for

25 each of the fiscal years 1996, 1997, and 1998, to carry
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1 out this title from amounts appropriated for such year to

2 carry out part A of title I of the Elementary and Second3 ary Education Act of 1965 (20 U.S.C. 6311 et seq.).

4 SEC. 404. PROGRAM AUTHORIZED.

5 (a) RESERVATION.—From the amount made avail6 able pursuant to section 403 for each fiscal year, the Sec7 retary shall reserve and make available to the Comptroller

8 General of the United States $1,000,000 for the evalua9 tions and reports required under section 410.

10 (b) GRANTS.—

11 (1) IN GENERAL.—From the amount made

12 available pursuant to section 403 and not reserved

13 under subsection (a) for any fiscal year, the Sec14 retary shall award grants to eligible entities to en15 able such entities to carry out not less than 7 dem16 onstration projects under which parents receive edu17 cation certificates for the costs of enrolling their eli18 gible children in a choice school.

19 (2) PRIORITY.—In awarding grants under this

20 title, the Secretary shall give priority to demonstra21 tion projects that serve the greatest number of eligi22 ble children.

23 (3) CONTINUING ELIGIBILITY.—The Secretary

24 shall continue a demonstration project under this

25 title by awarding a grant under paragraph (1) to an
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1 eligible entity that received such a grant for a fiscal

2 year preceding the fiscal year for which the deter3 mination is made, if the Secretary determines that

4 such eligible entity was in compliance with this title

5 for such preceding fiscal year.

6 (c) USE OF GRANTS.—Grants awarded under sub7 section (b) shall be used to pay the costs of providing edu8 cation certificates to parents to enable such parents to pay

9 the tuition, the fees, the allowable costs of transportation,

10 if any, and the costs of complying with section 408(a)(1),

11 if any, for their eligible children to attend a choice school.

12 (d) SPECIAL RULE.—Each school participating in a

13 demonstration project under this title shall comply with

14 title VI of the Civil Rights Act of 1964 which prohibits

15 discrimination on the basis of race, color, or national ori16 gin.

17 SEC. 405. AUTHORIZED PROJECTS.

18 The Secretary may award a grant under this title

19 only for a demonstration project that—

20 (1) involves at least one local educational agen21 cy that—

22 (A) receives funds under section 1124A of

23 the Elementary and Secondary Education Act

24 of 1965; and
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1 (B) is among the 20 percent of local edu2 cational agencies receiving funds under section

3 1124A of such Act in the State that have the

4 highest number of children described in section

5 1124(c) of such Act; and

6 (2) includes the involvement of a sufficient

7 number of public and private choice schools, in the

8 judgment of the Secretary, to allow for a valid dem9 onstration project.

10 SEC. 406. APPLICATIONS.

11 (a) IN GENERAL.—Any eligible entity that wishes to

12 receive a grant for a demonstration project under this title

13 shall submit an application to the Secretary at such time

14 and in such manner as the Secretary may prescribe.

15 (b) CONTENTS.—Each application described in sub16 section (a) shall contain—

17 (1) a description of how the eligible entity will

18 annually determine the number of spaces available

19 for eligible children in each choice school participat20 ing in the demonstration project;

21 (2) a description of each choice school partici22 pating in the demonstration project, including a de23 scription of the distances and costs associated with

24 commuting to each such choice school;
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1 (3) a description of the estimated costs to eligi2 ble students for tuition, fees, and transportation, at

3 each choice school participating in the demonstration

4 project;

5 (4) a description of the process to be used when

6 the number of parents provided education certifi7 cates under this title who desire to enroll their eligi8 ble children in a particular choice school participat9 ing in the demonstration project exceeds the number

10 of eligible children that such choice school will ac11 cept;

12 (5) a description of the procedures to be used

13 for the issuance and redemption of education certifi14 cates under this title;

15 (6) an assurance the eligible entity will submit

16 to the evaluating agency entering into the contract

17 under section 410(a) an annual report, at such time,

18 in such manner, and accompanied by such informa19 tion as such evaluating agency may require, describ20 ing the activities and expenditures of such eligible

21 entity under the demonstration project; and

22 (7) such other assurances and information as

23 the Secretary may require.

24 SEC. 407. EDUCATION CERTIFICATES.

25 (a) EDUCATION CERTIFICATES.—
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1 (1) AMOUNT.—The amount of an eligible

2 child’s education certificate under this title shall be

3 determined by the eligible entity, but shall be an

4 amount that provides to the recipient of the edu5 cation certificate the maximum degree of choice in

6 selecting the choice school the eligible child will at7 tend.

8 (2) CONSIDERATIONS.—

9 (A) IN GENERAL.—Subject to such regula10 tions as the Secretary shall prescribe, in deter11 mining the amount of an education certificate

12 under this title an eligible entity shall con13 sider—

14 (i) the additional reasonable costs of

15 transportation directly attributable to the

16 eligible child’s participation in the dem17 onstration project; and

18 (ii) the cost of complying with section

19 408(a)(1).

20 (B) SCHOOLS CHARGING TUITION.—If an

21 eligible child participating in a demonstration

22 project under this title was attending a public

23 or private school that charged tuition for the

24 year preceding the first year of such participa25 tion, then in determining the amount of an edu-
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1 cation certificate for such eligible child under

2 this title the eligible entity shall consider—

3 (i) the tuition charged by such school

4 for such eligible child in such preceding

5 year; and

6 (ii) the amount of the education cer7 tificates under this title that are provided

8 to other eligible children.

9 (3) SPECIAL RULE.—An eligible entity may pro10 vide an education certificate under this title to the

11 parent of an eligible child who chooses to attend a

12 school that does not charge tuition or fees, to pay

13 the additional reasonable costs of transportation di14 rectly attributable to the eligible child’s participation

15 in the demonstration project or the cost of comply16 ing with section 408(a)(1).

17 (b) ADJUSTMENT.—The amount of the education cer18 tificate for a fiscal year may be adjusted in the second

19 and third years of an eligible child’s participation in a

20 demonstration project under this title to reflect any in21 crease or decrease in the tuition, fees, or transportation

22 costs directly attributable to that eligible child’s continued

23 attendance at a choice school, but shall not be increased

24 for this purpose by more than 10 percent of the amount

25 of the education certificate for the fiscal year preceding
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1 the fiscal year for which the determination is made. The

2 amount of the education certificate may also be adjusted

3 in any fiscal year to comply with section 408(a)(1).

4 (c) MAXIMUM AMOUNT.—Notwithstanding any other

5 provision of this section, the amount of an eligible child’s

6 education certificate shall not exceed the per pupil expend7 iture for elementary or secondary education, as appro8 priate, by the local educational agency in which the public

9 school to which the eligible child would normally be as10 signed is located for the fiscal year preceding the fiscal

11 year for which the determination is made.

12 (d) INCOME.—An education certificate under this

13 title, and funds provided under the education certificate,

14 shall not be treated as income of the parents for purposes

15 of Federal tax laws or for determining eligibility for any

16 other Federal program.

17 SEC. 408. EFFECT ON OTHER PROGRAMS; USE OF SCHOOL

18 LUNCH DATA.

19 (a) EFFECT ON OTHER PROGRAMS.—

20 (1) IN GENERAL.—An eligible child participat21 ing in a demonstration project under this title, who,

22 in the absence of such a demonstration project,

23 would have received services under part A of title I

24 of the Elementary and Secondary Education Act of

25 1965 shall be provided such services.
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1 (2) PART B OF THE INDIVIDUALS WITH DIS2 ABILITIES EDUCATION ACT.—Nothing in this title

3 shall be construed to affect the requirements of part

4 B of the Individuals with Disabilities Education Act.

5 (b) COUNTING OF ELIGIBLE CHILDREN.—Notwith6 standing any other provision of law, any local educational

7 agency participating in a demonstration project under this

8 title may count eligible children who, in the absence of

9 such a demonstration project, would attend the schools of

10 such agency, for purposes of receiving funds under any

11 program administered by the Secretary.

12 (c) SPECIAL RULE.—Notwithstanding section 9 of

13 the National School Lunch Act, an eligible entity receiving

14 a grant under this title may use information collected for

15 the purpose of determining eligibility for free or reduced

16 price lunches to determine an eligible child’s eligibility to

17 participate in a demonstration project under this title. All

18 such information shall otherwise remain confidential, and

19 information pertaining to income may be disclosed only

20 to persons who need that information for the purposes of

21 a demonstration project under this title.

22 (d) CONSTRUCTION.—

23 (1) OTHER INSTITUTIONS.—Nothing in this

24 title shall be construed to supersede or modify any

25 provision of a State constitution or State law that
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1 prohibits the expenditure of public funds in or by

2 religious or other private institutions, except that no

3 provision of a State constitution or State law shall

4 be construed or applied to prohibit—

5 (A) any eligible entity receiving funds

6 under this title from using such funds to pay

7 the administrative costs of a demonstration

8 project under this title; or

9 (B) the expenditure in or by religious or

10 other private institutions of any Federal funds

11 provided under this title.

12 (2) DESEGREGATION PLANS.—Nothing in this

13 title shall be construed to interfere with any desegre14 gation plans that involve school attendance areas af15 fected by this title.

16 SEC. 409. PARENTAL NOTIFICATION.

17 Each eligible entity receiving a grant under this title

18 shall provide timely notice of the demonstration project

19 to parents of eligible children residing in the area to be

20 served by the demonstration project. At a minimum, such

21 notice shall—

22 (1) describe the demonstration project;

23 (2) describe the eligibility requirements for par24 ticipation in the demonstration project;
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1 (3) describe the information needed to make a

2 determination of eligibility for participation in the

3 demonstration project for an eligible child;

4 (4) describe the selection procedures to be used

5 if the number of eligible children seeking to partici6 pate in the demonstration project exceeds the num7 ber that can be accommodated in the demonstration

8 project;

9 (5) provide information about each choice

10 school participating in the demonstration project, in11 cluding information about any admission require12 ments or criteria for each such choice school; and

13 (6) include the schedule for parents to apply for

14 their eligible children to participate in the dem15 onstration project.

16 SEC. 410. EVALUATION AND REPORT.

17 (a) EVALUATION.—The Comptroller General of the

18 United States shall enter into a contract with an evaluat19 ing agency for the conduct of an ongoing evaluation of

20 each demonstration project assisted under this title.

21 (b) REPORT.—The evaluating agency entering into a

22 contract under subsection (a) annually shall report to the

23 Congress regarding the evaluations conducted under such

24 subsection.
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1 TITLE V—FAMILY OPPORTUNITY

2 SEC. 501. FINDINGS AND PURPOSE.

3 (a) FINDINGS.—Congress finds that—

4 (1) nearly 500,000 children are in foster care in

5 the United States;

6 (2) tens of thousands of children in foster care

7 are waiting for adoption;

8 (3) 2 years and 8 months is the median length

9 of time that children wait to be adopted, and minor10 ity children often wait twice as long as other chil11 dren to be adopted; and

12 (4) child welfare agencies should work to elimi13 nate racial, ethnic, and national origin discrimina14 tion and bias in adoption and foster care recruit15 ment, selection, and placement procedures.

16 (b) PURPOSE.—The purpose of this title is to pro17 mote the best interests of children by—

18 (1) decreasing the length of time that children

19 wait to be adopted; and

20 (2) preventing discrimination in the placement

21 of children on the basis of race, color, or national or22 igin.
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1 SEC. 502. REMOVAL OF BARRIERS TO INTERRACIAL AND

2 INTERETHNIC ADOPTIONS.

3 (a) PROHIBITION.—A State or other entity that re4 ceives funds from the Federal Government and is involved

5 in adoption or foster care placements may not—

6 (1) deny to any person the opportunity to be7 come an adoptive or a foster parent, on the basis of

8 the race, color, or national origin of the person, or

9 of the child, involved; or

10 (2) delay or deny the placement of a child for

11 adoption or into foster care, or otherwise discrimi12 nate in making a placement decision, on the basis of

13 the race, color, or national origin of the adoptive or

14 foster parent, or the child, involved.

15 (b) PENALTIES.—

16 (1) STATE VIOLATORS.—A State that violates

17 subsection (a) shall remit to the Secretary of Health

18 and Human Services all funds that were paid to the

19 State under part E of title IV of the Social Security

20 Act (42 U.S.C. 670 et seq.) (relating to foster care

21 and adoption assistance) during the period of the

22 violation.

23 (2) PRIVATE VIOLATORS.—Any other entity

24 that violates subsection (a) shall remit to the Sec25 retary of Health and Human Services all funds that

26 were paid to the entity during the period of the vio-
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1 lation by a State from funds provided under part E

2 of title IV of the Social Security Act.

3 (c) PRIVATE CAUSE OF ACTION.—

4 (1) IN GENERAL.—Any individual or class of in5 dividuals aggrieved by a violation of subsection (a)

6 by a State or other entity may bring an action seek7 ing relief in any United States district court or State

8 court of appropriate jurisdiction.

9 (2) STATUTE OF LIMITATIONS.—An action

10 under this subsection may not be brought more than

11 2 years after the date the alleged violation occurred.

12 (d) ATTORNEY’S FEES.—In any action or proceeding

13 under this title, the court, in the discretion of the court,

14 may allow the prevailing party, other than the United

15 States, a reasonable attorney’s fee, including litigation ex16 penses and costs, and the States and the United States

17 shall be liable for the fee to the same extent as a private

18 individual.

19 (e) STATE IMMUNITY.—A State shall not be immune

20 under the 11th amendment to the Constitution from an

21 action in Federal or State court of appropriate jurisdiction

22 for a violation of this title.

23 (f) NO EFFECT ON INDIAN CHILD WELFARE ACT OF

24 1978.—Nothing in this title shall be construed to affect
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1 the application of the Indian Child Welfare Act of 1978

2 (25 U.S.C. 1901 et seq.).

3 SEC. 503. REPEAL.

4 Subpart 1 of part E of title V of the Improving Amer5 ica’s Schools Act of 1994 (42 U.S.C. 5115a) is amended—

6 (1) by repealing sections 551 through 553; and

7 (2) by redesignating section 554 as section 551.

8 SEC. 504. EFFECTIVE DATE.

9 This title, and the amendments made by this title,

10 shall take effect 90 days after the date of enactment of

11 this Act.

12 TITLE VI—VOLUNTEER

13 PROTECTION

14 SEC. 601. FINDINGS AND PURPOSE.

15 (a) FINDINGS.—Congress finds that—

16 (1) the willingness of volunteers to offer their

17 services is deterred by potential personal liability for

18 simple mistakes made in the course of volunteer

19 service;

20 (2) as a result, many nonprofit public and pri21 vate organizations and governmental entities, includ22 ing voluntary associations, social service agencies,

23 educational institutions, local governments, founda24 tions, and other civic programs, have been adversely
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1 affected through the withdrawal of volunteers from

2 boards of directors and service in other capacities;

3 (3) the contribution of such programs to the

4 communities served by the programs is diminished

5 by the withdrawal of volunteers, resulting in fewer

6 and higher cost programs than would be obtainable

7 if the volunteers were participating; and

8 (4) because Federal funds are expended on use9 ful and cost-effective social service programs that de10 pend heavily on volunteer participation, protection of

11 voluntarism through clarification and limitation of

12 the personal liability risks assumed by a volunteer in

13 connection with such participation is an appropriate

14 subject for Federal encouragement of State reform.

15 (b) PURPOSE.—It is the purpose of this title to pro16 mote the interests of social service program beneficiaries

17 and taxpayers and to sustain the availability of programs,

18 nonprofit organizations, and governmental entities, that

19 depend on volunteer contributions by encouraging reason20 able reform of State laws to provide protection from per21 sonal financial liability to volunteers serving with such or22 ganizations and entities for actions undertaken in good

23 faith on behalf of such organizations and entities.

24 SEC. 602. DEFINITIONS.

25 As used in this title:
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1 (1) DAMAGE OR INJURY.—The term ‘‘damage

2 or injury’’ includes physical, nonphysical, economic,

3 and noneconomic damage.

4 (2) NONPROFIT ORGANIZATION.—The term

5 ‘‘nonprofit organization’’ means an organization de6 scribed in section 501(c) of the Internal Revenue

7 Code of 1986 and exempt from tax under section

8 501(a) of such Code.

9 (3) STATE.—The term ‘‘State’’ means each of

10 the several States, the District of Columbia, the

11 Commonwealth of Puerto Rico, the United States

12 Virgin Islands, Guam, American Samoa, the Com13 monwealth of the Northern Mariana Islands, any

14 other territory or possession of the United States, or

15 any political subdivision of any such State, territory,

16 or possession.

17 (4) VOLUNTEER.—The term ‘‘volunteer’’ means

18 an individual who—

19 (A) performs services (including serving as

20 a director, officer, or trustee or providing direct

21 services) for a nonprofit organization or a gov22 ernmental entity; and

23 (B) does not receive—
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1 (i) compensation (including reim2 bursement or allowance for expenses) in

3 excess of $300 for such services; or

4 (ii) any other thing of value (in lieu of

5 compensation) in excess of $300 for such

6 services.

7 SEC. 603. NO PREEMPTION OF STATE TORT LAW.

8 Nothing in this title shall be construed to preempt

9 the laws of any State governing tort liability actions.

10 SEC. 604. LIMITATION ON LIABILITY FOR VOLUNTEERS.

11 (a) LIABILITY PROTECTION FOR VOLUNTEERS.—Ex12 cept as provided in subsections (b) and (d), no volunteer

13 for a nonprofit organization or governmental entity shall

14 incur any personal financial liability for any tort claim al15 leging damage or injury from any act or omission of the

16 volunteer on behalf of the organization or entity if—

17 (1) such volunteer was acting in good faith and

18 within the scope of the official functions and duties

19 of the volunteer with the organization or entity; and

20 (2) such damage or injury was not caused by

21 willful and wanton misconduct by such volunteer.

22 (b) CONCERNING RESPONSIBILITY OF VOLUNTEERS

23 WITH RESPECT TO ORGANIZATIONS.—Nothing in this

24 section shall be construed to affect any civil action brought
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1 by any nonprofit organization or any governmental entity

2 against any volunteer for such organization or entity.

3 (c) NO EFFECT ON LIABILITY OF ORGANIZATION.—

4 Nothing in this section shall be construed to affect the

5 liability of any nonprofit organization or governmental en6 tity with respect to injury caused to any person.

7 (d) EXCEPTIONS TO VOLUNTEER LIABILITY PRO8 TECTION.—A State may impose 1 or more of the following

9 conditions on and exceptions to the granting of liability

10 protection to any volunteer for an organization or entity

11 as required by subsection (a):

12 (1) PROCEDURES.—The organization or entity

13 shall follow risk management procedures, including

14 mandatory training of volunteers, as defined by the

15 Secretary of Health and Human Services by regula16 tion.

17 (2) LIABILITY OF ORGANIZATION OR ENTITY.—

18 The organization or entity shall be liable for the acts

19 or omissions of volunteers for the organization or en20 tity to the same extent as an employer is liable,

21 under the laws of that State, for the acts or omis22 sions of the employees of the employer.

23 (3) EXCEPTIONS.—The protection from liability

24 shall not apply to an act or omission of a volun25 teer—
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1 (A) if, at the time of the act or omission,

2 the volunteer was operating a motor vehicle,

3 vessel, aircraft, or other vehicle for which the

4 State involved requires the operator or vehicle

5 owner to maintain insurance;

6 (B) in the case of a suit relating to the act

7 or omission brought by an appropriate officer of

8 a State or local government to enforce a Fed9 eral, State, or local law; and

10 (C) to the extent a claim relating to the

11 act or omission would be covered under any in12 surance policy.

13 (4) SOURCE OF RECOVERY.—The protection

14 from liability shall apply only if the organization or

15 entity provides a financially secure source of recov16 ery for individuals who suffer injury as a result of

17 acts or omissions by a volunteer on behalf of the or18 ganization or entity. For purposes of this paragraph,

19 a financially secure source of recovery may be an in20 surance policy within specified limits, comparable

21 coverage from a risk pooling mechanism, equivalent

22 assets, or an alternative arrangement that satisfies

23 the State that the entity will be able to pay for

24 losses up to a specified amount. In specifying stand25 ards for such a source, the State may specify sepa-
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1 rate standards for different types of liability expo2 sure.

3 SEC. 605. CERTIFICATION REQUIREMENT AND ADJUST4 MENT OF SOCIAL SERVICES BLOCK GRANT

5 ALLOTMENTS.

6 (a) CERTIFICATION AND BLOCK GRANT ALLOT7 MENTS.—In the case of any State that certifies, not later

8 than 2 years after the date of the enactment of this Act,

9 to the Secretary of Health and Human Services that the

10 State has enacted, has adopted, or otherwise has in effect

11 State law which substantially complies with section

12 604(a), the Secretary shall increase by 1 percent the fiscal

13 year allotment that would otherwise be made to such State

14 to carry out the social services block grant program under

15 title XX of the Social Security Act (42 U.S.C. 1397 et

16 seq.).

17 (b) CONTINUATION OF INCREASE.—Any increase

18 made under subsection (a) in an allotment to a State shall

19 remain in effect only if the State makes a certification

20 described in subsection (a) to the Secretary of Health and

21 Human Services by such day and by the end of each 1-

22 year period after such day, for 1 year after the date of

23 the most recent certification.
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1 TITLE VII—SPECTRUM AUCTION

2 SEC. 701. AUCTION OF ELECTROMAGNETIC SPECTRUM.

3 (a) REPEAL OF EXISTING AUTHORITY TO ALLOCATE

4 SPECTRUM.—(1) Subsections (i) and (j) of section 309 of

5 the Communications Act of 1934 (47 U.S.C. 309) are re6 pealed.

7 (2) No regulation prescribed by the Federal Commu8 nications Commission under the authority set forth in

9 such subsection (i) or (j), or under any other provision

10 of law authorizing the Commission to prescribe regulations

11 for the grant of licenses or permits for the use of the elec12 tromagnetic spectrum, shall have any further force or ef13 fect after the date of the enactment of this Act.

14 (b) GRANT OF LICENSES AND PERMITS BY COMPETI15 TIVE BIDDING.—Such section is further amended by add16 ing at the end the following:

17 ‘‘(i) REQUIREMENT FOR COMPETITIVE BIDDING.—

18 ‘‘(1) REQUIREMENT.—Except as provided in

19 paragraph (2), the Commission shall grant a license

20 or construction permit involving the use of a portion

21 of the electromagnetic spectrum not covered by a li22 cense or permit granted before the date of the enact23 ment of the Balanced Budget Reconciliation Act of

24 1995 only through the use of a system of competi25 tive bidding established by the Commission.
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1 ‘‘(2) EXCEPTIONS.—

2 ‘‘(A) IN GENERAL.—Subject to subpara3 graphs (B) and (C), the Commission may grant

4 a license or permit covered this subsection—

5 ‘‘(i) by alternative adjudication;

6 ‘‘(ii) without a fee; or

7 ‘‘(iii) for a nominal fee.

8 ‘‘(B) TERM OF LOW-FEE LICENSES AND

9 PERMITS.—The term of a license granted under

10 clause (ii) of subparagraph (A) or a permit

11 granted under clause (iii) of that subparagraph

12 may not exceed 10 years, except that the Com13 mission may permit the renewal of the license

14 or permit for an additional period of 10 years.

15 ‘‘(C) NOTICE AND WAIT REQUIREMENT.—

16 The Commission may not grant a license or

17 permit under this paragraph until 120 days

18 after the date on which the Commission sub19 mits to the Committee on Commerce, Science,

20 and Transportation of the Senate and the Com21 mittee on Commerce of the House of Represent22 atives a notice of the intent of the Commission

23 to so grant the license or permit.
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1 ‘‘(D) CONTENTS OF NOTICE.—Each notice

2 submitted under subparagraph (C) shall include

3 the following:

4 ‘‘(i) A justification for the decision to

5 grant the license or permit in question

6 under this paragraph.

7 ‘‘(ii) An estimate of the revenue that

8 the United States will forgo as a result of

9 the grant of the license or permit under

10 this paragraph.

11 ‘‘(iii) An explanation of the manner in

12 which the license or permit will be granted.

13 ‘‘(iv) If the license or permit will be

14 granted under clause (ii) or (iii) of sub15 paragraph (A), an explanation why the

16 grant of the license or permit under such

17 clause will be more beneficial to the public

18 interest than the grant of the license or

19 permit under paragraph (1).’’.

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