II

104TH CONGRESS

2D SESSION S. 1722

To amend the Fair Labor Standards Act of 1938 and the National Labor

Relations Act to strengthen minimum wage and striker replacement,

and to ensure quality job training, education, health care, and pension

security for workers, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 2, 1996

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

referred to the Committee on Labor and Human Resources

A BILL

To amend the Fair Labor Standards Act of 1938 and the

National Labor Relations Act to strengthen minimum

wage and striker replacement, and to ensure quality job

training, education, health care, and pension security

for workers, 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.

4 This Act may be cited as the ‘‘Working Families Eco5 nomic Security Act of 1996’’.

6 SEC. 2. TABLE OF CONTENTS.

7 The table of contents for this Act is as follows:
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Sec. 1. Short title.

Sec. 2. Table of contents.

TITLE I—MINIMUM WAGE GUARANTEE

Sec. 101. Findings and policies.

Sec. 102. Minimum wage increase and indexation.

TITLE II—INCOME EQUITY

Sec. 201. Denial of deduction for payments of excessive compensation.

TITLE III—WORKER PROTECTION IN LABOR DISPUTES

Sec. 301. Prevention of discrimination during and at the conclusion of labor

disputes.

Sec. 302. Prevention of discrimination during and at the conclusion of railway

labor disputes.

Sec. 303. Initial contract disputes.

TITLE IV—WORKFORCE OF THE FUTURE

Subtitle A—General Provisions

Sec. 401. Short title.

Sec. 402. Findings and purpose.

Sec. 403. Definitions.

Sec. 404. Authorization of appropriations.

Subtitle B—Streamlining and Consolidation

Sec. 411. Purpose; findings; sense of the Congress.

Sec. 412. Elimination of certain programs.

Sec. 413. Streamlining and integration of adult training programs.

Sec. 414. Process for establishing 21st century workforce development system.

Sec. 415. Centralized waivers.

Subtitle C—Market Building Activities

CHAPTER 1—FEDERAL LEVEL ACTIVITIES

Sec. 421. Purpose.

Sec. 422. National Workforce Development Board.

Sec. 423. Mechanisms for building high quality integrated workforce development systems.

Sec. 424. Quality assurance system.

CHAPTER 2—STATE LEVEL ACTIVITIES

Sec. 431. State Workforce Development Councils.

Sec. 432. Membership.

Sec. 433. Chairperson.

Sec. 434. Duties and responsibilities.

Sec. 435. Development of quality assurance systems and consumer reports.

Sec. 436. Administration.

Sec. 437. Establishment of unified service delivery areas.

Sec. 438. Financial and management information systems.

Sec. 439. Capacity building grants.

Sec. 440. Performance standards for unified service delivery areas.
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CHAPTER 3—LOCAL LEVEL ACTIVITIES

Sec. 441. Workforce development boards.

Sec. 442. Workforce development board policy blueprint.

Sec. 443. Report card.

Sec. 444. Capacity building.

Subtitle D—One-Stop Career Centers

Sec. 451. Career centers.

TITLE V—CORPORATE ACCOUNTABILITY

Sec. 501. Short title.

Sec. 502. Findings.

Sec. 503. Corporate code of conduct.

Sec. 504. Preference for entities adopting and enforcing corporate code of conduct.

Sec. 505. Certificate of compliance.

Sec. 506. Annual compliance review and petition process.

Sec. 507. Regulations.

Sec. 508. Definitions.

TITLE VI—HEALTH INSURANCE REFORM

Sec. 601. Short title.

Sec. 602. Definitions.

Subtitle A—Health Care Access, Portability, and Renewability

CHAPTER 1—GROUP MARKET RULES

Sec. 611. Guaranteed availability of health coverage.

Sec. 612. Guaranteed renewability of health coverage.

Sec. 613. Portability of health coverage and limitation on preexisting condition

exclusions.

Sec. 614. Special enrollment periods.

Sec. 615. Disclosure of information.

CHAPTER 2—INDIVIDUAL MARKET RULES

Sec. 620. Individual health plan portability.

Sec. 621. Guaranteed renewability of individual health coverage.

Sec. 622. State flexibility in individual market reforms.

Sec. 623. Definition.

CHAPTER 3—COBRA CLARIFICATIONS

Sec. 631. COBRA clarifications.

CHAPTER 4—PRIVATE HEALTH PLAN PURCHASING COOPERATIVES

Sec. 641. Private health plan purchasing cooperatives.

Subtitle B—Application and Enforcement of Standards

Sec. 651. Applicability.

Sec. 652. Enforcement of standards.

Subtitle C—Miscellaneous Provisions
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Sec. 661. HMOs allowed to offer plans with deductibles to individuals with

medical savings accounts.

Sec. 662. Rules governing litigation involving retiree health benefits.

Sec. 663. Health coverage availability study.

Sec. 664. Sense of the Committee concerning medicare.

Sec. 665. Parity for mental health services.

Sec. 666. Effective date.

Sec. 667. Severability.

TITLE VII—PENSIONS

Sec. 701. Sense of the Senate.

TITLE VIII—NORTH AMERICAN TRADE FAIRNESS ACT

Sec. 801. Short title.

Sec. 802. Conditions for continued participation in the NAFTA.

Sec. 803. Consultation with Congress.

Sec. 804. No expansion of NAFTA.

Sec. 805. Definitions.

TITLE IX—COMMISSION ON RETIREMENT INCOME POLICY

Sec. 901. Establishment.

Sec. 902. Duties.

Sec. 903. Membership.

Sec. 904. Staff and support services.

Sec. 905. Powers.

Sec. 906. Report.

Sec. 907. Termination.

1 TITLE I—MINIMUM WAGE

2 GUARANTEE

3 SEC. 101. FINDINGS AND POLICIES.

4 Congress finds that—

5 (1) the real value and purchasing power of the

6 minimum wage are at their lowest point in 40 years;

7 (2) it remains in the interest of the American

8 people to ensure that our lowest-paid workers are

9 paid a living wage the value of which does not con10 tinually erode;

11 (3) a phased increase in the minimum wage

12 will—
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1 (A) help restore the value and purchasing

2 power of the minimum wage to prior levels;

3 (B) increase incentives for the poor to seek

4 and retain jobs; and

5 (C) help to mitigate poverty in inner city

6 communities that have a disproportionate share

7 of low-wage and unskilled workers; and

8 (4) indexing is needed to prevent continual ero9 sion in the value of the minimum wage and to sub10 stitute modest annual increases in the minimum

11 wage consistent with general wage trends for large,

12 belated, and sometimes inadequate adjustments by

13 Congress.

14 SEC. 102. MINIMUM WAGE INCREASE AND INDEXATION.

15 Paragraph (1) of section 6(a) of the Fair Labor

16 Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended

17 to read as follows:

18 ‘‘(1) except as otherwise provided in this sec19 tion—

20 ‘‘(A) not less than—

21 ‘‘(i) $4.70 an hour during the year be22 ginning on September 1, 1996; and

23 ‘‘(ii) $5.15 an hour during the year

24 beginning September 1, 1997; and
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1 ‘‘(B) with respect to the year beginning on

2 September 1, 1999, and biennially thereafter,

3 not less than the amount applicable under this

4 paragraph adjusted on June 1 of such year to

5 equal 45 percent of the monthly average hourly

6 earnings for nonfarm, nonsupervisory private

7 workers for the preceding 12 months, as deter8 mined by the Bureau of Labor Statistics,

9 rounded to the nearest multiple of $0.05, except

10 that any amount determined under this sub11 paragraph shall not be less than the amount

12 applicable under this paragraph for the preced13 ing year;’’.

14 TITLE II—INCOME EQUITY

15 SEC. 201. DENIAL OF DEDUCTION FOR PAYMENTS OF EX16 CESSIVE COMPENSATION.

17 (a) IN GENERAL.—Section 162 of the Internal Reve18 nue Code of 1986 (relating to deduction for trade or busi19 ness expenses) is amended by inserting after subsection

20 (h) the following new subsection:

21 ‘‘(i) EXCESSIVE COMPENSATION.—

22 ‘‘(1) IN GENERAL.—No deduction shall be al23 lowed under this chapter for any excessive com24 pensation with respect to any full-time employee.
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1 ‘‘(2) EXCESSIVE COMPENSATION.—For pur2 poses of this subsection, the term ‘excessive com3 pensation’ means, with respect to any employee, the

4 amount by which—

5 ‘‘(A) the compensation for services per6 formed by such employee during the taxable

7 year, exceeds

8 ‘‘(B) an amount equal to 25 times the low9 est compensation for services performed by any

10 other employee during such taxable year.

11 ‘‘(3) DEFINITIONS AND SPECIAL RULES.—For

12 purposes of this subsection—

13 ‘‘(A) COMPENSATION.—

14 ‘‘(i) IN GENERAL.—The term ‘com15 pensation’ means salary, wages, and bo16 nuses.

17 ‘‘(ii) PART-YEAR EMPLOYEES.—In the

18 case of any part-year employee, the com19 pensation of the employee shall be com20 puted on an annualized basis.

21 ‘‘(B) EMPLOYER.—All persons treated as a

22 single employer under subsection (a) or (b) of

23 section 52 or subsection (m) or (o) of section

24 414 shall be treated as 1 employer.’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to taxable years beginning after

3 the date of the enactment of this Act.

4 TITLE III—WORKER PROTEC5 TION IN LABOR DISPUTES

6 SEC. 301. PREVENTION OF DISCRIMINATION DURING AND

7 AT THE CONCLUSION OF LABOR DISPUTES.

8 Section 8(a) of the National Labor Relations Act (29

9 U.S.C. 158(a)) is amended—

10 (1) by striking the period at the end of para11 graph (5) and inserting ‘‘; or’’; and

12 (2) by adding at the end thereof the following

13 new paragraph:

14 ‘‘(6) to promise, to threaten, or take other ac15 tion—

16 ‘‘(A) to hire a permanent replacement for

17 an employee who—

18 ‘‘(i) at the commencement of a labor

19 dispute, was an employee of the employer

20 in a bargaining unit in which a labor orga21 nization—

22 ‘‘(I) was the certified or recog23 nized exclusive representative; or

24 ‘‘(II) on the basis of written au25 thorizations by a majority of the unit
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1 employees, was seeking to be so cer2 tified or recognized; and

3 ‘‘(ii) in connection with that dispute,

4 has engaged in concerted activities for the

5 purpose of collective bargaining or other

6 mutual aid or protection through that

7 labor organization; or

8 ‘‘(B) to withhold or deny any other em9 ployment right or privilege to an employee, who

10 meets the criteria described in clauses (i) and

11 (ii) of paragraph (A) and who is working for or

12 has unconditionally offered to return to work

13 for the employer, out of a preference for any

14 other individual that is based on the fact that

15 the individual is performing, has performed or

16 has indicated a willingness to perform bargain17 ing unit work for the employer during the labor

18 dispute.’’.

19 SEC. 302. PREVENTION OF DISCRIMINATION DURING AND

20 AT THE CONCLUSION OF RAILWAY LABOR

21 DISPUTES.

22 Paragraph Fourth of section 2 of the Railway Labor

23 Act (45 U.S.C. 152) is amended—

24 (1) by inserting ‘‘(a)’’ after ‘‘Fourth.’’; and

25 (2) by adding at the end thereof the following:
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1 ‘‘(b) No carrier, or officer or agent of the carrier,

2 shall promise, threaten or take other action—

3 ‘‘(1) to hire a permanent replacement for an

4 employee who—

5 ‘‘(A) at the commencement of a dispute,

6 was an employee of the carrier in a craft or

7 class in which a labor organization—

8 ‘‘(i) was the designated or authorized

9 representative; or

10 ‘‘(ii) on the basis of written authoriza11 tions by a majority of the craft or class,

12 was seeking to be so designated or author13 ized; and

14 ‘‘(B) in connection with that dispute, has

15 exercised the right to join, to organize, to assist

16 in organizing, or to bargain collectively through

17 that labor organization; or

18 ‘‘(2) to withhold or deny any other employment

19 right or privilege to an employee, who meets the cri20 teria described in subparagraphs (A) and (B) of

21 paragraph (1) and who is working for or has uncon22 ditionally offered to return to work for the carrier,

23 out of a preference for any other individual that is

24 based on the fact that the individual is employed,
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1 was employed, or indicated a willingness to be em2 ployed during the dispute.’’.

3 SEC. 303. INITIAL CONTRACT DISPUTES.

4 Section 8 of the National Labor Relations Act (29

5 U.S.C. 158) is amended by adding at the end thereof the

6 following new subsection:

7 ‘‘(h)(1) If, not later than 60 days after the certifi8 cation of a new representative of employees for the pur9 pose of collective bargaining, the employer of the employ10 ees and the representative have not reached a collective

11 bargaining agreement with respect to the terms and condi12 tions of employment, the employer and representative shall

13 jointly select a mediator to mediate the issues on which

14 the employer and representative cannot agree.

15 ‘‘(2) If the employer and representative are unable

16 to agree upon a mediator, the employer or the representa17 tive may request the Federal Mediation and Conciliation

18 Service to select a mediator and the Federal Mediation

19 and Conciliation Service shall upon the request select a

20 person to serve as mediator.

21 ‘‘(3) If, not later than 30 days after the date of the

22 selection of a mediator under paragraph (1) or (2), the

23 employer and the representative have not reached agree24 ment on the issues described in paragraph 1, the employer

25 or the representative may transfer the matters remaining
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1 in controversy to the Federal Mediation and Conciliation

2 Service for binding arbitration.’’.

3 TITLE IV—WORKFORCE OF THE

4 FUTURE

5 Subtitle A—General Provisions

6 SEC. 401. SHORT TITLE.

7 This title may be cited as the ‘‘Workforce of the Fu8 ture Development Act’’.

9 SEC. 402. FINDINGS AND PURPOSE.

10 (a) FINDINGS.—Congress finds that—

11 (1) increasing international competition, techno12 logical advances, and structural changes in the Unit13 ed States economy present new challenges to private

14 firms and public policymakers in creating a skilled

15 workforce with the ability to adapt to change and

16 technological progress;

17 (2) the Federal Government should work with

18 the private sector to create a streamlined, high-per19 formance workforce development system that is driv20 en by the needs of its customers rather than bureau21 cratic requirements;

22 (3) such a system should actively encourage col23 laboration among private sector firms and publicly

24 funded education and training efforts in order to as-
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1 sist jobseekers and workers to adjust to structural

2 economic changes;

3 (4) although it is necessary for the Federal

4 Government to consolidate or eliminate unnecessary

5 programs, the primary goal of Federal workforce de6 velopment policy should be to help facilitate trans7 actions taking place between jobseekers, workers,

8 and business in local labor markets;

9 (5) while the Federal Government must main10 tain its commitment to provide economically and

11 educationally disadvantaged individuals with skills

12 and support services necessary to succeed in the

13 labor market, Federal workforce development policy

14 must also begin to provide incentives to assist firms

15 to help upgrade the skills of their frontline workers;

16 (6) in order for labor markets to function more

17 effectively, there must be—

18 (A) timely, accurate information about the

19 supply, demand, price, and quality of services

20 available in the job training marketplace; and

21 (B) trained brokers available to assist cus22 tomers to choose the most suitable service;

23 (7) accordingly, the United States needs a com24 prehensive integrated labor market information sys25 tem to ensure that workforce development programs
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1 are related to the demand for particular skills in

2 local labor markets, and a mechanism for providing

3 brokerage services to ensure that information about

4 the employment and earnings of the local workforce,

5 and the performance of education and training insti6 tutions, will be available to jobseekers, workers, and

7 firms;

8 (8) in order to bring more coherence to Federal

9 workforce development policy, there should be a sin10 gle entity at the Federal, State, and local level vest11 ed with the necessary authority to strategically plan

12 ways to transform the separate training and employ13 ment programs into an integrated and accountable

14 workforce development system;

15 (9) these Federal, State, and local strategic

16 planning bodies should be structured in such a way

17 to give businesses and workers a meaningful role in

18 shaping policy and overseeing the quality of

19 workforce development programs;

20 (10) in recent years, many States and commu21 nities have made progress in developing new ap22 proaches to better integrate Federal employment

23 and training programs;

24 (11) the Federal Government should take more

25 systematic measures to encourage experimentation
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1 and flexibility, and to disseminate best practices in

2 the design and implementation of a comprehensive

3 workforce development system throughout the coun4 try; and

5 (12) the Federal Government should address

6 the findings of this subsection through the imple7 mentation of immediate and long-term improvements

8 that result in the establishment of a high-quality

9 workforce development system needed for the econ10 omy of the 21st century.

11 (b) PURPOSE.—It is the purpose of this title to take

12 certain immediate actions, and to establish a process for

13 bringing about longer term improvements, that are needed

14 to begin the transformation of federally funded education

15 and job training efforts from a collection of fragmented

16 programs into a coherent, integrated, accountable

17 workforce development system that—

18 (1) is based on the needs of jobseekers, work19 ers, and employers, rather than bureaucratic re20 quirements;

21 (2) is accessible to any jobseeker, worker, or

22 employer;

23 (3) focuses on accountability, performance, and

24 accurate information;
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1 (4) provides flexibility and responsibility to the

2 States, and in turn to local communities, for design

3 and implementation of workforce development sys4 tems;

5 (5) requires the active involvement of firms and

6 workers in the governance, design, and implementa7 tion of such system;

8 (6) is linked directly to employment and train9 ing opportunities in the private sector; and

10 (7) adopts best practices of quality administra11 tion and management that have been successful in

12 the private sector.

13 SEC. 403. DEFINITIONS.

14 As used in this title:

15 (1) DEVELOPMENT GRANT.—The term ‘‘devel16 opment grant’’ means a grant provided to each State

17 under section 423(a).

18 (2) HARD-TO-SERVE.—The term ‘‘hard-to19 serve’’ means an individual meeting the require20 ments of section 203(b) of the Job Training Part21 nership Act (29 U.S.C. 1603(b)).

22 (3) IMPLEMENTATION GRANT.—The term ‘‘im23 plementation grant’’ means a grant provided under

24 section 423(b).
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1 (4) INTEGRATED WORKFORCE DEVELOPMENT

2 SYSTEM; INTEGRATED SYSTEM.—The terms ‘‘inte3 grated workforce development system’’ and ‘‘inte4 grated system’’ mean the system of employment,

5 training, and employment-related education pro6 grams, including the programs described in section

7 413(a) and any additional Federal or State pro8 grams designated by the Governor of a State, com9 prising the system described in section 423(b).

10 (5) LEADING EDGE STATE.—The term ‘‘leading

11 edge State’’ means a State that has been awarded

12 an implementation grant under section 423(b).

13 (6) NATIONAL BOARD.—The term ‘‘National

14 Board’’ means the National Workforce Development

15 Board established under section 422(b).

16 (7) NATIONAL REPORT CARD.—The term ‘‘Na17 tional Report Card’’ means the Nation’s Workforce

18 Development Report Card prepared pursuant to sec19 tion 422(c)(1).

20 (8) ONE-STOP CAREER CENTER.—The term

21 ‘‘one-stop career center’’ means an access point for

22 intake, assessment, referral, and placement services,

23 including services provided electronically, that is

24 part of the network established pursuant to section

25 451.
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1 (9) SECRETARY.—The term ‘‘Secretary’’ means

2 the Secretary of Labor, unless otherwise specified.

3 (10) STATE BLUEPRINT.—The term ‘‘State

4 Blueprint’’ means the State Workforce Development

5 Policy Blueprint prepared pursuant to section

6 434(a);

7 (11) STATE COUNCIL.—The term ‘‘State Coun8 cil’’ means a State Workforce Development Council

9 established pursuant to section 431.

10 (12) STATE REPORT CARD.—The term ‘‘State

11 Report Card’’ means the State Workforce Develop12 ment Report Card issued pursuant to section

13 434(b).

14 (13) UNIFIED SERVICE DELIVERY AREA.—The

15 term ‘‘unified service delivery area’’ means the com16 mon geographic service area boundaries established

17 pursuant to section 437 and overseen by a workforce

18 development board.

19 (14) WORKFORCE DEVELOPMENT BOARD.—The

20 term ‘‘workforce development board’’ means a local

21 board established pursuant to section 441.

22 (15) WORKFORCE DEVELOPMENT PROGRAM.—

23 The term ‘‘workforce development program’’ means

24 any federally funded or State-funded program that
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1 provides job training assistance to individuals or as2 sists employers to identify or train workers.

3 SEC. 404. AUTHORIZATION OF APPROPRIATIONS.

4 (a) IN GENERAL.—Subject to subsection (b), there

5 are authorized to be appropriated to carry out subtitles

6 C and D such sums as may be necessary for each of fiscal

7 years 1996 through 2000.

8 (b) LIMITATIONS.—

9 (1) FISCAL YEAR 1996.—Of the funds made

10 available pursuant to subsection (a) for fiscal year

11 1996—

12 (A) not more than 5 percent shall be used

13 for the activities of the National Board;

14 (B) not more than 15 percent shall be

15 used for development grants pursuant to section

16 423(a); and

17 (C) not less than 70 percent shall be used

18 for implementation grants pursuant to section

19 423(b).

20 (2) FISCAL YEARS 1997 THROUGH 2000.—Of the

21 funds made available pursuant to subsection (a) for

22 each of fiscal years 1997 through 2000—

23 (A) not more than 5 percent shall be used

24 for the activities of the National Board; and
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1 (B) not less than 85 percent shall be used

2 for implementation grants pursuant to section

3 423(b).

4 Subtitle B—Streamlining and

5 Consolidation

6 SEC. 411. PURPOSE; FINDINGS; SENSE OF THE CONGRESS.

7 (a) PURPOSE.—The purpose of this subtitle is to

8 streamline the system of federally funded employment

9 training services available to jobseekers, workers, and

10 businesses.

11 (b) FINDINGS.—The Congress finds that—

12 (1) the process of streamlining the current col13 lection of federally funded employment training pro14 grams begins with eliminating and consolidating sep15 arate employment training programs; and

16 (2) as such programs are eliminated, the fund17 ing for such programs should be utilized to support

18 the creation of a market-driven workforce develop19 ment system, as described in section 402(b).

20 (c) SENSE OF THE CONGRESS.—It is the sense of the

21 Congress that—

22 (1) any budget savings realized as a result of

23 the repeal of programs pursuant to section 412 or

24 through the consolidation of programs pursuant to
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1 sections 413 and 414 should be reinvested in the

2 Nation’s job training system; and

3 (2) as programs are eliminated and merged, it

4 is imperative that such elimination and merging be

5 done without in any way reducing the commitment

6 or level of effort of the Federal Government to im7 proving the education, employment, and earnings of

8 all workers and jobseekers, particularly hard-to-serve

9 individuals.

10 SEC. 412. ELIMINATION OF CERTAIN PROGRAMS.

11 (a) IN GENERAL.—The following provisions are re12 pealed:

13 (1) Section 6(d)(4) of the Food Stamp Act of

14 1977 (7 U.S.C. 2015(d)(4)).

15 (2) Section 211 of the Appalachian Regional

16 Development Act of 1965 (40 U.S.C. App. 211).

17 (3) Section 204 of the Immigration Reform and

18 Control Act of 1986 (8 U.S.C. 1255a note).

19 (4) Section 20 of the Federal Transit Act (49

20 U.S.C. App. 1616).

21 (5) Section 43 of the Airline Deregulation Act

22 of 1978 (49 U.S.C. App. 1552).

23 (6) Title II of Public Law 95–250 (92 Stat.

24 172).
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1 (7) Section 413 of the Carl D. Perkins Voca2 tional and Applied Technology Education Act (21

3 U.S.C. 2413).

4 (8) Title V of the Job Training Partnership Act

5 (29 U.S.C. 1791 et seq.).

6 (9) Part J of title IV such Act (29 U.S.C. 1784

7 et seq.).

8 (10) Section 325 of such Act (29 U.S.C.

9 1662d).

10 (11) Section 325A of such Act (29 U.S.C.

11 1662d–1).

12 (12) Section 326 of such Act (29 U.S.C.

13 1662e).

14 (13) Sections 1141 through 1144 of title 10,

15 United States Code.

16 (b) REPEALS OF EMPLOYMENT TRAINING PRO17 GRAMS.—The repeals made by subsection (a) shall take

18 effect on the date of enactment of this Act.

19 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

20 The National Board shall include in the draft joint resolu21 tion submitted under section 414(b), technical and con22 forming amendments regarding the provisions repealed

23 under subsection (a). Such proposed amendments should

24 be consistent with the purposes of this title.
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1 SEC. 413. STREAMLINING AND INTEGRATION OF ADULT

2 TRAINING PROGRAMS.

3 (a) REQUIREMENTS.—

4 (1) IN GENERAL.—A State that receives an im5 plementation grant to develop an integrated

6 workforce development system—

7 (A) shall include in such system the com8 ponents of the program and activities carried

9 out on the date of enactment of this Act under

10 the provisions described in subsection (b)(1);

11 and

12 (B) may include any other Federal or

13 State workforce development program identified

14 by the Governor under paragraph (2).

15 (2) ADDITIONAL PROGRAMS.—Any other Fed16 eral or State workforce development program identi17 fied by the Governor pursuant to section 423(b),

18 subject to a two-thirds vote of the National Board,

19 may be included in the integrated system of a State

20 described in paragraph (1).

21 (b) REPEALS OF JOB TRAINING PROGRAMS.—

22 (1) IN GENERAL.—The following provisions are

23 repealed:

24 (A) Part A of title II of the Job Training

25 Partnership Act (29 U.S.C. 1601 et seq.).
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1 (B) Title III of such Act (29 U.S.C. 1651

2 et seq.).

3 (C) Part C of title IV of such Act (29

4 U.S.C. 1721).

5 (D) Sections 235 and 236 of the Trade

6 Act of 1974 (19 U.S.C. 2295 and 2296), and

7 paragraphs (1) and (2) of section 250(d) of

8 such Act (19 U.S.C. 2331(d) (1) and (2)).

9 (2) EFFECTIVE DATE.—The repeals made by

10 paragraph (1) shall take effect on September 30,

11 1999.

12 (3) TECHNICAL AND CONFORMING AMEND13 MENTS.—The National Board shall include in the

14 draft joint resolution submitted under section

15 414(b), technical and conforming amendments re16 garding the provisions repealed under paragraph (1).

17 Such proposed amendments should be consistent

18 with the purposes of this title.

19 SEC. 414. PROCESS FOR ESTABLISHING 21ST CENTURY

20 WORKFORCE DEVELOPMENT SYSTEM.

21 (a) ANNUAL RECOMMENDATIONS.—Not later than

22 180 days after the date of enactment of this Act, and each

23 June 1 thereafter, the National Board shall make rec24 ommendations to the President and Congress for the

25 elimination of Federal workforce development programs,
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1 or programs whose functions should be subsumed under

2 other Federal programs.

3 (b) REPORT AND JOINT RESOLUTION.—

4 (1) REPORT.—Not later than June 1, 1999, the

5 National Board, based on such board’s analysis of

6 the experience of leading edge States and the

7 progress made toward establishing an integrated,

8 market-driven workforce development system, shall

9 prepare and submit to the Committee on Economic

10 and Educational Opportunities of the House of Rep11 resentatives and the Committee on Labor and

12 Human Resources of the Senate a report containing

13 the findings of such board, and recommendations for

14 proposed reforms.

15 (2) JOINT RESOLUTION.—Not later than June

16 1, 1999, the National Board shall submit to the

17 Congress a draft of a joint resolution containing pro18 visions to develop a streamlined, integrated, market19 driven workforce development system, from the pro20 grams described in section 413(b) and any other

21 Federal workforce development program determined

22 by the National Board as appropriate to be included

23 that is consistent with this title, pursuant to section

24 402(b). The joint resolution shall include rec25 ommendations for standard outcome measures as de-
26

•S 1722 IS

1 scribed in section 424(a)(2) and shall describe how

2 the new system will maintain services to hard-to3 serve populations.

4 SEC. 415. CENTRALIZED WAIVERS.

5 (a) EXPEDITED PROCESS.—Not later than 180 days

6 after the date of enactment of this Act, the President shall

7 establish an expedited process to consider and act on waiv8 er requests submitted by the States under this section.

9 (b) STATES NOT RECEIVING IMPLEMENTATION

10 GRANTS.—

11 (1) IN GENERAL.—Any State may apply, in ac12 cordance with this section, for a waiver of statutory

13 or regulatory requirements under 1 or more of the

14 programs described in section 413(b)(1), for a pe15 riod of 2 years to facilitate the provision of assist16 ance for workforce development.

17 (2) WAIVER AUTHORITY.—A waiver may be

18 granted under this subsection only if—

19 (A) the requirement sought to be waived

20 impedes the ability of the State, or a local en21 tity in the States, to carry out the State or

22 local workforce development plan;

23 (B) the State has waived, or agrees to

24 waive, similar requirements of State law; and
27

•S 1722 IS

1 (C) in the case of a statewide waiver, the

2 State—

3 (i) provides all State and local agen4 cies and appropriate organizations in the

5 State, including labor organizations, with

6 notice and an opportunity to comment on

7 the State’s proposal to seek a waiver; and

8 (ii) submits the affected agency’s com9 ments with the waiver application.

10 (3) APPLICATION.—Each application submitted

11 under this subsection shall—

12 (A) identify the statutory or regulatory re13 quirements that are requested to be waived and

14 the goals that the State or local agency intends

15 to achieve;

16 (B) describe the action that the State has

17 undertaken to remove State statutory or regu18 latory barriers identified in the application;

19 (C) describe the purpose of the waiver and

20 the expected programmatic outcomes if the re21 quest is granted;

22 (D) describe the numbers and types of peo23 ple to be affected by such waiver;

24 (E) describe a timetable for implementing

25 the waiver;
28

•S 1722 IS

1 (F) describe the process the State will use

2 to monitor, on a biannual basis, the progress in

3 implementing the waiver; and

4 (G) describe how the goals of the program

5 or programs for which a waiver is granted will

6 continue to be met.

7 (c) STATES RECEIVING IMPLEMENTATION

8 GRANTS.—Subject to subsection (d), each State receiving

9 an implementation grant under section 423(b) shall have

10 the statutory or regulatory requirement, described in its

11 grant application or State Blueprint of such State waived

12 for the duration of the implementation grant.

13 (d) LIMITATIONS.—

14 (1) IN GENERAL.—A waiver shall not be grant15 ed under a workforce development program if such

16 waiver would alter—

17 (A) the purposes or goals of such program;

18 (B) the allocation of funds under such pro19 gram;

20 (C) any statutory or regulatory require21 ment under such program relating to public

22 health or safety, civil rights, protections granted

23 under title I and sections 503 and 504 of the

24 Rehabilitation Act of 1973 (29 U.S.C. 701 et

25 seq.), occupational safety and health, environ-
29

•S 1722 IS

1 mental protection, displacement of current em2 ployees, or fraud and abuse; or

3 (D) eligibility requirements under such

4 program, except that a waiver may be granted

5 with respect to an eligibility requirement if such

6 waiver would provide for increased flexibility in

7 developing common definitions for individuals

8 eligible for such program.

9 (2) CIRCULARS AND RELATED REGULATIONS.—

10 The following circulars promulgated by the Office of

11 Management and Budget shall be subject to the

12 waiver authority of this subsection:

13 (A) A–87, relating to cost principles for

14 State and local governments.

15 (B) A–102, relating to grants and coopera16 tive agreements with State and local govern17 ments.

18 (C) A–122, relating to nonprofit organiza19 tions.

20 (D) A–110, relating to administrative re21 quirements for grants and cooperative agree22 ments with nonprofit organizations and institu23 tions of higher education.

24 (E) A–21, relating to cost principles for in25 stitutions of higher education.
30

•S 1722 IS

1 (3) EFFECTIVE DATE.—A waiver granted under

2 this section shall take effect on the date such waiver

3 is granted.

4 (4) REVIEW OF APPLICATION.—Each applica5 tion submitted by a State pursuant to subsection

6 (b)(3) shall be reviewed by the Secretary or agency

7 head who has jurisdiction over the workforce devel8 opment program or programs to which such waiver

9 request relates.

10 (5) APPROVAL OR DISAPPROVAL OF APPLICA11 TION.—

12 (A) TIMING.—Each application submitted

13 by a State in accordance with subsection (b)(3)

14 shall be reviewed promptly upon receipt, and

15 shall be approved or disapproved not later than

16 the end of the 60-day period beginning on the

17 date such application is received.

18 (B) APPROVAL.—A waiver or waivers pro19 posed in an application may be approved for the

20 2-year period beginning on the date such appli21 cation is approved, if the State demonstrates in

22 the application that such waiver or waivers will

23 achieve coordination, expansion, and improve24 ment in the quality of services under its

25 workforce development system.
31

•S 1722 IS

1 (C) DISAPPROVAL AND RESUBMISSION.—If

2 an application is incomplete or unsatisfactory,

3 the appropriate Federal official shall, before the

4 end of the period referred to in subparagraph

5 (A)—

6 (i) notify the State of the reasons for

7 the failure to approve the application;

8 (ii) notify the State that the applica9 tion may be resubmitted during the period

10 referred to in clause (iii); and

11 (iii) permit the State to resubmit a

12 corrected or amended application during

13 the 60-day period beginning on the date of

14 notification under this subparagraph.

15 (D) REVIEW OF RESUBMITTED APPLICA16 TION.—Any application resubmitted under sub17 paragraph (C) shall be approved or disapproved

18 before the expiration of the 60-day period be19 ginning on the date of the resubmission.

20 (6) REVOCATION OF WAIVER.—If, after the ap21 proval of an application under this subsection, the

22 Secretary determines that the waiver or waivers do

23 not achieve coordination, expansion, and improve24 ment in the quality of services under the workforce

25 development programs to which such waiver or waiv-
32

•S 1722 IS

1 ers relate, the waiver or waivers may be revoked in

2 whole or in part.

3 Subtitle C—Market Building

4 Activities

5 CHAPTER 1—FEDERAL LEVEL ACTIVITIES

6 SEC. 421. PURPOSE.

7 The purpose of this subtitle and subtitle D is to es8 tablish a framework at the Federal, State, and local levels

9 for key stakeholders to work cooperatively to build the in10 frastructure, brokerage, and accountability systems need11 ed to transform current Federally funded job training pro12 grams into a market-driven workforce development sys13 tem.

14 SEC. 422. NATIONAL WORKFORCE DEVELOPMENT BOARD.

15 (a) FINDINGS.—The Congress finds that a national

16 workforce development board is necessary to ensure—

17 (1) the establishment and continuous improve18 ment of the national workforce development system;

19 (2) that integrated strategic planning takes

20 place among the Federal agencies currently respon21 sible for administering job training programs;

22 (3) incorporation of private sector expertise to

23 the governance of the national workforce develop24 ment system; and
33

•S 1722 IS

1 (4) that unnecessary legislative and regulatory

2 barriers to service integration are removed as a mar3 ket-driven workforce development system is estab4 lished.

5 (b) ESTABLISHMENT.—

6 (1) IN GENERAL.—There is established the Na7 tional Workforce Development Board.

8 (2) COMPOSITION.—The National Board shall

9 be comprised of 16 members, of whom—

10 (A) 1 member shall be the Secretary of

11 Labor;

12 (B) 1 member shall be the Secretary of

13 Education;

14 (C) 1 member shall be the Secretary of

15 Health and Human Services;

16 (D) 1 member shall be the Secretary of

17 Commerce;

18 (E) 3 members shall be representatives of

19 business (including representatives of small

20 businesses and large employers);

21 (F) 3 members shall be representatives of

22 organized labor;

23 (G) 3 members shall be State and local

24 elected officials of whom 2 shall be Governors
34

•S 1722 IS

1 of a State and 1 shall be a local elected official;

2 and

3 (H)(i) 1 member shall be selected from

4 representatives of community-based organiza5 tions;

6 (ii) 1 member shall be selected from rep7 resentatives of secondary schools or postsecond8 ary educational institutions; and

9 (iii) 1 member shall be selected from rep10 resentatives of nongovernmental organizations

11 that have a history of successfully protecting

12 the rights of individuals with disabilities or

13 older persons.

14 (3) ADDITIONAL REQUIREMENTS.—The mem15 bers described in subparagraphs (E) and (F) of

16 paragraph (2) shall—

17 (A) in the aggregate, represent a broad

18 cross section of occupations and industries;

19 (B) to the extent feasible, be geographi20 cally representative of the United States, and

21 reflect the racial, ethnic, and gender diversity of

22 the United States; and

23 (C) include at least 1 member of the Na24 tional Skill Standards Board established pursu-
35

•S 1722 IS

1 ant to section 503 of the National Skill Stand2 ards Act of 1994 (20 U.S.C. 5933).

3 (4) EXPERTISE.—The National Board and the

4 staff shall have sufficient expertise to effectively

5 carry out the duties and functions of the National

6 Board.

7 (5) APPOINTMENT.—The members described in

8 subparagraphs (E), (F), (G), and (H) of paragraph

9 (2) shall be appointed by the President, by and with

10 the advice and consent of the Senate.

11 (6) EX OFFICIO NONVOTING MEMBERS.—The

12 Director of the Office of Management and Budget

13 and the chairpersons and ranking minority members

14 of the Committee on Labor and Human Resources

15 of the Senate and the Committee on Economic and

16 Educational Opportunities of the House of Rep17 resentatives shall be ex officio, nonvoting members

18 of the National Board.

19 (7) TERMS.—Each member of the National

20 Board appointed under subparagraph (E), (F), (G),

21 and (H) of paragraph (2) shall be appointed for a

22 term of 4 years, except that of the initial members

23 of the National Board appointed under such sub24 paragraphs—
36

•S 1722 IS

1 (A) 4 members shall be appointed for a

2 term of 2 years;

3 (B) 4 members shall be appointed for a

4 term of 3 years; and

5 (C) 4 members shall be appointed for a

6 term of 4 years.

7 (8) VACANCIES.—Any vacancy on the National

8 Board shall not affect the powers of the National

9 Board, but shall be filled in the same manner as the

10 original appointments.

11 (9) CHAIRPERSONS.—The President, by and

12 with the advice and consent of the Senate, shall se13 lect 1 cochairperson of the National Board from

14 among the members of the National Board ap15 pointed under paragraph (2)(E) and 1 cochairperson

16 from among the members appointed pursuant to

17 paragraph (2)(F).

18 (10) COMPENSATION AND EXPENSES.—

19 (A) COMPENSATION.—Each member of the

20 National Board who is not a full-time employee

21 or officer of the Federal Government shall serve

22 without compensation. Each member of the Na23 tional Board who is an officer or employee of

24 the Federal Government shall serve without

25 compensation in addition to that received for
37

•S 1722 IS

1 the services of such member as an officer or

2 employee of the Federal Government.

3 (B) EXPENSES.—The members of the Na4 tional Board shall be allowed travel expenses,

5 including per diem in lieu of subsistence, at

6 rates authorized for employees of agencies

7 under subchapter I of chapter 57 of title 5,

8 United States Code, while away from their

9 homes or regular places of business in the per10 formance of services for the National Board.

11 (11) EXECUTIVE DIRECTOR AND STAFF.—

12 (A) EXECUTIVE DIRECTOR.—The cochair13 persons of the National Board shall appoint an

14 Executive Director who shall be compensated at

15 a rate determined by the National Board, not

16 to exceed the rate payable for level V of the Ex17 ecutive Schedule under section 5316 of title 5,

18 United States Code.

19 (B) STAFF.—The Executive Director

20 may—

21 (i) appoint and compensate such addi22 tional staff as may be necessary to enable

23 the National Board to perform its duties;

24 and
38

•S 1722 IS

1 (ii) fix the compensation of the staff

2 without regard to the provisions of chapter

3 51 and subchapter III of chapter 53 of

4 title 5, United States Code, relating to

5 classifications of positions and General

6 Schedule pay rates, except that the rate of

7 pay for the staff may not exceed the rate

8 payable for level V of the Executive Sched9 ule under section 5316 of such title.

10 (12) AGENCY SUPPORT.—

11 (A) USE OF FACILITIES.—The National

12 Board may use the research, equipment, serv13 ices, and facilities of any agency or instrumen14 tality of the United States with the consent of

15 such agency or instrumentality.

16 (B) STAFF OF FEDERAL AGENCIES.—Upon

17 the request of the National Board, the head of

18 any Federal agency may detail to the National

19 Board, on a reimbursable basis, any of the per20 sonnel of such Federal agency to assist the Na21 tional Board in carrying out this title. Such de22 tail shall be without interruption or loss of civil

23 service status or privilege.

24 (13) PROCUREMENT OF TEMPORARY AND

25 INTERMITTENT SERVICES.—The cochairpersons of
39

•S 1722 IS

1 the National Board may procure temporary and

2 intermittent services of experts and consultants

3 under section 3109(b) of title 5, United States Code.

4 (c) DUTIES.—

5 (1) NATIONAL REPORT CARD.—

6 (A) IN GENERAL.—Not later than January

7 1, 1997, and each January 1 thereafter, the

8 National Board shall prepare a report to be

9 known as the Nation’s Workforce Development

10 Report Card.

11 (B) REQUIREMENTS.—The National Re12 port Card shall assess the performance of the

13 workforce development system of the United

14 States, based on the earnings and employment

15 gains and other nonemployment-related out16 comes of individuals assisted by the programs

17 comprising such system. The National Report

18 Card shall evaluate all workforce development

19 programs that receive Federal funding, and

20 shall—

21 (i) assess the performance of each

22 program;

23 (ii) assess performance based on the

24 type of assistance provided, including the
40

•S 1722 IS

1 categories of services identified in section

2 424(b)(1)(C);

3 (iii) assess year-to-year changes in

4 performance;

5 (iv) report on the extent to which

6 hard-to-serve populations are receiving

7 services and the related outcomes in rela8 tion to services received in the preceding 3

9 years;

10 (v) determine the annual Federal in11 vestment in workforce development in each

12 State;

13 (vi) assess the lessons learned from

14 the experience of leading-edge States, and

15 States that waive certain program require16 ments to experiment with alternative

17 workforce development strategies; and

18 (vii) assess the performance of the

19 workforce development system in each

20 State.

21 (2) CONGRESSIONAL TESTIMONY.—The cochair22 persons of the National Board shall, at least annu23 ally, provide testimony, during a joint hearing before

24 the Committee on Labor and Human Resources of

25 the Senate and the Committee on Economic and
41

•S 1722 IS

1 Educational Opportunities of the House of Rep2 resentatives on the progress being made in—

3 (A) developing a more streamlined inte4 grated and accountable public and private

5 workforce development system in the United

6 States; and

7 (B) carrying out the purposes described in

8 section 402(b).

9 (3) REVIEW OF GRANT PROPOSALS.—The Na10 tional Board shall review the development grant pro11 posals pursuant section 423(a), and the implementa12 tion grant proposals pursuant to section 423(b), and

13 make recommendations to the Secretary regarding

14 such proposals.

15 (4) FINAL RECOMMENDATIONS.—Not later than

16 January 1, 1999, the National Board shall submit

17 recommendations in the form of a joint resolution to

18 the President and Congress, pursuant to section

19 414(b).

20 (d) TERMINATION.—The National Board shall termi21 nate on the date on which the National Board submits

22 the joint resolution to President and Congress under sec23 tion 414(b).

24 (e) NATIONAL COMMISSION FOR EMPLOYMENT POL25 ICY.—
42

•S 1722 IS

1 (1) IN GENERAL.—Part F of title IV of the Job

2 Training Partnership Act (29 U.S.C. 1771 et seq.)

3 is repealed.

4 (2) CONFORMING AMENDMENT.—Subsection (i)

5 of section 106 of such Act (29 U.S.C. 1516(i)) is

6 amended by striking ‘‘(i) FUNCTIONS OF NCEP.—

7 The National Commission for Employment Policy’’

8 and inserting ‘‘(i) FUNCTIONS OF NATIONAL

9 WORKFORCE DEVELOPMENT BOARD.—The National

10 Workforce Development Board established under

11 section 422 of the Workforce of the Future Develop12 ment Act’’.

13 SEC. 423. MECHANISMS FOR BUILDING HIGH QUALITY IN14 TEGRATED WORKFORCE DEVELOPMENT SYS15 TEMS.

16 (a) STATE DEVELOPMENT GRANTS.—

17 (1) PURPOSE.—The purpose of this subsection

18 is to assist States and communities in strategic

19 planning for integrated workforce development sys20 tems, including the development of a financial and

21 management information system, a quality assur22 ance system, and an integrated labor market infor23 mation system.

24 (2) GRANTS TO STATES.—The Secretary may

25 provide a development grant to a State in such
43

•S 1722 IS

1 amount as the Secretary, in consultation with the

2 National Board, determines to be necessary to en3 able such State to develop a strategic plan, as de4 scribed in paragraph (1), for the development of a

5 comprehensive statewide integrated workforce devel6 opment system.

7 (3) APPLICATION.—To be eligible to receive a

8 development grant under this subsection, the Gov9 ernor of a State, on behalf of the State, shall submit

10 to the National Board and the Secretary an applica11 tion, at such time, in such form, and containing

12 such information as the Secretary may require.

13 (b) IMPLEMENTATION GRANTS TO LEADING-EDGE

14 STATES.—

15 (1) PURPOSE.—The purpose of this subsection

16 is to assist States in implementing statewide high17 quality integrated workforce development systems

18 that are accountable for achieving results.

19 (2) GRANTS TO STATES.—The Secretary, in

20 consultation with the National Board, may provide

21 an implementation grant to the State in such

22 amount as the Secretary determines to be necessary

23 to enable such State to implement an integrated

24 workforce development system.
44

•S 1722 IS

1 (3) PERIOD OF GRANT.—The provision of pay2 ments under a grant under this subsection shall not

3 exceed 4 fiscal years, and shall be subject to the an4 nual approval of the Secretary, in consultation with

5 the National Board, and the availability of appro6 priations for the fiscal year involved.

7 (4) ALLOCATION REQUIREMENTS.—

8 (A) FIRST YEAR.—For the first fiscal year

9 for which a State receives amounts from an im10 plementation grant under this subsection, the

11 State shall use not less than 75 percent of such

12 amount to provide subgrants to local workforce

13 development boards.

14 (B) SECOND YEAR.—For the second fiscal

15 year for which a State receives amounts from

16 an implementation grant under this subsection,

17 the State shall use not less than 80 percent of

18 such amount to provide subgrants to local

19 workforce development boards.

20 (C) THIRD AND SUCCEEDING YEARS.—For

21 the third, and each succeeding, fiscal year for

22 which a State receives amounts from an imple23 mentation grant under this subsection, the

24 State shall use not less than 85 percent of such
45

•S 1722 IS

1 amount to provide subgrants to local workforce

2 development boards.

3 (5) LIMITATION.—A State shall be eligible to

4 receive not more than 1 implementation grant under

5 this subsection.

6 (6) APPLICATION.—To be eligible to receive an

7 implementation grant under this subsection, the

8 Governor of a State, on behalf of the State, shall

9 submit to the National Board and the Secretary an

10 application that shall include a copy of the State

11 Blueprint and such other information as the Sec12 retary, with the advice of the National Board, may

13 require.

14 (c) DISSEMINATION OF INFORMATION ON BEST

15 PRACTICES.—The Secretary, in consultation with the Na16 tional Board, shall—

17 (1) collect and disseminate information that will

18 assist State and local communities undertaking ac19 tivities to streamline and reform their job training

20 systems, including information on—

21 (A) the successful experiences of States

22 and localities that—

23 (i) have received development or im24 plementation grants;

25 (ii) have been granted waivers; or
46

•S 1722 IS

1 (iii) are experimenting with training

2 account systems; and

3 (B) research concerning the restructuring

4 of workforce development systems; and

5 (2) facilitate the exchange of information and

6 ideas among States and local entities that are build7 ing market-based workforce development systems.

8 (d) WORKFORCE DEVELOPMENT IMPACT RE9 PORTS.—

10 (1) SUBMISSION.—For each bill or resolution

11 concerning workforce development reported by any

12 committee of the Senate or the House of Represent13 atives, the National Board shall determine whether

14 proposed Federal job training legislation complies

15 with the requirements relating to data reporting,

16 common definitions, and common funding cycles de17 scribed in subsections (b) and (e) of section 424. A

18 determination of compliance by the National Board

19 under this subsection shall be included in the com20 mittee report accompanying such legislation, if time21 ly submitted to such committee before such report is

22 filed.

23 (2) PROCEDURE.—It shall not be in order in

24 the Senate or the House of Representatives to con25 sider any bill or resolution concerning workforce de-
47

•S 1722 IS

1 velopment that would not comply with the national

2 workforce development system, as determined by the

3 National Board under paragraph (1).

4 (3) WAIVER.—Paragraph (2) may be waived or

5 suspended in the Senate or the House of Represent6 atives only by the affirmative vote of three-fifths of

7 the members of such House.

8 SEC. 424. QUALITY ASSURANCE SYSTEM.

9 (a) PURPOSE.—The purpose of this section is to im10 prove the quality of all Federal programs directed at im11 proving the knowledge, skills, and abilities of members of

12 the workforce by strengthening accountability and encour13 aging the adoption of quality improvement processes at

14 all levels of the workforce development system. In order

15 to accomplish this purpose, this title—

16 (1) directs the Secretaries of Labor, Education,

17 and Health and Human Services to jointly, in con18 sultation with the National Board—

19 (A) develop common terms and definitions

20 as described in subsection (b);

21 (B) develop a placement accountability sys22 tem as described in subsection (c); and

23 (C) adjust existing program performance

24 standards as described in section 440(c); and
48

•S 1722 IS

1 (2) directs the National Board to recommend a

2 system of performance standards in its joint resolu3 tion submitted to Congress pursuant to section

4 414(b) that includes standard outcome measures re5 lating to—

6 (A) employment;

7 (B) job retention;

8 (C) earnings; and

9 (D) nonemployment outcome measures,

10 such as learning and competency gains.

11 (b) COMMON TERMS AND DEFINITIONS.—

12 (1) IN GENERAL.—Each workforce development

13 program that receives Federal funds shall collect

14 and report to the Governor and the State Council,

15 if applicable, for each participant to whom assist16 ance is provided, the following information:

17 (A) The quarterly employment status and

18 earnings for 1 year after the participant no

19 longer receives assistance under such program.

20 (B) Economic and demographic character21 istics, including the participant’s—

22 (i) social security number;

23 (ii) date of birth;

24 (iii) gender;

25 (iv) race or ethnicity;
49

•S 1722 IS

1 (v) disability status;

2 (vi) education (highest formal grade

3 level achieved at commencement of partici4 pation in program);

5 (vii) academic degrees and credentials

6 at time of entry into the program; and

7 (viii) employment status at the time

8 of entry into the program.

9 (C) Services received, the extent, when ap10 propriate, and spending for such services, in11 cluding—

12 (i) assessments;

13 (ii) testing;

14 (iii) counseling;

15 (iv) job development or job search as16 sistance;

17 (v) occupational skills training;

18 (vi) work experience;

19 (vii) job readiness training;

20 (viii) basic skills education;

21 (ix) postsecondary academic education

22 (nonoccupational);

23 (x) supportive and supplementary

24 services; and

25 (xi) on-the-job training.
50

•S 1722 IS

1 (D) Program outcomes, as specified by the

2 State, such as—

3 (i) advancement to higher level edu4 cation or training;

5 (ii) attainment of additional degrees

6 or credentials (including skill standards as

7 such standards become available);

8 (iii) assessment of learning gain in

9 basic skills programs;

10 (iv) attainment and retention of sub11 sidized or unsubsidized employment;

12 (v) quarterly earnings; and

13 (vi) reduction in welfare dependency.

14 (2) REPLACEMENT OF EXISTING REQUIRE15 MENTS.—Program monitoring under this section

16 shall supplant existing monitoring and reporting re17 quirements for program participants.

18 (3) ADOPTION OF COMMON TERMS AND DEFINI19 TIONS.—

20 (A) REPORT.—Not later than 180 days

21 after the date of enactment of this Act, each

22 Federal department and agency with respon23 sibility for a workforce development program

24 shall report to the National Board on its

25 progress in adopting the common terms and
51

•S 1722 IS

1 definitions for program participants, service ac2 tivities, and outcomes by program operators

3 and grant recipients.

4 (B) IMPLEMENTATION.—Not later than 1

5 year after the date of enactment of this Act,

6 each workforce development program receiving

7 Federal funds shall use the common terms and

8 definitions.

9 (C) USE.—Upon adoption by the appro10 priate Federal agencies, the common definitions

11 for terminology developed and reported pursu12 ant to section 455 of the Job Training Partner13 ship Act (29 U.S.C. 1735(b)) shall be utilized

14 in interpreting and compiling the core data ele15 ments. Notwithstanding any other provision of

16 Federal law, such common definitions shall be

17 utilized in lieu of existing program definitions

18 for similar data elements.

19 (4) RECOMMENDATIONS.—Not later than 180

20 days after the date all of the Members of the Na21 tional Board are appointed, the National Board shall

22 make recommendations to the Secretaries of Labor,

23 Education, and Health and Human Services, and

24 the heads of other agencies operating workforce de-
52

•S 1722 IS

1 velopment programs, on common definitions for

2 other terms, including terms relating to—

3 (A) program status, including—

4 (i) applicant;

5 (ii) participant;

6 (iii) terminee; and

7 (iv) training-related placement;

8 (B) program eligibility, including—

9 (i) family income; and

10 (ii) economically disadvantaged indi11 viduals; and

12 (C) other terms considered appropriate by

13 the National Board, such as common cost cat14 egories.

15 (5) AMENDMENTS.—If any of the proposed

16 common definitions require amendment to existing

17 laws, the National Board shall submit to Congress

18 recommendations for legislative action not later than

19 9 months after the date all of the members of the

20 National Board are appointed.

21 (c) PLACEMENT ACCOUNTABILITY.—

22 (1) IN GENERAL.—The purpose of this sub23 section is to establish a placement accountability

24 system using a cost-effective data source with infor25 mation on job placement, earnings, and job reten-
53

•S 1722 IS

1 tion, to foster accountability by all federally funded

2 workforce development programs.

3 (2) PERFORMANCE MONITORING.—Each

4 workforce development program that receives Fed5 eral funds shall—

6 (A) engage in continuous performance self7 monitoring by measuring, at a minimum, the

8 quarterly employment status and earnings of

9 each recipient of assistance under such pro10 gram; and

11 (B) monitor each recipient of assistance

12 for a period of not less than 1 year, beginning

13 on the date on which the recipient no longer re14 ceives assistance under such program.

15 (3) REIMBURSEMENT.—Requesting programs

16 shall reimburse the State agency responsible for

17 wage record data for the cost of matching such in18 formation. Notwithstanding any other provision of

19 Federal law, requesting programs may use Federal

20 funds for such reimbursement.

21 (4) CONFIDENTIALITY.—Requesting pro22 grams—

23 (A) shall protect the confidentiality of

24 wage record data through the use of recognized

25 security procedures; and
54

•S 1722 IS

1 (B) may not retain such data for more

2 than 10 years.

3 (5) SUBMISSION TO STATE COUNCIL.—The

4 State agency responsible for labor market informa5 tion shall submit the results of the matching to the

6 State Council, in accordance with procedures and

7 schedules specified by the National Board and the

8 Secretary.

9 (6) RESPONSIBILITY OF GOVERNORS.—The

10 Governor of each State shall ensure the submission

11 of the matched data to the State Council, the Na12 tional Board, the Secretary, and other Federal enti13 ties, as required by the National Board.

14 (d) DISSEMINATION OF QUALITY ASSURANCE.—The

15 information obtained under subsection (c) shall be made

16 available to—

17 (1) the State Council of the State in which the

18 program is located;

19 (2) the local workforce development boards in

20 the State in which the program is located; and

21 (3) consumers of labor market information to

22 judge individual program performance in an easily

23 accessible format.

24 (e) CONSISTENT FUNDING CYCLES.—
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1 (1) IN GENERAL.—All federally funded

2 workforce development training activities shall, to

3 the extent practicable, be funded on a consistent

4 funding cycle basis.

5 (2) RECOMMENDATIONS FOR FUNDING

6 CYCLE.—Not later than 180 days after the date on

7 which all of the members of the National Board are

8 appointed, the National Board shall make rec9 ommendations to Congress on the appropriate fund10 ing cycle to be used for all workforce development

11 programs and activities.

12 CHAPTER 2—STATE LEVEL ACTIVITIES

13 SEC. 431. STATE WORKFORCE DEVELOPMENT COUNCILS.

14 (a) ESTABLISHMENT.—Each State desiring to par15 ticipate in the development or implementation of an inte16 grated and accountable workforce development system

17 under section 423 shall establish a State Workforce Devel18 opment Council or have located within such State an exist19 ing entity that is similar to a State Council and that in20 cludes members who are representatives of employers and

21 workers.

22 (b) PURPOSE.—Each State Council shall serve as the

23 principal advisory board for the Governor of such State

24 for all programs included in the integrated workforce de25 velopment system of such State.
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1 (c) FUNCTIONS.—Each State Council shall assume

2 the functions and responsibilities of councils and commis3 sions required under Federal law that are part of the inte4 grated workforce development system of such State.

5 SEC. 432. MEMBERSHIP.

6 (a) IN GENERAL.—

7 (1) REPRESENTATIVES OF BUSINESS AND IN8 DUSTRY AND ORGANIZED LABOR.—Each State

9 Council shall be comprised of individuals who are

10 appointed by the Governor for a term of not less

11 than 2 years from among—

12 (A) representatives of business and indus13 try, who shall constitute not less than 33 per14 cent of the membership of the State Council,

15 including individuals who are members of local

16 workforce development boards;

17 (B) representatives of organized labor who

18 shall constitute not less than 25 percent of the

19 membership of the State Council and shall be

20 selected from among individuals nominated by

21 recognized State labor federations;

22 (C) representatives of secondary and post23 secondary academic or vocational education in24 stitutions;
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•S 1722 IS

1 (D) representatives of community-based

2 organizations; and

3 (E) representatives of community colleges.

4 (2) ADDITIONAL MEMBERS.—Each State Coun5 cil may include 1 or more qualified members who are

6 appointed by the Governor from among representa7 tives of the following:

8 (A) Nongovernmental organizations that

9 have a history of successfully protecting the

10 rights of individuals with disabilities or older

11 persons.

12 (B) Units of general local government or

13 consortia of such units.

14 (C) State officials responsible for admin15 istering programs described in sections 413 and

16 414 and included in the integrated system.

17 (D) The State legislature.

18 (E) Any local program that receives Fed19 eral funding from any program included in the

20 integrated workforce development system of the

21 State.

22 (b) EX OFFICIO.—

23 (1) NONVOTING MEMBERS.—The Governor may

24 appoint ex officio additional nonvoting members to

25 the State Council.
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1 (2) EXPERTISE.—The Governor of the State

2 shall ensure that the State Council and the staff of

3 the State Council have sufficient expertise to effec4 tively carry out the duties and functions of the State

5 Council described under the laws relating to the ap6 plicable program.

7 SEC. 433. CHAIRPERSON.

8 The Governor of the State shall appoint a chairperson

9 of the State Council who shall be a representative of the

10 business community.

11 SEC. 434. DUTIES AND RESPONSIBILITIES.

12 (a) STATE WORKFORCE DEVELOPMENT POLICY

13 BLUEPRINT.—The State Council shall assist the Governor

14 to prepare and submit to the National Board a biennial

15 report to be known as the State Workforce Development

16 Policy Blueprint. The State Blueprint shall—

17 (1) serve as a strategic plan for integrating fed18 erally funded workforce development programs in19 cluded in an integrated system of the State, estab20 lished pursuant to section 423(b), with State-funded

21 job training, employment, employment-related edu22 cation, and economic development activities;

23 (2) summarize and analyze information about

24 training needs of critical industries in the State con25 tained in the local workforce development policy
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•S 1722 IS

1 blueprints developed by the workforce development

2 boards;

3 (3) establish State goals for the integrated

4 workforce development system and a common core

5 set of performance measures and standards for pro6 grams included in the system, to be used in lieu of

7 existing performance measures and standards for

8 each of the included programs;

9 (4) analyze how the businesses and labor orga10 nizations of the State are—

11 (A) progressing in the restructuring of the

12 work place to provide continuous learning;

13 (B) improving the skills and abilities of

14 frontline workers of such businesses; and

15 (C) participating in State and local efforts

16 to transform federally funded education and job

17 training programs into a coherent and account18 able workforce development system;

19 (5) utilize information available from the State

20 Report Card and other sources to analyze the rel21 ative effectiveness of individual workforce develop22 ment programs within the State and of the State’s

23 workforce development system as a whole;

24 (6) evaluate the progress being made within the

25 State in streamlining, consolidating, and reforming
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•S 1722 IS

1 the workforce development system of the State in ac2 cordance with the purposes contained in section

3 402(b) and the framework for State implementation

4 contained in the implementation grant proposal of

5 the State;

6 (7) describe how service to special hard-to-serve

7 populations is to be maintained;

8 (8) identify how any funds that a State may be

9 receiving under section 423(b) are to be utilized in

10 conjunction with existing resources to continuously

11 improve the effectiveness of the workforce develop12 ment system of the State;

13 (9) describe the method to be used to allocate

14 funds received under section 423(b) in a fair and eq15 uitable manner among unified service delivery areas;

16 (10) specify the additional elements, if any, to

17 be included in operating agreements between local

18 workforce development boards and one-stop career

19 centers;

20 (11) specify additional criteria, if any, for selec21 tion of one-stop career centers;

22 (12) specify the nonemployment-related out23 come measures that will be used for the workforce

24 development system;
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•S 1722 IS

1 (13) specify the nature and scope of the budget

2 authority for local workforce development boards in

3 the State; and

4 (14) supplant federally required planning re5 ports for programs under the integrated workforce

6 development system of the State.

7 (b) STATE WORKFORCE DEVELOPMENT REPORT

8 CARD.—The State Council shall assist the Governor of the

9 State to issue an annual report to be known as the State

10 Workforce Development Report Card. The State Report

11 Card shall describe the performance of all workforce devel12 opment programs operating in the State that receive Fed13 eral funding and any additional State-funded programs

14 that the Governor may choose to include. The State Re15 port Card shall—

16 (1) include an integrated budget that docu17 ments the annual spending, number of clients

18 served, and types of services provided for workforce

19 development programs for the State as a whole and

20 for each unified service delivery area within the

21 State;

22 (2) assess the level of services to hard-to-serve

23 populations in relation to the number served and

24 outcomes for those populations during the preceding

25 3 years;
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•S 1722 IS

1 (3) utilize information available from the qual2 ity assurance system established under section 424

3 to assess—

4 (A) employment and earnings experiences

5 of individuals who have received assistance from

6 each workforce development program operated

7 in the State; and

8 (B) relative employment and earnings ex9 periences of participants receiving services from

10 each one-stop career center in the State;

11 (4) include an analysis of other nonemploy12 ment-related results for each workforce development

13 program operating within the State; and

14 (5) include a report of annual employment

15 trends and earnings (by industry and occupation) in

16 the State and each unified service delivery area, to

17 assist State and local policymakers, training provid18 ers, and users of the system to link the training pro19 vided to the skill and labor force needs of local em20 ployers.

21 (c) WORKFORCE DEVELOPMENT BOARD CERTIFI22 CATION AND EFFECTIVENESS CRITERIA.—Each State

23 Council shall—

24 (1) assist the Governor to certify each local

25 workforce development board; and
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•S 1722 IS

1 (2) make recommendations to the Governor for

2 criteria that will be used to judge the effectiveness

3 of each of the workforce development boards of the

4 State.

5 SEC. 435. DEVELOPMENT OF QUALITY ASSURANCE SYS6 TEMS AND CONSUMER REPORTS.

7 (a) IN GENERAL.—The State Council shall develop

8 a quality assurance system to complement and expand

9 upon the quality assurance system established in section

10 424 in order to provide customers of job training services

11 with consumer reports on the supply, demand, price, and

12 quality of job training services in each unified service de13 livery area in the State.

14 (b) SELECTION OF TOOLS AND MEASURES.—Each

15 State shall select the tools and measures that are appro16 priate to the needs of such State, including—

17 (1) collecting and organizing service provider

18 performance data in accordance with information

19 generated from the State Report Card under section

20 434(b), the financial and management information

21 system designed pursuant to section 438; and

22 (2) conducting surveys as appropriate to ascer23 tain customer satisfaction.

24 (c) COLLECTION AND DISSEMINATION.—The State

25 Council shall, in conjunction with the local workforce de-
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•S 1722 IS

1 velopment boards, establish mechanisms for collecting and

2 disseminating the quality assurance information on a reg3 ular basis to—

4 (1) individuals seeking employment;

5 (2) employers;

6 (3) policymakers at the Federal, State, and

7 local levels; and

8 (4) training and education providers.

9 (d) ASSURANCES.—Each public and private edu10 cation, training, and career development service provider

11 receiving Federal funds under a program in an integrated

12 system of the State pursuant to section 423(b) shall col13 lect and provide the quality assurance information re14 quired under this section.

15 SEC. 436. ADMINISTRATION.

16 (a) AUTHORITIES.—Each State Council shall be inde17 pendent of other State workforce development agencies

18 and have the authority to—

19 (1) employ staff; and

20 (2) receive and disburse funds.

21 (b) SPECIAL PROJECTS.—Each State Council may

22 fund and operate special pilot or demonstration projects

23 for purposes of research or continuous improvement of

24 system performance.
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•S 1722 IS

1 (c) LIMITATION ON USE OF FUNDS.—Not more than

2 5 percent of the funds received by the State from an im3 plementation grant under section 423(b) shall be used for

4 the administration of the State Council.

5 SEC. 437. ESTABLISHMENT OF UNIFIED SERVICE DELIVERY

6 AREAS.

7 (a) RECOMMENDATIONS.—Each State Council shall

8 make recommendations to the Governor of such State for

9 the establishment of unified service delivery areas that

10 may be used as intrastate geographic boundaries, to the

11 extent practicable, for all workforce development programs

12 in an integrated system of the State implemented pursu13 ant to section 423(b).

14 (b) ESTABLISHMENT.—Each State receiving an im15 plementation grant under section 423(b) shall, based upon

16 the recommendations of the State Council, and in con17 sultation and cooperation with local communities, estab18 lish unified service delivery areas throughout the State for

19 the purpose of providing community-wide workforce devel20 opment assistance in one-stop career centers under section

21 451.

22 (c) RESPONSIBILITIES.—In establishing unified serv23 ice delivery areas, the Governor, in consultation with the

24 State Council and local communities—

25 (1) shall take into consideration—
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1 (A) existing labor market areas;

2 (B) existing units of general local govern3 ment;

4 (C) existing service delivery areas estab5 lished under section 101 of the Job Training

6 Partnership Act (29 U.S.C. 1511); and

7 (D) the distance traveled by individuals to

8 receive services;

9 (2) may merge existing service delivery areas;

10 and

11 (3) may not approve a total number of unified

12 service delivery areas that is greater than the total

13 number of service delivery areas in existence in the

14 State on the date of enactment of this Act.

15 SEC. 438. FINANCIAL AND MANAGEMENT INFORMATION

16 SYSTEMS.

17 (a) IN GENERAL.—Each State shall use a portion of

18 the funds the State receives under section 423(a) to design

19 a unified financial and management information system.

20 Each State that receives an implementation grant under

21 section 423(b) shall require that all programs designated

22 in the integrated system use the unified financial and

23 management information system.

24 (b) REQUIREMENTS.—Each unified financial and

25 management information system shall—
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•S 1722 IS

1 (1) notwithstanding any other provision of Fed2 eral law, supplant federally required fiscal reporting

3 and monitoring for each individual program included

4 in the integrated system;

5 (2) be used by all agencies involved in

6 workforce development activities, including one-stop

7 career centers which shall have the capability to

8 track the overall public investments within the State

9 and unified service delivery areas, and to inform pol10 icymakers as to the results being achieved through

11 that investment;

12 (3) contain a common structure of financial re13 porting requirements, fiscal systems, and monitoring

14 for all workforce development expenditures included

15 in the integrated system that shall utilize the com16 mon data elements and definitions included in sec17 tion 424(b); and

18 (4) support local efforts to establish unified

19 service systems, including intake and eligibility de20 termination for all financial aid sources.

21 SEC. 439. CAPACITY BUILDING GRANTS.

22 From funds made available to a State for implemen23 tation pursuant to section 423(b) or development pursuant

24 to section 423(a), the State shall develop a strategy to

25 enhance the capacity of the institutions, organizations,
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•S 1722 IS

1 and staff involved in State and local workforce develop2 ment activities by providing services such as—

3 (1) training for members of the local workforce

4 development boards;

5 (2) training for frontline staff of any local edu6 cation or training service provider or one-stop career

7 center;

8 (3) technical assistance regarding managing

9 systemic change;

10 (4) customer service training;

11 (5) organization of peer-to-peer network for

12 training, technical assistance, and information shar13 ing;

14 (6) organizing a best practices database cover15 ing the various workforce development system com16 ponents; and

17 (7) training for State and local staff on the

18 principles of quality management and decentralizing

19 decisionmaking.

20 SEC. 440. PERFORMANCE STANDARDS FOR UNIFIED SERV21 ICE DELIVERY AREAS.

22 (a) IN GENERAL.—The Governor of each State that

23 implements an integrated workforce development system

24 under section 423(b) may, in consultation with the State

25 Council, the local workforce development boards in the
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•S 1722 IS

1 State, and employees of any of the job training programs

2 included in the integrated system or the employee organi3 zations of such employees, make adjustments to existing

4 performance standards for programs in such system in the

5 unified service delivery areas of the State by prescribing

6 performance criteria.

7 (b) CRITERIA.—Criteria prescribed under subsection

8 (a) may include such factors as—

9 (1) placement, retention, and earnings of par10 ticipants in unsubsidized employment, including—

11 (A) earnings at 1, 2, and 4 quarters after

12 termination from the program; and

13 (B) comparability of wages 1 year after

14 termination from the program with wages prior

15 to participation in the program;

16 (2) acquisition of skills pursuant to a skill

17 standards and skill certification system endorsed by

18 the National Skill Standards Board established pur19 suant to section 503 of the National Skill Standards

20 Act of 1994 (20 U.S.C. 5933);

21 (3) the satisfaction of participants and employ22 ers with services provided and employment out23 comes; and
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•S 1722 IS

1 (4) the quality of services provided and the level

2 of services provided to hard-to-serve populations,

3 such as low-income individuals and older workers.

4 (c) ADJUSTMENTS.—Each Governor of a State that

5 implements an integrated workforce development system

6 under section 423(b) shall, within parameters established

7 by the National Board, and after consultation with the

8 workforce development boards in the State, prescribe ad9 justments to the performance criteria prescribed under

10 subsection (a) for the unified service delivery areas based

11 on—

12 (1) specific economic, geographic, and demo13 graphic factors in the State and in regions within

14 the State; and

15 (2) the characteristics of the population to be

16 served, including the demonstrated difficulties in

17 serving special populations.

18 (d) USE OF CRITERIA.—The performance criteria

19 prescribed under this section shall be utilized in lieu of

20 similar criteria for programs receiving Federal funding in21 cluded in the integrated system of the State, to the extent

22 determined by the State Council subject to the approval

23 of the National Board.
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1 CHAPTER 3—LOCAL LEVEL ACTIVITIES

2 SEC. 441. WORKFORCE DEVELOPMENT BOARDS.

3 (a) ESTABLISHMENT.—In each State receiving an

4 implementation grant under section 423(b), and subject

5 to subsection (b), the local elected officials of each unified

6 service delivery area shall establish a workforce develop7 ment board to administer the workforce development as8 sistance provided by all the programs in the integrated

9 workforce development system in such area.

10 (b) EXCEPTION.—States with a single unified deliv11 ery area with contiguous borders shall not be subject to

12 the requirement of subsection (a).

13 (c) MEMBERSHIP.—

14 (1) IN GENERAL.—Each workforce development

15 board shall be comprised of—

16 (A) representatives of business and indus17 try, who shall constitute a majority of the board

18 and who shall be business leaders in the unified

19 service delivery area;

20 (B)(i) representatives of State and local

21 organized labor organizations, who shall be se22 lected from among individuals nominated by

23 recognized State labor federations; and

24 (ii) representatives of community-based or25 ganizations, who shall be selected from among
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•S 1722 IS

1 those individuals nominated by officers of such

2 organizations;

3 (C) representatives of educational institu4 tions;

5 (D) community leaders, such as leaders

6 of—

7 (i) economic development agencies;

8 (ii) human service agencies and insti9 tutions;

10 (iii) veterans’ organizations; and

11 (iv) entities providing job training;

12 (E) representatives of nongovernmental or13 ganizations that have a history of successfully

14 protecting the rights of individuals with disabil15 ities or older persons; and

16 (F) a local elected official, who shall be a

17 nonvoting member.

18 (2) SPECIAL RULE.—The representatives de19 scribed in paragraph (1)(B) shall comprise not less

20 than 33 percent of the membership of the Board.

21 (d) NOMINATIONS.—

22 (1) BUSINESS AND INDUSTRY REPRESENTA23 TIVES.—

24 (A) IN GENERAL.—The representatives of

25 business and industry described in subsection
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•S 1722 IS

1 (c)(1) shall be selected by local elected officials

2 from among individuals nominated by general

3 purpose business organizations after consulta4 tion with, and receiving recommendations from,

5 other business organizations in the unified serv6 ice delivery area.

7 (B) DEFINITION.—For purposes of this

8 paragraph, the term ‘‘general purpose business

9 organization’’ means an organization that ad10 mits to membership any for-profit business op11 erating within the unified service delivery area.

12 (2) LABOR REPRESENTATIVES.—The represent13 atives of organized labor described in subsection

14 (c)(1)(B)(i) shall be selected from among individuals

15 recommended by recognized State and local labor

16 federations.

17 (3) OTHER MEMBERS.—The members of the

18 workforce development board described in subpara19 graphs (C), (D), and (E) of subsection (c)(1) shall

20 be selected by chief local elected officials in accord21 ance with subsection (e) from individuals rec22 ommended by interested organizations.

23 (4) EXPERTISE.—The State Council and Gov24 ernor of each State shall ensure that the workforce

25 development board and the staff of the State Council
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•S 1722 IS

1 have sufficient expertise to effectively carry out the

2 duties and functions of existing local boards de3 scribed under the laws relating to the applicable pro4 gram.

5 (e) APPOINTMENT PROCESS.—In the case of a uni6 fied service delivery area—

7 (1) in which there is 1 unit of general local gov8 ernment, the chief elected official of such unit shall

9 determine the number of members to serve on the

10 workforce development board and appoint the mem11 bers to such board from the individuals nominated

12 or recommended under subsection (d); and

13 (2) in which there are 2 or more units of gen14 eral local government, the chief elected officials of

15 such units shall determine the number of members

16 to serve on the workforce development board and ap17 point the members to such board from the individ18 uals nominated or recommended under subsection

19 (d), in accordance with an agreement entered into by

20 such units of general local government or, in the ab21 sence of such an agreement, by the Governor of the

22 State in which the unified service delivery area is lo23 cated.

24 (f) TERMS.—Each workforce development board shall

25 establish, in its bylaws, terms to be served by its members,
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•S 1722 IS

1 who may serve until the successors of such members are

2 appointed.

3 (g) VACANCIES.—Any vacancy on a workforce devel4 opment board shall be filled in the same manner as the

5 original appointment was made.

6 (h) REMOVAL FOR CAUSE.—Any member of a

7 workforce development board may be removed for cause

8 in accordance with procedures established by the

9 workforce development board.

10 (i) CHAIRPERSON.—Each workforce development

11 board shall select a chairperson, by a majority vote of the

12 members of the board, from among the members of the

13 workforce development board who are from business or in14 dustry. The term of the chairperson shall be determined

15 by the board.

16 (j) DUTIES.—Each workforce development board

17 shall—

18 (1) prepare a workforce development board pol19 icy blueprint in accordance with section 442;

20 (2) issue an annual unified service delivery area

21 report card in accordance with section 443;

22 (3) review and comment on the local plans for

23 all programs included in the integrated workforce

24 development system of the State and operating with25 in the unified service delivery area, prior to the sub-
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•S 1722 IS

1 mission of such plans to the appropriate State Coun2 cil, or the relevant Federal agency, if no State ap3 proval is required;

4 (4) oversee the operations of the one-stop career

5 center established in the unified service delivery area

6 under section 451, including the responsibility to—

7 (A) designate one-stop career center opera8 tors within the unified service delivery area con9 sistent with selection criteria specified in section

10 434(a)(11);

11 (B) develop and approve the budgets and

12 annual operating plans of the one-stop career

13 centers;

14 (C) establish annual performance stand15 ards, customer service quality criteria, and out16 come measures for the one-stop career centers,

17 consistent with measures developed pursuant to

18 section 440;

19 (D) assess the results of programs and

20 services;

21 (E) ensure that services and skills provided

22 through the centers are of high quality and are

23 relevant to labor market demands; and
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•S 1722 IS

1 (F) determine priorities for client services

2 from Federal funding sources in the system;

3 and

4 (5) develop a strategy to disseminate consumer

5 reports produced under section 435 to workers, job6 seekers, and employers, and other individuals in the

7 unified service delivery area.

8 (k) ADMINISTRATION.—

9 (1) IN GENERAL.—Each local workforce devel10 opment board shall have the authority to receive and

11 disburse funds made available for carrying out the

12 provisions of this title and shall employ its own

13 staff, independent of local programs and service pro14 viders.

15 (2) FUNDING.—Each workforce development

16 board shall receive a portion of its funding from the

17 implementation grant of the State, with additional

18 funds made available from participating programs.

19 (l) CONFLICT OF INTEREST.—No member of a

20 workforce development board shall cast a vote on the pro21 vision of services by that member (or any organization

22 which that member directly represents) or vote on any

23 matter that would provide direct financial benefit to such

24 member.
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1 SEC. 442. WORKFORCE DEVELOPMENT BOARD POLICY

2 BLUEPRINT.

3 (a) IN GENERAL.—Each workforce development

4 board shall prepare and submit to the State Council a bi5 ennial report, to be known as the workforce development

6 board policy blueprint, except that in States with a single

7 unified service delivery area, the additional elements re8 quired in the regional blueprint shall be incorporated into

9 the State Blueprint.

10 (b) REQUIREMENTS.—The workforce development

11 board policy blueprint shall—

12 (1) include a list of the key industries and in13 dustry clusters of small to mid-size firms that are

14 most critical to the current and future economic

15 competitiveness of unified service delivery areas;

16 (2) identify the workforce development needs of

17 the critical industries and industry clusters;

18 (3) summarize the capacity of local education

19 and training providers to respond to the workforce

20 development needs;

21 (4) indicate how the local workforce develop22 ment programs intend to strategically deploy re23 sources available from implementation grants and

24 existing programs operating in the unified service

25 delivery area to better meet the workforce develop26 ment needs of critical industries and industry clus-
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•S 1722 IS

1 ters in the unified service delivery area and enhance

2 program performance;

3 (5) include a plan to develop one-stop career

4 centers, as described in section 451, including an es5 timate of the costs in personnel and other resources

6 to develop a network adequate to provide universal

7 access to such centers in the local labor market;

8 (6) describe how services will be maintained to

9 all groups served by the participating programs in

10 accordance with their legislative intent, including

11 hard-to-serve populations;

12 (7) identify actions for building the capacity of

13 the workforce development system in the unified

14 service delivery area; and

15 (8) report on the level and recent changes in

16 earned income of workers in the local labor market,

17 in relation to State and national levels, by occupa18 tion and industry.

19 (c) USE IN OTHER REPORTS.—The workforce devel20 opment board policy blueprint may be utilized in lieu of

21 local planning reports required by any other Federal law

22 for any program included in the integrated workforce de23 velopment system, subject to the approval of the State

24 Council.
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•S 1722 IS

1 SEC. 443. REPORT CARD.

2 (a) IN GENERAL.—Each workforce development

3 board shall annually prepare and submit to the State

4 Council a unified service delivery area report card in ac5 cordance with this section. The report card shall describe

6 the performance of all workforce development programs

7 and service providers, including the one-stop career cen8 ters, operating in the area that is included in the inte9 grated workforce development system. In States with a

10 single unified service delivery area, the State Council shall

11 prepare the report card.

12 (b) REQUIREMENTS.—The report card shall—

13 (1) report on the relationship between services

14 provided and the local labor market needs as de15 scribed in the workforce development board policy

16 blueprint;

17 (2) using the quality assurance system informa18 tion established pursuant to section 435, include an

19 analysis of employment-related, and other outcomes

20 achieved by the programs and service providers oper21 ating in the area;

22 (3) identify the performance of the one-stop ca23 reer centers;

24 (4) detail the economic and demographic char25 acteristics of individuals served compared to the

26 characteristics of the general population of the uni-
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•S 1722 IS

1 fied service delivery area, and the jobseekers, work2 ers, and businesses of such area; and

3 (5) assess the level of services to hard-to-serve

4 populations in relation to the number served and the

5 outcomes for those during the preceding 3 years.

6 SEC. 444. CAPACITY BUILDING.

7 (a) IN GENERAL.—Each workforce development

8 board shall identify actions to be taken for building the

9 capacity of the workforce development system in such uni10 fied service delivery, except that in States with a single

11 unified delivery area, the State Council shall be respon12 sible for carrying out the actions under this section.

13 (b) FUNDING.—The State Council shall make funds

14 available to each workforce development board for capacity

15 building activities from funds made available under section

16 423(b) and any other funds within the integrated

17 workforce development budget of the State. For the activi18 ties described in subsection (c), the workforce development

19 board may also submit requests to the State Council to

20 redirect a portion of training and technical assistance re21 sources available from any of the workforce development

22 programs included in the integrated system within the uni23 fied service development area of the workforce develop24 ment board.
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1 (c) TYPES OF ACTIVITIES.—Capacity building activi2 ties may include—

3 (1) training of workforce development board

4 members;

5 (2) staff training;

6 (3) technical assistance regarding managing

7 systemic change;

8 (4) customer service training;

9 (5) organization of a peer-to-peer network for

10 training, technical assistance, and information shar11 ing;

12 (6) organizing a best practices database cover13 ing the various system activities; and

14 (7) training for local staff on the principles of

15 quality management and decentralized decisionmak16 ing.

17 Subtitle D—One-Stop Career

18 Centers

19 SEC. 451. CAREER CENTERS.

20 (a) ESTABLISHMENT.—Each workforce development

21 board receiving funds under an implementation grant

22 awarded under section 423(b) shall develop and implement

23 a network of one-stop career centers in the unified service

24 delivery area of the workforce development board. The

25 one-stop career centers shall provide jobseekers, workers,
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1 and businesses universal access to a comprehensive array

2 of quality employment, education, and training services.

3 (b) PROCEDURES.—Each workforce development

4 board shall, in conjunction with a local elected official or

5 officials in the unified service delivery area, and consistent

6 with criteria specified in section 434(a)(11), select a meth7 od for establishing one-stop career centers.

8 (c) ELIGIBLE ENTITIES.—Each entity within the uni9 fied service delivery area that performs the functions spec10 ified in subsections (e) and (f) for any of the programs

11 in the integrated workforce development system shall be

12 eligible to be selected as a one-stop career center.

13 (d) PERIOD OF SELECTION.—Each one-stop career

14 center operator shall be designated for 2-year periods.

15 Every 2 years, one-stop career center designations shall

16 be reevaluated by the workforce development board based

17 on performance indicated in the unified service delivery

18 area report card and other criteria established by the

19 workforce development board and the State Council.

20 (e) BROKERAGE SERVICES TO INDIVIDUALS.—Each

21 one-stop career center shall make available to the public,

22 at no cost—

23 (1) outreach to make individuals aware of, and

24 encourage the use of, services available from
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1 workforce development programs operating in the

2 unified service delivery area;

3 (2) intake and orientation to the information

4 and services available through the one-stop career

5 center;

6 (3) preliminary assessments of the skill levels

7 (including appropriate testing) and service needs of

8 individuals, including—

9 (A) basic skills;

10 (B) occupational skills;

11 (C) prior work experience;

12 (D) employability;

13 (E) interests;

14 (F) aptitude; and

15 (G) supportive service needs;

16 (4) job search assistance, including resume and

17 interview preparation and workshops;

18 (5) information relating to the supply, demand,

19 price, and quality of job training services available

20 in each unified service delivery area in the State;

21 and

22 (6) referral to appropriate job training, employ23 ment, and employment-related education or support

24 services in the unified service delivery area.
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1 (f) BROKERAGE SERVICES TO EMPLOYERS.—Each

2 one-stop career center shall provide to each requesting em3 ployer—

4 (1) information relating to supply, demand,

5 price, and quality of job training services available

6 in each unified service delivery area in the State,

7 consistent with the consumer reports described in

8 section 435;

9 (2) customized screening and referral of individ10 uals for employment;

11 (3) customized assessment of skills of the cur12 rent workers of the employer;

13 (4) an analysis of the skill needs of the em14 ployer; and

15 (5) other specialized employment and training

16 services.

17 (g) CONFLICTS.—Any entity that performs one-stop

18 career center functions shall be prohibited from making

19 an education and training referral to itself.

20 (h) FEES.—

21 (1) IN GENERAL.—Except as provided in para22 graph (2), each one-stop career center may charge

23 fees for the services described in subsection (f), sub24 ject to approval by the workforce development board.
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1 (2) LIMITATION.—No fee may be charged for

2 any service that an individual would be eligible to re3 ceive at no cost under a participating program.

4 (3) INCOME.—Income received by a one-stop

5 career center from the fees collected shall be used by

6 the workforce development board to expand or en7 hance one-stop career centers available within the

8 unified service delivery area.

9 (i) CORE DATA ELEMENTS AND COMMON DEFINI10 TIONS.—Each one-stop career center shall adopt the core

11 data elements and common definitions as specified in sec12 tion 424(b), and updated by the National Board.

13 (j) OPERATING AGREEMENTS.—

14 (1) IN GENERAL.—Each one-stop career center

15 operator shall enter into a written agreement with

16 the workforce development board concerning the op17 eration of the center.

18 (2) APPROVAL.—The agreement shall—

19 (A) be subject to the approval of—

20 (i) the local chief elected official or of21 ficials;

22 (ii) the State Council; and

23 (iii) the Governor of the State in

24 which the center is located; and

25 (B) address—
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•S 1722 IS

1 (i) the services to be provided;

2 (ii) the role that local officials of the

3 United States Employment Service will

4 play in the operation of one-stop career

5 centers in the unified service delivery area;

6 (iii) the financial and nonfinancial

7 contributions to be made to the centers

8 from funds made available pursuant to sec9 tion 423(b) and all participating workforce

10 development programs;

11 (iv) methods of administration;

12 (v) procedures to be used to ensure

13 compliance with statutory requirements of

14 the programs in the integrated workforce

15 development system; and

16 (vi) other elements, as required by the

17 workforce development board or the State

18 Council under section 434(a).

19 TITLE V—CORPORATE

20 ACCOUNTABILITY

21 SEC. 501. SHORT TITLE.

22 This title may be cited as the ‘‘Corporate Account23 ability Act of 1996’’.

24 SEC. 502. FINDINGS.

25 The Congress makes the following findings:
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1 (1) Every year the United States Government

2 buys more than $200,000,000,000 in goods and

3 services, ranging from weapons systems to cleaning

4 supplies, making it the largest customer in the

5 American marketplace.

6 (2) Harnessing the immense purchasing power

7 that the United States Government wields through

8 its procurement practices to reward good corporate

9 citizenship and to discourage corporate irresponsibil10 ity would serve as a powerful inducement for greater

11 corporate accountability at home and abroad.

12 SEC. 503. CORPORATE CODE OF CONDUCT.

13 It is the sense of Congress that any entity entering

14 into a contract with the Federal Government for goods

15 or services should do the following:

16 (1) Provide a safe and healthy workplace.

17 (2) Ensure that the entity applies fair employ18 ment practices, including (A) avoidance of use of

19 child and forced labor, (B) avoidance of discrimina20 tion based upon race, gender, national origin, or reli21 gious beliefs, (C) respect for freedom of association

22 and the right to organize and bargain collectively,

23 and (D) payment of a living wage to all workers.

24 (3) Uphold responsible environmental protection

25 and environmental practices.
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1 (4) Comply with United States and local laws

2 (whichever are more stringent) promoting good busi3 ness practices, including laws prohibiting illicit pay4 ments and ensuring fair competition.

5 (5) Maintain, through leadership at all levels, a

6 corporate culture that (A) respects free expression

7 consistent with legitimate business concerns, and

8 does not condone political coercion in the workplace,

9 (B) encourages good corporate citizenship and

10 makes a positive contribution to the communities in

11 which the contractor operates, and (C) recognizes,

12 values, and exemplifies ethical conduct by all em13 ployees.

14 (6) Require similar behavior by partners, sup15 pliers, and subcontractors under terms of contracts.

16 SEC. 504. PREFERENCE FOR ENTITIES ADOPTING AND EN17 FORCING CORPORATE CODE OF CONDUCT.

18 For each fiscal year it shall be a goal of the head

19 of each executive agency to award at least 15 percent (in

20 terms of contract price) of the contracts entered into by

21 the head of the executive agency in that fiscal year to enti22 ties that have been certified by the head of that executive

23 agency or the head of any other executive agency under

24 section 505 as entities that have adopted and are enforc25 ing the corporate code of conduct.
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1 SEC. 505. CERTIFICATION OF COMPLIANCE.

2 (a) DETERMINATION.—Upon the request of an

3 offeror for a contract to be entered into by the head of

4 an executive agency, the head of the executive agency shall

5 determine whether the offeror is complying with, and

6 agrees to continue to comply with, the corporate code of

7 conduct.

8 (b) CERTIFICATION.—Upon determining that an

9 offeror is complying with, and agrees to continue to com10 ply with, the corporate code of conduct, the head of an

11 executive agency shall transmit to the Administrator of

12 General Services a written certification that the head of

13 the executive agency has determined that the offeror has

14 adopted, and is enforcing, the corporate code of conduct.

15 (c) DECERTIFICATION.—The head of any executive

16 agency may revoke a certification of an entity by the head

17 of any executive agency under subsection (b) upon a deter18 mination made under section 506 or otherwise that, after

19 the certification, the entity ceased to comply with the cor20 porate code of conduct. The head of an agency revoking

21 a certification shall notify the Administrator of General

22 Services of the revocation.

23 (d) DIRECTORY OF CERTIFIED AND DECERTIFIED

24 ENTITIES.—The Administrator of General Services shall

25 maintain a directory of entities that have been certified

26 or decertified under this section. The directory shall indi-
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1 cate, for each such entity, whether the entity has a cer2 tified status or a decertified status. The Administrator

3 shall make the information in the directory available to

4 the head of an executive agency as necessary for the head

5 of the executive agency to carry out responsibilities under

6 this title.

7 SEC. 506. ANNUAL COMPLIANCE REVIEW AND PETITION

8 PROCESS.

9 (a) ANNUAL COMPLIANCE REVIEW.—For each entity

10 that receives a preference under section 504 in the award

11 of a contract to the entity by an executive agency, the head

12 of the executive agency shall conduct periodic reviews of

13 the entity, as appropriate, to determine whether the entity

14 is in compliance with the corporate code of conduct.

15 (b) PETITION.—

16 (1) IN GENERAL.—In the case of an entity that

17 is treated as being eligible for a preference under

18 section 504 in the award of a contract by an execu19 tive agency, an interested party may petition the

20 head of the executive agency to carry out a review

21 of the compliance of that entity with the corporate

22 code of conduct. The petition shall specify the al23 leged violations of the corporate code of conduct to

24 be reviewed and be accompanied by detailed docu25 mentation supporting the allegations.
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1 (2) RESPONSE BY EXECUTIVE AGENCY.—(A)

2 Upon receipt of a petition, the head of the executive

3 agency shall determine whether to dismiss the peti4 tion or to accept the petition for investigation and

5 public hearing.

6 (B) The head of the executive agency may dis7 miss a petition if the head of the executive agency

8 determines that the petition is frivolous or reason9 ably believes, on the basis of the evidence presented,

10 that the violations alleged in the petition did not

11 occur.

12 (C) Within 180 days after the head of the exec13 utive agency determines to accept a petition, the

14 head of the executive agency shall investigate the al15 legations set forth in the petition, hold a public

16 hearing, and make a final decision on the petition.

17 (D) If in the final decision on a petition, the

18 head of the executive agency finds that a contractor

19 has violated the corporate code of conduct, the head

20 of the executive agency, shall recommend remedies

21 to the contractor to be implemented within 180

22 days. If such remedies or appropriate alternatives

23 approved by the head of the executive agency are not

24 implemented within that 180-day period, the head of

25 the executive agency may suspend or terminate the
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•S 1722 IS

1 contract as the head of the executive agency consid2 ers appropriate.

3 (3) INTERESTED PARTY.—For purposes of this

4 subsection, an interested party is any person inter5 ested in the implementation of the corporate code of

6 conduct whose direct economic interest may be af7 fected by the award of the contract to the contrac8 tor.

9 (c) ENFORCEMENT.—The head of an executive agen10 cy that awarded a contract to an entity on a preferential

11 basis afforded under section 504 may suspend or termi12 nate the contract at any time that the head of executive

13 agency determines, on the basis of information available

14 to that official under subsection (a) or (b), that the con15 tractor is not in compliance with the corporate code of con16 duct.

17 SEC. 507. REGULATIONS.

18 The Federal Acquisition Regulatory Council shall

19 amend the Federal Acquisition Regulation to provide for

20 the implementation of the provisions of this title.

21 SEC. 508. DEFINITIONS.

22 In this title:

23 (1) The term ‘‘executive agency’’ has the mean24 ing given such term in section 4 of the Office of

25 Federal Procurement Policy Act (41 U.S.C. 403).
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1 (2) The term ‘‘corporate code of conduct’’

2 means the corporate code of conduct set forth in sec3 tion 503.

4 TITLE VI—HEALTH INSURANCE

5 REFORM

6 SEC. 601. SHORT TITLE.

7 This title may be cited as the ‘‘Health Insurance Re8 form Act of 1996’’.

9 SEC. 602. DEFINITIONS.

10 As used in this title:

11 (1) BENEFICIARY.—The term ‘‘beneficiary’’ has

12 the meaning given such term under section 3(8) of

13 the Employee Retirement Income Security Act of

14 1974 (29 U.S.C. 1002(8)).

15 (2) EMPLOYEE.—The term ‘‘employee’’ has the

16 meaning given such term under section 3(6) of the

17 Employee Retirement Income Security Act of 1974

18 (29 U.S.C. 1002(6)).

19 (3) EMPLOYER.—The term ‘‘employer’’ has the

20 meaning given such term under section 3(5) of the

21 Employee Retirement Income Security Act of 1974

22 (29 U.S.C. 1002(5)), except that such term shall in23 clude only employers of two or more employees.

24 (4) EMPLOYEE HEALTH BENEFIT PLAN.—
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•S 1722 IS

1 (A) IN GENERAL.—The term ‘‘employee

2 health benefit plan’’ means any employee wel3 fare benefit plan, governmental plan, or church

4 plan (as defined under paragraphs (1), (32),

5 and (33) of section 3 of the Employee Retire6 ment Income Security Act of 1974 (29 U.S.C.

7 1002 (1), (32), and (33))) that provides or pays

8 for health benefits (such as provider and hos9 pital benefits) for participants and beneficiaries

10 whether—

11 (i) directly;

12 (ii) through a group health plan of13 fered by a health plan issuer as defined in

14 paragraph (8); or

15 (iii) otherwise.

16 (B) RULE OF CONSTRUCTION.—An em17 ployee health benefit plan shall not be con18 strued to be a group health plan, an individual

19 health plan, or a health plan issuer.

20 (C) ARRANGEMENTS NOT INCLUDED.—

21 Such term does not include the following, or

22 any combination thereof:

23 (i) Coverage only for accident, or dis24 ability income insurance, or any combina25 tion thereof.
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1 (ii) Medicare supplemental health in2 surance (as defined under section

3 1882(g)(1) of the Social Security Act).

4 (iii) Coverage issued as a supplement

5 to liability insurance.

6 (iv) Liability insurance, including gen7 eral liability insurance and automobile li8 ability insurance.

9 (v) Workers compensation or similar

10 insurance.

11 (vi) Automobile medical payment in12 surance.

13 (vii) Coverage for a specified disease

14 or illness.

15 (viii) Hospital or fixed indemnity in16 surance.

17 (ix) Short-term limited duration in18 surance.

19 (x) Credit-only, dental-only, or vision20 only insurance.

21 (xi) A health insurance policy provid22 ing benefits only for long-term care, nurs23 ing home care, home health care, commu24 nity-based care, or any combination there25 of.
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•S 1722 IS

1 (5) FAMILY.—

2 (A) IN GENERAL.—The term ‘‘family’’

3 means an individual, the individual’s spouse,

4 and the child of the individual (if any).

5 (B) CHILD.—For purposes of subpara6 graph (A), the term ‘‘child’’ means any individ7 ual who is a child within the meaning of section

8 151(c)(3) of the Internal Revenue Code of

9 1986.

10 (6) GROUP HEALTH PLAN.—

11 (A) IN GENERAL.—The term ‘‘group

12 health plan’’ means any contract, policy, certifi13 cate or other arrangement offered by a health

14 plan issuer to a group purchaser that provides

15 or pays for health benefits (such as provider

16 and hospital benefits) in connection with an em17 ployee health benefit plan.

18 (B) ARRANGEMENTS NOT INCLUDED.—

19 Such term does not include the following, or

20 any combination thereof:

21 (i) Coverage only for accident, or dis22 ability income insurance, or any combina23 tion thereof.
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•S 1722 IS

1 (ii) Medicare supplemental health in2 surance (as defined under section

3 1882(g)(1) of the Social Security Act).

4 (iii) Coverage issued as a supplement

5 to liability insurance.

6 (iv) Liability insurance, including gen7 eral liability insurance and automobile li8 ability insurance.

9 (v) Workers compensation or similar

10 insurance.

11 (vi) Automobile medical payment in12 surance.

13 (vii) Coverage for a specified disease

14 or illness.

15 (viii) Hospital or fixed indemnity in16 surance.

17 (ix) Short-term limited duration in18 surance.

19 (x) Credit-only, dental-only, or vision20 only insurance.

21 (xi) A health insurance policy provid22 ing benefits only for long-term care, nurs23 ing home care, home health care, commu24 nity-based care, or any combination there25 of.
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•S 1722 IS

1 (7) GROUP PURCHASER.—The term ‘‘group

2 purchaser’’ means any person (as defined under

3 paragraph (9) of section 3 of the Employee Retire4 ment Income Security Act of 1974 (29 U.S.C.

5 1002(9)) or entity that purchases or pays for health

6 benefits (such as provider or hospital benefits) on

7 behalf of two or more participants or beneficiaries in

8 connection with an employee health benefit plan. A

9 health plan purchasing cooperative established under

10 section 641 shall not be considered to be a group

11 purchaser.

12 (8) HEALTH PLAN ISSUER.—The term ‘‘health

13 plan issuer’’ means any entity that is licensed (prior

14 to or after the date of enactment of this Act) by a

15 State to offer a group health plan or an individual

16 health plan.

17 (9) PARTICIPANT.—The term ‘‘participant’’ has

18 the meaning given such term under section 3(7) of

19 the Employee Retirement Income Security Act of

20 1974 (29 U.S.C. 1002(7)).

21 (10) PLAN SPONSOR.—The term ‘‘plan spon22 sor’’ has the meaning given such term under section

23 3(16)(B) of the Employee Retirement Income Secu24 rity Act of 1974 (29 U.S.C. 1002(16)(B)).
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1 (11) SECRETARY.—The term ‘‘Secretary’’, un2 less specifically provided otherwise, means the Sec3 retary of Labor.

4 (12) STATE.—The term ‘‘State’’ means each of

5 the several States, the District of Columbia, Puerto

6 Rico, the United States Virgin Islands, Guam,

7 American Samoa, and the Commonwealth of the

8 Northern Mariana Islands.

9 Subtitle A—Health Care Access,

10 Portability, and Renewability

11 CHAPTER 1—GROUP MARKET RULES

12 SEC. 611. GUARANTEED AVAILABILITY OF HEALTH COV13 ERAGE.

14 (a) IN GENERAL.—

15 (1) NONDISCRIMINATION.—Except as provided

16 in subsection (b), section 612 and section 613—

17 (A) a health plan issuer offering a group

18 health plan may not decline to offer whole

19 group coverage to a group purchaser desiring to

20 purchase such coverage; and

21 (B) an employee health benefit plan or a

22 health plan issuer offering a group health plan

23 may establish eligibility, continuation of eligi24 bility, enrollment, or premium contribution re25 quirements under the terms of such plan, ex-
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•S 1722 IS

1 cept that such requirements shall not be based

2 on health status, medical condition, claims ex3 perience, receipt of health care, medical history,

4 evidence of insurability (including conditions

5 arising out of acts of domestic violence), genetic

6 information, or disability.

7 (2) HEALTH PROMOTION AND DISEASE PRE8 VENTION.—Nothing in this subsection shall prevent

9 an employee health benefit plan or a health plan is10 suer from establishing premium discounts or modify11 ing otherwise applicable copayments or deductibles

12 in return for adherence to programs of health pro13 motion and disease prevention.

14 (b) APPLICATION OF CAPACITY LIMITS.—

15 (1) IN GENERAL.—Subject to paragraph (2), a

16 health plan issuer offering a group health plan may

17 cease offering coverage to group purchasers under

18 the plan if—

19 (A) the health plan issuer ceases to offer

20 coverage to any additional group purchasers;

21 and

22 (B) the health plan issuer can demonstrate

23 to the applicable certifying authority (as defined

24 in section 652(d)), if required, that its financial

25 or provider capacity to serve previously covered
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•S 1722 IS

1 participants and beneficiaries (and additional

2 participants and beneficiaries who will be ex3 pected to enroll because of their affiliation with

4 a group purchaser or such previously covered

5 participants or beneficiaries) will be impaired if

6 the health plan issuer is required to offer cov7 erage to additional group purchasers.

8 Such health plan issuer shall be prohibited from of9 fering coverage after a cessation in offering coverage

10 under this paragraph for a 6-month period or until

11 the health plan issuer can demonstrate to the appli12 cable certifying authority (as defined in section

13 652(d)) that the health plan issuer has adequate ca14 pacity, whichever is later.

15 (2) FIRST-COME-FIRST-SERVED.—A health plan

16 issuer offering a group health plan is only eligible to

17 exercise the limitations provided for in paragraph

18 (1) if the health plan issuer offers coverage to group

19 purchasers under such plan on a first-come-first20 served basis or other basis established by a State to

21 ensure a fair opportunity to enroll in the plan and

22 avoid risk selection.

23 (c) CONSTRUCTION.—

24 (1) MARKETING OF GROUP HEALTH PLANS.—

25 Nothing in this section shall be construed to prevent
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1 a State from requiring health plan issuers offering

2 group health plans to actively market such plans.

3 (2) INVOLUNTARY OFFERING OF GROUP

4 HEALTH PLANS.—Nothing in this section shall be

5 construed to require a health plan issuer to involun6 tarily offer group health plans in a particular mar7 ket. For the purposes of this paragraph, the term

8 ‘‘market’’ means either the large employer market or

9 the small employer market (as defined under appli10 cable State law, or if not so defined, an employer

11 with not more than 50 employees).

12 SEC. 612. GUARANTEED RENEWABILITY OF HEALTH COV13 ERAGE.

14 (a) IN GENERAL.—

15 (1) GROUP PURCHASER.—Subject to sub16 sections (b) and (c), a group health plan shall be re17 newed or continued in force by a health plan issuer

18 at the option of the group purchaser, except that the

19 requirement of this subparagraph shall not apply in

20 the case of—

21 (A) the nonpayment of premiums or con22 tributions by the group purchaser in accordance

23 with the terms of the group health plan or

24 where the health plan issuer has not received

25 timely premium payments;
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•S 1722 IS

1 (B) fraud or misrepresentation of material

2 fact on the part of the group purchaser;

3 (C) the termination of the group health

4 plan in accordance with subsection (b); or

5 (D) the failure of the group purchaser to

6 meet contribution or participation requirements

7 in accordance with paragraph (3).

8 (2) PARTICIPANT.—Subject to subsections (b)

9 and (c), coverage under an employee health benefit

10 plan or group health plan shall be renewed or con11 tinued in force, if the group purchaser elects to con12 tinue to provide coverage under such plan, at the op13 tion of the participant (or beneficiary where such

14 right exists under the terms of the plan or under ap15 plicable law), except that the requirement of this

16 paragraph shall not apply in the case of—

17 (A) the nonpayment of premiums or con18 tributions by the participant or beneficiary in

19 accordance with the terms of the employee

20 health benefit plan or group health plan or

21 where such plan has not received timely pre22 mium payments;

23 (B) fraud or misrepresentation of material

24 fact on the part of the participant or bene-
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•S 1722 IS

1 ficiary relating to an application for coverage or

2 claim for benefits;

3 (C) the termination of the employee health

4 benefit plan or group health plan;

5 (D) loss of eligibility for continuation cov6 erage as described in part 6 of subtitle B of

7 title I of the Employee Retirement Income Se8 curity Act of 1974 (29 U.S.C. 1161 et seq.); or

9 (E) failure of a participant or beneficiary

10 to meet requirements for eligibility for coverage

11 under an employee health benefit plan or group

12 health plan that are not prohibited by this title.

13 (3) RULES OF CONSTRUCTION.—Nothing in

14 this subsection, nor in section 611(a), shall be con15 strued to—

16 (A) preclude a health plan issuer from es17 tablishing employer contribution rules or group

18 participation rules for group health plans as al19 lowed under applicable State law;

20 (B) preclude a plan defined in section

21 3(37) of the Employee Retirement Income Se22 curity Act of 1974 (29 U.S.C. 1102(37)) from

23 establishing employer contribution rules or

24 group participation rules; or
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•S 1722 IS

1 (C) permit individuals to decline coverage

2 under an employee health benefit plan if such

3 right is not otherwise available under such plan.

4 (b) TERMINATION OF GROUP HEALTH PLANS.—

5 (1) PARTICULAR TYPE OF GROUP HEALTH

6 PLAN NOT OFFERED.—In any case in which a health

7 plan issuer decides to discontinue offering a particu8 lar type of group health plan, a group health plan

9 of such type may be discontinued by the health plan

10 issuer only if—

11 (A) the health plan issuer provides notice

12 to each group purchaser covered under a group

13 health plan of this type (and participants and

14 beneficiaries covered under such group health

15 plan) of such discontinuation at least 90 days

16 prior to the date of the discontinuation of such

17 plan;

18 (B) the health plan issuer offers to each

19 group purchaser covered under a group health

20 plan of this type, the option to purchase any

21 other group health plan currently being offered

22 by the health plan issuer; and

23 (C) in exercising the option to discontinue

24 a group health plan of this type and in offering

25 one or more replacement plans, the health plan
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•S 1722 IS

1 issuer acts uniformly without regard to the

2 health status or insurability of participants or

3 beneficiaries covered under the group health

4 plan, or new participants or beneficiaries who

5 may become eligible for coverage under the

6 group health plan.

7 (2) DISCONTINUANCE OF ALL GROUP HEALTH

8 PLANS.—

9 (A) IN GENERAL.—In any case in which a

10 health plan issuer elects to discontinue offering

11 all group health plans in a State, a group

12 health plan may be discontinued by the health

13 plan issuer only if—

14 (i) the health plan issuer provides no15 tice to the applicable certifying authority

16 (as defined in section 652(d)) and to each

17 group purchaser (and participants and

18 beneficiaries covered under such group

19 health plan) of such discontinuation at

20 least 180 days prior to the date of the ex21 piration of such plan; and

22 (ii) all group health plans issued or

23 delivered for issuance in the State are dis24 continued and coverage under such plans is

25 not renewed.
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•S 1722 IS

1 (B) APPLICATION OF PROVISIONS.—The

2 provisions of this paragraph and paragraph (3)

3 may be applied separately by a health plan is4 suer—

5 (i) to all group health plans offered to

6 small employers (as defined under applica7 ble State law, or if not so defined, an em8 ployer with not more than 50 employees);

9 or

10 (ii) to all other group health plans of11 fered by the health plan issuer in the

12 State.

13 (3) PROHIBITION ON MARKET REENTRY.—In

14 the case of a discontinuation under paragraph (2),

15 the health plan issuer may not provide for the issu16 ance of any group health plan in the market sector

17 (as described in paragraph (2)(B)) in which issuance

18 of such group health plan was discontinued in the

19 State involved during the 5-year period beginning on

20 the date of the discontinuation of the last group

21 health plan not so renewed.

22 (c) TREATMENT OF NETWORK PLANS.—

23 (1) GEOGRAPHIC LIMITATIONS.—A network

24 plan (as defined in paragraph (2)) may deny contin25 ued participation under such plan to participants or
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•S 1722 IS

1 beneficiaries who neither live, reside, nor work in an

2 area in which such network plan is offered, but only

3 if such denial is applied uniformly, without regard to

4 health status or the insurability of particular partici5 pants or beneficiaries.

6 (2) NETWORK PLAN.—As used in paragraph

7 (1), the term ‘‘network plan’’ means an employee

8 health benefit plan or a group health plan that ar9 ranges for the financing and delivery of health care

10 services to participants or beneficiaries covered

11 under such plan, in whole or in part, through ar12 rangements with providers.

13 (d) COBRA COVERAGE.—Nothing in subsection

14 (a)(2)(E) or subsection (c) shall be construed to affect any

15 right to COBRA continuation coverage as described in

16 part 6 of subtitle B of title I of the Employee Retirement

17 Income Security Act of 1974 (29 U.S.C. 1161 et seq.).

18 SEC. 613. PORTABILITY OF HEALTH COVERAGE AND LIMI19 TATION ON PREEXISTING CONDITION EXCLU20 SIONS.

21 (a) IN GENERAL.—An employee health benefit plan

22 or a health plan issuer offering a group health plan may

23 impose a limitation or exclusion of benefits relating to

24 treatment of a preexisting condition based on the fact that
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•S 1722 IS

1 the condition existed prior to the coverage of the partici2 pant or beneficiary under the plan only if—

3 (1) the limitation or exclusion extends for a pe4 riod of not more than 12 months after the date of

5 enrollment in the plan;

6 (2) the limitation or exclusion does not apply to

7 an individual who, within 30 days of the date of

8 birth or placement for adoption (as determined

9 under section 609(c)(3)(B) of the Employee Retire10 ment Income Security Act of 1974 (29 U.S.C.

11 1169(c)(3)(B)), was covered under the plan; and

12 (3) the limitation or exclusion does not apply to

13 a pregnancy.

14 (b) CREDITING OF PREVIOUS QUALIFYING COV15 ERAGE.—

16 (1) IN GENERAL.—Subject to paragraph (4), an

17 employee health benefit plan or a health plan issuer

18 offering a group health plan shall provide that if a

19 participant or beneficiary is in a period of previous

20 qualifying coverage as of the date of enrollment

21 under such plan, any period of exclusion or limita22 tion of coverage with respect to a preexisting condi23 tion shall be reduced by 1 month for each month in

24 which the participant or beneficiary was in the pe25 riod of previous qualifying coverage. With respect to
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•S 1722 IS

1 an individual described in subsection (a)(2) who

2 maintains continuous coverage, no limitation or ex3 clusion of benefits relating to treatment of a pre4 existing condition may be applied to a child within

5 the child’s first 12 months of life or within 12

6 months after the placement of a child for adoption.

7 (2) DISCHARGE OF DUTY.—An employee health

8 benefit plan shall provide documentation of coverage

9 to participants and beneficiaries whose coverage is

10 terminated under the plan. Pursuant to regulations

11 promulgated by the Secretary, the duty of an em12 ployee health benefit plan to verify previous qualify13 ing coverage with respect to a participant or bene14 ficiary is effectively discharged when such employee

15 health benefit plan provides documentation to a par16 ticipant or beneficiary that includes the following in17 formation:

18 (A) the dates that the participant or bene19 ficiary was covered under the plan; and

20 (B) the benefits and cost-sharing arrange21 ment available to the participant or beneficiary

22 under such plan.

23 An employee health benefit plan shall retain the doc24 umentation provided to a participant or beneficiary

25 under subparagraphs (A) and (B) for at least the
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•S 1722 IS

1 12-month period following the date on which the

2 participant or beneficiary ceases to be covered under

3 the plan. Upon request, an employee health benefit

4 plan shall provide a second copy of such documenta5 tion to such participant or beneficiary within the 12-

6 month period following the date of such ineligibility.

7 (3) DEFINITIONS.—As used in this section:

8 (A) PREVIOUS QUALIFYING COVERAGE.—

9 The term ‘‘previous qualifying coverage’’ means

10 the period beginning on the date—

11 (i) a participant or beneficiary is en12 rolled under an employee health benefit

13 plan or a group health plan, and ending on

14 the date the participant or beneficiary is

15 not so enrolled; or

16 (ii) an individual is enrolled under an

17 individual health plan (as defined in sec18 tion 623) or under a public or private

19 health plan established under Federal or

20 State law, and ending on the date the indi21 vidual is not so enrolled;

22 for a continuous period of more than 30 days

23 (without regard to any waiting period).

24 (B) LIMITATION OR EXCLUSION OF BENE25 FITS RELATING TO TREATMENT OF A PRE-
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•S 1722 IS

1 EXISTING CONDITION.—The term ‘‘limitation or

2 exclusion of benefits relating to treatment of a

3 preexisting condition’’ means a limitation or ex4 clusion of benefits imposed on an individual

5 based on a preexisting condition of such individ6 ual.

7 (4) EFFECT OF PREVIOUS COVERAGE.—An em8 ployee health benefit plan or a health plan issuer of9 fering a group health plan may impose a limitation

10 or exclusion of benefits relating to the treatment of

11 a preexisting condition, subject to the limits in sub12 section (a)(1), only to the extent that such service

13 or benefit was not previously covered under the

14 group health plan, employee health benefit plan, or

15 individual health plan in which the participant or

16 beneficiary was enrolled immediately prior to enroll17 ment in the plan involved.

18 (c) LATE ENROLLEES.—Except as provided in sec19 tion 614, with respect to a participant or beneficiary en20 rolling in an employee health benefit plan or a group

21 health plan during a time that is other than the first op22 portunity to enroll during an enrollment period of at least

23 30 days, coverage with respect to benefits or services relat24 ing to the treatment of a preexisting condition in accord25 ance with subsections (a) and (b) may be excluded, except
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•S 1722 IS

1 the period of such exclusion may not exceed 18 months

2 beginning on the date of coverage under the plan.

3 (d) AFFILIATION PERIODS.—With respect to a par4 ticipant or beneficiary who would otherwise be eligible to

5 receive benefits under an employee health benefit plan or

6 a group health plan but for the operation of a preexisting

7 condition limitation or exclusion, if such plan does not uti8 lize a limitation or exclusion of benefits relating to the

9 treatment of a preexisting condition, such plan may im10 pose an affiliation period on such participant or bene11 ficiary not to exceed 60 days (or in the case of a late par12 ticipant or beneficiary described in subsection (c), 90

13 days) from the date on which the participant or bene14 ficiary would otherwise be eligible to receive benefits under

15 the plan. An employee health benefit plan or a health plan

16 issuer offering a group health plan may also use alter17 native methods to address adverse selection as approved

18 by the applicable certifying authority (as defined in section

19 652(d)). During such an affiliation period, the plan may

20 not be required to provide health care services or benefits

21 and no premium shall be charged to the participant or

22 beneficiary.

23 (e) PREEXISTING CONDITION.—For purposes of this

24 section, the term ‘‘preexisting condition’’ means a condi25 tion, regardless of the cause of the condition, for which
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•S 1722 IS

1 medical advice, diagnosis, care, or treatment was rec2 ommended or received within the 6-month period ending

3 on the day before the effective date of the coverage (with4 out regard to any waiting period).

5 (f) STATE FLEXIBILITY.—Nothing in this section

6 shall be construed to preempt State laws that —

7 (1) require health plan issuers to impose a limi8 tation or exclusion of benefits relating to the treat9 ment of a preexisting condition for periods that are

10 shorter than those provided for under this section;

11 or

12 (2) allow individuals, participants, and bene13 ficiaries to be considered to be in a period of pre14 vious qualifying coverage if such individual, partici15 pant, or beneficiary experiences a lapse in coverage

16 that is greater than the 30-day period provided for

17 under subsection (b)(3);

18 unless such laws are preempted by section 514 of the Em19 ployee Retirement Income Security Act of 1974 (29

20 U.S.C. 1144).

21 SEC. 614. SPECIAL ENROLLMENT PERIODS.

22 In the case of a participant, beneficiary or family

23 member who—

24 (1) through marriage, separation, divorce,

25 death, birth or placement of a child for adoption, ex-
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•S 1722 IS

1 periences a change in family composition affecting

2 eligibility under a group health plan, individual

3 health plan, or employee health benefit plan;

4 (2) experiences a change in employment status,

5 as described in section 603(2) of the Employee Re6 tirement Income Security Act of 1974 (29 U.S.C.

7 1163(2)), that causes the loss of eligibility for cov8 erage, other than COBRA continuation coverage

9 under a group health plan, individual health plan, or

10 employee health benefit plan; or

11 (3) experiences a loss of eligibility under a

12 group health plan, individual health plan, or em13 ployee health benefit plan because of a change in the

14 employment status of a family member;

15 each employee health benefit plan and each group health

16 plan shall provide for a special enrollment period extend17 ing for a reasonable time after such event that would per18 mit the participant to change the individual or family basis

19 of coverage or to enroll in the plan if coverage would have

20 been available to such individual, participant, or bene21 ficiary but for failure to enroll during a previous enroll22 ment period. Such a special enrollment period shall ensure

23 that a child born or placed for adoption shall be deemed

24 to be covered under the plan as of the date of such birth

25 or placement for adoption if such child is enrolled within
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•S 1722 IS

1 30 days of the date of such birth or placement for adop2 tion.

3 SEC. 615. DISCLOSURE OF INFORMATION.

4 (a) DISCLOSURE OF INFORMATION BY HEALTH PLAN

5 ISSUERS.—

6 (1) IN GENERAL.—In connection with the offer7 ing of any group health plan to a small employer (as

8 defined under applicable State law, or if not so de9 fined, an employer with not more than 50 employ10 ees), a health plan issuer shall make a reasonable

11 disclosure to such employer, as part of its solicita12 tion and sales materials, of—

13 (A) the provisions of such group health

14 plan concerning the health plan issuer’s right to

15 change premium rates and the factors that may

16 affect changes in premium rates;

17 (B) the provisions of such group health

18 plan relating to renewability of coverage;

19 (C) the provisions of such group health

20 plan relating to any preexisting condition provi21 sion; and

22 (D) descriptive information about the ben23 efits and premiums available under all group

24 health plans for which the employer is qualified.
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•S 1722 IS

1 Information shall be provided to small employers

2 under this paragraph in a manner determined to be

3 understandable by the average small employer, and

4 shall be sufficiently accurate and comprehensive to

5 reasonably inform small employers, participants and

6 beneficiaries of their rights and obligations under

7 the group health plan.

8 (2) EXCEPTION.—With respect to the require9 ment of paragraph (1), any information that is pro10 prietary and trade secret information under applica11 ble law shall not be subject to the disclosure require12 ments of such paragraph.

13 (3) CONSTRUCTION.—Nothing in this sub14 section shall be construed to preempt State report15 ing and disclosure requirements to the extent that

16 such requirements are not preempted under section

17 514 of the Employee Retirement Income Security

18 Act of 1974 (29 U.S.C. 1144).

19 (b) DISCLOSURE OF INFORMATION TO PARTICIPANTS

20 AND BENEFICIARIES.—

21 (1) IN GENERAL.—Section 104(b)(1) of the

22 Employee Retirement Income Security Act of 1974

23 (29 U.S.C. 1024(b)(1)) is amended in the matter

24 following subparagraph (B)—
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•S 1722 IS

1 (A) by striking ‘‘102(a)(1),’’ and inserting

2 ‘‘102(a)(1) that is not a material reduction in

3 covered services or benefits provided,’’; and

4 (B) by adding at the end thereof the fol5 lowing new sentences: ‘‘If there is a modifica6 tion or change described in section 102(a)(1)

7 that is a material reduction in covered services

8 or benefits provided, a summary description of

9 such modification or change shall be furnished

10 to participants not later than 60 days after the

11 date of the adoption of the modification or

12 change. In the alternative, the plan sponsors

13 may provide such description at regular inter14 vals of not more than 90 days. The Secretary

15 shall issue regulations within 180 days after the

16 date of enactment of the Health Insurance Re17 form Act of 1996, providing alternative mecha18 nisms to delivery by mail through which em19 ployee health benefit plans may notify partici20 pants of material reductions in covered services

21 or benefits.’’.

22 (2) PLAN DESCRIPTION AND SUMMARY.—Sec23 tion 102(b) of the Employee Retirement Income Se24 curity Act of 1974 (29 U.S.C. 1022(b)) is amend25 ed—
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•S 1722 IS

1 (A) by inserting ‘‘including the office or

2 title of the individual who is responsible for ap3 proving or denying claims for coverage of bene4 fits’’ after ‘‘type of administration of the plan’’;

5 (B) by inserting ‘‘including the name of

6 the organization responsible for financing

7 claims’’ after ‘‘source of financing of the plan’’;

8 and

9 (C) by inserting ‘‘including the office, con10 tact, or title of the individual at the Depart11 ment of Labor through which participants may

12 seek assistance or information regarding their

13 rights under this Act and the Health Insurance

14 Reform Act of 1996 with respect to health ben15 efits that are not offered through a group

16 health plan.’’ after ‘‘benefits under the plan’’.

17 CHAPTER 2—INDIVIDUAL MARKET RULES

18 SEC. 620. INDIVIDUAL HEALTH PLAN PORTABILITY.

19 (a) LIMITATION ON REQUIREMENTS.—

20 (1) IN GENERAL.—With respect to an individ21 ual desiring to enroll in an individual health plan, if

22 such individual is in a period of previous qualifying

23 coverage (as defined in section 613(b)(3)(A)(i))

24 under one or more group health plans or employee

25 health benefit plans that commenced 18 or more
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•S 1722 IS

1 months prior to the date on which such individual

2 desires to enroll in the individual plan, a health plan

3 issuer described in paragraph (3) may not decline

4 to offer coverage to such individual, impose a new

5 period of exclusion or limitation of coverage with re6 spect to a preexisting condition (as defined in sec7 tion 613(e)), or deny enrollment to such individual

8 based on the health status, medical condition, claims

9 experience, receipt of health care, medical history,

10 evidence of insurability, or disability of the individ11 ual, except as described in subsections (b) and (c).

12 (2) HEALTH PROMOTION AND DISEASE PRE13 VENTION.—Nothing in this subsection shall be con14 strued to prevent a health plan issuer offering an in15 dividual health plan from establishing premium dis16 counts or modifying otherwise applicable copayments

17 or deductibles in return for adherence to programs

18 of health promotion or disease prevention.

19 (3) HEALTH PLAN ISSUER.—A health plan is20 suer described in this paragraph is a health plan is21 suer that issues or renews individual health plans.

22 (4) PREMIUMS.—Nothing in this subsection

23 shall be construed to affect the determination of a

24 health plan issuer as to the amount of the premium
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•S 1722 IS

1 payable under an individual health plan under appli2 cable State law.

3 (b) ELIGIBILITY FOR OTHER GROUP COVERAGE.—

4 The provisions of subsection (a) shall not apply to an indi5 vidual who is eligible for coverage under a group health

6 plan or an employee health benefit plan, or who has had

7 coverage terminated under a group health plan or em8 ployee health benefit plan for failure to make required pre9 mium payments or contributions, or for fraud or misrepre10 sentation of material fact, or who is otherwise eligible for

11 continuation coverage as described in part 6 of subtitle

12 B of title I of the Employee Retirement Income Security

13 Act of 1974 (29 U.S.C. 1161 et seq.) or under an equiva14 lent State program.

15 (c) APPLICATION OF CAPACITY LIMITS.—

16 (1) IN GENERAL.—Subject to paragraph (2), a

17 health plan issuer offering coverage to individuals

18 under an individual health plan may cease enrolling

19 individuals under the plan if—

20 (A) the health plan issuer ceases to enroll

21 any new individuals; and

22 (B) the health plan issuer can demonstrate

23 to the applicable certifying authority (as defined

24 in section 652(d)), if required, that its financial

25 or provider capacity to serve previously covered
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•S 1722 IS

1 individuals will be impaired if the health plan

2 issuer is required to enroll additional individ3 uals.

4 Such a health plan issuer shall be prohibited from

5 offering coverage after a cessation in offering cov6 erage under this paragraph for a 6-month period or

7 until the health plan issuer can demonstrate to the

8 applicable certifying authority (as defined in section

9 652(d)) that the health plan issuer has adequate ca10 pacity, whichever is later.

11 (2) FIRST-COME-FIRST-SERVED.—A health plan

12 issuer offering coverage to individuals under an indi13 vidual health plan is only eligible to exercise the lim14 itations provided for in paragraph (1) if the health

15 plan issuer provides for enrollment of individuals

16 under such plan on a first-come-first-served basis or

17 other basis established by a State to ensure a fair

18 opportunity to enroll in the plan and avoid risk se19 lection.

20 (d) MARKET REQUIREMENTS.—

21 (1) IN GENERAL.—The provisions of subsection

22 (a) shall not be construed to require that a health

23 plan issuer offering group health plans to group pur24 chasers offer individual health plans to individuals.
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•S 1722 IS

1 (2) CONVERSION POLICIES.—A health plan is2 suer offering group health plans to group purchasers

3 under this title shall not be deemed to be a health

4 plan issuer offering an individual health plan solely

5 because such health plan issuer offers a conversion

6 policy.

7 (3) MARKETING OF PLANS.—Nothing in this

8 section shall be construed to prevent a State from

9 requiring health plan issuers offering coverage to in10 dividuals under an individual health plan to actively

11 market such plan.

12 SEC. 621. GUARANTEED RENEWABILITY OF INDIVIDUAL

13 HEALTH COVERAGE.

14 (a) IN GENERAL.—Subject to subsections (b) and (c),

15 coverage for individuals under an individual health plan

16 shall be renewed or continued in force by a health plan

17 issuer at the option of the individual, except that the re18 quirement of this subsection shall not apply in the case

19 of—

20 (1) the nonpayment of premiums or contribu21 tions by the individual in accordance with the terms

22 of the individual health plan or where the health

23 plan issuer has not received timely premium pay24 ments;
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•S 1722 IS

1 (2) fraud or misrepresentation of material fact

2 on the part of the individual; or

3 (3) the termination of the individual health plan

4 in accordance with subsection (b).

5 (b) TERMINATION OF INDIVIDUAL HEALTH

6 PLANS.—

7 (1) PARTICULAR TYPE OF INDIVIDUAL HEALTH

8 PLAN NOT OFFERED.—In any case in which a health

9 plan issuer decides to discontinue offering a particu10 lar type of individual health plan to individuals, an

11 individual health plan may be discontinued by the

12 health plan issuer only if—

13 (A) the health plan issuer provides notice

14 to each individual covered under the plan of

15 such discontinuation at least 90 days prior to

16 the date of the expiration of the plan;

17 (B) the health plan issuer offers to each

18 individual covered under the plan the option to

19 purchase any other individual health plan cur20 rently being offered by the health plan issuer to

21 individuals; and

22 (C) in exercising the option to discontinue

23 the individual health plan and in offering one or

24 more replacement plans, the health plan issuer
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•S 1722 IS

1 acts uniformly without regard to the health sta2 tus or insurability of particular individuals.

3 (2) DISCONTINUANCE OF ALL INDIVIDUAL

4 HEALTH PLANS.—In any case in which a health plan

5 issuer elects to discontinue all individual health

6 plans in a State, an individual health plan may be

7 discontinued by the health plan issuer only if—

8 (A) the health plan issuer provides notice

9 to the applicable certifying authority (as defined

10 in section 652(d)) and to each individual cov11 ered under the plan of such discontinuation at

12 least 180 days prior to the date of the dis13 continuation of the plan; and

14 (B) all individual health plans issued or

15 delivered for issuance in the State are discon16 tinued and coverage under such plans is not re17 newed.

18 (3) PROHIBITION ON MARKET REENTRY.—In

19 the case of a discontinuation under paragraph (2),

20 the health plan issuer may not provide for the issu21 ance of any individual health plan in the State in22 volved during the 5-year period beginning on the

23 date of the discontinuation of the last plan not so

24 renewed.

25 (c) TREATMENT OF NETWORK PLANS.—
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•S 1722 IS

1 (1) GEOGRAPHIC LIMITATIONS.—A health plan

2 issuer which offers a network plan (as defined in

3 paragraph (2)) may deny continued participation

4 under the plan to individuals who neither live, re5 side, nor work in an area in which the individual

6 health plan is offered, but only if such denial is ap7 plied uniformly, without regard to health status or

8 the insurability of particular individuals.

9 (2) NETWORK PLAN.—As used in paragraph

10 (1), the term ‘‘network plan’’ means an individual

11 health plan that arranges for the financing and de12 livery of health care services to individuals covered

13 under such health plan, in whole or in part, through

14 arrangements with providers.

15 SEC. 622. STATE FLEXIBILITY IN INDIVIDUAL MARKET RE16 FORMS.

17 (a) IN GENERAL.—With respect to any State law

18 with respect to which the Governor of the State notifies

19 the Secretary of Health and Human Services that such

20 State law will achieve the goals of sections 620 and 621,

21 and that is in effect on, or enacted after, the date of enact22 ment of this Act (such as laws providing for guaranteed

23 issue, open enrollment by one or more health plan issuers,

24 high-risk pools, or mandatory conversion policies), such

25 State law shall apply in lieu of the standards described
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•S 1722 IS

1 in sections 620 and 621 unless the Secretary of Health

2 and Human Services determines, after considering the cri3 teria described in subsection (b)(1), in consultation with

4 the Governor and Insurance Commissioner or chief insur5 ance regulatory official of the State, that such State law

6 does not achieve the goals of providing access to affordable

7 health care coverage for those individuals described in sec8 tions 620 and 621.

9 (b) DETERMINATION.—

10 (1) IN GENERAL.—In making a determination

11 under subsection (a), the Secretary of Health and

12 Human Services shall only—

13 (A) evaluate whether the State law or pro14 gram provides guaranteed access to affordable

15 coverage to individuals described in sections

16 620 and 621;

17 (B) evaluate whether the State law or pro18 gram provides coverage for preexisting condi19 tions (as defined in section 613(e)) that were

20 covered under the individuals’ previous group

21 health plan or employee health benefit plan for

22 individuals described in sections 620 and 621;

23 (C) evaluate whether the State law or pro24 gram provides individuals described in sections

25 620 and 621 with a choice of health plans or
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•S 1722 IS

1 a health plan providing comprehensive coverage;

2 and

3 (D) evaluate whether the application of the

4 standards described in sections 620 and 621

5 will have an adverse impact on the number of

6 individuals in such State having access to af7 fordable coverage.

8 (2) NOTICE OF INTENT.—If, within 6 months

9 after the date of enactment of this Act, the Governor

10 of a State notifies the Secretary of Health and

11 Human Services that the State intends to enact a

12 law, or modify an existing law, described in sub13 section (a), the Secretary of Health and Human

14 Services may not make a determination under such

15 subsection until the expiration of the 12-month pe16 riod beginning on the date on which such notifica17 tion is made, or until January 1, 1997, whichever is

18 later. With respect to a State that provides notice

19 under this paragraph and that has a legislature that

20 does not meet within the 12-month period beginning

21 on the date of enactment of this Act, the Secretary

22 shall not make a determination under subsection (a)

23 prior to January 1, 1998.

24 (3) NOTICE TO STATE.—If the Secretary of

25 Health and Human Services determines that a State
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•S 1722 IS

1 law or program does not achieve the goals described

2 in subsection (a), the Secretary of Health and

3 Human Services shall provide the State with ade4 quate notice and reasonable opportunity to modify

5 such law or program to achieve such goals prior to

6 making a final determination under subsection (a).

7 (c) ADOPTION OF NAIC MODEL.—If, not later than

8 9 months after the date of enactment of this Act—

9 (1) the National Association of Insurance Com10 missioners (hereafter referred to as the ‘‘NAIC’’),

11 through a process which the Secretary of Health and

12 Human Services determines has included consulta13 tion with representatives of the insurance industry

14 and consumer groups, adopts a model standard or

15 standards for reform of the individual health insur16 ance market; and

17 (2) the Secretary of Health and Human Serv18 ices determines, within 30 days of the adoption of

19 such NAIC standard or standards, that such stand20 ards comply with the goals of sections 620 and 621;

21 a State that elects to adopt such model standards or sub22 stantially adopt such model standards shall be deemed to

23 have met the requirements of sections 620 and 621 and

24 shall not be subject to a determination under subsection

25 (a).
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•S 1722 IS

1 SEC. 623. DEFINITION.

2 (a) IN GENERAL.—As used in this subtitle, the term

3 ‘‘individual health plan’’ means any contract, policy, cer4 tificate or other arrangement offered to individuals by a

5 health plan issuer that provides or pays for health benefits

6 (such as provider and hospital benefits) and that is not

7 a group health plan under section 602(6).

8 (b) ARRANGEMENTS NOT INCLUDED.—Such term

9 does not include the following, or any combination thereof:

10 (1) Coverage only for accident, or disability in11 come insurance, or any combination thereof.

12 (2) Medicare supplemental health insurance (as

13 defined under section 1882(g)(1) of the Social Secu14 rity Act).

15 (3) Coverage issued as a supplement to liability

16 insurance.

17 (4) Liability insurance, including general liabil18 ity insurance and automobile liability insurance.

19 (5) Workers’ compensation or similar insurance.

20 (6) Automobile medical payment insurance.

21 (7) Coverage for a specified disease or illness.

22 (8) Hospital or fixed indemnity insurance.

23 (9) Short-term limited duration insurance.

24 (10) Credit-only, dental-only, or vision-only in25 surance.
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•S 1722 IS

1 (11) A health insurance policy providing bene2 fits only for long-term care, nursing home care,

3 home health care, community-based care, or any

4 combination thereof.

5 CHAPTER 3—COBRA CLARIFICATIONS

6 SEC. 631. COBRA CLARIFICATIONS.

7 (a) PUBLIC HEALTH SERVICE ACT.—

8 (1) PERIOD OF COVERAGE.—Section 2202(2) of

9 the Public Health Service Act (42 U.S.C. 300bb10 2(2)) is amended—

11 (A) in subparagraph (A)—

12 (i) by transferring the sentence imme13 diately preceding clause (iv) so as to ap14 pear immediately following such clause

15 (iv); and

16 (ii) in the last sentence (as so trans17 ferred)—

18 (I) by inserting ‘‘, or a bene19 ficiary-family member of the individ20 ual,’’ after ‘‘an individual’’; and

21 (II) by striking ‘‘at the time of a

22 qualifying event described in section

23 2203(2)’’ and inserting ‘‘at any time

24 during the initial 18-month period of

25 continuing coverage under this title’’;
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•S 1722 IS

1 (B) in subparagraph (D)(i), by inserting

2 before ‘‘, or’’ the following: ‘‘, except that the

3 exclusion or limitation contained in this clause

4 shall not be considered to apply to a plan under

5 which a preexisting condition or exclusion does

6 not apply to an individual otherwise eligible for

7 continuation coverage under this section be8 cause of the provision of the Health Insurance

9 Reform Act of 1996’’; and

10 (C) in subparagraph (E), by striking ‘‘at

11 the time of a qualifying event described in sec12 tion 2203(2)’’ and inserting ‘‘at any time dur13 ing the initial 18-month period of continuing

14 coverage under this title’’.

15 (2) ELECTION.—Section 2205(1)(C) of the

16 Public Health Service Act (42 U.S.C. 300bb17 5(1)(C)) is amended—

18 (A) in clause (i), by striking ‘‘or’’ at the

19 end thereof;

20 (B) in clause (ii), by striking the period

21 and inserting ‘‘, or’’; and

22 (C) by adding at the end thereof the fol23 lowing new clause:

24 ‘‘(iii) in the case of an individual de25 scribed in the last sentence of section
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•S 1722 IS

1 2202(2)(A), or a beneficiary-family mem2 ber of the individual, the date such individ3 ual is determined to have been disabled.’’.

4 (3) NOTICES.—Section 2206(3) of the Public

5 Health Service Act (42 U.S.C. 300bb-6(3)) is

6 amended by striking ‘‘at the time of a qualifying

7 event described in section 2203(2)’’ and inserting

8 ‘‘at any time during the initial 18-month period of

9 continuing coverage under this title’’.

10 (4) BIRTH OR ADOPTION OF A CHILD.—Section

11 2208(3)(A) of the Public Health Service Act (42

12 U.S.C. 300bb-8(3)(A)) is amended by adding at the

13 end thereof the following new flush sentence:

14 ‘‘Such term shall also include a child who is born to

15 or placed for adoption with the covered employee

16 during the period of continued coverage under this

17 title.’’.

18 (b) EMPLOYEE RETIREMENT INCOME SECURITY ACT

19 OF 1974.—

20 (1) PERIOD OF COVERAGE.—Section 602(2) of

21 the Employee Retirement Income Security Act of

22 1974 (29 U.S.C. 1162(2)) is amended—

23 (A) in the last sentence of subparagraph

24 (A)—
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•S 1722 IS

1 (i) by inserting ‘‘, or a beneficiary2 family member of the individual,’’ after

3 ‘‘an individual’’; and

4 (ii) by striking ‘‘at the time of a

5 qualifying event described in section

6 603(2)’’ and inserting ‘‘at any time during

7 the initial 18-month period of continuing

8 coverage under this part’’;

9 (B) in subparagraph (D)(i), by inserting

10 before ‘‘, or’’ the following: ‘‘, except that the

11 exclusion or limitation contained in this clause

12 shall not be considered to apply to a plan under

13 which a preexisting condition or exclusion does

14 not apply to an individual otherwise eligible for

15 continuation coverage under this section be16 cause of the provision of the Health Insurance

17 Reform Act of 1996’’; and

18 (C) in subparagraph (E), by striking ‘‘at

19 the time of a qualifying event described in sec20 tion 603(2)’’ and inserting ‘‘at any time during

21 the initial 18-month period of continuing cov22 erage under this part’’.

23 (2) ELECTION.—Section 605(1)(C) of the Em24 ployee Retirement Income Security Act of 1974 (29

25 U.S.C. 1165(1)(C)) is amended—
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•S 1722 IS

1 (A) in clause (i), by striking ‘‘or’’ at the

2 end thereof;

3 (B) in clause (ii), by striking the period

4 and inserting ‘‘, or’’; and

5 (C) by adding at the end thereof the fol6 lowing new clause:

7 ‘‘(iii) in the case of an individual de8 scribed in the last sentence of section

9 602(2)(A), or a beneficiary-family member

10 of the individual, the date such individual

11 is determined to have been disabled.’’.

12 (3) NOTICES.—Section 606(3) of the Employee

13 Retirement Income Security Act of 1974 (29 U.S.C.

14 1166(3)) is amended by striking ‘‘at the time of a

15 qualifying event described in section 603(2)’’ and in16 serting ‘‘at any time during the initial 18-month pe17 riod of continuing coverage under this part’’.

18 (4) BIRTH OR ADOPTION OF A CHILD.—Section

19 607(3)(A) of the Employee Retirement Income Secu20 rity Act of 1974 (29 U.S.C. 1167(3)) is amended by

21 adding at the end thereof the following new flush

22 sentence:

23 ‘‘Such term shall also include a child who is born to

24 or placed for adoption with the covered employee
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•S 1722 IS

1 during the period of continued coverage under this

2 part.’’.

3 (c) INTERNAL REVENUE CODE OF 1986.—

4 (1) PERIOD OF COVERAGE.—Section

5 4980B(f)(2)(B) of the Internal Revenue Code of

6 1986 is amended—

7 (A) in the last sentence of clause (i) by

8 striking ‘‘at the time of a qualifying event de9 scribed in paragraph (3)(B)’’ and inserting ‘‘at

10 any time during the initial 18-month period of

11 continuing coverage under this section’’;

12 (B) in clause (iv)(I), by inserting before ‘‘,

13 or’’ the following: ‘‘, except that the exclusion

14 or limitation contained in this subclause shall

15 not be considered to apply to a plan under

16 which a preexisting condition or exclusion does

17 not apply to an individual otherwise eligible for

18 continuation coverage under this subsection be19 cause of the provision of the Health Insurance

20 Reform Act of 1996’’; and

21 (C) in clause (v), by striking ‘‘at the time

22 of a qualifying event described in paragraph

23 (3)(B)’’ and inserting ‘‘at any time during the

24 initial 18-month period of continuing coverage

25 under this section’’.
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1 (2) ELECTION.—Section 4980B(f)(5)(A)(iii) of

2 the Internal Revenue Code of 1986 is amended—

3 (A) in subclause (I), by striking ‘‘or’’ at

4 the end thereof;

5 (B) in subclause (II), by striking the pe6 riod and inserting ‘‘, or’’; and

7 (C) by adding at the end thereof the fol8 lowing new subclause:

9 ‘‘(III) in the case of an qualified

10 beneficiary described in the last sen11 tence of paragraph (2)(B)(i), the date

12 such individual is determined to have

13 been disabled.’’.

14 (3) NOTICES.—Section 4980B(f)(6)(C) of the

15 Internal Revenue Code of 1986 is amended by strik16 ing ‘‘at the time of a qualifying event described in

17 paragraph (3)(B)’’ and inserting ‘‘at any time dur18 ing the initial 18-month period of continuing cov19 erage under this section’’.

20 (4) BIRTH OR ADOPTION OF A CHILD.—Section

21 4980B(g)(1)(A) of the Internal Revenue Code of

22 1986 is amended by adding at the end thereof the

23 following new flush sentence:

24 ‘‘Such term shall also include a child who is

25 born to or placed for adoption with the covered
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•S 1722 IS

1 employee during the period of continued cov2 erage under this section.’’.

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

4 this section shall apply to qualifying events occurring on

5 or after the date of the enactment of this Act for plan

6 years beginning after December 31, 1996.

7 (e) NOTIFICATION OF CHANGES.—Not later than 60

8 days prior to the date on which this section becomes effec9 tive, each group health plan (covered under title XXII of

10 the Public Health Service Act, part 6 of subtitle B of title

11 I of the Employee Retirement Income Security Act of

12 1974, and section 4980B(f) of the Internal Revenue Code

13 of 1986) shall notify each qualified beneficiary who has

14 elected continuation coverage under such title, part or sec15 tion of the amendments made by this section.

16 CHAPTER 4—PRIVATE HEALTH PLAN

17 PURCHASING COOPERATIVES

18 SEC. 641. PRIVATE HEALTH PLAN PURCHASING COOPERA19 TIVES.

20 (a) DEFINITION.—As used in this title, the term

21 ‘‘health plan purchasing cooperative’’ means a group of

22 individuals or employers that, on a voluntary basis and

23 in accordance with this section, form a cooperative for the

24 purpose of purchasing individual health plans or group

25 health plans offered by health plan issuers. A health plan
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•S 1722 IS

1 issuer, agent, broker or any other individual or entity en2 gaged in the sale of insurance may not underwrite a coop3 erative.

4 (b) CERTIFICATION.—

5 (1) IN GENERAL.—If a group described in sub6 section (a), desires to form a health plan purchasing

7 cooperative in accordance with this section and such

8 group appropriately notifies the State and the Sec9 retary of such desire, the State, upon a determina10 tion that such group meets the requirements of this

11 section, shall certify the group as a health plan pur12 chasing cooperative. The State shall make a deter13 mination of whether such group meets the require14 ments of this section in a timely fashion. Each such

15 cooperative shall also be registered with the Sec16 retary.

17 (2) STATE REFUSAL TO CERTIFY.—If a State

18 fails to implement a program for certifying health

19 plan purchasing cooperatives in accordance with the

20 standards under this title, the Secretary shall certify

21 and oversee the operations of such cooperatives in

22 such State.

23 (3) INTERSTATE COOPERATIVES.—For purposes

24 of this section, a health plan purchasing cooperative

25 operating in more than one State shall be certified
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•S 1722 IS

1 by the State in which the cooperative is domiciled.

2 States may enter into cooperative agreements for the

3 purpose of certifying and overseeing the operation

4 of such cooperatives. For purposes of this sub5 section, a cooperative shall be considered to be domi6 ciled in the State in which most of the members of

7 the cooperative reside.

8 (c) BOARD OF DIRECTORS.—

9 (1) IN GENERAL.—Each health plan purchasing

10 cooperative shall be governed by a Board of Direc11 tors that shall be responsible for ensuring the per12 formance of the duties of the cooperative under this

13 section. The Board shall be composed of a broad

14 cross-section of representatives of employers, em15 ployees, and individuals participating in the coopera16 tive. A health plan issuer, agent, broker or any other

17 individual or entity engaged in the sale of individual

18 health plans or group health plans may not hold or

19 control any right to vote with respect to a coopera20 tive.

21 (2) LIMITATION ON COMPENSATION.—A health

22 plan purchasing cooperative may not provide com23 pensation to members of the Board of Directors.

24 The cooperative may provide reimbursements to

25 such members for the reasonable and necessary ex-
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•S 1722 IS

1 penses incurred by the members in the performance

2 of their duties as members of the Board.

3 (3) CONFLICT OF INTEREST.—No member of

4 the Board of Directors (or family members of such

5 members) nor any management personnel of the co6 operative may be employed by, be a consultant for,

7 be a member of the board of directors of, be affili8 ated with an agent of, or otherwise be a representa9 tive of any health plan issuer, health care provider,

10 or agent or broker. Nothing in the preceding sen11 tence shall limit a member of the Board from pur12 chasing coverage offered through the cooperative.

13 This paragraph shall not apply to any management

14 personnel who is not employed by, or getting any re15 muneration from, a health plan issuer offering a

16 group health or individual health plan, but who, as

17 a result of performing marketing functions as re18 quired under subsection (e)(1)(E), is mandated by

19 State law to be licensed as an agent or broker.

20 (d) MEMBERSHIP AND MARKETING AREA.—

21 (1) MEMBERSHIP.—A health plan purchasing

22 cooperative may establish limits on the maximum

23 size of employers who may become members of the

24 cooperative, and may determine whether to permit

25 individuals to become members. Upon the establish-
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•S 1722 IS

1 ment of such membership requirements, the coopera2 tive shall, except as provided in subparagraph (B),

3 accept all employers (or individuals) residing within

4 the area served by the cooperative who meet such re5 quirements as members on a first come, first-served

6 basis, or on another basis established by the State

7 to ensure equitable access to the cooperative.

8 (2) MARKETING AREA.—A State may establish

9 rules regarding the geographic area that must be

10 served by a health plan purchasing cooperative. With

11 respect to a State that has not established such

12 rules, a health plan purchasing cooperative operating

13 in the State shall define the boundaries of the area

14 to be served by the cooperative, except that such

15 boundaries may not be established on the basis of

16 health status or insurability of the populations that

17 reside in the area.

18 (e) DUTIES AND RESPONSIBILITIES.—

19 (1) IN GENERAL.—A health plan purchasing co20 operative shall—

21 (A) enter into agreements with multiple,

22 unaffiliated health plan issuers, except that the

23 requirement of this subparagraph shall not

24 apply in regions (such as remote or frontier
144

•S 1722 IS

1 areas) in which compliance with such require2 ment is not possible;

3 (B) enter into agreements with employers

4 and individuals who become members of the co5 operative;

6 (C) participate in any program of risk-ad7 justment or reinsurance, or any similar pro8 gram, that is established by the State;

9 (D) prepare and disseminate comparative

10 health plan materials (including information

11 about cost, quality, benefits, and other informa12 tion concerning group health plans and individ13 ual health plans offered through the coopera14 tive);

15 (E) actively market to all eligible employ16 ers and individuals residing within the service

17 area; and

18 (F) act as an ombudsman for group health

19 plan or individual health plan enrollees.

20 (2) PERMISSIBLE ACTIVITIES.—A health plan

21 purchasing cooperative may perform such other

22 functions as necessary to further the purposes of

23 this title, including—

24 (A) collecting and distributing premiums

25 and performing other administrative functions;
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•S 1722 IS

1 (B) collecting and analyzing surveys of en2 rollee satisfaction;

3 (C) charging membership fee to enrollees

4 (such fees may not be based on health status)

5 and charging participation fees to health plan

6 issuers;

7 (D) cooperating with (or accepting as

8 members) employers who provide health bene9 fits directly to participants and beneficiaries

10 only for the purpose of negotiating with provid11 ers; and

12 (E) negotiating with health care providers

13 and health plan issuers.

14 (f) LIMITATIONS ON COOPERATIVE ACTIVITIES.—A

15 health plan purchasing cooperative shall not—

16 (1) perform any activity relating to the licens17 ing of health plan issuers;

18 (2) assume financial risk directly or indirectly

19 on behalf of members of a health plan purchasing

20 cooperative relating to any group health plan or in21 dividual health plan;

22 (3) establish eligibility, continuation of eligi23 bility, enrollment, or premium contribution require24 ments for participants, beneficiaries, or individuals

25 based on health status, medical condition, claims ex-
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•S 1722 IS

1 perience, receipt of health care, medical history, evi2 dence of insurability, genetic information, or disabil3 ity;

4 (4) operate on a for-profit or other basis where

5 the legal structure of the cooperative permits profits

6 to be made and not returned to the members of the

7 cooperative, except that a for-profit health plan pur8 chasing cooperative may be formed by a nonprofit

9 organization or organizations—

10 (A) in which membership in such organiza11 tion is not based on health status, medical con12 dition, claims experience, receipt of health care,

13 medical history, evidence of insurability, genetic

14 information, or disability; and

15 (B) that accepts as members all employers

16 or individuals on a first-come, first-served basis,

17 subject to any established limit on the maxi18 mum size of and employer that may become a

19 member; or

20 (5) perform any other activities that conflict or

21 are inconsistent with the performance of its duties

22 under this title.

23 (g) LIMITED PREEMPTION OF CERTAIN STATE

24 LAWS.—
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•S 1722 IS

1 (1) IN GENERAL.—With respect to a health

2 plan purchasing cooperative that meets the require3 ments of this section, State fictitious group laws

4 shall be preempted.

5 (2) HEALTH PLAN ISSUERS.—

6 (A) RATING.—With respect to a health

7 plan issuer offering a group health plan or indi8 vidual health plan through a health plan pur9 chasing cooperative that meets the requirements

10 of this section, State premium rating require11 ment laws, except to the extent provided under

12 subparagraph (B), shall be preempted unless

13 such laws permit premium rates negotiated by

14 the cooperative to be less than rates that would

15 otherwise be permitted under State law, if such

16 rating differential is not based on differences in

17 health status or demographic factors.

18 (B) EXCEPTION.—State laws referred to in

19 subparagraph (A) shall not be preempted if

20 such laws—

21 (i) prohibit the variance of premium

22 rates among employers, plan sponsors, or

23 individuals that are members of a health

24 plan purchasing cooperative in excess of

25 the amount of such variations that would
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•S 1722 IS

1 be permitted under such State rating laws

2 among employers, plan sponsors, and indi3 viduals that are not members of the coop4 erative; and

5 (ii) prohibit a percentage increase in

6 premium rates for a new rating period that

7 is in excess of that which would be per8 mitted under State rating laws.

9 (C) BENEFITS.—Except as provided in

10 subparagraph (D), a health plan issuer offering

11 a group health plan or individual health plan

12 through a health plan purchasing cooperative

13 shall comply with all State mandated benefit

14 laws that require the offering of any services,

15 category or care, or services of any class or type

16 of provider.

17 (D) EXCEPTION.—In those States that

18 have enacted laws authorizing the issuance of

19 alternative benefit plans to small employers,

20 health plan issuers may offer such alternative

21 benefit plans through a health plan purchasing

22 cooperative that meets the requirements of this

23 section.

24 (h) RULES OF CONSTRUCTION.—Nothing in this sec25 tion shall be construed to—
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•S 1722 IS

1 (1) require that a State organize, operate, or

2 otherwise create health plan purchasing cooperatives;

3 (2) otherwise require the establishment of

4 health plan purchasing cooperatives;

5 (3) require individuals, plan sponsors, or em6 ployers to purchase group health plans or individual

7 health plans through a health plan purchasing coop8 erative;

9 (4) require that a health plan purchasing coop10 erative be the only type of purchasing arrangement

11 permitted to operate in a State;

12 (5) confer authority upon a State that the State

13 would not otherwise have to regulate health plan is14 suers or employee health benefits plans; or

15 (6) confer authority upon a State (or the Fed16 eral Government) that the State (or Federal Govern17 ment) would not otherwise have to regulate group

18 purchasing arrangements, coalitions, association

19 plans, or other similar entities that do not desire to

20 become a health plan purchasing cooperative in ac21 cordance with this section.

22 (i) APPLICATION OF ERISA.—For purposes of en23 forcement only, the requirements of parts 4 and 5 of sub24 title B of title I of the Employee Retirement Income Secu25 rity Act of 1974 (29 U.S.C. 1101) shall apply to a health
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•S 1722 IS

1 plan purchasing cooperative as if such plan were an em2 ployee welfare benefit plan.

3 Subtitle B—Application and

4 Enforcement of Standards

5 SEC. 651. APPLICABILITY.

6 (a) CONSTRUCTION.—

7 (1) ENFORCEMENT.—

8 (A) IN GENERAL.—A requirement or

9 standard imposed under this title on a group

10 health plan or individual health plan offered by

11 a health plan issuer shall be deemed to be a re12 quirement or standard imposed on the health

13 plan issuer. Such requirements or standards

14 shall be enforced by the State insurance com15 missioner for the State involved or the official

16 or officials designated by the State to enforce

17 the requirements of this title. In the case of a

18 group health plan offered by a health plan is19 suer in connection with an employee health ben20 efit plan, the requirements or standards im21 posed under this title shall be enforced with re22 spect to the health plan issuer by the State in23 surance commissioner for the State involved or

24 the official or officials designated by the State

25 to enforce the requirements of this title.
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1 (B) LIMITATION.—Except as provided in

2 subsection (c), the Secretary shall not enforce

3 the requirements or standards of this title as

4 they relate to health plan issuers, group health

5 plans, or individual health plans. In no case

6 shall a State enforce the requirements or stand7 ards of this title as they relate to employee

8 health benefit plans.

9 (2) PREEMPTION OF STATE LAW.—Nothing in

10 this title shall be construed to prevent a State from

11 establishing, implementing, or continuing in effect

12 standards and requirements—

13 (A) not prescribed in this title; or

14 (B) related to the issuance, renewal, or

15 portability of health insurance or the establish16 ment or operation of group purchasing arrange17 ments, that are consistent with, and are not in

18 direct conflict with, this title and provide great19 er protection or benefit to participants, bene20 ficiaries or individuals.

21 (b) RULE OF CONSTRUCTION.—Nothing in this title

22 shall be construed to affect or modify the provisions of

23 section 514 of the Employee Retirement Income Security

24 Act of 1974 (29 U.S.C. 1144).
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•S 1722 IS

1 (c) CONTINUATION.—Nothing in this title shall be

2 construed as requiring a group health plan or an employee

3 health benefit plan to provide benefits to a particular par4 ticipant or beneficiary in excess of those provided under

5 the terms of such plan.

6 SEC. 652. ENFORCEMENT OF STANDARDS.

7 (a) HEALTH PLAN ISSUERS.—Each State shall re8 quire that each group health plan and individual health

9 plan issued, sold, renewed, offered for sale or operated in

10 such State by a health plan issuer meet the standards es11 tablished under this title pursuant to an enforcement plan

12 filed by the State with the Secretary. A State shall submit

13 such information as required by the Secretary demonstrat14 ing effective implementation of the State enforcement

15 plan.

16 (b) EMPLOYEE HEALTH BENEFIT PLANS.—With re17 spect to employee health benefit plans, the Secretary shall

18 enforce the reform standards established under this title

19 in the same manner as provided for under sections 502,

20 504, 506, and 510 of the Employee Retirement Income

21 Security Act of 1974 (29 U.S.C. 1132, 1134, 1136, and

22 1140). The civil penalties contained in paragraphs (1) and

23 (2) of section 502(c) of such Act (29 U.S.C. 1132(c)(1)

24 and (2)) shall apply to any information required by the

25 Secretary to be disclosed and reported under this section.
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•S 1722 IS

1 (c) FAILURE TO IMPLEMENT PLAN.—In the case of

2 the failure of a State to substantially enforce the stand3 ards and requirements set forth in this title with respect

4 to group health plans and individual health plans as pro5 vided for under the State enforcement plan filed under

6 subsection (a), the Secretary, in consultation with the Sec7 retary of Health and Human Services, shall implement an

8 enforcement plan meeting the standards of this title in

9 such State. In the case of a State that fails to substan10 tially enforce the standards and requirements set forth in

11 this title, each health plan issuer operating in such State

12 shall be subject to civil enforcement as provided for under

13 sections 502, 504, 506, and 510 of the Employee Retire14 ment Income Security Act of 1974 (29 U.S.C. 1132, 1134,

15 1136, and 1140). The civil penalties contained in para16 graphs (1) and (2) of section 502(c) of such Act (29

17 U.S.C. 1132(c)(1) and (2)) shall apply to any information

18 required by the Secretary to be disclosed and reported

19 under this section.

20 (d) APPLICABLE CERTIFYING AUTHORITY.—As used

21 in this subtitle, the term ‘‘applicable certifying authority’’

22 means, with respect to—

23 (1) health plan issuers, the State insurance

24 commissioner or official or officials designated by
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•S 1722 IS

1 the State to enforce the requirements of this title for

2 the State involved; and

3 (2) an employee health benefit plan, the Sec4 retary.

5 (e) REGULATIONS.—The Secretary may promulgate

6 such regulations as may be necessary or appropriate to

7 carry out this title.

8 (f) TECHNICAL AMENDMENT.—Section 508 of the

9 Employee Retirement Income Security Act of 1974 (29

10 U.S.C. 1138) is amended by inserting ‘‘and under the

11 Health Insurance Reform Act of 1996’’ before the period.

12 Subtitle C—Miscellaneous

13 Provisions

14 SEC. 661. HMOS ALLOWED TO OFFER PLANS WITH

15 DEDUCTIBLES TO INDIVIDUALS WITH MEDI16 CAL SAVINGS ACCOUNTS.

17 (a) IN GENERAL.—Section 1301(b) of the Public

18 Health Service Act (42 U.S.C. 300e(b)) is amended by

19 adding at the end the following new paragraph:

20 ‘‘(6)(A) If a member certifies that a medical

21 savings account has been established for the benefit

22 of such member, a health maintenance organization

23 may, at the request of such member reduce the basic

24 health services payment otherwise determined under
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•S 1722 IS

1 paragraph (1) by requiring the payment of a deduct2 ible by the member for basic health services.

3 ‘‘(B) For purposes of this paragraph, the term

4 ‘medical savings account’ means an account which,

5 by its terms, allows the deposit of funds and the use

6 of such funds and income derived from the invest7 ment of such funds for the payment of the deduct8 ible described in subparagraph (A).’’.

9 (b) MEDICAL SAVINGS ACCOUNTS.—It is the sense

10 of the Committee on Labor and Human Resources of the

11 Senate that the establishment of medical savings accounts,

12 including those defined in section 1301(b)(6)(B) of the

13 Public Health Service Act (42 U.S.C. 300e(b)(6)(B)),

14 should be encouraged as part of any health insurance re15 form legislation passed by the Senate through the use of

16 tax incentives relating to contributions to, the income

17 growth of, and the qualified use of, such accounts.

18 (c) SENSE OF THE SENATE.—It is the sense of the

19 Senate that the Congress should take measures to further

20 the purposes of this title, including any necessary changes

21 to the Internal Revenue Code of 1986 to encourage groups

22 and individuals to obtain health coverage, and to promote

23 access, equity, portability, affordability, and security of

24 health benefits.
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•S 1722 IS

1 SEC. 662. RULES GOVERNING LITIGATION INVOLVING RE2 TIREE HEALTH BENEFITS.

3 (a) IN GENERAL.—Part 5 of subtitle B of title I of

4 the Employee Retirement Income Security Act of 1974

5 (29 U.S.C. 1131 et seq.) is amended by adding at the end

6 the following new section:

7 ‘‘SEC. 516. RULES GOVERNING LITIGATION INVOLVING RE8 TIREE HEALTH BENEFITS.

9 ‘‘(a) MAINTENANCE OF BENEFITS.—

10 ‘‘(1) IN GENERAL.—If—

11 ‘‘(A) retiree health benefits or plan or plan

12 sponsor payments in connection with such bene13 fits are to be or have been terminated or re14 duced under an employee welfare benefit plan;

15 and

16 ‘‘(B) an action is brought by any partici17 pant or beneficiary to enjoin or otherwise mod18 ify such termination or reduction,

19 the court without requirement of any additional

20 showing shall promptly order the plan and plan

21 sponsor to maintain the retiree health benefits and

22 payments at the level in effect immediately before

23 the termination or reduction while the action is

24 pending in any court. No security or other undertak25 ing shall be required of any participant or bene26 ficiary as a condition for issuance of such relief. An
157

•S 1722 IS

1 order requiring such maintenance of benefits may be

2 refused or dissolved only upon determination by the

3 court, on the basis of clear and convincing evidence,

4 that the action is clearly without merit.

5 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not

6 apply to any action if—

7 ‘‘(A) the termination or reduction of re8 tiree health benefits is substantially similar to

9 a termination or reduction in health benefits (if

10 any) provided to current employees which oc11 curs either before, or at or about the same time

12 as, the termination or reduction of retiree

13 health benefits, or

14 ‘‘(B) the changes in benefits are in connec15 tion with the addition, expansion, or clarifica16 tion of the delivery system, including utilization

17 review requirements and restrictions, require18 ments that goods or services be obtained

19 through managed care entities or specified pro20 viders or categories of providers, or other spe21 cial major case management restrictions.

22 ‘‘(3) MODIFICATIONS.—Nothing in this section

23 shall preclude a court from modifying the obligation

24 of a plan or plan sponsor to the extent retiree bene25 fits are otherwise being paid by the plan sponsor.
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•S 1722 IS

1 ‘‘(b) BURDEN OF PROOF.—In addition to the relief

2 authorized in subsection (a) or otherwise available, if, in

3 any action to which subsection (a)(1) applies, the terms

4 of the employee welfare benefit plan summary plan de5 scription or, in the absence of such description, other ma6 terials distributed to employees at the time of a partici7 pant’s retirement or disability, are silent or are ambigu8 ous, either on their face or after consideration of extrinsic

9 evidence, as to whether retiree health benefits and pay10 ments may be terminated or reduced for a participant and

11 his or her beneficiaries after the participant’s retirement

12 or disability, then the benefits and payments shall not be

13 terminated or reduced for the participant and his or her

14 beneficiaries unless the plan or plan sponsor establishes

15 by a preponderance of the evidence that the summary plan

16 description or other materials about retiree benefits—

17 ‘‘(1) were distributed to the participant at least

18 90 days in advance of retirement or disability;

19 ‘‘(2) did not promise retiree health benefits for

20 the lifetime of the participant and his or her spouse;

21 and

22 ‘‘(3) clearly and specifically disclosed that the

23 plan allowed such termination or reduction as to the

24 participant after the time of his or her retirement or

25 disability.
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•S 1722 IS

1 The disclosure described in paragraph (3) must have been

2 made prominently and in language which can be under3 stood by the average plan participant.

4 ‘‘(c) REPRESENTATION.—Notwithstanding any other

5 provision of law, an employee representative of any retired

6 employee or the employee’s spouse or dependents may—

7 ‘‘(1) bring an action described in this section on

8 behalf of such employee, spouse, or dependents; or

9 ‘‘(2) appear in such an action on behalf of such

10 employee, spouse or dependents.

11 ‘‘(d) RETIREE HEALTH BENEFITS.—For the pur12 poses of this section, the term ‘retiree health benefits’

13 means health benefits (including coverage) which are pro14 vided to—

15 ‘‘(1) retired or disabled employees who, imme16 diately before the termination or reduction, have a

17 reasonable expectation to receive such benefits upon

18 retirement or becoming disabled; and

19 ‘‘(2) their spouses or dependents.’’

20 (b) CONFORMING AMENDMENT.—The table of con21 tents in section 1 of such Act is amended by inserting

22 after the item relating to section 515 the following new

23 item:

‘‘Sec. 516. Rules governing litigation involving retiree health benefits.’’

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

25 this section shall apply to actions relating to terminations
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1 or reductions of retiree health benefits which are pending

2 or brought, on or after March 23, 1995.

3 SEC. 663. HEALTH COVERAGE AVAILABILITY STUDY.

4 (a) IN GENERAL.—The Secretary of Health and

5 Human Services, in consultation with the Secretary, rep6 resentatives of State officials, consumers, and other rep7 resentatives of individuals and entities that have expertise

8 in health insurance and employee benefits, shall conduct

9 a two-part study, and prepare and submit reports, in ac10 cordance with this section.

11 (b) EVALUATION OF AVAILABILITY.—Not later than

12 January 1, 1997, the Secretary of Health and Human

13 Services shall prepare and submit to the appropriate com14 mittees of Congress a report, concerning—

15 (1) an evaluation, based on the experience of

16 States, expert opinions, and such additional data as

17 may be available, of the various mechanisms used to

18 ensure the availability of reasonably priced health

19 coverage to employers purchasing group coverage

20 and to individuals purchasing coverage on a non21 group basis; and

22 (2) whether standards that limit the variation

23 in premiums will further the purposes of this title.

24 (c) EVALUATION OF EFFECTIVENESS.—Not later

25 than January 1, 1998, the Secretary of Health and
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1 Human Services shall prepare and submit to the appro2 priate committees of Congress a report, concerning the ef3 fectiveness of the provisions of this title and the various

4 State laws, in ensuring the availability of reasonably

5 priced health coverage to employers purchasing group cov6 erage and individuals purchasing coverage on a non-group

7 basis.

8 SEC. 664. SENSE OF THE COMMITTEE CONCERNING MEDI9 CARE.

10 (a) FINDINGS.—The Committee on Labor and

11 Human Resources of the Senate finds that the Public

12 Trustees of Medicare concluded in their 1995 Annual Re13 port that—

14 (1) the Medicare program is clearly

15 unsustainable in its present form;

16 (2) ‘‘the Hospital Insurance Trust Fund, which

17 pays inpatient hospital expenses, will be able to pay

18 benefits for only about 7 years and is severely out

19 of financial balance in the long range’’; and

20 (3) the Public Trustees ‘‘strongly recommend

21 that the crisis presented by the financial condition of

22 the Medicare trust fund be urgently addressed on a

23 comprehensive basis, including a review of the

24 programs’s financing methods, benefit provisions,

25 and delivery mechanisms’’.
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1 (b) SENSE OF THE COMMITTEE.—It is the Sense of

2 the Committee on Labor and Human Resources of the

3 Senate that the Senate should take measures necessary

4 to reform the Medicare program, to provide increased

5 choice for seniors, and to respond to the findings of the

6 Public Trustees by protecting the short-term solvency and

7 long-term sustainability of the Medicare program.

8 SEC. 665. PARITY FOR MENTAL HEALTH SERVICES.

9 (a) PROHIBITION.—An employee health benefit plan,

10 or a health plan issuer offering a group health plan or

11 an individual health plan, shall not impose treatment limi12 tations or financial requirements on the coverage of men13 tal health services if similar limitations or requirements

14 are not imposed on coverage for services for other condi15 tions.

16 (b) RULE OF CONSTRUCTION.—Nothing in sub17 section (a) shall be construed as prohibiting an employee

18 health benefit plan, or a health plan issuer offering a

19 group health plan or an individual health plan, from re20 quiring preadmission screening prior to the authorization

21 of services covered under the plan or from applying other

22 limitations that restrict coverage for mental health serv23 ices to those services that are medically necessary.
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1 SEC. 666. EFFECTIVE DATE.

2 Except as otherwise provided for in this title, the pro3 visions of this title shall apply as follows:

4 (1) With respect to group health plans and in5 dividual health plans, such provisions shall apply to

6 plans offered, sold, issued, renewed, in effect, or op7 erated on or after January 1, 1997.

8 (2) With respect to employee health benefit

9 plans, on the first day of the first plan year begin10 ning on or after January 1, 1997.

11 SEC. 667. SEVERABILITY.

12 If any provision of this title or the application of such

13 provision to any person or circumstance is held to be un14 constitutional, the remainder of this title and the applica15 tion of the provisions of such to any person or cir16 cumstance shall not be affected thereby.

17 TITLE VII—PENSIONS

18 SEC. 701. SENSE OF THE SENATE.

19 It is the sense of the Senate that—

20 (1) the tax on reversion of qualified pension

21 plan assets to employers should not be repealed or

22 modified; and

23 (2) the provisions allowing transfer of excess

24 pension assets to retiree health accounts should not

25 be expanded.
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1 TITLE VIII—NORTH AMERICAN

2 TRADE FAIRNESS ACT

3 SEC. 801. SHORT TITLE.

4 This title may be cited as the ‘‘North American Trade

5 Fairness Act’’.

6 SEC. 802. CONDITIONS FOR CONTINUED PARTICIPATION IN

7 THE NAFTA.

8 (a) IN GENERAL.—

9 (1) WITHDRAWAL OF APPROVAL.—Notwith10 standing any other provision of law, unless each of

11 the conditions described in paragraph (2) is met—

12 (A) the approval of the NAFTA by the

13 Congress provided for in section 101(a) of the

14 North American Free Trade Agreement Imple15 mentation Act shall cease to be effective on Oc16 tober 1, 1998, and

17 (B) not later than March 31, 1998, the

18 President shall provide written notice of with19 drawal to the Governments of Canada and Mex20 ico in accordance with Article 2205 of the

21 NAFTA.

22 (2) CONDITIONS FOR CONTINUING PARTICIPA23 TION IN NAFTA.—The conditions described in this

24 paragraph are that before December 31, 1997—

25 (A) the President—
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1 (i) renegotiate the terms of the

2 NAFTA in accordance with paragraphs

3 (1), (2), (3), and (4) of subsection (b), and

4 (ii) provide the certification to the

5 Congress described in subsection (b)(9),

6 (B) the Secretary of Labor provide the cer7 tification described in subsection (b)(5),

8 (C) the Secretary of Commerce provide the

9 certification described in subsection (b)(6),

10 (D) the Secretary of Agriculture and the

11 Administrator of the Food and Drug Adminis12 tration provide the certification described in

13 paragraphs (7)(A) and (8) of subsection (b),

14 and

15 (E) the Administrator of the Environ16 mental Protection Agency submit the certifi17 cation and report described in subsection

18 (b)(7)(B).

19 (b) AREAS OF RENEGOTIATION AND CERTIFI20 CATION.—The areas of renegotiation and certification de21 scribed in this subsection are as follows:

22 (1) RENEGOTIATE THE NAFTA TO CORRECT

23 TRADE DEFICITS.—The President is authorized and

24 directed to confer with the Governments of Canada

25 and Mexico and to renegotiate the terms of the
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1 NAFTA to achieve a trade balance among the

2 NAFTA Parties when the United States experiences

3 a significant trade deficit with another Party.

4 (2) RENEGOTIATE THE NAFTA TO CORRECT

5 CURRENCY DISTORTIONS.—The President is author6 ized and directed to confer with the Governments of

7 Canada and Mexico and to renegotiate the terms of

8 the NAFTA to mitigate the adverse effects of rapid

9 or substantial changes in exchange rates between the

10 United States dollar and the currency of another

11 NAFTA Party.

12 (3) RENEGOTIATE THE NAFTA TO CORRECT AG13 RICULTURAL DISTORTIONS.—The President is au14 thorized and directed to confer with the Govern15 ments of Canada and Mexico and to renegotiate the

16 terms of the NAFTA to prevent imports of agricul17 tural commodities from any NAFTA Party from un18 fairly displacing production from small- and mod19 erate-sized farm operations in the United States or

20 from significantly and negatively affecting the secu21 rity of the food supply in the United States.

22 (4) RENEGOTIATE THE NAFTA TO RAISE

23 LABOR, HEALTH, AND ENVIRONMENTAL STAND24 ARDS.—The President is authorized and directed to

25 renegotiate the NAFTA to ensure that improve-
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1 ments are made in labor, health, and environmental

2 standards in all the NAFTA Parties and to require,

3 as a condition for continuing the trade privileges of

4 the NAFTA, that each NAFTA Party effectively en5 force its domestic labor, health, and environmental

6 laws and regulations.

7 (5) CERTIFICATION OF GAINS IN JOBS AND LIV8 ING STANDARDS.—If the Secretary of Labor, after

9 consultation with appropriate government agencies

10 and citizen organizations, determines that—

11 (A) the number of jobs lost because of im12 ports of manufactured goods from other

13 NAFTA Parties does not significantly exceed

14 the number of jobs resulting from increased ex15 ports of United States manufactured goods to

16 other NAFTA Parties since January 1, 1994,

17 (B) the purchasing power of wage-earners

18 in the United States, measured by real hourly

19 wage levels, has not been significantly and neg20 atively affected by the NAFTA since January

21 1, 1994, and

22 (C) enforcement of the labor standards de23 scribed in paragraph (4) has led to new employ24 ment opportunities, improved working condi25 tions and living standards, and enhanced and
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1 protected workers’ rights in the territories of

2 the NAFTA Parties,

3 the Secretary shall so certify to the Congress.

4 (6) CERTIFICATION OF INCREASED DOMESTIC

5 MANUFACTURING.—If the Secretary of Commerce,

6 after consultation with the appropriate government

7 agencies and citizen organizations, determines that

8 the balance between the export of United States

9 manufactured goods to NAFTA Parties and the im10 ports of manufactured goods from NAFTA Parties

11 is not significantly affected in a negative manner,

12 the Secretary shall so certify to the Congress. In

13 making the determination, the Secretary shall not

14 include any goods originating outside the United

15 States that are exported to another NAFTA Party,

16 nor imports from another NAFTA Party that are

17 destined for other countries.

18 (7) CERTIFICATION RELATING TO HEALTH AND

19 ENVIRONMENTAL STANDARDS.—

20 (A) IN GENERAL.—If the Secretary of Ag21 riculture and the Administrator of the Food

22 and Drug Administration, after consultation

23 with appropriate government agencies and citi24 zen organizations, determine, with respect to

25 imports from NAFTA Parties, that since Janu-
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1 ary 1, 1994, there has not been an increased

2 amount of contaminated and adulterated food,

3 food containing additives or pesticide residues

4 exceeding United States standards, or food con5 taining additives or pesticide residues which

6 cannot be legally used in the United States, the

7 Secretary and Administrator shall so certify to

8 the Congress. In making this determination, all

9 foods and food products, including fruits, vege10 tables, grains, oilseeds, and meats, both fresh

11 and processed, shall be reviewed. Special atten12 tion shall be given to foods which have had a

13 history of violations.

14 (B) BORDER AREA POLLUTION.—If the

15 Administrator of the Environmental Protection

16 Agency determines that conditions affecting

17 public health in the United States-Mexico bor18 der zone have not worsened since January 1,

19 1994, the Administrator shall so certify to the

20 Congress. In addition, the Administrator, in

21 consultation with the Secretariat for the

22 NAFTA Commission on Environmental Co23 operation, shall report to the Congress on the

24 outcomes of the Administration’s investigations

25 on pollution and health hazards in and around
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1 the United States-Mexico border zone since the

2 implementation of the NAFTA. The report

3 shall include, but not be limited to—

4 (i) a description and status report of

5 all industrial site cleanup and environ6 mental improvement projects begun in the

7 border zone since January 1, 1994;

8 (ii) information available from local,

9 State, and Federal health agencies reflect10 ing the incidence since January 1, 1990, in

11 and around the border zone of hepatitis,

12 neural stem birth defects, lupus, chronic

13 adolescent diarrhea, tuberculosis, nonneu14 ral birth defects, cholera, botulism, and

15 other disorders commonly related to indus16 trial pollution, inadequate infrastructures,

17 and hazardous waste; and

18 (iii) information on the incidence of

19 air and water pollution, including data re20 ported under the Clean Air Act, the Clean

21 Water Act, and related legislation since

22 January 1, 1990, and the causes, levels,

23 and types of pollution which have occurred.

24 (C) ENVIRONMENTAL STANDARDS.—If the

25 Administrator of the Environmental Protection
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1 Agency determines that enforcement of the

2 health and environmental standards described

3 in paragraph (4) has enhanced the protection of

4 health and the environment in the countries of

5 the NAFTA Parties, the Administrator shall so

6 certify to the Congress.

7 (8) CERTIFICATION RELATING TO FAMILY

8 FARMS AND FOOD SECURITY.—If the Secretary of

9 Agriculture determines that production from small10 and moderate-sized farm operations in the United

11 States has not been unfairly displaced by imports

12 from NAFTA partners and that the security of the

13 food supply of the United States has not been sig14 nificantly and negatively affected by those imports,

15 the Secretary shall so certify to the Congress.

16 (9) CERTIFICATION RELATING TO DEMOCRACY

17 AND HUMAN FREEDOMS.—If the President, after

18 consultation with appropriate government agencies,

19 international organizations, and citizen organiza20 tions, determines that the Governments of the

21 NAFTA Parties protect the basic, internationally

22 recognized human, democratic, and labor rights of

23 their countries’ inhabitants, the President shall so

24 certify to the Congress.
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1 SEC. 803. CONSULTATION WITH CONGRESS.

2 The President shall consult regularly with the Con3 gress regarding the negotiations described in section

4 802(b) (1), (2), (3), and (4). The United States Trade

5 Representative shall consult with the appropriate commit6 tees of Congress in the development of any technical and

7 conforming amendments that may be required to carry out

8 the provisions of this title.

9 SEC. 804. NO EXPANSION OF NAFTA.

10 Until such time as the conditions described in section

11 802(b) are met, it is the sense of the Congress that the

12 President should not engage in negotiations to expand the

13 NAFTA to include other countries and that fast-track au14 thority should not be renewed with respect to the approval

15 of any such expansion of the NAFTA.

16 SEC. 805. DEFINITIONS.

17 As used in this title:

18 (1) NAFTA.—The term ‘‘NAFTA’’ means the

19 North American Free Trade Agreement entered into

20 between the United States, Canada, and Mexico on

21 December 17, 1992.

22 (2) NAFTA PARTY.—The term ‘‘NAFTA

23 Party’’ means the United States, Canada, or Mexico.

24 (3) UNITED STATES-MEXICO BORDER ZONE.—

25 The term ‘‘United States-Mexico border zone’’

26 means the area that comprises the 12-mile zone on
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1 the Mexican side of the United States-Mexico border

2 and the counties within any State of the United

3 States that are contiguous with Mexico.

4 TITLE IX—COMMISSION ON

5 RETIREMENT INCOME POLICY

6 SEC. 901. ESTABLISHMENT.

7 There is established a commission to be known as the

8 Commission on Retirement Income Policy (in this title re9 ferred to as the ‘‘Commission’’).

10 SEC. 902. DUTIES.

11 (a) IN GENERAL.—The Commission shall conduct a

12 full and complete review and study of—

13 (1) trends in retirement savings in the United

14 States;

15 (2) existing Federal incentives and programs

16 that are established to encourage and protect such

17 savings; and

18 (3) new Federal incentives and programs that

19 are needed to encourage and protect such savings.

20 (b) SPECIFIC ISSUES.—In fulfilling the duty de21 scribed in subsection (a), the Commission shall address—

22 (1) the amount and sources of Federal and pri23 vate funds, including tax expenditures (as defined in

24 section 3 of the Congressional Budget Act of 1974

25 (2 U.S.C. 622)), needed to finance the incentives
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1 and programs referred to in subsection (a)(2) and

2 any new Federal incentive or program that the Com3 mission recommends be established;

4 (2) the most efficient and effective manner,

5 considering the needs of retirement plan sponsors

6 for simplicity, reasonable cost, and appropriate in7 centives, of ensuring that individuals in the United

8 States will have adequate retirement savings;

9 (3) the amounts of retirement income that fu10 ture retirees will need to replace various levels of

11 preretirement income, including amounts necessary

12 to pay for medical and long-term care;

13 (4) the workforce and demographic trends that

14 affect the pensions of future retirees;

15 (5) the role of retirement savings in the econ16 omy of the United States;

17 (6) sources of retirement income other than pri18 vate pensions that are available to individuals in the

19 United States; and

20 (7) the shift away from insured and qualified

21 pension benefits in the United States.

22 (c) RECOMMENDATIONS.—

23 (1) IN GENERAL.—The Commission shall for24 mulate recommendations based on the review and

25 study conducted under subsection (a). The rec-
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1 ommendations shall include measures that address

2 the needs of future retirees for—

3 (A) appropriate pension plan coverage and

4 other mechanisms for saving for retirement;

5 (B) an adequate retirement income;

6 (C) preservation of benefits they accumu7 late by participating in pension plans;

8 (D) information concerning pension plan

9 benefits; and

10 (E) procedures to resolve disputes involv11 ing such benefits.

12 (2) EFFECT ON FEDERAL BUDGET DEFICIT.—

13 A recommendation of the Commission for a new

14 Federal incentive or program that would result in an

15 increase in the Federal budget deficit shall not ap16 pear in the report required under section 906 unless

17 it is accompanied by a recommendation for offset18 ting the increase.

19 SEC. 903. MEMBERSHIP.

20 (a) NUMBER AND APPOINTMENT.—

21 (1) IN GENERAL.—The Commission shall be

22 composed of 16 members appointed not later than

23 90 days after the date of the enactment of this Act.

24 The Commission shall consist of the following mem25 bers:
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1 (A) 4 individuals appointed by the Presi2 dent.

3 (B) 3 individuals appointed by the Speaker

4 of the House of Representatives.

5 (C) 3 individuals appointed by the minority

6 leader of the House of Representatives.

7 (D) 3 individuals appointed by the major8 ity leader of the Senate.

9 (E) 3 individuals appointed by the minor10 ity leader of the Senate.

11 (2) QUALIFICATIONS.—The individuals referred

12 to in paragraph (1) shall be Members of the Con13 gress, leaders of business or labor, distinguished aca14 demics, or other individuals with distinctive quali15 fications or experience.

16 (b) TERMS.—Each member shall be appointed for the

17 life of the Commission.

18 (c) VACANCIES.—A vacancy in the Commission shall

19 be filled not later than 90 days after the date of the cre20 ation of the vacancy in the manner in which the original

21 appointment was made.

22 (d) COMPENSATION.—

23 (1) RATES OF PAY.—Except as provided in

24 paragraph (2), members of the Commission shall

25 serve without pay.
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1 (2) TRAVEL EXPENSES.—Each member of the

2 Commission shall receive travel expenses, including

3 per diem in lieu of subsistence, in accordance with

4 sections 5702 and 5703 of title 5, United States

5 Code.

6 (e) QUORUM.—10 members of the Commission shall

7 constitute a quorum, but 6 members may hold hearings,

8 take testimony, or receive evidence.

9 (f) CHAIRPERSON.—The chairperson of the Commis10 sion shall be elected by a majority vote of the members

11 of the Commission.

12 (g) MEETINGS.—The Commission shall meet at the

13 call of the chairperson of the Commission.

14 (h) DECISIONS.—Decisions of the Commission shall

15 be made according to the vote of not less than a majority

16 of the members who are present and voting at a meeting

17 called pursuant to subsection (g).

18 SEC. 904. STAFF AND SUPPORT SERVICES.

19 (a) EXECUTIVE DIRECTOR.—The Commission shall

20 have an executive director appointed by the Commission.

21 The Commission shall fix the pay of the executive director.

22 (b) STAFF.—The Commission may appoint and fix

23 the pay of additional personnel as it considers appropriate.

24 (c) APPLICABILITY OF CERTAIN CIVIL SERVICE

25 LAWS.—The executive director and staff of the Commis-
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1 sion may be appointed without regard to the provisions

2 of title 5, United States Code, governing appointments in

3 the competitive service, and may be paid without regard

4 to the provisions of chapter 51 and subchapter III of chap5 ter 53 of that title relating to classification and General

6 Schedule pay rates.

7 (d) EXPERTS AND CONSULTANTS.—The Commission

8 may procure temporary and intermittent services under

9 section 3109(b) of title 5, United States Code, at rates

10 the Commission determines to be appropriate.

11 (e) STAFF OF FEDERAL AGENCIES.—Upon request

12 of the Commission, the head of any Federal agency may

13 detail, on a reimbursable basis, any of the personnel of

14 the agency to the Commission to assist it in carrying out

15 its duties under this title.

16 (f) ADMINISTRATIVE SUPPORT SERVICES.—Upon the

17 request of the Commission, the Administrator of General

18 Services shall provide to the Commission, on a reimburs19 able basis, the administrative support services necessary

20 for the Commission to carry out its responsibilities under

21 this title.

22 SEC. 905. POWERS.

23 (a) HEARINGS AND SESSIONS.—

24 (1) IN GENERAL.—The Commission may, for

25 the purpose of carrying out this title, hold hearings,
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1 sit and act at times and places, take testimony, and

2 receive evidence as the Commission considers appro3 priate. The Commission may administer oaths or af4 firmations to witnesses appearing before it.

5 (2) PUBLIC HEARINGS.—The Commission shall,

6 to the extent practicable, hold public hearings to re7 ceive the views of a broad spectrum of the public on

8 the status of the private retirement system of the

9 United States.

10 (b) DELEGATION OF AUTHORITY.—Any member,

11 committee, or agent of the Commission may, if authorized

12 by the Commission, take any action which the Commission

13 is authorized to take by this section.

14 (c) INFORMATION.—

15 (1) INFORMATION FROM FEDERAL AGENCIES.—

16 (A) IN GENERAL.—The Commission may

17 secure directly from any Federal agency infor18 mation necessary to enable it to carry out this

19 title. Upon request of the Commission, the head

20 of the Federal agency shall furnish the informa21 tion to the Commission.

22 (B) EXCEPTION.—Subparagraph (A) shall

23 not apply to any information that the Commis24 sion is prohibited to secure or request by an25 other law.
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1 (2) PUBLIC SURVEYS.—The Commission may

2 conduct the public surveys necessary to enable it to

3 carry out this title. In conducting such surveys, the

4 Commission shall not be considered an agency for

5 purposes of chapter 35 of title 44, United States

6 Code.

7 (d) MAILS.—The Commission may use the United

8 States mails in the same manner and under the same con9 ditions as other Federal agencies.

10 (e) CONTRACT AND PROCUREMENT AUTHORITY.—

11 The Commission may make purchases, and may contract

12 with and compensate government and private agencies or

13 persons for property or services, without regard to—

14 (1) section 3709 of the Revised Statutes (41

15 U.S.C. 5); and

16 (2) title III of the Federal Property and Ad17 ministrative Services Act of 1949 (41 U.S.C. 251 et

18 seq.).

19 (f) GIFTS.—The Commission may accept, use, and

20 dispose of gifts of services or property, both real and per21 sonal, for the purpose of assisting the work of the Com22 mission. Gifts of money and proceeds from sales of prop23 erty received as gifts shall be deposited in the Treasury

24 and shall be available for disbursement upon order of the

25 Commission. For purposes of Federal income, estate, and
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1 gift taxes, property accepted under this subsection shall

2 be considered as a gift to the United States.

3 (g) VOLUNTEER SERVICES.—Notwithstanding sec4 tion 1342 of title 31, United States Code, the Commission

5 may accept and use voluntary and uncompensated services

6 as the Commission determines necessary.

7 SEC. 906. REPORT.

8 Not later than December 31, 1997, the Commission

9 shall submit a report to the President, the majority and

10 minority leaders of the Senate, and the majority and mi11 nority leaders of the House of Representatives. The report

12 shall review the matters that the Commission is required

13 to study under section 902 and shall set forth the rec14 ommendations of the Commission.

15 SEC. 907. TERMINATION.

16 The Commission shall terminate not later than the

17 expiration of the 90-day period beginning on the date on

18 which the Commission submits its report under section

19 906.

Æ