103D CONGRESS

1ST SESSION H. R. 2264

AMENDMENT
In the Senate of the United States,

June 25 (legislative day, June 22), 1993.

Resolved, That the bill from the House of Representatives (H.R. 2264) entitled ‘‘An Act to provide for reconciliation pursuant to section 7 of the concurrent resolution on

the budget for fiscal year 1994’’, do pass with the following

AMENDMENT:

Strike out all after the enacting clause and insert:

1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Omnibus Budget Rec3 onciliation Act of 1993’’.

4 SEC. 2. TABLE OF CONTENTS.

5 The table of contents is as follows:
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TITLE I—COMMITTEE ON AGRICULTURE, NUTRITION, AND

FORESTRY

TITLE II—COMMITTEE ON ARMED SERVICES

TITLE III—COMMITTEE ON BANKING, HOUSING, AND URBAN

AFFAIRS

TITLE IV—COMMUNICATIONS AND TRANSPORTATION

TITLE V—COMMITTEE ON ENERGY AND NATURAL RESOURCES

TITLE VI—COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

TITLE VII—FINANCE COMMITTEE RECONCILIATION PROVISIONS

RELATING TO MEDICARE, MEDICAID, AND OTHER PROGRAMS

TITLE VIII—FINANCE COMMITTEE REVENUE PROVISIONS

TITLE IX—COMMITTEE ON FOREIGN RELATIONS

TITLE X—COMMITTEE ON GOVERNMENTAL AFFAIRS

TITLE XI—COMMITTEE ON THE JUDICIARY

TITLE XII—COMMITTEE ON LABOR AND HUMAN RESOURCES

TITLE XIII—VETERANS’ PROGRAMS

TITLE XIV—ENFORCEMENT PROCEDURES

TITLE XV—MISCELLANEOUS PROVISIONS

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

3 FORESTRY

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

5 (a) SHORT TITLE.—This title may be cited as the ‘‘Ag6 ricultural Reconciliation Act of 1993’’.

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

8 title is as follows:

Sec. 1001. Short title and table of contents.

Subtitle A—Commodity Programs

Sec. 1101. Wheat program.

Sec. 1102. Feed grain program.

Sec. 1103. Upland cotton program.

Sec. 1104. Rice program.
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Sec. 1105. Dairy program.

Sec. 1106. Tobacco program.

Sec. 1107. Sugar program.

Sec. 1108. Oilseeds program.

Sec. 1109. Peanut program.

Sec. 1110. Honey program.

Sec. 1111. Wool and mohair program.

Subtitle B—Restructuring of Loan Programs

Sec. 1201. Electric and telephone loan programs.

Subtitle C—Food Stamp Program

Sec. 1301. Uniform reimbursement rates.

Subtitle D—Agricultural Trade

Sec. 1401. Market promotion program.

Sec. 1402. Acreage reduction requirements.

Sec. 1403. End-use certificates.

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

Subtitle E—Miscellaneous

Sec. 1501. Federal crop insurance.

Sec. 1502. Environmental conservation acreage reserve program amendments.

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

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

1 Subtitle A—Commodity Programs

2 SEC. 1101. WHEAT PROGRAM.

3 Section 107B(c)(1)(E) of the Agricultural Act of 1949

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

5 (1) in the subparagraph heading, by striking ‘‘0/

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

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

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

9 1991 through 1993 crops, and 15 percent for each of

10 the 1994 and 1995 crops (except as provided in clause

11 (vii)),’’, and by adding at the end of the subpara12 graph the following new clause:
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1 ‘‘(vii) EXCEPTIONS TO 0/85.—In the

2 case of each of the 1994 and 1995 crops of

3 wheat, producers on a farm shall be eligible

4 to receive deficiency payments as provided

5 in clause (ii) if an acreage limitation pro6 gram under subsection (e) is in effect for the

7 crop and—

8 ‘‘(I)(aa) the producers have been

9 determined by the Secretary (in ac10 cordance with section 503(c)) to be pre11 vented from planting the crop or have

12 incurred a reduced yield for the crop

13 (due to a natural disaster); and

14 ‘‘(bb) the producers elect to devote

15 a portion of the maximum payment

16 acres for wheat (as calculated under

17 subparagraph (C)(ii)) equal to more

18 than 8 percent of the wheat acreage, to

19 conservation uses; or

20 ‘‘(II) the producers elect to devote

21 a portion of the maximum payment

22 acres for wheat (as calculated under

23 subparagraph (C)(ii)) equal to more

24 than 8 percent of the wheat acreage, to
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1 alternative crops as provided in sub2 paragraph (F).’’.

3 SEC. 1102. FEED GRAIN PROGRAM.

4 (a) 0/92 PROGRAM.—Section 105B(c)(1)(E) of the Ag5 ricultural Act of 1949 (7 U.S.C. 1444f(c)(1)(E)) is amend6 ed—

7 (1) in the subparagraph heading, by striking ‘‘0/

8 92 PROGRAM’’ and inserting ‘‘0/85 PROGRAM’’; and

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

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

11 1991 through 1993 crops, and 15 percent for each of

12 the 1994 and 1995 crops (except as provided in clause

13 (vii)),’’, and by adding at the end of the subpara14 graph the following new clause:

15 ‘‘(vii) EXCEPTIONS TO 0/85.—In the

16 case of each of the 1994 and 1995 crops of

17 feed grains, producers on a farm shall be el18 igible to receive deficiency payments as pro19 vided in clause (ii) if an acreage limitation

20 program under subsection (e) is in effect for

21 the crop and—

22 ‘‘(I)(aa) the producers have been

23 determined by the Secretary (in ac24 cordance with section 503(c)) to be pre25 vented from planting the crop or have
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1 incurred a reduced yield for the crop

2 (due to a natural disaster); and

3 ‘‘(bb) the producers elect to devote

4 a portion of the maximum payment

5 acres for feed grains (as calculated

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

7 more than 8 percent of the feed grain

8 acreage, to conservation uses; or

9 ‘‘(II) the producers elect to devote

10 a portion of the maximum payment

11 acres for feed grains (as calculated

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

13 more than 8 percent of the feed grain

14 acreage, to alternative crops as pro15 vided in subparagraph (F).’’.

16 (b) TECHNICAL AMENDMENT.—Section

17 105B(c)(1)(B)(iii)(IV)(bb) of such Act is amended by strik18 ing ‘‘clause (i)(I)’’ and inserting ‘‘clauses (i)(I) and

19 (ii)(I)’’.

20 SEC. 1103. UPLAND COTTON PROGRAM.

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

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

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

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

3 and

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

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

6 1991 through 1993 crops, and 15 percent for each of

7 the 1994 and 1995 crops (except as provided in clause

8 (v)(II)),’’, and in clause (v)—

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

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

13 ‘‘(I) 1991 THROUGH 1993

14 CROPS.—In the case of each of the 1991

15 through 1993 crops of upland cotton,

16 if’’; and

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

18 subclause:

19 ‘‘(II) 1994 AND 1995 CROPS.—In

20 the case of each of the 1994 and 1995

21 crops of upland cotton, producers on a

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

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

2 crop and—

3 ‘‘(aa) the producers have

4 been determined by the Secretary

5 (in accordance with section

6 503(c)) to be prevented from

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

9 crop (due to a natural disaster)

10 and the producers elect to devote a

11 portion of the maximum payment

12 acres for upland cotton (as cal13 culated under subparagraph

14 (C)(ii)) equal to more than 8 per15 cent of the upland cotton acreage,

16 to conservation uses; or

17 ‘‘(bb) the producers elect to

18 devote a portion of the maximum

19 payment acres for upland cotton

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

22 8 percent of the upland cotton

23 acreage, to alternative crops as

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

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

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

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

5 SEC. 1104. RICE PROGRAM.

6 Section 101B(c)(1)(D) of the Agricultural Act of 1949

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

8 (1) in the subparagraph heading, by striking

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

10 and

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

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

13 1991 through 1993 crops, and 15 percent for each of

14 the 1994 and 1995 crops (except as provided in clause

15 (v)(II)),’’, and in clause (v)—

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

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

20 ‘‘(I) 1991 THROUGH 1993

21 CROPS.—In the case of each of the 1991

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

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

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

2 the case of each of the 1994 and 1995

3 crops of rice, producers on a farm shall

4 be eligible to receive deficiency pay5 ments as provided in clause (iii) if an

6 acreage limitation program under sub7 section (e) is in effect for the crop

8 and—

9 ‘‘(aa) the producers have

10 been determined by the Secretary

11 (in accordance with section

12 503(c)) to be prevented from

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

15 crop (due to a natural disaster)

16 and the producers elect to devote a

17 portion of the maximum payment

18 acres for rice (as calculated under

19 subparagraph (C)(ii)) equal to

20 more than 8 percent of the rice

21 acreage, to conservation uses; or

22 ‘‘(bb) the producers elect to

23 devote a portion of the maximum

24 payment acres for rice (as cal25 culated under subparagraph
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1 (C)(ii)) equal to more than 8 per2 cent of the rice acreage, to alter3 native crops as provided in sub4 paragraph (E).’’.

5 SEC. 1105. DAIRY PROGRAM.

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

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

8 (1) in subsection (c)(3)—

9 (A) in the first sentence of subparagraph

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

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

12 (B) by redesignating subparagraph (B) as

13 subparagraph (C); and

14 (C) by inserting after subparagraph (A) the

15 following new subparagraph:

16 ‘‘(B) GUIDELINES.—In the case of pur17 chases of butter and nonfat dry milk that are

18 made by the Secretary under this section on or

19 after the date of enactment of this clause, in allo20 cating the rate of price support between the pur21 chase prices of butter and nonfat dry milk under

22 this paragraph, the Secretary may not—

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

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

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

3 (2) in subsection (h)(2)—

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

6 (B) by striking the period at the end of sub7 paragraph (B) and inserting ‘‘; and’’; and

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

9 subparagraph:

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

11 per hundredweight of milk marketed, which rate

12 shall be adjusted on or before May 1 of calendar

13 year 1996 in the manner provided in subpara14 graph (B).’’.

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

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

17 (1) by redesignating subsection (k) as subsection

18 (l); and

19 (2) by inserting after subsection (j) the following

20 new subsection:

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

22 HORMONE.—

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

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

2 techniques that is intended for use in bovine animals.

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

4 USE.—During the period beginning on the date of en5 actment of this paragraph and ending on September

6 30, 1994, it shall be unlawful for a person to sell,

7 market, or use bovine growth hormone for commercial

8 agricultural purposes.

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

10 after the date of enactment of this paragraph, the Sec11 retary shall issue regulations to provide for the en12 forcement of the prohibition contained in paragraph

13 (2).’’.

14 (c) COMMERCIAL USE OF BOVINE GROWTH HORMONE

15 IN OTHER COUNTRIES.—Section 204(k) of such Act (as

16 added by subsection (b)(2)) is further amended by adding

17 at the end the following new paragraph:

18 ‘‘(4) EXTENSION.—The Secretary shall have the

19 authority to continue the prohibition on the commer20 cial use of bovine growth hormone beyond the period

21 referred to in paragraph (2) until the President cer22 tifies to Congress that other major milk and dairy ex23 porting countries have approved the commercial use

24 of bovine growth hormone.’’.
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1 (d) CONFORMING AMENDMENTS.—Section 204 of such

2 Act is amended—

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

4 and inserting ‘‘1996’’;

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

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

7 ‘‘1996’’; and

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

9 inserting ‘‘1995’’.

10 SEC. 1106. TOBACCO PROGRAM.

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

12 subtitle B of title III of the Agricultural Adjustment Act

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

14 the end the following new section:

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

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

17 cigarettes shall certify to the Secretary, for each calendar

18 year, the percentage of the quantity of tobacco that the man19 ufacturer uses to produce cigarettes during the year that

20 is produced in the United States.

21 ‘‘(b) PENALTIES.—

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

23 cigarettes that has failed, as determined by the Sec24 retary after notice and opportunity for a hearing, to

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

2 the United States, or to comply with subsection (a),

3 shall be subject to the requirements of subsections (c),

4 (d), and (e).

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

6 section, if a manufacturer fails to comply with sub7 section (a), the manufacturer shall be presumed to

8 have used only imported tobacco in the manufacture

9 of cigarettes produced by the manufacturer.

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

11 may require a manufacturer to make such reports

12 and maintain such records as are necessary to carry

13 out this section in accordance with section 373.

14 ‘‘(c) DOMESTIC MARKETING ASSESSMENT.—

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

16 cigarettes described in subsection (b) shall remit to the

17 Commodity Credit Corporation a nonrefundable mar18 keting assessment in accordance with this subsection.

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

20 imposed on a manufacturer under this subsection

21 shall be determined by multiplying—

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

23 imported tobacco used by the manufacturer to

24 produce cigarettes during a preceding calendar

25 year exceeds 25 percent of the quantity of all to-
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1 bacco used by the manufacturer to produce ciga2 rettes during the preceding calendar year; by

3 ‘‘(B) the difference between—

‘‘(i) 1 4 ⁄2 of the sum of—

5 ‘‘(I) the average price per pound

6 received by domestic producers for

7 Burley tobacco during the preceding

8 calendar year; and

9 ‘‘(II) the average price per pound

10 received by domestic producers for

11 Flue-cured tobacco during the preced12 ing calendar year; and

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

14 unmanufactured imported tobacco during

15 the preceding calendar year, as determined

16 by the Secretary.

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

18 under this subsection shall be—

19 ‘‘(A) collected by this Secretary and trans20 mitted to the Commodity Credit Corporation;

21 and

22 ‘‘(B) enforced in the same manner as pro23 vided in section 320B.

24 ‘‘(d) PURCHASE OF BURLEY TOBACCO.—
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1 ‘‘(1) IN GENERAL.—A domestic manufacturer of

2 cigarettes described in subsection (b) shall purchase

3 from the inventories of the producer-owned coopera4 tive marketing associations for Burley tobacco de5 scribed in section 320B(a)(2), at the applicable list

6 price published by the association, the quantity of to7 bacco described in paragraph (2).

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

9 quantity of Burley tobacco required to be purchased

10 by a manufacturer during a calendar year under this

subsection shall equal 1 11 ⁄2 of the quantity of imported

12 tobacco used by the manufacturer to produce ciga13 rettes during the preceding calendar year that exceeds

14 25 percent of the quantity of all tobacco used by the

15 manufacturer to produce cigarettes during the preced16 ing calendar year.

17 ‘‘(3) LIMITATION.—If the total quantity of Bur18 ley tobacco required to be purchased by all manufac19 turers under paragraph (2) would reduce the inven20 tories of the producer-owned cooperative marketing

21 associations for Burley tobacco to less than the reserve

22 stock level for Burley tobacco, the Secretary shall re23 duce the quantity of tobacco required to be purchased

24 by manufacturers under paragraph (2), on a pro rata
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1 basis, to ensure that the inventories will not be less

2 than the reserve stock level for Burley tobacco.

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

4 to purchase from the inventories of the producer5 owned cooperative marketing associations the quan6 tity of Burley tobacco required under this subsection,

7 the manufacturer shall be subject to a penalty of 75

8 percent of the average market price (calculated to the

9 nearest whole cent) for Burley tobacco for the imme10 diately preceding year on the quantity of tobacco as

11 to which the failure occurs.

12 ‘‘(5) PURCHASE REQUIREMENTS.—Tobacco pur13 chased by a manufacturer under this subsection shall

14 not be included in determining the quantity of to15 bacco purchased by the manufacturer under section

16 320B.

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

18 ‘‘(1) IN GENERAL.—A domestic manufacturer of

19 cigarettes described in subsection (b) shall purchase

20 from the inventories of the producer-owned coopera21 tive marketing association for Flue-cured tobacco de22 scribed in section 320B(a)(2), at the applicable list

23 price published by the association, the quantity of to24 bacco described in paragraph (2).
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1 ‘‘(2) QUANTITY.—Subject to paragraph (3), the

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

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

5 imported tobacco used by the manufacturer to produce

6 cigarettes during the preceding calendar year that ex7 ceeds 25 percent of the quantity of all tobacco used by

8 the manufacturer to produce cigarettes during the

9 preceding calendar year.

10 ‘‘(3) LIMITATION.—If the total quantity of Flue11 cured tobacco required to be purchased by all manu12 facturers under paragraph (2) would reduce the in13 ventories of the producer-owned cooperative marketing

14 association for Flue-cured tobacco to less than the re15 serve stock level for Flue-cured tobacco, the Secretary

16 shall reduce the quantity of tobacco required to be

17 purchased by manufacturers under paragraph (2), on

18 a pro rata basis, to ensure that the inventories will

19 not be less than the reserve stock level for Flue-cured

20 tobacco.

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

22 to purchase from the inventories of the producer23 owned cooperative marketing association the quantity

24 of Flue-cured tobacco required under this subsection,

25 the manufacturer shall be subject to a penalty of 75
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1 percent of the average market price (calculated to the

2 nearest whole cent) for Flue-cured tobacco for the im3 mediately preceding year on the quantity of tobacco

4 as to which the failure occurs.

5 ‘‘(5) PURCHASE REQUIREMENTS.—Tobacco pur6 chased by a manufacturer under this subsection shall

7 not be included in determining the quantity of to8 bacco purchased by the manufacturer under section

9 320B.

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

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

12 (b) BUDGET DEFICIT ASSESSMENT.—

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

15 (A) in subsection (g)(1), by striking ‘‘1995’’

16 and inserting ‘‘1998’’; and

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

18 subsection:

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

20 1998 crops of tobacco, an importer of tobacco that is pro21 duced outside the United States shall remit to the Commod22 ity Credit Corporation a nonrefundable marketing assess23 ment in an amount equal to the product obtained by mul24 tiplying—
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1 ‘‘(A) the number of pounds of tobacco that is im2 ported by the importer; by

3 ‘‘(B) the sum of—

4 ‘‘(i) the per pound marketing assessment

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

7 ‘‘(ii) the per pound marketing assessment

8 imposed on purchasers of domestic Flue-cured to9 bacco pursuant to subsection (g).

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

11 be paid by the importer.

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

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

14 the Secretary.

15 ‘‘(B) If the importer fails to comply with subpara16 graph (A), the importer shall be liable for a marketing pen17 alty at a rate equal to 37.5 percent of the sum of the average

18 market price (calculated to the nearest whole cent) of Flue19 cured and Burley tobacco for the immediately preceding

20 year on the quantity of tobacco as to which the failure oc21 curs.

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

23 amount as the Secretary determines equitable in any case

24 in which the Secretary determines that the failure was un-
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1 intentional or without knowledge on the part of the person

2 concerned.

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

5 opportunity for a hearing.

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

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

10 after the penalty is imposed.

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

12 certified copy of the record on which the penalty is based.

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

14 jurisdiction to review and enforce any penalty imposed

15 under this subsection.

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

17 by the Secretary under this subsection shall be deposited

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

19 (2) IMPORTER ASSESSMENTS FOR NO NET COST

20 TOBACCO FUND.—Section 106A of such Act (7 U.S.C.

21 1445–1) is amended—

22 (A) in subsection (c), by inserting ‘‘and im23 porters’’ after ‘‘purchasers’’;

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

2 clause (i); and

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

4 following new clause:

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

6 Burley tobacco shall pay to the appropriate

7 association, for deposit in the Fund of the

8 association, an assessment, in an amount

9 that is equal to the product obtained by

10 multiplying—

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

13 by

14 ‘‘(II) the sum of the amount of

15 per pound producer contributions and

16 purchaser assessments that are payable

17 by domestic producers and purchasers

18 of Flue-cured and Burley tobacco

19 under clauses (i) and (ii); and’’;

20 (C) in subsection (d)(2)—

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

22 purchaser’’;

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

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

2 subparagraph (C); and

3 (iv) by adding at the end the following

4 new subparagraph:

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

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

7 (D) in subsection (h)(1)—

8 (i) by redesignating subparagraphs (B)

9 and (C) as subparagraphs (C) and (D), re10 spectively; and

11 (ii) by inserting after subparagraph

12 (A) the following new subparagraph:

13 ‘‘(B) Each importer who fails to pay to the association

14 an assessment as required by subsection (d)(2) at such time

15 and in such manner as may be prescribed by the Secretary,

16 shall be liable, in addition to any amount due, to a market17 ing penalty at a rate equal to 75 percent of the average

18 market price (calculated to the nearest whole cent) for the

19 respective kind of tobacco for the immediately preceding

20 year on the quantity of tobacco as to which the failure oc21 curs.’’.

22 (3) IMPORTER ASSESSMENTS TO NO NET COST

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

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

4 (B) in subsection (d)(1)—

5 (i) by designating the first and second

6 sentences as subparagraphs (A) and (B), re7 spectively; and

8 (ii) by adding at the end the following

9 new subparagraph:

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

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

12 of Flue-cured and Burley tobacco shall pay to the Corpora13 tion, for deposit in the Account of the association, an assess14 ment, as determined under paragraph (2) and collected

15 under paragraph (3), with respect to purchases of all such

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

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

18 end the following new subparagraph:

19 ‘‘(C) The amount of the assessment to be paid by im20 porters shall be an amount that is equal to the product ob21 tained by multiplying—

22 ‘‘(i) the number of pounds of tobacco that is im23 ported by the importer; by

24 ‘‘(ii) the sum of the amount of per pound pro25 ducer and purchaser assessments that are payable by
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1 domestic producers and purchasers of the respective

2 kind of tobacco under this paragraph.’’;

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

4 end the following new subparagraph:

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

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

8 (E) in subsection (j)(1)—

9 (i) by redesignating subparagraphs (B)

10 and (C) as subparagraphs (C) and (D), re11 spectively; and

12 (ii) by inserting after subparagraph

13 (A) the following new subparagraph:

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

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

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

19 average market price (calculated to the nearest whole cent)

20 for the respective kind of tobacco for the immediately pre21 ceding year on the quantity of tobacco as to which the fail22 ure occurs.’’.

23 (c) FEES FOR INSPECTING IMPORTED TOBACCO.—The

24 second sentence of section 213(d) of the Tobacco Adjustment

25 Act of 1983 (7 U.S.C. 511r(d)) is amended by inserting be-
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1 fore the period at the end the following: ‘‘, and which shall

2 be comparable to fees and charges fixed and collected for

3 services provided in connection with tobacco produced in

4 the United States’’.

5 (d) EXTENSION OF QUOTA REDUCTION FLOORS.—

6 (1) BURLEY TOBACCO.—Section 319(c)(3)(C)(ii)

7 of the Agricultural Adjustment Act of 1938 (7 U.S.C.

8 1314e(c)(3)(C)(ii)) is amended—

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

10 ‘‘1996’’; and

11 (B) by inserting before the period at the end

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

13 of the 1995 and 1996 crops of Burley tobacco, the

14 Secretary may waive the requirements of this

15 clause if the Secretary determines that the re16 quirements would likely result in inventories of

17 the producer-owned cooperative marketing asso18 ciations for Burley tobacco described in section

19 320B(a)(2) to exceed 150 percent of the reserve

20 stock level for Burley tobacco’’.

21 (2) FLUE-CURED TOBACCO.—Section

22 317(a)(1)(C)(ii) of such Act (7 U.S.C.

23 1314c(a)(1)(C)(ii)) is amended—

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

25 ‘‘1996’’; and
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1 (B) by inserting before the period at the end

2 the following: ‘‘, except that, in the case of each

3 of the 1995 and 1996 crops of Flue-cured to4 bacco, the Secretary may waive the requirements

5 of this clause if the Secretary determines that the

6 requirements would likely result in inventories of

7 the producer-owned cooperative marketing asso8 ciation for Flue-cured tobacco described in sec9 tion 320B(a)(2) to exceed 150 percent of the re10 serve stock level for Flue-cured tobacco’’.

11 SEC. 1107. SUGAR PROGRAM.

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

13 U.S.C. 1446g(i)) is amended—

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

15 all that follows through the period and inserting the

16 following: ‘‘equal to—

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

18 of fiscal years 1992 through 1994, .18 cents per

19 pound of raw cane sugar, processed by the proc20 essor from domestically produced sugarcane or

21 sugarcane molasses, that has been marketed (in22 cluding the transfer or delivery of the sugar to

23 a refinery for further processing or marketing);

24 and
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1 ‘‘(B) in the case of marketings during each

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

3 pound of raw cane sugar, processed by the proc4 essor from domestically produced sugarcane or

5 sugarcane molasses, that has been marketed (in6 cluding the transfer or delivery of the sugar to

7 a refinery for further processing or marketing).’’;

8 and

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

10 all that follows through the period and inserting the

11 following: ‘‘equal to—

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

13 of fiscal years 1992 through 1994, .193 cents per

14 pound of beet sugar, processed by the processor

15 from domestically produced sugar beets or sugar

16 beet molasses, that has been marketed; and

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

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

19 pound of beet sugar, processed by the processor

20 from domestically produced sugar beets or sugar

21 beet molasses, that has been marketed.’’.

22 SEC. 1108. OILSEEDS PROGRAM.

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

24 Act of 1949 (7 U.S.C. 1446f(c)) is amended—
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1 (1) in paragraph (1), by inserting after ‘‘$5.02

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

3 through 1993 crops and $4.92 per bushel for each of

4 the 1994 and 1995 crops’’; and

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

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

7 through 1993 crops and $0.087 per pound for each of

8 the 1994 and 1995 crops’’.

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

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

11 month following the month the application for the loan is

12 made.’’ and inserting the following: ‘‘mature—

13 ‘‘(1) in the case of each of the 1991 through 1993

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

15 month the application for the loan is made; and

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

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

18 month the application for the loan is made, except

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

20 of the fiscal year in which the application is made.’’.

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

22 Act is amended by adding at the end the following new

23 paragraph:
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1 ‘‘(3) APPLICABILITY.—This subsection shall

2 apply only to each of the 1991 through 1993 crops of

3 oilseeds.’’.

4 SEC. 1109. PEANUT PROGRAM.

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

6 U.S.C. 1445c–3(g)) is amended—

7 (1) in paragraph (1), by inserting after ‘‘1 per8 cent’’ both places it appears the following: ‘‘for each

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

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

11 (2) in paragraph (2)(A)—

(A) in clause (i), by striking ‘‘1 12 ⁄2 percent’’

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

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

15 the 1994 and 1995 crops,’’; and

(B) in clause (ii), by striking ‘‘1 16 ⁄2 percent’’

17 and inserting ‘‘.5 percent’’.

18 SEC. 1110. HONEY PROGRAM.

19 (a) REDUCED SUPPORT RATE.—Section 207(a) of the

20 Agricultural Act of 1949 (7 U.S.C. 1446h(a)) is amended

21 by striking ‘‘than 53.8 cents per pound.’’ and inserting the

22 following: ‘‘than—

23 ‘‘(1) 53.8 cents per pound for each of the 1991

24 through 1993 crops; and
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1 ‘‘(2) 47 cents per pound for each of the 1994

2 through 1997 crops.’’.

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

4 Act is amended—

5 (1) by striking ‘‘and’’ at the end of subpara6 graph (C); and

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

8 the following new subparagraphs:

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

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

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

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

13 (c) CONFORMING AMENDMENTS.—Section 207 of such

14 Act (as amended by subsection (b)) is further amended by

15 striking ‘‘1995’’ each place it appears (other than in sub16 section (e)(1)(E)) and inserting ‘‘1997’’.

17 SEC. 1111. WOOL AND MOHAIR PROGRAM.

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

19 National Wool Act of 1954 (7 U.S.C. 1783(b)(1)) is amend20 ed—

21 (1) by striking ‘‘and’’ at the end of subpara22 graph (C); and

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

24 the following new subparagraphs:

25 ‘‘(D) $125,000 for the 1994 marketing year;
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1 ‘‘(E) $100,000 for the 1995 marketing year;

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

3 and

4 ‘‘(G) $50,000 for the 1997 marketing year.’’.

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

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

7 amended to read as follows:

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

9 marketing years, the support price for shorn wool shall not

10 exceed the support price for shorn wool for the 1993 market11 ing year.’’.

12 (c) MARKETING ASSESSMENT.—Section 704(c) of such

13 Act (7 U.S.C. 1783(c)) is amended by striking ‘‘through

14 1995’’ and inserting ‘‘and 1992’’.

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

16 (7 U.S.C. 1785) is amended by inserting after the second

17 sentence the following new sentence: ‘‘In determining the net

18 sales proceeds and national payment rates for shorn wool

19 and shorn mohair, the Secretary shall not deduct marketing

20 charges for commissions, coring, or grading.’’.

21 (e) TECHNICAL AND CONFORMING AMENDMENTS.—

22 (1) TECHNICAL AMENDMENT.—Section 703(b)(2)

23 of such Act (7 U.S.C. 1782(b)(2)) is amended by

24 striking ‘‘1982’’ and inserting ‘‘1990’’.
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1 (2) CONFORMING AMENDMENTS.—Section 703 of

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

3 ‘‘1995’’ both places it appears in subsections (a) and

4 (b) and inserting ‘‘1997’’.

5 Subtitle B—Restructuring of Loan

6 Programs

7 SEC. 1201. ELECTRIC AND TELEPHONE LOAN PROGRAMS.

8 (a) LOAN PROGRAMS UNDER THE RURAL ELEC9 TRIFICATION ACT OF 1936.—

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

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

12 is amended—

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

14 (B) by redesignating subsection (c) as sub15 section (b); and

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

17 redesignated) the following new subsections:

18 ‘‘(c) INSURED ELECTRIC LOANS.—

19 ‘‘(1) HARDSHIP LOANS.—

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

21 shall make insured electric loans, to the extent of

22 qualifying applications for the loans, at an in23 terest rate of 5 percent per year to any applicant

24 for a loan who meets each of the following re25 quirements:
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1 ‘‘(i) The average revenue per kilowatt2 hour sold by the applicant is not less than

3 120 percent of the average revenue per kilo4 watt-hour sold by all utilities in the State

5 in which the applicant provides service.

6 ‘‘(ii) The average residential revenue

7 per kilowatt-hour sold by the applicant is

8 not less than 120 percent of the average res9 idential revenue per kilowatt-hour sold by

10 all utilities in the State in which the appli11 cant provides service.

12 ‘‘(iii) The average per capita income of

13 the residents receiving electric service from

14 the applicant is less than the average per

15 capita income of the residents of the State

16 in which the applicant provides service, or

17 the median household income of the house18 holds receiving electric service from the ap19 plicant is less than the median household

20 income of the households in the State.

21 ‘‘(B) SEVERE HARDSHIP LOANS.—In addi22 tion to hardship loans that are made under sub23 paragraph (A), the Administrator may make an

24 insured electric loan at an interest rate of 5 per25 cent per year to an applicant for a loan if, in
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1 the sole discretion of the Administrator, the ap2 plicant has experienced a severe hardship.

3 ‘‘(C) LIMITATION.—The Administrator may

4 not make a loan under this paragraph to an ap5 plicant for the purpose of furnishing or improv6 ing electric service to a consumer located in an

7 urban area (as defined by the Bureau of the Cen8 sus) if the average number of consumers per mile

9 of line of the total electric system of the appli10 cant exceeds 17.

11 ‘‘(2) MUNICIPAL RATE LOANS.—

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

13 shall make insured electric loans, to the extent of

14 qualifying applications for the loans, at the in15 terest rate described in subparagraph (B) for the

16 term or terms selected by the applicant pursuant

17 to subparagraph (C).

18 ‘‘(B) INTEREST RATE.—

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

20 (ii), the interest rate described in this sub21 paragraph on a loan to a qualifying appli22 cant shall be—

23 ‘‘(I) the interest rate determined

24 by the Administrator to be equal to the

25 current market yield on outstanding
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1 municipal obligations with remaining

2 periods to maturity similar to the term

3 selected by the applicant pursuant to

4 subparagraph (C), but not greater than

5 the rate determined under section

6 307(a)(3)(A) of the Consolidated Farm

7 and Rural Development Act (7 U.S.C.

8 1927(a)(3)(A)) that is based on the

9 current market yield on outstanding

10 municipal obligations; plus

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

12 makes an election pursuant to sub13 paragraph (D) to include in the loan

14 agreement the right of the applicant to

15 prepay the loan, a rate equal to the

16 amount by which—

17 ‘‘(aa) the interest rate on

18 commercial loans for a similar

19 period that afford the borrower

20 such a right; exceeds

21 ‘‘(bb) the interest rate on

22 commercial loans for the period

23 that do not afford the borrower

24 such a right.
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1 ‘‘(ii) MAXIMUM RATE.—The interest

2 rate described in this subparagraph on a

3 loan to an applicant for the loan shall not

4 exceed 7 percent if—

5 ‘‘(I) the average number of con6 sumers per mile of line of the total

7 electric system of the applicant is less

8 than 5.50; or

9 ‘‘(II)(aa) the average revenue per

10 kilowatt-hour sold by the applicant is

11 more than the average revenue per kil12 owatt-hour sold by all utilities in the

13 State in which the applicant provides

14 service; and

15 ‘‘(bb) the average per capita in16 come of the residents receiving electric

17 service from the applicant is less than

18 the average per capita income of the

19 residents of the State in which the ap20 plicant provides service, or the median

21 household income of the households re22 ceiving electric service from the appli23 cant is less than the median household

24 income of the households in the State.
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1 ‘‘(iii) EXCEPTION.—Clause (ii) shall

2 not apply to a loan to be made to an appli3 cant for the purpose of furnishing or im4 proving electric service to consumers located

5 in an urban area (as defined by the Bureau

6 of the Census) if the average number of con7 sumers per mile of line of the total electric

8 system of the applicant exceeds 17.

9 ‘‘(C) LOAN TERM.—

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

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

12 paragraph may select the term for which an

13 interest rate shall be determined pursuant

14 to subparagraph (B), and, at the end of the

15 term (and any succeeding term selected by

16 the applicant under this subparagraph),

17 may renew the loan for another term se18 lected by the applicant.

19 ‘‘(ii) MAXIMUM TERM.—

20 ‘‘(I) APPLICANT.—The applicant

21 may not select a term that ends more

22 than 35 years after the beginning of

23 the first term the applicant selects

24 under clause (i).
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1 ‘‘(II) ADMINISTRATOR.—The Ad2 ministrator may prohibit an applicant

3 from selecting a term that would result

4 in the total term of the loan being

5 greater than the expected useful life of

6 the assets being financed.

7 ‘‘(D) CALL PROVISION.—The Administrator

8 shall offer any applicant for a loan under this

9 paragraph the option to include in the loan

10 agreement the right of the applicant to prepay

11 the loan on terms consistent with similar provi12 sions of commercial loans.

13 ‘‘(3) OTHER SOURCE OF CREDIT NOT REQUIRED

14 IN CERTAIN CASES.—The Administrator may not re15 quire any applicant for a loan made under this sub16 section who is eligible for a loan under paragraph (1)

17 to obtain a loan from another source as a condition

18 of approving the application for the loan or advanc19 ing any amount under the loan.

20 ‘‘(d) INSURED TELEPHONE LOANS.—

21 ‘‘(1) HARDSHIP LOANS.—

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

23 shall make insured telephone loans, to the extent

24 of qualifying applications for the loans, at an

25 interest rate of 5 percent per year, to any appli-
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1 cant who meets each of the following require2 ments:

3 ‘‘(i) The average number of subscribers

4 per mile of line in the proposed service area

5 of the applicant is not more than 4.

6 ‘‘(ii) The applicant is capable of pro7 ducing net income or margins, after interest

8 payments on the loan applied for, of not

9 less than 100 percent (but not more than

10 300 percent) of the interest requirements on

11 all of the outstanding and proposed loans of

12 the applicant.

13 ‘‘(iii) The Administrator has approved

14 a telecommunications modernization plan

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

16 the plan was developed by telephone borrow17 ers under this title, the applicant is a par18 ticipant in the plan.

19 ‘‘(B) AUTHORITY TO WAIVE TIER REQUIRE20 MENT.—The Administrator may waive the re21 quirement of subparagraph (A)(ii) in any case

22 in which the Administrator determines (and sets

23 forth the reasons for the waiver in writing) that

24 the requirement would prevent emergency res-
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1 toration of the telephone system of the applicant

2 or result in severe hardship to the applicant.

3 ‘‘(C) EFFECT OF LACK OF FUNDS.—On re4 quest of any applicant who is eligible for a loan

5 under this paragraph for which funds are not

6 available, the applicant shall be considered to

7 have applied for a loan under title IV.

8 ‘‘(2) COST-OF-MONEY LOANS.—

9 ‘‘(A) IN GENERAL.—The Administrator

10 may make insured telephone loans for the acqui11 sition, purchase, and installation of telephone

12 lines, systems, and facilities (other than build13 ings used primarily for administrative purposes,

14 vehicles not used primarily in construction, and

15 customer premise equipment) related to the fur16 nishing, improvement, or extension of rural tele17 communications service, at an interest rate equal

18 to the then current cost of money to the Govern19 ment of the United States for loans of similar

20 maturity, but not more than 7 percent per year,

21 to any applicant for a loan who meets the follow22 ing requirements:

23 ‘‘(i) The average number of subscribers

24 per mile of line in the service area of the

25 applicant is not more than 15.
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1 ‘‘(ii) The applicant is capable of pro2 ducing net income or margins, before inter3 est payments on the loan applied for, of not

4 less than 100 percent (but not more than

5 500 percent) of the interest requirements on

6 all of the outstanding and proposed loans of

7 the applicant.

8 ‘‘(iii) The Administrator has approved

9 a telecommunications modernization plan

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

11 the plan was developed by telephone borrow12 ers under this title, the applicant is a par13 ticipant in the plan.

14 ‘‘(B) CALL PROVISION.—The Administrator

15 shall offer any applicant for a loan under this

16 paragraph the option to include in the loan

17 agreement the right of the applicant to prepay

18 the loan on terms consistent with similar provi19 sions of commercial loans.

20 ‘‘(C) CONCURRENT LOAN AUTHORITY.—On

21 request of any applicant for a loan under this

22 paragraph during any fiscal year, the Adminis23 trator shall—
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1 ‘‘(i) consider the application to be for

2 a loan under this paragraph and a loan

3 under section 408; and

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

5 loan, make a loan to the applicant under

6 this paragraph in an amount equal to the

7 amount that bears the same ratio to the

8 total amount of loans for which the appli9 cant is eligible under this paragraph and

10 under section 408, as the amount made

11 available for loans under this paragraph for

12 the fiscal year bears to the total amount

13 made available for loans under this para14 graph and under section 408 for the fiscal

15 year.

16 ‘‘(D) EFFECT OF LACK OF FUNDS.—On re17 quest of any applicant who is eligible for a loan

18 under this paragraph for which funds are not

19 available, the applicant shall be considered to

20 have applied for a loan guarantee under section

21 306.

22 ‘‘(3) STATE TELECOMMUNICATIONS MODERNIZA23 TION PLANS.—

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

25 days after final regulations are promulgated to
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1 carry out this paragraph, the public utility com2 mission of any State develops a telecommuni3 cations modernization plan that meets the re4 quirements of subparagraph (B), the Adminis5 trator shall approve the plan for the State. If a

6 State does not develop a plan in accordance with

7 the requirements of the preceding sentence, the

8 Administrator shall approve any telecommuni9 cations modernization plan for the State that

10 meets the requirements that is developed by a

11 majority of the borrowers of telephone loans

12 made under this title who are located in the

13 State.

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

15 subparagraph (A), a telecommunications mod16 ernization plan must, at a minimum, meet the

17 following objectives:

18 ‘‘(i) The plan must provide for the

19 elimination of party line service.

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

21 availability of telecommunications services

22 for improved business, educational, and

23 medical services.

24 ‘‘(iii) The plan must encourage and

25 improve computer networks and informa-
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1 tion highways for subscribers in rural

2 areas.

3 ‘‘(iv) The plan must provide for—

4 ‘‘(I) subscribers in rural areas to

5 be able to receive through telephone

6 lines—

7 ‘‘(aa) multiple voices;

8 ‘‘(bb) video images; and

9 ‘‘(cc) data at a rate of at

10 least 1,000,000 bits of information

11 per second; and

12 ‘‘(II) the proper routing of infor13 mation to subscribers.

14 ‘‘(v) The plan must provide for uni15 form deployment schedules to ensure that

16 advanced services are deployed at the same

17 time in rural and nonrural areas.

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

19 additional requirements for service stand20 ards as may be required by the Adminis21 trator.

22 ‘‘(C) FINALITY OF APPROVAL.—

23 ‘‘(i) IN GENERAL.—A telecommuni24 cations modernization plan approved under

25 subparagraph (A) may not subsequently be
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1 disapproved. Notwithstanding subsection

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

3 section 408(b)(4)(C), the Administrator and

4 the Governor of the telephone bank may

5 make a loan to a borrower serving a State

6 that does not have a telecommunication

7 modernization plan approved by the Ad8 ministrator if the loan is made less than 1

9 year after the Administrator has adopted

10 final regulations implementing subsection

11 (c)(3).’’.

12 (2) RURAL TELEPHONE BANK LOAN PROGRAM.—

13 Section 408 of such Act (7 U.S.C. 948) is amended—

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

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

16 and inserting ‘‘, (2) for the acquisition, pur17 chase, and installation of telephone lines, sys18 tems, and facilities (other than buildings used

19 primarily for administrative purposes, vehicles

20 not used primarily in construction, and cus21 tomer premise equipment) related to the furnish22 ing, improvement, or extension of rural tele23 communications service,’’; and

24 (B) in subsection (b)—
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1 (i) by striking paragraph (4) and in2 serting the following new paragraph:

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

4 make a loan under this section only to an applicant

5 for the loan who meets the following requirements:

6 ‘‘(A) The average number of subscribers per

7 mile of line in the service area of the applicant

8 is not more than 15.

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

10 net income or margins, after interest payments

11 on the loan applied for, of not less than 100 per12 cent (but not more than 500 percent) of the in13 terest requirements on all of the outstanding and

14 proposed loans of the applicant.

15 ‘‘(C) The Administrator has approved,

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

17 modernization plan for the State in which the

18 applicant is located, and, if the plan was devel19 oped by telephone borrowers under title III, the

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

21 (ii) in paragraph (8)—

22 (I) by inserting ‘‘(A)’’ after ‘‘(8)’’;

23 (II) by striking ‘‘if such prepay24 ment is not made later than September

25 30, 1988’’ and inserting ‘‘except for
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1 any prepayment penalty provided for

2 in a loan agreement entered into before

3 the date of enactment of the Omnibus

4 Budget Reconciliation Act of 1993’’;

5 and

6 (III) by adding at the end the fol7 lowing new subparagraph:

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

9 made under this section, then, notwithstanding sec10 tion 407(b), the Governor of the telephone bank shall

11 use the full amount of the prepayment to repay obli12 gations of the telephone bank issued pursuant to sec13 tion 407(b) before October 1, 1991, to the extent any

14 such obligations are outstanding.’’; and

15 (iii) by adding at the end the following

16 new paragraphs:

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

18 under this section during any fiscal year, the Gov19 ernor of the telephone bank shall—

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

21 loan under this section and a loan under section

22 305(d)(2); and

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

24 make a loan to the applicant under this section

25 in an amount equal to the amount that bears the
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1 same ratio to the total amount of loans for which

2 the applicant is eligible under this section and

3 under section 305(d)(2), as the amount made

4 available for loans under this section for the fis5 cal year bears to the total amount made avail6 able for loans under this section and under sec7 tion 305(d)(2) for the fiscal year.

8 ‘‘(10) On request of any applicant who is eligible

9 for a loan under this section for which funds are not

10 available, the applicant shall be considered to have

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

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

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

14 ‘‘SEC. 314. LIMITATIONS ON AUTHORIZATION OF APPRO15 PRIATIONS.

16 ‘‘(a) DEFINITION OF ADJUSTMENT PERCENTAGE.—As

17 used in this section, the term ‘adjustment percentage’

18 means, with respect to a fiscal year, the percentage (if any)

19 by which—

20 ‘‘(1) the average of the Consumer Price Index (as

21 defined in section 1(f)(5) of the Internal Revenue

22 Code of 1986) for the 1-year period ending on July

23 31 of the immediately preceding fiscal year; exceeds
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1 ‘‘(2) the average of the Consumer Price Index (as

2 so defined) for the 1-year period ending on July 31,

3 1993.

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

5 of each of fiscal years 1994 through 1998, there are author6 ized to be appropriated to the Administrator such sums as

7 may be necessary for the cost of loans in the following

8 amounts, for the following purposes:

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

10 under section 305(c)(1)—

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

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

13 1998, $125,000,000, increased by the adjustment

14 percentage for the fiscal year.

15 ‘‘(2) ELECTRIC MUNICIPAL RATE LOANS.—For

16 loans under section 305(c)(2)—

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

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

19 1998, $600,000,000, increased by the adjustment

20 percentage for the fiscal year.

21 ‘‘(3) TELEPHONE HARDSHIP LOANS.—For loans

22 under section 305(d)(1)—

23 ‘‘(A) for fiscal year 1994, $125,000,000; and
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1 ‘‘(B) for each of fiscal years 1995 through

2 1998, $125,000,000, increased by the adjustment

3 percentage for the fiscal year.

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

5 loans under section 305(d)(2)—

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

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

8 1998, $198,000,000, increased by the adjustment

9 percentage for the fiscal year.

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

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

12 amounts, and for the periods of time specified in subsection

13 (b), as provided in advance in appropriations Acts.

14 ‘‘(d) AVAILABILITY OF FUNDS FOR INSURED LOANS.—

15 Amounts made available for loans under section 305 are

16 authorized to remain available until expended.’’.

17 (4) MISCELLANEOUS AMENDMENTS.—

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

19 amended—

20 (i) by inserting ‘‘(a)’’ before ‘‘The Ad21 ministrator’’;

22 (ii) by striking ‘‘telephone service in

23 rural areas, as hereinafter provided;’’ and

24 inserting ‘‘electric and telephone service in

25 rural areas, as provided in this Act, and for
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1 the purpose of assisting electric borrowers to

2 implement demand side management and

3 energy conservation programs;’’; and

4 (iii) by adding at the end the following

5 new subsection:

6 ‘‘(b) Not later than January 1, 1994, the Adminis7 trator shall issue interim regulations to implement the au8 thority contained in subsection (a) to make loans for the

9 purpose of assisting electric borrowers to implement de10 mand side management and energy conservation programs.

11 If the regulations are not issued by January 1, 1994, the

12 Administrator shall consider any demand side management

13 program that is approved by a State agency to be eligible

14 for the loans.’’.

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

16 amended by inserting after ‘‘central station serv17 ice’’ the following: ‘‘and for the furnishing and

18 improving of electric service to persons in rural

19 areas, including by assisting electric borrowers

20 to implement demand side management and en21 ergy conservation programs’’.

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

23 is amended—
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1 (i) by inserting ‘‘, except as provided

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

3 to mean any area’’; and

4 (ii) by striking ‘‘city, village, or bor5 ough having a population in excess of fif6 teen hundred inhabitants’’ and inserting

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

8 the Census’’.

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

10 924(b)) is amended by striking ‘‘one thousand

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

12 (E) Section 305 of such Act (7 U.S.C. 935)

13 (as amended by subsection (a)(1)) is further

14 amended—

15 (i) by striking ‘‘SEC. 305. INSURED

16 LOANS; INTEREST RATES AND LENDING

17 LEVELS.—(a) The’’ and inserting the fol18 lowing:

19 ‘‘SEC. 305. INSURED LOANS; INTEREST RATES AND LEND20 ING LEVELS.

21 ‘‘(a) IN GENERAL.—The’’; and

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

23 Loans’’ and inserting ‘‘(b) INSURED

24 LOANS.—Loans’’.
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1 (F) Section 307 of such Act (7 U.S.C. 937)

2 is amended by adding at the end the following

3 new sentence: ‘‘The Administrator may not re4 quest any applicant for an electric loan under

5 this Act to apply for and accept a loan in an

6 amount exceeding 30 percent of the credit needs

7 of the applicant.’’.

8 (G) Section 406 of such Act (7 U.S.C. 946)

9 is amended by adding at the end the following

10 new subsection:

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

12 in obligations of the United States the amounts in the ac13 count in the Treasury of the United States numbered

14 12X8139 (known as the ‘RTB Equity Fund’).’’.

15 (H) Section 18 of such Act (7 U.S.C. 918)

16 is amended—

17 (i) by inserting ‘‘(a) NO CONSIDER18 ATION OF BORROWER’S LEVEL OF GENERAL

19 FUNDS.—’’ before ‘‘The Administrator’’;

20 and

21 (ii) by adding at the end the following

22 new subsections:

23 ‘‘(b) NO LOAN ORIGINATION FEES.—The Adminis24 trator and the Governor of the telephone bank may not

25 charge any fee or charge not expressly provided in this Act
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1 in connection with any loan made or guaranteed under this

2 Act.

3 ‘‘(c) CONSULTANTS.—

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

5 on applications by borrowers for financial assistance

6 under this Act and for approvals required of the agen7 cy pursuant to the terms of outstanding loan or secu8 rity instruments or otherwise, the Administrator may

9 use consultants funded by the borrower, paid for out

10 of the general funds of the borrower, for financial,

11 legal, engineering, and other technical advice and

12 services in connection with the review of the applica13 tion by the Rural Electrification Administration.

14 ‘‘(2) CONFLICTS OF INTEREST.—The Adminis15 trator shall establish procedures for the selection and

16 the provision of technical services by consultants to

17 ensure that the consultants have no financial or other

18 potential conflicts of interest in the outcome of the ap19 plication of the borrower.

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

21 may not, without the consent of the borrower, require,

22 as a condition of processing an application for ap23 proval, that the borrower agree to pay the costs, fees,

24 and expenses of consultants hired to provide technical

25 or advisory services to the Administrator.
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1 ‘‘(4) CONTRACTS, GRANTS, AND AGREEMENTS.—

2 The Administrator may enter into such contracts,

3 grants, or cooperative agreements as are necessary to

4 carry out this section without regard to any require5 ment for competition, section 3709 of the Revised

6 Statutes (41 U.S.C. 5) and section 3324 of title 31,

7 United States Code.

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

9 subsection shall limit the authority of the Adminis10 trator to retain the services of consultants from funds

11 made available to the Administrator or otherwise.’’.

12 (I) Title III of such Act is amended by in13 serting after section 306B (7 U.S.C. 936b) the

14 following new sections:

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

16 FOR LOANS, LOAN GUARANTEES, AND LIEN

17 ACCOMMODATIONS.

18 ‘‘For the purpose of determining the eligibility of a dis19 tribution borrower not in default on the repayment of a

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

21 guarantee, or lien accommodation under this title, a default

22 by a borrower from which the distribution borrower pur23 chases wholesale power shall not—

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

25 borrower;
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1 ‘‘(2) reduce the eligibility of the distribution bor2 rower for assistance under this Act; or

3 ‘‘(3) be the cause, directly or indirectly, of im4 posing any requirement or restriction on the borrower

5 as a condition of the assistance, except such require6 ments or restrictions as are necessary to implement a

7 debt restructuring agreed on by the power supply bor8 rower and the Government.

9 ‘‘SEC. 306D. ADMINISTRATIVE PROHIBITIONS APPLICABLE

10 TO ELECTRIC BORROWERS.

11 ‘‘The Administrator may not require prior approval

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

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

14 of a lien accommodation to, any electric borrower under

15 this Act whose net worth exceeds 110 percent of the out16 standing principal balance on all loans made or guaranteed

17 to the borrower by the Administrator.’’.

18 (b) EXPANDED ELIGIBILITY FOR LOANS FOR WATER

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

20 the Consolidated Farm and Rural Development Act (7

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

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

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

24 made under the Rural Electrification Act of 1936 (7 U.S.C.

25 901 et seq.), for the conservation, development, use, and con-
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1 trol of water, and the installation of drainage or waste dis2 posal facilities, primarily serving farmers, ranchers, farm

3 tenants, farm laborers, rural businesses, and other rural

4 residents.’’.

5 (c) RURAL ECONOMIC DEVELOPMENT.—Section 364 of

6 the Consolidated Farm and Rural Development Act (7

7 U.S.C. 2006f) is amended by adding at the end the follow8 ing new subsection:

9 ‘‘(g) RURAL ECONOMIC DEVELOPMENT.—

10 ‘‘(1) IN GENERAL.—A borrower of a loan or loan

11 guarantee under the Rural Electrification Act of 1936

12 (7 U.S.C. 901 et seq.) shall be eligible for assistance

13 under all programs administered by the Rural Devel14 opment Administration.

15 ‘‘(2) PARTICIPATION.—The Administrator of the

16 Rural Development Administration shall encourage

17 and facilitate the full participation of borrowers re18 ferred to in paragraph (1) in programs administered

19 by the Rural Development Administration.’’.

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

21 interim final rules shall be issued by—

22 (1) the Administrator of the Rural Electrifica23 tion Administration in the case of amendments made

24 by this section to programs administered by the

25 Administrator; and
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1 (2) the Administrator of the Rural Development

2 Administration in the case of amendments made by

3 this section to programs administered by the Admin4 istrator.

5 Subtitle C—Food Stamp Program

6 SEC. 1301. UNIFORM REIMBURSEMENT RATES.

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

8 of 1977 (7 U.S.C. 2025) is amended—

9 (1) in the first sentence of subsection (a)—

10 (A) by striking ‘‘and (5)’’ and inserting

11 ‘‘(5)’’;

12 (B) by inserting before ‘‘: Provided,’’ the fol13 lowing: ‘‘, (6) automated data processing and in14 formation retrieval systems subject to the condi15 tions set forth in subsection (g), (7) food stamp

16 program investigations and prosecutions, and

17 (8) implementing and operating the immigra18 tion status verification system established under

19 section 1137(d) of the Social Security Act (42

20 U.S.C. 1320b–7(d))’’; and

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

22 to pay each State agency an amount not less

23 than 75 per centum of the costs of State food

24 stamp program investigations and prosecutions,

25 and is further’’;
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1 (2) in subsection (g)—

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

3 percent effective on October 1, 1991, of’’ and in4 serting ‘‘the amount authorized under subsection

5 (a)(6) for’’; and

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

7 ‘‘automated’’;

8 (3) by striking subsection (j); and

9 (4) by redesignating subsection (k) as subsection

10 (j).

11 (b) EFFECTIVE DATE.—

12 (1) IN GENERAL.—Except as provided in para13 graph (2), the amendments made by this section shall

14 be effective with respect to calendar quarters begin15 ning on or after April 1, 1994.

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

17 State whose legislature meets biennially, and does not

18 have a regular session scheduled in calendar year

19 1994, and that demonstrates to the satisfaction of the

20 Secretary of Agriculture that there is no mechanism,

21 under the constitution and laws of the State, for ap22 propriating the additional funds required by the

23 amendments made by this section before the next such

24 regular legislative session, the Secretary may delay

25 the effective date of all or part of the amendments
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1 made by subsection (a) until the beginning date of a

2 calendar quarter that is not later than the first cal3 endar quarter beginning after the close of the first

4 regular session of the State legislature after the date

5 of enactment of this Act.

6 Subtitle D—Agricultural Trade

7 SEC. 1401. MARKET PROMOTION PROGRAM.

8 (a) REDUCTION OF FUNDING LEVEL.—Section 211(c)

9 of the Agricultural Trade Act of 1978 (7 U.S.C. 5641(c))

10 is amended—

11 (1) in paragraph (1)—

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

13 ‘‘1993’’; and

14 (B) by striking ‘‘and’’ at the end;

15 (2) by redesignating paragraph (2) as para16 graph (3); and

17 (3) by inserting after paragraph (1) the follow18 ing new paragraph:

19 ‘‘(2) in addition to any funds that may be spe20 cifically appropriated to implement a market develop21 ment program, for each of fiscal years 1994 and 1995,

22 of the funds of, or an equal value of commodities

23 owned by, the Commodity Credit Corporation—

24 ‘‘(A) not less than $33,000,000 for—
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1 ‘‘(i) branded promotion activities in2 volving small-sized commercial entities and

3 medium-sized commercial entities that are

4 beginning exporters; and

5 ‘‘(ii) activities other than branded pro6 motion activities that only benefit small7 sized commercial entities and medium-sized

8 commercial entities, or (as determined by

9 the Secretary) small-sized agricultural pro10 ducers and medium-sized agricultural pro11 ducers; and

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

13 subparagraph (A), not less than $77,000,000 for

14 program activities by any eligible trade organi15 zation, including organizations specified under

16 subparagraph (A); and’’.

17 (b) DEFINITIONS.—Section 102 of such Act (7 U.S.C.

18 5602) is amended by adding at the end the following new

19 paragraph:

20 ‘‘(9) COMMERCIAL ENTITY.—

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

22 entity’ means a cooperative or private organiza23 tion that exports or promotes an agricultural

24 commodity, including an entity that controls, is
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1 controlled by, or is under common control with

2 such a cooperative or private organization.

3 ‘‘(B) MEDIUM-SIZED COMMERCIAL EN4 TITY.—The term ‘medium-sized commercial en5 tity’ means a commercial entity that employs

6 not less than 51, nor more than 500, individuals.

7 ‘‘(C) SMALL-SIZED COMMERCIAL ENTITY.—

8 The term ‘small-sized commercial entity’ means

9 a commercial entity that employs not more than

10 50 individuals.’’.

11 SEC. 1402. ACREAGE REDUCTION REQUIREMENTS.

12 (a) IN GENERAL.—Section 1104 of the Omnibus Budg13 et Reconciliation Act of 1990 (7 U.S.C. 1445b–3a note) is

14 amended—

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

16 and inserting the following new paragraph:

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

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

19 corn crop acreage base for the farm for the crop reduced by not less than 71 20 ⁄2 percent.’’; and

21 (2) in subsection (b)(2), by striking ‘‘grain sor22 ghum, and barley,’’.

23 (b) READJUSTMENT OF SUPPORT LEVELS.—Section

24 1302 of such Act (7 U.S.C. 1421 note) is amended—

25 (1) in subsection (b)—
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1 (A) by striking paragraph (1); and

2 (B) by redesignating paragraphs (2) and

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

4 (2) in subsection (c), by striking ‘‘and other pro5 grams’’; and

6 (3) in subsection (d)—

7 (A) in paragraph (1)—

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

9 (ii) by redesignating subparagraphs

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

11 respectively;

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

13 and (C)’’ and inserting ‘‘(A) and (B)’’; and

14 (C) in paragraph (3)—

15 (i) by striking ‘‘measures specified in

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

17 and

18 (ii) by striking ‘‘(B) or (C)’’ and in19 serting ‘‘(A) or (B)’’.

20 SEC. 1403. END-USE CERTIFICATES.

21 (a) IN GENERAL.—Subtitle A of title IV of the Agricul22 tural Trade Act of 1978 (7 U.S.C. 5661 et seq.) is amend23 ed—

24 (1) by redesignating section 404 (7 U.S.C. 5664)

25 as section 405; and
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1 (2) by inserting after section 403 the following

2 new section:

3 ‘‘SEC. 404. END-USE CERTIFICATES.

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

5 ‘‘(1) COVERED FOREIGN COMMODITY.—The term

6 ‘covered foreign commodity’ means any wheat or bar7 ley produced in a foreign country that is imported

8 into the United States, including any imported com9 modity that will be subsequently commingled with a

10 like commodity produced in the United States.

11 ‘‘(2) END-USE CERTIFICATE.—The term ‘end-use

12 certificate’ means a certification that describes—

13 ‘‘(A) the class, quantity, and country of ori14 gin of the covered foreign commodity;

15 ‘‘(B) the importer and consignee of the cov16 ered foreign commodity;

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

18 will use the covered foreign commodity; and

19 ‘‘(D) at the option of the Secretary, the sales

20 price and quality of the covered foreign commod21 ity.

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

23 improve monitoring of the end use of covered foreign com24 modities, as provided in this section, in order to ensure that

25 exports of agricultural commodities under the programs au-
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1 thorized by this Act and other agricultural trade programs

2 are entirely produced in the United States.

3 ‘‘(c) REQUIREMENT ON COVERED FOREIGN COMMOD4 ITIES.—The Commissioner of Customs shall not permit the

5 entry into, or the withdrawal from a warehouse for use in,

6 the United States of a covered foreign commodity, unless

7 the importer of record presents an end-use certificate for

8 the covered foreign commodity that complies with this sec9 tion at the time of entry or withdrawal, as appropriate.

10 ‘‘(d) MAINTENANCE OF CERTIFICATE WITH COVERED

11 FOREIGN COMMODITY.—The end-use certificate shall be

12 maintained with the covered foreign commodity until the

13 commodity reaches the end use of the commodity within the

14 United States. The end use of a covered foreign commodity

15 includes feeding to livestock, first stage processing for

16 human consumption, exporting from the United States, or

17 (as determined by the Secretary) other end uses.

18 ‘‘(e) CERTIFICATION.—The Secretary shall require any

19 importer or consignee of a covered foreign commodity to

20 certify, on a quarterly basis, the end use or transfer, during

21 the period the commodity is a covered foreign commodity,

22 by the importer or consignee, along with any additional

23 information the Secretary determines to be appropriate.

24 ‘‘(f) COMPLIANCE.—Subsections (b), (c), and (d) of sec25 tion 402 shall apply to an importer or consignee of a cov-
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1 ered foreign commodity subject to the terms and conditions

2 specified in this section.’’.

3 (b) EFFECTIVE DATE.—The amendments made by sub4 section (a) shall become effective on the date that is 120

5 days after the date of enactment of this Act.

6 SEC. 1404. SENSE OF CONGRESS REGARDING THE EXPORT

7 OF VEGETABLE OIL.

8 It is the sense of Congress that the Secretary of Agri9 culture should continue aggressively to promote the export

10 of vegetable oil through all available authorities, including

11 but not limited to the export enhancement program estab12 lished under section 301 of the Agricultural Trade Act of

13 1978 (7 U.S.C. 5651).

14 Subtitle E—Miscellaneous

15 SEC. 1501. FEDERAL CROP INSURANCE.

16 (a) ACTUARIAL SOUNDNESS.—Section 506 of the Fed17 eral Crop Insurance Act (7 U.S.C. 1506) is amended by

18 adding at the end the following new subsection:

19 ‘‘(n) ACTUARIAL SOUNDNESS.—The Corporation shall

20 take such actions as are necessary to improve the actuarial

21 soundness of Federal multiperil crop insurance coverage

22 made available under this title to achieve, on and after Oc23 tober 1, 1995, an overall projected loss ratio of not greater

24 than 1.1, including—
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1 ‘‘(1) instituting appropriate requirements for

2 documentation of the actual production history of in3 sured producers to establish recorded or appraised

4 yields for Federal crop insurance coverage that more

5 accurately reflect the associated actuarial risk, except

6 that the Corporation may not carry out this para7 graph in a manner that would prevent beginning

8 farmers from obtaining adequate Federal crop insur9 ance, as determined by the Corporation;

10 ‘‘(2) establishing in counties, to the extent prac11 ticable, a crop insurance option based on area yields

12 in a manner that allows an insured producer to qual13 ify for an indemnity if a loss has occurred in a speci14 fied area in which the farm of the insured producer

15 is located;

16 ‘‘(3) establishing a database that contains the so17 cial security account and employee identification

18 numbers of participating producers and using the

19 numbers to identify insured producers who are high

20 risk for actuarial purposes and insured producers

21 who have not documented at least 4 years of produc22 tion history, to assess the performance of insurance

23 providers, and for other purposes permitted by law;

24 and
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1 ‘‘(4) taking any other measures authorized by

2 law to improve the actuarial soundness of the Federal

3 crop insurance program while maintaining fairness

4 and effective coverage for agricultural producers.’’.

5 (b) CONFORMING AMENDMENTS.—

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

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

8 sentence and inserting the following new sentence:

9 ‘‘The Corporation shall also pay operating and ad10 ministrative costs to insurers of policies on which the

11 Corporation provides reinsurance in an amount de12 termined by the Corporation.’’.

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

14 (7 U.S.C. 1508) is amended by adding at the end the

15 following new subsection:

16 ‘‘(n) AREA YIELD PLAN.—

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

18 provision of this title, the Corporation may offer, only

19 as an option to individual crop insurance coverage

20 available under this Act, a crop insurance plan based

21 on an area yield that allows an insured producer to

22 qualify for an indemnity if a loss has occurred in an

23 area, as specified by the Corporation, in which the

24 farm of the producer is located.
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1 ‘‘(2) LEVEL OF COVERAGE.—Under a plan of2 fered under paragraph (1), an insured producer shall

3 be allowed to select the level of production at which

4 an indemnity will be paid consistent with terms and

5 conditions established by the Corporation.’’.

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

7 (7 U.S.C. 1508a) is amended—

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

9 and inserting ‘‘shall’’; and

10 (B) in subsection (b)—

11 (i) in paragraph (1)(A)—

12 (I) by striking ‘‘A crop insurance

13 contract’’ and all that follows through

14 ‘‘producer—’’ and inserting ‘‘Under

15 regulations issued by the Corporation,

16 a crop insurance contract offered under

17 this title to an eligible insured pro18 ducer of a commodity with respect to

19 which the Corporation provides crop

20 insurance coverage shall make avail21 able to the producer either—’’;

22 (II) by striking ‘‘or’’ at the end of

23 clause (i);

24 (III) in clause (ii)—
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1 (aa) by striking ‘‘5’’ and in2 serting ‘‘4 building to 10’’; and

3 (bb) by striking the period at

4 the end and inserting ‘‘; or’’; and

5 (IV) by adding at the end the fol6 lowing new clause:

7 ‘‘(iii) yield coverage based on—

8 ‘‘(I) not less than 65 percent of

9 the transitional yield of the producer

10 (adjusted to reflect actual experience),

11 as specified in regulations issued by

12 the Corporation based on production

13 history requirements; or

14 ‘‘(II) the area yield under section

15 508(n) for the crop established under

16 the program for the commodity in17 volved.’’;

18 (ii) in paragraph (1)(B)—

19 (I) by striking ‘‘two’’ and insert20 ing ‘‘3’’; and

21 (II) by inserting after ‘‘subpara22 graph (A)’’ the following: ‘‘, where

23 available (as determined by the Cor24 poration),’’;

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

2 ‘‘4 building to 10’’; and

3 (II) by inserting after ‘‘previous

4 crops,’’ the following: ‘‘not less than 65

5 percent of the transitional yield of the

6 producer (adjusted to reflect actual ex7 perience), or the area yield,’’; and

8 (iv) in paragraph (3)(A)(i), by insert9 ing after ‘‘farm program yield’’ the follow10 ing: ‘‘, not less than 65 percent of the tran11 sitional yield of the producer (adjusted to

12 reflect actual experience), as specified in

13 regulations issued by the Corporation based

14 on production history requirements, or the

15 area yield under section 508(n), whichever

16 is applicable,’’.

17 (c) EFFECTIVE DATE.—

18 (1) IN GENERAL.—Except as provided in para19 graph (2), this section and the amendments made by

20 this section shall become effective on October 1, 1993.

21 (2) REGULATIONS.—Not later than 30 days after

22 the date of enactment of this Act, the Secretary of Ag23 riculture shall publish, for public comment, proposed

24 regulations to implement the amendments made by

25 this section.
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1 SEC. 1502. ENVIRONMENTAL CONSERVATION ACREAGE RE2 SERVE PROGRAM AMENDMENTS.

3 Subtitle D of title XII of the Food Security Act of 1985

4 (16 U.S.C. 3830 et seq.) is amended—

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

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

7 ‘‘acres’’;

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

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

10 ‘‘shall’’;

11 (B) by striking ‘‘the amount of acres speci12 fied in section 1230(b)’’ and inserting ‘‘a total of

13 38,000,000 acres during the 1986 through 1995

14 calendar years’’; and

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

16 1994 and 1995’’ and inserting ‘‘the 1995 cal17 endar year’’;

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

19 (A) by striking subsection (b) and inserting

20 the following new subsection:

21 ‘‘(b) MINIMUM ENROLLMENT.—The Secretary shall en22 roll into the wetlands reserve program—

23 ‘‘(1) a total of not less than 330,000 acres by the

24 end of the 1995 calendar year; and

25 ‘‘(2) a total of not less than 975,000 acres during

26 the 1991 through 2000 calendar years.’’; and
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1 (B) in subsection (c), by striking ‘‘1995’’

2 and inserting ‘‘2000’’; and

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

4 (A) in subsection (a)—

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

6 the fiscal years ending September 30, 1986,

7 and September 30, 1987’’ and inserting

8 ‘‘(a) During each of fiscal years 1994

9 through 2000’’; and

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

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

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

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

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

15 (1) AREA OF CONCENTRATED PUBLIC USE.—The

16 term ‘‘area of concentrated public use’’ means an area

17 administered by the Secretary that meets each of the

18 following criteria:

19 (A) The area is managed primarily for out20 door recreation purposes.

21 (B) Facilities and services necessary to ac22 commodate heavy public use are provided in the

23 area.

24 (C) The area contains at least one major

25 recreation attraction.
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1 (D) Public access to the area is provided in

2 such a manner that admission fees can be effi3 ciently collected at 1 or more centralized loca4 tions.

5 (2) BOAT LAUNCHING FACILITY.—The term ‘‘boat

6 launching facility’’ includes any boat launching facil7 ity, regardless of whether specialized facilities or serv8 ices, such as mechanical or hydraulic boat lifts or fa9 cilities, are provided.

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

11 means any campground where a majority of the fol12 lowing amenities are provided, as determined by the

13 Secretary:

14 (A) Tent or trailer spaces.

15 (B) Drinking water.

16 (C) An access road.

17 (D) Refuse containers.

18 (E) Toilet facilities.

19 (F) The personal collection of recreation use

20 fees by an employee or agent of the Secretary.

21 (G) Reasonable visitor protection.

22 (H) If campfires are permitted in the

23 campground, simple devices for containing the

24 fires.
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1 (4) SECRETARY.—The term ‘‘Secretary’’ means

2 the Secretary of Agriculture.

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

4 (1) may charge admission or entrance fees at na5 tional monuments, national volcanic monuments, na6 tional scenic areas, and areas of concentrated public

7 use administered by the Secretary;

8 (2) acting through the Forest Service, shall reim9 burse the Agricultural Stabilization and Conservation

10 Service for administrative costs incurred under the

11 Stewardship Incentive Program for the actual cost of

12 services provided by the Agricultural Stabilization

13 and Conservation Service, except that the actual costs

14 shall not exceed 10 percent of the total annual appro15 priation for the program; and

16 (3) may charge recreation use fees at lands ad17 ministered by the Secretary in connection with the

18 use of specialized outdoor recreation sites, equipment,

19 services, and facilities, including visitors’ centers, pic20 nic tables, boat launching facilities, and camp21 grounds.

22 (c) AMOUNT OF FEES.—The amount of the admission,

23 entrance, and recreation fees authorized to be imposed

24 under this section shall be determined by the Secretary.
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1 SEC. 1504. SENSE OF THE SENATE REGARDING DEFICIT RE2 DUCTION.

3 It is the sense of the Senate that—

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

5 share of any budget reduction necessary to achieve the

6 goal of deficit reduction; and

7 (2) the level of budget reduction should take into

8 account and be adjusted to reflect any BTU or energy

9 taxes, any other taxes, reduction in interest rates, and

10 other user fees.

11 TITLE II—COMMITTEE ON

12 ARMED SERVICES

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

14 FOR MILITARY RETIREES.

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

16 States Code, is amended to read as follows:

17 ‘‘(2) PRE-AUGUST 1, 1986 MEMBERS.—

18 ‘‘(A) GENERAL RULE.—The Secretary shall

19 increase the retired pay of each member and

20 former member who first became a member of a

21 uniformed service before August 1, 1986, by the

22 percent (adjusted to the nearest one-tenth of 1

23 percent) by which—

24 ‘‘(i) the price index for the base quar25 ter of that year, exceeds

26 ‘‘(ii) the base index.
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1 ‘‘(B) SPECIAL RULES FOR FISCAL YEARS

2 1994 THROUGH 1998.—

3 ‘‘(i) FISCAL YEARS 1994 THROUGH

4 1997.—In the case of an increase in retired

5 pay that, pursuant to paragraph (1), be6 comes effective on December 1 of 1993, 1994,

7 1995, or 1996, the initial month for which

8 such increase is payable as part of such re9 tired pay shall (notwithstanding such De10 cember 1 effective date) be September of the

11 following year.

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

13 an increase in retired pay that, pursuant to

14 paragraph (1), becomes effective on Decem15 ber 1, 1997, the initial month for which

16 such increase is payable as part of such re17 tired pay shall (notwithstanding such De18 cember 1 effective date) be August 1998.

19 ‘‘(C) INAPPLICABILITY TO DISABILITY RE20 TIREES.—Subparagraph (B) does not apply with

21 respect to the retired pay of a member retired

22 under chapter 61 of this title.’’.
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1 TITLE III—COMMITTEE ON BANK2 ING, HOUSING, AND URBAN

3 AFFAIRS

4 SEC. 3001. NATIONAL DEPOSITOR PREFERENCE.

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

6 Deposit Insurance Act (12 U.S.C. 1821(d)(11)) is amended

7 to read as follows:

8 ‘‘(11) DEPOSITOR PREFERENCE.—

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

10 5(e)(2)(C), amounts realized from the liquidation

11 or other resolution of any insured depository in12 stitution by any receiver appointed for such in13 stitution shall be distributed to pay claims (other

14 than secured claims to the extent of any such se15 curity) in the following order of priority:

16 ‘‘(i) Administrative expenses of the re17 ceiver.

18 ‘‘(ii) Any deposit liability of the insti19 tution.

20 ‘‘(iii) Any other general or senior li21 ability of the institution (which is not a li22 ability described in clause (iv) or (v)).

23 ‘‘(iv) Any obligation subordinated to

24 depositors or general creditors (which is not

25 an obligation described in clause (v)).
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1 ‘‘(v) Any obligation to shareholders or

2 members arising as a result of their status

3 as shareholders or members (including any

4 depository institution holding company or

5 any shareholder or creditor of such com6 pany).

7 ‘‘(B) EFFECT ON STATE LAW.—

8 ‘‘(i) IN GENERAL.—The provisions of

9 subparagraph (A) shall not supersede the

10 law of any State except to the extent such

11 law is inconsistent with the provisions of

12 such subparagraph, and then only to the ex13 tent of the inconsistency.

14 ‘‘(ii) PROCEDURE FOR DETERMINATION

15 OF INCONSISTENCY.—Upon the Corpora16 tion’s own motion or upon the request of

17 any person with a claim described in sub18 paragraph (A)(i) or any State which is sub19 mitted to the Corporation in accordance

20 with procedures which the Corporation shall

21 prescribe, the Corporation shall determine

22 whether any provision of the law of any

23 State is inconsistent with any provision of

24 subparagraph (A) and the extent of any

25 such inconsistency.
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1 ‘‘(iii) JUDICIAL REVIEW.—The final

2 determination of the Corporation under

3 clause (ii) shall be subject to judicial review

4 under chapter 7 of title 5, United States

5 Code.

6 ‘‘(C) ACCOUNTING REPORT.—Any distribu7 tion by the Corporation in connection with any

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

9 accompanied by the accounting report required

10 under paragraph (15)(B).’’.

11 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

12 (1) Section 11(c)(13) of the Federal Deposit In13 surance Act (12 U.S.C. 1821(c)(13)) is amended—

14 (A) in subparagraph (A), by striking ‘‘sub15 ject to subparagraph (B),’’;

16 (B) by inserting ‘‘and’’ after the semicolon

17 at the end of subparagraph (A);

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

19 (D) by redesignating subparagraph (C) as

20 subparagraph (B).

21 (2) Section 11(g)(4) of the Federal Deposit In22 surance Act (12 U.S.C. 1921(g)(4)) is amended by

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

24 to subsection (d)(11), if the Corporation’’.
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1 (c) EFFECTIVE DATE.—The amendments made by this

2 section shall apply with respect to insured depository insti3 tutions for which a receiver is appointed after the date of

4 the enactment of this Act.

5 SEC. 3002. TRANSFER OF FEDERAL RESERVE SURPLUSES.

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

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

8 amended to read as follows:

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

10 BANKS.—

11 ‘‘(1) STOCKHOLDER DIVIDENDS.—

12 ‘‘(A) IN GENERAL.—After all necessary ex13 penses of a Federal reserve bank have been paid

14 or provided for, the stockholders of the bank shall

15 be entitled to receive an annual dividend of 6

16 percent on paid-in capital stock.

17 ‘‘(B) DIVIDEND CUMULATIVE.—The entitle18 ment to dividends under subparagraph shall be

19 cumulative.

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

21 FUND.—That portion of net earnings of each Federal

22 reserve bank which remains after dividend claims

23 under subparagraph (A) have been fully met shall be

24 deposited in the surplus fund of the bank.
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1 ‘‘(3) PAYMENT TO TREASURY.—During fiscal

2 years 1997 and 1998, any amount in the surplus

3 fund of any Federal reserve bank in excess of the

4 amount equal to 3 percent of the total paid-in capital

5 and surplus of the member banks of such bank shall

6 be transferred to the Board for transfer to the Sec7 retary of the Treasury for deposit in the general fund

8 of the Treasury.’’.

9 (b) ADDITIONAL TRANSFERS FOR FISCAL YEARS 1997

10 AND 1998.—

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

12 required to be transferred from the surplus funds of

13 the Federal reserve banks pursuant to section 7(a)(3)

14 of the Federal Reserve Act, the Federal reserve banks

15 shall transfer from such surplus funds to the Board

16 of Governors of the Federal Reserve System for trans17 fer to the Secretary of the Treasury for deposit in the

18 general fund of the Treasury, a total amount of

19 $106,000,000 in fiscal year 1997 and a total amount

20 of $107,000,000 in fiscal year 1998.

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

22 required to be paid by the Federal reserve banks

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

24 Board of Governors of the Federal Reserve System
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1 shall determine the amount each such bank shall pay

2 in such fiscal year.

3 (3) REPLENISHMENT OF SURPLUS FUND PROHIB4 ITED.—No Federal reserve bank may replenish such

5 bank’s surplus fund by the amount of any transfer by

6 such bank under paragraph (1) during fiscal years

7 1997 and 1998.

8 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

9 (1) The penultimate undesignated paragraph of

10 section 7 of the Federal Reserve Act (12 U.S.C. 290)

11 is amended by striking ‘‘The net earnings derived’’

12 and inserting ‘‘(b) USE OF EARNINGS TRANSFERRED

13 TO THE TREASURY.—The net earnings derived’’.

14 (2) The last undesignated paragraph of section 7

15 of the Federal Reserve Act (12 U.S.C. 531) is amend16 ed by striking ‘‘Federal reserve banks’’ and inserting

17 ‘‘(c) EXEMPTION FROM TAXATION.—Federal reserve

18 banks’’.

19 SEC. 3003. USE OF RETURN DATA FOR INCOME VERIFICA20 TION UNDER CERTAIN HOUSING ASSISTANCE

21 PROGRAMS.

22 (a) AMENDMENTS TO HOUSING ACTS.—Section 904 of

23 the Stewart B. McKinney Homeless Assistance Amendments

24 Act of 1988 (42 U.S.C. 3544) is amended as follows:
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1 (1) DEFINITION.—In subsection (a), by adding

2 at the end the following:

3 ‘‘(4) PROGRAM OF THE DEPARTMENT OF HOUS4 ING AND URBAN DEVELOPMENT.—The term ‘program

5 of the Department of Housing and Urban Develop6 ment’ includes Indian housing programs assisted

7 under title II of the United States Housing Act of

8 1937.’’.

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

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

11 the end;

12 (B) in paragraph (2), by striking the period

13 at the end and inserting ‘‘; and’’;

14 (C) by inserting after paragraph (2) the fol15 lowing new paragraph:

16 ‘‘(3) sign a consent form approved by the Sec17 retary authorizing the Secretary to request the Com18 missioner of Social Security and the Secretary of the

19 Treasury to release information pursuant to section

20 6103(l)(7)(D)(ix) of the Internal Revenue Code of

21 1986 with respect to such applicant or participant for

22 the sole purpose of the Secretary verifying income in23 formation pertinent to the applicant’s or partici24 pant’s eligibility or level of benefits.’’; and
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1 (D) in the last sentence, by striking ‘‘This’’

2 and inserting the following: ‘‘Except as provided

3 in this subsection, this’’.

4 (2) APPLICANT, PARTICIPANT, AND PUBLIC

5 HOUSING AGENCY PROTECTIONS.—In subsection

6 (c)(2)—

7 (A) in subparagraph (A)—

8 (i) in the matter preceding clause (i)—

9 (I) by inserting after ‘‘compensa10 tion law’’ the following: ‘‘or pursuant

11 to section 6103(l)(7)(D)(ix) of the In12 ternal Revenue Code of 1986 from the

13 Commissioner of Social Security or the

14 Secretary of the Treasury’’; and

15 (II) by inserting ‘‘(in the case of

16 information obtained pursuant to such

17 section 303(i))’’ before ‘‘representa18 tives’’; and

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

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

21 place it appears; and

22 (B) in subparagraph (B), by inserting after

23 ‘‘wages’’ each place it appears the following: ‘‘,

24 other earnings or income,’’.

25 (3) PENALTY.—In subsection (c)(3)—
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1 (A) in subparagraph (A), by inserting ‘‘or

2 section 6103(l)(7)(D)(ix) of the Internal Revenue

3 Code of 1986’’ after ‘‘Social Security Act’’; and

4 (B) in the first sentence of subparagraph

5 (B)—

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

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

8 disclosure of information referred to in this

9 section, section 303(i) of the Social Security

10 Act, or section 6103(l)(7)(D)(ix) of the In11 ternal Revenue Code of 1986 about such

12 person by an officer or employee of any

13 public housing agency or owner (or em14 ployee thereof), which disclosure is not au15 thorized by this section, such section 303(i),

16 such section 6103(l)(7)(D)(ix), or any regu17 lation implementing this section, such sec18 tion 303(i), or such section

19 6103(l)(7)(D)(ix), or’’; and

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

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

22 (4) CONFORMING AMENDMENT.—The heading of

23 subsection (c) of section 904 of the Stewart B. McKin24 ney Homeless Assistance Amendments Act of 1988 is

25 amended by striking ‘‘STATE EMPLOYMENT’’.
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1 (5) OPERATING SUBSIDY ADJUSTMENTS.—Sec2 tion 9(a) of the United States Housing Act of 1937

3 (42 U.S.C. 1437g(c)) is amended by adding at the

4 end the following:

5 ‘‘(4) Adjustments to a public housing agency’s operat6 ing subsidy made by the Secretary under this section shall

7 reflect actual changes in rental income collections resulting

8 from the application of section 904 of the Stewart B.

9 McKinney Homeless Assistance Amendments Act of 1988.’’.

10 (b) CONFORMING INTERNAL REVENUE CODE AMEND11 MENTS.—

12 (1) IN GENERAL.—Subparagraph (D) of section

13 6103(l)(7) of the Internal Revenue Code of 1986 (26

14 U.S.C. 6103(l)(7)(D); relating to the disclosure of re15 turn information to Federal, State, and local agencies

16 administering certain programs) is amended—

17 (A) in clause (vii), by striking ‘‘, and’’ at

18 the end and inserting a semicolon;

19 (B) in clause (viii), by striking the period

20 at the end and inserting ‘‘; and’’;

21 (C) by inserting after clause (viii) the fol22 lowing new clause:

23 ‘‘(ix) any housing assistance program

24 administered by the Department of Housing

25 and Urban Development that involves ini-
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1 tial and periodic review of an applicant’s

2 or participant’s income, except that return

3 information may be disclosed under this

4 paragraph only to the Secretary of Housing

5 and Urban Development and only with re6 spect to applicants for and participants in

7 such programs who have signed consent

8 forms under section 904(b)(3) of the Stewart

9 B. McKinney Homeless Assistance Amend10 ments Act of 1988.’’; and

11 (D) by adding at the end the following:

12 ‘‘Clause (ix) shall not apply after September 30,

13 1998.’’.

14 (2) AMENDMENT TO THE HEADING.—The head15 ing of paragraph (7) of section 6103(l) of the Internal

16 Revenue Code of 1986 is amended by inserting after

17 ‘‘1977,’’ the following: ‘‘CERTAIN HOUSING ASSIST18 ANCE PROGRAMS,’’.

19 SEC. 3004. GNMA REMIC GUARANTEE FEES.

20 Section 306(g)(3) of the National Housing Act (12

21 U.S.C. 1721(g)(3)) is amended by adding at the end the

22 following new subparagraph:

23 ‘‘(E)(i) Notwithstanding subparagraphs (A) through

24 (D), fees charged for the guarantee of, or commitment to

25 guarantee, multiclass securities backed by a trust or pool
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1 of securities or notes guaranteed by the Association under

2 this subsection, and other related fees shall be charged by

3 the Association in an amount the Association deems appro4 priate. The Association shall take such action as may be

5 necessary to reasonably assure that such portion of the bene6 fit, resulting from the Association’s multiclass securities

7 program, as the Association determines is appropriate ac8 crues to mortgagors who execute eligible mortgages after the

9 date of the enactment of this subparagraph.

10 ‘‘(ii) In its annual report, the Association shall pro11 vide a summary of each activity of the Association pertain12 ing to the Association’s multiclass securities program. Each

13 summary shall contain a description of the activity and

14 shall include—

15 ‘‘(I) information pertaining to the size of the

16 transactions closed, the number of mortgages involved,

17 the amount of fees charged, those persons or entities

18 receiving payments for services provided and the

19 amounts of such payments; and

20 ‘‘(II) an estimate of the portion of the benefit of

21 the multiclass securities program accruing to mortga22 gors as well as a description of any action taken by

23 the Association to ensure such accrual.

24 ‘‘(iii) The Association shall provide for the initial im25 plementation of the program for which fees are charged
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1 under the first sentence of clause (i) by notice published

2 in the Federal Register. The notice shall be effective upon

3 publication and shall provide an opportunity for public

4 comment. Not later than 12 months after publication of the

5 notice, the Association shall issue regulations for such pro6 gram based on the notice, comments received, and the expe7 rience of the Association in carrying out the program dur8 ing such period.

9 ‘‘(iv) The Association shall consult with persons or en10 tities in such manner as the Association deems appropriate

11 to ensure the efficient commencement and operation of the

12 multiclass securities program.

13 ‘‘(v) No State or local law, and no Federal law (except

14 Federal law enacted expressly in limitation of this clause

15 after the effective date of this subparagraph) shall preclude

16 or limit the exercise by the Association of its power to con17 tract with persons or entities, and its rights to enforce such

18 contracts, for the purpose of ensuring the efficient com19 mencement and continued operation of the multiclass secu20 rities program.

21 ‘‘(vi) Prior to the commencement of the multiclass se22 curities program, the Association shall provide to the Com23 mittee on Banking, Housing, and Urban Affairs of the Sen24 ate and the Committee on Banking, Finance and Urban

25 Affairs of the House of Representatives a report describing
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1 the Association’s design of the multiclass securities pro2 gram, including program elements that ensure the mini3 mization of risks arising from the operation of the

4 multiclass securities program, such as—

5 ‘‘(I) any industry proven safeguards, including

6 capital standards for sponsors and provisions for in7 demnification from private parties for events that

8 may result in the Association’s liability under its

9 guaranty or commitment to guaranty; and

10 ‘‘(II) the sufficiency of the Association’s staff re11 sources to administer the multiclass securities pro12 gram.’’.

13 SEC. 3005. MUTUAL MORTGAGE INSURANCE FUND PRE14 MIUMS.

15 To improve the actuarial soundness of the Mutual

16 Mortgage Insurance Fund under the National Housing Act,

17 the Secretary of Housing and Urban Development shall in18 crease the rate at which the Secretary earns the single pre19 mium payment collected at the time of insurance of a mort20 gage that is an obligation of such Fund (with respect to

21 the rate in effect on the date of the enactment of this Act).

22 In establishing such increased rate, the Secretary shall con23 sider any current audit findings and reserve analyses and

24 information regarding the expected average duration of

25 mortgages that are obligations of such Fund and may con-
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1 sider any other information that the Secretary determines

2 to be appropriate.

3 TITLE IV—COMMUNICATIONS

4 AND TRANSPORTATION

5 Subtitle A—Spectrum Allocation

6 and Auction

7 SEC. 4001. SHORT TITLE.

8 This subtitle may be cited as the ‘‘Emerging Tele9 communications Technologies Act of 1993’’.

10 SEC. 4002. FINDINGS.

11 The Congress finds that—

12 (1) the Federal Government currently reserves

13 for its own use, or has priority of access to, approxi14 mately 40 percent of the electromagnetic spectrum

15 that is assigned for use pursuant to the Communica16 tions Act of 1934;

17 (2) many of such frequencies are underutilized

18 by Federal Government licensees;

19 (3) the public interest requires that many of such

20 frequencies be utilized more efficiently by Federal

21 Government and non-Federal licensees;

22 (4) additional frequencies are assigned for serv23 ices that could be obtained more efficiently from com24 mercial providers or other vendors;
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1 (5) scarcity of assignable frequencies for licens2 ing by the Commission can and will—

3 (A) impede the development and commer4 cialization of new telecommunications products

5 and services;

6 (B) limit the capacity and efficiency of tele7 communications systems in the United States;

8 (C) prevent some State and local police,

9 fire, and emergency services from obtaining ur10 gently needed radio channels; and

11 (D) adversely affect the productive capacity

12 and international competitiveness of the United

13 States economy;

14 (6) a reassignment of these frequencies can

15 produce significant economic returns;

16 (7) a reassignment of Federal Government fre17 quencies can be accomplished without adverse impact

18 on amateur radio licenses that currently share alloca19 tions with Federal Government stations;

20 (8) current spectrum assignment procedures—

21 comparative hearings and lotteries—can be expensive

22 and time consuming, can strain the limited resources

23 of the Federal Communications Commission, and can

24 result in an inefficient distribution of spectrum and

25 an unjustified windfall to speculators;
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1 (9) competitive bidding could reduce the cost in

2 time and money—and increase the efficiency—of the

3 spectrum assignment process for certain radio serv4 ices, discourage speculative applications, encourage

5 the efficient use of spectrum by licensees, and fairly

6 compensate United States taxpayers for use of a

7 scarce public natural resource;

8 (10) competitive bidding should be structured

9 to—

10 (A) facilitate introduction of new spectrum11 based technologies and services and entry of new

12 companies into the telecommunications market;

13 (B) recognize the legitimate needs of rural

14 telephone companies in providing spectrum15 based, common carrier services in rural markets

16 in which they provide telephone exchange service

17 by wire;

18 (C) give appropriate consideration to small

19 businesses and minority-owned businesses that

20 want to participate in the competitive bidding

21 process;

22 (D) recognize the need to make reasonably

23 priced mobile communications services available

24 to businesses in rural areas;
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1 (E) recognize the need to ensure that ade2 quate spectrum continues to be available for pub3 lic safety services; and

4 (F) otherwise further the public interest;

5 (11) competitive bidding should apply only to

6 the granting of new spectrum licenses and should

7 not—

8 (A) disrupt the operations of existing spec9 trum licensees;

10 (B) alter existing spectrum allocation proce11 dures;

12 (C) apply to certain services governed by

13 public interest regulations;

14 (D) diminish the existing authority of the

15 Federal Communications Commission to regulate

16 or reclaim spectrum licenses;

17 (E) prevent or discourage the allocation of

18 spectrum to meet the current or future needs of

19 public safety services; or

20 (F) grant any right to a spectrum licensee

21 different from the rights awarded to licensees

22 who obtain their license through assignment

23 methods other than competitive bidding;

24 (12) in appropriating revenues received from

25 competitive bidding, priority should be given to—
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1 (A) funding spectrum management, plan2 ning, monitoring, and enforcement and other ac3 tivities of the Federal Communications Commis4 sion, the National Telecommunications and In5 formation Administration, and other Federal

6 agencies aimed at increasing the efficiency and

7 effectiveness of spectrum use, facilitating the in8 troduction of new spectrum-based technologies

9 and services, and enhancing the international

10 competitiveness of the United States and the

11 ability of American companies to enter new

12 markets; and

13 (B) extending the reach of public radio and

14 television to underserved areas of the United

15 States and underserved groups of Americans and

16 enhancing the ability of public telecommuni17 cations to deliver needed original, high-quality

18 public service programming; and

19 (13) because commercial mobile services require

20 a Federal license and the Federal Government is at21 tempting to promote competition for such services,

22 and because providers of such services do not exercise

23 market power vis-a-vis telephone exchange service car24 riers and State regulation can be a barrier to the de-
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1 velopment of competition in this market, uniform na2 tional policy is necessary and in the public interest.

3 SEC. 4003. NATIONAL SPECTRUM PLANNING.

4 (a) PLANNING ACTIVITIES.—The Assistant Secretary

5 of Commerce for Communications and Information and the

6 Chairman of the Commission shall meet, at least bian7 nually, to conduct joint spectrum planning with respect to

8 the following issues:

9 (1) the future spectrum requirements for public

10 and private uses, including State and local govern11 ment public safety agencies;

12 (2) the spectrum allocation actions necessary to

13 accommodate those uses; and

14 (3) actions necessary to promote the efficient use

15 of the spectrum, including spectrum management

16 techniques to promote increased shared use of the

17 spectrum that does not cause harmful interference, as

18 a means of increasing commercial access.

19 (b) REPORT ON PLANNING ACTIVITIES.—Not later

20 than 24 months after the date of enactment of this Act, the

21 Assistant Secretary of Commerce for Communications and

22 Information and the Chairman of the Commission shall

23 submit a joint report to the Committee on Energy and Com24 merce of the House of Representatives and the Committee

25 on Commerce, Science, and Transportation of the Senate
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1 on the joint spectrum planning activities conducted under

2 subsection (a) and recommendations for action developed

3 pursuant to such activities. The report shall contain rec4 ommendations for the reform of the process of allocating

5 spectrum between Federal uses and non-Federal uses.

6 (c) PROCEDURES TO ENSURE OPPORTUNITY FOR MI7 NORITY-OWNED BUSINESSES AND SMALL BUSINESSES.—

8 The Commission shall develop procedures to ensure that mi9 nority-owned businesses and small businesses are given the

10 opportunity to provide spectrum-based services. In develop11 ing such procedures, the Commission shall consider the use

12 of tax certificates and bidding preferences.

13 (d) STUDY ON SPECTRUM NEEDS OF PUBLIC SAFETY

14 AGENCIES.—The Commission shall complete and submit to

15 Congress, not later than 18 months after the date of enact16 ment of this Act, a study of current and future spectrum

17 needs of State and local government public safety agencies

18 through the year 2010, and a specific plan to satisfy those

19 spectrum needs.

20 SEC. 4004. RECOMMENDATIONS FOR REALLOCATION OF

21 CERTAIN FREQUENCIES.

22 (a) IDENTIFICATION REQUIRED.—For purposes of

23 reallocation, the Secretary shall identify frequencies that—

24 (1) are allocated on a primary basis for Federal

25 Government use;
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1 (2) are not required for the present or identifi2 able future needs of the Federal Government;

3 (3) can feasibly be made available, as of the date

4 of such identification or at any time during the next

5 15 years, for use under the Act (other than for Fed6 eral Government stations under section 305 of the

7 Act) without resulting in costs to the Federal Govern8 ment, or loss of services or benefits to the public, that

9 are excessive in relation to the benefits to the public

10 that may be provided by non-Federal licensees; and

11 (4) are most likely to have the greatest potential

12 for productive uses and public benefits under the Act

13 if allocated for commercial uses.

14 (b) MINIMUM AMOUNT OF SPECTRUM REC15 OMMENDED.—

16 (1) OVERALL RECOMMENDATION.—In accordance

17 with the provisions of this section, the Secretary shall

18 recommend for reallocation, for use other than by

19 Federal Government stations under section 305 of the

20 Act (47 U.S.C. 305), at least 200 megahertz of fre21 quencies identified under subsection (a) that are lo22 cated below 5 gigahertz. At least one-half of such fre23 quencies shall be located below 3 gigahertz.

24 (2) MIXED USES PERMITTED TO BE COUNTED.—

25 Among the frequencies recommended under this sec-
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1 tion for reallocation, the Secretary may include fre2 quencies and frequency bands that are to be partially

3 retained for use by Federal Government stations but

4 that are also recommended to be reallocated under the

5 Act for use by non-Federal stations, except that—

6 (A) such mixed-use frequencies and fre7 quency bands may not count toward more than

8 one-half of the 200 megahertz minimum required

9 by paragraph (1);

10 (B) such mixed-use frequencies and fre11 quency bands may not be so counted unless the

12 assignments of the frequencies to Federal Govern13 ment stations under section 305 of the Act (47

14 U.S.C. 305) are limited by geographic area, by

15 time, or by other means so as to guarantee that

16 the potential use to be made by such Federal

17 Government stations is substantially less (as

18 measured by geographic area, time, or otherwise)

19 than the potential use to be made by non-Federal

20 stations; and

21 (C) the operational sharing permitted under

22 this paragraph shall be subject to coordination

23 procedures that the Commission and the Sec24 retary shall jointly establish and implement to

25 ensure against harmful interference.
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1 (c) CONSIDERATION OF CRITERIA FOR IDENTIFICA2 TION.—

3 (1) NEEDS OF THE FEDERAL GOVERNMENT.—In

4 determining whether a frequency meets the criteria

5 specified in subsection (a)(2), the Secretary shall—

6 (A) consider whether the frequency is used

7 to provide a communications service that is or

8 could be made available from a commercial car9 rier or other vendor;

10 (B) seek to promote—

11 (i) the maximum practicable reliance

12 on commercially available substitutes;

13 (ii) the sharing of frequencies (as per14 mitted under subsection (b)(2));

15 (iii) the development and use of new

16 communications technologies; and

17 (iv) the use of nonradiating commu18 nications systems where practicable; and

19 (C) seek to avoid—

20 (i) serious degradation of Federal Gov21 ernment services and operations;

22 (ii) excessive costs to the Federal Gov23 ernment and users of Federal Government

24 services; and
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1 (iii) excessive disruption of existing use

2 of Federal Government frequencies by ama3 teur radio licensees.

4 (2) FEASIBILITY OF USE.—In determining

5 whether a frequency meets the criteria specified in

6 subsection (a)(3), the Secretary shall—

7 (A) assume that the frequency will be as8 signed by the Commission under section 303 of

9 the Act (47 U.S.C. 303) within 15 years;

10 (B) assume reasonable rates of scientific

11 progress and growth of demand for telecommuni12 cations services;

13 (C) seek to include frequencies which can be

14 used to stimulate the development of new tech15 nologies; and

16 (D) consider the immediate and recurring

17 costs to reestablish services displaced by the

18 reallocation of spectrum.

19 (3) COMMERCIAL USE.—In determining whether

20 a frequency meets the criteria specified in subsection

21 (a)(4), the Secretary shall consider—

22 (A) the extent to which equipment is avail23 able that is capable of utilizing such frequency;
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1 (B) the proximity of frequencies that are al2 ready assigned for commercial or other non-Fed3 eral use;

4 (C) the extent to which, in general, commer5 cial users could share the frequency with ama6 teur radio licensees; and

7 (D) the activities of foreign governments in

8 making frequencies available for experimentation

9 or commercial assignments in order to support

10 their domestic manufacturers of equipment.

11 (4) OTHER USES.—

12 (A) APPLICABILITY OF CRITERIA.—The cri13 teria specified by subsection (a) shall be deemed

14 not to be met for any purpose under this subtitle

15 with regard to any frequency assignment to, or

16 any frequency assignment used by, a Federal

17 power agency for the purpose of withdrawing

18 that assignment.

19 (B) MIXED USE ELIGIBILITY.—The fre20 quencies assigned to any Federal power agency

21 may only be eligible for mixed use under sub22 section (b)(2) in geographically separate areas,

23 but in those cases where a frequency is to be

24 shared by an affected Federal power agency and

25 a non-Federal user, such use by the non-Federal
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1 user shall not cause harmful interference to the

2 affected Federal power agency or adversely affect

3 the reliability of its power system.

4 (C) DEFINITION.—As used in this para5 graph, the term ‘‘Federal power agency’’ means

6 the Tennessee Valley Authority, the Bonneville

7 Power Administration, the Western Area Power

8 Administration, or the Southwestern Power Ad9 ministration.

10 (d) PROCEDURE FOR IDENTIFICATION OF

11 REALLOCABLE BANDS OF FREQUENCIES.—

12 (1) REPORT IDENTIFYING 30 MEGAHERTZ FOR

13 IMMEDIATE REALLOCATION.—Within 6 months after

14 the date of enactment of this Act, the Secretary shall

15 prepare and submit to the President and the Congress

16 a report that recommends for immediate reallocation

17 no less than 30 megahertz of frequencies identified

18 under subsection (a). None of the frequencies covered

19 by such report may be allocated for mixed use as de20 scribed in subsection (b)(2). Not less than one-half of

21 such frequencies shall be located below 3 gigahertz.

22 (2) PRELIMINARY REPORT ON OTHER

23 REALLOCABLE FREQUENCIES.—Within 6 months after

24 the date of enactment of this Act, the Secretary shall

25 prepare, make publicly available, and submit to the
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1 President and the Congress a preliminary report that

2 recommends for reallocation at least 170 megahertz of

3 frequencies identified under subsection (a), other than

4 those recommended for immediate reallocation under

5 paragraph (1).

6 (3) PUBLIC COMMENT; CHANGES TO REPORT.—

7 The Secretary shall receive public comment on the

8 preliminary report required by paragraph (2) and

9 shall, based upon the comments, make such changes to

10 the report as are warranted to meet the objectives of

11 this section.

12 (4) DIRECT DISCUSSIONS.—The Secretary shall

13 encourage and provide opportunity for direct discus14 sions among commercial representatives and Federal

15 Government users of the spectrum to aid the Sec16 retary in determining which frequencies to rec17 ommend for reallocation. The Secretary shall provide

18 notice to the public of any such discussions, including

19 the name or names of any businesses or other persons

20 represented in such discussions, and shall provide the

21 public with an opportunity to comment on the results

22 of any such negotiations prior to the submission of

23 the final report required by paragraph (5).

24 (5) FINAL REPORT ON OTHER REALLOCABLE

25 FREQUENCIES.—Within 18 months after the date of
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1 enactment of this Act, the Secretary shall prepare and

2 submit to the President and the Congress a final re3 port that recommends the reallocation of at least 170

4 megahertz of frequencies as described in paragraph

5 (2). Not less than one-half of such frequencies shall be

6 located below 3 gigahertz.

7 (6) LIMITATION ON REALLOCATION.—None of the

8 frequencies recommended for reallocation in the re9 ports required by this subsection shall have been rec10 ommended, prior to the date of enactment of this Act,

11 for reallocation to non-Federal use by international

12 agreement.

13 (e) TIMETABLE FOR REALLOCATION AND LIMITA14 TION.—The Secretary shall, as part of the reports required

15 by paragraphs (1) and (2) of subsection (d), include a time16 table that recommends dates by which the President shall

17 withdraw or limit assignments of the frequencies specified

18 in the reports. In setting the recommended effectived dates,

19 the Secretary shall—

20 (1) consider the need to reallocate frequencies as

21 early as possible, taking into account the require22 ments of section 406;

23 (2) consider the useful remaining life of equip24 ment that has been purchased or contracted for pur25 chase to operate on identified frequencies;
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1 (3) consider the need to coordinate frequency use

2 with other nations; and

3 (4) take into account the relationship between the

4 costs to the Federal Government of changing to dif5 ferent frequencies and the benefits that may be ob6 tained from commercial and other non-Federal uses of

7 the reassigned frequencies.

8 SEC. 4005. WITHDRAWAL OR LIMITATION OF ASSIGNMENT

9 TO FEDERAL GOVERNMENT STATIONS.

10 (a) IN GENERAL.—The President shall—

11 (1) within 12 months after receipt of the report

12 required by section 404(d)(1), withdraw the assign13 ment to a Federal Government station of any fre14 quency in the frequencies recommended by that report

15 for immediate reallocation;

16 (2) by the effective date recommended by the Sec17 retary under section 404(e) (except as provided in

18 subsection (b)(4) of this section), withdraw or limit

19 the assignment to a Federal Government station of

20 any frequency which the report required by section

21 404(d)(3) recommends be reallocated or made avail22 able for mixed use on such recommended effective

23 date;
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1 (3) assign or reassign other frequencies to Fed2 eral Government stations as necessary to adjust to

3 such withdrawal or limitation of assignments; and

4 (4) transmit a notice and description to the

5 Commission and each House of Congress of the ac6 tions taken under this subsection.

7 (b) EXCEPTIONS.—

8 (1) AUTHORITY TO SUBSTITUTE.—If the Presi9 dent determines that a circumstance described in

10 paragraph (2) exists, the President—

11 (A) may substitute an alternative frequency

12 for the frequency that is subject to such deter13 mination and withdraw (or limit) the assign14 ment of that alternative frequency in the manner

15 required by subsection (a); and

16 (B) shall submit a statement of the reasons

17 for taking the action described in subparagraph

18 (A) to the Committee on Energy and Commerce

19 of the House of Representatives and the Commit20 tee on Commerce, Science, and Transportation of

21 the Senate.

22 (2) GROUNDS FOR SUBSTITUTION.—Each of the

23 following subparagraphs describes a circumstance re24 ferred to in paragraph (1):
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1 (A) The reassignment would seriously jeop2 ardize the national defense interests of the Unit3 ed States.

4 (B) The frequency proposed for reassign5 ment is uniquely suited to meeting important

6 governmental needs.

7 (C) The reassignment would seriously jeop8 ardize public health or safety.

9 (D) The reassignment will result in costs to

10 the Federal Government that are excessive in re11 lation to the benefits that may be obtained from

12 commercial or other non-Federal uses of the reas13 signed frequency.

14 (E) The reassignment will disrupt the exist15 ing use of a Federal Government band of fre16 quencies by amateur radio licensees.

17 (3) CRITERIA FOR SUBSTITUTED FRE18 QUENCIES.—For purposes of paragraph (1), a fre19 quency may not be substituted for a frequency identi20 fied and recommended under section 404 for

21 reallocation, unless the substituted frequency also

22 meets each of the criteria specified by section 404(a).

23 (4) DELAYS IN IMPLEMENTATION.—If the Presi24 dent determines that any action cannot be completed

25 by the effective date recommended by the Secretary
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1 pursuant to section 404(e), or that such an action by

2 such date would result in a frequency being unused

3 as a consequence of the Commission’s plan under sec4 tion 404(b), the President may—

5 (A) withdraw or limit the assignment to

6 Federal Government stations on a later date that

7 is consistent with such plan, except that the

8 President shall notify each Committee specified

9 in paragraph (1)(B) and the Commission of the

10 reason that withdrawal or limitation at a later

11 date is required; or

12 (B) substitute alternative frequencies pursu13 ant to this subsection.

14 (c) COSTS OF WITHDRAWING FREQUENCIES ASSIGNED

15 TO THE FEDERAL GOVERNMENT.—

16 (1) REIMBURSEMENT AUTHORIZED.—Any Fed17 eral agency, or non-Federal entity operating on behalf

18 of a Federal agency, whose operation is displaced

19 from a frequency pursuant to this section may be re20 imbursed, from revenues received pursuant to section

21 408, not more than the incremental costs such agency

22 or entity incurs (in such amounts as are provided in

23 advance in an appropriations Act) that are directly

24 attributable to the displacement from the frequency.

25 The estimates of these costs shall be prepared by the
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1 affected agency, in consultation with the Department

2 of Commerce.

3 (2) AUTHORIZATION OF APPROPRIATIONS.—

4 There are authorized to be appropriated to the af5 fected Federal agencies such sums as may be nec6 essary to carry out the purposes of this subsection.

7 (d) EXISTING AUTHORITY RETAINED.—

8 (1) ADDITIONAL REALLOCATION.—Nothing in

9 this subtitle prevents or limits additional reallocation

10 of spectrum from the Federal Government to the com11 mercial or other sectors.

12 (2) IMPLEMENTATION OF NEW TECHNOLOGIES

13 AND SERVICES.—Notwithstanding any other provision

14 of this subtitle—

15 (A) the Secretary may at any time allow

16 frequencies allocated on a primary basis for Fed17 eral Government use to be used by non-Federal

18 licensees on a mixed-use basis for the purpose of

19 facilitating the prompt implementation of new

20 technologies or services; and

21 (B) the Commission shall expedite and give

22 priority to the allocation of any frequencies iden23 tified pursuant to subparagraph (A), and any

24 associated licensing.
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1 SEC. 4006. ALLOCATION AND ASSIGNMENT OF FRE2 QUENCIES BY THE COMMISSION.

3 (a) ALLOCATION AND ASSIGNMENT OF IMMEDIATELY

4 AVAILABLE FREQUENCIES.—With respect to the frequencies

5 made available for immediate reallocation pursuant to sec6 tion 405(a)(1), the Commission, not later than 18 months

7 after the date of enactment of this Act, shall issue rules to

8 allocate such frequencies and shall propose rules to assign

9 such frequencies.

10 (b) ALLOCATION AND ASSIGNMENT OF REMAINING

11 AVAILABLE FREQUENCIES.—With respect to the frequencies

12 made available for reallocation pursuant to section

13 405(a)(2), the Commission shall, not later than 1 year after

14 receipt of the final report identified in section 404(d)(4),

15 prepare, in consultation with the Assistant Secretary of

16 Commerce for Communications and Information, submit to

17 the President and the Congress, and implement, a plan for

18 the allocation and assignment under the Act of such fre19 quencies. Such plan shall—

20 (1) not propose the immediate allocation and as21 signment of all such frequencies but, taking into ac22 count the timetable recommended by the Secretary

23 pursuant to section 404(e), shall propose—

24 (A) gradually to allocate and assign the fre25 quencies remaining, after making the reservation

26 required by subparagraph (B), over the course of
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1 10 years beginning on the date of submission of

2 such plan; and

3 (B) to reserve a significant portion of such

4 frequencies for distribution beginning after the

5 end of such 10-year period;

6 (2) contain appropriate provisions to ensure the

7 availability of frequencies for (A) new technologies

8 and services in accordance with the policies of section

9 7 of the Act (47 U.S.C. 157) and (B) the safety of life

10 and property in accordance with the policies of sec11 tion 1 of the Act (47 U.S.C. 151);

12 (3) address (A) the feasibility of reallocating por13 tions of the spectrum from current commercial and

14 other non-Federal uses to provide for more efficient

15 use of the spectrum, and (B) innovation and market16 place developments that may affect the relative effi17 ciencies of different spectrum allocations;

18 (4) not prevent the Commission from allocating

19 frequencies, and assigning licenses to use frequencies,

20 not included in the plan; and

21 (5) not preclude the Commission from making

22 changes to the plan in future proceedings.

23 (c) AMENDMENT TO THE ACT.—Section 303 of the Act

24 (47 U.S.C. 303) is amended by adding at the end the follow25 ing new subsection:
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1 ‘‘(v) Have authority to assign licenses to use the fre2 quencies reallocated from United States Government use to

3 non-United States Government use pursuant to the Emerg4 ing Telecommunications Technologies Act of 1993; except

5 that any such assignment shall be made expressly subject

6 to the right of the President to reclaim such frequencies

7 under section 7 of such Act.’’.

8 SEC. 4007. AUTHORITY TO RECLAIM REASSIGNED FRE9 QUENCIES.

10 (a) AUTHORITY OF PRESIDENT.—Subsequent to the

11 withdrawal of assignment to Federal Government stations

12 pursuant to section 405, the President may reclaim reas13 signed frequencies for reassignment to Federal Government

14 stations in accordance with this section.

15 (b) PROCEDURE FOR RECLAIMING FREQUENCIES.—

16 (1) UNALLOCATED FREQUENCIES.—If the fre17 quencies to be reclaimed have not been allocated or as18 signed by the Commission pursuant to the Act, the

19 President shall follow the procedures for substitution

20 of frequencies established by section 405(b) of this sub21 title.

22 (2) ALLOCATED FREQUENCIES.—If the fre23 quencies to be reclaimed have been allocated or as24 signed by the Commission, the President shall follow

25 the procedures for substitution of frequencies estab-
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1 lished by section 405(b) of this subtitle, except that the

2 notification required by section 405(b)(1)(B) shall in3 clude—

4 (A) a timetable to accommodate an orderly

5 transition for displaced licensees to obtain new

6 frequencies and equipment necessary for its utili7 zation; and

8 (B) an estimate of the cost of displacing

9 spectrum uses licensed by the Commission.

10 (c) COSTS OF RECLAIMING FREQUENCIES; APPROPRIA11 TIONS AUTHORIZED.—The Federal Government shall bear

12 all costs of reclaiming frequencies pursuant to this section,

13 including the cost of equipment which is rendered unusable,

14 the cost of relocating operations to a different frequency,

15 and any other costs that are directly attributable to the re16 claiming of the frequency pursuant to this section. There

17 are authorized to be appropriated such sums as may be nec18 essary to carry out the purposes of this section.

19 (d) EFFECTIVE DATE OF RECLAIMED FRE20 QUENCIES.—The Commission shall not withdraw licenses

21 for any reclaimed frequencies until the end of the fiscal year

22 following the fiscal year in which the President’s notifica23 tion is received.

24 (e) EFFECT ON OTHER LAW.—Nothing in this section

25 shall be construed to limit or otherwise affect the authority
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1 of the President under section 706 of the Act (47 U.S.C.

2 606).

3 SEC. 4008. COMPETITIVE BIDDING.

4 (a) COMPETITIVE BIDDING.—

5 (1) IN GENERAL.—

6 (A) FIVE-YEAR AUTHORIZATION.—The Com7 mission shall, during fiscal years 1994 through

8 1998, use the competitive bidding process author9 ized under the amendment made by subsection

10 (b) to grant all radio spectrum licenses for which

11 two or more mutually exclusive applications

12 have been filed, including the 200 megahertz of

13 spectrum made available to the Commission

14 under this subtitle, and including the licenses is15 sued for a personal communications service es16 tablished pursuant to the proceeding entitled

17 ‘‘Amendment to the Commission’s Rules to Es18 tablish New Personal Communications Services’’,

19 or any successor proceeding, except for those li20 censes identified in subparagraphs (A) through

21 (E) of section 309(j)(4) of the Act and those li22 censes that the Commission determines should in

23 the public interest be issued by comparative

24 hearing under section 309(a) through (f) of the

25 Act. To the extent possible, and consistent with
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1 the purposes of this subtitle, the Commission

2 shall seek to ensure that revenues received pursu3 ant to the competitive bidding process are re4 ceived before the end of fiscal year 1998.

5 (B) EXPIRATION OF REQUIREMENTS.—The

6 requirements of subparagraph (A) shall expire

7 either—

8 (i) upon a determination by the Sec9 retary of the Treasury that competitive bid10 ding has resulted in or is reasonably ex11 pected to result in the receipt of

12 $7,200,000,000 by the end of fiscal year

13 1998, or

14 (ii) at the end of fiscal year 1998,

15 whichever is earlier.

16 (C) REPORT TO PRESIDENT AND CON17 GRESS.—The Commission shall prepare, in con18 sultation with the Assistant Secretary of Com19 merce for Communications and Information,

20 and submit to the President and the Congress,

21 not later than March 31, 1997, and March 31,

22 1999, reports on the use of competitive bidding

23 under subparagraph (A). Such reports shall ex24 amine, in addition to any other matters deemed
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1 appropriate by the Commission, whether and to

2 what extent—

3 (i) competitive bidding significantly

4 improved the efficiency and effectiveness of

5 the process for granting radio spectrum

6 licenses;

7 (ii) competitive bidding facilitated the

8 introduction of new spectrum-based tech9 nologies and the entry of new companies

10 into the telecommunications market;

11 (iii) the needs of rural spectrum users

12 were adequately addressed in the competi13 tive bidding process;

14 (iv) small businesses and minority15 owned businesses were able to participate

16 successfully in the competitive bidding proc17 ess; and

18 (v) statutory changes are needed to im19 prove the competitive bidding process.

20 (2) RETENTION OF REVENUES.—Notwithstand21 ing paragraph (6) of section 309(j) of the Act, as

22 added by this subtitle, the salaries and expenses ac23 count of the Commission shall retain as an offsetting

24 collection such sums as may be necessary from the re25 ceipts received pursuant to such section for the costs
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1 of developing and implementing the program required

2 by subsection (a)(1)(A). Such offsetting collections

3 shall be available for obligation subject to the terms

4 and conditions of the receiving appropriations ac5 count, and shall be deposited in such accounts on a

6 quarterly basis. Any funds appropriated to the Com7 mission for fiscal years 1994 through 1998 for the

8 purpose of assigning licenses using random selection

9 under section 309(i) of the Act shall be used by the

10 Commission to implement section 309(j) of the Act.

11 (b) COMPETITIVE BIDDING AUTHORIZATION.—Section

12 309 of the Act (47 U.S.C. 309) is amended by adding at

13 the end the following new subsection:

14 ‘‘(j)(1) Subject to the exemptions and conditions set

15 forth in the other provisions of this subsection, if there are

16 two or more mutually exclusive applications for any con17 struction permit or initial license which will involve any

18 use of the electromagnetic spectrum, the Commission shall

19 have authority to use competitive bidding in the granting

20 of such construction permit or initial license.

21 ‘‘(2)(A) The Commission shall, within 6 months after

22 the date of enactment of the Emerging Telecommunications

23 Technologies Act of 1993 and following public notice and

24 comment proceedings, issue rules establishing competitive

25 bidding procedures under this subsection. Such rules shall
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1 include safeguards to protect the public interest in the use

2 of the spectrum and shall ensure the opportunity for suc3 cessful participation by small businesses and minority4 owned businesses.

5 ‘‘(B)(i) In the rules issued pursuant to subparagraph

6 (A), the Commission shall require potential bidders to file

7 a first-stage application indicating an intent to participate

8 in the competitive bidding process and containing such

9 other information as the Commission finds necessary. After

10 conducting the bidding, the Commission shall require the

11 wining bidder to file a second-stage application. After deter12 mining that such application is acceptable for filing and

13 that the winning bidder is qualified as described in clause

14 (ii), the Commission shall grant the permit or license to

15 the winning bidder.

16 ‘‘(ii) No permit or license shall be granted to a win17 ning bidder pursuant to clause (i) unless the Commission

18 determines that such winning bidder is qualified pursuant

19 to section 308(b) and subsection (a) of this section, on the

20 basis of the information contained in the first-stage and sec21 ond-stage applications submitted pursuant to clause (i).

22 ‘‘(iii) Each participant in the competitive bidding

23 process shall be subject to the schedule of charges contained

24 in section 8.
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1 ‘‘(C) In the rules issued pursuant to subparagraph (A),

2 the Commission, in addition to other actions it finds nec3 essary to implement competitive bidding fairly and

4 effectively, shall—

5 ‘‘(i) establish the method of bidding (including

6 but not limited to sealed bids) and the basis for pay7 ment (such as installment or lump sum payments,

8 royalties on future income, a combination thereof, or

9 other reasonable forms of payment specified by the

10 Commission); and

11 ‘‘(ii) establish other appropriate conditions on

12 such permits and licenses that serve the public

13 interest.

14 ‘‘(3)(A)(i) If the Commission decides to use competitive

15 bidding to grant two or more national, regional, or local

16 licenses per market in a terrestrial service that will compete

17 with telephone exchange service provided by a qualified

18 common carrier, the Commission shall designate one such

19 license per market as a rural program license.

20 ‘‘(ii) The Commission shall define the geographic

21 boundaries of the rural program license to correspond to

22 the geographic area of the telephone exchange service by

23 which the qualified common carrier became eligible for the

24 rural program license under subparagraph (E)(ii).
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1 ‘‘(B)(i) Except as provided in subparagraph (D), the

2 Commission shall either grant a rural program license to

3 the qualified common carrier providing telephone exchange

4 service in the area covered by such license, or grant a license

5 to a consortium of such qualified carriers.

6 ‘‘(ii) No qualified common carrier that receives a rural

7 program license shall be eligible to—

8 ‘‘(I) receive any other license to provide the same

9 service in such area; or

10 ‘‘(II) own any equity interest in, become a credi11 tor of, or otherwise become affiliated with any entity

12 that holds a license to provide the same service in

13 such area.

14 ‘‘(iii) Any qualified common carrier that receives a

15 rural program license shall (I) provide to all other licensees

16 providing the same service in such area the same quality

17 of access to its wire network that it provides itself, and (II)

18 shall interconnect its wireless service with the wireless serv19 ice provided by another licensee providing the same service

20 on the same frequency in a different geographic area. Such

21 other licensee shall provide an equivalent interconnection

22 with the wireless service of such rural program licensee.

23 ‘‘(iv) The Commission may establish other rules or

24 conditions for the award of a rural program license, consist25 ent with the intent of this paragraph.
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1 ‘‘(C)(i) Upon the grant of a rural program license to

2 a qualified common carrier, such carrier shall pay a fee

3 (in lump sum or installment payments, in royalties on fu4 ture income, in a combination thereof, or on any other rea5 sonable basis specified by the Commission) equal to the

6 value of such license. The value of such license shall be the

7 average of the amounts paid by persons granted licenses

8 through competitive bidding to provide the same service in

9 such area, except that the Commission shall determine the

10 value of such license by any reasonable means when the geo11 graphic area served by the rural program license is not con12 gruent with the geographic area served by the other license

13 or licenses. The Commission shall ensure that the total

14 amount paid by qualified common carriers for all the li15 censes issued to them under the rural program shall equal

16 the total value, as determined under clause (ii), of such li17 censes.

18 ‘‘(ii) The Commission shall determine the total value

19 of the licenses issued under the rural program to qualified

20 common carriers by first adding the amounts paid for the

21 licenses not subject to the rural program, and dividing that

22 sum by the number of licenses per market that are not sub23 ject to the rural program. The Commission shall then sub24 tract from the amount found in the previous calculation

25 the total amount paid for the licenses issued for the non-
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1 rural areas under bidding subject to the rural program and

2 the total amount paid for licenses issued pursuant to sub3 paragraph (D). The amount remaining shall be the total

4 value of all the licenses issued under the rural program to

5 qualified common carriers.

6 ‘‘(D) If no qualified common carrier applies for a

7 rural program license in a particular market and the Com8 mission awards the non-rural program licenses through

9 competitive bidding, the rural program shall not apply for

10 that particular market and the Commission shall use com11 petitive bidding to award the licenses for the former rural

12 program areas, either separately or as part of larger license

13 areas.

14 ‘‘(E) For purposes of this paragraph—

15 ‘‘(i) the term ‘rural area’ means any geographic

16 area that does not include either—

17 ‘‘(I) any incorporated place of 10,000 in18 habitants or more, or any part thereof; or

19 ‘‘(II) any territory, incorporated or unin20 corporated, included in an urbanized area (as

21 defined by the Bureau of the Census as of the

22 date of enactment of the Emerging Telecommuni23 cations Technologies Act of 1993); and

24 ‘‘(ii) the term ‘qualified common carrier’ means

25 a common carrier that—
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1 ‘‘(I) either provides telephone exchange serv2 ice by wire in a rural area, provides telephone

3 exchange service by wire to less than 10,000 sub4 scribers, or is a telephone utility whose income

5 accrues to a State or political subdivision there6 of; and

7 ‘‘(II) submits an application for a rural

8 program license that meets the standards estab9 lished by the Commission to determine ability to

10 provide the service covered by the license.

11 ‘‘(F) The provisions of subparagraph (A)(ii) do not

12 limit the Commission’s discretion to determine, for licenses

13 issued other than under this paragraph, the size of any

14 market area or the number of licensees for any service.

15 ‘‘(4) The competitive bidding authority provided to the

16 Commission in paragraph (1) shall not—

17 ‘‘(A) because of the need to avoid excessive service

18 disruption, extend to license renewals and modifica19 tions;

20 ‘‘(B) because of the essential services they pro21 vide, extend to licenses reserved for the United States

22 Government and State or local government entities;

23 ‘‘(C) because of their public service obligations,

24 extend to licenses to provide amateur operator serv25 ices, over-the-air terrestrial radio and television
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1 broadcast services, public safety services, and radio

2 astronomy services;

3 ‘‘(D) because they do not involve mutually exclu4 sive applications, extend to private radio end-user li5 censes, including Specialized Mobile Radio Service

6 (SMRS), maritime, and aeronautical end-user

7 licenses;

8 ‘‘(E) because of the need to avoid excessive serv9 ice disruption, extend to any license grant to a non10 Federal licensee being moved from its current fre11 quency assignment to a different one by the Commis12 sion in order to make spectrum available for new

13 technologies; and

14 ‘‘(F) extend to any other service, class of services,

15 or assignments that the Commission determines, after

16 conducting public notice and comment proceedings,

17 should be exempt from competitive bidding because of

18 public interest factors warranting an exemption to

19 the extent the Commission determines the use of com20 petitive bidding would jeopardize appropriate treat21 ment of those factors.

22 ‘‘(5) No provision of this subsection or of the Emerging

23 Telecommunications Technologies Act of 1993 shall be con24 strued, in any way, to—
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1 ‘‘(A) alter spectrum allocation criteria and pro2 cedures established by the other provisions of this Act;

3 ‘‘(B) allow the Commission to consider potential

4 revenues from competitive bidding when making deci5 sions concerning spectrum allocation;

6 ‘‘(C) diminish the authority of the Commission

7 under the other provisions of this Act to regulate or

8 reclaim spectrum licenses;

9 ‘‘(D) grant any right to a spectrum licensee dif10 ferent from the rights awarded to licensees who ob11 tained their license through assignment methods other

12 than competitive bidding; or

13 ‘‘(E) prevent the Commission from awarding li14 censes to those persons who make significant contribu15 tions to the development of a new telecommunications

16 service or technology.

17 ‘‘(6) Moneys received from competitive bidding pursu18 ant to this subsection shall be deposited in the general fund

19 of the Treasury.’’

20 (c) STATE AND LOCAL TAX TREATMENT OF LICENSES

21 AND PERMITS.—Title VII of the Act (47 U.S.C. 601 et seq.)

22 is amended by adding at the end the following new section:
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1 ‘‘SEC. 714. STATE AND LOCAL TAX TREATMENT OF LI2 CENSES AND PERMITS.

3 ‘‘A license or permit issued by the Commission under

4 this Act shall not be treated as the property of the licensee

5 for property tax purposes, or other similar tax purposes,

6 by any State or local government entity.’’.

7 SEC. 4009. REGULATORY PARITY.

8 (a) AMENDMENT.—Section 332 of the Act (47 U.S.C.

9 332) is amended—

10 (1) by striking ‘‘PRIVATE LAND’’ from the head11 ing of the section; and

12 (2) by amending subsection (c) to read as

13 follows:

14 ‘‘(c)(1)(A) A person engaged in the provision of com15 mercial mobile services shall, insofar as such person is so

16 engaged, be treated as a common carrier for purposes of

17 this Act, except that the Commission may waive the require18 ments of sections 203, 204, 205, and 214, and the 30-day

19 notice provision of section 309(a), for commercial mobile

20 services and such other provisions of title II as the Commis21 sion may, consistent with the public interest, specify by

22 rule. In prescribing any such rule, the Commission may

23 not waive for commercial mobile services the requirements

24 of section 201, 202, 206, 208, 209, 215(c), 216, 217, 220

25 (d) or (e), 223, 225, 226 (a), (b), (c), (d), (e), (f), (g), or

26 (i), 227, or 228, or any other provision that is necessary
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1 in order to ensure that the charges, practices, classifications,

2 or regulations for or in connection with commercial mobile

3 services are just and reasonable and are not unjustly or un4 reasonably discriminatory or that is otherwise in the public

5 interest.

6 ‘‘(B) Upon reasonable request of any person providing

7 commercial mobile service, the Commission shall order a

8 common carrier to establish physical connections with such

9 service pursuant to section 201. Except to the extent that

10 the Commission is required to respond to such a request,

11 this subparagraph shall not be construed as a limitation

12 or expansion of the Commission’s authority to order inter13 connection under this Act.

14 ‘‘(2) A person engaged in private land mobile service

15 shall not, insofar as such person is so engaged, be treated

16 as a common carrier for any purpose under this Act. A

17 common carrier shall not provide any dispatch service on

18 any frequency allocated for common carrier service, except

19 to the extent that such dispatch service is provided on sta20 tions licensed by the Commission in the Specialized Mobile

21 Radio Service prior to May 24, 1993, or is provided on

22 stations licensed in the domestic public land mobile radio

23 service before January 1, 1982. The Commission may by

24 regulation terminate, in whole or in part, the prohibition
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1 contained in the preceding sentence if the commission deter2 mines that such termination will service the public interest.

3 ‘‘(3)(A) Notwithstanding sections 2(b) and 221(b), no

4 State or local government shall have any authority to regu5 late the entry of or the rates charged by any commercial

6 mobile service or any private land mobile service, except

7 that this paragraph shall not prohibit a State from regulat8 ing the other terms and conditions of commercial mobile

9 services. Nothing in this subparagraph shall exempt provid10 ers of commercial mobile services (where such services are

11 a substitute for land line telephone exchange service for a

12 substantial portion of the communications within such

13 State) from requirements imposed by a State commission

14 on all providers of telecommunications services necessary to

15 ensure the continued availability of telephone exchange serv16 ice at affordable rates.

17 ‘‘(B) Notwithstanding subparagraph (A), a State may

18 petition the Commission for authority to regulate the rates

19 for any commercial mobile service if such State dem20 onstrates that (i) such service is a substitute for land line

21 telephone exchange service for a substantial portion of the

22 communications within such State, or (ii) market condi23 tions with respect to such services fail to protect subscribers

24 adequately from unjust and unreasonable rates or rates that

25 are unjustly or unreasonably discriminatory. The Commis-
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1 sion shall provide reasonable opportunity for public com2 ment in response to such petition, and shall, within 9

3 months after the date of its submission, grant or deny such

4 petition. If the Commission grants such petition, the Com5 mission shall authorize the State to exercise under State

6 law such authority over rates, for such periods of time, as

7 the Commission deems necessary to ensure that such rates

8 are just and reasonable and not unjustly or unreasonably

9 discriminatory.

10 ‘‘(C) If a State has in effect on June 1, 1993, any regu11 lation concerning the rates for any commercial mobile serv12 ice, such State may, no later than 1 year after the date

13 of enactment of the Emerging Telecommunications Tech14 nologies Act of 1993, petition the Commission requesting

15 that the State be authorized to continue exercising authority

16 over such rates. The State’s existing regulation shall, not17 withstanding subparagraph (A), remain in effect until the

18 Commission issues a final order granting or denying such

19 petition. The Commission shall review such petition in ac20 cordance with the procedures and schedule established in

21 subparagraph (B), and shall grant such petition if the State

22 satisfies the showing required under subparagraph (B)(i)

23 or (B)(ii). If the Commission grants such petition, the Com24 mission shall authorize the State to exercise under the State

25 law such authority over rates, for such period of time, as
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1 the Commission deems necessary to ensure that such rates

2 are just and reasonable and not unjustly or unreasonably

3 discriminatory.

4 ‘‘(D) After a reasonable period of time, as determined

5 by the Commission, has elapsed from the issuance of an

6 order under subparagraph (B) or (C), any interested party

7 may petition the Commission for an order that the exercise

8 of authority by a State pursuant to such subparagraph is

9 no longer necessary to ensure that the rates for commercial

10 mobile services are just and reasonable and not unjustly

11 or unreasonably discriminatory. The Commission shall pro12 vide reasonable opportunity for public comment in response

13 to such petition, and shall, within 9 months after the date

14 of its submission, grant or deny such petition in whole or

15 in part.

16 ‘‘(4) Nothing in this subsection shall be construed to

17 alter or affect the regulatory treatment required by title IV

18 of the Communications Satellite Act of 1962 of the corpora19 tion authorized by title III of such Act.

20 ‘‘(5) The Commission shall continue to determine

21 whether the provision of space segment capacity by satellite

22 systems to providers of commercial mobile services shall be

23 treated as common carriage.

24 ‘‘(6) The provisions of section 310(b) shall not apply

25 to any lawful foreign ownership in a provider of commer-
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1 cial mobile services prior to May 24, 1993, if that provider

2 was not regulated as a common carrier prior to the date

3 of enactment of the Emerging Telecommunications Tech4 nologies Act of 1993 and is deemed to be a common carrier

5 under this Act.

6 ‘‘(7) As part of any proceeding under this subsection

7 the Commission (i) shall consider in such proceeding the

8 ability of new entrants to compete in the services to which

9 such proceeding relates, and (ii) shall have the flexibility

10 to amend, modify, or forbear from any regulation of new

11 entrants under this subsection, or, consistent with the public

12 interest, take other appropriate action, to provide a full op13 portunity for new entrants to compete in such services.

14 ‘‘(8) For purposes of this section—

15 ‘‘(A) the term ‘commercial mobile service’ means

16 any mobile service (as defined in section 3(n)) that,

17 as specified by regulation by the Commission, is pro18 vided for profit and makes interconnected service

19 available (i) to the public or (ii) to such broad classes

20 of eligible users as to be effectively available to a sub21 stantial portion of the public;

22 ‘‘(B) the term ‘interconnected service’ means

23 service that is interconnected with the public switched

24 network (as such term is defined by regulation by the
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1 Commission) or service for which interconnection

2 pursuant to paragraph (1)(B) is pending; and

3 ‘‘(C) the term ‘private land mobile service’

4 means any mobile service (as defined in section 3(n))

5 that is not a commercial mobile service under sub6 paragraph (A).’’.

7 (b) CONFORMING AMENDMENTS.—

8 (1) DEFINITION OF MOBILE SERVICE.—Section 3

9 of the Act (47 U.S.C. 153) is amended—

10 (A) in subsection (n)—

11 (i) by inserting ‘‘(1)’’ immediately

12 after ‘‘and includes’’; and

13 (ii) by inserting immediately before the

14 period at the end the following: ‘‘, (2) a mo15 bile service which provides a regularly

16 interacting group of base, mobile, portable,

17 and associated control and relay stations

18 (whether licensed on an individual, coopera19 tive, or multiple basis) for private one-way

20 or two-way land mobile radio communica21 tions by eligible users over designated areas

22 of operation, and (3) any service for which

23 a license is required in a personal commu24 nications service established pursuant to the

25 proceeding entitled ‘Amendment to the Com-
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1 mission’s Rules to Establish New Personal

2 Communications Services’ (GEN Docket No.

3 90–314; ET Docket No. 92–100), or any

4 successor proceeding; but such term does not

5 include any rural radio service as defined

6 by the Commission and does not include the

7 provision, by a local exchange carrier, of

8 telephone exchange service by radio instead

9 of by wire’’; and

10 (B) by striking subsection (gg).

11 (2) REGULATION OF INTRASTATE COMMUNICA12 TIONS.—Section 2(b) of the Act (47 U.S.C. 152(b)) is

13 amended by inserting ‘‘and section 332’’ immediately

14 after ‘‘inclusive,’’.

15 (c) RULEMAKING SCHEDULE; EFFECTIVE DATE.—

16 (1) RULEMAKING REQUIRED.—Within 1 year

17 after the date of enactment of this Act, the Commis18 sion shall—

19 (A) issue such modifications or termi20 nations of its regulations as are necessary to im21 plement the amendments made by subsection (a);

22 (B) make such other modifications of such

23 regulations as may be necessary to promote par24 ity in the regulatory treatment of providers of all
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1 commercial mobile services that offer services

2 that are substantially similar; and

3 (C) include in such modifications and ter4 minations such provisions as are necessary to

5 provide for an orderly transition to the regu6 latory treatment required by such amendments.

7 (2) EFFECTIVE DATE.—The amendments made

8 by subsection (a) shall be effective 1 year after such

9 date of enactment, except that—

10 (A) section 332(c)(1)(A) of the Act, as added

11 by such amendments, shall take effect upon such

12 date of enactment; and

13 (B) any person that provides private land

14 mobile services before such date of enactment

15 shall continue to be treated as a provider of pri16 vate land mobile service until 3 years after such

17 date of enactment.

18 SEC. 4010. DEADLINES FOR PCS ORDERS AND LICENSING.

19 The Commission shall—

20 (1) within 180 days after the date of enactment

21 of this Act, issue a final report and order (A) in the

22 matter entitled ‘‘Redevelopment of Spectrum to En23 courage Innovation in the Use of New Telecommuni24 cations Technologies’’ (ET Docket No. 92–9); and (B)

25 in the matter entitled ‘‘Amendment of the Commis-
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1 sion’s Rules to Establish New Personal Communica2 tions Services’’ (GEN Docket No. 90–314; ET Docket

3 No. 92–100); and

4 (2) within 270 days after such date of enact5 ment, commence issuing licenses and permits in the

6 personal communications service.

7 SEC. 4011. DEFINITIONS.

8 As used in this subtitle:

9 (1) The term ‘‘allocation’’ means an entry in the

10 National Table of Frequency Allocations of a given

11 frequency band for the purpose of its use by one or

12 more radiocommunication services.

13 (2) The term ‘‘assignment’’ means an authoriza14 tion given to a station licensee to use specific fre15 quencies or channels in a particular geographic area.

16 (3) The term ‘‘commercial carrier’’ means any

17 entity that uses a facility licensed by the Federal

18 Communications Commission pursuant to the Com19 munications Act of 1934 for hire or for its own use,

20 but does not include Federal Government stations li21 censed pursuant to section 305 of the Act (47 U.S.C.

22 305).

23 (4) The term ‘‘Commission’’ means the Federal

24 Communications Commission.
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1 (5) The term ‘‘Secretary’’ means the Secretary of

2 Commerce.

3 (6) The term ‘‘the Act’’ means the Communica4 tions Act of 1934 (47 U.S.C. 151 et seq.).

5 Subtitle B—Vessel Tonnage Duties

6 SEC. 4051. EXTENSION OF VESSEL TONNAGE DUTIES.

7 (a) EXTENSION OF DUTIES.—Section 36 of the Act of

8 August 5, 1909 (36 Stat. 111; 46 App. U.S.C. 121), is

9 amended—

10 (1) by striking ‘‘and 1995,’’ each place it ap11 pears and inserting in lieu thereof ‘‘1995, 1996, 1997,

12 and 1998,’’;

13 (2) by striking ‘‘place,’’ and inserting in lieu

14 thereof ‘‘place;’’; and

15 (3) by striking ‘‘port, not, however, to include

16 vessels in distress or not engaged in trade’’ and in17 serting in lieu thereof ‘‘port. However, neither duty

18 shall be imposed on vessels in distress or not engaged

19 in trade’’.

20 (b) CONFORMING AMENDMENT.—The Act of March 8,

21 1910 (36 Stat. 234; 46 App. U.S.C. 132), is amended by

22 striking ‘‘and 1995,’’ and inserting in lieu thereof ‘‘1995,

23 1996, 1997, and 1998.’’.

24 (c) TECHNICAL CORRECTION.—
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1 (1) CORRECTION.—Section 10402(a) of the Om2 nibus Budget Reconciliation Act of 1990 (104 Stat.

3 1388–398) is amended by striking ‘‘in the second

4 paragraph’’.

5 (2) EFFECTIVE DATE.—The amendment made by

6 paragraph (1) shall be effective on and after Novem7 ber 5, 1990.

8 TITLE V—COMMITTEE ON EN9 ERGY AND NATURAL RE10 SOURCES

11 Subtitle A—Recreation and

12 Commercial Use Fees

13 SEC. 5001. ADMISSION FEES.

14 Section 4(a) of the Land and Water Conservation

15 Fund Act of 1965 (16 U.S.C. 460l–6a(a)), is amended:

16 (1) by inserting in the first sentence of the first

17 paragraph after the words ‘‘National Park System’’

18 the words ‘‘and for fiscal years 1994 through 1998,

19 the Bureau of Land Management’’ and by inserting

20 after the words ‘‘National Recreation Areas’’ the

21 words ‘‘, and for fiscal years 1994 through 1998, Na22 tional Monuments, National Volcanic Monuments,

23 National Scenic Areas, and areas of concentrated

24 public use’’; and
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1 (2) by adding at the end the following new para2 graph:

3 ‘‘(13) For the purposes of this subsection, ‘areas

4 of concentrated public use’ shall meet each of the fol5 lowing criteria:

6 ‘‘(A) be managed primarily for outdoor

7 recreation purposes;

8 ‘‘(B) provide facilities and services nec9 essary to accommodate heavy public use;

10 ‘‘(C) contain at least one major recreation

11 attraction including, but not limited to, a lake,

12 river, historical site, or geologic feature; and

13 ‘‘(D) provide public access such that admis14 sion fees can be efficiently collected at one or

15 more centralized locations.’’.

16 SEC. 5002. RECREATION USE FEES.

17 (a) IN GENERAL.—The first sentence of section 4(b)

18 of the Land and Water Conservation Fund Act of 1965 (16

19 U.S.C. 460l–6a(b)) is amended by striking out ‘‘visitors’

20 centers,’’ and all that follows down through the period at

21 the end thereof and inserting the following: ‘‘scenic drives,

22 or toilet facilities: Provided, That in no event shall there

23 be any charge for the use of any campground not having

24 a majority of the following: tent or trailer spaces, picnic

25 tables, drinking water, access road, refuse containers, toilet
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1 facilities, fee collection by an employee or agent of the Fed2 eral agency operating the facility, reasonable visitor protec3 tion, and simple devices for containing a campfire (where

4 campfires are permitted). For purposes of this subsection,

5 the term ‘specialized outdoor recreation site’ includes but

6 shall not be limited to campgrounds, swimming sites, boat

7 launch facilities, and managed parking lots.’’.

8 (b) COSTS OF COLLECTION.—Section 4(i) of the Land

9 and Water Conservation Fund Act of 1965 (16 U.S.C. 460l–

10 6a(i)) is amended by inserting ‘‘(A)’’ after ‘‘(1)’’ and by

11 adding the following at the end of paragraph (1):

12 ‘‘(B) Notwithstanding subparagraph (A), in any

13 fiscal year, the Secretary of Agriculture and the Sec14 retary of the Interior may withhold from the special

15 account established under subparagraph (A) such por16 tion of all receipts the fees collected in that fiscal year

17 under this section as such Secretary determines to be

18 equal to the additional fee collection costs for that fis19 cal year. The amounts so withheld shall be retained

20 by the Secretary of Agriculture or the Secretary of the

21 Interior and shall be available, without further ap22 propriation, for expenditure by the Secretary con23 cerned in the fiscal year in which collected to cover

24 such additional fee collection costs. The Secretary con25 cerned shall deposit in the special account established
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1 pursuant to subparagraph (A) any amounts so re2 tained which remain unexpended and unobligated at

3 the end of such fiscal year. For the purposes of this

4 subparagraph, for any fiscal year, the term ‘addi5 tional fee collection costs’ means those costs for per6 sonnel and infrastructure directly associated with the

7 collection fees imposed under this section which exceed

8 the costs for personnel and infrastructure directly as9 sociated with the collection of such fees during fiscal

10 year 1993.’’.

11 (c) COMMERICAL TOUR USE FEES.—(1) For fiscal

12 years 1994 through 1998, in the case of each unit of the

13 National Park System for which an admission fee is

14 charged under section 4 of the Land and Water Conserva15 tion Fund Act of 1965 (16 U.S.C. 460l–4), the Secretary

16 of the Interior shall establish, by October 1, 1993, a com17 mercial tour use fee to be imposed on each vehicle entering

18 the unit for the purpose of providing commercial tour serv19 ices within the unit. Fee revenue derived from such commer20 cial tour use fees shall be deposited into the special account

21 established under section 4(i) of the Land and Water Con22 servation Fund Act of 1965.

23 (2) The Secretary shall establish the amount of fee per

24 entry as follows:
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1 (A) $25 per vehicle with a passenger capacity of

2 25 persons or less, and

3 (B) $50 per vehicle with a passenger capacity of

4 more than 25 persons.

5 (3) The commercial tour use fee imposed under this

6 subsection shall not apply to either of the following:

7 (A) Any vehicle transporting organized school

8 groups or outings conducted for educational purposes

9 by schools or other bona fide educational

10 institutions.

11 (B) Any vehicle entering a park system unit

12 pursuant to a contract issued under the Act of Octo13 ber 9, 1965 (16 U.S.C. 20–20g) entitled ‘‘An Act re14 lating to the establishment of concession policies in

15 the areas administered by the National Park Service

16 and for other purposes.’’.

17 (d) NON-FEDERAL GOLDEN EAGLE PASSPORT

18 SALES.—Section 4(a)(1)(A) of the Land and Water Con19 servation Fund Act of 1965 (16 U.S.C. 460l–6a(a)(1)(A))

20 is amended by redesignating the paragraph as 4(a)(1)(A)(i)

21 and adding at the end thereof the following new paragraph:

22 ‘‘(ii) For fiscal years 1994 through 1998, the Secretary

23 of the Interior and the Secretary of Agriculture may author24 ize businesses, non-profit entities, and other organizations

25 to sell and collect fees for the Golden Eagle Passport subject
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1 to such conditions as the Secretaries may jointly prescribe.

2 The Secretaries shall develop detailed guidelines for pro3 motional advertising of non-Federal Golden Eagle Passport

4 sales and shall monitor compliance with such guidelines.

5 The Secretaries may authorize the sellers to maintain an

6 inventory of Golden Eagle Passports for periods not to ex7 ceed 6 months, and to withhold amounts up to, but not ex8 ceeding 7 per centum of the fees of the gross fees collected

9 from the sale of such passports as reimbursement for actual

10 expenses of the sales.’’.

11 SEC. 5002A. EXTENSION OF AUTHORITY TO COLLECT FEE.

12 The third undesignated paragraph under the heading

13 ‘‘ADMINISTRATIVE PROVISIONS’’ in chapter VII of

14 title I of Public Law 98–63 (97 Stat. 329) is amended by

15 striking paragraph (3).

16 SEC. 5003. RADIO AND TELEVISION COMMUNICATION SITE

17 FEES.

18 (a) Notwithstanding any other provision of law, the

19 Secretary of Agriculture and the Secretary of the Interior

20 (hereinafter referred to as ‘‘the Secretaries’’), shall assess

21 and collect charges for utilization of radio and television

22 communications sites located on Federal lands adminis23 tered by the Forest Service or the Bureau of Land Manage24 ment at such rates as the Forest Service and the Bureau

25 of Land Management shall establish or at such modified
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1 rates as are established pursuant to the provisions of sub2 section (b) of this section.

3 (b) The schedule of charges established under this sec4 tion shall be reviewed by the Forest Service and the Bureau

5 of Land Management on an annual basis, and shall be ad6 justed by the Forest Service and the Bureau of Land Man7 agement to reflect changes in the Consumer Price Index.

8 Increases or decreases in charges shall apply to all cat9 egories of charges, but any increase or decrease shall not

10 total less than 3 percent or more than 5 percent of the

11 charge assessed to the user in the preceding year. The Bu12 reau of Land Management and the Forest Service shall

13 transmit to the Congress notification of any such adjust14 ment not later than 60 days before the effective date of such

15 adjustment.

16 (1) Under the schedule of charges established

17 under the section, if any radio or television commu18 nications site user is to be charged an amount that

19 is greater than $1,000 more than the amount such

20 site user pays to the Bureau of Land Management or

21 the Forest Service as of January 1, 1993, then during

22 the first year in which the schedule of charges is in

23 effect, such site user shall pay an amount equal to the

24 amount it paid to the Bureau of Land Management

25 or the Forest Service as of January 1, 1993 plus
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1 $1,000. Each year thereafter, such site user shall pay

2 the full amount under the schedule of charges, as

3 modified pursuant to the subsection.

4 (2) Under the schedule of charges established

5 under this section, if any radio or television commu6 nications site user is to be charged an amount that

7 is less than the amount such site user paid to the Bu8 reau of Land Management or the Forest Service as of

9 January 1, 1993, such site user shall continue to pay

10 the higher amount until such time as the charge to

11 the site user in the schedule of charges equals or ex12 ceeds that amount, as modified pursuant to this sub13 section.

14 (c)(1) If the radio or television communications site

15 user is permitted under the terms of its site use authoriza16 tion from the Bureau of Land Management or the Forest

17 Service to grant access to the site to additional users, then

18 the radio or television communications site user shall pay

19 annually to the Bureau of Land Management or the Forest

20 Service an amount equal to 25 percent of the gross income

21 it receives from each such additional user during that year.

22 (2) Authorizations to radio and television communica23 tions site users shall require such site users to provide the

24 Bureau of Land Management or the Forest Service with

25 a certified list which identifies all additional users of such
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1 sites and all gross revenues received from such additional

2 users. The Bureau of Land Management and the Forest

3 Service shall not require any additional user of a radio or

4 television communications site to obtain a separate author5 ization to use such a site.

6 (d)(1) The Secretaries shall prescribe appropriate rules

7 and regulations to carry out the provisions of this section.

8 (2) Ten years after the date of enactment of this sec9 tion, the Secretaries shall establish a broad-based advisory

10 group, including representatives from the radio and tele11 vision broadcast industry, to review the schedule of charges

12 and other acceptable criteria for determining fair market

13 value for radio and television communications site users.

14 The advisory group shall report its findings to the Congress

15 no later than 1 year after it is established.

16 (e)(1) Until modified pursuant to subsection (b) of this

17 section, the schedule of charges for television communica18 tions site users which the Secretaries shall prescribe pursu19 ant to subsection (a) of this section shall be as listed in

20 exhibit 3, (television rental fee schedule) in the report of

21 the radio and television broadcast use fee advisory commit22 tee dated December 1992.

23 (2) Until modified pursuant to subsection (b) of this

24 section, the schedule of charges for radio communications

25 site users which the Secretaries shall prescribe pursuant to
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1 subsection (a) of this section shall be as listed in exhibit

2 4, (radio rental fee schedule) in the report of the radio and

3 television broadcast use fee advisory committee dated De4 cember 1992.

5 (f)(1) The Secretaries are directed to jointly establish

6 a broad-based advisory group comprised of representatives

7 from the non-broadcast communications industry (users of

8 both private and public communication sites) and the two

9 agencies to review recommendations on acceptable criteria

10 for determining fair market values and next best alternative

11 use.

12 (2) The advisory group shall review the methodology

13 used in any previous studies and reach concurrence on such

14 methodology.

15 (3) The advisory group shall also assess the validity

16 of the results of such studies, taking into account all reason17 able options for the establishment of fair market values and

18 next best alternative use.

19 (4) The advisory group shall report its findings to the

20 Committee on Energy and Natural Resources of the United

21 States Senate and the Committee on Natural Resources of

22 the United States House of Representatives within one year

23 after the enactment of this Act.
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1 Subtitle B—Hardrock Mining

2 Claim Maintenance Fee

3 SEC. 5101. FEE.

4 (a) Except as provided in section 2511(e)(2) of the En5 ergy Policy Act of 1992, for each unpatented mining claim,

6 mill or tunnel site on federally owned lands, whether located

7 before or after enactment of this Act, each claimant shall

8 pay to the Secretary of the Interior, on or before August

9 31 of each year, for years 1994 through 1998, a claim main10 tenance fee of $100 per claim to hold such unpatented min11 ing claim, mill or tunnel site for the assessment year begin12 ning at noon on the next day, September 1. Such claim

13 maintenance fee shall be in lieu of the assessment work re14 quirement contained in the Mining Law of 1872 (30 U.S.C.

15 28–28e) and the related filing requirements contained in

16 section 314(a) and (c) of the Federal Land Policy and Man17 agement Act of 1976 (43 U.S.C. 1744(a) and (c)).

18 (b)(1) The claim maintenance fee required under this

19 section shall be waived for a claimant who certifies in writ20 ing to the Secretary that on the date the payment was due,

21 the claimant and all related parties—

22 (A) held not more than 10 mining claims, mill

23 sites, or tunnel sites, or any combination thereof, on

24 public lands; and
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1 (B) have performed assessment work required

2 under the Mining Law of 1872 (30 U.S.C. 28–28e) to

3 maintain the mining claims held by the claimant and

4 such related parties for the assessment year ending on

5 noon of September 1 of the calendar year in which

6 payment of the claim maintenance fee was due.

7 (2) For purposes of paragraph (1), with respect to any

8 claimant, the term ‘‘all related parties’’ means—

9 (A) the spouse and dependent children (as de10 fined in section 152 of the Internal Revenue Code of

11 1986), of the claimant; or

12 (B) a person affiliated with the claimant, in13 cluding—

14 (i) a person controlled by, controlling, or

15 under common control with the claimant; or

16 (ii) a subsidiary or parent company or cor17 poration of the claimant.

18 (c)(1) The Secretary shall adjust the fees required by

19 this section to reflect changes in the Consumer Price Index

20 published by the Bureau of Labor Statistics of the Depart21 ment of Labor every 5 years after the date of enactment

22 of this Act, or more frequently if the Secretary determines

23 an adjustment to be reasonable.
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1 (2) The Secretary shall provide claimants notice of

2 any adjustment made under this subsection not later than

3 July 1 of any year in which the adjustment is made.

4 (3) A fee adjustment under this section shall begin to

5 apply the calendar year following the calendar year in

6 which it is made.

7 (d) Monies received under this section shall be depos8 ited as miscellaneous receipts in the Treasury.

9 SEC. 5102. LOCATION.

10 (a) Notwithstanding any provision of law, for every

11 unpatented mining claim, mill or tunnel site located after

12 the date of enactment of this subtitle and before September

13 30, 1998, the locator shall, at the time the location notice

14 is recorded with the Bureau of Land Management, pay to

15 the Secretary of the Interior a location fee, in addition to

16 the fee required by section 5101, of $25.00 per claim.

17 (b) Moneys received under this section shall be depos18 ited as miscellaneous receipts in the Treasury.

19 SEC. 5103. CO-OWNERSHIP.

20 The co-ownership provisions of the Mining Law of

21 1872 (30 U.S.C. 28–28e) will remain in effect except that

22 the annual claim maintenance fee, where applicable, shall

23 replace applicable assessment requirements and expendi24 tures.
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1 SEC. 5104. FAILURE TO PAY.

2 Failure to pay the claim maintenance fee as required

3 by section 5101 of this subtitle shall conclusively constitute

4 a forfeiture of the unpatented mining claim, mill or tunnel

5 site by the claimant and the claim shall be deemed null

6 and void by operation of law.

7 SEC. 5105. OTHER REQUIREMENTS.

8 (a) Nothing in this subtitle shall change or modify the

9 requirements of section 314(b) of the Federal Land Policy

10 and Management Act of 1976 (43 U.S.C. 1744(b)), or the

11 requirements of section 314(c) of the Federal Land Policy

12 and Management Act of 1976 (43 U.S.C. 1744(c)) related

13 to filings required by section 314(b), which remain in effect.

14 (b) The third sentence of 2324 of the Revised Statutes

15 (30 U.S.C. 28) is amended by inserting after ‘‘On each

16 claim located after the 10th day of May, 1972,’’ the follow17 ing: ‘‘that is eligible for a waiver under section 5101 of the

18 Omnibus Budget Reconciliation Act of 1993,’’.

19 SEC. 5106. REGULATIONS.

20 The Secretary of the Interior shall promulgate rules

21 and regulations to carry out the purposes of this subtitle

22 as soon as practicable after the date of enactment of this

23 subtitle.
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1 Subtitle C—Commonwealth of

2 Northern Mariana Islands

3 Agreement

4 SEC. 5201. COMMONWEALTH OF NORTHERN MARIANA IS5 LANDS AGREEMENT.

6 Public Law 94–241 (90 Stat. 263), as amended, is fur7 ther amended by striking ‘‘law’’ in subsection 4(b) and in8 serting in lieu thereof the following: ‘‘law: Provided, That

9 for fiscal years 1994 through 1998, payments shall be lim10 ited to the amounts and for the purposes set forth in the

11 Agreement of the Special Representatives on Future Federal

12 Financial Assistance of the Northern Mariana Islands, exe13 cuted on December 17, 1992 between the special representa14 tive of the President and the special representatives of the

15 Governor of the Northern Mariana Islands: Provided fur16 ther, That after 1998, the amount shall continue at the an17 nual amount of $27.720 million.

18 Subtitle D—Mineral Receipts

19 SEC. 5301. AMENDMENT TO THE MINERAL LEASING ACT.

20 Section 35 of the Mineral Leasing Act, as amended (30

21 U.S.C. 191) is amended as follows:

22 (1) by deleting the last sentence and redesignat23 ing the remaining language as subsection (a);

24 (2) by amending subsection (a) by inserting the

25 words ‘‘and, subject to the provisions of subsection
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1 (b),’’ between the words ‘‘United States;’’ and ‘‘50 per

2 centum’’;

3 (3) by adding a new subsection (b) as follows:

4 ‘‘(b)(1) In calculating the amount to be paid to States

5 during any fiscal year under this section or under any

6 other provision of law requiring payment to a State of any

7 revenues derived from the leasing of any onshore lands or

8 interest in land owned by the United States for the produc9 tion of the same types of minerals leasable under this Act

10 or of geothermal steam, 50 per centum of the portion of

11 the enacted appropriation of the Department of the Interior

12 and any other agency during the preceding fiscal year allo13 cable to the administration of all laws providing for the

14 leasing of any onshore lands or interest in land owned by

15 the United States for the production of the same types of

16 minerals leasable under this Act or of geothermal steam,

17 and in enforcing such laws, shall be deducted from the re18 ceipts derived under those laws in approximately equal

19 amounts each month (subject to paragraph (4)) prior to the

20 division and distribution of such receipts between the States

21 and the United States.

22 ‘‘(2) The proportion of the deduction provided in para23 graph (1) allocable to each State shall be determined by di24 viding the monies disbursed to the State during the preced25 ing fiscal year derived from onshore mineral leasing re-
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1 ferred to in paragraph (1) in that State by the total money

2 disbursed to States during the preceding fiscal year from

3 such onshore mineral leasing in all States.

4 ‘‘(3) In the event the deduction apportioned to any

5 State under this subsection exceeds 50 per centum of the

6 Secretary of the Interior’s estimate of the amounts attrib7 utable to onshore mineral leasing referred to in paragraph

8 (1) within that State during the preceding fiscal year, the

9 deduction from receipts received from leases in that State

10 shall be limited to such estimated amounts and the total

11 amount to be deducted from such onshore mineral leasing

12 receipts shall be reduced accordingly.

13 ‘‘(4) If the amount otherwise deductible under this sub14 section in any month from the portion of receipts to be dis15 tributed to a State exceeds the amount payable to the State

16 during that month, any amount exceeding the amount pay17 able shall be carried forward and deducted amounts payable

18 to the State in subsequent months. If any amount remains

19 to be carried forward at the end of the fiscal year, such

20 amount shall not be deducted from any disbursements in

21 any subsequent fiscal year.

22 ‘‘(5) All deductions to be made pursuant to this sub23 section shall be made in full during the fiscal year in which

24 such deductions were incurred.
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1 ‘‘(6) All amounts deducted under this subsection from

2 monies otherwise payable to a State shall be credited to mis3 cellaneous receipts in the Treasury.’’.

4 SEC. 5302. CONFORMING AMENDMENTS.

5 (a) Section 6 of the Mineral Leasing Act for Acquired

6 Lands, as amended (30 U.S.C. 355), is amended by adding

7 the following words ‘‘Subject to the provisions of 30 U.S.C.

8 191(b),’’ at the beginning of the first sentence.

9 (b) Section 5(a) of the Geothermal Steam Act, as

10 amended (30 U.S.C. 1019), is amended by adding the words

11 ‘‘Subject to the provisions of 30 U.S.C. 191(b),’’ at the be12 ginning of that section.

13 TITLE VI—COMMITTEE ON ENVI14 RONMENT AND PUBLIC

15 WORKS

16 SEC. 6001. NUCLEAR REGULATORY COMMISSION ANNUAL

17 CHARGES.

18 Section 6101(a)(3) of the Omnibus Budget Reconcili19 ation Act of 1990 (42 U.S.C. 2214(a)(3)) is amended by

20 striking ‘‘September 30, 1995’’ and inserting ‘‘September

21 30, 1998’’.

22 SEC. 6002. CORPS OF ENGINEERS RECREATION USER FEES.

23 (a) IN GENERAL.—Section 210 of the Flood Control

24 Act of 1968 (16 U.S.C. 460d–3) is amended—

25 (1) by inserting ‘‘(a)’’ before ‘‘No entrance’’;
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1 (2) by striking the second sentence; and

2 (3) by adding at the end the following new sub3 section:

4 ‘‘(b)(1) Except as provided in paragraph (2), notwith5 standing section 4(b) of the Land and Water Conservation

6 Fund Act of 1965 (16 U.S.C. 460l–6a(b)), the Secretary of

7 the Army may charge fees for the use of developed recreation

8 sites and facilities, including campsites, swimming beaches,

9 and boat launching ramps.

10 ‘‘(2) The Secretary may not charge fees for the use or

11 provision of drinking water, wayside exhibits, general pur12 pose roads, overlook sites, toilet facilities, or general visitor

13 information.

14 ‘‘(3) Fees collected under this subsection shall be depos15 ited into the special account established in the Treasury of

16 the United States for the Army Corps of Engineers under

17 section 4(i) of the Land and Water Conservation Fund Act

18 of 1965 (16 U.S.C. 460l–6a(i)).’’.

19 (b) CONFORMING AMENDMENT.—Section 4(b) of the

20 Land and Water Conservation Fund Act of 1965 (16 U.S.C.

21 460l–6a(b)) is amended by striking the second sentence.
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1 TITLE VII—FINANCE COMMITTEE

2 RECONCILIATION PROVI3 SIONS RELATING TO MEDI4 CARE, MEDICAID, AND OTHER

5 PROGRAMS

6 SEC. 7000. AMENDMENTS TO SOCIAL SECURITY ACT; REF7 ERENCES; TABLE OF CONTENTS.

8 (a) AMENDMENTS TO SOCIAL SECURITY ACT.—Except

9 as otherwise specifically provided, whenever in this title an

10 amendment is expressed in terms of an amendment to or

11 repeal of a section or other provision, the reference shall

12 be considered to be made to that section or other provision

13 of the Social Security Act.

14 (b) REFERENCES TO OBRA.—In this title, the terms

15 ‘‘OBRA–1986’’, ‘‘OBRA–1987’’, ‘‘OBRA–1989’’, and

16 ‘‘OBRA–1990’’ refer to the Omnibus Budget Reconciliation

17 Act of 1986 (Public Law 99–509), the Omnibus Budget Rec18 onciliation Act of 1987 (Public Law 100–203), the Omnibus

19 Budget Reconciliation Act of 1989 (Public Law 101–239),

20 and the Omnibus Budget Reconciliation Act of 1990 (Public

21 Law 101–508), respectively.

22 (c) REFERENCES TO OMNIBUS BUDGET RECONCILI23 ATION ACT OF 1993.—Any reference in this title (or in any

24 amendment made by this title) to the Omnibus Budget Rec-
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1 onciliation Act of 1993 shall be deemed to be a reference

2 to this title.

3 (d) TABLE OF CONTENTS.—The table of contents of

4 this title is as follows:

Sec. 7000. Amendments to Social Security Act; references; table of contents.

Subtitle A—Medicare

PART I—PROVISIONS RELATING TO PART A

Sec. 7101. Payment updates for inpatient hospital services.

Sec. 7102. Loss of regional referral center status.

Sec. 7103. Medicare-dependent, small rural hospital payment extension.

Sec. 7104. Elimination of return on equity for proprietary skilled nursing facilities.

Sec. 7105. Skilled nursing facility cost limits.

PART II—PROVISIONS RELATING TO PART B

SUBPART A—PHYSICIANS’ SERVICES

Sec. 7201. Reduction in default update for conversion factor for 1994.

Sec. 7202. Reduction in performance standard rate of increase and increase in

maximum reduction permitted in default update and classification of primary care services as a separate category of services.

Sec. 7203. Phased-in reduction in practice expense relative value units for certain

services.

Sec. 7204. Limitation on payment for the anesthesia care team.

Sec. 7205. Separate payment for interpretation of electrocardiograms.

Sec. 7206. Payments for new physicians and practitioners.

Sec. 7207. Extra-billing limits.

SUBPART B—OUTPATIENT HOSPITAL SERVICES AND AMBULATORY SURGICAL

SERVICES

Sec. 7221. Extension of 10 percent reduction in payments for capital-related costs

of outpatient hospital services.

Sec. 7222. Extension of reduction in payments for other costs of outpatient hospital services.

Sec. 7223. Reduction in payments for intraocular lenses.

SUBPART C—DURABLE MEDICAL EQUIPMENT

Sec. 7231. Revisions to payment rules for durable medical equipment.

Sec. 7232. Treatment of nebulizers and aspirators.

Sec. 7233. Payment for surgical dressings.

Sec. 7234. Payments for tens devices.

SUBPART D—PART B PREMIUM

Sec. 7251. Part B premium.
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SUBPART E—OTHER PROVISIONS

Sec. 7261. Payments for clinical diagnostic laboratory tests.

PART III—PROVISIONS RELATING TO PARTS A AND B

Sec. 7301. Payments for direct graduate medical education costs.

Sec. 7302. Revision of home health agency cost limits.

Sec. 7303. Medicare as secondary payer.

Sec. 7304. Extension of self-referral ban to additional specified services.

Sec. 7305. Reduction in payment for erythropoietin.

Subtitle B—Medicaid Program

PART I—PROGRAM SAVINGS PROVISIONS

SUBPART A—REPEAL OF MANDATE

Sec. 7401. Personal care services furnished outside the home as optional benefit.

SUBPART B—OUTPATIENT PRESCRIPTION DRUGS

Sec. 7411. Permitting prescription drug formularies under State plans.

Sec. 7412. Elimination of special exemption from prior authorization for new

drugs.

Sec. 7413. Modifications to drug rebate program.

SUBPART C—RESTRICTIONS ON DIVESTITURE OF ASSETS AND ESTATE RECOVERY

Sec. 7421. Medicaid estate recoveries.

Sec. 7422. Transfers of assets.

Sec. 7423. Treatment of certain trusts.

SUBPART D—IMPROVEMENT IN IDENTIFICATION AND COLLECTION OF THIRD

PARTY PAYMENTS

Sec. 7431. Liability of third parties to pay for care and services.

Sec. 7432. Medical child support.

Sec. 7433. Offset of payment obligations relating to medical assistance against

overpayments of State and Federal income taxes.

SUBPART E—ASSURING PROPER PAYMENTS TO DISPROPORTIONATE SHARE

HOSPITALS

Sec. 7441. Assuring proper payments to disproportionate share hospitals.

SUBPART F—ANTI-FRAUD AND ABUSE PROVISIONS

Sec. 7451. Application of medicare rules limiting certain physician referrals.

PART II—OTHER MEDICAID PROVISIONS

Sec. 7501. Extension of demonstration project on the effect of allowing States to

extend medicaid coverage to certain low-income families.

Subtitle C—Income Security Programs

Sec. 7601. Matching of State administrative costs.

Sec. 7602. State paternity establishment programs.

Sec. 7603. Fees for Federal administration of State supplementary payments.
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Subtitle D—Miscellaneous Provisions

PART I—TRADE PROVISIONS

Sec. 7701. Extension of authority to levy customs user fees.

Sec. 7702. Extension of, and authorization of appropriations for, trade adjustment assistance program.

PART II—IMPROVED ACCESS TO CHILDHOOD IMMUNIZATIONS

Sec. 7801. Reimbursement to vaccine manufacturers.

Sec. 7802. State option to provide that certain payments under AFDC are conditioned on receipt of immunizations.

PART III—DISCLOSURE PROVISIONS

Sec. 7901. Disclosure of return information for administration of certain veterans

programs.

Sec. 7902. Disclosure of return information to carry out income contingent repayment of student loans.

Sec. 7903. Use of return information for income verification under certain housing assistance programs.

Sec. 7904. Use of return information for health coverage clearinghouse.

PART IV—OTHER PROVISIONS

Sec. 7950. Disallowance of interest on certain overpayments of tax.

Sec. 7951. Fees for applications for alcohol labeling and formula reviews.

Sec. 7952. Use of Harbor Maintenance Trust Fund amounts for administrative

expenses.

Sec. 7953. Increase in presidential election campaign fund check-off.

Sec. 7954. Increase in public debt limit.

1 Subtitle A—Medicare

2 PART I—PROVISIONS RELATING TO PART A

3 SEC. 7101. PAYMENT UPDATES FOR INPATIENT HOSPITAL

4 SERVICES.

5 (a) REDUCTION.—

6 (1) PPS HOSPITALS.—

7 (A) IN GENERAL.—Section 1886(b)(3)(B)(i)

8 (42 U.S.C. 1395ww(b)(3)(B)(i)) is amended—

9 (i) in the matter preceding subclause

10 (I), by striking ‘‘fiscal year’’ and inserting

11 ‘‘particular time period’’,
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1 (ii) in subclause (VIII), by inserting

2 ‘‘and the 3 succeeding months’’ after ‘‘fiscal

3 year 1993’’,

4 (iii) in subclause (IX)—

5 (I) by striking ‘‘fiscal year’’,

6 (II) by inserting ‘‘minus 2.18 per7 centage points’’ after ‘‘market basket

8 percentage increase’’ the first place it

9 appears, and

10 (III) by striking ‘‘plus 1.5 per11 centage points’’ and inserting ‘‘minus

12 .68 percentage point’’,

13 (iv) in subclause (X)—

14 (I) by striking ‘‘fiscal year’’,

15 (II) by inserting ‘‘minus 2.27 per16 centage points’’ after ‘‘market basket

17 percentage increase’’, and

18 (III) by striking ‘‘and’’ at the

19 end,

20 (v) in subclause (XI)—

21 (I) by striking ‘‘for fiscal year

22 1996 and each subsequent fiscal year’’

23 and inserting ‘‘for 1996’’,
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1 (II) by inserting ‘‘minus 2.0 per2 centage points’’ after ‘‘market basket

3 percentage increase’’, and

4 (III) by striking the period and

5 inserting a comma, and

6 (vi) by adding at the end the following

7 new subclauses:

8 ‘‘(XII) for 1997, the market basket percentage in9 crease minus 1.0 percentage point for hospitals in all

10 areas, and

11 ‘‘(XIII) for 1998 and each subsequent year, the

12 market basket percentage increase for hospitals in all

13 areas.’’.

14 (B) ADJUSTMENT OF LABOR AND NON15 LABOR PORTIONS OF STANDARDIZED

16 AMOUNTS.—Section 1886(d)(3)(A) (42 U.S.C.

17 1395ww(d)(3)(A)) is amended by adding at the

18 end the following new clause:

19 ‘‘(vi) For discharges occurring on or after

20 January 1, 1995, the Secretary shall adjust the

21 ratio of the labor portion to non-labor portion of

22 each average standardized amount to equal such

23 ratio for the national average standardized

24 amount.’’.
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1 (2) OTHER HOSPITALS.—Section

2 1886(b)(3)(B)(ii) (42 U.S.C. 1395ww(b)(3)(B)(ii)) is

3 amended—

4 (A) by striking ‘‘, (C), (D),’’

5 (B) by striking ‘‘and’’ at the end of

6 subclause (III),

7 (C) by striking subclause (IV) and inserting

8 the following new subclauses:

9 ‘‘(IV) fiscal years 1988 through 1993 and the 3

10 succeeding months, is the market basket percentage

11 increase,

12 ‘‘(V) 1994, is 75 percent of the difference between

13 the market basket percentage increase and 1.0 per14 centage point,

15 ‘‘(VI) 1995 through 1997, is the market basket

16 percentage increase minus 1.0 percentage points, and

17 ‘‘(VII) 1998 and each subsequent year, is the

18 market basket percentage increase.’’.

19 (3) SOLE COMMUNITY AND MEDICARE-DEPEND20 ENT, SMALL RURAL HOSPITALS.—

21 (A) IN GENERAL.—Section 1886(b)(3)(B)

22 (42 U.S.C. 1395ww(b)(3)(B)) is amended by

23 adding at the end the following new clause:
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1 ‘‘(iv) For purposes of subparagraphs (C) and (D), the

2 applicable percentage increase for discharges occurring dur3 ing—

4 ‘‘(I) cost reporting periods beginning in fiscal

5 year 1986 through fiscal year 1993 and the 3 succeed6 ing months, is the increase specified in clause (ii),

7 ‘‘(II) for 1994, is 75 percent of the difference be8 tween the market basket percentage increase and 2.0

9 percentage points,

10 ‘‘(III) for 1995, is the market basket percentage

11 increase, minus 2.0 percentage points, and

12 ‘‘(IV) for 1996 and each subsequent year, is the

13 increase described in clause (i) for such year.

14 For purposes of subclause (I), the annual update applied

15 for a cost reporting period beginning during calendar year

16 1993 is adjusted to reflect only the time period occurring

17 from the beginning of the hospital’s cost reporting period

18 through December 31, 1993.’’.

19 (B) TARGET AMOUNT ADJUSTMENT.—

20 (i) SOLE COMMUNITY HOSPITAL.—Sec21 tion 1886(b)(3)(C) (42 U.S.C.

22 1395ww(b)(3)(C)) is amended—

23 (I) in clause (i)(II), by striking

24 ‘‘or’’,

25 (II) in clause (ii)—
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1 (aa) by inserting ‘‘or portion

2 of a cost reporting period occur3 ring before December 31, 1993,’’

4 before ‘‘the target amount’’,

5 (bb) by striking ‘‘subpara6 graph (B)(ii)’’ and inserting

7 ‘‘subparagraph (B)(iv)’’, and

8 (cc) by striking the period at

9 the end and inserting a comma,

10 and

11 (dd) by adding at the end the

12 following new clauses:

13 ‘‘(iii) with respect to discharges occurring in

14 1994, the target amount for the cost reporting period

15 beginning in 1993 increased by the applicable per16 centage increase under subparagraph (B)(iv), or

17 ‘‘(iv) with respect to discharges occurring in

18 1995 and each subsequent year, the target amount for

19 the preceding year increased by the applicable per20 centage increase under subparagraph (B)(iv).’’.

21 (ii) MEDICARE-DEPENDENT, SMALL

22 RURAL HOSPITAL.—Section 1886(b)(3)(D)

23 (42 U.S.C. 1395ww(b)(3)(D)) is amended—

24 (I) in clause (i)(II), by striking

25 ‘‘or’’,
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1 (II) in clause (ii)—

2 (aa) by inserting ‘‘or portion

3 of a cost reporting period occur4 ring before December 31, 1993,’’

5 before ‘‘the target amount’’,

6 (bb) by striking ‘‘subpara7 graph (B)(ii)’’ and inserting

8 ‘‘subparagraph (B)(iv)’’, and

9 (cc) by striking the period at

10 the end and inserting ‘‘, or’’ and

11 (dd) by adding at the end the

12 following new clause:

13 ‘‘(iii) with respect to discharges occurring in

14 1994, the target amount for the cost reporting period

15 beginning in 1993 increased by the applicable per16 centage increase under subparagraph (B)(iv).’’.

17 (4) DELAY IN INCREASE IN DISPROPORTIONATE

18 SHARE PAYMENTS FOR CERTAIN URBAN HOSPITALS.—

19 Section 1886(d)(5)(F)(vii)(II) (42 U.S.C.

20 1395ww(d)(5)(F)(vii)(II)) is amended—

21 (A) in subdivision (b), by striking ‘‘Septem22 ber 30, 1993’’ and inserting ‘‘December 31,

23 1993’’, and

24 (B) in subdivision (c), by striking ‘‘October

25 1, 1993’’ and inserting ‘‘January 1, 1994’’.
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1 (5) REGIONAL FLOOR EXTENDED.—Section

2 1886(d)(1)(A) (42 U.S.C. 1395ww(d)(1)(A)) is

3 amended—

4 (i) in clause (ii), by striking ‘‘or’’ at

5 the end;

6 (ii) in clause (iii), by striking ‘‘Sep7 tember 30, 1993, ’’ and inserting ‘‘December

8 31, 1993’’; and

9 (iii) by adding at the end the following

10 new clause:

11 ‘‘(iv) beginning on and after January 1, 1994,

12 is equal to the national adjusted DRG prospective

13 payment rate determined under paragraph (3) for

14 such discharges.’’.

15 (b) CONFORMING AMENDMENTS.—

16 (1) Section 1886(b)(3)(B)(iii) (42 U.S.C.

17 1395ww(b)(3)(B)(iii)) is amended—

18 (A) by inserting ‘‘beginning in’’ after ‘‘cost

19 reporting periods’’,

20 (B) by striking ‘‘fiscal year’’ the first place

21 it appears and inserting ‘‘particular time pe22 riod’’,

23 (C) by striking ‘‘or fiscal year’’ the first

24 and second place it appears, and
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1 (D) by striking ‘‘cost reporting period or

2 fiscal year’’ and inserting ‘‘period’’.

3 (2) The first sentence in the matter in section

4 1886(d)(3) (42 U.S.C. 1395ww(d)(3)) preceding sub5 paragraph (A) is amended by inserting ‘‘or calendar’’

6 after ‘‘fiscal’’ the first place it appears.

7 (3) Section 1886(d)(3)(A)(ii) (42 U.S.C.

8 1395ww(d)(3)(A)(ii)) is amended—

9 (A) by striking ‘‘1994,’’ and inserting

10 ‘‘1992, in the 15-month period beginning on Oc11 tober 1, 1992, and in 1994,’’, and

12 (B) by striking ‘‘fiscal year’’ the second and

13 third place it appears and inserting ‘‘time pe14 riod’’.

15 (4) Section 1886(d)(3)(A)(iii) (42 U.S.C.

16 1395ww(d)(3)(A)(iii)) is amended by striking ‘‘the

17 fiscal year beginning on October 1, 1994’’ and insert18 ing ‘‘1995’’.

19 (5) Section 1886(d)(3)(A)(iv) (42 U.S.C.

20 1395ww(d)(3)(A)(iv)) is amended—

21 (A) by striking ‘‘fiscal year beginning on or

22 after October 1, 1995’’ and inserting ‘‘year be23 ginning on or after January 1, 1996’’,

24 (B) by striking ‘‘and within each region’’,

25 and
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1 (C) by striking ‘‘fiscal’’ each place it ap2 pears.

3 (6) Section 1886(d)(3)(D) (42 U.S.C.

4 1395ww(d)(3)(D)) is amended—

5 (A) by inserting ‘‘or calendar’’ after ‘‘fiscal’’

6 each place it appears, and

7 (B) by inserting ‘‘for each fiscal year

8 through 1993’’ after ‘‘and shall establish’’.

9 (7) Section 1886(d)(3)(E) (42 U.S.C.

10 1395ww(d)(3)(E)) is amended—

11 (A) in the second sentence, by striking ‘‘Oc12 tober 1, 1993’’ and inserting ‘‘January 1, 1994’’,

13 and

14 (B) in the last sentence, by inserting ‘‘or

15 calendar’’ after ‘‘fiscal’’ the first and last place

16 it appears.

17 (8)(A) Section 1886(d)(4)(C)(iii) (42 U.S.C.

18 1395ww(d)(4)(C)(iii)) is amended—

19 (i) by inserting ‘‘or calendar’’ after ‘‘fiscal’’

20 the first place it appears, and

21 (ii) by deleting ‘‘fiscal’’ the third place it

22 appears.

23 (B) The requirements of paragraphs (3)(E) and

24 (4)(C)(iii) of section 1886(d) of the Social Security

25 Act (42 U.S.C. 1395ww(d)(4)(C)(iii)) shall be applied
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1 on a 15-month basis for the period beginning on Octo2 ber 1, 1992, and ending on December 31, 1993.

3 (9) Section 1886(d)(4)(E) is (42 U.S.C.

4 1395ww(d)(4)(E)) is amended by striking ‘‘October 1,

5 1993’’ and inserting ‘‘January 1, 1994’’.

6 (10)(A) Section 1886(d)(5)(A)(iv) (42 U.S.C.

7 1395ww(d)(5)(A)(iv)) is amended by inserting ‘‘or

8 calendar’’ after ‘‘fiscal’’.

9 (B) The requirement of section 1886(d)(5)(A)(iv)

10 of the Social Security Act (42 U.S.C.

11 1395ww(d)(5)(A)(iv)) shall be applied on a 15-month

12 basis for the period beginning on October 1, 1992,

13 and ending on December 31, 1993.

14 (11) Section 1886(d)(5)(B)(i) (42 U.S.C.

15 1395ww(d)(5)(B)(i)) is amended by striking ‘‘or, if

16 applicable, the amount determined under paragraph

17 (1)(A)(iii)’’ and inserting ‘‘or, the amount determined

18 under paragraphs (1)(A)(iii) or (1)(A)(iv), as appli19 cable’’.

20 (12) Section 1886(d)(5)(E)(ii) (42 U.S.C.

21 1395ww(d)(5)(E)(ii)) is amended by inserting ‘‘or

22 calendar’’ after ‘‘fiscal’’.

23 (13) Section 1886(d)(6) (42 U.S.C.

24 1395ww(d)(5)(6)) is amended by striking ‘‘the Sep-
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1 tember 1 before each fiscal year (beginning with fiscal

2 year 1984)’’ and inserting ‘‘December 1 each year’’.

3 (14) The matter in section 1886(d)(9)(A) (42

4 U.S.C. 1395ww(d)(9)(A)) preceding clause (i) is

5 amended by striking ‘‘fiscal year’’ and inserting

6 ‘‘particular time period’’.

7 (15) Section 1886(d)(9)(C)(i) (42 U.S.C.

8 1395ww(d)(9)(C)(i)) is amended—

9 (A) by striking ‘‘fiscal year’’ the first place

10 it appears and inserting ‘‘time period’’, and

11 (B) by striking ‘‘fiscal years’’ and inserting

12 ‘‘time periods’’.

13 (16) Subparagraphs (A) and (B) of section

14 1886(e)(3) (42 U.S.C. 1395ww(e)(3)) are each amend15 ed by striking ‘‘that fiscal year’’ and inserting ‘‘the

16 coming fiscal or calendar year’’.

17 (17) The first sentence of section 1886(e)(4)(A)

18 (42 U.S.C. 1395ww(e)(4)(A)) is amended by inserting

19 ‘‘or calendar’’ after ‘‘fiscal’’ the first and last place it

20 appears.

21 (18) Section 1886(e)(4)(B) (42 U.S.C.

22 1395ww(e)(4)(B)) is amended by inserting ‘‘or cal23 endar’’ after ‘‘fiscal’’.

24 (19) Section 1886(e)(5)(A) (42 U.S.C.

25 1395ww(e)(5)(A)) is amended by striking ‘‘that fiscal
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1 year’’ and inserting ‘‘the coming fiscal or calendar

2 year’’.

3 (20) The second and third sentences of section

4 1886(e)(5) (42 U.S.C. 1395ww(e)(5)) are each amend5 ed by inserting ‘‘or calendar’’ after ‘‘fiscal’’ each place

6 it appears.

7 SEC. 7102. LOSS OF REGIONAL REFERRAL CENTER STATUS.

8 (a) CONTINUATION OF OTHER URBAN PAYMENT RATE

9 THROUGH CALENDAR YEAR 1994.—Effective on the date of

10 the enactment of this Act, any hospital that was classified

11 as a regional referral center under section 1886(d)(5)(C)

12 of the Social Security Act as of September 30, 1992, shall

13 continue to be paid under this subsection the standardized

14 amount for hospitals located in other urban areas for dis15 charges occurring before the earlier of—

16 (1) January 1, 1995, or

17 (2) the reclassification of such hospital as an

18 urban hospital under section 1886(d)(10)(C) of such

19 Act.

20 (b) PERMITTING HOSPITALS TO DECLINE RECLASSI21 FICATION.—If any hospital fails to qualify as a rural refer22 ral center under section 1886(d)(5)(C) of the Social Secu23 rity Act as a result of a decision by the Medicare Geo24 graphic Classification Review Board under section

25 1886(d)(10) of such Act to reclassify the hospital as being
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1 located in an urban area for fiscal year 1993 or fiscal year

2 1994, the Secretary of Health and Human Services shall—

3 (1) notify such hospital of such failure to qual4 ify,

5 (2) provide an opportunity for such hospital to

6 decline such reclassification, and

7 (3) if the hospital declines such reclassification,

8 administer the Social Security Act (other than section

9 1886(d)(8)(D)) for such fiscal year as if the decision

10 by the Review Board had not occurred.

11 (c) REQUIRING LUMP-SUM RETROACTIVE PAYMENT

12 FOR HOSPITALS LOSING CLASSIFICATION.—

13 (1) IN GENERAL.—In the case of any regional re14 ferral center described in subsection (a), the Secretary

15 of Health and Human Services shall make a lump16 sum payment to the center equal to the difference be17 tween—

18 (A) the aggregate payment made to the cen19 ter under section 1886 of the Social Security Act

20 (excluding outlier payments under subsection

21 (d)(5)(A) of such section) during the period of

22 applicability described in paragraph (2), and

23 (B) the aggregate payment that would have

24 been made to the center under such section if,

25 during the period of applicability, the center had
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1 been paid as if subsection (a) of this section had

2 been in effect.

3 (2) PERIOD OF APPLICABILITY.—In paragraph

4 (1), the ‘‘period of applicability’’ is the period that

5 begins on October 1, 1992, and ends on the date of

6 the enactment of this Act.

7 SEC. 7103. MEDICARE-DEPENDENT, SMALL RURAL HOS8 PITAL PAYMENT EXTENSION.

9 (a) EXTENSION OF ADDITIONAL PAYMENTS.—

10 (1) IN GENERAL.—Section 1886(d)(5)(G) (42

11 U.S.C. 1395ww(d)(5)(G)) is amended—

12 (A) in clause (i)—

13 (i) by inserting ‘‘(or portion thereof)’’

14 after ‘‘cost reporting period’’ in the matter

15 preceding subclause (I), and

16 (ii) by striking ‘‘March 31, 1993,’’ and

17 all that follows and inserting: ‘‘January 1,

18 1995, in the case of a subsection (d) hos19 pital which is a medicare-dependent, small

20 rural hospital, payment under paragraph

21 (1)(A) shall be equal to the sum of the

22 amount determined under clause (ii) and

23 the amount determined under clause (iii) or

24 (iv) of paragraph (1)(A).’’;
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1 (B) by redesignating clauses (ii) and (iii)

2 as clauses (iii) and (iv); and

3 (C) by inserting after clause (i) the follow4 ing new clause:

5 ‘‘(ii) The amount determined under this clause is—

6 ‘‘(I) for discharges occurring during the first 3

7 12-month cost reporting periods that begin on or after

8 April 1, 1990, the amount by which the hospital’s tar9 get amount for the cost reporting period (as defined

10 in subsection (b)(3)(D)) exceeds the amount deter11 mined under clause (iii) or (iv) paragraph (1)(A);

12 and

13 ‘‘(II) for discharges occurring during any subse14 quent cost reporting period (or portion thereof), 50

15 percent of the amount by which the hospital’s target

16 amount for the cost reporting period (as defined in

17 subsection (b)(3)(D)) exceeds the amount determined

18 under clause (iii) or (iv) of paragraph (1)(A).’’.

19 (2) EFFECTIVE DATE.—The amendments made

20 by paragraph (1) shall be effective as if included in

21 the amendment made by section 6003(f) of OBRA–

22 1989.

23 (b) PERMITTING HOSPITALS TO DECLINE RECLASSI24 FICATION.—If any hospital fails to qualify as a medicare25 dependent, small rural hospital under section
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1 1886(d)(5)(G)(i) of the Social Security Act as a result of

2 a decision by the Medicare Geographic Classification Re3 view Board under section 1886(d)(10) of such Act to reclas4 sify the hospital as being located in an urban area for fiscal

5 year 1993 or fiscal year 1994 the Secretary of Health and

6 Human Services shall—

7 (1) notify such hospital of such failure to qual8 ify,

9 (2) provide an opportunity for such hospital to

10 decline such reclassification, and

11 (3) if the hospital declines such reclassification,

12 administer the Social Security Act (other than section

13 1886(d)(8)(D)) for such fiscal year as if the decision

14 by the Review Board had not occurred.

15 (c) REQUIRING LUMP-SUM RETROACTIVE PAYMENT.—

16 (1) IN GENERAL.—In the case of a hospital treat17 ed as a medicare-dependent, small rural hospital

18 under section 1886(d)(5)(G) of the Social Security

19 Act, the Secretary of Health and Human Services

20 shall make a lump-sum payment to the hospital equal

21 to the difference between—

22 (A) the aggregate payment made to the hos23 pital under section 1886 of such Act (excluding

24 outlier payments under subsection (d)(5)(A) of
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1 such section) during the period of applicability

2 described in paragraph (2), and

3 (B) the aggregate payment that would have

4 been made to the hospital under such section if,

5 during the period of applicability, section

6 1886(d)(5)(G) of such Act had been applied as

7 if—

8 (i) the reference in clause (i) to ‘‘March

9 31, 1993,’’ had been deemed a reference to

10 ‘‘January 1, 1995,’’; and

11 (ii) the amendments made by sub12 section (a) had been in effect.

13 (2) PERIOD OF APPLICABILITY.—In paragraph

14 (1), the ‘‘period of applicability’’ is, with respect to

15 a hospital, the period that begins on the first day of

16 the hospital’s first 12-month cost reporting period

17 that begins after April 1, 1992, and ends on the date

18 of the enactment of this Act.

19 SEC. 7104. ELIMINATION OF RETURN ON EQUITY FOR PRO20 PRIETARY SKILLED NURSING FACILITIES.

21 (a) REPEAL OF REQUIREMENT FOR RETURN ON EQ22 UITY.—(1) Section 1861(v)(1)(B) (42 U.S.C.

23 1395x(v)(1)(B)) is amended to read as follows:
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1 ‘‘(B) In the case of extended care services, the regula2 tions under subparagraph (A) shall not include provision

3 for specific recognition of a return on equity capital.’’.

4 (2) Section 1878(f)(2) (42 U.S.C. 1395oo(f)(2)) is

5 amended by striking ‘‘the rate of return on equity capital

6 established by regulation pursuant to section 1861(v)(1)(B)

7 and in effect at the time’’ and inserting ‘‘the average of

8 the rates of interest on obligations issued for purchase by

9 the Federal Hospital Insurance Trust Fund for each of the

10 months any part of which is included in the cost reporting

11 period in which’’.

12 (3) Section 1881(b)(2)(C) (42 U.S.C. 1395rr(b)(2)(C))

13 is amended by striking all that follows ‘‘capital’’ up to the

14 period.

15 (b) EFFECTIVE DATE.—The amendments made by sub16 section (a) apply to portions of cost reporting periods occur17 ring on or after October 1, 1993.

18 SEC. 7105. SKILLED NURSING FACILITY COST LIMITS.

19 (a) SKILLED NURSING FACILITY COST LIMITS.—

20 (1) IN GENERAL.—Section 1888(a) (42 U.S.C.

21 1395yy(a)) is amended by striking ‘‘112 percent of

22 the mean’’ and inserting ‘‘110 percent of the median’’

23 each place it appears.
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1 (2) EFFECTIVE DATE.—The amendments made

2 by paragraph (1) shall apply to cost reporting peri3 ods beginning on or after October 1, 1993.

4 (b) SKILLED NURSING FACILITY WAGE INDEX.—Not

5 later than 1 year after the date of the enactment of this

6 Act, the Secretary of Health and Human Services shall

7 begin to collect data on employee compensation and paid

8 hours of employment in skilled nursing facilities for the

9 purpose of constructing a skilled nursing facility wage

10 index adjustment to the routine service cost limits required

11 under section 1888(a) of the Social Security Act.

12 (c) PROPAC REPORT.—The Prospective Payment As13 sessment Commission shall, by March 31, 1994, study and

14 report to the Congress on the impact of applying the routine

15 per diem cost limits for skilled nursing facilities on a re16 gional basis.

17 PART II—PROVISIONS RELATING TO PART B

18 Subpart A—Physicians’ Services

19 SEC. 7201. REDUCTION IN DEFAULT UPDATE FOR CONVER20 SION FACTOR FOR 1994.

21 Section 1848(d)(3)(A) (42 U.S.C. 1395w–4(d)(3)(A))

22 is amended—

23 (1) in clause (i), by striking ‘‘clause (iii)’’ and

24 inserting ‘‘clauses (iii) and (iv)’’, and
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1 (2) by adding at the end the following new

2 clause:

3 ‘‘(iv) ADJUSTMENT IN PERCENTAGE IN4 CREASE FOR 1994.—In applying clause (i)

5 for services (other than primary care serv6 ices) furnished in 1994, the percentage in7 crease in the appropriate update index shall

8 be reduced by—

9 ‘‘(I) 8 percentage points for sur10 gical services (as defined for purposes

11 of subsection (j)(1)), and

12 ‘‘(II) 4.4 percentage points for

13 other services.’’.

14 SEC. 7202. REDUCTION IN PERFORMANCE STANDARD RATE

15 OF INCREASE AND INCREASE IN MAXIMUM

16 REDUCTION PERMITTED IN DEFAULT UPDATE

17 AND CLASSIFICATION OF PRIMARY CARE

18 SERVICES AS A SEPARATE CATEGORY OF

19 SERVICES.

20 (a) REDUCTION IN PERFORMANCE STANDARD FAC21 TOR.—Section 1848(f)(2)(B) (42 U.S.C. 1395w–4(f)(2)(B))

22 is amended to read as follows:

23 ‘‘(B) PERFORMANCE STANDARD FACTOR.—

24 For purposes of subparagraph (A)—
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1 ‘‘(i) IN GENERAL.—Except as provided

2 in clause (ii), the performance standard fac3 tor—

4 ‘‘(I) for 1993 is 2 percentage

5 points,

‘‘(II) for 1994 is 31 6 ⁄2 percentage

7 points, and

8 ‘‘(III) for each succeeding year is

9 4 percentage points.

10 ‘‘(ii) PRIMARY CARE SERVICES.—The

11 performance standard factor for primary

12 care services (as defined in section

13 1842(i)(4)) is 0 percentage points.’’.

14 (b) INCREASE IN MAXIMUM REDUCTION PERMITTED IN

15 DEFAULT UPDATE.—Section 1848(d)(3)(B)(ii) (42 U.S.C.

16 1395w–4(d)(3)(B)(ii)) is amended—

17 (1) in subclause (II), by striking ‘‘or 1995’’, and

18 (2) in subclause (III), by striking ‘‘3’’ and in19 serting ‘‘5’’.

20 (c) CLASSIFICATION OF PRIMARY CARE SERVICES AS

21 SEPARATE CATEGORY OF SERVICES.—

22 (1) IN GENERAL.—Section 1848(j)(1) (42 U.S.C.

23 1395w–4(j)(1)) is amended by inserting ‘‘, primary

24 care services (as defined in section 1842(i)(4)),’’ after

25 ‘‘Secretary)’’.
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1 (2) EFFECTIVE DATE.—The amendment made by

2 paragraph (1) shall apply—

3 (A) to volume performance standard rates of

4 increase established under section 1848(f) of the

5 Social Security Act for fiscal years beginning on

6 or after October 1, 1993, and

7 (B) to updates in the conversion factors for

8 physicians’ services established under section

9 1848(d) of such Act for physicians’ services to be

10 furnished in calendar years beginning after

11 1995.

12 SEC. 7203. PHASED-IN REDUCTION IN PRACTICE EXPENSE

13 RELATIVE VALUE UNITS FOR CERTAIN SERV14 ICES.

15 (a) IN GENERAL.—Section 1848(c)(2) (42 U.S.C.

16 1395w–4(c)(2)) is amended by adding at the end the follow17 ing new subparagraph:

18 ‘‘(E) REDUCTION IN PRACTICE EXPENSE

19 RELATIVE VALUE UNITS FOR CERTAIN SERV20 ICES.—

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

22 (ii), the Secretary shall reduce the practice

23 expense relative value units applied to serv24 ices described in clause (iii) furnished in—
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1 ‘‘(I) 1994, by 25 percent of the

2 number by which the number of prac3 tice expense relative value units (deter4 mined for 1994 without regard to this

5 subparagraph) exceeds the number of

6 work relative value units determined

7 for 1994,

8 ‘‘(II) 1995, by an additional 25

9 percent of such excess, and

10 ‘‘(III) 1996, by an additional 25

11 percent of such excess.

12 ‘‘(ii) FLOOR ON REDUCTIONS.—The

13 practice expense relative value units for a

14 physician’s service shall not be reduced

15 under this subparagraph to a number less

16 than 110 percent of the number of work rel17 ative value units.

18 ‘‘(iii) SERVICES COVERED.—For pur19 poses of clause (i), the services described in

20 this clause are physicians’ services that are

21 not described in clause (iv) and for which—

22 ‘‘(I) there are work relative value

23 units, and

24 ‘‘(II) the number of practice ex25 pense relative value units (determined
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1 for 1994) exceeds 110 percent of the

2 number of work relative value units

3 (determined for such year).

4 ‘‘(iv) EXCLUDED SERVICES.—For pur5 poses of clause (iii), the services described in

6 this clause are services which the Secretary

7 determines at least 75 percent of which are

8 provided under this title in an office set9 ting.’’.

10 (b) DEVELOPMENT OF RESOURCE-BASED METHODOL11 OGY FOR PRACTICE EXPENSES.—

12 (1) The Secretary of Health and Human Serv13 ices shall develop a methodology for implementing in

14 1997 a resource-based system for determining practice

15 expense relative value units for each physician’s serv16 ice.

17 (2) The Secretary shall transmit a report by

18 June 30, 1996, on the methodology developed under

19 paragraph (1) to the Committee on Ways and Means

20 and the Committee on Energy and Commerce of the

21 House of Representatives and the Committee on Fi22 nance of the Senate. The report shall include a pres23 entation of data utilized in developing the methodol24 ogy and an explanation of the methodology.
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1 SEC. 7204. LIMITATION ON PAYMENT FOR THE ANESTHESIA

2 CARE TEAM.

3 (a) LIMIT ON PAYMENT TO A PHYSICIAN FOR MEDICAL

4 DIRECTION.—

5 (1) IN GENERAL.—Section 1848(a) (42 U.S.C.

6 1395w–4(a)) is amended by adding at the end the fol7 lowing new paragraph:

8 ‘‘(5) SPECIAL RULE FOR MEDICAL DIRECTION.—

9 ‘‘(A) IN GENERAL.—With respect to physi10 cians’ services furnished on or after January 1,

11 1994, and consisting of medical direction of 2, 3,

12 or 4 concurrent anesthesia cases, the fee schedule

13 amount to be applied shall not exceed one-half of

14 the amount described in subparagraph (B).

15 ‘‘(B) AMOUNT.—The amount described in

16 this subparagraph, for a physician’s medical di17 rection of the performance of anesthesia services,

18 is the following percentage of the fee schedule

19 amount otherwise applicable under this section if

20 the anesthesia services were personally performed

21 by the physician alone:

22 ‘‘(i) For services furnished during

23 1994, 120 percent.

24 ‘‘(ii) For services furnished during

25 1995, 115 percent.
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1 ‘‘(iii) For services furnished during

2 1996, 110 percent.

3 ‘‘(iv) For services furnished during

4 1997, 105 percent.

5 ‘‘(v) For services furnished after 1997,

6 100 percent.’’.

7 (2) ELIMINATION OF REDUCTION FOR MEDICAL

8 DIRECTION OF MULTIPLE NURSE ANESTHETISTS.—

9 Section 1842(b) (42 U.S.C. 1395u(b)) is amended by

10 striking paragraph (13).

11 (b) PAYMENT TO A CERTIFIED REGISTERED NURSE

12 ANESTHETIST FOR MEDICALLY DIRECTED SERVICES.—

13 Subparagraph (B) of section 1833(l)(4) (42 U.S.C.

14 1395l(l)(4)) is amended—

15 (1) in clause (i), by inserting ‘‘and before Janu16 ary 1, 1994,’’ after ‘‘1991,’’;

17 (2) in clause (ii)—

18 (A) by adding ‘‘and’’ at the end of subclause

19 (II),

20 (B) by striking the comma at the end of

21 subclause (III) and inserting a period, and

22 (C) by striking subclauses (IV) through

23 (VII); and

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

25 clause:
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1 ‘‘(iii) In the case of services of a certified registered

2 nurse anesthetist who is medically directed or medically su3 pervised by a physician which are furnished on or after

4 January 1, 1994, the fee schedule amount shall be 50 per5 cent of the amount described in section 1848(a)(5)(B) with

6 respect to the physician.’’.

7 SEC. 7205. SEPARATE PAYMENT FOR INTERPRETATION OF

8 ELECTROCARDIOGRAMS.

9 (a) IN GENERAL.—Paragraph (3) of section 1848(b)

10 (42 U.S.C. 1395w–4(b)) is amended to read as follows:

11 ‘‘(3) TREATMENT OF INTERPRETATION OF ELEC12 TROCARDIOGRAMS.—The Secretary—

13 ‘‘(A) shall make separate payment under

14 this section for the interpretation of electro15 cardiograms performed or ordered to be per16 formed as part of or in conjunction with a visit

17 to or a consultation with a physician, and

18 ‘‘(B) shall adjust the relative values estab19 lished for visits and consultations under sub20 section (c) so as not to include relative value

21 units for interpretations of electrocardiograms in

22 the relative value for visits and consultations.’’.

23 (b) ASSURING BUDGET NEUTRALITY.—Section

24 1848(c)(2) (42 U.S.C. 1395w–4(c)(2)), as amended by sec-
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1 tion 7203(a), is further amended by adding at the end the

2 following new subparagraph:

3 ‘‘(F) BUDGET NEUTRALITY ADJUST4 MENTS.—The Secretary—

5 ‘‘(i) shall reduce the relative values for

6 all services (other than anesthesia services)

7 established under this paragraph (and, in

8 the case of anesthesia services, the conver9 sion factor established by the Secretary for

10 such services) by such percentage as the Sec11 retary determines to be necessary so that,

12 beginning in 1996, the amendment made by

13 section 7205(a) of the Omnibus Budget Rec14 onciliation Act of 1993 would not result in

15 expenditures under this section that exceed

16 the amount of such expenditures that would

17 have been made if such amendment had not

18 been made, and

19 ‘‘(ii) shall reduce the amounts deter20 mined under subsection (a)(2)(B)(ii)(I) by

21 such percentage as the Secretary determines

22 to be required to assure that, taking into ac23 count the reductions made under clause (i),

24 the amendment made by section 7205(a) of

25 the Omnibus Budget Reconciliation Act of
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1 1993 would not result in expenditures

2 under this section in 1994 that exceed the

3 amount of such expenditures that would

4 have been made if such amendment had not

5 been made.’’.

6 (c) CONFORMING AMENDMENTS.—Section 1848 (42

7 U.S.C. 1395w–4) is amended—

8 (1) in subsection (a)(2)(B)(ii)(I), by inserting

9 ‘‘and as adjusted under subsection (c)(2)(F)(ii)’’ after

10 ‘‘for 1994’’;

11 (2) in subsection (c)(2)(A)(i), by adding at the

12 end the following: ‘‘Such relative values are subject to

13 adjustment under subparagraph (F)(i).’’; and

14 (3) in subsection (i)(1)(B), by adding at the end

15 ‘‘including adjustments under subsection (c)(2)(F),’’.

16 (d) EFFECTIVE DATE.—The amendments made by this

17 section shall apply to services furnished on or after January

18 1, 1994.

19 SEC. 7206. PAYMENTS FOR NEW PHYSICIANS AND PRACTI20 TIONERS.

21 (a) EQUAL TREATMENT OF NEW PHYSICIANS AND

22 PRACTITIONERS.—(1) Section 1848(a) (42 U.S.C. 1395w–

23 4(a)), as amended by section 7204(a), is further amended

24 by striking paragraph (4) and by redesignating paragraph

25 (5) as paragraph (4).
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1 (2) Section 1842(b)(4) (42 U.S.C. 1395u(b)(4)) is

2 amended by striking subparagraph (F).

3 (b) BUDGET NEUTRALITY ADJUSTMENT.—Notwith4 standing any other provision of law, the Secretary of

5 Health and Human Services shall reduce the following val6 ues and amounts for 1994 (to be applied for that year and

7 subsequent years) by such uniform percentage as the Sec8 retary determines to be required to assure that the amend9 ments made by subsection (a) will not result in expendi10 tures under part B of title XVIII of the Social Security

11 Act in 1994 that exceed the amount of such expenditures

12 that would have been made if such amendments had not

13 been made:

14 (1) The relative values established under section

15 1848(c) of such Act for services (other than anesthesia

16 services) and, in the case of anesthesia services, the

17 conversion factor established under section 1848 of

18 such Act for such services.

19 (2) The amounts determined under section

20 1848(a)(2)(B)(ii)(I) of such Act.

21 (3) The prevailing charges or fee schedule

22 amounts to be applied under such part for services of

23 a health care practitioner (as defined in section

24 1842(b)(4)(F)(ii)(I) of such Act, as in effect before the

25 date of the enactment of this Act).
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1 (c) CONFORMING AMENDMENTS.—Section 1848 (42

2 U.S.C. 1395w–4), as amended by section 7205(c), is amend3 ed—

4 (1) in subsection (a)(2)(B)(ii)(I), by inserting

5 ‘‘and under section 7206(b) of the Omnibus Budget

6 Reconciliation Act of 1993’’ after ‘‘subsection

7 (c)(2)(F)(ii)’’;

8 (2) in subsection (c)(2)(A)(i), by inserting ‘‘and

9 section 7206(b) of the Omnibus Budget Reconciliation

10 Act of 1993’’ after ‘‘under subparagraph (F)(i)’’; and

11 (3) in subsection (i)(1)(B), by inserting ‘‘and

12 section 7206(b) of the Omnibus Budget Reconciliation

13 Act of 1993’’ after ‘‘under subsection (c)(2)(F)’’.

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

15 subsection (a) shall apply to services furnished on or after

16 January 1, 1994.

17 SEC. 7207. EXTRA-BILLING LIMITS.

18 (a) ENFORCEMENT AND UNIFORM APPLICATION.—

19 (1) ENFORCEMENT.—Paragraph (1) of section

20 1848(g) (42 U.S.C. 1395w–4(g)) is amended to read

21 as follows:

22 ‘‘(1) LIMITATION ON ACTUAL CHARGES.—

23 ‘‘(A) IN GENERAL.—In the case of a

24 nonparticipating physician or nonparticipating

25 supplier or other person (as defined in section
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1 1842(i)(2)) who does not accept payment on an

2 assignment-related basis for a physician’s service

3 furnished with respect to an individual enrolled

4 under this part, the following rules apply:

5 ‘‘(i) APPLICATION OF LIMITING

6 CHARGE.—No person may bill or collect an

7 actual charge for the service in excess of the

8 limiting charge described in paragraph (2)

9 for such service.

10 ‘‘(ii) NO LIABILITY FOR EXCESS

11 CHARGES.—No person is liable for payment

12 of any amounts billed for the service in ex13 cess of such limiting charge.

14 ‘‘(iii) CORRECTION OF EXCESS

15 CHARGES.—If such a physician, supplier,

16 or other person bills, but does not collect, an

17 actual charge for a service in violation of

18 clause (i), the physician, supplier, or other

19 person shall reduce on a timely basis the ac20 tual charge billed for the service to an

21 amount not to exceed the limiting charge for

22 the service.

23 ‘‘(iv) REFUND OF EXCESS COLLEC24 TIONS.—If such a physician, supplier, or

25 other person collects an actual charge for a
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1 service in violation of clause (i), the physi2 cian, supplier, or other person shall provide

3 on a timely basis a refund to the individual

4 charged in the amount by which the amount

5 collected exceeded the limiting charge for the

6 service. The amount of such a refund shall

7 be reduced to the extent the individual has

8 an outstanding balance owed to the physi9 cian.

10 ‘‘(B) SANCTIONS.—If a physician, supplier,

11 or other person—

12 ‘‘(i) knowingly and willfully bills or

13 collects for services in violation of subpara14 graph (A)(i) on a repeated basis, or

15 ‘‘(ii) fails to comply with clause (iii)

16 or (iv) of subparagraph (A) on a timely

17 basis,

18 the Secretary may apply sanctions against the

19 physician, supplier, or other person in accord20 ance with paragraph (2) of section 1842(j). In

21 applying this subparagraph, paragraph (4) of

22 such section applies in the same manner as such

23 paragraph applies to such section and any ref24 erence in such section to a physician is deemed
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1 also to include a reference to a supplier or other

2 person under this subparagraph.

3 ‘‘(C) TIMELY BASIS.—For purposes of this

4 paragraph, a reduction or refund under clauses

5 (iii) and (iv) of subparagraph (A) shall be treat6 ed as done on a timely basis if the reduction or

7 refund is made not later than 30 days after the

8 date the physician, supplier, or other person is

9 notified by the carrier under this part of such

10 violation and of the requirements of subpara11 graph (A).’’.

12 (2) UNIFORM APPLICATION OF EXTRA-BILLING

13 LIMITS TO PHYSICIANS’ SERVICES.—

14 (A) IN GENERAL.—Section 1848(g)(2)(C)

15 (42 U.S.C. 1395w–4(g)(2)(C)) is amended by in16 serting ‘‘or for nonparticipating suppliers or

17 other persons’’ after ‘‘nonparticipating physi18 cians’’.

19 (B) CONFORMING DEFINITION.—Section

20 1842(i)(2) (42 U.S.C. 1395u(i)(2)) is amended—

21 (i) by striking ‘‘, and the term’’ and

22 inserting ‘‘; the term’’, and

23 (ii) by inserting before the period at

24 the end the following: ‘‘; and the term

25 ‘nonparticipating supplier or other person’
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1 means a supplier or other person (excluding

2 a provider of services) that is not a partici3 pating physician or supplier (as defined in

4 subsection (h)(1))’’.

5 (3) ADDITIONAL CONFORMING AMENDMENTS.—

6 Section 1848 (42 U.S.C. 1395w–4) is amended—

7 (A) in subsection (a)(3)—

8 (i) by inserting ‘‘AND SUPPLIERS’’

9 after ‘‘PHYSICIANS’’ in the heading,

10 (ii) by inserting ‘‘or a

11 nonparticipating supplier or other person’’

12 after ‘‘nonparticipating physician’’, and

13 (iii) by adding at the end the follow14 ing: ‘‘In the case of physicians’ services (in15 cluding services which the Secretary ex16 cludes pursuant to subsection (j)(3)) of a

17 nonparticipating physician, supplier, or

18 other person for which payment is made

19 under this part on a basis other than the fee

20 schedule amount, the payment shall be

21 based on 95 percent of the payment basis

22 for such services furnished by a participat23 ing physician, supplier, or other person.’’;

24 (B) in subsection (g)(1)(A), as amended by

25 subsection (a), in the matter before clause (i), by
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1 inserting ‘‘(including services which the Sec2 retary excludes pursuant to subsection (j)(3))’’

3 after ‘‘a physician’s service’’;

4 (C) in subsection (g)(2)(D), by inserting

5 ‘‘(or, if payment under this part is made on a

6 basis other than the fee schedule under this sec7 tion, 95 percent of the other payment basis)’’

8 after ‘‘subsection (a)’’;

9 (D) in subsection (g)(3)(B)—

10 (i) by inserting after the first sentence

11 the following: ‘‘No person is liable for pay12 ment of any amounts billed for such a serv13 ice in violation of the preceding sentence.’’,

14 and

15 (ii) in the last sentence, by striking

16 ‘‘previous sentence’’ and inserting ‘‘first

17 sentence’’;

18 (E) in subsection (h)—

19 (i) by inserting ‘‘or nonparticipating

20 supplier or other person furnishing physi21 cians’ services (as defined in section

22 1848(j)(3))’’ after ‘‘physician’’ the first

23 place it appears,
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1 (ii) by inserting ‘‘, supplier, or other

2 person’’ after ‘‘physician’’ the second place

3 it appears, and

4 (iii) by inserting ‘‘, suppliers, and

5 other persons’’ after ‘‘physicians’’ the second

6 place it appears; and

7 (F) in subsection (j)(3), by inserting ‘‘, ex8 cept for purposes of subsections (a)(3), (g), and

9 (h),’’ after ‘‘tests and’’.

10 (b) CLARIFICATION OF MANDATORY ASSIGNMENT

11 RULES FOR CERTAIN PRACTITIONERS.—

12 (1) IN GENERAL.—Section 1842(b) (42 U.S.C.

13 1395u(b)) is amended by adding at the end the fol14 lowing new paragraph:

15 ‘‘(19)(A) Payment for any service furnished by a prac16 titioner described in subparagraph (C) and for which pay17 ment may be made under this part on a reasonable charge

18 or fee schedule basis may only be made under this part on

19 an assignment-related basis.

20 ‘‘(B) A practitioner described in subparagraph (C) or

21 other person may not bill (or collect any amount from) the

22 individual or another person for any service described in

23 subparagraph (A), except for deductible and coinsurance

24 amounts applicable under this part. No person is liable for

25 payment of any amounts billed for such a service in viola-
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1 tion of the previous sentence. If a practitioner or other per2 son knowingly and willfully bills (or collects an amount)

3 for such a service in violation of such sentence, the Sec4 retary may apply sanctions against the practitioner or

5 other person in the same manner as the Secretary may

6 apply sanctions against a physician in accordance with

7 subsection (j)(2) in the same manner as such section applies

8 with respect to a physician. Paragraph (4) of subsection

9 (j) shall apply in this subparagraph in the same manner

10 as such paragraph applies to such section.

11 ‘‘(C) A practitioner described in this subparagraph is

12 any of the following:

13 ‘‘(i) A physician assistant, nurse practitioner, or

14 clinical nurse specialist (as defined in section

15 1861(aa)(5)).

16 ‘‘(ii) A certified registered nurse anesthetist (as

17 defined in section 1861(bb)(2)).

18 ‘‘(iii) A certified nurse-midwife (as defined in

19 section 1861(gg)(2)).

20 ‘‘(iv) A clinical social worker (as defined in sec21 tion 1861(hh)(1)).

22 ‘‘(v) A clinical psychologist (as defined by the

23 Secretary for purposes of section 1861(ii)).

24 ‘‘(D) For purposes of this paragraph, a service fur25 nished by a practitioner described in subparagraph (C) in-
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1 cludes any services and supplies furnished as incident to

2 the service as would otherwise be covered under this part

3 if furnished by a physician or as incident to a physician’s

4 service.’’.

5 (2) CONFORMING AMENDMENTS.—

6 (A) Section 1833 (42 U.S.C. 1395l) is

7 amended—

8 (i) in subsection (l)(5), by striking sub9 paragraph (B) and redesignating subpara10 graph (C) as subparagraph (B);

11 (ii) by striking subsection (p); and

12 (iii) in subsection (r), by striking

13 paragraph (3) and redesignating paragraph

14 (4) as paragraph (3).

15 (B) Section 1842(b)(12) (42 U.S.C.

16 1395u(b)(12)) is amended by striking subpara17 graph (C).

18 (c) INFORMATION ON EXTRA-BILLING LIMITS.—

19 (1) PART OF EXPLANATION OF MEDICARE BENE20 FITS.—Section 1842(h)(7) (42 U.S.C. 1395u(h)(7)) is

21 amended—

22 (A) by striking ‘‘and’’ at the end of sub23 paragraph (B),

24 (B) in subparagraph (C), by striking ‘‘shall

25 include’’,
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1 (C) in subparagraph (C), by striking the

2 period at the end and inserting ‘‘, and’’, and

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

4 subparagraph:

5 ‘‘(D) in the case of services for which the billed

6 amount exceeds the limiting charge imposed under

7 section 1848(g), information regarding such applica8 ble limiting charge (including information concerning

9 the right to a refund under section

10 1848(g)(1)(A)(iv)).’’.

11 (2) DETERMINATIONS BY CARRIERS.—Subpara12 graph (G) of section 1842(b)(3) (42 U.S.C.

13 1395u(b)(3)) is amended to read as follows:

14 ‘‘(G) will, for a service that is furnished with re15 spect to an individual enrolled under this part, that

16 is not paid on an assignment-related basis, and that

17 is subject to a limiting charge under section

18 1848(g)—

19 ‘‘(i) determine, prior to making payment,

20 whether the amount billed for such service ex21 ceeds the limiting charge applicable under sec22 tion 1848(g)(2);

23 ‘‘(ii) notify the physician, supplier, or other

24 person periodically (but not less often than once

25 every 30 days) of determinations that amounts
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1 billed exceeded such applicable limiting charges;

2 and

3 ‘‘(iii) provide for prompt response to in4 quiries of physicians, suppliers, and other per5 sons concerning the accuracy of such limiting

6 charges for their services;’’.

7 (d) REPORT ON CHARGES IN EXCESS OF LIMITING

8 CHARGE.—Section 1848(g)(6)(B) (42 U.S.C. 1395w–

9 4(g)(6)(B)) is amended by inserting ‘‘the extent to which

10 actual charges exceed limiting charges, the number and

11 types of services involved, and the average amount of excess

12 charges and’’ after ‘‘report to the Congress’’.

13 (e) MISCELLANEOUS AND TECHNICAL AMENDMENTS.—

14 Section 1833 (42 U.S.C. 1395l) is amended—

15 (1) in subsection (a)(1)—

16 (A) by striking ‘‘and’’ before ‘‘(N)’’;

17 (B) with respect to the matter inserted by

18 section 4155(b)(2)(B) of OBRA–1990—

19 (i) by striking ‘‘(M)’’ and inserting ‘‘,

20 and (O)’’; and

21 (ii) by transferring and inserting it

22 (as amended) immediately before the semi23 colon at the end;

24 (C) by striking ‘‘and’’ before ‘‘(O)’’, and
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1 (D) by inserting before the semicolon at the

2 end the following: ‘‘, and (P) with respect to

3 services described in clauses (i), (ii) and (iv) of

4 section 1861(s)(2)(K), the amounts paid are sub5 ject to the provisions of section 1842(b)(12)’’;

6 and

7 (2) in subsection (h)(5)(D)—

8 (A) by striking ‘‘paragraphs (2) and (3)’’

9 and by inserting ‘‘paragraph (2)’’, and

10 (B) by adding at the end the following:

11 ‘‘Paragraph (4) of such section shall apply in

12 this subparagraph in the same manner as such

13 paragraph applies to such section.’’.

14 (f) EFFECTIVE DATES.—

15 (1) ENFORCEMENT AND UNIFORM APPLICATION;

16 MISCELLANEOUS AND TECHNICAL AMENDMENTS.—The

17 amendments made by subsections (a) and (e) shall

18 apply to services furnished on or after the date of the

19 enactment of this Act; except that the amendments

20 made by subsection (a) shall not apply to services of

21 a nonparticipating supplier or other person furnished

22 before January 1, 1994.

23 (2) PRACTITIONERS.—The amendments made by

24 subsection (b) shall apply to services furnished on or

25 after January 1, 1994.
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1 (3) EOMBS.—The amendments made by sub2 section (c)(1) shall apply to explanations of benefits

3 provided on or after January 1, 1994.

4 (4) CARRIER DETERMINATIONS.—The amend5 ments made by subsection (c)(2) shall apply to con6 tracts as of January 1, 1994.

7 (5) REPORT.—The amendment made by sub8 section (d) shall apply to reports for years beginning

9 after 1993.

10 Subpart B—Outpatient Hospital Services and

11 Ambulatory Surgical Services

12 SEC. 7221. EXTENSION OF 10 PERCENT REDUCTION IN PAY13 MENTS FOR CAPITAL-RELATED COSTS OF

14 OUTPATIENT HOSPITAL SERVICES.

15 Section 1861(v)(1)(S)(ii)(I) (42 U.S.C.

16 1395x(v)(1)(S)(ii)(I)) is amended by striking ‘‘fiscal year

17 1992, 1993, 1994, or 1995’’ and inserting ‘‘fiscal years 1992

18 through 1998’’.

19 SEC. 7222. EXTENSION OF REDUCTION IN PAYMENTS FOR

20 OTHER COSTS OF OUTPATIENT HOSPITAL

21 SERVICES.

22 Section 1861(v)(1)(S)(ii)(II) (42 U.S.C.

23 1395x(v)(1)(S)(ii)(II)) is amended by striking ‘‘, 1992,

24 1993, 1994, or 1995’’ and inserting ‘‘through 1998’’.
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1 SEC. 7223. REDUCTION IN PAYMENTS FOR INTRAOCULAR

2 LENSES.

3 (a) PAYMENT FOR INTRAOCULAR LENS.—Section

4 4151(c)(3) of OBRA–1990 is amended—

5 (1) by striking ‘‘center’’ and all that follows and

6 inserting ‘‘center—

7 ‘‘(A) on or after the date of the enactment

8 of this Act and on or before December 31, 1993,

9 shall be equal to $200; and

10 ‘‘(B) on or after January 1, 1994, and on

11 or before December 31, 1998, shall be equal to

12 $150.’’; and

13 (2) in the heading, by striking ‘‘2-YEAR FREEZE

14 IN ALLOWANCE’’ and inserting ‘‘ALLOWANCE’’.

15 (b) CONFORMING AMENDMENTS.—

16 (1) PAYMENT AMOUNTS FOR SERVICES FUR17 NISHED IN AMBULATORY SURGICAL CENTERS.—(A)(i)

18 Section 1833(i)(2)(A)(i) (42 U.S.C. 1395l(i)(2)(A)(i))

19 is amended by striking the comma at the end and in20 serting the following: ‘‘, as determined in accordance

21 with a survey (based upon a representative sample of

22 procedures and facilities) taken not later than Janu23 ary 1, 1995, and every 5 years thereafter, of the ac24 tual audited costs incurred by such centers in provid25 ing such services,’’.
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1 (ii) The second sentence of section 1833(i)(1) (42

2 U.S.C. 1395l(i)(1)) is amended by striking the period

3 and inserting the following: ‘‘, in consultation with

4 appropriate trade and professional organizations.’’.

5 (B) Section 4151(c)(3) of OBRA–1990, as

6 amended in subsection (a), is amended by striking

7 ‘‘for the insertion of an intraocular lens’’ and insert8 ing ‘‘for an intraocular lens inserted’’.

9 (2) ADJUSTMENTS TO PAYMENT AMOUNTS FOR

10 NEW TECHNOLOGY INTRAOCULAR LENSES.—(A) Not11 withstanding section 4151(c)(3) of OBRA–1990 (as

12 amended by subsection (a)), the Secretary of Health

13 and Human Services (in this paragraph referred to

14 as the ‘‘Secretary’’) shall, not later than 1 year after

15 the date of the enactment of this Act, develop and im16 plement a process under which interested parties may

17 request review by the Secretary of the appropriateness

18 of the reimbursement amount provided under section

19 1833(i)(2)(A)(iii) of the Social Security Act with re20 spect to a class of new technology intraocular lenses.

21 For purposes of the preceding sentence, an intraocular

22 lens may not be treated as a new technology intra23 ocular lens unless it has been approved by the Food

24 and Drug Administration.
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1 (B) In determining whether to provide an ad2 justment of payment with respect to a particular lens

3 under subparagraph (A), the Secretary shall take into

4 account whether use of the lens is likely to result in

5 reduced risk of intraoperative or postoperative com6 plication or trauma, accelerated postoperative recov7 ery, reduced induced astigmatism, improved post8 operative visual acuity, more stable postoperative vi9 sion, or other comparable clinical advantages.

10 (C) The Secretary shall publish notice in the

11 Federal Register from time to time (but no less often

12 than once each year) of a list of the requests that the

13 Secretary has received for review under this sub14 section, and shall provide for a 30-day comment pe15 riod on the lenses that are the subjects of the requests

16 contained in such notice. The Secretary shall publish

17 a notice of the determinations with respect to intra18 ocular lenses listed in the notice within 90 days after

19 the close of the comment period.

20 (D) Any adjustment of a payment amount (or

21 payment limit) made under this paragraph shall be22 come effective not later than 30 days after the date on

23 which the notice with respect to the adjustment is

24 published under subparagraph (C).
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1 (3) BLEND AMOUNTS FOR AMBULATORY SUR2 GICAL CENTER PAYMENTS.—

3 (A) IN GENERAL.—Subclauses (I) and (II)

4 of section 1833(i)(3)(B)(ii) (42 U.S.C.

5 1395l(i)(3)(B)(ii)) are each amended—

6 (i) by striking ‘‘for reporting’’ and in7 serting ‘‘for portions of cost reporting’’; and

8 (ii) by striking ‘‘and on or before’’ and

9 inserting ‘‘and ending on or before’’.

10 (B) EFFECTIVE DATE.—The amendments

11 made by subparagraph (A) shall take effect as if

12 included in the enactment of OBRA–1990.

13 Subpart C—Durable Medical Equipment

14 SEC. 7231. REVISIONS TO PAYMENT RULES FOR DURABLE

15 MEDICAL EQUIPMENT.

16 (a) BASING NATIONAL PAYMENT LIMITS ON MEDIAN

17 OF LOCAL PAYMENT AMOUNTS.—

18 (1) INEXPENSIVE AND ROUTINELY PURCHASED

19 ITEMS; ITEMS REQUIRING FREQUENT AND SUBSTAN20 TIAL SERVICING.—(A) Paragraphs (2)(C)(i)(II) and

21 (3)(C)(i)(II) of section 1834(a) (42 U.S.C. 1395m(a))

22 are each amended—

23 (i) by striking ‘‘1992’’ the first place it ap24 pears and inserting ‘‘1992, 1993, and 1994’’;

25 and
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1 (ii) by striking ‘‘1992’’ the second place it

2 appears and inserting ‘‘the year’’.

3 (B) Paragraphs (2)(C)(ii) and (3)(C)(ii) of sec4 tion 1834(a) (42 U.S.C. 1395m(a)) are each amend5 ed—

6 (i) by striking ‘‘and’’ at the end of

7 subclause (I);

8 (ii) by redesignating subclause (II) as (IV);

9 and

10 (iii) by inserting after subclause (I) the fol11 lowing new subclauses:

12 ‘‘(II) for 1992 and 1993, the

13 amount determined under this clause

14 for the preceding year increased by the

15 covered item update for such subse16 quent year,

17 ‘‘(III) for 1994, the local payment

18 amount determined under clause (i) for

19 such item or device for that year, ex20 cept that the national limited payment

21 amount may not exceed 100 percent of

22 the median of all local payment

23 amounts determined under such clause

24 for such item for that year and may

25 not be less than 85 percent of the me-
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1 dian of all local payment amounts de2 termined under such clause for such

3 item or device for that year, and’’.

4 (2) MISCELLANEOUS DEVICES AND ITEMS.—Sec5 tion 1834(a)(8) (42 U.S.C. 1395m(a)(8)) is amend6 ed—

7 (A) in subparagraph (A)(ii)(III), by strik8 ing ‘‘1992’’ and inserting ‘‘1992, 1993, and

9 1994’’; and

10 (B) in subparagraph (B)—

11 (i) by striking ‘‘and’’ at the end of

12 clause (i),

13 (ii) by redesignating clause (ii) as (iv),

14 and

15 (iii) by inserting after clause (i) the

16 following new clauses:

17 ‘‘(ii) for 1992 and 1993, the amount

18 determined under this subparagraph for the

19 preceding year increased by the covered

20 item update for such subsequent year;

21 ‘‘(iii) for 1994, the local purchase price

22 computed under subparagraph (A)(ii) for

23 the item for the year, except that such na24 tional limited purchase price may not ex25 ceed 100 percent of the median of all local
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1 purchase prices computed for the item

2 under such subparagraph for the year and

3 may not be less than 85 percent of the me4 dian of all local purchase prices computed

5 under such subparagraph for the item for

6 the year; and’’.

7 (3) OXYGEN AND OXYGEN EQUIPMENT.—Section

8 1834(a)(9) (42 U.S.C. 1395m(a)(9)) is amended—

9 (A) in subparagraph (A)(ii)(II), by striking

10 ‘‘1991 and 1992’’ and inserting ‘‘1991, 1992,

11 1993, and 1994’’; and

12 (B) in subparagraph (B)—

13 (i) by striking ‘‘and’’ at the end of

14 clause (i),

15 (ii) by redesignating clause (ii) as (iv),

16 and

17 (iii) by inserting after clause (i) the

18 following new clauses:

19 ‘‘(ii) for 1992 and 1993, the amount

20 determined under this subparagraph for the

21 preceding year increased by the covered

22 item update for such subsequent year;

23 ‘‘(iii) for 1994, the local monthly pay24 ment rate computed under subparagraph

25 (A)(ii) for the item for the year, except that
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1 such national limited monthly payment

2 rate may not exceed 100 percent of the me3 dian of all local monthly payment rates

4 computed for the item under such subpara5 graph for the year and may not be less than

6 85 percent of the median of all local month7 ly payment rates computed for the item

8 under such subparagraph for the year;

9 and’’.

10 (b) PAYMENT FOR PROSTHETIC DEVICES AND

11 ORTHOTICS AND PROSTHETICS.—

12 (1) IN GENERAL.—Section 1834(h)(2) (42 U.S.C.

13 1395m(h)(2)) is amended—

14 (A) in subparagraph (A)(ii)(II), by striking

15 ‘‘1992 or 1993’’ and inserting ‘‘1992, 1993, or

16 1994’’;

17 (B) in subparagraph (B)(ii), by striking

18 ‘‘each subsequent year’’ and inserting ‘‘1993’’;

19 (C) in subparagraph (C)(iv), by striking

20 ‘‘regional purchase price computed under sub21 paragraph (B)’’ and inserting ‘‘national limited

22 purchase price computed under subparagraph

23 (E)’’;

24 (D) in subparagraph (D)(ii), by striking ‘‘a

25 subsequent year’’ and inserting ‘‘1993’’; and
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1 (E) by adding at the end the following new

2 subparagraph:

3 ‘‘(E) COMPUTATION OF NATIONAL LIMITED

4 PURCHASE PRICE.—With respect to the furnish5 ing of a particular item in a year, the Secretary

6 shall compute a national limited purchase

7 price—

8 ‘‘(i) for 1994, equal to the local pur9 chase price computed under subparagraph

10 (A)(ii)(II) for the item for the year, except

11 that such national limited purchase price

12 may not exceed 100 percent of the median

13 of all local purchase prices for the item

14 computed under such subparagraph for the

15 year, and may not be less than 85 percent

16 of the median of all local purchase prices

17 for the item computed under such subpara18 graph for the year; and

19 ‘‘(ii) for each subsequent year, equal to

20 the amount determined under this subpara21 graph for the preceding year increased by

22 the applicable percentage increase for such

23 subsequent year.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by this

2 section shall apply to items furnished on or after January

3 1, 1994.

4 SEC. 7232. TREATMENT OF NEBULIZERS AND ASPIRATORS.

5 (a) IN GENERAL.—Section 1834(a)(3)(A) (42 U.S.C.

6 1395m(a)(3)(A)) is amended by striking ‘‘(such as ventila7 tors, aspirators, IPPB machines, and nebulizers)’’.

8 (b) PAYMENT FOR ACCESSORIES RELATING TO

9 NEBULIZERS AND ASPIRATORS.—Section 1834(a)(2)(A)

10 (42 U.S.C. 1395m(a)) is amended—

11 (1) by striking ‘‘or’’ at the end of clause (i),

12 (2) by adding ‘‘or’’ at the end of clause (ii), and

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

14 new clause:

15 ‘‘(iii) which is an accessory used in

16 conjunction with a nebulizer or aspirator,’’.

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

18 section shall apply to items furnished on or after January

19 1, 1994.

20 SEC. 7233. PAYMENT FOR SURGICAL DRESSINGS.

21 (a) IN GENERAL.—Section 1834 (42 U.S.C. 1395m)

22 is amended by adding at the end the following new sub23 section:

24 ‘‘(i) PAYMENT FOR SURGICAL DRESSINGS.—
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1 ‘‘(1) IN GENERAL.—Payment under this sub2 section for surgical dressings (described in section

3 1861(s)(5)) shall be made in a lump sum amount for

4 the purchase of the item in an amount equal to 80

5 percent of the lesser of—

6 ‘‘(A) the actual charge for the item; or

7 ‘‘(B) a payment amount determined in ac8 cordance with the methodology described in sub9 paragraphs (B) and (C) of subsection (a)(2) (ex10 cept that in applying such methodology, the na11 tional limited payment amount referred to in

12 such subparagraphs shall be initially computed

13 based on local payment amounts using average

14 reasonable charges for the 12-month period end15 ing December 31, 1992, increased by the covered

16 item updates described in such subsection for

17 1993 and 1994).

18 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not

19 apply to surgical dressings that are—

20 ‘‘(A) furnished as an incident to a physi21 cian’s professional service; or

22 ‘‘(B) furnished by a home health agency.’’.

23 (b) CONFORMING AMENDMENT.—Section 1833(a)(1)

24 (42 U.S.C. 1395l(a)(1)), as amended by section 7207(e)(1),

25 is amended—
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1 (1) by striking ‘‘and’’ before ‘‘(P)’’, and

2 (2) by inserting before the semicolon at the end

3 the following: ‘‘, and (Q) with respect to surgical

4 dressings, the amounts paid shall be the amounts de5 termined under section 1834(j)’’.

6 (c) EFFECTIVE DATE.—The amendments made by this

7 section shall apply to items furnished on or after January

8 1, 1994.

9 SEC. 7234. PAYMENTS FOR TENS DEVICES.

10 (a) IN GENERAL.—Section 1834(a)(1)(D) (42 U.S.C.

11 1395m(a)(1)(D)) is amended by striking ‘‘15 percent’’ the

12 second place it appears and inserting ‘‘45 percent’’.

13 (b) EFFECTIVE DATE.—The amendment made by sub14 section (a) shall apply to items furnished on or after Janu15 ary 1, 1994.

16 Subpart D—Part B Premium

17 SEC. 7251. PART B PREMIUM.

18 Section 1839(e) (42 U.S.C. 1395r(e)) is amended—

19 (1) in paragraph (1)(A), by striking ‘‘December

20 1983 and prior to January 1991 shall be an amount

21 equal to 50 percent’’ and inserting ‘‘after December

22 1995 and prior to January 1999 shall be an amount

23 equal to 50 percent’’, and

24 (2) in paragraph (2), by striking ‘‘1991’’ and in25 serting ‘‘1998’’.
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1 Subpart E—Other Provisions

2 SEC. 7261. PAYMENTS FOR CLINICAL DIAGNOSTIC LABORA3 TORY TESTS.

4 (a) LOWER CAP.—Section 1833(h)(4)(B) (42 U.S.C.

5 1395l(h)(4)(B)) is amended—

6 (1) by striking ‘‘and’’ at the end of clause (iii),

7 (2) in clause (iv), by inserting ‘‘and before Janu8 ary 1, 1994,’’ after ‘‘1990,’’,

9 (3) by striking the period at the end of clause

10 (iv) and inserting ‘‘, and’’, and

11 (4) by adding at the end the following:

12 ‘‘(v) after December 31, 1993, is equal to 76 per13 cent of the median of all the fee schedules established

14 for that test for that laboratory setting under para15 graph (1).’’.

16 (b) NO UPDATE FOR 1994 THROUGH 1998.—Section

17 1833(h)(2)(A)(ii)(II) (42 U.S.C. 1395l(h)(2)(A)(ii)(III)) is

18 amended by inserting ‘‘1994, 1995, 1996, 1997, and 1998’’

19 after ‘‘1988’’.

20 PART III—PROVISIONS RELATING TO PARTS A

21 AND B

22 SEC. 7301. PAYMENTS FOR DIRECT GRADUATE MEDICAL

23 EDUCATION COSTS.

24 (a) WEIGHTING FACTORS.—Section 1886(h)(4)(C) (42

25 U.S.C. 1395ww(h)(4)(C)) is amended to read as follows:
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1 ‘‘(C) WEIGHTING FACTORS FOR CERTAIN

2 RESIDENTS.—Subject to subparagraph (D), such

3 rules shall provide, in calculating the number of

4 full-time-equivalent residents in an approved

5 residency program—

6 ‘‘(i) with respect to residents entering

7 an approved medical residency training

8 program before September 1, 1993—

9 ‘‘(I) for a resident who is in the

10 resident’s initial residency period, the

11 weighting factor is 1.00, and

12 ‘‘(II) for a resident who is not in

13 the resident’s initial residency period,

14 the weighting factor is .50; and

15 ‘‘(ii) with respect to residents entering

16 an approved medical residency training

17 program on or after September 1, 1993—

18 ‘‘(I) for a resident who is in the

19 resident’s initial residency period, and

20 is in—

21 ‘‘(aa) a primary care resi22 dency, the weighting factor is

23 1.10, and

24 ‘‘(bb) any other residency,

25 the weighting factor is 0.70, and
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1 ‘‘(II) for a resident who is not in

2 the resident’s initial residency period,

3 the weighting factor is 0.50.’’.

4 (b) INITIAL RESIDENCY PERIOD.—

5 (1) IN GENERAL.—Section 1886(h)(5)(F) (42

6 U.S.C. 1395ww(h)(5)(F)) is amended by striking

7 ‘‘plus one year’’.

8 (2) EFFECTIVE DATE.—The amendment made by

9 paragraph (1) shall be effective on and after July 1,

10 1995.

11 (c) PRIMARY CARE RESIDENCY.—Section 1886(h)(5)

12 (42 U.S.C. 1395ww(h)(5)) is amended by adding at the end

13 the following new subparagraph:

14 ‘‘(I) PRIMARY CARE RESIDENCY.—The term

15 ‘primary care residency’ means a residency

16 training program in family medicine, general

17 internal medicine, general pediatrics, preventive

18 care, geriatric care, or osteopathic general prac19 tice.’’.

20 (d) PREVENTIVE CARE SERVICES AS PART OF INITIAL

21 RESIDENCY PERIOD.—Section 1886(h)(5)(F)(ii) (42 U.S.C.

22 1395ww(h)(5)(F)(ii)) is amended by inserting ‘‘or a pre23 ventive care residency or fellowship program’’ after ‘‘fellow24 ship program’’.
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1 (e) SUCCESSOR EXAMS INCLUDED IN DEFINITION OF

2 FMGEMS EXAMINATION.—

3 (1) IN GENERAL.—Section 1886(h)(5)(E) is

4 amended by inserting ‘‘or any successor examination’’

5 after ‘‘Medical Sciences’’.

6 (2) EFFECTIVE DATE.—The amendment made by

7 paragraph (1) shall apply as if included in the enact8 ment of the Consolidated Omnibus Budget Reconcili9 ation Act of 1985 (Public Law 99–272).

10 (f) REPORT BY THE SECRETARY.—

11 (1) RECOMMENDATIONS.—The Secretary shall

12 make recommendations—

13 (A) concerning the extent to which variation

14 in the approved FTE per resident amounts

15 should be reduced;

16 (B) whether the approved FTE per resident

17 amounts should be adjusted to account for sub18 stantial changes in the operation of an approved

19 medical residency training program since the

20 base year calculation; and

21 (C) potential changes in the graduate medi22 cal education payment system that would pro23 mote residency training in nonhospital ambula24 tory site.
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1 (2) REPORT.—Not later than July 31, 1994, the

2 Secretary shall deliver a report to Congress which

3 shall contain recommendations on each of the matters

4 under paragraph (1).

5 SEC. 7302. REVISION OF HOME HEALTH AGENCY COST LIM6 ITS.

7 (a) IN GENERAL.—Section 1861(v)(1)(L) (42 U.S.C.

8 1395x(v)(1)(L)(i)) is amended—

9 (1) in clause (i), by striking ‘‘for cost reporting

10 periods’’ and all that follows through to the period

11 and inserting ‘‘110 percent of the median of the labor12 related and nonlabor per visit costs for home health

13 agencies.’’, and

14 (2) in clause (ii), by striking ‘‘specific basis,’’

15 and all that follows through ‘‘agencies.’’ and inserting

16 ‘‘specific basis.’’.

17 (b) EFFECTIVE DATE.—The amendments made by sub18 section (a) shall apply to cost reporting periods beginning

19 on or after October 1, 1993.

20 SEC. 7303. MEDICARE AS SECONDARY PAYER.

21 (a) EXTENSION OF AND MODIFICATIONS TO DATA

22 MATCH PROGRAM.—(1)(A) Section 1862(b)(5)(C)(iii) (42

23 U.S.C. 1395y(b)(5)(C)(iii)) is amended by striking ‘‘1995’’

24 and inserting ‘‘1998’’.
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1 (B) Section 6103(l)(12)(F) of the Internal Revenue

2 Code of 1986 is amended—

3 (i) in clause (i), by striking ‘‘1995’’ and insert4 ing ‘‘1998’’,

5 (ii) in clause (ii)(I), by striking ‘‘1994’’ and in6 serting ‘‘1997’’, and

7 (iii) in clause (ii)(II), by striking ‘‘1995’’ and

8 inserting ‘‘1998’’.

9 (2)(A) Section 6103(l)(12)(B)(i) of the Internal Reve10 nue Code of 1986 is amended by inserting ‘‘, above an

11 amount (if any) specified by the Secretary of Health and

12 Human Services,’’ after ‘‘section 3401(a))’’.

13 (B) The matter in section 6103(l)(12)(B)(ii) of such

14 Code preceding subclause (I) is amended by inserting ‘‘,

15 above an amount (if any) specified by the Secretary of

16 Health and Human Services,’’ after ‘‘wages’’.

17 (C) The heading to section 6103(l)(12) of such Code

18 is amended by striking ‘‘TAXPAYER IDENTITY’’ and insert19 ing ‘‘RETURN’’.

20 (3)(A) Section 6103(l)(12) of the Internal Revenue

21 Code of 1986, as amended by paragraph (1), is amended—

22 (i) by redesignating subparagraphs (E) and (F)

23 as subparagraphs (F) and (G), respectively, and

24 (ii) by inserting after subparagraph (D) the fol25 lowing new subparagraph:
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1 ‘‘(E) DISCLOSURE CONCERNING ENFORCE2 MENT ACTIVITIES.—The Secretary shall, upon

3 written request from the Secretary of Health and

4 Human Services, disclose to the Secretary of

5 Health and Human Services the status of any

6 activities undertaken (with respect to persons

7 specified by the Secretary of Health and Human

8 Services) to enforce the requirements of section

9 5000.’’.

10 (B) Section 6103(l)(12)(D)(i) of such Code is amended

11 by striking ‘‘this paragraph’’ and inserting ‘‘subparagraphs

12 (A) through (C)’’.

13 (C) The heading to section 6103(l)(12) of such Code

14 is amended by inserting ‘‘AND FOR FACILITATION OF EN15 FORCEMENT OF MEDICARE SECONDARY PAYER REQUIRE16 MENTS’’ before the period.

17 (D) Section 1862(b)(5)(C)(i) (42 U.S.C.

18 1395y(b)(5)(C)(i)) is amended by striking

19 ‘‘6103(l)(12)(D)(iii)’’ and inserting ‘‘6103(l)(12)(F)(iii)’’.

20 (b) PERMANENT APPLICATION TO DISABLED ACTIVE

21 INDIVIDUALS.—Section 1862(b)(1)(B) (42 U.S.C.

22 1395y(b)(1)(B)) is amended by striking clause (iii).

23 (c) APPLICATION OF ESRD RULES TO CERTAIN AGED

24 AND DISABLED BENEFICIARIES AND INCREASE IN MEDI25 CARE SECONDARY PAYER COVERAGE FOR ESRD SERVICES
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1 TO 24-MONTHS.—(1) Subparagraphs (A)(iv) and (B)(ii) of

2 section 1862(b)(1) (42 U.S.C. 1395y(b)(1)) are each amend3 ed—

4 (A) by striking ‘‘Clause (i) shall not apply’’ and

5 inserting ‘‘Subparagraph (C) shall apply instead of

6 clause (i)’’, and

7 (B) by inserting ‘‘(without regard to entitlement

8 under section 226)’’ after ‘‘individual is, or’’.

9 (2) Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C))

10 is amended—

11 (A) in the second sentence, by striking ‘‘on or be12 fore January 1, 1996’’ and inserting before ‘‘January

13 1, 1994’’, and

14 (B) by adding at the end the following: ‘‘Effec15 tive for items and services furnished on or after Janu16 ary 1, 1994, and before October 1, 1998, (with respect

17 to periods beginning on or after July 1, 1992), this

18 subparagraph shall be applied by substituting ‘24-

19 month’ for ‘12-month’ each place it appears.’’.

20 (d) APPLICATION OF EXCISE TAX TO FAILURE TO RE21 IMBURSE FEDERAL GOVERNMENT.—

22 (1) IN GENERAL.—Section 5000(c) of the Inter23 nal Revenue Code of 1986 is amended by striking ‘‘of

24 section 1862(b)(1)’’ and inserting ‘‘of paragraph (1),
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1 or with the requirements of paragraph (2), of section

2 1862(b).’’.

3 (2) EFFECTIVE DATE.—The amendment made by

4 paragraph (1) shall apply to demands for repayment

5 issued after the date of the enactment of this Act.

6 (e) RETROACTIVE EXEMPTION FOR CERTAIN SITUA7 TIONS INVOLVING RELIGIOUS ORDERS.—Section

8 1862(b)(1)(D) of the Social Security Act (42 U.S.C.

9 1395y(b)(1)(D)) applies, with respect to items and services

10 furnished before October 1, 1989, to any claims that the

11 Secretary of Health and Human Services had not identified

12 before that date as subject to the provisions of this sub13 section.

14 (f) UNIFORM RULES FOR SIZE OF EMPLOYER.—(1)

15 Section 1862(b)(1) (42 U.S.C. 1395y(b)(1)) is amended by

16 adding at the end the following new subparagraph:

17 ‘‘(E) GENERAL PROVISIONS.—

18 ‘‘(i) EXCLUSION OF GROUP HEALTH

19 PLAN OF A SMALL EMPLOYER.—Subpara20 graphs (A) through (C) shall not apply to

21 a group health plan unless the plan is a

22 plan of, or contributed to by, an employer

23 or employee organization that has 20 or

24 more individuals in current employment

25 status for each working day in each of 20
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1 or more calendar weeks in the current cal2 endar year or the preceding calendar year.

3 ‘‘(ii) EXCEPTION FOR SMALL EMPLOY4 ERS IN MULTIEMPLOYER OR MULTIPLE EM5 PLOYER GROUP HEALTH PLANS.—Subpara6 graphs (A) through (C) shall not apply with

7 respect to individuals enrolled in a multi8 employer or multiple employer group health

9 plan if the coverage of the individuals under

10 the plan is by virtue of current employment

11 status with an employer that does not have

12 20 or more individuals in current employ13 ment status for each working day in each of

14 20 or more calendar weeks in the current

15 calendar year or the preceding calendar

16 year; but the exception provided in this

17 clause applies only if the plan elects treat18 ment under this clause.

19 ‘‘(iii) SPECIAL RULES.—For purposes

20 of clauses (i) and (ii)—

21 ‘‘(I) all employees of corporations

22 which are members of a controlled

23 group of corporations (within the

24 meaning of section 1563(a) of the In25 ternal Revenue Code of 1986, deter-
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1 mined without regard to section

2 1563(a)(4) or section (e)(3)(C) of such

3 Code), shall be treated as employed by

4 a single employer,

5 ‘‘(II) all employees of trades or

6 businesses (whether or not incor7 porated) which are under common con8 trol (under regulations prescribed by

9 the Secretary of the Treasury under

10 section 414(c) of such Code) shall be

11 treated as employed by a single em12 ployer,

13 ‘‘(III) all employees of the mem14 bers of an affiliated service group (as

15 defined in section 414(m) of such

16 Code) shall be treated as employed by

17 a single employer, and

18 ‘‘(IV) leased employees (as defined

19 in section 414(n)(2) of such Code) shall

20 be treated as employees of the person

21 for whom they perform services to the

22 extent they are so treated under section

23 414(n) of such Code.

24 In applying sections of the Internal Reve25 nue Code under this clause, the Secretary
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1 shall rely upon regulations and decisions of

2 the Secretary of the Treasury respecting

3 such sections.’’.

4 ‘‘(iv) GROUP HEALTH PLAN DE5 FINED.—For purposes of this subsection, the

6 term ‘group health plan’ has the meaning

7 given such term in section 5000(b) of the

8 Internal Revenue Code of 1986, without re9 gard to section 5000(d) of such Code.

10 ‘‘(v) CURRENT EMPLOYMENT STATUS

11 DEFINED.—For purposes of this subsection,

12 an individual has ‘current employment sta13 tus’ with an employer if the individual is

14 an employee, is the employer, or is associ15 ated with the employer in a business rela16 tionship.

17 ‘‘(vi) EMPLOYER DEFINED.—For pur18 poses of this subsection, the term ‘employer’

19 includes a self-employed person.’’.

20 (2)(A) Section 1862(b)(1)(A)(i)(I) (42 U.S.C.

21 1395y(b)(1)(A)(i)(I)) is amended to read as follows:

22 ‘‘(I) may not take into account

23 that an individual (or the individual’s

24 spouse) who is covered under the plan

25 by virtue of the individual’s current
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1 employment status with an employer is

2 entitled to benefits under this title

3 under section 226(a), and’’.

4 (B) Section 1862(b)(1)(A)(i)(II) (42 U.S.C.

5 1395y(b)(1)(A)(i)(II)) is amended to read as follows:

6 ‘‘(II) shall provide that any indi7 vidual age 65 or over (and the individ8 ual’s spouse age 65 or older) who is

9 covered under the plan by virtue of the

10 individual’s current employment status

11 with an employer shall be entitled to

12 the same benefits under the plan under

13 the same conditions as any such indi14 vidual (or spouse) under age 65.’’.

15 (C) Section 1862(b)(1)(A) (42 U.S.C. 1395y(b)(1)(A)),

16 as amended by subsection (c)(1), is amended—

17 (i) by striking clauses (ii), (iii), and (v), and

18 (ii) by redesignating clause (iv) as clause (ii).

19 (3)(A) Section 1862(b)(1)(B) (42 U.S.C.

20 1395y(b)(1)(B)(i)) is amended—

21 (i) by striking the heading and inserting the fol22 lowing new heading:

23 ‘‘(B) DISABLED INDIVIDUALS UNDER GROUP

24 HEALTH PLANS.—’’, and
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1 (ii) by striking clause (i) and inserting the fol2 lowing new clause:

3 ‘‘(i) IN GENERAL.—A group health plan

4 may not take into account that an individual

5 (or a member of the individual’s family) who is

6 covered under the plan by virtue of the individ7 ual’s current employment status with an em8 ployer is entitled to benefits under this title

9 under section 226(b).’’.

10 (B) Section 1862(b)(1)(B) (42 U.S.C. 1395y(b)(1)(B))

11 is amended by striking clause (iv).

12 (4) Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C))

13 is amended—

14 (A) in the matter preceding clause (i), by strik15 ing ‘‘(as defined in subparagraph (A)(v))’’,

16 (B) by striking ‘‘solely’’ each place it appears,

17 (C) by striking ‘‘by reason of’’ and inserting

18 ‘‘under’’ each place it appears, and

19 (D) by inserting ‘‘or eligible for’’ after ‘‘entitled

20 to’’ the first and last place it appears.

21 (5) The second sentence of section 1862(b)(2)(A) (42

22 U.S.C. 1395y(b)(2)(A)) is amended by striking ‘‘or large

23 group health plan’’.
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1 (6)(A) Subsection (a) of section 5000 of the Internal

2 Revenue Code of 1986 is amended by inserting ‘‘(including

3 a self-employed person)’’ after ‘‘employer’’;

4 (B) Subsection (b) of section 5000 of such Code is

5 amended to read as follows:

6 ‘‘(b) GROUP HEALTH PLAN.—The term ‘group health

7 plan’ means a plan (including a self-insured plan) of, or

8 contributed to by, an employer (including a self-employed

9 person) or employee organization to provide health care

10 (directly or otherwise) to the employees, former employees,

11 the employer, others associated or formerly associated with

12 the employer in a business relationship, or their families.’’;

13 and

14 (C) Subsection (c) of section 5000 of such Code by

15 striking ‘‘or large group health plan’’.

16 (D) Section 6103(l)(12)(F)(ii) of such Code (as redes17 ignated by subsection (a)(3)(A)(i) of this section) is amend18 ed to read as follows:

19 ‘‘(ii) GROUP HEALTH PLAN.—The term

20 ‘group health plan’ means any group health

21 plan (as defined in section 5000(b)).’’.

22 (g) EFFECTIVE DATE.—The amendments made by sub23 sections (c)(1), (d), and (f) apply to items and services fur24 nished after the third calendar month beginning after the

25 date of enactment of this Act.
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1 SEC. 7304. EXTENSION OF SELF-REFERRAL BAN TO ADDI2 TIONAL SPECIFIED SERVICES.

3 (a) EXTENSION TO DESIGNATED HEALTH SERV4 ICES.—

5 (1) IN GENERAL.—Section 1877(h) (42 U.S.C.

6 1395nn(h)) is amended by adding at the end the fol7 lowing new paragraph:

8 ‘‘(8) DESIGNATED HEALTH SERVICES.—The term

9 ‘designated health services’ means—

10 ‘‘(A) clinical laboratory services;

11 ‘‘(B) physical or occupational therapy serv12 ices;

13 ‘‘(C) radiology or other diagnostic services;

14 ‘‘(D) radiation therapy services;

15 ‘‘(E) the furnishing of durable medical

16 equipment;

17 ‘‘(F) the furnishing of parenteral and en18 teral nutrition nutrients, supplies, and equip19 ment;

20 ‘‘(G) home health services; and

21 ‘‘(H) the furnishing of prosthetics, orthotics,

22 and prosthetic devices.’’.

23 (2) CONFORMING AMENDMENTS.—Section 1877

24 (42 U.S.C. 1395nn) is amended—

25 (A) by striking ‘‘clinical laboratory serv26 ices’’ and ‘‘CLINICAL LABORATORY SERVICES’’
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1 and inserting ‘‘designated health services’’ and

2 ‘‘DESIGNATED HEALTH SERVICES’’, respectively,

3 each place either appears in subsections (a)(1),

4 (b)(2)(A)(ii), (d)(1), (d)(2), and (d)(3); and

5 (B) by striking ‘‘clinical laboratory service’’

6 and inserting ‘‘designated health service’’ each

7 place it appears in subsections (g)(1) and

8 (h)(7)(B).

9 (b) MODIFICATION TO EXCEPTION FOR IN-OFFICE AN10 CILLARY SERVICES.—Section 1877(b)(2) (42 U.S.C.

11 1395nn(b)(2)) is amended—

12 (1) by inserting ‘‘(other than durable medical

13 equipment and parenteral and enteral nutrition

14 equipment and supplies)’’ after ‘‘services’’ the first

15 place it appears; and

16 (2) in subparagraph (A)(ii)(II), by striking

17 ‘‘centralized provision’’ and inserting ‘‘provision of

18 some or all’’.

19 (c) TREATMENT OF COMPENSATION ARRANGE20 MENTS.—

21 (1) RENTAL OF OFFICE SPACE AND EQUIP22 MENT.—

23 (A) IN GENERAL.—Paragraph (1) of section

24 1877(e) (42 U.S.C. 1395nn(e)) is amended to

25 read as follows:
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1 ‘‘(1) RENTAL OF OFFICE SPACE; RENTAL OF

2 EQUIPMENT.—

3 ‘‘(A) OFFICE SPACE.—Payments made by a

4 lessee to a lessor for the use of premises if—

5 ‘‘(i) the lease is set out in writing,

6 signed by the parties, and specifies the

7 premises covered by the lease,

8 ‘‘(ii) the space rented or leased is rea9 sonable and necessary for the legitimate

10 business purposes of the lease or rental and

11 is used exclusively by the lessee when being

12 used by the lessee, except that the lessee may

13 make payments for the use of space consist14 ing of common areas if such payments do

15 not exceed the lessee’s pro rata share of ex16 penses for such space based upon the ratio

17 of the space used exclusively by the lessee to

18 the total amount of space (other than com19 mon areas) occupied by all persons using

20 such common areas,

21 ‘‘(iii) the lease provides for a term of

22 rental or lease for at least one year,

23 ‘‘(iv) the rental charges over the term

24 of the lease are set in advance, are consist25 ent with fair market value, and are not de-
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1 termined in a manner that takes into ac2 count the volume or value of any referrals

3 or other business generated between the par4 ties,

5 ‘‘(v) the lease would be commercially

6 reasonable even if no referrals were made

7 between the parties,

8 ‘‘(vi) the lease covers all of the premises

9 leased between the parties for the period of

10 the lease, and

11 ‘‘(vii) the compensation arrangement

12 meets such other requirements as the Sec13 retary may impose by regulation as needed

14 to protect against program or patient abuse.

15 ‘‘(B) EQUIPMENT.—Payments made by a

16 lessee of equipment to the lessor of the equipment

17 for the use of the equipment if—

18 ‘‘(i) the lease is set out in writing,

19 signed by the parties, and specifies the

20 equipment covered by the lease,

21 ‘‘(ii) the equipment rented or leased is

22 reasonable and necessary for the legitimate

23 business purposes of the lease or rental and

24 is used exclusively by the lessee when being

25 used by the lessee,
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1 ‘‘(iii) the lease provides for a term of

2 rental or lease of at least one year,

3 ‘‘(iv) the rental charges over the term

4 of the lease are set in advance, are consist5 ent with fair market value, and are not de6 termined in a manner that takes into ac7 count the volume or value of any referrals

8 or other business generated between the par9 ties,

10 ‘‘(v) the lease would be commercially

11 reasonable even if no referrals were made

12 between the parties,

13 ‘‘(vi) the lease covers all of the equip14 ment leased between the parties for the pe15 riod of the lease, and

16 ‘‘(vii) the compensation arrangement

17 meets such other requirements as the Sec18 retary may impose by regulation as needed

19 to protect against program or patient

20 abuse.’’.

21 (B) CONFORMING AMENDMENT.—Section

22 1877(h) (42 U.S.C. 1395nn(h)) is amended by

23 striking paragraphs (5) and (6) and by redesig24 nating paragraphs (7) and (8) (as added by sub-
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1 section (a)(1)) as paragraphs (5) and (6), respec2 tively.

3 (2) BONA FIDE EMPLOYMENT RELATIONSHIPS.—

4 Section 1877(e)(2) (42 U.S.C. 1395nn(e)(2)) is

5 amended—

6 (A) by striking ‘‘AND SERVICE’’ and ‘‘WITH

7 HOSPITALS’’;

8 (B) by striking ‘‘An arrangement’’ and all

9 that follows through ‘‘if’’ and inserting ‘‘Any

10 amount paid by an employer to a physician (or

11 an immediate family member of such physician)

12 who has a bona fide employment relationship

13 with the employer for the provision of services

14 if’’;

15 (C) in subparagraphs (A), (B), and (D), by

16 striking ‘‘arrangement’’ and inserting ‘‘employ17 ment relationship’’;

18 (D) in subparagraph (C), by striking ‘‘hos19 pital’’ and inserting ‘‘employer’’; and

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

21 flush sentence:

22 ‘‘Subparagraph (B)(ii) shall not be construed as pro23 hibiting the payment of remuneration in the form of

24 a productivity bonus based on services performed per-
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1 sonally by the physician (or an immediate family

2 member of such physician).’’.

3 (3) PERSONAL SERVICE ARRANGEMENTS.—Sec4 tion 1877(e)(3) (42 U.S.C. 1395nn(e)(3)) is amended

5 to read as follows:

6 ‘‘(3) SERVICE ARRANGEMENTS.—

7 ‘‘(A) PERSONAL SERVICE ARRANGE8 MENTS.—Remuneration from an entity under an

9 arrangement if—

10 ‘‘(i) the arrangement is set out in writ11 ing, signed by the parties, and specifies the

12 services covered by the arrangement,

13 ‘‘(ii) the arrangement covers all of the

14 services to be provided,

15 ‘‘(iii) the aggregate services contracted

16 for do not exceed those that are reasonable

17 and necessary for the legitimate business

18 purposes of the arrangement,

19 ‘‘(iv) the term of the arrangement is

20 for at least one year,

21 ‘‘(v) the compensation to be paid over

22 the term of the arrangement is set in ad23 vance, does not exceed fair market value,

24 and is not determined in a manner that

25 takes into account the volume or value of
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1 any referrals or other business generated be2 tween the parties,

3 ‘‘(vi) the services to be performed under

4 the arrangement do not involve the counsel5 ing or promotion of a business arrangement

6 of other activity that violates any State or

7 Federal law, and

8 ‘‘(vii) the arrangement meets such

9 other requirements as the Secretary may

10 impose by regulation as needed to protect

11 against program or patient abuse.

12 ‘‘(B) OTHER SERVICE ARRANGEMENTS.—

13 Remuneration from an entity under an arrange14 ment if—

15 ‘‘(i) the arrangement is—

16 ‘‘(I) for specific identifiable serv17 ices as the medical director or as a

18 member of a medical advisory board at

19 the entity pursuant to a requirement of

20 this title,

21 ‘‘(II) for specific identifiable phy22 sicians’ services to be furnished to an

23 individual receiving hospice care if

24 payment for such services may only be

25 made under this title as hospice care,
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1 ‘‘(III) for specific physicians’

2 services furnished to a nonprofit blood

3 center, or

4 ‘‘(IV) for specific identifiable ad5 ministrative services (other than direct

6 patient care services), but only under

7 exceptional circumstances specified by

8 the Secretary in regulations;

9 ‘‘(ii) the requirements described in sub10 paragraphs (B) and (C) of paragraph (2)

11 are met with respect to the entity in the

12 same manner as they apply to an employer;

13 and

14 ‘‘(iii) the arrangement meets such other

15 requirements as the Secretary may impose

16 by regulation as needed to protect against

17 program or patient abuse.’’.

18 (4) HEALTH SERVICES FURNISHED UNDER CER19 TAIN HOSPITAL ARRANGEMENTS.—Section 1877(e) (42

20 U.S.C. 1395nn(e)) is amended by adding at the end

21 the following new paragraph:

22 ‘‘(7) CERTAIN GROUP PRACTICE ARRANGEMENTS

23 WITH A HOSPITAL.—

24 ‘‘(A) IN GENERAL.—An arrangement be25 tween a hospital and a group under which des-
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1 ignated health services are provided by the group

2 but are billed by the hospital if—

3 ‘‘(i) the group would be a group prac4 tice, but for the fact that it bills for such

5 services through the hospital;

6 ‘‘(ii) with respect to services provided

7 to an inpatient of the hospital, the arrange8 ment is pursuant to the provision of inpa9 tient hospital services under section

10 1861(b)(3);

11 ‘‘(iii) the arrangement began before

12 December 19, 1989, and has continued in

13 effect without interruption since such date;

14 ‘‘(iv) the group provides substantially

15 all of the designated health services fur16 nished under the arrangement to the hos17 pital’s patients;

18 ‘‘(v) the arrangement is pursuant to

19 an agreement that is set out in writing and

20 that specifies the services to be provided by

21 the parties and the compensation for serv22 ices provided under the arrangement;

23 ‘‘(vi) the compensation paid over the

24 term of the agreement is consistent with fair

25 market value and the compensation per
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1 unit of services is fixed in advance and is

2 not determined in a manner that takes into

3 account the volume or value of any referrals

4 or other business generated between the par5 ties;

6 ‘‘(vii) the compensation is provided

7 pursuant to an agreement which would be

8 commercially reasonable even if no referrals

9 were made to the entity; and

10 ‘‘(viii) the arrangement between the

11 parties meets such other requirements as the

12 Secretary may impose by regulation as

13 needed to protect against program or pa14 tient abuse.’’.

15 (5) ADDITIONAL EXCEPTION.—Section 1877(e)

16 (42 U.S.C. 1395nn(e)) is further amended by adding

17 at the end the following new paragraph:

18 ‘‘(8) PAYMENTS BY A PHYSICIAN FOR ITEMS AND

19 SERVICES.—Payments made by a physician—

20 ‘‘(A) to a laboratory in exchange for the

21 provision of clinical laboratory diagnostic tests,

22 or

23 ‘‘(B) to an entity as compensation for other

24 items or services if the items or services are fur-
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1 nished at a price that is consistent with fair

2 market value.’’.

3 (6) REFERRING PHYSICIANS.—Subparagraph (C)

4 of section 1877(h)(5) (42 U.S.C. 1395nn(h)(5)), as re5 designated by subsection (c)(1)(B), is amended—

6 (A) by inserting ‘‘a request by a radiologist

7 for diagnostic radiology services, and a request

8 by a radiation oncologist for radiation therapy,’’

9 after ‘‘examination services,’’, and

10 (B) by inserting ‘‘, radiologist, or radiation

11 oncologist’’ after ‘‘pathologist’’ the second place it

12 appears.

13 (7) CONFORMING AMENDMENT.—Section 1877(b)

14 (42 U.S.C. 1395nn(b)) is amended by striking para15 graph (4) and redesignating paragraph (5) as para16 graph (4).

17 (d) REQUIREMENTS FOR GROUP PRACTICE.—

18 (1) ADDITIONAL REQUIREMENTS.—Section

19 1877(h)(4) (42 U.S.C. 1395nn(h)(4)) is amended to

20 read as follows:

21 ‘‘(4) GROUP PRACTICE.—

22 ‘‘(A) DEFINITION OF GROUP PRACTICE.—

23 The term ‘group practice’ means a group of 2 or

24 more physicians legally organized as a partner25 ship, professional corporation, foundation, not-
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1 for-profit corporation, faculty practice plan, or

2 similar association—

3 ‘‘(i) in which each physician who is a

4 member of the group provides substantially

5 the full range of services which the physi6 cian routinely provides, including medical

7 care, consultation, diagnosis, or treatment,

8 through the joint use of shared office space,

9 facilities, equipment and personnel;

10 ‘‘(ii) for which substantially all of the

11 services of the physicians who are members

12 of the group are provided through the group

13 and are billed in the name of the group and

14 amounts so received are treated as receipts

15 of the group;

16 ‘‘(iii) in which the overhead expenses of

17 and the income from the practice are dis18 tributed in accordance with methods pre19 viously determined by members of the

20 group;

21 ‘‘(iv) except as provided in subpara22 graph (B)(i), in which no physician who is

23 a member of the group directly or indirectly

24 receives compensation based on the volume

25 or value of referrals by the physician;
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1 ‘‘(v) in which, on average, there are no

2 less than 5 physicians per office location,

3 but if a group has less than 15 physicians

4 such group may have up to 3 office loca5 tions any one of which may have less than

6 5 physicians;

7 ‘‘(vi) in which members of the group

8 personally conduct no less than 75 percent

9 of the physician-patient encounters of the

10 group practice; and

11 ‘‘(vii) which meets such other stand12 ards as the Secretary may impose by regu13 lation.

14 ‘‘(B) SPECIAL RULES.—

15 ‘‘(i) PROFITS AND PRODUCTIVITY BO16 NUSES.—A physician in a group practice

17 may be paid a share of overall profits of the

18 group, or a productivity bonus based on

19 services personally performed or services in20 cident to such personally performed services,

21 so long as the share or bonus is not deter22 mined in any manner which is directly re23 lated to the volume or value of referrals by

24 such physician.
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1 ‘‘(ii) FACULTY PRACTICE PLANS.—In

2 the case of a faculty practice plan associ3 ated with a hospital, institution of higher

4 education, or medical school with an ap5 proved medical residency training program

6 in which physician members may provide a

7 variety of different specialty services and

8 provide professional services both within

9 and outside the group, as well as perform

10 other tasks such as research, subparagraph

11 (A) shall be applied only with respect to the

12 services provided within the faculty practice

13 plan.

14 ‘‘(C) DEFINITION OF OFFICE LOCATION.—

15 For purposes of this paragraph, the term ‘office

16 location’ means an office where physician serv17 ices are offered to patients except that—

18 ‘‘(i) such term does not include—

19 ‘‘(I) a location consisting solely of a

20 diagnostic facility, nursing facility, or

21 treatment facility such as a physical or oc22 cupational therapy center, or a facility pro23 viding administrative services affiliated

24 with the group practice; or
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1 ‘‘(II) an office located in a rural area

2 (as defined in section 1886(d)(2)(D)) if at

3 least 85 percent of the physicians’ services

4 furnished at the location are furnished to

5 individuals who reside in such a rural area;

6 and

7 ‘‘(ii) any office location which is located

8 immediately adjacent to another office location

9 shall be treated as the same office location.’’.

10 (2) USE OF BILLING NUMBERS, ETC.—Section

11 1877 (42 U.S.C. 1395nn) is amended—

12 (A) in subsection (b)(2)(B), by inserting

13 ‘‘under a billing number assigned to the group

14 practice’’ after ‘‘member’’,

15 (B) in subsection (h)(4)(A)(ii), as added by

16 subsection (d)(1), by inserting ‘‘and under a bill17 ing number assigned to the group’’ after ‘‘in the

18 name of the group’’, and

19 (C) in subsection (h)(4)(A)(iii), as so added,

20 by striking ‘‘by members of the group’’.

21 (3) CONFORMING AMENDMENT.—Section 1877(h)

22 (42 U.S.C. 1395nn(h)) is amended by striking ‘‘DEFI23 NITIONS.—’’ and inserting ‘‘DEFINITIONS AND SPE24 CIAL RULES.—’’.
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1 (e) EXPANDING RURAL PROVIDER EXCEPTION TO

2 COVER COMPENSATION ARRANGEMENTS.—

3 (1) IN GENERAL.—Section 1877(b) (42 U.S.C.

4 1395nn(b)) is amended—

5 (A) by redesignating paragraph (4), as re6 designated by subsection (c)(7), as paragraph

7 (5), and

8 (B) by inserting after paragraph (3) the fol9 lowing new paragraph:

10 ‘‘(4) RURAL PROVIDERS.—In the case of des11 ignated health services if—

12 ‘‘(A) the services are furnished in a rural

13 area (as defined in section 1886(d)(2)(D)), and

14 ‘‘(B) substantially all of the services fur15 nished by the entity furnishing the services de16 scribed in subparagraph (A) are furnished to in17 dividuals entitled to benefits under this title who

18 reside in such a rural area.’’.

19 (2) CONFORMING AMENDMENTS.—Section

20 1877(d) (42 U.S.C. 1395nn(d)) is amended—

21 (A) by striking paragraph (2), and

22 (B) by redesignating paragraph (3) as

23 paragraph (2).
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1 (f) EXEMPTION OF COMPENSATION ARRANGEMENTS

2 INVOLVING CERTAIN TYPES OF REMUNERATION.—Section

3 1877(h)(1) (42 U.S.C. 1395nn(h)(1)) is amended—

4 (1) in subparagraph (A), by inserting before the

5 period at the end the following: ‘‘other than an ar6 rangement involving only remuneration described in

7 subparagraph (C)’’, and

8 (2) by adding at the end the following new sub9 paragraph:

10 ‘‘(C) Remuneration described in this subpara11 graph is any remuneration consisting of any of the

12 following:

13 ‘‘(i) The forgiveness of amounts owed for in14 accurate tests or procedures, mistakenly per15 formed tests or procedures, or the correction of

16 minor billing errors.

17 ‘‘(ii) The provision of items, devices, or sup18 plies of minor value that are used to—

19 ‘‘(I) collect, transport, process, or store

20 specimens for the entity providing the item,

21 device, or supply, or

22 ‘‘(II) communicate the results of tests

23 or procedures for such entity.’’.
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1 (g) EXCEPTION FOR PUBLICLY-TRADED SECURI2 TIES.—Section 1877(c) (42 U.S.C. 1395nn(c)) is amend3 ed—

4 (1) in the matter preceding paragraph (1), by

5 striking ‘‘on terms generally available to the public’’

6 and inserting ‘‘through public trading on a public ex7 change or which were inherited’’; and

8 (2) in paragraph (2), by striking ‘‘total assets

9 exceeding $100,000,000’’ and inserting ‘‘stockholder

10 equity exceeding $75,000,000’’.

11 (h) MISCELLANEOUS AND TECHNICAL CORREC12 TIONS.—Section 1877 (42 U.S.C. 1395nn) is amended—

13 (1) in subsection (b)(2)(A)(i), by striking ‘‘who

14 are employed by such physician or group practice

15 and who are personally’’ and inserting ‘‘who are di16 rectly’’;

17 (2) in the fourth sentence of subsection (f)—

18 (A) by striking ‘‘provided’’ and inserting

19 ‘‘furnished’’, and

20 (B) by striking ‘‘provides’’ and inserting

21 ‘‘furnish’’;

22 (3) in the last sentence of subsection (f)—

23 (A) by striking ‘‘providing’’ each place it

24 appears and inserting ‘‘furnishing’’,
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1 (B) by striking ‘‘with respect to the provid2 ers’’ and inserting ‘‘with respect to the entities’’,

3 and

4 (C) by striking ‘‘diagnostic imaging services

5 of any type’’ and inserting ‘‘magnetic resonance

6 imaging, computerized axial tomography scans,

7 and ultrasound services’’; and

8 (4) in subsection (a)(2)(B), by striking ‘‘sub9 section (h)(1)(A)’’ and inserting ‘‘subsection (h)(1)’’.

10 (i) EFFECTIVE DATES.—

11 (1) Except as provided in paragraph (2), the

12 amendments made by this section shall apply to refer13 rals made on or after January 1, 1992.

14 (2) The amendments made by subsection (a)

15 apply with respect to a referral by a physician for

16 designated health services (as defined in section

17 1877(h)(6) of the Social Security Act) made after De18 cember 31, 1994.

19 SEC. 7305. REDUCTION IN PAYMENT FOR ERYTHROPOIETIN.

20 (a) IN GENERAL.—Section 1881(b)(11)(B)(ii)(I) (42

21 U.S.C. 1395rr(b)(11)(B)(ii)(I)) is amended—

22 (1) by striking ‘‘1991’’ and inserting ‘‘1994’’,

23 and

24 (2) by striking ‘‘$11’’ and inserting ‘‘$10’’.
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1 (b) EFFECTIVE DATE.—The amendments made by sub2 section (a) apply to erythropoietin furnished after 1993.

3 Subtitle B—Medicaid Program

4 PART I—PROGRAM SAVINGS PROVISIONS

5 Subpart A—Repeal of Mandate

6 SEC. 7401. PERSONAL CARE SERVICES FURNISHED OUT7 SIDE THE HOME AS OPTIONAL BENEFIT.

8 (a) IN GENERAL.—Section 1905(a) (42 U.S.C.

9 1396d(a)), as amended by subsection (b), is amended—

10 (1) in paragraph (7), by striking ‘‘including per11 sonal care services’’ and all that follows through

12 ‘‘nursing facility’’;

13 (2) in paragraph (23), by striking ‘‘and’’ at the

14 end;

15 (3) by redesignating paragraph (24) as para16 graph (25); and

17 (4) by inserting after paragraph (23) the follow18 ing new paragraph:

19 ‘‘(24) personal care services furnished to an indi20 vidual who is not an inpatient or resident of a nurs21 ing facility or other medical institution that are (A)

22 authorized by a physician for the individual in ac23 cordance with a plan of treatment, (B) provided by

24 an individual who is qualified to provide such serv25 ices and who is not a member of the individual’s fam-
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1 ily, (C) supervised by a registered nurse, and (D) fur2 nished in a home or other location; and’’.

3 (b) REDESIGNATIONS TO PARAGRAPHS ADDED BY

4 OBRA–1990.—Section 1905(a) (42 U.S.C. 1396d(a)) is

5 amended—

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

7 (21);

8 (2) in paragraph (24), by striking the comma at

9 the end and inserting ‘‘; and’’; and

10 (3) by redesignating paragraphs (22), (23), and

11 (24) as paragraphs (24), (22), and (23), respectively,

12 and by transferring and inserting paragraph (24), as

13 so redesignated, after paragraph (23), as so redesig14 nated.

15 (c) CONFORMING AMENDMENTS.—(1) Section

16 1902(a)(10)(C)(iv) (42 U.S.C. 1396a(a)(10)(C)(iv)) is

17 amended by striking ‘‘through (21)’’ and inserting ‘‘through

18 (24)’’.

19 (2) Section 1902(j) (42 U.S.C. 1396a(j)) is amended

20 by striking ‘‘through (22)’’ and inserting ‘‘through (25)’’.

21 (d) EFFECTIVE DATE.—The amendments made by this

22 section shall take effect as if included in the enactment of

23 OBRA–1990.
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1 Subpart B—Outpatient Prescription Drugs

2 SEC. 7411. PERMITTING PRESCRIPTION DRUG

3 FORMULARIES UNDER STATE PLANS.

4 (a) ELIMINATION OF PROHIBITION AGAINST USE OF

5 FORMULARIES.—Paragraph (54) of section 1902(a) (42

6 U.S.C. 1396a(a)) is amended to read as follows:

7 ‘‘(54) in the case of a State plan that provides

8 medical assistance for covered outpatient drugs (as

9 defined in section 1927(k)), comply with the applica10 ble requirements of section 1927;’’.

11 (b) STANDARDS FOR FORMULARIES.—Section 1927(d)

12 (42 U.S.C. 1396r–8(d)), as amended by section 7412(a), is

13 amended—

14 (1) by adding at the end of paragraph (1) the

15 following new subparagraph:

16 ‘‘(C) In the case of a State that establishes a for17 mulary in accordance with paragraph (6), the State

18 may exclude coverage of a covered outpatient drug

19 that is not included in the formulary.’’; and

20 (2) by inserting after paragraph (5) the follow21 ing new paragraph:

22 ‘‘(6) REQUIREMENTS FOR FORMULARIES.—A

23 State may establish a formulary only if the following

24 requirements are met:

25 ‘‘(A) The formulary is developed by a com26 mittee consisting of physicians, pharmacists, and
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1 other appropriate individuals appointed by the

2 Governor of the State or, at the option of the

3 State, the State’s drug use review board estab4 lished under subsection (g)(3).

5 ‘‘(B) The formulary includes each covered

6 outpatient drug of a manufacturer which has en7 tered into and complies with an agreement under

8 subsection (a) unless the drug is contained in the

9 list referred to in paragraph (2) or excluded in

10 accordance with subparagraph (C).

11 ‘‘(C)(i) The committee may exclude a cov12 ered outpatient drug with respect to the treat13 ment of a specific disease or condition for an

14 identified population (if any) only if the com15 mittee finds that the excluded drug does not have

16 a significant, clinically meaningful therapeutic

17 advantage in terms of safety, effectiveness, or

18 clinical outcome of such treatment for such popu19 lation over other drugs included in the for20 mulary.

21 ‘‘(ii) The committee’s finding under clause

22 (i) shall be based on—

23 ‘‘(I) the drug’s labeling, or

24 ‘‘(II) in the case of a drug the pre25 scribed use of which is not approved under
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1 the Federal Food, Drug, and Cosmetic Act

2 but is a medically accepted indication, on

3 information from the appropriate compen4 dia described in subsection (k)(6).

5 ‘‘(D) With respect to a recommendation to

6 exclude a covered outpatient drug from the for7 mulary or to exclude a prescribed use of such a

8 drug, the committee issues a written explanation

9 of its recommendation that is available to the

10 public.

11 ‘‘(E) The State plan permits coverage of a

12 drug excluded from the formulary pursuant to a

13 prior authorization program that is consistent

14 with paragraph (5) unless the drug is contained

15 in the list referred to in paragraph (2).

16 ‘‘(F) The formulary meets such other re17 quirements as the Secretary may impose.’’.

18 (c) EFFECTIVE DATE.—The amendments made by this

19 section shall apply to calendar quarters beginning on or

20 after October 1, 1993, without regard to whether or not reg21 ulations to carry out such amendments have been promul22 gated by such date.
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1 SEC. 7412. ELIMINATION OF SPECIAL EXEMPTION FROM

2 PRIOR AUTHORIZATION FOR NEW DRUGS.

3 (a) IN GENERAL.—Section 1927(d) (42 U.S.C. 1396r–

4 8(d)) is amended by striking paragraph (6).

5 (b) CONFORMING AMENDMENT.—(1) Section

6 1927(d)(1)(A) (42 U.S.C. 1396r–8(d)(1)(A)) is amended by

7 striking ‘‘Except as provided in paragraph (6), a State’’

8 and inserting ‘‘A State’’.

9 (2) Section 1927(d)(3) (42 U.S.C. 1396r–8(d)(3)) is

10 amended by striking ‘‘(except with respect’’ and all that fol11 lows through ‘‘of this paragraph)’’.

12 (c) EFFECTIVE DATE.—The amendments made by this

13 section shall apply to calendar quarters beginning on or

14 after October 1, 1993, without regard to whether or not reg15 ulations to carry out such amendments have been promul16 gated by such date.

17 SEC. 7413. MODIFICATIONS TO DRUG REBATE PROGRAM.

18 (a) ELIMINATION OF ADDITIONAL REBATE BASED ON

19 WEIGHTED AVERAGE MANUFACTURER PRICE.—Paragraph

20 (2) of section 1927(c) (42 U.S.C. 1396r–8(c)) is amended

21 to read as follows:

22 ‘‘(2) ADDITIONAL REBATE FOR SINGLE SOURCE

23 AND INNOVATOR MULTIPLE SOURCE DRUGS.—

24 ‘‘(A) IN GENERAL.—The amount of the re25 bate for a calendar quarter with respect to each

26 dosage form and strength of a single source drug
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1 or an innovator multiple source drug, is in2 creased by an amount equal to the product of—

3 ‘‘(i) the total number of dosage units

4 dispensed after December 31, 1990, for

5 which payment was made under the State

6 plan for the period reported by the State

7 under subsection (b)(2), and

8 ‘‘(ii) the amount (if any) by which—

9 ‘‘(I) the average manufacturer

10 price for the dosage form and strength

11 of the drug for the period, exceeds

12 ‘‘(II) the average manufacturer

13 price for such dosage form and strength

14 for the calendar quarter beginning

15 July 1, 1990, increased by the percent16 age by which the average of the

17 consumer price indices for all urban

18 consumers (U.S. city average) for

19 months during the calendar quarter ex20 ceeds such index for September 1990.

21 ‘‘(B) SPECIAL RULE.—In the case of a cov22 ered outpatient drug approved by the Food and

23 Drug Administration after October 1, 1990,

24 subclause (II) of subparagraph (A)(ii) shall be

25 applied by substituting ‘the first full calendar
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1 quarter after the drug was marketed’ for ‘the cal2 endar quarter beginning July 1, 1990’ and ‘the

3 month prior to the first month of the first full

4 calendar quarter after the drug was marketed’

5 for ‘September 1990’.’’.

6 (b) BASE DATE FOR COVERED OUTPATIENT DRUG

7 SOLD OR TRANSFERRED.—Paragraph (2) of section 1927(c)

8 (42 U.S.C. 1396r–8(c)), as amended by subsection (a), is

9 amended by adding at the end the following new subpara10 graph:

11 ‘‘(C) BASE DATE FOR COVERED OUTPATIENT

12 DRUG SOLD OR TRANSFERRED.—For purposes of

13 computing the additional rebate under this para14 graph for any covered outpatient drug that is

15 sold or transferred to any entity, including a di16 vision or subsidiary of a manufacturer, the base

17 date for such drug after such sale or transfer

18 shall be the original base date established for

19 such drug.’’.

20 (c) MAXIMUM ALLOWABLE COST LIMITATIONS.—Sec21 tion 1927 (42 U.S.C. 1396r–8) is amended by adding at

22 the end the following new subsection:

23 ‘‘(l) MAXIMUM ALLOWABLE COST LIMITATIONS.—This

24 section shall not supersede or affect provisions in effect

25 prior to January 1, 1991, relating to maximum allowable
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1 cost limitations for payment by States for covered out2 patient drugs, and rebates under this section shall be made

3 without regard to whether or not payment by the State for

4 such drugs is subject to such limitations or the amount of

5 such cost limitations.’’.

6 (d) EFFECTIVE DATES.—(1) The amendments made

7 by subsections (a) and (c) shall be effective as if included

8 in the enactment of section 4401 of OBRA–1990.

9 (2) The amendment made by subsection (b) shall be

10 effective on the date of the enactment of this Act.

11 Subpart C—Restrictions on Divestiture of Assets and

12 Estate Recovery

13 SEC. 7421. MEDICAID ESTATE RECOVERIES.

14 (a) MANDATE TO SEEK RECOVERY.—The matter pre15 ceding subparagraph (A) of section 1917(b)(1) (42 U.S.C.

16 1396p(b)(1)) is amended to read as follows: ‘‘The State

17 agency shall seek adjustment or recovery of any medical as18 sistance correctly paid on behalf of an individual under the

19 State plan—’’.

20 (b) HARDSHIP WAIVER.—Section 1917(b) (42 U.S.C.

21 1396p(b)) is amended by adding at the end the following

22 new paragraph:

23 ‘‘(3) The State agency shall establish procedures (in

24 accordance with standards specified by the Secretary) under

25 which the agency shall waive the application of this sub-
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1 section if such application would work an undue hardship

2 as determined on the basis of criteria established by the Sec3 retary.’’.

4 (c) DEFINITION OF ESTATE.—Section 1917(b) (42

5 U.S.C. 1396p(b)), as amended by subsection (b), is amended

6 by adding at the end the following new paragraph:

7 ‘‘(4) DEFINITION.—For purposes of this section, the

8 term ‘estate’, with respect to a deceased individual—

9 ‘‘(A) shall include all real and personal property

10 and other assets included within the individual’s es11 tate, as defined for purposes of State law with respect

12 to inheritance, and

13 ‘‘(B) may include, at the option of the State,

14 any or all other real or personal property or other as15 sets in which the individual had any legal title or in16 terest at the time of death, including such assets con17 veyed to a survivor, heir, or assign of the deceased in18 dividual through joint tenancy, tenancy in common,

19 survivorship, life estate, living trust, or other arrange20 ment.’’.

21 (d) EFFECTIVE DATE.—(1)(A) Except as provided in

22 subparagraph (B), the amendments made by this section

23 shall apply to payments under title XIX of the Social Secu24 rity Act for calendar quarters beginning on or after October

25 1, 1993.
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1 (B) In the case of a State plan for medical assistance

2 under title XIX of the Social Security Act which the Sec3 retary of Health and Human Services determines requires

4 State legislation (other than legislation appropriating

5 funds) in order for the plan to meet the additional require6 ments imposed by the amendments made by this section,

7 the State plan shall not be regarded as failing to comply

8 with the requirements imposed by such amendments solely

9 on the basis of its failure to meet these additional require10 ments before the first day of the first calendar quarter be11 ginning after the close of the first regular session of the

12 State legislature that begins after the date of the enactment

13 of this Act. For purposes of the preceding sentence, in the

14 case of a State that has a 2-year legislative session, each

15 year of such session shall be deemed to be a separate regular

16 session of the State legislature.

17 (2) The amendments made by this section shall not

18 apply to individuals who died before October 1, 1993.

19 SEC. 7422. TRANSFERS OF ASSETS.

20 (a) MANDATORY AND OPTIONAL PERIODS OF INELI21 GIBILITY.—Section 1917(c) (42 U.S.C. 1396p(c)) is amend22 ed—

23 (1) by amending paragraph (1) to read as fol24 lows:
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1 ‘‘(1)(A) In order to meet the requirements of this sub2 section for purposes of section 1902(a)(18), the State plan

3 shall provide that any institutionalized individual (or the

4 spouse of such individual) who disposes of assets for less

5 than fair market value on the date specified in subpara6 graph (B)(ii), or at any time thereafter during such indi7 vidual’s lifetime, is ineligible for medical assistance for—

8 ‘‘(i) nursing facility services,

9 ‘‘(ii) a level of care in any institution equivalent

10 to that of nursing facility services, and

11 ‘‘(iii) home or community-based services under

12 subsection (c) or (d) of section 1915,

13 during any and all applicable periods specified in para14 graph (2).

15 ‘‘(B)(i) The date specified in this clause, with respect

16 to an institutionalized individual, is the first date as of

17 which the individual—

18 ‘‘(I) is an institutionalized individual, and

19 ‘‘(II) has applied for or is receiving medical as20 sistance under the State plan.

21 ‘‘(ii) The date specified in this clause, with respect to

22 an institutionalized individual, is the date 30 months before

23 the date specified in clause (i) (or, at the option of the State,

24 such earlier date as provided by the State in accordance

25 with paragraph (3)(A)(iii)).’’;
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1 (2) by redesignating paragraphs (2) through (5)

2 as paragraphs (4) through (7) and by inserting after

3 paragraph (1) the following new paragraphs:

4 ‘‘(2) The period of ineligibility required under para5 graph (1) with respect to an institutionalized individual—

6 ‘‘(A) shall be a number of months equal to—

7 ‘‘(i) the total uncompensated value of all as8 sets transferred by the individual or the individ9 ual’s spouse on or after the date specified in

10 paragraph (1)(B)(ii), divided by

11 ‘‘(ii) the average cost to a private patient of

12 nursing facility services in the State (or, at the

13 option of the State, in the community in which

14 the individual is institutionalized) on the date

15 specified in paragraph (1)(B)(i) based on costs

16 which include the cost of services included in the

17 State’s nursing facility reimbursement rate; and

18 ‘‘(B) shall begin with the first month in which—

19 ‘‘(i) the individual—

20 ‘‘(I) is an institutionalized individual,

21 ‘‘(II) is (or but for the provisions of

22 this subsection would be) entitled to have

23 medical assistance paid under the State

24 plan for services specified under paragraph

25 (1), and
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1 ‘‘(III) is receiving or is an applicant

2 for such medical assistance, and

3 ‘‘(ii) the State has become aware that assets

4 have been transferred.

5 ‘‘(3)(A) The State plan may include, in accordance

6 with this paragraph, any or all of the following provisions

7 concerning eligibility for medical assistance of individuals

8 who (or whose spouses) dispose of assets for less than fair

9 market value:

10 ‘‘(i) The State plan may provide for periods of

11 ineligibility for medical assistance for long-term care

12 services specified by the State and approved by the

13 Secretary for any or all individuals (or groups of in14 dividuals) otherwise eligible for such medical assist15 ance, in addition to the individuals specified in para16 graph (1).

17 ‘‘(ii) Subject to such restrictions as the Secretary

18 may impose, the State plan may provide for periods

19 of ineligibility for medical assistance for any long20 term care services (in addition to the services speci21 fied in paragraph (1)(A)) for which medical assist22 ance is otherwise available under the plan.

23 ‘‘(iii) The State plan may provide for a date on

24 and after which transfers of assets are subject to re-
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1 view earlier than the date specified in paragraph

2 (1)(B)(ii), but not earlier than 4 years before—

3 ‘‘(I) in the case of an institutionalized indi4 vidual, the date specified in paragraph (1)(B)(i),

5 or 

6 ‘‘(II) in the case of any other individual,

7 the date on which the individual applied for

8 medical assistance under the State plan.

9 ‘‘(B)(i) The period of ineligibility imposed by the State

10 pursuant to this paragraph for services other than those

11 specified in paragraph (1)(A) shall not be longer than the

12 period of ineligibility that would have resulted if the indi13 vidual had expended the assets transferred for the costs of

14 medical care furnished on and after the date the individual

15 applied for medical assistance, as determined by the State

16 in accordance with clause (ii).

17 ‘‘(ii) In determining the period of ineligibility of an

18 individual pursuant to clause (i), the State—

19 ‘‘(I) may presume that the individual’s cost of

20 medical care furnished is equal to the average cost to

21 a private patient for such care on a daily, monthly,

22 or other basis, or

23 ‘‘(II) may use any other method approved by the

24 Secretary.’’;

25 (3) in paragraph (4), as redesignated—
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1 (A) by amending subparagraph (B) to read

2 as follows:

3 ‘‘(B) the resources—

4 ‘‘(i) were transferred to the individual’s

5 spouse or to another for the sole benefit of the in6 dividual’s spouse and did not exceed the amount

7 permitted under section 1924(f)(1);

8 ‘‘(ii) were transferred from the individual’s

9 spouse to another for the sole benefit of the indi10 vidual’s spouse and did not exceed the amount

11 permitted under section 1924(f)(1); or

12 ‘‘(iii) were transferred to the individual’s

13 child described in subparagraph (A)(ii)(II);’’;

14 (B) in subparagraph (C)—

15 (i) by striking ‘‘any’’;

16 (ii) by striking ‘‘or (ii)’’ and inserting

17 ‘‘(ii)’’; and

18 (iii) by striking ‘‘; or’’ and inserting ‘‘,

19 or (iii) all assets transferred by an individ20 ual for less than fair market value have

21 been returned to the individual;’’;

22 (C) by amending subparagraph (D) to read

23 as follows:
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1 ‘‘(D) the State determines (in accordance with

2 regulations promulgated by the Secretary) that denial

3 of eligibility would work an undue hardship; or’’;

4 (D) by adding at the end the following new

5 subparagraph:

6 ‘‘(E) the State determines that the total fair

7 market value of all of the assets transferred by the in8 dividual during the period between the date specified

9 in paragraph (1)(B)(i) and the date specified by the

10 State under paragraph (1)(B)(ii) are below an

11 amount determined appropriate by the State and ap12 proved by the Secretary.’’; and

13 (E) by adding at the end the following flush

14 sentence:

15 ‘‘In determining whether an individual has made a satis16 factory showing to the State under subparagraph (C)(ii),

17 the State shall consider the individual’s health status at the

18 time of the transfer of assets and whether, at the time of

19 such transfer, the individual retained assets sufficient to

20 meet the individual’s foreseeable future health care needs

21 based on such health status.’’;

22 (4) by striking paragraph (5), as redesignated,

23 and inserting the following:

24 ‘‘(5) For purposes of this subsection, in the case of an

25 asset held by an individual in common with another person
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1 or persons in a joint tenancy, tenancy in common, or simi2 lar arrangement, the asset (or the affected portion of such

3 asset) shall be considered to be transferred by such individ4 ual when any action is taken, either by such individual

5 or by any other person, that reduces or eliminates such in6 dividual’s ownership or control of such asset, except to the

7 extent an action taken by a person other than the individ8 ual is an action consistent with partial ownership of the

9 asset, as provided in regulations issued by the Secretary.’’;

10 (5) by adding the following at the end of para11 graph (6), as redesignated: ‘‘In the case of a transfer

12 by the spouse of an institutionalized individual which

13 results in a period of ineligibility for medical assist14 ance under a State plan for the institutionalized in15 dividual, a State shall apply a reasonable methodol16 ogy to transfer all or a portion of any such period of

17 ineligibility to such spouse if the spouse becomes an

18 institutionalized individual.’’; and

19 (6) by amending paragraph (7), as redesignated,

20 to read as follows:

21 ‘‘(7) For purposes of this subsection:

22 ‘‘(A) The term ‘assets’, with respect to an indi23 vidual, includes all income and resources of the indi24 vidual and of the individual’s spouse, including any

25 income or resources which the individual or such in-
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1 dividual’s spouse is entitled to but does not receive be2 cause of action—

3 ‘‘(i) by the individual or such individual’s

4 spouse,

5 ‘‘(ii) by a person, including a court or ad6 ministrative body, with legal authority to act in

7 place of or on behalf of the individual or such in8 dividual’s spouse, or

9 ‘‘(iii) by any person, including any court or

10 administrative body, acting at the direction or

11 upon the request of the individual or such indi12 vidual’s spouse.

13 ‘‘(B) The term ‘income’ has the meaning given

14 such term in section 1612.

15 ‘‘(C) The term ‘resources’ has the meaning given

16 such term in section 1613, without regard (in the case

17 of an institutionalized individual) to the exclusion de18 scribed in subsection (a)(1) of such section.

19 ‘‘(D) The term ‘institutionalized individual’

20 means, and the term ‘individual is institutionalized’

21 refers to, an individual receiving any of the services

22 specified in paragraph (1)(A).’’.

23 (b) CONFORMING AMENDMENTS.—(1) Section

24 1902(a)(51) (42 U.S.C. 1396a(a)(51)) is amended—

25 (A) by striking ‘‘(A)’’; and
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1 (B) by striking ‘‘, and (B)’’ and all that follows

2 and inserting a semicolon.

3 (2) Section 1924(f)(1) (42 U.S.C. 1396r–5(f)(1)) is

4 amended by striking ‘‘transfer an amount’’ and inserting

5 ‘‘transfer an amount sufficient to make the resources of the

6 community spouse’’.

7 (c) REQUIREMENTS FOR NURSING FACILITIES.—

8 (1) MEDICAID PROGRAM.—Section

9 1919(c)(5)(A)(i) (42 U.S.C. 1396r(c)(5)(A)(i)) is

10 amended by striking ‘‘and (III)’’ and inserting ‘‘(III)

11 not require individuals applying to reside or residing

12 in the facility, or family members of such individuals,

13 to provide any financial information other than to

14 identify the source of payment for such individual’s

15 stay in the facility, and (IV)’’.

16 (2) MEDICARE PROGRAM.—Section

17 1819(c)(5)(A)(i) (42 U.S.C. 1395i–3(c)(5)(A)(i)) is

18 amended by striking ‘‘and (III)’’ and inserting ‘‘(III)

19 not require individuals applying to reside or residing

20 in the facility, or family members of such individuals,

21 to provide any financial information other than to

22 identify the source of payment for such individual’s

23 stay in the facility, and (IV)’’.

24 (d) EFFECTIVE DATE.—(1)(A) Except as provided in

25 subparagraph (B), the amendments made by this section
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1 shall apply to calendar quarters beginning on or after Octo2 ber 1, 1993.

3 (B) In the case of a State plan for medical assistance

4 under title XIX of the Social Security Act which the Sec5 retary of Health and Human Services determines requires

6 State legislation (other than legislation appropriating

7 funds) in order for the plan to meet the additional require8 ments imposed by the amendments made by this section,

9 the State plan shall not be regarded as failing to comply

10 with the requirements imposed by such amendments solely

11 on the basis of its failure to meet these additional require12 ments before the first day of the first calendar quarter be13 ginning after the close of the first regular session of the

14 State legislature that begins after the date of the enactment

15 of this Act. For purposes of the preceding sentence, in the

16 case of a State that has a 2-year legislative session, each

17 year of such session shall be deemed to be a separate regular

18 session of the State legislature.

19 (2) The amendments made by this section shall not

20 apply with respect to assets disposed of before the date

21 which is 60 days after the date of the enactment of this

22 Act.

23 SEC. 7423. TREATMENT OF CERTAIN TRUSTS.

24 (a) IN GENERAL.—Section 1917 (42 U.S.C. 1396p) is

25 amended by adding at the end the following:
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1 ‘‘(d)(1) For purposes of determining an individual’s

2 eligibility for, or amount of, benefits under a State plan

3 under this title, the following rules shall apply to a trust

4 established by such individual:

5 ‘‘(A) In the case of a revocable trust—

6 ‘‘(i) the corpus of the trust shall be consid7 ered resources available to the individual,

8 ‘‘(ii) payments from the trust to or for the

9 benefit of the individual shall be considered in10 come of the individual, and

11 ‘‘(iii) any other payments from the trust

12 shall be considered a transfer of assets by the in13 dividual subject to subsection (c).

14 ‘‘(B) In the case of an irrevocable trust—

15 ‘‘(i) the portion of the corpus from which, or

16 the income on the corpus from which, payment

17 to the individual could be made shall be consid18 ered resources available to the individual, and

19 payments from that portion of the corpus or in20 come—

21 ‘‘(I) to or for the benefit of the individ22 ual, shall be considered income of the indi23 vidual, and
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1 ‘‘(II) for any other purpose, shall be

2 considered a transfer of assets by the indi3 vidual subject to subsection (c); and

4 ‘‘(ii) any portion of the trust from which, or

5 any income on the corpus from which, no pay6 ment could under any circumstances be made to

7 the individual shall be considered, as of the date

8 of establishment of the trust (or, if later, the date

9 on which payment to the individual was fore10 closed) a transfer of assets by the individual sub11 ject to subsection (c), and payments from such

12 portion of the trust after such date shall be dis13 regarded.

14 ‘‘(2)(A) For purposes of this subsection, an individual

15 shall be considered to have established a trust if—

16 ‘‘(i) any of the following individuals established

17 such trust other than by will:

18 ‘‘(I) the individual,

19 ‘‘(II) the individual’s spouse,

20 ‘‘(III) a person, including a court or ad21 ministrative body, with legal authority to act in

22 place of or on behalf of the individual or the in23 dividual’s spouse, or

24 ‘‘(IV) a person, including any court or ad25 ministrative body, acting at the direction or
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1 upon the request of the individual or the individ2 ual’s spouse; and

3 ‘‘(ii) assets of the individual were used to form

4 all or part of the corpus of the trust.

5 ‘‘(B) In the case of a trust the corpus of which includes

6 assets of an individual (as determined under subparagraph

7 (A)) and assets of any other person or persons, the provi8 sions of this subsection shall apply to the portion of the

9 trust attributable to the assets of the individual.

10 ‘‘(3) This subsection shall apply without regard to—

11 ‘‘(A) the purposes for which a trust is estab12 lished,

13 ‘‘(B) whether the trustees have or exercise any

14 discretion under the trust,

15 ‘‘(C) any restrictions on when or whether dis16 tributions may be made from the trust, or

17 ‘‘(D) any restrictions on the use of distributions

18 from the trust.

19 ‘‘(4)(A) This subsection shall not apply to any of the

20 following trusts:

21 ‘‘(i) A trust containing the assets of a disabled

22 individual (as determined under section 1614(a)(3))

23 established for the benefit of such individual by a par24 ent, grandparent, legal guardian of the individual, or

25 a court if the State will receive all amounts remain-
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1 ing in the trust upon the death of such individual up

2 to an amount equal to the total medical assistance re3 ceived by the individual under a State plan under

4 this title.

5 ‘‘(ii) A trust established in a State for the benefit

6 of an individual if—

7 ‘‘(I) the trust is composed only of pension,

8 Social Security, and other income to the individ9 ual (and accumulated income in the trust),

10 ‘‘(II) the State will receive all amounts re11 maining in the trust upon the death of such in12 dividual up to an amount equal to the total

13 medical assistance received by the individual

14 under a State plan under this title, and

15 ‘‘(III) the State makes medical assistance

16 available to individuals described in section

17 1902(a)(10)(A)(ii)(V), but does not make such

18 assistance available to individuals for nursing

19 facility services under section 1902(a)(10)(C).

20 ‘‘(B) For purposes of this subsection, the term ‘trust’

21 includes any legal instrument or device that is similar to

22 a trust but includes an annuity only to such extent and

23 in such manner as the Secretary specifies.

24 ‘‘(C) The State agency shall establish procedures (in

25 accordance with standards specified by the Secretary) under
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1 which the agency waives the application of this subsection

2 with respect to an individual if the individual establishes

3 that such application would work an undue hardship on

4 the individual as determined on the basis of criteria estab5 lished by the Secretary.

6 ‘‘(5) For purposes of this subsection, the terms ‘assets’,

7 ‘income’, and ‘resources’ shall have the meaning given to

8 such terms under subsection (c)(7).’’.

9 (b) CONFORMING AMENDMENTS.—(1) Section

10 1902(a)(18) (42 U.S.C. 1396a(a)(18)) is amended by strik11 ing ‘‘and transfers of assets’’ and inserting ‘‘, transfers of

12 assets, and treatment of certain trusts’’.

13 (2) Section 1902 (42 U.S.C. 1396a) is amended by re14 pealing subsection (k).

15 (c) EFFECTIVE DATE.—(1)(A) Except as provided in

16 subparagraph (B), the amendments made by this section

17 shall apply to payments under title XIX of the Social Secu18 rity Act for calendar quarters beginning on or after October

19 1, 1993.

20 (B) In the case of a State plan for medical assistance

21 under title XIX of the Social Security Act which the Sec22 retary of Health and Human Services determines requires

23 State legislation (other than legislation appropriating

24 funds) in order for the plan to meet the additional require25 ments imposed by the amendments made by this section,
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1 the State plan shall not be regarded as failing to comply

2 with the requirements imposed by such amendments solely

3 on the basis of its failure to meet these additional require4 ments before the first day of the first calendar quarter be5 ginning after the close of the first regular session of the

6 State legislature that begins after the date of the enactment

7 of this Act. For purposes of the preceding sentence, in the

8 case of a State that has a 2-year legislative session, each

9 year of such session shall be deemed to be a separate regular

10 session of the State legislature.

11 (2) The amendments made by this section shall not

12 apply with respect to trusts established before the date which

13 is 60 days after the date of the enactment of this Act.

14 Subpart D—Improvement in Identification and

15 Collection of Third Party Payments

16 SEC. 7431. LIABILITY OF THIRD PARTIES TO PAY FOR CARE

17 AND SERVICES.

18 (a) LIABILITY OF ERISA PLANS.—(1) Section

19 1902(a)(25)(A) (42 U.S.C. 1396a(a)(25)(A)) is amended by

20 striking ‘‘insurers)’’ and inserting ‘‘insurers, group health

21 plans (as defined in section 607(1) of the Employee Retire22 ment Income Security Act of 1974), service benefit plans,

23 and health maintenance organizations)’’.

24 (2) Section 1903(o) (42 U.S.C. 1396b(o)) is amended

25 by striking ‘‘regulation)’’ and inserting ‘‘regulation and in-
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1 cluding a group health plan (as defined in section 607(1)

2 of the Employee Retirement Income Security Act of 1974)),

3 a service benefit plan, and a health maintenance organiza4 tion’’.

5 (b) REQUIRING STATE TO PROHIBIT INSURERS FROM

6 TAKING MEDICAID STATUS INTO ACCOUNT.—Section

7 1902(a)(25) (42 U.S.C. 1396a(a)(25)) is amended—

8 (1) by striking ‘‘and’’ at the end of subpara9 graph (F);

10 (2) by adding ‘‘and’’ at the end of subparagraph

11 (G); and

12 (3) by adding after subparagraph (G) the follow13 ing new subparagraph:

14 ‘‘(H) assurances satisfactory to the Sec15 retary that the State has in effect laws which

16 prohibit any health insurer (including a group

17 health plan, as defined in section 607(1) of the

18 Employee Retirement Income Security Act of

19 1974, a service benefit plan, and a health main20 tenance organization), in enrolling an individ21 ual or in making any payments for benefits to

22 the individual or on the individual’s behalf, from

23 taking into account that the individual is eligi24 ble for or is provided medical assistance under a
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1 plan under this title for such State, or any other

2 State;’’.

3 (c) STATE RIGHT TO THIRD PARTY PAYMENTS FOR

4 RECIPIENT.—Section 1902(a)(25) (42 U.S.C.

5 1396a(a)(25)), as amended by subsection (b), is amended—

6 (1) by striking ‘‘and’’ at the end of subpara7 graph (G);

8 (2) by adding ‘‘and’’ at the end of subparagraph

9 (H); and

10 (3) by adding after subparagraph (H) the follow11 ing new subparagraph:

12 ‘‘(I) assurances satisfactory to the Secretary

13 that the State has in effect laws under which, to

14 the extent that payment has been made under the

15 State plan for medical assistance for health care

16 items or services furnished to an individual, the

17 State is considered to have acquired the rights of

18 such individual to payment by any other party

19 for such health care items or services;’’.

20 (d) EFFECTIVE DATE.—(1) Except as provided in

21 paragraph (2), the amendments made by subsections (a)(1),

22 (b), and (c) shall apply to calendar quarters beginning on

23 or after October 1, 1993, without regard to whether or not

24 final regulations to carry out such amendments have been

25 promulgated by such date.
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1 (2) In the case of a State plan for medical assistance

2 under title XIX of the Social Security Act which the Sec3 retary of Health and Human Services determines requires

4 State legislation (other than legislation appropriating

5 funds) in order for the plan to meet the additional require6 ments imposed by the amendments made by subsections (a)

7 and (b), the State plan shall not be regarded as failing to

8 comply with the requirements of such title solely on the

9 basis of its failure to meet these additional requirements

10 before the first day of the first calendar quarter beginning

11 after the close of the first regular session of the State legisla12 ture that begins after the date of the enactment of this Act.

13 For purposes of the preceding sentence, in the case of a State

14 that has a 2-year legislative session, each year of such ses15 sion shall be deemed to be a separate regular session of the

16 State legislature.

17 (3) The amendment made by subsection (a)(2) shall

18 apply to items and services furnished on or after October

19 1, 1993.

20 SEC. 7432. MEDICAL CHILD SUPPORT.

21 (a) STATE PLAN REQUIREMENT.—Section 1902(a) (42

22 U.S.C. 1396a(a)), as amended by subsection (c), is amend23 ed—

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

25 (58);
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1 (2) by striking the period at the end of para2 graph (59) and inserting ‘‘; and’’; and

3 (3) by adding at the end the following new para4 graph:

5 ‘‘(60) provide that the State agency shall provide

6 assurances satisfactory to the Secretary that the State

7 has in effect the laws relating to medical child sup8 port required under section 1908.’’.

9 (b) MEDICAL CHILD SUPPORT LAWS.—Title XIX (42

10 U.S.C 1936 et seq.) is amended by inserting after section

11 1907 the following new section:

12 ‘‘REQUIRED LAWS RELATING TO MEDICAL CHILD SUPPORT

13 ‘‘SEC. 1908. (a) IN GENERAL.—The laws relating to

14 medical child support, which a State is required to have

15 in effect under section 1902(a)(60), are as follows:

16 ‘‘(1) A law that prohibits an insurer from deny17 ing enrollment of a child under the health coverage of

18 the child’s parent on the ground that—

19 ‘‘(A) the child was born out of wedlock,

20 ‘‘(B) the child is not claimed as a depend21 ent on the parent’s Federal income tax return, or

22 ‘‘(C) the child does not reside with the par23 ent or in the insurer’s service area.

24 ‘‘(2) In any case in which a parent is required

25 by a court or administrative order to provide health

26 coverage for a child and the parent is eligible for fam-
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1 ily health coverage through an insurer, a law that re2 quires such insurer—

3 ‘‘(A) to permit such parent to enroll under

4 such family coverage any such child who is oth5 erwise eligible for such coverage (without regard

6 to any enrollment season restrictions and subject

7 to the requirements under paragraph (1)); and

8 ‘‘(B) if such a parent fails to provide such

9 health insurance coverage for any such child, to

10 enroll such child under such family coverage

11 upon application by the child’s other parent or

12 by the State agency administering the program

13 under this title or part D of title IV.

14 ‘‘(3) In any case in which a parent is required

15 by a court or administrative order to provide health

16 coverage for a child and the parent is eligible for fam17 ily health coverage through an employer doing busi18 ness in the State, a law that requires such em19 ployer—

20 ‘‘(A) to permit such parent to enroll under

21 such family coverage any such child who is oth22 erwise eligible for such coverage (without regard

23 to any enrollment season restrictions and subject

24 to the requirements under paragraph (1));
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1 ‘‘(B) if such a parent fails to provide such

2 health insurance coverage for a child, to enroll

3 such child under such family coverage upon ap4 plication by the child’s other parent or by the

5 State agency administering the program under

6 this title or part D of title IV;

7 ‘‘(C) not to disenroll (or eliminate coverage

8 of) any such child unless the employer is pro9 vided satisfactory written evidence that—

10 ‘‘(i) such court or administrative order

11 is no longer in effect, or

12 ‘‘(ii) the child is or will be enrolled in

13 comparable health coverage which will take

14 effect not later than the effective date of such

15 disenrollment; and

16 ‘‘(D) to withhold from such employee’s com17 pensation the employee’s share (if any) of pre18 miums for health coverage and to pay such share

19 of premiums to the insurer.

20 ‘‘(4) A law that prohibits an insurer from im21 posing requirements on a State agency, which has

22 been assigned the rights of an individual eligible for

23 medical assistance under this title and covered for

24 health benefits from the insurer, that are different
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1 from requirements applicable to an agent or assignee

2 of any other individual so covered.

3 ‘‘(5) A law that requires an insurer, in any case

4 in which a child has health coverage through the in5 surer of a noncustodial parent—

6 ‘‘(A) to provide such information to the cus7 todial parent as may be necessary for the child

8 to obtain benefits through such coverage;

9 ‘‘(B) to permit the custodial parent (or pro10 vider, with the custodial parent’s approval) to

11 submit claims for covered services without the

12 approval of the noncustodial parent; and

13 ‘‘(C) to make payment on claims submitted

14 in accordance with subparagraph (B) directly to

15 such custodial parent, the provider, or the State

16 agency.

17 ‘‘(6) A law that permits the State agency under

18 this title to garnish the wages, salary, or other em19 ployment income of, and requires withholding

20 amounts from State tax refunds to, any person who—

21 ‘‘(A) is required by court or administrative

22 order to provide coverage of the costs of health

23 services to a child who is eligible for medical as24 sistance under this title,
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1 ‘‘(B) has received payment from a third

2 party for the costs of such services to such child,

3 but

4 ‘‘(C) has not used such payments to reim5 burse, as appropriate, either the other parent or

6 guardian of such child or the provider of such

7 services,

8 to the extent necessary to reimburse the State agency

9 for expenditures for such costs under its plan under

10 this title, but any claims for current or past-due child

11 support shall take priority over any such claims for

12 the costs of such services.

13 ‘‘(b) SPECIAL RULE.—The Secretary may provide by

14 regulation for such exceptions to the requirement under sub15 section (a)(3) as the Secretary determines necessary to en16 sure compliance with the conditions of any order referred

17 to in such subsection or with the maximum amounts per18 mitted to be withheld under section 303(b) of the Consumer

19 Credit Protection Act.

20 ‘‘(c) DEFINITION.—For purposes of this subsection, the

21 term ‘insurer’ includes a group health plan, as defined in

22 section 607(1) of the Employee Retirement Income Security

23 Act of 1974, a health maintenance organization, and an

24 entity offering a service benefit plan.’’.
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1 (c) REDESIGNATIONS TO PARAGRAPHS ADDED BY

2 OBRA–1990.—Section 1902(a) (42 U.S.C. 1396a(a)) is

3 amended—

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

5 (54);

6 (2) in the paragraph (55) inserted by section

7 4602(a)(3) of OBRA–1990, by striking the period at

8 the end and inserting a semicolon;

9 (3) by redesignating the paragraph (55) inserted

10 by section 4604(b)(3) of OBRA–1990 as paragraph

11 (56), by transferring and inserting it after the para12 graph (55) inserted by section 4602(a)(3) of such Act,

13 and by striking the period at the end and inserting

14 a semicolon;

15 (4) by placing paragraphs (57) and (58), in16 serted by section 4751(a)(1)(C) of OBRA–1990, im17 mediately after paragraph (56), as redesignated by

18 paragraph (3);

19 (5) in the paragraph (58) inserted by section

20 4751(a)(1)(C) of OBRA–1990, by striking the period

21 at the end and inserting ‘‘; and’’; and

22 (6) by redesignating the paragraph (58) inserted

23 by section 4752(c)(1)(C) of OBRA–1990 as paragraph

24 (59) and by transferring and inserting it after the
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1 paragraph (58) inserted by section 4751(a)(1)(C) of

2 such Act.

3 (d) EFFECTIVE DATE.—(1) Except as provided in

4 paragraph (2), the amendments made by this section apply

5 to calendar quarters beginning on or after April 1, 1994.

6 (2) In the case of a State plan under title XIX of the

7 Social Security Act which the Secretary of Health and

8 Human Services determines requires State legislation in

9 order for the plan to meet the additional requirements im10 posed by the amendments made by this section, the State

11 plan shall not be regarded as failing to comply with the

12 requirements of such title solely on the basis of its failure

13 to meet these additional requirements before the first day

14 of the first calendar quarter beginning after the close of the

15 first regular session of the State legislature that begins after

16 the date of enactment of this Act. For purposes of the pre17 ceding sentence, in the case of a State that has a 2-year

18 legislative session, each year of such session shall be deemed

19 to be a separate regular session of the State legislature.

20 SEC. 7433. OFFSET OF PAYMENT OBLIGATIONS RELATING

21 TO MEDICAL ASSISTANCE AGAINST OVERPAY22 MENTS OF STATE AND FEDERAL INCOME

23 TAXES.

24 (a) AMENDMENTS TO THE INTERNAL REVENUE CODE

25 OF 1986.—
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1 (1) IN GENERAL.—Section 6402 of the Internal

2 Revenue Code of 1986 is amended—

3 (A) by redesignating subsections (e), (f), (g),

4 (h), and (i) as subsections (f), (g), (h), (i), and

5 (j), respectively; and

6 (B) by adding after subsection (d) the fol7 lowing new subsection:

8 ‘‘(e) COLLECTION OF CERTAIN DEBTS OWED TO

9 STATES.—

10 ‘‘(1) IN GENERAL.—Upon receiving notice from

11 any State under section 1931(b)(1) of the Social Se12 curity Act that a named person owes a legally en13 forceable debt for any payment obligation relating to

14 medical assistance, the Secretary shall—

15 ‘‘(A) reduce the amount of any overpayment

16 payable to such person by the amount of such

17 debt;

18 ‘‘(B) pay the amount by which such over19 payment is reduced under subparagraph (A) to

20 such State; and

21 ‘‘(C) notify the person making such over22 payment that such overpayment has been re23 duced by an amount necessary to satisfy such

24 debt.
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1 ‘‘(2) PRIORITIES FOR OFFSET.—Any overpay2 ment by a person shall be reduced pursuant to this

3 subsection after such overpayment is reduced pursu4 ant to subsections (c) and (d) and before such over5 payment is credited to the future liability for tax of

6 such person pursuant to subsection (b). Any overpay7 ment by a person shall be applied against any debts

8 described in paragraph (1) in the order in which such

9 debts accrued.

10 ‘‘(3) NOTICE; PROTECTION OF OTHER PERSONS

11 FILING JOINT RETURN.—For purposes of this sub12 section, rules similar to the rules described in clause

13 (i) and the first sentence of clause (ii) of subsection

14 (d)(3)(B) shall apply.

15 ‘‘(4) DEFINITION.—For purposes of this sub16 section, the term ‘medical assistance’ means medical

17 assistance provided under title XIX of the Social Se18 curity Act.’’.

19 (2) CONFORMING AMENDMENT.—Section 6402(f)

20 of the Internal Revenue Code of 1986, as redesignated,

21 is amended by striking ‘‘(c) or (d)’’ and inserting

22 ‘‘(c), (d), or (e)’’.

23 (3) EFFECTIVE DATE.—The amendments made

24 by this subsection shall be effective for taxable years

25 beginning after December 31, 1993.
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1 (b) AMENDMENTS TO THE SOCIAL SECURITY ACT.—

2 (1) STATE PLAN AMENDMENT.—Section 1902(a)

3 (42 U.S.C. 1396a(a)), as amended by section 7432, is

4 amended—

5 (A) by striking ‘‘and’’ at the end of para6 graph (59);

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

8 paragraph (60) and inserting ‘‘; and’’; and

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

10 paragraph:

11 ‘‘(61) provide that recovery of any legally en12 forceable debt for any payment obligation relating to

13 medical assistance provided under this title shall be

14 made in accordance with a program for the collection

15 of such debt from State and Federal tax refunds in

16 accordance with section 1931.’’.

17 (2) PROGRAM FOR COLLECTIONS FROM STATE

18 AND FEDERAL TAX REFUNDS.—Title XIX (42 U.S.C

19 1936 et seq.) is amended by adding at the end the fol20 lowing new section:

21 ‘‘COLLECTION OF PAYMENT OBLIGATIONS RELATING TO

22 MEDICAL ASSISTANCE FROM STATE AND FEDERAL TAX

23 REFUNDS

24 ‘‘SEC. 1931. (a) STATE TAX REFUNDS.—If a State

25 with a State plan approved under this title has a State

26 income tax system, such State shall require the State agency
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1 administering the State plan and the State agency respon2 sible for administering the States income tax system to de3 velop and implement a program under which any person

4 determined appropriate by the State agency administering

5 the State plan who owes a legally enforceable debt for any

6 payment obligation relating to medical assistance provided

7 under this title will have withheld an appropriate amount

8 from any refund otherwise payable to such person under

9 the State income tax system.

10 ‘‘(b) FEDERAL TAX REFUNDS.—

11 ‘‘(1) NOTICE TO THE SECRETARY OF THE TREAS12 URY.—

13 ‘‘(A) IN GENERAL.—If a State with a State

14 plan approved under this title—

15 ‘‘(i) implements a program described

16 in subsection (a), or

17 ‘‘(ii) is a State that does not have a

18 State income tax system,

19 the State agency administering such plan may

20 provide a notice to the Secretary of the Treasury

21 regarding any person determined appropriate by

22 such State agency who owes a legally enforceable

23 debt for any payment obligation relating to med24 ical assistance provided under this title and the

25 Secretary of the Treasury shall withhold an ap-
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1 propriate amount from any refund otherwise

2 payable to such person in accordance with sec3 tion 6402(e) of the Internal Revenue Code of

4 1986 (hereafter in this section referred to as the

5 ‘Code’).

6 ‘‘(B) REGULATIONS RELATING TO NO7 TICES.—The Secretary of the Treasury shall

8 issue regulations, after consultation with the Sec9 retary, which—

10 ‘‘(i) prescribe the timing by which

11 State agencies may submit notices of pay12 ment obligations relating to medical assist13 ance,

14 ‘‘(ii) specify the manner in which such

15 notices must be submitted,

16 ‘‘(iii) specify the necessary information

17 that must be contained in or accompany

18 such notices,

19 ‘‘(iv) specify the minimum payment

20 obligation relating to medical assistance to

21 which the offset procedures may be applied,

22 ‘‘(v) specify the fee that a State must

23 pay to reimburse the Secretary of the Treas24 ury for the full cost of applying the offset

25 procedure, and
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1 ‘‘(vi) provide that the Secretary of the

2 Treasury will advise the Secretary, not less

3 frequently than annually, of the States

4 which have furnished notices under this sub5 section, the number of cases in each State

6 with respect to which such notices have been

7 furnished, the total amount of payment ob8 ligations sought to be collected under this

9 subsection by each State, and the amount of

10 such collections actually made in the case of

11 each State.

12 ‘‘(2) NOTICE.—Prior to notifying the Secretary

13 of the Treasury under paragraph (1), the State agen14 cy shall send a notice to the person owing the legally

15 enforceable debt for a payment obligation relating to

16 medical assistance provided under this title which—

17 ‘‘(A) explains that a withholding may be

18 made under 6402(e) of the Code from any refund

19 otherwise payable to such person,

20 ‘‘(B) instructs the person having the pay21 ment obligation of the steps which may be taken

22 to contest the State’s determination that such

23 payment obligation is owed or the amount of the

24 payment obligation, and
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1 ‘‘(C) provides information with respect to

2 procedures to be followed, in the case of a joint

3 return, to protect the share of the refund which

4 may be payable to another person.

5 ‘‘(3) EXCESS WITHHOLDING.—In any case in

6 which an amount was withheld under section 6402(e)

7 of the Code and the State subsequently determines

8 that the amount certified as owing with respect to

9 medical assistance was in excess of the amount actu10 ally owed at the time the amount withheld is distrib11 uted to the State, the State shall pay the excess

12 amount withheld to the named person determined to

13 have the payment obligation (or, in the case of

14 amounts withheld on the basis of a joint return, joint15 ly to the parties filing such return).’’.

16 (3) EFFECTIVE DATE.—

17 (A) IN GENERAL.—The amendments made

18 by this paragraph shall apply to calendar quar19 ters beginning on or after December 31, 1993.

20 (B) SPECIAL RULE.—In the case of a State

21 which the Secretary determines requires State

22 legislation (other than legislation authorizing or

23 appropriating funds) in order to comply with

24 the amendments made by subparagraph (A), the

25 State shall not be regarded as failing to comply
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1 with such amendments solely on the basis of its

2 failure to meet the requirements of such amend3 ments before the first day of the first calendar

4 quarter beginning after the close of the first regu5 lar session of the State legislature that begins

6 after the date of the enactment of this Act. For

7 purposes of the preceding sentence, in the case of

8 a State that has a 2-year legislative session, each

9 year of such session shall be deemed to be a sepa10 rate regular session of the State legislature.

11 Subpart E—Assuring Proper Payments to

12 Disproportionate Share Hospitals

13 SEC. 7441. ASSURING PROPER PAYMENTS TO DISPROPOR14 TIONATE SHARE HOSPITALS.

15 (a) DISPROPORTIONATE SHARE HOSPITALS RE16 QUIRED TO PROVIDE MINIMUM LEVEL OF SERVICES TO

17 MEDICAID PATIENTS.—Section 1923 (42 U.S.C. 1396r–4)

18 is amended—

19 (1) in subsection (a)(1)(A), by striking ‘‘require20 ment’’ and inserting ‘‘requirements’’;

21 (2) in subsection (b)(1), by striking ‘‘require22 ment’’ and inserting ‘‘requirements’’;

23 (3) in the heading to subsection (d), by striking

24 ‘‘REQUIREMENT’’ and inserting ‘‘REQUIREMENTS’’;
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1 (4) by adding at the end of subsection (d) the fol2 lowing new paragraph:

3 ‘‘(3) No hospital may be defined or deemed as a

4 disproportionate share hospital under a State plan

5 under this title or under subsection (b) or (e) of this

6 section unless the hospital has a medicaid inpatient

7 utilization rate (as defined in subsection (b)(2)) of

8 not less than 1 percent.’’;

9 (5) in subsection (e)(1)—

10 (A) by striking ‘‘and’’ before ‘‘(B)’’, and

11 (B) by inserting before the period at the end

12 the following: ‘‘, and (C) the plan meets the re13 quirement of subsection (d)(3) and such payment

14 adjustments are made consistent with the fourth

15 sentence of subsection (c)’’; and

16 (6) in subsection (e)(2)—

17 (A) in subparagraph (A), by inserting

18 ‘‘(other than the fourth sentence of subsection

19 (c))’’ after ‘‘(c)’’,

20 (B) by striking ‘‘and’’ at the end of sub21 paragraph (A),

22 (C) by striking the period at the end of sub23 paragraph (B) and inserting ‘‘, and’’, and

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

25 subparagraph:
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1 ‘‘(C) subsection (d)(3) shall apply.’’.

2 (b) LIMITING AMOUNT OF PAYMENT ADJUSTMENTS

3 FOR STATE OR COUNTY HOSPITALS TO UNCOVERED

4 COSTS.—Subsection (c) of section 1923 (42 U.S.C. 1396r–

5 4) is amended by adding at the end the following: ‘‘A pay6 ment adjustment during a year is not considered to be con7 sistent with this subsection with respect to a hospital owned

8 or operated by a State (or by an instrumentality of, or a

9 unit of government within, a State) if the payment adjust10 ment exceeds the costs incurred during the year of furnish11 ing hospital services (as determined by the Secretary and

12 net of payments under this title, other than under this sec13 tion, and by uninsured patients) by the hospital to individ14 uals who either are eligible for medical assistance under the

15 State plan or have no health insurance (or other source of

16 third party coverage) for services provided during the year.

17 For purposes of the preceding sentence, payments made to

18 a hospital for services provided to indigent patients made

19 by a State or a unit of local government within a State

20 shall not be considered to be a source of third party pay21 ment.’’.

22 (c) EFFECTIVE DATE.—The amendments made by this

23 section shall apply to payments to States under section

24 1903(a) of the Social Security Act which are for payments
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1 to hospitals made under State plans after the end of the

2 State fiscal year that ends during 1995.

3 Subpart F—Anti-Fraud and Abuse Provisions

4 SEC. 7451. APPLICATION OF MEDICARE RULES LIMITING

5 CERTAIN PHYSICIAN REFERRALS.

6 (a) IN GENERAL.—Section 1903(i) (42 U.S.C.

7 1396b(i)), as amended by subsection (b), is amended—

8 (1) in paragraph (12), by striking ‘‘or’’ at the

9 end,

10 (2) in paragraph (13), by striking the period at

11 the end and inserting ‘‘; or’’, and

12 (3) by inserting after paragraph (13) the follow13 ing new paragraph:

14 ‘‘(14) with respect to any amount expended for

15 an item or service for which payment would be denied

16 under section 1877(g)(1) if the item or service were

17 furnished to an individual entitled to benefits under

18 title XVIII.’’.

19 (b) REDESIGNATIONS.—Section 1903(i) (42 U.S.C.

20 1396b(i)), as amended by section 2(b)(2) of the Medicaid

21 Voluntary Contribution and Provider-Specific Tax Amend22 ments of 1991, is amended—

23 (1) by redesignating the paragraph (12) inserted

24 by section 4752(a)(2) of OBRA–1990 as paragraph

25 (11), by transferring and inserting it after the para-
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1 graph (10) inserted by section 4401(a)(1)(B) of

2 OBRA–1990, and by striking the period at the end

3 and inserting a semicolon;

4 (2) by redesignating the paragraph (14) inserted

5 by section 4752(e) of OBRA–1990 as paragraph (12),

6 by transferring and inserting it after paragraph (11),

7 as redesignated by paragraph (2), and by striking the

8 period at the end and inserting ‘‘; or’’; and

9 (3) by redesignating the paragraph (11) inserted

10 by section 4801(e)(16)(A) of OBRA–1990 as para11 graph (13) and by transferring and inserting it after

12 paragraph (12), as redesignated by paragraph (3),

13 and by striking ‘‘; or’’ and inserting a period.

14 (c) EFFECTIVE DATE.—The amendment made by sub15 section (a) shall apply to items and services furnished on

16 or after October 1, 1993.

17 PART II—OTHER MEDICAID PROVISIONS

18 SEC. 7501. EXTENSION OF DEMONSTRATION PROJECT ON

19 THE EFFECT OF ALLOWING STATES TO EX20 TEND MEDICAID COVERAGE TO CERTAIN

21 LOW-INCOME FAMILIES.

22 (a) IN GENERAL.—Section 4745 of OBRA–1990 is

23 amended—

24 (1) in paragraph (1) of subsection (e), by strik25 ing ‘‘$12,000,000 in each of fiscal years 1991, 1992,
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1 and 1993, and to no more than $4,000,000 in fiscal

2 year 1994’’ and inserting ‘‘$40,000,000’’; and

3 (2) in paragraph (2) of subsection (f) by striking

4 ‘‘January 1, 1995’’ and inserting ‘‘one year after the

5 termination of the projects’’.

6 (b) EFFECTIVE DATE.—The amendments made by

7 paragraph (1) shall take effect as if included in the enact8 ment of OBRA–1990.

9 Subtitle C—Income Security

10 Programs

11 SEC. 7601. MATCHING OF STATE ADMINISTRATIVE COSTS.

12 (a) AFDC MATCHING.—Section 403(a)(3) (42 U.S.C.

13 603(a)(3)) is amended to read as follows:

14 ‘‘(3) in the case of any State, 50 percent of the

15 total amounts expended during such quarter as found

16 necessary by the Secretary for the proper and efficient

17 administration of the State plan, except that no pay18 ment shall be made with respect to amounts expended

19 in connection with the provision of any service de20 scribed in section 2002(a) of this Act other than serv21 ices furnished pursuant to section 402(g); and’’.

22 (b) TERRITORIAL PROGRAMS FOR AGED, BLIND, AND

23 DISABLED.—Sections 3(a)(4), 1003(a)(3), 1403(a)(3), and

24 1603(a)(4) (42 U.S.C. 303(a)(3), 1203(a)(3), 1353(a)(3),

25 and 1383 note) (as in effect as provided by section 303 of
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1 the Social Security Amendments of 1972) are each amended

2 by striking ‘‘the sum of’’ and all that follows and inserting

3 ‘‘50 percent of the total amounts expended during such

4 quarter as found necessary by the Secretary for the proper

5 and efficient administration of the State plan.’’.

6 (c) REQUIREMENTS FOR ATTESTING TO CITIZENSHIP

7 STATUS.—Paragraph (1)(A) of section 1137(d) (42 U.S.C.

8 1320b–7(d)) is amended to read as follows:

9 ‘‘(1)(A) The State shall require, as a condition

10 of an individual’s eligibility for benefits under a pro11 gram listed in subsection (b), a declaration in writ12 ing, under penalty of perjury—

13 ‘‘(i) by the individual,

14 ‘‘(ii) in the case in which eligibility for pro15 gram benefits is determined on a family or

16 household basis, by any adult member of such in17 dividual’s family or household (as applicable), or

18 ‘‘(iii) in the case of an individual born into

19 a family or household receiving benefits under

20 such program, by any adult member of such

21 family or household no later than the next rede22 termination of eligibility of such family or

23 household following the birth of such individual,

24 stating whether the individual is a citizen or national

25 of the United States, and, if that individual is not a
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1 citizen or national of the United States, that the indi2 vidual is in a satisfactory immigration status.’’.

3 (d) EFFECTIVE DATES.—

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

6 (A) subsections (a) and (b) shall be effective

7 with respect to calendar quarters beginning on

8 or after April 1, 1994, and

9 (B) subsection (c) shall be effective on and

10 after the date of the enactment of this Act.

11 (2) SPECIAL RULE.—In the case of a State whose

12 legislature meets biennially, and does not have a reg13 ular session scheduled in calendar year 1994, the

14 amendments made by subsections (a) and (b) shall be

15 effective no later than the first day of the first cal16 endar quarter beginning after the close of the first

17 regular session of the State legislature that begins

18 after the date of enactment of this Act.

19 SEC. 7602. STATE PATERNITY ESTABLISHMENT PROGRAMS.

20 (a) PERFORMANCE STANDARDS FOR STATE PATER21 NITY ESTABLISHMENT PROGRAMS.— Section 452(g) (42

22 U.S.C. 652(g)) is amended—

23 (1) in paragraph (1)—

24 (A) by striking ‘‘1991’’ and inserting

25 ‘‘1994’’;
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1 (B) by inserting ‘‘is based on reliable data

2 and’’ before ‘‘equals or exceeds’’; and

3 (C) by striking subparagraphs (A), (B), and

4 (C) and inserting the following new subpara5 graphs:

6 ‘‘(A) 75 percent;

7 ‘‘(B) for a State with a paternity establish8 ment percentage of not less than 50 percent but

9 less than 75 percent for such fiscal year, the pa10 ternity establishment percentage of the State for

11 the immediately preceding fiscal year plus 3 per12 centage points; or

13 ‘‘(C) for a State with a paternity establish14 ment percentage of less than 50 percent for such

15 fiscal year, the paternity establishment percent16 age of the State for the immediately preceding

17 fiscal year plus 6 percentage points.’’; and

18 (2) in paragraph (2)—

19 (A) by striking ‘‘(or under all such plans)’’

20 each place it appears;

21 (B) by inserting ‘‘or part (E)’’ after ‘‘under

22 part A’’ each place it appears;

23 (C) by striking subparagraph (B) and in24 serting the following new subparagraph:
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1 ‘‘(B) the term ‘reliable data’ means the most

2 recent data available which are found by the

3 Secretary to be reliable for purposes of this sec4 tion.’’;

5 (D) by inserting ‘‘unless paternity is estab6 lished for such child’’ after ‘‘the death of a par7 ent’’; and

8 (E) by inserting ‘‘or any child with respect

9 to whom the State agency administering the

10 plan under part E determines (as provided in

11 section 454(4)(B)) that it is against the best in12 terest of such child to do so’’ after ‘‘cooperate

13 under section 402(a)(26)’’.

14 (b) STATE PLAN REQUIREMENTS FOR THE ESTAB15 LISHMENT OF PATERNITY.—Section 466(a) (42 U.S.C.

16 666(a)) is amended—

17 (1) in paragraph (2)—

18 (A) by striking ‘‘at the option of the State,’’;

19 and

20 (B) by inserting ‘‘or paternity establish21 ment’’ after ‘‘support order issuance and enforce22 ment’’;

23 (2) in paragraph (5) by adding at the end the

24 following new subparagraphs:
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1 ‘‘(C) Procedures for a simple civil process

2 for voluntarily acknowledging paternity under

3 which the State must provide that the rights and

4 responsibilities of acknowledging paternity are

5 explained and ensure that due process safeguards

6 are afforded. Such procedures must include (i) a

7 hospital-based program for the voluntary ac8 knowledgment of paternity during the period im9 mediately preceding or following the birth of a

10 child, and (ii) the inclusion of signature lines on

11 applications for official birth certificates which,

12 once signed by the father and the mother, con13 stitute a voluntary acknowledgment of paternity.

14 ‘‘(D) Procedures under which the voluntary

15 acknowledgment of paternity creates a rebuttable,

16 or at the option of the State, conclusive presump17 tion of paternity, and under which such vol18 untary acknowledgment is admissible as evidence

19 of paternity.

20 ‘‘(E) Procedures under which the voluntary

21 acknowledgment of paternity must be recognized

22 as a basis for seeking a support order without

23 first requiring any further proceedings to estab24 lish paternity.
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1 ‘‘(F) Procedures which provide that (i) any

2 objection to genetic testing results must be made

3 in writing within a specified number of days be4 fore any hearing at which such results may be

5 introduced into evidence, and (ii) if no objection

6 is made, the test results are admissible as evi7 dence of paternity without the need for founda8 tion testimony or other proof of authenticity or

9 accuracy.

10 ‘‘(G) Procedures which create a rebuttable

11 or, at the option of the State, conclusive pre12 sumption of paternity upon genetic testing re13 sults indicating a threshold probability of the al14 leged father being the father of the child.

15 ‘‘(H) Procedures requiring a default order

16 to be entered in a paternity case upon a showing

17 of service of process on the defendent and any

18 additional showing required by State law.’’; and

19 (3) by inserting after paragraph (10) the follow20 ing new paragraph:

21 ‘‘(11) Procedures under which a State must give

22 full faith and credit to a determination of paternity

23 made by any other State, whether established through

24 voluntary acknowledgment or through administrative

25 or judicial processes.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by this

2 section shall become effective with respect to a State on the

3 later of—

4 (1) October 1, 1993 or,

5 (2) the date of enactment by the legislature of

6 such State of all laws required by such amendments,

7 but in no event later than the first day of the first calendar

8 quarter beginning after the close of the first regular session

9 of the State legislature that begins after the date of enact10 ment of this Act. For purposes of the previous sentence, in

11 the case of a State that has a 2-year legislative session, each

12 year of such session shall be deemed to be a separate regular

13 session of the State legislature.

14 SEC. 7603. FEES FOR FEDERAL ADMINISTRATION OF STATE

15 SUPPLEMENTARY PAYMENTS.

16 (a) IN GENERAL.—

17 (1) OPTIONAL STATE SUPPLEMENTARY PAY18 MENTS.—Section 1616(d) (42 U.S.C. 1382e(d)) is

19 amended—

20 (A) by inserting ‘‘(1)’’ after ‘‘(d)’’;

21 (B) by inserting ‘‘, plus an administration

22 fee assessed in accordance with paragraph (2)

23 and any additional services fee charged in ac24 cordance with paragraph (3)’’ before the period;

25 and
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1 (C) by adding after and below the end the

2 following:

3 ‘‘(2)(A) The Secretary shall assess each State an ad4 ministration fee in an amount equal to—

5 ‘‘(i) the number of supplementary payments

6 made by the Secretary on behalf of the State under

7 this section for any month in a fiscal year; multiplied

8 by

9 ‘‘(ii) the applicable rate for the fiscal year.

10 ‘‘(B) As used in subparagraph (A), the term ‘applica11 ble rate’ means—

12 ‘‘(i) for fiscal year 1995, $1.67;

13 ‘‘(ii) for fiscal year 1996, $3.33;

14 ‘‘(iii) for fiscal year 1997, $5.00; and

15 ‘‘(iv) for fiscal year 1998 and each succeeding

16 fiscal year, $5.00, or such different rate as the Sec17 retary determines pursuant to criteria established in

18 regulations is appropriate for the State, taking into

19 account the complexity of the State’s supplementary

20 payment program.

21 ‘‘(C) All fees collected pursuant to this paragraph shall

22 be transferred to the United States at the same time that

23 amounts for such supplementary payments are required to

24 be so transferred.
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1 ‘‘(3)(A) The Secretary shall charge a State an addi2 tional services fee if, at the request of the State, the Sec3 retary provides additional services beyond the level cus4 tomarily provided, in the administration of State supple5 mentary payments pursuant to this section.

6 ‘‘(B) The additional services fee shall be in an amount

7 that the Secretary determines is necessary to cover all costs

8 (including indirect costs) incurred by the Federal Govern9 ment in furnishing the additional services referred to in

10 subparagraph (A).

11 ‘‘(C) The additional services fee shall be payable in

12 advance or by way of reimbursement.

13 ‘‘(4) All administration fees and additional services

14 fees collected pursuant to this subsection shall be deposited

15 in the general fund of the Treasury of the United States

16 as miscellaneous receipts.’’.

17 (2) MANDATORY STATE SUPPLEMENTARY PAY18 MENTS.—Section 212(b)(3) of Public Law 93–66 (42

19 U.S.C. 1382 note) is amended—

20 (A) by inserting ‘‘(A)’’ after ‘‘(3)’’;

21 (B) by inserting ‘‘, plus an administration

22 fee assessed in accordance with subparagraph

23 (B) and any additional services fee charged in

24 accordance with subparagraph (C)’’ before the

25 period; and
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1 (C) by adding after and below the end the

2 following:

3 ‘‘(B)(i) The Secretary shall assess each State an ad4 ministration fee in an amount equal to—

5 ‘‘(I) the number of supplementary payments

6 made by the Secretary on behalf of the State under

7 this subsection for any month in a fiscal year; multi8 plied by

9 ‘‘(II) the applicable rate for the fiscal year.

10 ‘‘(ii) As used in clause (i), the term ‘applicable rate’

11 means—

12 ‘‘(I) for fiscal year 1995, $1.67;

13 ‘‘(II) for fiscal year 1996, $3.33;

14 ‘‘(III) for fiscal year 1997, $5.00; and

15 ‘‘(IV) for fiscal year 1998 and each succeeding

16 fiscal year, $5.00, or such different rate as the Sec17 retary determines pursuant to regulations established

18 in regulations is appropriate for the State, taking

19 into account the complexity of the State’s supple20 mentary payment program.

21 ‘‘(iii) All fees collected pursuant to this subparagraph

22 shall be transferred to the United States at the same time

23 that amounts for such supplementary payments are re24 quired to be so transferred.
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1 ‘‘(C)(i) The Secretary shall charge a State an addi2 tional services fee if, at the request of the State, the Sec3 retary provides additional services beyond the level cus4 tomarily provided, in the administration of State supple5 mentary payments pursuant to this subsection.

6 ‘‘(ii) The additional services fee shall be in an amount

7 that the Secretary determines is necessary to cover all costs

8 (including indirect costs) incurred by the Federal Govern9 ment in furnishing the additional services referred to in

10 clause (i).

11 ‘‘(iii) The additional services fee shall be payable in

12 advance or by way of reimbursement.

13 ‘‘(D) All administration fees and additional services

14 fees collected pursuant to this paragraph shall be deposited

15 in the general fund of the Treasury of the United States

16 as miscellaneous receipts.’’.

17 (b) EFFECTIVE DATE.—The amendments made by this

18 section shall apply to supplementary payments made pur19 suant to section 1616(a) of the Social Security Act or sec20 tion 212(a) of Public Law 93–66 for any calendar month

21 beginning after September 30, 1994, and to services fur22 nished after such date, regardless of whether regulations to

23 implement such amendments have been promulgated by

24 such date, or whether any agreement entered into under
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1 such section 1616(a) or such section 212(a) has been modi2 fied.

3 Subtitle D—Miscellaneous

4 Provisions

5 PART I—TRADE PROVISIONS

6 SEC. 7701. EXTENSION OF AUTHORITY TO LEVY CUSTOMS

7 USER FEES.

8 Section 13031(j)(3) of the Consolidated Omnibus

9 Budget Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is

10 amended by striking out ‘‘1995’’ and inserting ‘‘1998’’.

11 SEC. 7702. EXTENSION OF, AND AUTHORIZATION OF APPRO12 PRIATIONS FOR, TRADE ADJUSTMENT AS13 SISTANCE PROGRAM.

14 (a) EXTENSION.—Section 285 of the Trade Act of 1974

15 (19 U.S.C. 2271, preceding note) is amended—

16 (1) by striking ‘‘No’’ and all that follows through

17 ‘‘and no duty’’ in subsection (b) and inserting ‘‘No

18 duty’’; and

19 (2) by adding at the end the following new sub20 section:

21 ‘‘(c) No assistance, vouchers, allowances, or other pay22 ments may be provided under chapter 2, and no technical

23 assistance may be provided under chapter 3, after Septem24 ber 30, 1998.’’.

25 (b) AUTHORIZATION OF APPROPRIATIONS.—
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1 (1) CHAPTER 2 ADJUSTMENT ASSISTANCE.—Sec2 tion 245 of the Trade Act of 1974 (19 U.S.C. 2317)

3 is amended by striking ‘‘1988, 1989, 1990, 1991,

4 1992, and 1993’’ and inserting ‘‘1993, 1994, 1995,

5 1996, 1997, and 1998’’.

6 (2) CHAPTER 3 ADJUSTMENT ASSISTANCE.—Sec7 tion 256(b) of such Act (19 U.S.C. 2346(b)) is amend8 ed by striking ‘‘1988, 1989, 1990, 1991, 1992, and

9 1993’’ and inserting ‘‘1993, 1994, 1995, 1996, 1997,

10 and 1998’’.

11 PART II—IMPROVED ACCESS TO CHILDHOOD

12 IMMUNIZATIONS

13 SEC. 7801. REIMBURSEMENT TO VACCINE MANUFACTUR14 ERS.

15 (a) IN GENERAL.—Section 1902(a)(32) (42 U.S.C.

16 1396a(32)) is amended—

17 (1) by striking ‘‘and’’ at the end of subpara18 graph (B);

19 (2) by striking the period at the end of subpara20 graph (C) and inserting ‘‘; and’’; and

21 (3) by adding at the end the following new sub22 paragraph:

23 ‘‘(D) nothing in this paragraph shall be

24 construed to prevent the making of such payment
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1 to a manufacturer of a childhood vaccine under

2 a contract with the State pursuant to which the

3 manufacturer participates in a vaccine replace4 ment program described in subsection (z).’’.

5 (b) STATE VACCINE BULK PURCHASE PROGRAM.—

6 Section 1902 (42 U.S.C. 1396a) is amended by adding after

7 paragraph (58) the following new paragraph:

8 ‘‘(59) provide for the establishment of a State

9 vaccine bulk purchase program for the purchase of pe10 diatric vaccines.’’

11 and by adding at the end the following new subsection:

12 ‘‘(z)(1) For purposes of section 1396a(a)(59), a vaccine

13 replacement program described in this subsection is a vac14 cine bulk purchase program under which a State with a

15 State plan approved under this title contracts with each

16 manufacturer of childhood vaccines selling such vaccines in

17 the State to—

18 ‘‘(A) supply doses of childhood vaccines to pro19 viders (or in the case of a State medicaid vaccine pro20 gram, the State) administering such vaccines to indi21 viduals eligible to receive medical assistance under the

22 State plan and replace such vaccines as needed; and

23 ‘‘(B) charge the State agency for such doses of

24 childhood vaccine the price under the most recent bid

25 (determined once such a bid price is made public)
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1 submitted by a manufacturer which receives the Cen2 ters for Disease Control and Prevention contract with

3 respect to the childhood immunization program under

4 the Public Health Services Act, plus a reasonable fee

5 to cover shipping and handling of returns for such

6 doses.

7 ‘‘(2) Any manufacturer of childhood vaccines selling

8 such vaccines in a State which does not participate in a

9 vaccine replacement program described in paragraph (1)

10 which is operated in such State shall be ineligible to bid

11 for Centers for Disease Control and Prevention Immuniza12 tion contracts under section 317(j) of the Public Health

13 Services Act.’’.

14 (c) DEFINITION OF STATE VACCINE BULK PURCHASE

15 PROGRAM.—Section 1902 (42 U.S.C. 1396d) is amended by

16 adding at the end the following new subsection:

17 ‘‘(t) VACCINE BULK PURCHASE PROGRAM.—The term

18 ‘vaccine bulk purchase program’ means a State program

19 which purchases vaccines at prices negotiated by the Centers

20 for Disease Control and Prevention’s childhood immuniza21 tion program and distributes such vaccines free of charge

22 to entities providing medical assistance to individuals eligi23 ble for such medical assistance under this title.’’.

24 (d) AGREEMENT WITH THE STATE.—Section

25 1902(a)(27) (42 U.S.C. 1396a(a)(27)) is amended—
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1 (1) by striking ‘‘under the State plan’’, and in2 serting ‘‘under the State plan and with any entity

3 that is a manufacturer of a childhood vaccine under

4 a contract with the State pursuant to which the man5 ufacturer participates in a vaccine replacement pro6 gram described in subsection (z)’’; and

7 (2) by striking ‘‘such person or institution’’ each

8 place it appears and inserting ‘‘such person, institu9 tion, or entity’’.

10 (e) CDC PRICE PLUS CPI.—To the extent that, at the

11 date of enactment, a specific vaccine is purchased under

12 contract with the Centers for Disease Control and Preven13 tion as provided in the Public Health Service Act, no bid

14 for the purchase of such vaccine shall be accepted by the

15 Centers for Disease Control and Prevention if the price per

16 dose of such vaccine exceeds the price in effect on the date

17 of enactment increased by the percentage increase in CPI

18 from date of the contract in effect on the date of the enact19 ment to the date of the contract. This provision shall be

20 in effect for contracts made in fiscal year 1994 through fis21 cal year 1998.

22 (f) MULTIPLE SUPPLIERS.—The Public Health Service

23 provisions relating to the Centers for Disease Control and

24 Prevention purchase of vaccine may not be construed as

25 prohibiting the Secretary from entering into a contract
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1 with each manufacturer of a vaccine that meets the terms

2 and conditions of the Secretary for an award of such a con3 tract (including terms and conditions regarding safety,

4 quality, and price).

5 SEC. 7802. STATE OPTION TO PROVIDE THAT CERTAIN PAY6 MENTS UNDER AFDC ARE CONDITIONED ON

7 RECEIPT OF IMMUNIZATIONS.

8 (a) IN GENERAL.—Section 402 (42 U.S.C. 602) is

9 amended—

10 (1) in paragraph (44), by striking ‘‘; and’’ and

11 inserting a semicolon;

12 (2) in paragraph (45) by striking the period at

13 the end and inserting ‘‘; and’’; and

14 (3) by adding at the end the following new para15 graph:

16 ‘‘(46) at the option of the State, provide that if

17 a family receiving aid to families with dependent

18 children for any month includes a child under the age

19 of 6 who has not received appropriate immunizations

20 (as determined by the State), the State will take ac21 tions to encourage the timely immunization of such

22 child including, but not limited to, reducing the total

23 benefits received by such family for such month by all

24 or a portion of the benefits allocable to the parent or

25 guardian of such child and either—
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1 ‘‘(A) placing all or a portion of such

2 amount in an account until the family dem3 onstrates to the State that such child has been

4 appropriately immunized; or

5 ‘‘(B) using all or a portion of such amount

6 to provide services to such family intended to en7 sure that such child receives appropriate immu8 nizations.’’.

9 (b) STATE PROGRAMS TO ENCOURAGE APPROPRIATE

10 IMMUNIZATIONS.—

11 (1) IN GENERAL.—The Secretary of Health and

12 Human Services (hereafter referred to in this sub13 section as the ‘‘Secretary’’) shall provide for the estab14 lishment or programs intended to ensure the appro15 priate immunization of children to be operated in the

16 States electing to take actions to encourage the timely

17 immunization of children described in section

18 402(a)(46) of the Social Security Act.

19 (2) PAYMENTS TO STATES AND LIMITS ON FUND20 ING.—

21 (A) PAYMENTS TO STATES.—Except as pro22 vided in subparagraph (B), the Secretary shall

23 pay to each State conducting a program under

24 this subsection for each quarter in which such

25 program is conducted an amount equal such
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1 State’s Federal percentage (as determined under

2 section 403(a) of the Social Security Act) of the

3 expenditures incurred by such State during such

4 quarter in conducting such program.

5 (B) LIMITS ON FUNDING.—In conducting

6 programs under this subsection, the Secretary

7 shall limit the total amount of the Federal share

8 of expenses incurred under title IV and section

9 1903 of the Social Security Act to no more than

10 $250,000 for each State in any year.

11 (c) EFFECTIVE DATE.—The amendment made by sub12 section (a) and the provisions of subsection (b) shall become

13 effective on the date of the enactment of this Act.

14 PART III—DISCLOSURE PROVISIONS

15 SEC. 7901. DISCLOSURE OF RETURN INFORMATION FOR AD16 MINISTRATION OF CERTAIN VETERANS PRO17 GRAMS.

18 (a) GENERAL RULE.—Subparagraph (D) of section

19 6103(l)(7) of the Internal Revenue Code of 1986 (relating

20 to disclosure of return information to Federal, State, and

21 local agencies administering certain programs) is amended

22 by striking ‘‘September 30, 1997’’ in the second sentence

23 following clause (viii) and inserting ‘‘September 30, 1998’’.

24 (b) AUTHORITY FOR SECRETARY OF VETERANS AF25 FAIRS TO OBTAIN INFORMATION.—Section 5317(g) of title
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1 38, United States Code, is amended by striking out ‘‘Sep2 tember 30, 1997’’ and inserting ‘‘September 30, 1998’’.

3 (c) EFFECTIVE DATE.—The amendments made by this

4 section shall take effect on the date of the enactment of this

5 Act.

6 SEC. 7902. DISCLOSURE OF RETURN INFORMATION TO

7 CARRY OUT INCOME CONTINGENT REPAY8 MENT OF STUDENT LOANS.

9 (a) GENERAL RULE.—Subsection (l) of section 6103

10 of the Internal Revenue Code of 1986 (relating to confiden11 tiality and disclosure of returns and return information)

12 is amended by adding at the end thereof the following new

13 paragraph:

14 ‘‘(13) DISCLOSURE OF RETURN INFORMATION TO

15 CARRY OUT INCOME CONTINGENT REPAYMENT OF STU16 DENT LOANS.—

17 ‘‘(A) IN GENERAL.—The Secretary may,

18 upon written request from the Secretary of Edu19 cation, disclose to officers and employees of the

20 Department of Education return information

21 with respect to a taxpayer who has received an

22 applicable student loan and whose loan repay23 ment amounts are based in whole or in part on

24 the taxpayer’s income. Such return information

25 shall be limited to—
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1 ‘‘(i) taxpayer identity information

2 with respect to such taxpayer,

3 ‘‘(ii) the filing status of such taxpayer,

4 and

5 ‘‘(iii) the adjusted gross income of such

6 taxpayer.

7 ‘‘(B) RESTRICTION ON USE OF DISCLOSED

8 INFORMATION.—Return information disclosed

9 under subparagraph (A) may be used by officers

10 and employees of the Department of Education

11 only for the purposes of, and to the extent nec12 essary in, establishing the appropriate income

13 contingent repayment amount for an applicable

14 student loan.

15 ‘‘(C) APPLICABLE STUDENT LOAN.—For

16 purposes of this paragraph, the term ‘applicable

17 student loan’ means—

18 ‘‘(i) any loan made under the program

19 authorized under part D of title IV of the

20 Higher Education Act of 1965, and

21 ‘‘(ii) any loan made under part B or

22 E of title IV of the Higher Education Act

23 of 1965 which is in default and has been as24 signed to the Department of Education.
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1 ‘‘(D) TERMINATION.—This paragraph shall

2 not apply to any request made after September

3 30, 1998.’’

4 (b) CONFORMING AMENDMENTS.—

5 (1) So much of paragraph (4) of section 6103(m)

6 of such Code as precedes subparagraph (B) thereof is

7 amended to read as follows:

8 ‘‘(4) INDIVIDUALS WHO OWE AN OVERPAYMENT

9 OF FEDERAL PELL GRANTS OR WHO HAVE DE10 FAULTED ON STUDENT LOANS ADMINISTERED BY THE

11 DEPARTMENT OF EDUCATION.—

12 ‘‘(A) IN GENERAL.—Upon written request

13 by the Secretary of Education, the Secretary

14 may disclose the mailing address of any tax15 payer—

16 ‘‘(i) who owes an overpayment of a

17 grant awarded to such taxpayer under sub18 part 1 of part A of title IV of the Higher

19 Education Act of 1965, or

20 ‘‘(ii) who has defaulted on a loan—

21 ‘‘(I) made under part B, D, or E

22 of title IV of the Higher Education Act

23 of 1965, or

24 ‘‘(II) made pursuant to section

25 3(a)(1) of the Migration and Refugee
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1 Assistance Act of 1962 to a student at

2 an institution of higher education,

3 for use only by officers, employees, or agents of

4 the Department of Education for purposes of lo5 cating such taxpayer for purposes of collecting

6 such overpayment or loan .’’

7 (2) Subparagraph (B) of section 6103(m)(4) of

8 such Code is amended—

9 (A) in clause (i), by striking ‘‘under part

10 B’’ and inserting ‘‘under part B or D’’; and

11 (B) in clause (ii), by striking ‘‘under part

12 E’’ and inserting ‘‘under subpart 1 of part A, or

13 part D or E,’’;

14 (3) Section 6103(p) of such Code is amended—

15 (A) in paragraph (3)(A), by striking ‘‘(11),

16 or (12), (m)’’ and inserting ‘‘(11), (12), or (13),

17 (m)’’;

18 (B) in paragraph (4)—

19 (i) in the matter preceding subpara20 graph (A), by striking out ‘‘(10), or (11),’’

21 and inserting ‘‘(10), (11), or (13),’’, and

22 (ii) in subparagraph (F)(ii), by strik23 ing ‘‘(11), or (12),’’ and inserting ‘‘(11),

24 (12), or (13),’’.
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1 (c) EFFECTIVE DATE.—The amendments made by this

2 section shall take effect on the date of the enactment of this

3 Act.

4 SEC. 7903. USE OF RETURN INFORMATION FOR INCOME

5 VERIFICATION UNDER CERTAIN HOUSING AS6 SISTANCE PROGRAMS.

7 (a) IN GENERAL.—Subparagraph (D) of section

8 6103(l)(7) of the Internal Revenue Code of 1986 (relating

9 to the disclosure of return information to Federal, State,

10 and local agencies administering certain programs) is

11 amended—

12 (1) in clause (vii), by striking ‘‘and’’ at the end;

13 (2) in clause (viii), by striking the period at the

14 end and inserting ‘‘; and’’;

15 (3) by inserting after clause (viii) the following

16 new clause:

17 ‘‘(ix) any housing assistance program adminis18 tered by the Department of Housing and Urban De19 velopment that involves initial and periodic review of

20 an applicant’s or participant’s income, except that

21 return information may be disclosed under this clause

22 only on written request by the Secretary of Housing

23 and Urban Development and only for use by officers

24 and employees of the Department of Housing and
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1 Urban Development with respect to applicants for

2 and participants in such programs.’’; and

3 (4) by adding at the end thereof the following:

4 ‘‘Clause (ix) shall not apply after September 30,

5 1998.’’

6 (b) CONFORMING AMENDMENT.—The heading of para7 graph (7) of section 6103(l) of such Code is amended by

8 inserting after ‘‘CODE’’ the following: ‘‘, OR CERTAIN HOUS9 ING ASSISTANCE PROGRAMS’’.

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

11 section shall take effect on the date of the enactment of this

12 Act.

13 SEC. 7904. USE OF RETURN INFORMATION FOR HEALTH

14 COVERAGE CLEARINGHOUSE.

15 (a) ESTABLISHMENT OF HEALTH COVERAGE CLEAR16 INGHOUSE.—Part A of title XI (42 U.S.C. 1301 et seq.) is

17 amended by adding at the end the following new section:

18 ‘‘THIRD PARTY LIABILITY CLEARINGHOUSE

19 ‘‘SEC. 1144. (a) ESTABLISHMENT OF CLEARING20 HOUSE.—

21 ‘‘(1) IN GENERAL.—The Secretary shall establish

22 and operate a Third Party Liability Clearinghouse

23 (hereafter in this section referred to as the ‘Clearing24 house’) for the purpose of identifying third parties re25 sponsible for payment for health care items and serv26 ices furnished to beneficiaries of the medicare pro-
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1 gram under title XVIII and the medicaid program

2 under title XIX.

3 ‘‘(2) DIRECTOR.—The Clearinghouse established

4 pursuant to paragraph (1) shall be headed by a Di5 rector.

6 ‘‘(b) DATA BANK.—

7 ‘‘(1) MAINTENANCE OF INFORMATION.—The

8 Clearinghouse shall maintain a data bank containing

9 information obtained pursuant to section 6103(l)(12)

10 of the Internal Revenue Code of 1986. Information in

11 the data bank shall be retained for not less than 1

12 year after the date the information was obtained.

13 ‘‘(2) DISCLOSURE OF INFORMATION IN DATA

14 BANK.—The Director is authorized (subject to the re15 striction in section 6103(l)(12)(E)(i) of the Internal

16 Revenue Code of 1986) to disclose any information in

17 the data bank established pursuant to paragraph (1)

18 to the Commissioner of Social Security, the Secretary

19 of the Treasury, employers, group health plans, the

20 administrator of the medicare program under title

21 XVIII, and the administrators of the medicaid pro22 gram under title XIX, to the extent necessary to assist

23 the administration of such programs.

24 ‘‘(c) REQUIREMENT THAT EMPLOYERS FURNISH IN25 FORMATION.—
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1 ‘‘(1) IN GENERAL.—An employer shall furnish to

2 the Director the information requested pursuant to

3 section 6103(l)(12)(C)(i) of the Internal Revenue Code

4 of 1986 within 60 days after receipt of such a request.

5 ‘‘(2) CIVIL MONEY PENALTY FOR FAILURE TO CO6 OPERATE.—An employer (other than a Federal or

7 other governmental entity) who willfully or repeatedly

8 fails to provide a timely and accurate response to a

9 request for information pursuant to paragraph (1)

10 shall be subject, in addition to any other penalties

11 that may be prescribed by law, to a civil money pen12 alty of not to exceed $1,000 for each individual or in13 dividual’s spouse with respect to which such a request

14 is made. The provisions of section 1128A (other than

15 subsections (a) and (b)) shall apply to such civil

16 money penalty in the same manner as such provi17 sions apply to penalties or proceedings under section

18 1128A(a).

19 ‘‘(d) COLLECTIONS FROM THIRD PARTIES.—The Di20 rector is authorized, upon request by the administrator of

21 the medicare program under title XVIII or any adminis22 trator of the medicaid program under title XIX, to assist

23 in the collection of amounts due from liable third parties

24 to reimburse costs incurred by such program for health care

25 items and services.
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1 ‘‘(e) FEES FOR CLEARINGHOUSE SERVICES.—The Di2 rector shall establish fees for services provided under section

3 6103(l)(12)(C)(ii) of the Internal Revenue Code of 1986 and

4 subsection (d) which are designed to cover the full costs to

5 the Clearinghouse of providing such services. Clearinghouse

6 services under such section and subsection shall be available

7 subject to payment of such fees.

8 ‘‘(f) EVALUATION RESPONSIBILITIES.—The Director

9 shall evaluate methods for improving—

10 ‘‘(1) procedures for the collection, management,

11 and appropriate disclosure of health care coverage in12 formation, and

13 ‘‘(2) Federal laws and policies concerning third

14 party liability for medical care.

15 ‘‘(g) DEFINITIONS.—For purposes of this section, the

16 term ‘group health plan’ has the meaning given to such

17 term in section 6103(l)(12)(G) of the Internal Revenue Code

18 of 1986.’’.

19 (b) DISCLOSURE OF TAX RETURN INFORMATION.—

20 (1) IN GENERAL.—Paragraph (12) of section

21 6103(l) of the Internal Revenue Code of 1986, as

22 amended by section 7303, is amended to read as fol23 lows:

24 ‘‘(12) DISCLOSURE OF CERTAIN TAXPAYER RE25 TURN INFORMATION FOR PURPOSES OF IDENTIFYING
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1 HEALTH INSURANCE COVERAGE OF CERTAIN INDIVID2 UALS AND SPOUSES.—

3 ‘‘(A) RETURN INFORMATION FROM INTER4 NAL REVENUE SERVICE.—The Secretary shall,

5 upon written request from the Commissioner of

6 Social Security (referred to in this subparagraph

7 as the ‘Commissioner’), disclose to the Commis8 sioner available filing status and taxpayer iden9 tity information from the individual master files

10 of the Internal Revenue Service relating to

11 whether any individual identified by the Com12 missioner was a married individual (as defined

13 in section 7703) for any specified year after

14 1986, and, if so, the name of the spouse of such

15 individual and such spouse’s TIN.

16 ‘‘(B) RETURN INFORMATION FROM SOCIAL

17 SECURITY ADMINISTRATION.—The Commissioner

18 shall, upon written request from the Director of

19 the Third Party Liability Clearinghouse (re20 ferred to in this subparagraph as the ‘Director’),

21 disclose to the Director the following information

22 with respect to the individuals, and the spouses

23 of such individuals, specified in subparagraph

24 (A):
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1 ‘‘(i) For each such individual who is

2 identified as having received wages (as de3 fined in section 3401(a)) above an amount

4 (if any) specified by the Secretary of Health

5 and Human Services from an employer in

6 a previous year—

7 ‘‘(I) the name and TIN of the in8 dividual,

9 ‘‘(II) the name, address, and TIN

10 of the employer, and

11 ‘‘(III) the information reported

12 under section 6051(a)(10).

13 ‘‘(ii) For each individual who was

14 identified as married under subparagraph

15 (A) and whose spouse is identified as hav16 ing received wages above an amount (if

17 any) specified by the Secretary of Health

18 and Human Services from an employer in

19 a previous year—

20 ‘‘(I) the name and TIN of the in21 dividual,

22 ‘‘(II) the name and TIN of the

23 spouse,

24 ‘‘(III) the name, address, and TIN

25 of the spouse’s employer, and
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1 ‘‘(IV) the information reported

2 under section 6051(a)(10) with respect

3 to the spouse.

4 ‘‘(C) DISCLOSURE BY THIRD PARTY LIABIL5 ITY CLEARINGHOUSE.—The Director may (sub6 ject to the provisions of subparagraph (E)) dis7 close—

8 ‘‘(i) with respect to the information

9 disclosed under subparagraph (B), to the

10 employer referred to in such subparagraph

11 the name and TIN of each individual iden12 tified under such subparagraph as having

13 received wages from the employer (hereafter

14 referred to in this subparagraph as the ‘em15 ployee’) for purposes of determining during

16 what period such employee or the employee’s

17 spouse may be (or have been) covered under

18 a group health plan of the employer and

19 what benefits are or were covered under the

20 plan (including the name, address, and

21 identifying number of the plan),

22 ‘‘(ii) to the administrator of the medi23 care program under title XVIII of the So24 cial Security Act or to any administrator of

25 the medicaid program under title XIX of
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1 such Act the information disclosed under

2 subparagraph (B) and clause (i) for pur3 poses of providing information concerning

4 employment and group health coverage of

5 individuals and individual’s spouses who

6 are program beneficiaries,

7 ‘‘(iii) to any agent of such Director the

8 information referred to in subparagraph

9 (B) for purposes of carrying out clauses (i)

10 and (ii) on behalf of such Director, and

11 ‘‘(iv) to any person specified in sub12 section (b)(2) of section 1144 of the Social

13 Security Act, information in the data bank

14 established pursuant to subsection (b)(1) of

15 such section, for the purposes specified in

16 such subsection.

17 ‘‘(D) DISCLOSURE BY CERTAIN PROGRAMS

18 TO GROUP HEALTH PLANS.—The administrator

19 of the medicare program under title XVIII of the

20 Social Security Act or any administrator of the

21 medicaid program under title XIX of such Act

22 may (subject to the provisions of subparagraph

23 (E)) disclose information concerning an em24 ployee or spouse disclosed to the Director pursu-
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1 ant to subparagraph (B) and redisclosed to such

2 administrator pursuant to subparagraph (C)—

3 ‘‘(i) to any group health plan which

4 provides or provided coverage to such em5 ployee or spouse, and

6 ‘‘(ii) to any agent of such adminis7 trator,

8 for purposes of identifying, or collecting on

9 claims under coverage of such employee or spouse

10 under such group health plan.

11 ‘‘(E) SPECIAL RULES.—

12 ‘‘(i) RESTRICTIONS ON DISCLOSURE.—

13 Information may be disclosed under sub14 paragraphs (A) through (D) only for pur15 poses of, and to the extent necessary in, de16 termining the extent to which any individ17 ual is covered under any group health plan.

18 ‘‘(ii) TIMELY RESPONSE TO RE19 QUESTS.—Any request made under sub20 paragraph (A) or (B) shall be complied

21 with as soon as possible but in no event

22 later than 120 days after the date the re23 quest was made.

24 ‘‘(F) DISCLOSURE CONCERNING ENFORCE25 MENT ACTIVITIES.—The Secretary shall, upon
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1 written request from the Secretary of Health and

2 Human Services, disclose to the Secretary of

3 Health and Human Services the status of any

4 activities undertaken (with respect to persons

5 specified by the Secretary of Health and Human

6 Services) to enforce the requirements of section

7 5000.

8 ‘‘(G) DEFINITIONS.—For purposes of this

9 paragraph, the term ‘group health plan’ means

10 any group health plan (as defined in section

11 5000(b)).’’.

12 (2) REPORTING OF GROUP HEALTH PLAN INFOR13 MATION.—Section 6051(a) of the Internal Revenue

14 Code of 1986 is amended—

15 (A) by striking ‘‘and’’ at the end of para16 graph (8),

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

18 paragraph (9) and inserting ‘‘, and’’, and

19 (C) by inserting after paragraph (9) the fol20 lowing new paragraph:

21 ‘‘(10) whether a group health plan (as defined in

22 section 6103(l)(12)(G)) is available to the employee

23 and the plan coverage (single or family) elected by

24 such employee (if any).’’.
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1 (c) CONFORMING AMENDMENT.—Section 1862(b)(5)

2 (42 U.S.C. 1395y(b)(5)), as amended by section 7303, is

3 amended to read as follows:

4 ‘‘(5) IDENTIFICATION OF SECONDARY PAYER SIT5 UATIONS.—In addition to any other information pro6 vided under this title to fiscal intermediaries and car7 riers, the Administrator shall disclose to such

8 intermediaries and carriers (or to such a single

9 intermediary or carrier as the Secretary may des10 ignate) the information received under section

11 6103(l)(12)(C)(ii) of the Internal Revenue Code of

12 1986.’’.

13 (d) EXCEPTION FROM PRIVACY ACT REQUIRE14 MENTS.—Subsection (a)(8)(B) of section 552a of title 5,

15 United States Code, is amended—

16 (1) in clause (v), by striking ‘‘; or’’ at the end;

17 (2) in clause (vi), by striking the semicolon at

18 the end and inserting ‘‘; or’’; and

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

20 clause:

21 ‘‘(vii) matches performed pursuant to

22 section 6103(l)(12) of the Internal Revenue

23 Code of 1986 and section 1144 of the Social

24 Security Act for the purpose of identifying

25 third parties responsible for payment for
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1 health care items and services furnished to

2 beneficiaries of certain Federal and feder3 ally assisted programs;’’.

4 (e) EFFECTIVE DATE.—The amendments made by this

5 section shall take effect on April 1, 1995.

6 PART IV—OTHER PROVISIONS

7 SEC. 7950. DISALLOWANCE OF INTEREST ON CERTAIN

8 OVERPAYMENTS OF TAX.

9 (a) GENERAL RULE.—Subsection (e) of section 6611

10 of the Internal Revenue Code of 1986 (relating to income

11 tax refund within 45 days after return is filed) is amended

12 to read as follows:

13 ‘‘(e) DISALLOWANCE OF INTEREST ON CERTAIN OVER14 PAYMENTS.—

15 ‘‘(1) REFUNDS WITHIN 45 DAYS AFTER RETURN

16 IS FILED.—If any overpayment of tax imposed by

17 this title is refunded within 45 days after the last day

18 prescribed for filing the return of such tax (deter19 mined without regard to any extension of time for fil20 ing the return) or, in the case of a return filed after

21 such last date, is refunded within 45 days after the

22 date the return is filed, no interest shall be allowed

23 under subsection (a) on such overpayment.

24 ‘‘(2) REFUNDS AFTER CLAIM FOR CREDIT OR RE25 FUND.—If—
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1 ‘‘(A) the taxpayer files a claim for a credit

2 or refund for any overpayment of tax imposed by

3 this title, and

4 ‘‘(B) such overpayment is refunded within

5 45 days after such claim is filed,

6 no interest shall be allowed on such overpayment from

7 the date the claim is filed until the day the refund is

8 made.

9 ‘‘(3) IRS INITIATED ADJUSTMENTS.—If an ad10 justment initiated by the Secretary, results in a re11 fund or credit of an overpayment, interest on such

12 overpayment shall be computed by subtracting 45

13 days from the number of days interest would other14 wise be allowed with respect to such overpayment.’’

15 (b) EFFECTIVE DATES.—

16 (1) Paragraph (1) of section 6611(e) of the Inter17 nal Revenue Code of 1986 (as amended by subsection

18 (a)) shall apply in the case of returns the due date

19 for which (determined without regard to extensions) is

20 on or after January 1, 1994.

21 (2) Paragraph (2) of section 6611(e) of such

22 Code (as so amended) shall apply in the case of

23 claims for credit or refund of any overpayment filed

24 on or after January 1, 1995, regardless of the taxable

25 period to which such refund relates.
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1 (3) Paragraph (3) of section 6611(e) of such

2 Code (as so amended) shall apply in the case of any

3 refund paid on or after January 1, 1995, regardless

4 of the taxable period to which such refund relates.

5 SEC. 7951. FEES FOR APPLICATIONS FOR ALCOHOL LABEL6 ING AND FORMULA REVIEWS.

7 (a) IN GENERAL.—The Secretary of the Treasury or

8 his delegate (hereinafter in this section referred to as the

9 ‘Secretary’) shall establish a program requiring the pay10 ment of user fees for—

11 (1) requests for each certificate of alcohol label

12 approval required under the Federal Alcohol Admin13 istration Act (27 U.S.C. 201 et seq.) and for each re14 quest for exemption from such requirement, and

15 (2) requests for each formula review, and re16 quests for each statement of process (including labora17 tory tests and analyses), under such Act or under

18 chapter 51 of the Internal Revenue Code of 1986.

19 (b) PROGRAM CRITERIA.—

20 (1) IN GENERAL.—The fees charged under the

21 program required by subsection (a) shall be deter22 mined such that the Secretary estimates that the ag23 gregate of such fees received during any fiscal year

24 will be $5,000,000.
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1 (2) MINIMUM FEES.—The fee charged under the

2 program required by subsection (a) shall not be less

3 than—

4 (A) $50 for each request referred to in sub5 section (a)(1), and

6 (B) $250 for each request referred to in sub7 section (a)(2).

8 (c) APPLICATION OF SECTION.—Subsection (a) shall

9 apply to requests made on or after the 90th day after the

10 date of the enactment of this Act.

11 (d) DEPOSIT AND CREDIT AS OFFSETTING RE12 CEIPTS.—The amounts collected by the Secretary under the

13 program required by subsection (a) (to the extent such

14 amounts do not exceed $5,000,000) shall be deposited into

15 the Treasury as offsetting receipts and ascribed to the alco16 hol compliance program of the Bureau of Alcohol, Tobacco,

17 and Firearms.

18 SEC. 7952. USE OF HARBOR MAINTENANCE TRUST FUND

19 AMOUNTS FOR ADMINISTRATIVE EXPENSES.

20 (a) IN GENERAL.—Paragraph (3) of section 9505(c)

21 of the Internal Revenue Code of 1986 (relating to expendi22 tures from Harbor Maintenance Trust Fund) is amended

23 to read as follows:

24 ‘‘(3) for the payment of all expenses of adminis25 tration incurred by the Department of the Treasury,
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1 the Army Corps of Engineers, and the Department of

2 Commerce related to the administration of subchapter

3 A of chapter 36 (relating to harbor maintenance tax),

4 but not in excess of $5,000,000 for any fiscal year.’’

5 (b) EFFECTIVE DATE.—The amendment made by sub6 section (a) shall apply to fiscal years beginning after the

7 date of the enactment of this Act.

8 SEC. 7953. INCREASE IN PRESIDENTIAL ELECTION CAM9 PAIGN FUND CHECK-OFF.

10 (a) IN GENERAL.—Section 6096(a) of the Internal

11 Revenue Code of 1986 (relating to designation by individ12 uals) is amended—

13 (1) by striking ‘‘$1’’ each place it appears and

14 inserting ‘‘$3’’, and

15 (2) by striking ‘‘$2’’ and inserting ‘‘$6’’.

16 (b) EFFECTIVE DATE.—The amendments made by sub17 section (a) apply with respect to tax returns required to

18 be filed after December 31, 1993.

19 SEC. 7954. INCREASE IN PUBLIC DEBT LIMIT.

20 (a) GENERAL RULE.—Subsection (b) of section 3101

21 of title 31, United States Code, is amended by striking out

22 the dollar limitation contained in such subsection and in23 serting in lieu thereof ‘‘$4,900,000,000,000’’.
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1 (b) REPEAL OF TEMPORARY INCREASE.—Effective on

2 and after the date of the enactment of this Act, section 1

3 of Public Law 103–12 is hereby repealed.

4 TITLE VIII—FINANCE COMMIT5 TEE REVENUE PROVISIONS

6 SEC. 8000. SHORT TITLE; ETC.

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

8 ‘‘Revenue Reconciliation Act of 1993’’.

9 (b) AMENDMENT TO 1986 CODE.—Except as otherwise

10 expressly provided, whenever in this title an amendment

11 or repeal is expressed in terms of an amendment to, or re12 peal of, a section or other provision, the reference shall be

13 considered to be made to a section or other provision of the

14 Internal Revenue Code of 1986.

15 (c) SECTION 15 NOT TO APPLY.—Except in the case

16 of the amendments made by section 8221 (relating to cor17 porate rate increase), no amendment made by this title

18 shall be treated as a change in a rate of tax for purposes

19 of section 15 of the Internal Revenue Code of 1986.

20 (d) WAIVER OF ESTIMATED TAX PENALTIES.—No ad21 dition to tax shall be made under section 6654 or 6655 of

22 the Internal Revenue Code of 1986 for any period before

23 April 16, 1994 (March 16, 1994, in the case of a corpora24 tion), with respect to any underpayment to the extent such
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1 underpayment was created or increased by any provision

2 of this title.

3 (e) TABLE OF CONTENTS.—

Sec. 8000. Short title; etc.

Subtitle A—Training and Investment Incentives

PART I—PROVISIONS RELATING TO EDUCATION AND TRAINING

Sec. 8101. Employer-provided educational assistance.

Sec. 8102. Targeted jobs credit.

PART II—INVESTMENT INCENTIVES

SUBPART A—RESEARCH CREDIT

Sec. 8111. Extension of research credit.

Sec. 8112. Modification of fixed base percentage for startup companies.

Sec. 8113. Sense of Senate regarding permanent extension of research credit.

SUBPART B—MODIFICATION TO MINIMUM TAX DEPRECIATION RULES

Sec. 8115. Modification to minimum tax depreciation rules.

SUBPART C—INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES

Sec. 8119. Increase in expense treatment for small businesses.

SUBPART D—TAX EXEMPT BONDS

Sec. 8121. Extension of qualified small issue bonds.

PART III—EXPANSION AND SIMPLIFICATION OF EARNED INCOME TAX CREDIT

Sec. 8131. Expansion and simplification of earned income tax credit.

PART IV—INCENTIVES FOR INVESTMENT IN REAL ESTATE

SUBPART A—EXTENSION OF QUALIFIED MORTGAGE BONDS AND LOW-INCOME

HOUSING CREDIT

Sec. 8141. Extension of qualified mortgage bonds.

Sec. 8141A. Sense of the Senate regarding permanent extension of qualified mortgage bonds.

Sec. 8142. Low-income housing credit.

SUBPART B—PASSIVE LOSS RULES

Sec. 8143. Modification of passive loss rules.

SUBPART C—PROVISIONS RELATING TO REAL ESTATE INVESTMENTS BY PENSION

FUNDS

Sec. 8144. Real estate property acquired by a qualified organization.

Sec. 8145. Repeal of special treatment of publicly treated partnerships.

Sec. 8146. Title-holding companies permitted to receive small amounts of unrelated business taxable income.

Sec. 8147. Exclusion from unrelated business tax of gains from certain property.
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Sec. 8148. Exclusion from unrelated business tax of certain fees and option premiums.

Sec. 8149. Treatment of pension fund investments in real estate investment trusts.

SUBPART D—INCREASE IN RECOVERY PERIOD FOR NONRESIDENTIAL REAL

PROPERTY

Sec. 8151. Increase in recovery period for nonresidential real property.

PART V—LUXURY TAX

Sec. 8161. Repeal of luxury excise taxes other than on passenger vehicles.

Sec. 8162. Exemption from luxury excise tax for certain equipment installed on

passenger vehicles for use by disabled individuals.

Sec. 8163. Tax on diesel fuel used in noncommercial boats.

PART VI—OTHER CHANGES

Sec. 8171. Alternative minimum tax treatment of contributions of appreciated

property.

Sec. 8172. Substantiation requirement for deduction of certain charitable contributions.

Sec. 8173. Disclosure related to quid pro quo contributions.

Sec. 8174. Certain transfers to railroad retirement account made permanent.

Sec. 8175. Temporary extension of deduction for health insurance costs of self-employed individuals.

PART VII—INVESTMENT IN INDIAN RESERVATIONS

Sec. 8181. Investment tax credit for property on Indian Reservations.

Sec. 8182. Indian employment credit.

Subtitle B—Revenue Increases

PART I—PROVISIONS AFFECTING INDIVIDUALS

SUBPART A—RATE INCREASES

Sec. 8201. Increase in top marginal rate under section 1.

Sec. 8202. Surtax on high-income taxpayers.

Sec. 8203. Modifications to alternative minimum tax rates and exemption

amounts.

Sec. 8203A. Rate increases not to take effect until July 1, 1993.

Sec. 8204. Overall limitation on itemized deductions for high-income taxpayers

made permanent.

Sec. 8205. Phaseout of personal exemption of high-income taxpayers made permanent.

Sec. 8206. Provisions to prevent conversion of ordinary income to capital gain.

SUBPART B—OTHER PROVISIONS

Sec. 8207. Repeal of limitation on amount of wages subject to health insurance

employment tax.

Sec. 8208. Top estate and gift tax rates made permanent.

Sec. 8209. Reduction in deductible portion of business meals and entertainment.

Sec. 8209A. Sense of the Senate relating to the deductibility of business meals and

entertainment expenses.

Sec. 8210. Elimination of deduction for club membership fees.
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Sec. 8211. Disallowance of deduction for certain employee remuneration in excess

of $1,000,000.

Sec. 8212. Reduction in compensation taken into account in determining contributions and benefits under qualified retirement plans.

Sec. 8213. Modification to deduction for certain moving expenses.

Sec. 8214. Simplification of individual estimated tax safe harbor based on last

year’s tax.

Sec. 8215. Social security and tier 1 railroad retirement benefits.

PART II—PROVISIONS AFFECTING BUSINESSES

Sec. 8221. Increase in top marginal rate under section 11.

Sec. 8222. Disallowance of deduction for lobbying expenditures.

Sec. 8223. Mark to market accounting method for securities dealers.

Sec. 8224. Clarification of treatment of certain FSLIC financial assistance.

Sec. 8225. Modification of corporate estimated tax rules.

Sec. 8226. Modifications of discharge of indebtedness provisions.

Sec. 8227. Limitation on section 936 credit.

Sec. 8228. Modification to limitation on deduction for certain interest.

PART III—FOREIGN TAX PROVISIONS

SUBPART A—CURRENT TAXATION OF CERTAIN EARNINGS OF CONTROLLED

FOREIGN CORPORATIONS

Sec. 8231. Earnings invested in excess passive assets.

Sec. 8232. Modification to taxation of investment in United States property.

Sec. 8233. Other modifications to Subpart F.

SUBPART B—ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES

Sec. 8234. Allocation of research and experimental expenditures.

SUBPART C—OTHER PROVISIONS

Sec. 8235. Repeal of certain exceptions for working capital.

Sec. 8236. Modifications of accuracy-related penalty.

Sec. 8237. Denial of portfolio interest exemption for contingent interest.

Sec. 8238. Regulations dealing with conduit arrangements.

Sec. 8239. Treatment of export of certain softwood logs.

PART IV—TRANSPORTATION FUELS PROVISIONS

SUBPART A—TRANSPORTATION FUELS TAX

Sec. 8241. Transportation fuels tax.

SUBPART B—MODIFICATIONS TO TAX ON DIESEL FUEL

Sec. 8242. Modifications to tax on diesel fuel.

Sec. 8243. Floor stocks tax.

SUBPART C—EXTENSION OF MOTOR FUEL TAX RATES; INCREASED DEPOSITS

INTO HIGHWAY TRUST FUND

Sec. 8244. Extension of motor fuel tax rates; increased deposits into Highway

Trust Fund.
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PART V—COMPLIANCE PROVISIONS

Sec. 8251. Modifications to substantial understatement and return-preparer penalties.

Sec. 8252. Returns relating to the cancellation of indebtedness by certain financial entities.

PART VI—TREATMENT OF INTANGIBLES

Sec. 8261. Amortization of goodwill and certain other intangibles.

Sec. 8262. Treatment of certain payments to retired or deceased partner.

PART VII—MISCELLANEOUS PROVISIONS

Sec. 8271. Denial of deduction relating to travel expenses.

Sec. 8272. Increase in withholding from supplemental wage payments.

Sec. 8273. Excise tax on certain vaccines made permanent.

1 Subtitle A—Training and

2 Investment Incentives

3 PART I—PROVISIONS RELATING TO EDUCATION

4 AND TRAINING

5 SEC. 8101. EMPLOYER-PROVIDED EDUCATIONAL ASSIST6 ANCE.

7 (a) EXTENSION OF EXCLUSION.—

8 (1) IN GENERAL.—Subsection (d) of section 127

9 (relating to educational assistance programs) is

10 amended to read as follows:

11 ‘‘(d) TERMINATION.—

12 ‘‘(1) IN GENERAL.—This section shall not apply

13 to taxable years beginning after June 30, 1994.

14 ‘‘(2) SPECIAL RULE.—In the case of any taxable

15 year beginning in 1994, only amounts paid before

16 July 1, 1994, by the employer for educational assist17 ance for any employee shall be taken into account for

18 purposes of this section.’’
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1 (2) CONFORMING AMENDMENT.—Paragraph (2)

2 of section 103(a) of the Tax Extension Act of 1991 is

3 hereby repealed.

4 (b) COORDINATION WITH SECTION 132.—Paragraph

5 (8) of section 132(i) is amended to read as follows:

6 ‘‘(8) APPLICATION OF SECTION TO OTHERWISE

7 TAXABLE EDUCATIONAL OR TRAINING BENEFITS.—

8 Amounts paid or expenses incurred by the employer

9 for education or training provided to the employee

10 which are not excludable from gross income under sec11 tion 127 shall be excluded from gross income under

12 this section if (and only if) such amounts or expenses

13 are a working condition fringe.’’

14 (c) EFFECTIVE DATES.—

15 (1) SUBSECTION (a).—The amendments made by

16 subsection (a) shall apply to taxable years ending

17 after June 30, 1992.

18 (2) SUBSECTION (b).—The amendment made by

19 subsection (b) shall apply to taxable years beginning

20 after December 31, 1988.

21 SEC. 8102. TARGETED JOBS CREDIT.

22 (a) EXTENSION OF CREDIT.—Paragraph (4) of section

23 51(c) (relating to amount of targeted jobs credit) is amend24 ed by striking ‘‘1992’’ and inserting ‘‘1994’’.
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1 (b) EFFECTIVE DATE.—The amendment made by sub2 section (a) shall apply to individuals who begin work for

3 the employer after June 30, 1992.

4 PART II—INVESTMENT INCENTIVES

5 Subpart A—Research Credit

6 SEC. 8111. EXTENSION OF RESEARCH CREDIT.

7 (a) IN GENERAL.—Subsection (h) of section 41 (relat8 ing to credit for research activities) is amended to read as

9 follows:

10 ‘‘(h) NONAPPLICABILITY.—

11 ‘‘(1) IN GENERAL.—This section shall not apply

12 to amounts paid or incurred during any suspension

13 period.

14 ‘‘(2) BASE AMOUNT.—In the case of any taxable

15 year which includes a portion of any suspension pe16 riod, the base amount with respect to such taxable

17 year shall be the amount which bears the same ratio

18 to the base amount for such year (determined without

19 regard to this paragraph) as the number of days in

20 such taxable year which are not in any suspension

21 period bears to the total number of days in such tax22 able year.

23 ‘‘(3) FIXED-BASE PERCENTAGE.—The fixed-base

24 percentage under subsection (c)(3)(B)(ii) shall be
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1 computed as if this section were in effect during any

2 suspension period.

3 ‘‘(4) SUSPENSION PERIOD.—For purposes of this

4 subsection, the term ‘suspension period’ includes—

5 ‘‘(A) the period beginning July 1, 1992, and

6 ending June 30, 1993, and

7 ‘‘(B) any period after June 30, 1994.’’

8 (b) CONFORMING AMENDMENT.—Subparagraph (D) of

9 section 28(b)(1) is amended by striking ‘‘for periods after

10 June 30, 1992’’ and inserting ‘‘during any suspension pe11 riod (as defined in section 41(h)(4))’’.

12 (c) EFFECTIVE DATE.—The amendments made by this

13 section shall apply to taxable years ending after June 30,

14 1992.

15 SEC. 8112. MODIFICATION OF FIXED BASE PERCENTAGE

16 FOR STARTUP COMPANIES.

17 (a) GENERAL RULE.—Clause (ii) of section

18 41(c)(3)(B) is amended to read as follows:

19 ‘‘(ii) FIXED-BASE PERCENTAGE.—In a

20 case to which this subparagraph applies, the

21 fixed-base percentage is—

22 ‘‘(I) 3 percent for each of the tax23 payer’s 1st 5 taxable years beginning

24 after December 31, 1993, for which the
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1 taxpayer has qualified research ex2 penses,

3 ‘‘(II) in the case of the taxpayer’s

6th such taxable year, 1 4 ⁄6 of the per5 centage which the aggregate qualified

6 research expenses of the taxpayer for

7 the 4th and 5th such taxable years is

8 of the aggregate gross receipts of the

9 taxpayer for such years,

10 ‘‘(III) in the case of the taxpayer’s

7th such taxable year, 1 11 ⁄3 of the per12 centage which the aggregate qualified

13 research expenses of the taxpayer for

14 the 5th and 6th such taxable years is

15 of the aggregate gross receipts of the

16 taxpayer for such years,

17 ‘‘(IV) in the case of the taxpayer’s

8th such taxable year, 1 18 ⁄2 of the per19 centage which the aggregate qualified

20 research expenses of the taxpayer for

21 the 5th, 6th, and 7th such taxable

22 years is of the aggregate gross receipts

23 of the taxpayer for such years,

24 ‘‘(V) in the case of the taxpayer’s

9th such taxable year, 2 25 ⁄3 of the per-
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1 centage which the aggregate qualified

2 research expenses of the taxpayer for

3 the 5th, 6th, 7th, and 8th such taxable

4 years is of the aggregate gross receipts

5 of the taxpayer for such years,

6 ‘‘(VI) in the case of the taxpayer’s

10th such taxable year, 5 7 ⁄6 of the per8 centage which the aggregate qualified

9 research expenses of the taxpayer for

10 the 5th, 6th, 7th, 8th, and 9th such

11 taxable years is of the aggregate gross

12 receipts of the taxpayer for such years,

13 and

14 ‘‘(VII) for taxable years thereafter,

15 the percentage which the aggregate

16 qualified research expenses for any 5

17 taxable years selected by the taxpayer

18 from among the 5th through the 10th

19 such taxable years is of the aggregate

20 gross receipts of the taxpayer for such

21 selected years.’’.

22 (b) CONFORMING AMENDMENTS.—

23 (1) Clause (iii) of section 41(c)(3)(B) is amended

24 by striking ‘‘clause (i)’’ and inserting ‘‘clauses (i) and

25 (ii)’’.
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1 (2) Subparagraph (D) of section 41(c)(3) is

2 amended by striking ‘‘subparagraph (A)’’ and insert3 ing ‘‘subparagraphs (A) and (B)(ii)’’.

4 (c) EFFECTIVE DATE.—The amendments made by this

5 section shall apply to taxable years beginning after Decem6 ber 31, 1993.

7 SEC. 8113. SENSE OF SENATE REGARDING PERMANENT EX8 TENSION OF RESEARCH CREDIT.

9 It is the sense of the Senate that the research credit

10 under section 41 of the Internal Revenue Code of 1986 be

11 extended permanently.

12 Subpart B—Modification To Minimum Tax

13 Depreciation Rules

14 SEC. 8115. MODIFICATION TO MINIMUM TAX DEPRECIATION

15 RULES.

16 (a) ELIMINATION OF ACE DEPRECIATION ADJUST17 MENT.—Clause (i) of section 56(g)(4)(A) (relating to depre18 ciation adjustments for computing adjusted current earn19 ings) is amended by adding at the end thereof the following

20 new sentence: ‘‘The preceding sentence shall not apply to

21 any property placed in service after December 31, 1993,

22 and the depreciation deduction with respect to such prop23 erty shall be determined under the rules of subsection

24 (a)(1)(A).’’.

25 (b) EFFECTIVE DATES.—
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1 (1) IN GENERAL.—Except as provided in para2 graph (2), the amendments made by this section shall

3 apply to property placed in service after December

4 31, 1993.

5 (2) COORDINATION WITH TRANSITIONAL

6 RULES.—The amendments made by this section shall

7 not apply to any property to which paragraph (1) of

8 section 56(a) of the Internal Revenue Code of 1986

9 does not apply by reason of subparagraph (C)(i)

10 thereof.

11 Subpart C—Increase in Expense Treatment for Small

12 Businesses

13 SEC. 8119. INCREASE IN EXPENSE TREATMENT FOR SMALL

14 BUSINESSES.

15 (a) GENERAL RULE.—Paragraph (1) of section 179(b)

16 (relating to dollar limitation) is amended by striking

17 ‘‘$10,000’’ and inserting ‘‘$20,500’’.

18 (b) EFFECTIVE DATE.—The amendment made by sub19 section (a) shall apply to taxable years beginning after De20 cember 31, 1992.

21 Subpart D—Tax Exempt Bonds

22 SEC. 8121. EXTENSION OF QUALIFIED SMALL ISSUE BONDS.

23 (a) IN GENERAL.—Subparagraph (B) of section

24 144(a)(12) is amended by striking ‘‘1992’’ and inserting

25 ‘‘1994’’.
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1 (b) EFFECTIVE DATE.—The amendment made by sub2 section (a) shall apply to bonds issued after June 30, 1992.

3 PART III—EXPANSION AND SIMPLIFICATION OF

4 EARNED INCOME TAX CREDIT

5 SEC. 8131. EXPANSION AND SIMPLIFICATION OF EARNED

6 INCOME TAX CREDIT.

7 (a) GENERAL RULE.—Section 32 (relating to earned

8 income credit) is amended by striking subsections (a) and

9 (b) and inserting the following:

10 ‘‘(a) ALLOWANCE OF CREDIT.—

11 ‘‘(1) IN GENERAL.—In the case of an eligible in12 dividual, there shall be allowed as a credit against the

13 tax imposed by this subtitle for the taxable year an

14 amount equal to the credit percentage of so much of

15 the taxpayer’s earned income for the taxable year as

16 does not exceed the earned income amount.

17 ‘‘(2) LIMITATION.—The amount of the credit al18 lowable to a taxpayer under paragraph (1) for any

19 taxable year shall not exceed the excess (if any) of—

20 ‘‘(A) the credit percentage of the earned in21 come amount, over

22 ‘‘(B) the phaseout percentage of so much of

23 the adjusted gross income (or, if greater, the

24 earned income) of the taxpayer for the taxable

25 year as exceeds the phaseout amount.
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1 ‘‘(b) PERCENTAGES AND AMOUNTS.—For purposes of

2 subsection (a)—

3 ‘‘(1) PERCENTAGES.—The credit percentage and

4 the phaseout percentage shall be determined as fol5 lows:

6 ‘‘(A) IN GENERAL.—In the case of taxable

7 years beginning after 1995:

In the case of an eligible individual with:The credit percentage

is:

The phaseout percentage is:

1 qualifying child ...... 34 .................................. 16.16

2 or more qualifying

children .................. 39 .................................. 20.72

8 ‘‘(B) TRANSITIONAL PERCENTAGES FOR

9 1995.—In the case of a taxable year beginning in

10 1995:

In the case of an eligible individual with:The credit percentage

is:

The phaseout percentage is:

1 qualifying child ...... 34 .................................. 16.16

2 or more qualifying

children .................. 34 .................................. 15.94

11 ‘‘(C) TRANSITIONAL PERCENTAGES FOR

12 1994.—In the case of a taxable year beginning in

13 1994:

In the case of an eligible individual with:The credit percentage

is:

The phaseout percentage is:

1 qualifying child ...... 26 .................................. 16.16

2 or more qualifying

children .................. 30 .................................. 15.94

14 ‘‘(2) AMOUNTS.—The earned income amount and

15 the phaseout amount shall be determined as follows:
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1 ‘‘(A) IN GENERAL.—In the case of taxable

2 years beginning after 1994:

In the case of an eligible individual with:The earned income

amount is:

The phaseout amount

is:

1 qualifying child ...... $6,000 ........................... $11,000

2 or more qualifying

children .................. $8,500 ........................... $11,000

3 ‘‘(B) TRANSITIONAL AMOUNTS.—In the case

4 of a taxable year beginning in 1994:

In the case of an eligible individual with:The earned income

amount is:

The phaseout amount

is:

1 qualifying child ...... $7,750 ........................... $11,000

2 or more qualifying

children .................. $8,500 ........................... $11,000.’’

5 (b) INFLATION ADJUSTMENTS.—Section 32(i) (relat6 ing to inflation adjustments) is amended—

7 (1) by striking paragraphs (1) and (2) and in8 serting the following new paragraph:

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

10 year beginning after 1994, each dollar amount con11 tained in subsection (b)(2)(A) shall be increased by

12 an amount equal to—

13 ‘‘(A) such dollar amount, multiplied by

14 ‘‘(B) the cost-of-living adjustment deter15 mined under section 1(f)(3), for the calendar

16 year in which the taxable year begins, by sub17 stituting ‘calendar year 1993’ for ‘calendar year

18 1992’.’’, and
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1 (2) by redesignating paragraph (3) as para2 graph (2).

3 (c) CONFORMING AMENDMENTS.—

4 (1) Subparagraph (D) of section 32(c)(3) is

5 amended—

6 (A) by striking ‘‘clause (i) or (ii)’’ in clause

7 (iii) and inserting ‘‘clause (i)’’,

8 (B) by striking clause (ii), and

9 (C) by redesignating clause (iii) as clause

10 (ii).

11 (2) Paragraph (3) of section 162(l) is amended

12 to read as follows:

13 ‘‘(3) COORDINATION WITH MEDICAL DEDUC14 TION.—Any amount paid by a taxpayer for insurance

15 to which paragraph (1) applies shall not be taken

16 into account in computing the amount allowable to

17 the taxpayer as a deduction under section 213(a).’’

18 (3) Section 213 is amended by striking sub19 section (f).

20 (4) Subsection (b) of section 3507 is amended by

21 redesignating paragraphs (2) and (3) as paragraphs

22 (3) and (4), respectively, and by inserting after para23 graph (1) the following new paragraph:
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1 ‘‘(2) certifies that the employee has 1 or more

2 qualifying children (within the meaning of section

3 32(c)(3)) for such taxable year,’’.

4 (5) Subparagraph (B) of section 3507(c)(2) is

5 amended by striking clauses (i) and (ii) and inserting

6 the following:

7 ‘‘(i) of not more than the credit per8 centage in effect under section 32(b)(1) for

9 an eligible individual with 1 qualifying

10 child and with earned income not in excess

11 of the earned income amount in effect under

12 section 32(b)(2) for such an eligible individ13 ual, which

14 ‘‘(ii) phases out at the phaseout per15 centage in effect under section 32(b)(1) for

16 such an eligible individual between the

17 phaseout amount in effect under section

18 32(b)(2) for such an eligible individual and

19 the amount of earned income at which the

20 credit under section 32(a) phases out for

21 such an eligible individual, or’’.

22 (d) EFFECTIVE DATE.—The amendments made by this

23 section shall apply to taxable years beginning after Decem24 ber 31, 1993.
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1 PART IV—INCENTIVES FOR INVESTMENT IN REAL

2 ESTATE

3 Subpart A—Extension of Qualified Mortgage Bonds

4 and Low-Income Housing Credit

5 SEC. 8141. EXTENSION OF QUALIFIED MORTGAGE BONDS.

6 (a) IN GENERAL.—Subparagraph (B) of section

7 143(a)(1) (defining qualified mortgage bond) is amended

8 by striking ‘‘1992’’ each place it appears and inserting

9 ‘‘1994’’.

10 (b) MORTGAGE CREDIT CERTIFICATES.—Subsection

11 (h) of section 25 is amended by striking ‘‘1992’’ and insert12 ing ‘‘1994’’.

13 (c) EFFECTIVE DATES.—

14 (1) BONDS.—The amendment made by sub15 section (a) shall apply to bonds issued after June 30,

16 1992.

17 (2) CERTIFICATES.—The amendment made by

18 subsection (b) shall apply to elections for periods after

19 June 30, 1992.

20 SEC. 8141A. SENSE OF THE SENATE REGARDING PERMA21 NENT EXTENSION OF QUALIFIED MORTGAGE

22 BONDS.

23 (a) FINDINGS.—The Senate finds that:

24 (1) Low and moderate income families often

25 have difficulty in obtaining affordable mortgage fi26 nancing.
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1 (2) The mortgage revenue bond provisions of the

2 Internal Revenue Code are an important tool in pro3 viding affordable financing for first-time home buy4 ers.

5 (3) The tax-exempt status of mortgage revenue

6 bonds have enabled State and local housing agencies

7 to finance home mortgages for first-time buyers at

8 rates below conventional market rates. This cost dif9 ferential enables buyers, who otherwise might not be

10 able to get mortgage financing, to obtain a loan at an

11 affordable rate.

12 (4) Mortgage revenue bonds are targeted to fami13 lies with the greatest need. In 1992, the average in14 come of a mortgage revenue bond borrower was 74

15 percent of median income. Mortgage revenue bonds

16 are only available to buyers who have not owned a

17 home within the past 3 years, earn 115 percent or less

18 of the applicable median income, and buy a principal

19 residence that does not exceed 90 percent of the aver20 age home purchase price.

21 (5) Prior to its expiration in June, mortgage

22 revenue bonds were the only Federal assistance tar23 geted to first-time home buyers. During the past 15

24 years, mortgage revenue bonds have financed more
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1 than 2 million home purchases and accounted for 1

2 out of every 12 mortgages made to first-time buyers.

3 (6) In the last decade, mortgage revenue bonds

4 have been scheduled to sunset 7 times, making admin5 istration and timing of bond issues extremely difficult

6 and costly. The mortgage revenue bond program

7 lapsed on June 30, underscoring the need for perma8 nent extension.

9 (b) SENSE OF THE SENATE.—It is the sense of the Sen10 ate that mortgage revenue bonds are a vital, proven tool

11 for providing affordable home ownership opportunities for

12 low- and moderate-income families and that Congress

13 should adopt a permanent extension of the mortgage reve14 nue bond program as part of the Internal Revenue Code.

15 SEC. 8142. LOW-INCOME HOUSING CREDIT.

16 (a) PERMANENT EXTENSION.—

17 (1) IN GENERAL.—Section 42 (relating to low18 income housing credit) is amended by striking sub19 section (o).

20 (2) EFFECTIVE DATE.—The amendments made

21 by paragraph (1) shall apply to periods ending after

22 June 30, 1992.

23 (b) MODIFICATIONS.—

24 (1) HOUSING CREDIT AGENCY DETERMINATION

25 OF REASONABLENESS OF PROJECT COSTS.—Subpara-
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1 graph (B) of section 42(m)(2) (relating to credit allo2 cated to building not to exceed amount necessary to

3 assure project feasibility) is amended—

4 (A) by striking ‘‘and’’ at the end of clause

5 (ii),

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

7 clause (iii) and inserting ‘‘, and’’, and

8 (C) by inserting after clause (iii) the follow9 ing new clause:

10 ‘‘(iv) the reasonableness of the devel11 opmental and operational costs of the

12 project.’’

13 (2) UNITS WITH CERTAIN FULL-TIME STUDENTS

14 NOT DISQUALIFIED.—Subparagraph (D) of section

15 42(i)(3) (defining low-income unit) is amended to

16 read as follows:

17 ‘‘(D) CERTAIN STUDENTS NOT TO DIS18 QUALIFY UNIT.—A unit shall not fail to be treat19 ed as a low-income unit merely because it is oc20 cupied—

21 ‘‘(i) by an individual who is—

22 ‘‘(I) a student and receiving as23 sistance under title IV of the Social Se24 curity Act, or
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1 ‘‘(II) enrolled in a job training

2 program receiving assistance under the

3 Job Training Partnership Act or

4 under other similar Federal, State, or

5 local laws, or

6 ‘‘(ii) entirely by full-time students if

7 such students are—

8 ‘‘(I) single parents and their chil9 dren and such parents and children

10 are not dependents (as defined in sec11 tion 152) of another individual, or

12 ‘‘(II) married and file a joint re13 turn.’’

14 (3) TREASURY WAIVERS OF CERTAIN DE MINIMIS

15 ERRORS AND RECERTIFICATIONS.—Subsection (g) of

16 section 42 (relating to qualified low-income housing

17 projects) is amended by adding at the end thereof the

18 following new paragraph:

19 ‘‘(8) WAIVER OF CERTAIN DE MINIMIS ERRORS

20 AND RECERTIFICATIONS.—On application by the tax21 payer, the Secretary may waive—

22 ‘‘(A) any recapture under subsection (j) in

23 the case of any de minimis error in complying

24 with paragraph (1), or
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1 ‘‘(B) any annual recertification of tenant

2 income for purposes of this subsection, if the en3 tire building is occupied by low-income tenants.’’

4 (4) DISCRIMINATION AGAINST TENANTS PROHIB5 ITED.—Section 42(h)(6)(B) (defining extended low-in6 come housing commitment) is amended by redesignat7 ing clauses (iv) and (v) as clauses (v) and (vi) and

8 by inserting after clause (iii) the following new

9 clause:

10 ‘‘(iv) which prohibits the refusal to

11 lease to a holder of a voucher or certificate

12 of eligibility under section 8 of the United

13 States Housing Act of 1937 because of the

14 status of the prospective tenant as such a

15 holder,’’.

16 (5) EFFECTIVE DATES.—

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

18 subparagraph (B), the amendments made by this

19 subsection shall apply to—

20 (i) determinations under section 42 of

21 the Internal Revenue Code of 1986 with re22 spect to housing credit dollar amounts allo23 cated from State housing credit ceilings

24 after June 30, 1992, or
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1 (ii) buildings placed in service after

2 June 30, 1992, to the extent paragraph (1)

3 of section 42(h) of such Code does not apply

4 to any building by reason of paragraph (4)

5 thereof, but only with respect to bonds is6 sued after such date.

7 (B) WAIVER AUTHORITY AND PROHIBITED

8 DISCRIMINATION.—The amendments made by

9 paragraphs (3) and (4) shall take effect on the

10 date of the enactment of this Act.

11 (c) ELECTION TO DETERMINE RENT LIMITATION

12 BASED ON NUMBER OF BEDROOMS AND DEEP RENT SKEW13 ING.—In the case of a building to which the amendments

14 made by subsection (e)(1) or (n)(2) of section 7108 of the

15 Revenue Reconciliation Act of 1989 did not apply, the tax16 payer may elect to have such amendments apply to such

17 building but only with respect to tenants first occupying

18 any unit in the building after the date of the election, and

19 only if the taxpayer has met the requirements of the proce20 dures described in section 42(m)(1)(B)(iii) of the Internal

21 Revenue Code of 1986. Such an election may be made only

22 during the 180 day period beginning on the date of the en23 actment of this Act and, once made, shall be irrevocable.
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1 Subpart B—Passive Loss Rules

2 SEC. 8143. MODIFICATION OF PASSIVE LOSS RULES.

3 (a) GENERAL RULE.—Section 469 (relating to passive

4 activity losses and credits limited) is amended by redesig5 nating subsections (l) and (m) as subsections (m) and (n),

6 respectively, and by inserting after subsection (k) the follow7 ing new subsection:

8 ‘‘(l) SPECIAL RULES FOR REAL ESTATE ACTIVI9 TIES.—

10 ‘‘(1) LOSS FROM CERTAIN RENTAL REAL ESTATE

11 ACTIVITIES TREATED AS NOT PASSIVE.—If the tax12 payer meets the requirements of paragraph (2) for the

13 taxable year, subsection (a) shall not apply to so

14 much of the passive activity loss for such taxable year

15 as does not exceed the least of—

16 ‘‘(A) the lesser of—

17 ‘‘(i) the net loss for such taxable year

18 from rental real estate activities in which

19 the taxpayer materially participates, or

20 ‘‘(ii) the net loss for such taxable year

21 from all rental real estate activities of the

22 taxpayer,

23 ‘‘(B) the net income of the taxpayer for the

24 taxable year from real property trade or business

25 activities which are not passive activities, or
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1 ‘‘(C) the taxable income of the taxpayer for

2 the taxable year determined without regard to

3 this subsection.

4 A similar rule shall apply to any passive activity

5 credit.

6 ‘‘(2) REQUIREMENTS.—The taxpayer meets the

7 requirements of this paragraph for any taxable year

8 if more than one-half of the personal services per9 formed in trades or businesses by the taxpayer during

10 such taxable year are performed in real property

11 trades or businesses in which the taxpayer materially

12 participates.

13 ‘‘(3) REAL PROPERTY TRADE OR BUSINESS.—

14 For purposes of this paragraph, the term ‘real prop15 erty trade or business’ means any real property devel16 opment, redevelopment, construction, reconstruction,

17 acquisition, conversion, rental, operation, manage18 ment, leasing, or brokerage trade or business.

19 ‘‘(4) SPECIAL RULES.—

20 ‘‘(A) PERSONAL SERVICES AS AN EM21 PLOYEE.—For purposes of paragraph (2), per22 sonal services performed as an employee shall

23 not be treated as performed in real property

24 trades or businesses. The preceding sentence shall

25 not apply if such employee is a 5-percent owner
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1 (as defined in section 416(i)(1)(B)) in the em2 ployer.

3 ‘‘(B) CLOSELY HELD C CORPORATIONS.—

4 This subsection shall not apply to any interests

5 held by a closely held C corporation.

6 ‘‘(5) COORDINATION WITH SUBSECTION (i).—

7 ‘‘(A) IN GENERAL.—This subsection shall be

8 applied after the application of subsection (i).

9 ‘’(B) AMOUNTS ALLOWED UNDER SUB10 SECTION (i).—For purposes of this subsection—

11 ‘‘(i) the passive activity loss and pas12 sive activity credit, and

13 ‘‘(ii) the net loss referred to in para14 graph (1)(A),

15 shall not include any amount allowed under sub16 section (i).’’

17 (b) EFFECTIVE DATE.—The amendments made by this

18 section shall apply to taxable years beginning after Decem19 ber 31, 1993.

20 Subpart C—Provisions Relating to Real Estate

21 Investments by Pension Funds

22 SEC. 8144. REAL ESTATE PROPERTY ACQUIRED BY A QUALI23 FIED ORGANIZATION.

24 (a) MODIFICATIONS OF EXCEPTIONS.—Paragraph (9)

25 of section 514(c) (relating to real property acquired by a
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1 qualified organization) is amended by adding at the end

2 thereof the following new subparagraphs:

3 ‘‘(G) SPECIAL RULES FOR PURPOSES OF

4 THE EXCEPTIONS.—Except as otherwise provided

5 by regulations—

6 ‘‘(i) SMALL LEASES DISREGARDED.—

7 For purposes of clauses (iii) and (iv) of sub8 paragraph (B), a lease to a person described

9 in such clause (iii) or (iv) shall be dis10 regarded if no more than 25 percent of the

11 leasable floor space in a building (or com12 plex of buildings) is covered by the lease

13 and if the lease is on commercially reason14 able terms.

15 ‘‘(ii) COMMERCIALLY REASONABLE FI16 NANCING.—Clause (v) of subparagraph (B)

17 shall not apply if the financing is on com18 mercially reasonable terms.

19 ‘‘(H) QUALIFYING SALES BY FINANCIAL IN20 STITUTIONS.—

21 ‘‘(i) IN GENERAL.—In the case of a

22 qualifying sale by a financial institution,

23 except as provided in regulations, clauses

24 (i) and (ii) of subparagraph (B) shall not
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1 apply with respect to financing provided by

2 such institution for such sale.

3 ‘‘(ii) QUALIFYING SALE.—For purposes

4 of this clause, there is a qualifying sale by

5 a financial institution if—

6 ‘‘(I) a qualified organization ac7 quires property described in clause

8 (iii) from a financial institution and

9 any gain recognized by the financial

10 institution with respect to the property

11 is ordinary income,

12 ‘‘(II) the stated principal amount

13 of the financing provided by the finan14 cial institution does not exceed the

15 amount of the outstanding indebtedness

16 (including accrued but unpaid inter17 est) of the financial institution with

18 respect to the property described in

19 clause (iii) immediately before the ac20 quisition referred to in clause (iii) or

21 (v), whichever is applicable, and

22 ‘‘(III) the present value (deter23 mined as of the time of the sale and by

24 using the applicable Federal rate deter25 mined under section 1274(d)) of the
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1 maximum amount payable pursuant

2 to the financing that is determined by

3 reference to the revenue, income, or

4 profits derived from the property can5 not exceed 30 percent of the total pur6 chase price of the property (including

7 the contingent payments).

8 ‘‘(iii) PROPERTY TO WHICH SUBPARA9 GRAPH APPLIES.—Property is described in

10 this clause if such property is foreclosure

11 property, or is real property which—

12 ‘‘(I) was acquired by the qualified

13 organization from a financial institu14 tion which is in conservatorship or re15 ceivership, or from the conservator or

16 receiver of such an institution, and

17 ‘‘(II) was held by the financial in18 stitution at the time it entered into

19 conservatorship or receivership.

20 ‘‘(iv) FINANCIAL INSTITUTION.—For

21 purposes of this subparagraph, the term ‘fi22 nancial institution’ means—

23 ‘‘(I) any financial institution de24 scribed in section 581 or 591(a),
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1 ‘‘(II) any other corporation which

2 is a direct or indirect subsidiary of an

3 institution referred to in subclause (I)

4 but only if, by virtue of being affiliated

5 with such institution, such other cor6 poration is subject to supervision and

7 examination by a Federal or State

8 agency which regulates institutions re9 ferred to in subclause (I), and

10 ‘‘(III) any person acting as a con11 servator or receiver of an entity re12 ferred to in subclause (I) or (II) (or

13 any government agency or corporation

14 succeeding to the rights or interest of

15 such person).

16 ‘‘(v) FORECLOSURE PROPERTY.—For

17 purposes of this subparagraph, the term

18 ‘foreclosure property’ means any real prop19 erty acquired by the financial institution as

20 the result of having bid on such property at

21 foreclosure, or by operation of an agreement

22 or process of law, after there was a default

23 (or a default was imminent) on indebted24 ness which such property secured.’’.
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1 (b) CONFORMING AMENDMENT.—Paragraph (9) of sec2 tion 514(c) is amended—

3 (1) by adding the following new sentence at the

4 end of subparagraph (A): ‘‘For purposes of this para5 graph, an interest in a mortgage shall in no event be

6 treated as real property.’’, and

7 (2) by striking the last sentence of subparagraph

8 (B).

9 (c) EFFECTIVE DATES.—

10 (1) IN GENERAL.—The amendments made by

11 this section shall apply to acquisitions on or after

12 January 1, 1994.

13 (2) SMALL LEASES.—The provisions of section

14 514(c)(9)(G)(i) of the Internal Revenue Code of 1986

15 shall, in addition to any leases to which the provi16 sions apply by reason of paragraph (1), apply to

17 leases entered into on or after January 1, 1994.

18 SEC. 8145. REPEAL OF SPECIAL TREATMENT OF PUBLICLY

19 TREATED PARTNERSHIPS.

20 (a) GENERAL RULE.—Subsection (c) of section 512 is

21 amended—

22 (1) by striking paragraph (2),

23 (2) by redesignating paragraph (3) as para24 graph (2), and
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1 (3) by striking ‘‘paragraph (1) or (2)’’ in para2 graph (2) (as so redesignated) and inserting ‘‘para3 graph (1)’’.

4 (b) EFFECTIVE DATE.—The amendments made by sub5 section (a) shall apply to partnership years beginning on

6 or after January 1, 1994.

7 SEC. 8146. TITLE-HOLDING COMPANIES PERMITTED TO RE8 CEIVE SMALL AMOUNTS OF UNRELATED

9 BUSINESS TAXABLE INCOME.

10 (a) GENERAL RULE.—Paragraph (25) of section

11 501(c) is amended by adding at the end thereof the follow12 ing new subparagraph:

13 ‘‘(G)(i) An organization shall not be treated

14 as failing to be described in this paragraph

15 merely by reason of the receipt of any otherwise

16 disqualifying income which is incidentally de17 rived from the holding of real property.

18 ‘‘(ii) Clause (i) shall not apply if the

19 amount of gross income described in such clause

20 exceeds 10 percent of the organization’s gross in21 come for the taxable year unless the organization

22 establishes to the satisfaction of the Secretary

23 that the receipt of gross income described in

24 clause (i) in excess of such limitation was inad25 vertent and reasonable steps are being taken to
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1 correct the circumstances giving rise to such in2 come.’’

3 (b) CONFORMING AMENDMENT.—Paragraph (2) of sec4 tion 501(c) is amended by adding at the end thereof the

5 following new sentence: ‘‘Rules similar to the rules of sub6 paragraph (G) of paragraph (25) shall apply for purposes

7 of this paragraph.’’

8 (c) EFFECTIVE DATE.—The amendments made by this

9 section shall apply to taxable years beginning on or after

10 January 1, 1994.

11 SEC. 8147. EXCLUSION FROM UNRELATED BUSINESS TAX

12 OF GAINS FROM CERTAIN PROPERTY.

13 (a) GENERAL RULE.—Subsection (b) of section 512

14 (relating to modifications) is amended by adding at the end

15 thereof the following new paragraph:

16 ‘‘(16)(A) Notwithstanding paragraph (5)(B),

17 there shall be excluded all gains or losses from the

18 sale, exchange, or other disposition of any real prop19 erty described in subparagraph (B) if—

20 ‘‘(i) such property was acquired by the or21 ganization from—

22 ‘‘(I) a financial institution described

23 in section 581 or 591(a) which is in

24 conservatorship or receivership, or
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1 ‘‘(II) the conservator or receiver of such

2 an institution (or any government agency

3 or corporation succeeding to the rights or

4 interests of the conservator or receiver),

5 ‘‘(ii) such property is designated by the or6 ganization within the 9-month period beginning

7 on the date of its acquisition as property held for

8 sale, except that not more than one-half (by

9 value determined as of such date) of property ac10 quired in a single transaction may be so

11 designated,

12 ‘‘(iii) such sale, exchange, or disposition oc13 curs before the later of—

14 ‘‘(I) the date which is 30 months after

15 the date of the acquisition of such property,

16 or

17 ‘‘(II) the date specified by the Sec18 retary in order to assure an orderly disposi19 tion of property held by persons described

20 in subparagraph (A), and

21 ‘‘(iv) while such property was held by the

22 organization, the aggregate expenditures on im23 provements and development activities included

24 in the basis of the property are (or were) not in
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1 excess of 20 percent of the net selling price of

2 such property.

3 ‘‘(B) Property is described in this subparagraph

4 if it is real property which—

5 ‘‘(i) was held by the financial institution at

6 the time it entered into conservatorship or receiv7 ership, or

8 ‘‘(ii) was foreclosure property (as defined in

9 section 514(c)(9)(H)(v)) which secured indebted10 ness held by the financial institution at such

11 time.

12 For purposes of this subparagraph, real property in13 cludes an interest in a mortgage.’’

14 (b) EFFECTIVE DATE.—The amendment made by sub15 section (a) shall apply to property acquired on or after Jan16 uary 1, 1994.

17 SEC. 8148. EXCLUSION FROM UNRELATED BUSINESS TAX

18 OF CERTAIN FEES AND OPTION PREMIUMS.

19 (a) LOAN COMMITMENT FEES.—Paragraph (1) of sec20 tion 512(b) (relating to modifications) is amended by in21 serting ‘‘amounts received or accrued as consideration for

22 entering into agreements to make loans,’’ before ‘‘and annu23 ities’’.

24 (b) OPTION PREMIUMS.—The second sentence of sec25 tion 512(b)(5) is amended—
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1 (1) by striking ‘‘all gains on’’ and inserting ‘‘all

2 gains or losses recognized, in connection with the or3 ganization’s investment activities, from’’,

4 (2) by striking ‘‘, written by the organization in

5 connection with its investment activities,’’ and

6 (3) by inserting ‘‘or real property and all gains

7 or losses from the forfeiture of good-faith deposits

8 (that are consistent with established business practice)

9 for the purchase, sale, or lease of real property in con10 nection with the organization’s investment activities’’

11 before the period.

12 (c) EFFECTIVE DATE.—The amendments made by this

13 section shall apply to amounts received on or after January

14 1, 1994.

15 SEC. 8149. TREATMENT OF PENSION FUND INVESTMENTS

16 IN REAL ESTATE INVESTMENT TRUSTS.

17 (a) GENERAL RULE.—Subsection (h) of section 856

18 (relating to closely held determinations) is amended by add19 ing at the end thereof the following new paragraph:

20 ‘‘(3) TREATMENT OF TRUSTS DESCRIBED IN SEC21 TION 401(a).—

22 ‘‘(A) LOOK-THRU TREATMENT.—

23 ‘‘(i) IN GENERAL.—Except as provided

24 in clause (ii), in determining whether the

25 stock ownership requirement of section
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1 542(a)(2) is met for purposes of paragraph

2 (1)(A), any stock held by a qualified trust

3 shall be treated as held directly by its bene4 ficiaries in proportion to their actuarial in5 terests in such trust and shall not be treated

6 as held by such trust.

7 ‘‘(ii) CERTAIN RELATED TRUSTS NOT

8 ELIGIBLE.—Clause (i) shall not apply to

9 any qualified trust if one or more disquali10 fied persons (as defined in section

11 4975(e)(2), without regard to subpara12 graphs (B) and (I) thereof) with respect to

13 such qualified trust hold in the aggregate 5

14 percent or more in value of the interests in

15 the real estate investment trust and such

16 real estate investment trust has accumulated

17 earnings and profits attributable to any pe18 riod for which it did not qualify as a real

19 estate investment trust.

20 ‘‘(B) COORDINATION WITH PERSONAL HOLD21 ING COMPANY RULES.—If any entity qualifies as

22 a real estate investment trust for any taxable

23 year by reason of subparagraph (A), such entity

24 shall not be treated as a personal holding com-
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1 pany for such taxable year for purposes of part

2 II of subchapter G of this chapter.

3 ‘‘(C) TREATMENT FOR PURPOSES OF UNRE4 LATED BUSINESS TAX.—If any qualified trust

5 holds more than 10 percent (by value) of the in6 terests in any pension-held REIT at any time

7 during a taxable year, the trust shall be treated

8 as having for such taxable year gross income

9 from an unrelated trade or business in an

10 amount which bears the same ratio to the aggre11 gate dividends paid (or treated as paid) by the

12 REIT to the trust for the taxable year of the

13 REIT with or within which the taxable year of

14 the trust ends (the ‘REIT year’) as—

15 ‘‘(i) the gross income (less direct ex16 penses related thereto) of the REIT for the

17 REIT year from unrelated trades or busi18 nesses (determined as if the REIT were a

19 qualified trust), bears to

20 ‘‘(ii) the gross income (less direct ex21 penses related thereto) of the REIT for the

22 REIT year.

23 This subparagraph shall apply only if the ratio

24 determined under the preceding sentence is at

25 least 5 percent.
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1 ‘‘(D) PENSION-HELD REIT.—The purposes

2 of subparagraph (C)—

3 ‘‘(i) IN GENERAL.—A real estate in4 vestment trust is a pension-held REIT if

5 such trust would not have qualified as a

6 real estate investment trust but for the pro7 visions of this paragraph and if such trust

8 is predominantly held by qualified trusts.

9 ‘‘(ii) PREDOMINANTLY HELD.—For

10 purposes of clause (i), a real estate invest11 ment trust is predominantly held by quali12 fied trusts if—

13 ‘‘(I) at least 1 qualified trust

14 holds more than 25 percent (by value)

15 of the interests in such real estate in16 vestment trust, or

17 ‘‘(II) 1 or more qualified trusts

18 (each of whom own more than 10 per19 cent by value of the interests in such

20 real estate investment trust) hold in

21 the aggregate more than 50 percent (by

22 value) of the interests in such real es23 tate investment trust.

24 ‘‘(E) QUALIFIED TRUST.—For purposes of

25 this paragraph, the term ‘qualified trust’ means
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1 any trust described in section 401(a) and exempt

2 from tax under section 501(a).’’

3 (b) EFFECTIVE DATE.—The amendment made by this

4 section shall apply to taxable years beginning after Decem5 ber 31, 1993.

6 Subpart D—Increase in Recovery Period for

7 Nonresidential Real Property

8 SEC. 8151. INCREASE IN RECOVERY PERIOD FOR

9 NONRESIDENTIAL REAL PROPERTY.

10 (a) GENERAL RULE.—Paragraph (1) of section 168(c)

11 (relating to applicable recovery period) is amended by strik12 ing the item relating to nonresidential real property and

13 inserting the following:

‘‘Nonresidential real property ....................................................... 38 years.’’.

14 (b) EFFECTIVE DATE.—

15 (1) IN GENERAL.—Except as provided in para16 graph (2), the amendment made by subsection (a)

17 shall apply to property placed in service by the tax18 payer on or after February 25, 1993.

19 (2) EXCEPTION.—The amendments made by this

20 section shall not apply to property placed in service

21 by the taxpayer before January 1, 1994, if—

22 (A) the taxpayer or a qualified person en23 tered into a binding written contract to purchase

24 or construct such property before February 25,

25 1993, or
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1 (B) the construction of such property was

2 commenced by or for the taxpayer or a quali3 fied person before February 25, 1993.

4 For purposes of this paragraph, the term ‘‘qualified

5 person’’ means any person who transfers his rights in

6 such a contract or such property to the taxpayer but

7 only if the property is not placed in service by such

8 person before such rights are transferred to the tax9 payer.

10 PART V—LUXURY TAX

11 SEC. 8161. REPEAL OF LUXURY EXCISE TAXES OTHER THAN

12 ON PASSENGER VEHICLES.

13 (a) IN GENERAL.—Subchapter A of chapter 31 (relat14 ing to retail excise taxes) is amended to read as follows:

15 ‘‘Subchapter A—Luxury Passenger Automobiles

‘‘Sec. 4001. Imposition of tax.

‘‘Sec. 4002. 1st retail sale; uses, etc. treated as sales; determination

of price.

‘‘Sec. 4003. Special rules.

16 ‘‘SEC. 4001. IMPOSITION OF TAX.

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

18 the 1st retail sale of any passenger vehicle a tax equal to

19 10 percent of the price for which so sold to the extent such

20 price exceeds $30,000.

21 ‘‘(b) PASSENGER VEHICLE.—
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1 ‘‘(1) IN GENERAL.—For purposes of this sub2 chapter, the term ‘passenger vehicle’ means any 4-

3 wheeled vehicle—

4 ‘‘(A) which is manufactured primarily for

5 use on public streets, roads, and highways, and

6 ‘‘(B) which is rated at 6,000 pounds un7 loaded gross vehicle weight or less.

8 ‘‘(2) SPECIAL RULES.—

9 ‘‘(A) TRUCKS AND VANS.—In the case of a

10 truck or van, paragraph (1)(B) shall be applied

11 by substituting ‘gross vehicle weight’ for ‘un12 loaded gross vehicle weight’.

13 ‘‘(B) LIMOUSINES.—In the case of a lim14 ousine, paragraph (1) shall be applied without

15 regard to subparagraph (B) thereof.

16 ‘‘(c) EXCEPTIONS FOR TAXICABS, ETC.—The tax im17 posed by this section shall not apply to the sale of any pas18 senger vehicle for use by the purchaser exclusively in the

19 active conduct of a trade or business of transporting persons

20 or property for compensation or hire.

21 ‘‘(d) EXEMPTION FOR LAW ENFORCEMENT USES,

22 ETC.—No tax shall be imposed by this section on the sale

23 of any passenger vehicle—

24 ‘‘(1) to the Federal Government, or a State or

25 local government, for use exclusively in police, fire-
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1 fighting, search and rescue, or other law enforcement

2 or public safety activities, or in public works activi3 ties, or

4 ‘‘(2) to any person for use exclusively in provid5 ing emergency medical services.

6 ‘‘(e) INFLATION ADJUSTMENT.—

7 ‘‘(1) IN GENERAL.—In the case of any calendar

8 year after 1992, the $30,000 amount in subsection (a)

9 and section 4003(a) shall be increased by an amount

10 equal to—

11 ‘‘(A) $30,000, multiplied by

12 ‘‘(B) the cost-of-living adjustment under sec13 tion 1(f)(3) for such calendar year, determined

14 by substituting ‘calendar year 1990’ for ‘cal15 endar year 1992’ in subparagraph (B) thereof.

16 ‘‘(2) ROUNDING.—If any amount as adjusted

17 under paragraph (1) is not a multiple of $100, such

18 amount shall be rounded to the nearest multiple of

19 $100.

20 ‘‘(f) TERMINATION.—The tax imposed by this section

21 shall not apply to any sale or use after December 31, 1999.

22 ‘‘SEC. 4002. 1ST RETAIL SALE; USES, ETC. TREATED AS

23 SALES; DETERMINATION OF PRICE.

24 ‘‘(a) 1ST RETAIL SALE.—For purposes of this sub25 chapter, the term ‘1st retail sale’ means the 1st sale, for
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1 a purpose other than resale, after manufacture, production,

2 or importation.

3 ‘‘(b) USE TREATED AS SALE.—

4 ‘‘(1) IN GENERAL.—If any person uses a pas5 senger vehicle (including any use after importation)

6 before the 1st retail sale of such vehicle, then such per7 son shall be liable for tax under this subchapter in the

8 same manner as if such vehicle were sold at retail by

9 him.

10 ‘‘(2) EXEMPTION FOR FURTHER MANUFAC11 TURE.—Paragraph (1) shall not apply to use of a ve12 hicle as material in the manufacture or production of,

13 or as a component part of, another vehicle taxable

14 under this subchapter to be manufactured or produced

15 by him.

16 ‘‘(3) EXEMPTION FOR DEMONSTRATION USE.—

17 Paragraph (1) shall not apply to any use of a pas18 senger vehicle as a demonstrator.

19 ‘‘(4) EXCEPTION FOR USE AFTER IMPORTATION

20 OF CERTAIN VEHICLES.—Paragraph (1) shall not

21 apply to the use of a vehicle after importation if the

22 user or importer establishes to the satisfaction of the

23 Secretary that the 1st use of the vehicle occurred be24 fore January 1, 1991, outside the United States.
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1 ‘‘(5) COMPUTATION OF TAX.—In the case of any

2 person made liable for tax by paragraph (1), the tax

3 shall be computed on the price at which similar vehi4 cles are sold at retail in the ordinary course of trade,

5 as determined by the Secretary.

6 ‘‘(c) LEASES CONSIDERED AS SALES.—For purposes

7 of this subchapter—

8 ‘‘(1) IN GENERAL.—Except as otherwise provided

9 in this subsection, the lease of a vehicle (including

10 any renewal or any extension of a lease or any subse11 quent lease of such vehicle) by any person shall be

12 considered a sale of such vehicle at retail.

13 ‘‘(2) SPECIAL RULES FOR LONG-TERM LEASES.—

14 ‘‘(A) TAX NOT IMPOSED ON SALE FOR LEAS15 ING IN A QUALIFIED LEASE.—The sale of a pas16 senger vehicle to a person engaged in a passenger

17 vehicle leasing or rental trade or business for

18 leasing by such person in a long-term lease shall

19 not be treated as the 1st retail sale of such vehi20 cle.

21 ‘‘(B) LONG-TERM LEASE.—For purposes of

22 subparagraph (A), the term ‘long-term lease’

23 means any long-term lease (as defined in section

24 4052).
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1 ‘‘(C) SPECIAL RULES.—In the case of a

2 long-term lease of a vehicle which is treated as

3 the 1st retail sale of such vehicle—

4 ‘‘(i) DETERMINATION OF PRICE.—The

5 tax under this subchapter shall be computed

6 on the lowest price for which the vehicle is

7 sold by retailers in the ordinary course of

8 trade.

9 ‘‘(ii) PAYMENT OF TAX.—Rules similar

10 to the rules of section 4217(e)(2) shall

11 apply.

12 ‘‘(iii) NO TAX WHERE EXEMPT USE BY

13 LESSEE.—No tax shall be imposed on any

14 lease payment under a long-term lease if the

15 lessee’s use of the vehicle under such lease is

16 an exempt use (as defined in section

17 4003(b)) of such vehicle.

18 ‘‘(d) DETERMINATION OF PRICE.—

19 ‘‘(1) IN GENERAL.—In determining price for

20 purposes of this subchapter—

21 ‘‘(A) there shall be included any charge in22 cident to placing the passenger vehicle in condi23 tion ready for use,

24 ‘‘(B) there shall be excluded—
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1 ‘‘(i) the amount of the tax imposed by

2 this subchapter,

3 ‘‘(ii) if stated as a separate charge, the

4 amount of any retail sales tax imposed by

5 any State or political subdivision thereof or

6 the District of Columbia, whether the liabil7 ity for such tax is imposed on the vendor or

8 vendee, and

9 ‘‘(iii) the value of any component of

10 such passenger vehicle if—

11 ‘‘(I) such component is furnished

12 by the 1st user of such passenger vehi13 cle, and

14 ‘‘(II) such component has been

15 used before such furnishing, and

16 ‘‘(C) the price shall be determined without

17 regard to any trade-in.

18 ‘‘(2) OTHER RULES.—Rules similar to the rules

19 of paragraphs (2) and (4) of section 4052(b) shall

20 apply for purposes of this subchapter.

21 ‘‘SEC. 4003. SPECIAL RULES.

22 ‘‘(a) SEPARATE PURCHASE OF VEHICLE AND PARTS

23 AND ACCESSORIES THEREFOR.—Under regulations pre24 scribed by the Secretary—
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1 ‘‘(1) IN GENERAL.—Except as provided in para2 graph (2), if—

3 ‘‘(A) the owner, lessee, or operator of any

4 passenger vehicle installs (or causes to be in5 stalled) any part or accessory on such vehicle,

6 and

7 ‘‘(B) such installation is not later than the

8 date 6 months after the date the vehicle was 1st

9 placed in service,

10 then there is hereby imposed on such installation a

11 tax equal to 10 percent of the price of such part or

12 accessory and its installation.

13 ‘‘(2) LIMITATION.—The tax imposed by para14 graph (1) on the installation of any part or accessory

15 shall not exceed 10 percent of the excess (if any) of—

16 ‘‘(A) the sum of—

17 ‘‘(i) the price of such part or accessory

18 and its installation,

19 ‘‘(ii) the aggregate price of the parts

20 and accessories (and their installation) in21 stalled before such part or accessory, plus

22 ‘‘(iii) the price for which the passenger

23 vehicle was sold, over

24 ‘‘(B) $30,000.
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1 ‘‘(3) EXCEPTIONS.—Paragraph (1) shall not

2 apply if—

3 ‘‘(A) the part or accessory installed is a re4 placement part or accessory,

5 ‘‘(B) the part or accessory is installed to en6 able or assist an individual with a disability to

7 operate the vehicle, or to enter or exit the vehicle,

8 by compensating for the effect of such disability,

9 or

10 ‘‘(C) the aggregate price of the parts and

11 accessories (and their installation) described in

12 paragraph (1) with respect to the vehicle does

13 not exceed $200 (or such other amount or

14 amounts as the Secretary may by regulation pre15 scribe).

16 The price of any part or accessory (and its installa17 tion) to which paragraph (1) does not apply by rea18 son of this paragraph shall not be taken into account

19 under paragraph (2)(A).

20 ‘‘(4) INSTALLERS SECONDARILY LIABLE FOR

21 TAX.—The owners of the trade or business installing

22 the parts or accessories shall be secondarily liable for

23 the tax imposed by this subsection.

24 ‘‘(b) IMPOSITION OF TAX ON SALES, ETC., WITHIN 2

25 YEARS OF VEHICLES PURCHASED TAX-FREE.—
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1 ‘‘(1) IN GENERAL.—If—

2 ‘‘(A) no tax was imposed under this sub3 chapter on the 1st retail sale of any passenger

4 vehicle by reason of its exempt use, and

5 ‘‘(B) within 2 years after the date of such

6 1st retail sale, such vehicle is resold by the pur7 chaser or such purchaser makes a substantial

8 nonexempt use of such vehicle,

9 then such sale or use of such vehicle by such purchaser

10 shall be treated as the 1st retail sale of such vehicle

11 for a price equal to its fair market value at the time

12 of such sale or use.

13 ‘‘(2) EXEMPT USE.—For purposes of this sub14 section, the term ‘exempt use’ means any use of a ve15 hicle if the 1st retail sale of such vehicle is not taxable

16 under this subchapter by reason of such use.

17 ‘‘(c) PARTS AND ACCESSORIES SOLD WITH TAXABLE

18 PASSENGER VEHICLE.—Parts and accessories sold on, in

19 connection with, or with the sale of any passenger vehicle

20 shall be treated as part of the vehicle.

21 ‘‘(d) PARTIAL PAYMENTS, ETC.—In the case of a con22 tract, sale, or arrangement described in paragraph (2), (3),

23 or (4) of section 4216(c), rules similar to the rules of section

24 4217(e)(2) shall apply for purposes of this subchapter.’’

25 (b) TECHNICAL AMENDMENTS.—
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1 (1) Subsection (c) of section 4221 is amended by

2 striking ‘‘4002(b), 4003(c), 4004(a)’’ and inserting

3 ‘‘4001(d)’’.

4 (2) Subsection (d) of section 4222 is amended by

5 striking ‘‘4002(b), 4003(c), 4004(a)’’ and inserting

6 ‘‘4001(d)’’.

7 (3) The table of subchapters for chapter 31 is

8 amended by striking the item relating to subchapter

9 A and inserting the following:

‘‘Subchapter A. Luxury passenger vehicles.’’

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

11 section shall take effect on January 1, 1993.

12 SEC. 8162. EXEMPTION FROM LUXURY EXCISE TAX FOR

13 CERTAIN EQUIPMENT INSTALLED ON PAS14 SENGER VEHICLES FOR USE BY DISABLED IN15 DIVIDUALS.

16 (a) IN GENERAL.—Paragraph (3) of section 4004(b)

17 (relating to separate purchase of article and parts and ac18 cessories therefor), as in effect on the day before the date

19 of the enactment of this Act, is amended—

20 (1) by striking ‘‘or’’ at the end of subparagraph

21 (A),

22 (2) by redesignating subparagraph (B) as sub23 paragraph (C),

24 (3) by inserting after subparagraph (A) the fol25 lowing new subparagraph:
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1 ‘‘(B) the part or accessory is installed on a

2 passenger vehicle to enable or assist an individ3 ual with a disability to operate the vehicle, or to

4 enter or exit the vehicle, by compensating for the

5 effect of such disability, or’’, and

6 (4) by inserting after subparagraph (C) the fol7 lowing flush sentence:

8 ‘‘The price of any part or accessory (and its installa9 tion) to which paragraph (1) does not apply by rea10 son of this paragraph shall not be taken into account

11 under paragraph (2)(A).’’

12 (b) EFFECTIVE DATE.—The amendments made by this

13 section shall take effect as if included in the amendments

14 made by section 11221(a) of the Omnibus Budget Reconcili15 ation Act of 1990.

16 (c) PERIOD FOR FILING CLAIMS.—If refund or credit

17 of any overpayment of tax resulting from the application

18 of the amendments made by this section is prevented at any

19 time before the close of the 1-year period beginning on the

20 date of the enactment of this Act by the operation of any

21 law or rule of law (including res judicata), refund or credit

22 of such overpayment (to the extent attributable to such

23 amendments) may, nevertheless, be made or allowed if claim

24 therefor is filed before the close of such 1-year period.
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1 SEC. 8163. TAX ON DIESEL FUEL USED IN NONCOMMERCIAL

2 BOATS.

3 (a) GENERAL RULE.—

4 (1) Paragraph (2) of section 4092(a) (defining

5 diesel fuel) is amended by striking ‘‘or a diesel-pow6 ered train’’ and inserting ‘‘, a diesel-powered train,

7 or a diesel-powered boat’’.

8 (2) Paragraph (1) of section 4041(a) is amend9 ed—

10 (A) by striking ‘‘diesel-powered highway ve11 hicle’’ each place it appears and inserting ‘‘die12 sel-powered highway vehicle or diesel-powered

13 boat’’, and

14 (B) by striking ‘‘such vehicle’’ and inserting

15 ‘‘such vehicle or boat’’.

16 (3) Subparagraph (B) of section 4092(b)(1) is

17 amended by striking ‘‘commercial and noncommercial

18 vessels’’ each place it appears and inserting ‘‘vessels

19 for use in an off-highway business use (as defined in

20 section 6421(e)(2)(B))’’.

21 (b) EXEMPTION FOR USE IN FISHERIES OR COMMER22 CIAL NAVIGATION.—Subparagraph (B) of section

23 6421(e)(2) is amended to read as follows:

24 ‘‘(B) USES IN BOATS.—

25 ‘‘(i) IN GENERAL.—Except as otherwise

26 provided in this subparagraph, the term
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1 ‘off-highway business use’ does not include

2 any use in a motorboat.

3 ‘‘(ii) FISHERIES AND WHALING.—The

4 term ‘off-highway business use’ shall include

5 any use in a vessel employed in the fisheries

6 or in the whaling business.

7 ‘‘(iii) EXCEPTION FOR DIESEL FUEL.—

8 The term ‘off-highway business use’ shall in9 clude the use of diesel fuel in a boat in the

10 active conduct of—

11 ‘‘(I) a trade or business of com12 mercial fishing or transporting persons

13 or property for compensation or hire,

14 or

15 ‘‘(II) any other trade or business,

16 except that this subclause shall not

17 apply to noncommercial uses described

18 in clause (iv) during a taxable period.

19 ‘‘(iv) TAXABLE PERIODS FOR NON20 COMMERCIAL BOATS.—In the case of any

21 use of diesel fuel in a boat used predomi22 nantly in any activity which is of a type

23 generally considered to constitute entertain24 ment, amusement, or recreation, the taxable
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1 period for purposes of clause (iii)(II) shall

2 be—

3 ‘‘(I) in the case so much of the tax

4 under section 4091 as is attributable to

5 4.3 cents of the diesel fuel deficit reduc6 tion rate imposed under such section,

7 any period beginning after September

8 30, 1993, and

9 ‘‘(II) in the case so much of the

10 tax under section 4091 as is not de11 scribed in subclause (I) the period be12 ginning after January 1, 1994, and

13 ending on December 31, 1999.

14 (c) RETENTION OF TAXES IN GENERAL FUND.—

15 (1) TAXES IMPOSED AT HIGHWAY TRUST FUND

16 FINANCING RATE.—Paragraph (4) of section 9503(b)

17 (relating to transfers to Highway Trust Fund) is

18 amended—

19 (A) by striking ‘‘and’’ at the end of sub20 paragraph (A),

21 (B) by striking the period at the end of sub22 paragraph (B) and inserting ‘‘, and’’, and

23 (C) by adding at the end thereof the follow24 ing new subparagraph:
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1 ‘‘(C) there shall not be taken into account

2 the taxes imposed by sections 4041 and 4091 on

3 diesel fuel sold for use or used as fuel in a diesel4 powered boat.’’

5 (2) TAXES IMPOSED AT LEAKING UNDERGROUND

6 STORAGE TANK TRUST FUND FINANCING RATE.—Sub7 section (b) of section 9508 (relating to transfers to

8 Leaking Underground Storage Tank Trust Fund) is

9 amended by adding at the end thereof the following

10 new sentence: ‘‘For purposes of this subsection, there

11 shall not be taken into account the taxes imposed by

12 sections 4041 and 4091 on diesel fuel sold for use or

13 used as fuel in a diesel-powered boat.’’

14 (d) EFFECTIVE DATE.—

15 (1) IN GENERAL.—Except as provided in para16 graph (2), the amendments made by this section shall

17 take effect on October 1, 1993.

18 (2) SPECIAL RULE.—No tax shall be imposed be19 fore January 1, 1994, under section 4091 of the Inter20 nal Revenue Code of 1986 by reason of the amend21 ments made by this section, other than the portion of

22 such tax as is attributable to 4.3 cents of the diesel

23 fuel deficit reduction rate imposed by such section.
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1 PART VI—OTHER CHANGES

2 SEC. 8171. ALTERNATIVE MINIMUM TAX TREATMENT OF

3 CONTRIBUTIONS OF APPRECIATED PROP4 ERTY.

5 (a) REPEAL OF TAX PREFERENCE.—Subsection (a) of

6 section 57 is amended by striking paragraph (6) (relating

7 to appreciated property charitable deduction) and by redes8 ignating paragraph (7) as paragraph (6).

9 (b) EFFECT ON ADJUSTED CURRENT EARNINGS.—

10 Paragraph (4) of section 56(g) is amended by adding at

11 the end thereof the following new subparagraph:

12 ‘‘(J) TREATMENT OF CHARITABLE CON13 TRIBUTIONS.—Notwithstanding subparagraphs

14 (B) and (C), no adjustment related to the earn15 ings and profits effects of any charitable con16 tribution shall be made in computing adjusted

17 current earnings.’’

18 (c) CONFORMING AMENDMENT.—Subclause (II) of sec19 tion 53(d)(1)(B)(ii) is amended by striking ‘‘(5) and (6)’’

20 and inserting ‘‘(5)’’.

21 (d) EFFECTIVE DATE.—The amendments made by this

22 section shall apply to contributions made after June 30,

23 1992, except that in the case of any contribution of capital

24 gain property which is not tangible personal property, such

25 amendments shall apply only if the contribution is made

26 after December 31, 1992.
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1 SEC. 8172. SUBSTANTIATION REQUIREMENT FOR DEDUC2 TION OF CERTAIN CHARITABLE CONTRIBU3 TIONS.

4 (a) SUBSTANTIATION REQUIREMENT.—Section 170(f)

5 (providing special rules relating to the deduction of chari6 table contributions and gifts) is amended by adding at the

7 end the following new paragraph:

8 ‘‘(8) SUBSTANTIATION REQUIREMENT FOR CER9 TAIN CONTRIBUTIONS.—

10 ‘‘(A) GENERAL RULE.—No deduction shall

11 be allowed under subsection (a) for any contribu12 tion of $250 or more unless the taxpayer sub13 stantiates the contribution by a contemporaneous

14 written acknowledgment of the contribution by

15 the donee organization that meets the require16 ments of subparagraph (B).

17 ‘‘(B) CONTENT OF ACKNOWLEDGMENT.—

18 ‘‘(i) IN GENERAL.—An acknowledg19 ment meets the requirements of this sub20 paragraph if it provides information suffi21 cient to substantiate the amount of the de22 ductible contribution. Nothing in this clause

23 shall be construed as requiring the donee or24 ganization to estimate the value of a

25 noncash contribution.
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1 ‘‘(ii) QUID PRO QUO CONTRIBU2 TIONS.—If the contribution was made by

3 means of a payment part of which con4 stituted consideration for goods or services

5 provided by the donee organization, the ac6 knowledgment must provide a good faith

7 estimate of the value of such goods or serv8 ices. The preceding sentence shall not apply

9 to any payment made to an organization,

10 organized exclusively for religious purposes,

11 in return for which the taxpayer receives

12 solely an intangible religious benefit that

13 generally is not sold in a commercial trans14 action outside the donative context.

15 ‘‘(C) CONTEMPORANEOUS.—For purposes of

16 subparagraph (A), an acknowledgment shall be

17 considered to be contemporaneous if the taxpayer

18 obtains the acknowledgment on or before the ear19 lier of—

20 ‘‘(i) the date on which the taxpayer

21 files a return for the taxable year in which

22 the contribution was made, or

23 ‘‘(ii) the due date (including exten24 sions) for filing such return.
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1 ‘‘(D) SUBSTANTIATION NOT REQUIRED FOR

2 CONTRIBUTIONS REPORTED BY THE DONEE OR3 GANIZATION.—Subparagraph (A) shall not apply

4 to a contribution if the donee organization files

5 a return, on such form and in accordance with

6 such regulations as the Secretary may prescribe,

7 which includes the information described in sub8 paragraph (B) with respect to the contribution.

9 ‘‘(E) REGULATIONS.—The Secretary shall

10 prescribe such regulations as may be necessary

11 or appropriate to carry out the purposes of this

12 paragraph, including regulations that may pro13 vide that some or all of the requirements of this

14 paragraph do not apply in appropriate cases.’’

15 (b) EFFECTIVE DATE.—The provisions of this section

16 shall apply to contributions made on or after January 1,

17 1994.

18 SEC. 8173. DISCLOSURE RELATED TO QUID PRO QUO

19 CONTRIBUTIONS.

20 (a) DISCLOSURE REQUIREMENT.—Subchapter B of

21 chapter 61 (relating to information and returns) is amend22 ed by redesignating section 6115 as section 6116 and by

23 inserting after section 6114 the following new section:
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1 ‘‘SEC. 6115. DISCLOSURE RELATED TO QUID PRO QUO CON2 TRIBUTIONS.

3 ‘‘(a) DISCLOSURE REQUIREMENT.—If an organization

4 described in section 170(c) (other than paragraph (1) there5 of) receives a quid pro quo contribution in excess of $75,

6 the organization shall, in connection with the solicitation

7 or receipt of the contribution, provide a written statement

8 which—

9 ‘‘(1) informs the donor that the amount of the

10 contribution that is deductible for Federal income tax

11 purposes is limited to the excess of the amount of any

12 money and the value of any property other than

13 money contributed by the donor over the value of the

14 goods or services provided by the organization, and

15 ‘‘(2) provides the donor with a good faith esti16 mate of the value of such goods or services.

17 ‘‘(b) QUID PRO QUO CONTRIBUTION.—For purposes of

18 this section, the term ‘quid pro quo contribution’ means a

19 payment made partly as a contribution and partly in con20 sideration for goods or services provided to the payor by

21 the donee organization. A quid pro quo contribution does

22 not include any payment made to an organization, orga23 nized exclusively for religious purposes, in return for which

24 the taxpayer receives solely an intangible religious benefit

25 that generally is not sold in a commercial transaction out26 side the donative context.’’
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1 (b) PENALTY FOR FAILURE TO DISCLOSE.—Part I of

2 subchapter B of chapter 68 (relating to assessable penalties)

3 is amended by inserting after section 6713 the following

4 new section:

5 ‘‘SEC. 6714. FAILURE TO MEET DISCLOSURE REQUIRE6 MENTS APPLICABLE TO QUID PRO QUO CON7 TRIBUTIONS.

8 ‘‘(a) IMPOSITION OF PENALTY.—If an organization

9 fails to meet the disclosure requirement of section 6115 with

10 respect to a quid pro quo contribution, such organization

11 shall pay a penalty of $10 for each contribution in respect

12 of which the organization fails to make the required disclo13 sure, except that the total penalty imposed by this sub14 section with respect to a particular fundraising event or

15 mailing shall not exceed $5,000.

16 ‘‘(b) REASONABLE CAUSE EXCEPTION.—No penalty

17 shall be imposed under this section with respect to any fail18 ure if it is shown that such failure is due to reasonable

19 cause.’’

20 (c) CLERICAL AMENDMENTS.—

21 (1) The table for subchapter B of chapter 61 is

22 amended by striking the item relating to section 6115

23 and inserting the following new items:

‘‘Sec. 6115. Disclosure related to quid pro quo contributions.

‘‘Sec. 6116. Cross reference.’’
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1 (2) The table for part I of subchapter B of chap2 ter 68 is amended by inserting after the item for sec3 tion 6713 the following new item:

‘‘Sec. 6714. Failure to meet disclosure requirements applicable to

quid pro quo contributions.’’

4 (d) EFFECTIVE DATE.—The provisions of this section

5 shall apply to quid pro quo contributions made on or after

6 January 1, 1994.

7 SEC. 8174. CERTAIN TRANSFERS TO RAILROAD RETIRE8 MENT ACCOUNT MADE PERMANENT.

9 Subsection (c)(1)(A) of section 224 of the Railroad Re10 tirement Solvency Act of 1983 (relating to section 72(r) rev11 enue increase transferred to certain railroad accounts) is

12 amended by striking ‘‘with respect to benefits received before

13 October 1, 1992’’.

14 SEC. 8175. TEMPORARY EXTENSION OF DEDUCTION FOR

15 HEALTH INSURANCE COSTS OF SELF-EM16 PLOYED INDIVIDUALS.

17 (a) IN GENERAL.—

18 (1) EXTENSION.—Paragraph (6) of section

19 162(l) (relating to special rules for health insurance

20 costs of self-employed individuals) is amended by

21 striking ‘‘June 30, 1992’’ and inserting ‘‘December

22 31, 1993’’.
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1 (2) CONFORMING AMENDMENT.—Paragraph (2)

2 of section 110(a) of the Tax Extension Act of 1991 is

3 hereby repealed.

4 (3) EFFECTIVE DATE.—The amendments made

5 by this subsection shall apply to taxable years ending

6 after June 30, 1992.

7 (b) DETERMINATION OF ELIGIBILITY FOR EMPLOYER8 SPONSORED HEALTH PLAN.—

9 (1) IN GENERAL.—Paragraph (2)(B) of section

10 162(l) is amended to read as follows:

11 ‘‘(B) OTHER COVERAGE.—Paragraph (1)

12 shall not apply to any taxpayer for any calendar

13 month for which the taxpayer is eligible to par14 ticipate in any subsidized health plan main15 tained by any employer of the taxpayer or of the

16 spouse of the taxpayer.’’

17 (2) EFFECTIVE DATE.—The amendment made by

18 paragraph (1) shall apply to taxable years beginning

19 after December 31, 1992.

20 Part VII—Investment in Indian Reservations

21 SEC. 8181. INVESTMENT TAX CREDIT FOR PROPERTY ON IN22 DIAN RESERVATIONS.

23 (a) ALLOWANCE OF INDIAN RESERVATION CREDIT.—

24 Section 46 (relating to investment credits) is amended by

25 striking ‘‘and’’ at the end of paragraph (2), by striking the
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1 period at the end of paragraph (3) and inserting ‘‘, and’’,

2 and by adding after paragraph (3) the following new para3 graph:

4 ‘‘(4) the Indian reservation credit.’’

5 (b) AMOUNT OF INDIAN RESERVATION CREDIT.—

6 (1) IN GENERAL.—Section 48 (relating to the en7 ergy credit and the reforestation credit) is amended

8 by adding after subsection (b) the following new sub9 section:

10 ‘‘(c) INDIAN RESERVATION CREDIT.—

11 ‘‘(1) IN GENERAL.—For purposes of section 46,

12 the Indian reservation credit for any taxable year is

13 the Indian reservation percentage of the qualified in14 vestment in qualified Indian reservation property

15 placed in service during such taxable year, deter16 mined in accordance with the following table:

‘‘In the case of qualified

Indian reservation property The Indian reservation

which is: percentage is:

Reservation personal property .................................. 10

New reservation construction property .................... 15

Reservation infrastructure investment ..................... 15.

17 ‘‘(2) QUALIFIED INVESTMENT IN QUALIFIED IN18 DIAN RESERVATION PROPERTY DEFINED.—For pur19 poses of this subpart—

20 ‘‘(A) IN GENERAL.—The term ‘qualified In21 dian reservation property’ means property—

22 ‘‘(i) which is—
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1 ‘‘(I) reservation personal prop2 erty,

3 ‘‘(II) new reservation construction

4 property, or

5 ‘‘(III) reservation infrastructure

6 investment, and

7 ‘‘(ii) not acquired (directly or indi8 rectly) by the taxpayer from a person who

9 is related to the taxpayer (within the mean10 ing of section 465(b)(3)(C)).

11 The term ‘qualified Indian reservation property’

12 does not include any property (or any portion

13 thereof) placed in service for purposes of conduct14 ing or housing class I, II, or III gaming (as de15 fined in section 4 of the Indian Regulatory Act

16 (25 U.S.C. 2703)).

17 ‘‘(B) QUALIFIED INVESTMENT.—The term

18 ‘qualified investment’ means—

19 ‘‘(i) in the case of reservation infra20 structure investment, the amount expended

21 by the taxpayer for the acquisition or con22 struction of the reservation infrastructure

23 investment; and
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1 ‘‘(ii) in the case of all other qualified

2 Indian reservation property, the taxpayer’s

3 basis for such property.

4 ‘‘(C) RESERVATION PERSONAL PROPERTY.—

5 The term ‘reservation personal property’ means

6 qualified personal property which is used by the

7 taxpayer predominantly in the active conduct of

8 a trade or business within an Indian reserva9 tion. Property shall not be treated as ‘reservation

10 personal property’ if it is used or located outside

11 the Indian reservation on a regular basis.

12 ‘‘(D) QUALIFIED PERSONAL PROPERTY.—

13 The term ‘qualified personal property’ means

14 property—

15 ‘‘(i) for which depreciation is allowable

16 under section 168,

17 ‘‘(ii) which is not—

18 ‘‘(I) nonresidential real property,

19 ‘‘(II) residential rental property,

20 or

21 ‘‘(III) real property which is not

22 described in (I) or (II) and which has

23 a class life of more than 12.5 years.

24 For purposes of this subparagraph, the terms

25 ‘nonresidential real property’, ‘residential rental
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1 property’, and ‘class life’ have the respective

2 meanings given such terms by section 168.

3 ‘‘(E) NEW RESERVATION CONSTRUCTION

4 PROPERTY.—The term ‘new reservation construc5 tion property’ means qualified real property—

6 ‘‘(i) which is located in an Indian res7 ervation,

8 ‘‘(ii) which is used by the taxpayer

9 predominantly in the active conduct of a

10 trade or business within an Indian reserva11 tion, and

12 ‘‘(iii) which is originally placed in

13 service by the taxpayer.

14 ‘‘(F) QUALIFIED REAL PROPERTY.—The

15 term ‘qualified real property’ means property for

16 which depreciation is allowable under section

17 168 and which is described in clause (I), (II), or

18 (III) of subparagraph (D)(ii).

19 ‘‘(G) RESERVATION INFRASTRUCTURE IN20 VESTMENT.—

21 ‘‘(i) IN GENERAL.—The term ‘reserva22 tion infrastructure investment’ means

23 qualified personal property or qualified real

24 property which—
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1 ‘‘(I) benefits the tribal infrastruc2 ture,

3 ‘‘(II) is available to the general

4 public, and

5 ‘‘(III) is placed in service in con6 nection with the taxpayer’s active con7 duct of a trade or business within an

8 Indian reservation.

9 ‘‘(ii) PROPERTY MAY BE LOCATED OUT10 SIDE THE RESERVATION.—Qualified per11 sonal property and qualified real property

12 used or located outside an Indian reserva13 tion shall be reservation infrastructure in14 vestment only if its purpose is to connect to

15 existing tribal infrastructure in the reserva16 tion, and shall include, but not be limited

17 to, roads, power lines, water systems, rail18 road spurs, and communications facilities.

19 ‘‘(H) COORDINATION WITH OTHER CRED20 ITS.—The term ‘qualified Indian reservation

21 property’ shall not include any property with re22 spect to which the energy credit or the rehabilita23 tion credit is allowed.

24 ‘‘(3) REAL ESTATE RENTALS.—For purposes of

25 this section, the rental to others of real property lo-
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1 cated within an Indian reservation shall be treated as

2 the active conduct of a trade or business in an Indian

3 reservation.

4 ‘‘(4) INDIAN RESERVATION DEFINED.—For pur5 poses of this subpart, the term ‘Indian reservation’

6 means a reservation, as defined in—

7 ‘‘(A) section 3(d) of the Indian Financing

8 Act of 1974 (25 U.S.C. 1452(d)), or

9 ‘‘(B) section 4(10) of the Indian Child Wel10 fare Act of 1978 (25 U.S.C. 1903(10)).

11 ‘‘(5) LIMITATION BASED ON UNEMPLOYMENT.—

12 ‘‘(A) GENERAL RULE.—The Indian reserva13 tion credit allowed under section 46 for any tax14 able year shall equal—

15 ‘‘(i) if the Indian unemployment rate

16 on the applicable Indian reservation for

17 which the credit is sought exceeds 300 per18 cent of the national average unemployment

19 rate at any time during the calendar year

20 in which the property is placed in service or

21 during the immediately preceding 2 cal22 endar years, 100 percent of such credit,

23 ‘‘(ii) if such Indian unemployment

24 rate exceeds 150 percent but not 300 per25 cent, 50 percent of such credit, and
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1 ‘‘(iii) if such Indian unemployment

2 rate does not exceed 150 percent, 0 percent

3 of such credit.

4 ‘‘(B) SPECIAL RULE FOR LARGE

5 PROJECTS.—In the case of a qualified Indian

6 reservation property which has (or is a compo7 nent of a project which has) a projected construc8 tion period of more than 2 years or a cost of

9 more than $1,000,000, subparagraph (A) shall

10 apply by substituting ‘during the earlier of the

11 calendar year in which the taxpayer enters into

12 a binding agreement to make a qualified invest13 ment or the first calendar year in which the tax14 payer has expended at least 10 percent of the

15 taxpayer’s qualified investment, or the preceding

16 calendar year’ for ‘during the calendar year in

17 which the property is placed in service or during

18 the immediately preceding 2 calendar years’.

19 ‘‘(C) DETERMINATION OF INDIAN UNEM20 PLOYMENT.—For purposes of this paragraph,

21 with respect to any Indian reservation, the In22 dian unemployment rate shall be based upon In23 dians unemployed and able to work, and shall be

24 certified by the Secretary of the Interior.
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1 ‘‘(6) COORDINATION WITH NONREVENUE LAWS.—

2 Any reference in this subsection to a provision not

3 contained in this title shall be treated for purposes of

4 this subsection as a reference to such provision as in

5 effect on the date of the enactment of this paragraph.’’

6 (2) LODGING TO QUALIFY.—Paragraph (2) of

7 section 50(b) (relating to property used for lodging)

8 is amended—

9 (A) by striking ‘‘and’’ at the end of sub10 paragraph (C),

11 (B) by striking the period at the end of sub12 paragraph (D) and inserting ‘‘; and’’ and

13 (C) by adding at the end thereof the follow14 ing subparagraph:

15 ‘‘(E) new reservation construction prop16 erty.’’

17 (c) RECAPTURE.—Subsection (a) of section 50 (relat18 ing to recapture in case of dispositions, etc.), is amended

19 by adding at the end thereof the following new paragraph:

20 ‘‘(6) SPECIAL RULES FOR INDIAN RESERVATION

21 PROPERTY.—

22 ‘‘(A) IN GENERAL.—If, during any taxable

23 year, property with respect to which the tax24 payer claimed an Indian reservation credit—

25 ‘‘(i) is disposed of, or
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1 ‘‘(ii) in the case of reservation personal

2 property—

3 ‘‘(I) otherwise ceases to be invest4 ment credit property with respect to

5 the taxpayer, or

6 ‘‘(II) is removed from the Indian

7 reservation, converted or otherwise

8 ceases to be Indian reservation prop9 erty,

10 the tax under this chapter for such taxable year

11 shall be increased by the amount described in

12 subparagraph (B).

13 ‘‘(B) AMOUNT OF INCREASE.—The increase

14 in tax under subparagraph (A) shall equal the

15 aggregate decrease in the credits allowed under

16 section 38 by reason of section 48(c) for all prior

17 taxable years which would have resulted had the

18 qualified investment taken into account with re19 spect to the property been limited to an amount

20 which bears the same ratio to the qualified in21 vestment with respect to such property as the pe22 riod such property was held by the taxpayer

23 bears to the applicable recovery period under sec24 tion 168(g).
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1 ‘‘(C) COORDINATION WITH OTHER RECAP2 TURE PROVISIONS.—In the case of property to

3 which this paragraph applies, paragraph (1)

4 shall not apply and the rules of paragraphs (3),

5 (4), and (5) shall apply.’’

6 (d) BASIS ADJUSTMENT TO REFLECT INVESTMENT

7 CREDIT.—Paragraph (3) of section 50(c) (relating to basis

8 adjustment to investment credit property) is amended by

9 striking ‘‘energy credit or reforestation credit’’ and insert10 ing ‘‘energy credit, reforestation credit or Indian reserva11 tion credit other than with respect to any expenditure for

12 new reservation construction property’’.

13 (e) CERTAIN GOVERNMENTAL USE PROPERTY TO

14 QUALIFY.—Paragraph (4) of section 50(b) (relating to

15 property used by governmental units or foreign persons or

16 entities) is amended by redesignating subparagraphs (D)

17 and (E) as subparagraphs (E) and (F), respectively, and

18 inserting after subparagraph (C) the following new sub19 paragraph:

20 ‘‘(D) EXCEPTION FOR RESERVATION INFRA21 STRUCTURE INVESTMENT.—This paragraph shall

22 not apply for purposes of determining the Indian

23 reservation credit with respect to reservation in24 frastructure investment.’’
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1 (f) APPLICATION OF AT-RISK RULES.—Subparagraph

2 (C) of section 49(a)(1) is amended by striking ‘‘and’’ at

3 the end of clause (ii), by striking the period at the end of

4 clause (iii) and inserting ‘‘, and’’, and by adding at the

5 end the following new clause:

6 ‘‘(iv) the qualified investment in quali7 fied Indian reservation property.’’

8 (g) CLERICAL AMENDMENTS.—

9 (1) Section 48 is amended by striking the head10 ing and inserting the following:

11 ‘‘SEC. 48. ENERGY CREDIT; REFORESTATION CREDIT; IN12 DIAN RESERVATION CREDIT.’’

13 (2) The table of sections for subpart E of part IV

14 of subchapter A of chapter 1 is amended by striking

15 out the item relating to section 48 and inserting the

16 following:

‘‘Sec. 48. Energy credit; reforestation credit; Indian reservation

credit.’’

17 (h) EFFECTIVE DATE.—The amendments made by this

18 section shall apply to property placed in service after De19 cember 31, 1993.

20 SEC. 8182. INDIAN EMPLOYMENT CREDIT.

21 (a) ALLOWANCE OF INDIAN EMPLOYMENT CREDIT.—

22 Section 38(b) (relating to general business credits) is

23 amended by striking ‘‘plus’’ at the end of paragraph (6),

24 by striking the period at the end of paragraph (7) and in-
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1 serting ‘‘, plus’’, and by adding after paragraph (7) the fol2 lowing new paragraph:

3 ‘‘(8) the Indian employment credit as deter4 mined under section 45(a).’’

5 (b) AMOUNT OF INDIAN EMPLOYMENT CREDIT.—Sub6 part D of Part IV of subchapter A of chapter 1 (relating

7 to business related credits) is amended by adding at the

8 end thereof the following new section:

9 ‘‘SEC. 45. INDIAN EMPLOYMENT CREDIT.

10 ‘‘(a) AMOUNT OF CREDIT.—

11 ‘‘(1) IN GENERAL.—For purposes of section 38,

12 the amount of the Indian employment credit deter13 mined under this section with respect to any em14 ployer for any taxable year is 10 percent (30 percent

15 in the case of an employer with at least 85 percent

16 Indian employees throughout the taxable year) of the

17 sum of—

18 ‘‘(A) the qualified wages paid or incurred

19 during such taxable year, plus

20 ‘‘(B) qualified employee health insurance

21 costs paid or incurred during such taxable year.

22 In no event shall the amount of the Indian employ23 ment credit for any taxable year exceed the credit

24 limitation amount determined under subsection (e)

25 for such taxable year.
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1 ‘‘(2) INDIAN EMPLOYEE.—For purposes of para2 graph (1), the term ‘Indian employee’ means an em3 ployee who is an enrolled member of an Indian tribe

4 or the spouse of such a member.

5 ‘‘(b) QUALIFIED WAGES; QUALIFIED EMPLOYEE

6 HEALTH INSURANCE COSTS.—For purposes of this sec7 tion—

8 ‘‘(1) QUALIFIED WAGES.—

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

10 wages’ means any wages paid or incurred by an

11 employer for services performed by an employee

12 while such employee is a qualified employee.

13 ‘‘(B) COORDINATION WITH TARGETED JOBS

14 CREDIT.—The term ‘qualified wages’ shall not

15 include wages attributable to service rendered

16 during the 1-year period beginning with the day

17 the individual begins work for the employer if

18 any portion of such wages is taken into account

19 in determining the credit under section 51.

20 ‘‘(2) QUALIFIED EMPLOYEE HEALTH INSURANCE

21 COSTS.—

22 ‘‘(A) IN GENERAL.—The term ‘qualified em23 ployee health insurance costs’ means any amount

24 paid or incurred by an employer for health in25 surance to the extent such amount is attributable
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1 to coverage provided to any employee while such

2 employee is a qualified employee.

3 ‘‘(B) EXCEPTION FOR AMOUNTS PAID

4 UNDER SALARY REDUCTION ARRANGEMENTS.—

5 No amount paid or incurred for health insurance

6 pursuant to a salary reduction arrangement

7 shall be taken into account under subparagraph

8 (A).

9 ‘‘(c) QUALIFIED EMPLOYEE.—For purposes of this sec10 tion—

11 ‘‘(1) IN GENERAL.—Except as otherwise provided

12 in this subsection, the term ‘qualified employee’

13 means, with respect to any period, any employee of

14 an employer if—

15 ‘‘(A) substantially all of the services per16 formed during such period by such employee for

17 such employer are performed within an Indian

18 reservation,

19 ‘‘(B) the principal place of abode of such

20 employee while performing such services is on or

21 near the reservation in which the services are

22 performed, and

23 ‘‘(C) the employee began work for such em24 ployer on or after January 1, 1994.
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1 ‘‘(2) CREDIT ALLOWED ONLY FOR FIRST 7

2 YEARS.—An employee shall not be treated as a quali3 fied employee for any period after the date 7 years

4 after the day on which such employee first began work

5 for the employer.

6 ‘‘(3) INDIVIDUALS RECEIVING WAGES IN EXCESS

7 OF $30,000 NOT ELIGIBLE.—An employee shall not be

8 treated as a qualified employee for any taxable year

9 of the employer if the total amount of the wages paid

10 or incurred by such employer to such employee during

11 such taxable year (whether or not for services within

12 an Indian reservation) exceeds the amount deter13 mined at an annual rate of $30,000. The Secretary

14 shall adjust the $30,000 amount contained in the pre15 ceding sentence for years beginning after 1993 at the

16 same time and in the same manner as under section

17 415(d).

18 ‘‘(4) EMPLOYMENT MUST BE TRADE OR BUSI19 NESS EMPLOYMENT.—An employee shall be treated as

20 a qualified employee for any taxable year of the em21 ployer only if more than 50 percent of the wages paid

22 or incurred by the employer to such employee during

23 such taxable year are for services performed in a

24 trade or business of the employer. Any determination

25 as to whether the preceding sentence applies with re-
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1 spect to any employee for any taxable year shall be

2 made without regard to subsection (f)(2).

3 ‘‘(5) CERTAIN EMPLOYEES NOT ELIGIBLE.—The

4 term ‘qualified employee’ shall not include—

5 ‘‘(A) any individual described in subpara6 graph (A), (B), or (C) of section 51(i)(1),

7 ‘‘(B) any 5-percent owner (as defined in

8 section 416(i)(1)(B)),

9 ‘‘(C) any individual who is neither an en10 rolled member of an Indian tribe nor the spouse

11 of an enrolled member of an Indian tribe, and

12 ‘‘(D) any individual if the services per13 formed by such individual for the employer in14 volve the conduct of class I, II, or III gaming as

15 defined in section 4 of the Indian Gaming Regu16 latory Act (25 U.S.C. 2703), or are performed in

17 a building housing such gaming activity.

18 ‘‘(6) INDIAN TRIBE DEFINED.—The term ‘Indian

19 tribe’ means any Indian tribe, band, nation, pueblo,

20 or other organized group or community, including

21 any Alaska Native village, or regional or village cor22 poration, as defined in, or established pursuant to,

23 the Alaska Native Claims Settlement Act (43 U.S.C.

24 1601 et seq.) which is recognized as eligible for the
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1 special programs and services provided by the United

2 States to Indians because of their status as Indians.

3 ‘‘(7) INDIAN RESERVATION DEFINED.—The term

4 ‘Indian reservation’ means a reservation, as defined

5 in—

6 ‘‘(A) section 3(d) of the Indian Financing

7 Act of 1974 (25 U.S.C. 1452(d)), or

8 ‘‘(B) section 4(10) of the Indian Child Wel9 fare Act of 1978 (25 U.S.C. 1903 (10)).

10 ‘‘(d) EARLY TERMINATION OF EMPLOYMENT BY EM11 PLOYER.—

12 ‘‘(1) IN GENERAL.—If the employment of any

13 employee is terminated by the taxpayer before the day

14 1 year after the day on which such employee began

15 work for the employer—

16 ‘‘(A) no wages (or qualified employee health

17 insurance costs) with respect to such employee

18 shall be taken into account under subsection (a)

19 for the taxable year in which such employment

20 is terminated, and

21 ‘‘(B) the tax under this chapter for the tax22 able year in which such employment is termi23 nated shall be increased by the aggregate credits

24 (if any) allowed under section 38(a) for prior

25 taxable years by reason of wages (or qualified
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1 employee health insurance costs) taken into ac2 count with respect to such employee.

3 ‘‘(2) CARRYBACKS AND CARRYOVERS AD4 JUSTED.—In the case of any termination of employ5 ment to which paragraph (1) applies, the carrybacks

6 and carryovers under section 39 shall be properly ad7 justed.

8 ‘‘(3) SUBSECTION NOT TO APPLY IN CERTAIN

9 CASES.—

10 ‘‘(A) IN GENERAL.—Paragraph (1) shall

11 not apply to—

12 ‘‘(i) a termination of employment of

13 an employee who voluntarily leaves the em14 ployment of the taxpayer,

15 ‘‘(ii) a termination of employment of

16 an individual who before the close of the pe17 riod referred to in paragraph (1) becomes

18 disabled to perform the services of such em19 ployment unless such disability is removed

20 before the close of such period and the tax21 payer fails to offer reemployment to such

22 individual, or

23 ‘‘(iii) a termination of employment of

24 an individual if it is determined under the

25 applicable State unemployment compensa-
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1 tion law that the termination was due to

2 the misconduct of such individual.

3 ‘‘(B) CHANGES IN FORM OF BUSINESS.—

4 For purposes of paragraph (1), the employment

5 relationship between the taxpayer and an em6 ployee shall not be treated as terminated—

7 ‘‘(i) by a transaction to which section

8 381(a) applies if the employee continues to

9 be employed by the acquiring corporation,

10 or

11 ‘‘(ii) by reason of a mere change in the

12 form of conducting the trade or business of

13 the taxpayer if the employee continues to be

14 employed in such trade or business and the

15 taxpayer retains a substantial interest in

16 such trade or business.

17 ‘‘(4) SPECIAL RULE.—Any increase in tax under

18 paragraph (1) shall not be treated as a tax imposed

19 by this chapter for purposes of—

20 ‘‘(A) determining the amount of any credit

21 allowable under this chapter, and

22 ‘‘(B) determining the amount of the tax im23 posed by section 55.

24 ‘‘(e) CREDIT LIMITATION AMOUNT.—For purposes of

25 this section—
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1 ‘‘(1) CREDIT LIMITATION AMOUNT.—The credit

2 limitation amount for a taxable year shall be an

3 amount equal to the credit rate (10 or 30 percent as

4 determined under subsection (a)) multiplied by the

5 increased credit base.

6 ‘‘(2) INCREASED CREDIT BASE.—The increased

7 credit base for a taxable year shall be the excess of—

8 ‘‘(A) the sum of any qualified wages and

9 qualified employee health insurance costs paid or

10 incurred by the employer during the taxable year

11 with respect to employees whose wages (paid or

12 incurred by the employer) during the taxable

13 year do not exceed the amount determined under

14 paragraph (3) of subsection (c), over

15 ‘‘(B) the sum of any qualified wages and

16 qualified employee health insurance costs paid or

17 incurred by the employer (or any predecessor)

18 during calendar year 1993 with respect to em19 ployees whose wages (paid or incurred by the

20 employer or any predecessor) during 1993 did

21 not exceed $30,000.

22 ‘‘(3) SPECIAL RULE FOR SHORT TAXABLE

23 YEARS.—For any taxable year having less than 12

24 months—
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1 ‘‘(A) the amounts paid or incurred by the

2 employer shall be annualized for purposes of de3 termining the increased credit base, and

4 ‘‘(B) the credit limitation amount shall be

5 multiplied by a fraction, the numerator of which

6 is the number of days in the taxable year and

7 the denominator of which is 365.

8 ‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.—For

9 purposes of this section—

10 ‘‘(1) WAGES.—The term ‘wages’ has the same

11 meaning given to such term in section 51.

12 ‘‘(2) CONTROLLED GROUPS.—

13 ‘‘(A) All employers treated as a single em14 ployer under section (a) or (b) of section 52 shall

15 be treated as a single employer for purposes of

16 this section.

17 ‘‘(B) The credit (if any) determined under

18 this section with respect to each such employer

19 shall be its proportionate share of the wages and

20 qualified employee health insurance costs giving

21 rise to such credit.

22 ‘‘(3) CERTAIN OTHER RULES MADE APPLICA23 BLE.—Rules similar to the rules of section 51(k) and

24 subsections (c), (d), and (e) of section 52 shall apply.
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1 ‘‘(4) COORDINATION WITH NONREVENUE LAWS.—

2 Any reference in this section to a provision not con3 tained in this title shall be treated for purposes of this

4 section as a reference to such provision as in effect on

5 the date of the enactment of this paragraph.’’

6 (c) DENIAL OF DEDUCTION FOR PORTION OF WAGES

7 EQUAL TO INDIAN EMPLOYMENT CREDIT.—

8 (1) Subsection (a) of section 280C (relating to

9 rule for targeted jobs credit) is amended by striking

10 ‘‘51(a)’’ and inserting ‘‘45(a), 51(a), and’’.

11 (2) Subsection (c) of section 196 (relating to de12 duction for certain unused business credits) is amend13 ed by striking ‘‘and’’ at the end of paragraph (5), by

14 striking the period at the end of paragraph (6) and

15 inserting ‘‘, and’’, and by adding at the end the fol16 lowing new paragraph:

17 ‘‘(7) the Indian employment credit determined

18 under section 45(a).’’

19 (d) DENIAL OF CARRYBACKS TO PREENACTMENT

20 YEARS.—Subsection (d) of section 39 is amended by adding

21 at the end thereof the following new paragraph:

22 ‘‘(4) NO CARRYBACK OF SECTION 45 CREDIT BE23 FORE ENACTMENT.—No portion of the unused busi24 ness credit for any taxable year which is attributable

25 to the Indian employment credit determined under
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1 section 45 may be carried to a taxable year ending

2 before the date of the enactment of section 45.’’

3 (e) CLERICAL AMENDMENT.—The table of sections for

4 subpart D of part IV of subchapter A of chapter 1 is amend5 ed by adding at the end thereof the following:

‘‘Sec. 45. Indian employment credit.’’

6 (f) EFFECTIVE DATE.—The amendments made by this

7 section shall apply to wages paid or incurred after Decem8 ber 31, 1993.

9 Subtitle B—Revenue Increases

10 PART I—PROVISIONS AFFECTING INDIVIDUALS

11 Subpart A—Rate Increases

12 SEC. 8201. INCREASE IN TOP MARGINAL RATE UNDER SEC13 TION 1.

14 (a) GENERAL RULE.—Section 1 (relating to tax im15 posed) is amended by striking subsections (a) through (e)

16 and inserting the following:

17 ‘‘(a) MARRIED INDIVIDUALS FILING JOINT RETURNS

18 AND SURVIVING SPOUSES.—There is hereby imposed on the

19 taxable income of—

20 ‘‘(1) every married individual (as defined in sec21 tion 7703) who makes a single return jointly with his

22 spouse under section 6013, and

23 ‘‘(2) every surviving spouse (as defined in section

24 2(a)),

25 a tax determined in accordance with the following table:
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‘‘If taxable income is: The tax is:

Not over $36,900 .............................. 15% of taxable income.

Over $36,900 but not over $89,150 $5,535, plus 28% of the excess over

$36,900.

Over $89,150 but not over $140,000 $20,165, plus 31% of the excess over

$89,150.

Over $140,000 ................................... $35,928.50, plus 36% of the excess over

$140,000.

1 ‘‘(b) HEADS OF HOUSEHOLDS.—There is hereby im2 posed on the taxable income of every head of a household

3 (as defined in section 2(b)) a tax determined in accordance

4 with the following table:

‘‘If taxable income is: The tax is:

Not over $29,600 .............................. 15% of taxable income.

Over $29,600 but not over $76,400 $4,440, plus 28% of the excess over

$29,600.

Over $76,400 but not over $127,500 $17,544, plus 31% of the excess over

$76,400.

Over $127,500 ................................... $33,385, plus 36% of the excess over

$127,500.

5 ‘‘(c) UNMARRIED INDIVIDUALS (OTHER THAN SURVIV6 ING SPOUSES AND HEADS OF HOUSEHOLDS).—There is

7 hereby imposed on the taxable income of every individual

8 (other than a surviving spouse as defined in section 2(a)

9 or the head of a household as defined in section 2(b)) who

10 is not a married individual (as defined in section 7703)

11 a tax determined in accordance with the following table:

‘‘If taxable income is: The tax is:

Not over $22,100 .............................. 15% of taxable income.

Over $22,100 but not over $53,500 $3,315, plus 28% of the excess over

$22,100.

Over $53,500 but not over $115,000 $12,107, plus 31% of the excess over

$53,500.

Over $115,000 ................................... $31,172, plus 36% of the excess over

$115,000.

12 ‘‘(d) MARRIED INDIVIDUALS FILING SEPARATE RE13 TURNS.—There is hereby imposed on the taxable income of
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1 every married individual (as defined in section 7703) who

2 does not make a single return jointly with his spouse under

3 section 6013, a tax determined in accordance with the fol4 lowing table:

‘‘If taxable income is: The tax is:

Not over $18,450 .............................. 15% of taxable income.

Over $18,450 but not over $44,575 $2,767.50, plus 28% of the excess over

$18,450.

Over $44,575 but not over $70,000 $10,082.50, plus 31% of the excess over

$44,575.

Over $70,000 ..................................... $17,964.25, plus 36% of the excess over

$70,000.

5 ‘‘(e) ESTATES AND TRUSTS.—There is hereby imposed

6 on the taxable income of—

7 ‘‘(1) every estate, and

8 ‘‘(2) every trust,

9 taxable under this subsection a tax determined in accord10 ance with the following table:

‘‘If taxable income is: The tax is:

Not over $1,500 ................................ 15% of taxable income.

Over $1,500 but not over $3,500 ..... $225, plus 28% of the excess over

$1,500.

Over $3,500 but not over $5,500 ..... $785, plus 31% of the excess over

$3,500.

Over $5,500 ....................................... $1,405, plus 36% of the excess over

$5,500.’’

11 (b) CONFORMING AMENDMENTS.—

12 (1) Section 531 is amended by striking ‘‘28 per13 cent’’ and inserting ‘‘36 percent’’.

14 (2) Section 541 is amended by striking ‘‘28 per15 cent’’ and inserting ‘‘36 percent’’.

16 (3)(A) Subsection (f) of section 1 is amended—
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1 (i) by striking ‘‘1990’’ in paragraph (1)

2 and inserting‘‘1993’’, and

3 (ii) by striking ‘‘1989’’ in paragraph (3)(B)

4 and inserting ‘‘1992’’.

5 (B) Subsection (f) of section 1 is amended by

6 adding at the end thereof the following new para7 graph:

8 ‘‘(7) SPECIAL RULE FOR CERTAIN BRACKETS.—

9 ‘‘(A) CALENDAR YEAR 1994.—In prescribing

10 the tables under paragraph (1) which apply with

11 respect to taxable years beginning in calendar

12 year 1994, the Secretary shall make no adjust13 ment to the dollar amounts at which the 36 per14 cent rate bracket begins or at which the 39.6 per15 cent rate begins under any table contained in

16 subsection (a), (b), (c), (d), or (e).

17 ‘‘(B) LATER CALENDAR YEARS.—In pre18 scribing tables under paragraph (1) which apply

19 with respect to taxable years beginning in a cal20 endar year after 1994, the cost-of-living adjust21 ment used in making adjustments to the dollar

22 amounts referred to in subparagraph (A) shall be

23 determined under paragraph (3) by substituting

24 ‘1993’ for ‘1992’.’’
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1 (C) Subparagraph (C) of section 41(e)(5) is

2 amended by striking ‘‘1989’’ each place it appears

3 and inserting ‘‘1992’’.

4 (D) Subparagraph (B) of section 63(c)(4) is

5 amended by striking ‘‘1989’’ and inserting ‘‘1992’’.

6 (E) Subparagraph (B) of section 68(b)(2) is

7 amended by striking ‘‘1989’’ and inserting ‘‘1992’’.

8 (F) Subparagraph (B) of section 132(f)(6) is

9 amended by striking ‘‘, determined by substituting’’

10 and all that follows down through the period at the

11 end thereof and inserting a period.

12 (G) Subparagraphs (A)(ii) and (B)(ii) of section

13 151(d)(4) are each amended by striking ‘‘1989’’ and

14 inserting ‘‘1992’’.

15 (H) Clause (ii) of section 513(h)(2)(C) is amend16 ed by striking ‘‘1989’’ and inserting ‘‘1992’’.

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

18 section shall apply to taxable years beginning after Decem19 ber 31, 1992.

20 SEC. 8202. SURTAX ON HIGH-INCOME TAXPAYERS.

21 (a) GENERAL RULE.—

22 (1) Subsection (a) of section 1 (as amended by

23 section 8201) is amended by striking the last item in

24 the table contained therein and inserting the follow25 ing:
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‘‘Over $140,000 but not over

$250,000.

$35,928.50, plus 36% of the excess over

$140,000.

Over $250,000 ................................... $75,528.50, plus 39.6% of the excess

over $250,000.’’

1 (2) Subsection (b) of section 1 (as so amended)

2 is amended by striking the last item in the table con3 tained therein and inserting the following:

‘‘Over $127,500 but not over

$250,000.

$33,385, plus 36% of the excess over

$127,500.

Over $250,000 ................................... $77,485, plus 39.6% of the excess over

$250,000.’’

4 (3) Subsection (c) of section 1 (as so amended)

5 is amended by striking the last item in the table con6 tained therein and inserting the following:

‘‘Over $115,000 but not over

$250,000.

$31,172, plus 36% of the excess over

$115,000.

Over $250,000 ................................... $79,772, plus 39.6% of the excess over

$250,000.’’

7 (4) Subsection (d) of section 1 (as so amended)

8 is amended by striking the last item in the table con9 tained therein and inserting the following:

‘‘Over $70,000 but not over

$125,000.

$17,964.25, plus 36% of the excess over

$70,000.

Over $125,000 ................................... $37,764.25, plus 39.6% of the excess

over $125,000.’’

10 (5) Subsection (e) of section 1 (as so amended)

11 is amended by striking the last item in the table con12 tained therein and inserting the following:

‘‘Over $5,500 but not over $7,500 ... $1,405, plus 36% of the excess over

$5,500.

Over $7,500 ....................................... $2,125, plus 39.6% of the excess over

$7,500.’’

13 (b) SURTAX ON NET CAPITAL GAINS.—Section 1(h)

14 (relating to maximum capital gains rate) is amended by
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1 striking the period at the end of paragraph (2) and insert2 ing ‘‘, plus’’, and by adding at the end the following new

3 paragraph:

4 ‘‘(3) a tax of 2.8 percent of the lesser of—

5 ‘‘(A) the net capital gain, or

6 ‘‘(B) the amount of taxable income in excess

7 of the dollar amount at which the last rate

8 bracket begins for such taxable year in the table

9 contained in subsection (a), (b), (c), (d), or (e),

10 whichever is applicable.’’

11 (c) TECHNICAL AMENDMENT.—Sections 531 and 541

12 (as amended by section 8201) are each amended by striking

13 ‘‘36 percent’’ and inserting ‘‘39.6 percent’’.

14 (d) EFFECTIVE DATE.—The amendments made by this

15 section shall apply to taxable years beginning after Decem16 ber 31, 1992.

17 SEC. 8203. MODIFICATIONS TO ALTERNATIVE MINIMUM TAX

18 RATES AND EXEMPTION AMOUNTS.

19 (a) INCREASE IN RATE.—Paragraph (1) of section

20 55(b) (defining tentative minimum tax) is amended to read

21 as follows:

22 ‘‘(1) AMOUNT OF TENTATIVE TAX.—

23 ‘‘(A) NONCORPORATE TAXPAYERS.—

24 ‘‘(i) IN GENERAL.—In the case of a

25 taxpayer other than a corporation, the ten-
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1 tative minimum tax for the taxable year is

2 the sum of—

3 ‘‘(I) 26 percent of so much of the

4 taxable excess as does not exceed

5 $175,000, plus

6 ‘‘(II) 28 percent of so much of the

7 taxable excess as exceeds $175,000.

8 The amount determined under the preceding

9 sentence shall be reduced by the alternative

10 minimum tax foreign tax credit for the tax11 able year.

12 ‘‘(ii) TAXABLE EXCESS.—For purposes

13 of clause (i), the term ‘taxable excess’ means

14 so much of the alternative minimum taxable

15 income for the taxable year as exceeds the

16 exemption amount.

17 ‘‘(iii) MARRIED INDIVIDUAL FILING

18 SEPARATE RETURN.—In the case of a mar19 ried individual filing a separate return,

20 clause (i) shall be applied by substituting

21 ‘$87,500’ for ‘$175,000’ each place it ap22 pears. For purposes of the preceding sen23 tence, marital status shall be determined

24 under section 7703.
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1 ‘‘(B) CORPORATIONS.—In the case of a cor2 poration, the tentative minimum tax for the tax3 able year is—

4 ‘‘(i) 20 percent of so much of the alter5 native minimum taxable income for the tax6 able year as exceeds the exemption amount,

7 reduced by

8 ‘‘(ii) the alternative minimum tax for9 eign tax credit for the taxable year.’’

10 (b) INCREASE IN EXEMPTION AMOUNTS.—Paragraph

11 (1) of section 55(d) (defining exemption amount) is amend12 ed—

13 (1) by striking ‘‘$40,000’’ in subparagraph (A)

14 and inserting ‘‘$45,000’’,

15 (2) by striking ‘‘$30,000’’ in subparagraph (B)

16 and inserting ‘‘$33,750’’, and

17 (3) by striking ‘‘$20,000’’ in subparagraph (C)

18 and inserting ‘‘$22,500’’.

19 (c) CONFORMING AMENDMENTS.—

20 (1) The last sentence of section 55(d)(3) is

21 amended by striking ‘‘$155,000 or (ii) $20,000’’ and

22 inserting ‘‘$165,000 or (ii) $22,500’’.

23 (2)(A) Subparagraph (A) of section 897(a)(2) is

24 amended by striking ‘‘the amount determined under

25 section 55(b)(1)(A) shall not be less than 21 percent
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1 of’’ and inserting ‘‘the taxable excess for purposes of

2 section 55(b)(1)(A) shall not be less than’’.

3 (B) The heading for paragraph (2) of section

4 897(a) is amended by striking ‘‘21-PERCENT’’.

5 (d) EFFECTIVE DATE.—The amendments made by this

6 section shall apply to taxable years beginning after Decem7 ber 31, 1992.

8 SEC. 8203A. RATE INCREASES NOT TO TAKE EFFECT UNTIL

9 JULY 1, 1993.

10 (a) IN GENERAL.—Section 1 (relating to tax imposed)

11 is amended by adding at the end the following new sub12 section:

13 ‘‘(i) SPECIAL RULES FOR TAXABLE YEARS BEGINNING

14 IN 1993.—

15 ‘‘(1) IN GENERAL.—In the case of taxable years

16 beginning in calendar year 1993, each of the tables

17 contained in subsections (a), (b), (c), (d), and (e)

18 shall be applied—

19 ‘‘(A) by substituting ‘33.5 percent’ for ‘36

20 percent’,

21 ‘‘(B) by substituting ‘35.3 percent’ for ‘39.6

22 percent’, and

23 ‘‘(C) by substituting for the dollar amount

24 of tax in the last rate bracket the dollar amount
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1 determined under the table contained in para2 graph (2).

3 ‘‘(2) DOLLAR AMOUNT OF TAX.—The dollar

4 amount substituted under paragraph (1) shall be de5 termined as follows:

‘‘In the case of: The dollar amount is:

Subsection (a) ...................... $72,778.50 for $75,528.50.

Subsection (b) ....................... $74,422.50 for $77,485.00.

Subsection (c) ....................... $76,397.00 for $79,772.00.

Subsection (d) ...................... $36,389.25 for $37,764.25.

Subsection (e) ....................... $2,075.00 for $2,125.00.’’

6 (b) CONFORMING AMENDMENTS.—

7 (1) Sections 531 and 541 (as amended by section

8 8202) are each amended by inserting ‘‘(35.3 percent

9 in the case of taxable years beginning in calendar

10 year 1993)’’ after ‘‘39.6 percent’’.

11 (2) Section 1(h)(3), as added by section 8202(b),

12 is amended by inserting ‘‘(1.4 percent in the case of

13 taxable years beginning in calendar year 1993)’’ after

14 ‘‘2.8 percent’’.

15 (3) Paragraph (1) of section 55(b), as amended

16 by section 8203, is amended by adding at the end the

17 following new subparagraph:

18 ‘‘(C) SPECIAL RULES FOR 1993.—In the case

19 of any taxable year beginning in the calendar

20 year 1993, subparagraph (A)(i) shall be applied

21 by substituting—
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1 ‘‘(i) ‘25 percent’ for ‘26 percent’ in

2 subclause (I), and

3 ‘‘(ii) ‘26 percent’ for ‘28 percent’ in

4 subclause (II).’’

5 (c) EFFECTIVE DATE.—The amendments made by this

6 section shall apply to taxable years beginning after Decem7 ber 31, 1992.

8 SEC. 8204. OVERALL LIMITATION ON ITEMIZED DEDUC9 TIONS FOR HIGH-INCOME TAXPAYERS MADE

10 PERMANENT.

11 Subsection (f) of section 68 (relating to overall limita12 tion on itemized deductions) is hereby repealed.

13 SEC. 8205. PHASEOUT OF PERSONAL EXEMPTION OF HIGH14 INCOME TAXPAYERS MADE PERMANENT.

15 Section 151(d)(3) (relating to phaseout of personal ex16 emption) is amended by striking subparagraph (E).

17 SEC. 8206. PROVISIONS TO PREVENT CONVERSION OF OR18 DINARY INCOME TO CAPITAL GAIN.

19 (a) INTEREST EMBEDDED IN FINANCIAL TRANS20 ACTIONS.—

21 (1) IN GENERAL.—Part IV of subchapter P of

22 chapter 1 (relating to special rules for determining

23 capital gains and losses) is amended by adding at the

24 end the following new section:
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1 ‘‘SEC. 1258. RECHARACTERIZATION OF GAIN FROM CERTAIN

2 FINANCIAL TRANSACTIONS.

3 ‘‘(a) GENERAL RULE.—In the case of any gain—

4 ‘‘(1) which (but for this section) would be treated

5 as gain from the sale or exchange of a capital asset,

6 and

7 ‘‘(2) which is recognized on the disposition or

8 other termination of any position which was held as

9 part of a conversion transaction,

10 such gain (to the extent such gain does not exceed the appli11 cable imputed income amount) shall be treated as ordinary

12 income.

13 ‘‘(b) APPLICABLE IMPUTED INCOME AMOUNT.—For

14 purposes of subsection (a), the term ‘applicable imputed in15 come amount’ means, with respect to any disposition or

16 other termination referred to in subsection (a), an amount

17 equal to—

18 ‘‘(1) the amount of interest which would have ac19 crued on the taxpayer’s net investment in the conver20 sion transaction for the period ending on the date of

21 such disposition or other termination (or, if earlier,

22 the date on which the requirements of subsection (c)

23 ceased to be satisfied) at a rate equal to 120 percent

24 of the applicable rate, reduced by

25 ‘‘(2) the amount treated as ordinary income

26 under subsection (a) with respect to any prior dis-
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1 position or other termination of a position which was

2 held as a part of such transaction.

3 The Secretary shall by regulations provide for such reduc4 tions in the applicable imputed income amount as may be

5 appropriate by reason of amounts capitalized under section

6 263(g), ordinary income received, or otherwise.

7 ‘‘(c) CONVERSION TRANSACTION.—For purposes of this

8 section, the term ‘conversion transaction’ means any trans9 action—

10 ‘‘(1) substantially all of the taxpayer’s expected

11 return from which is attributable to the time value of

12 the taxpayer’s net investment in such transaction,

13 and

14 ‘‘(2) which is—

15 ‘‘(A) the holding of any property (whether

16 or not actively traded), and the entering into a

17 contract to sell such property (or substantially

18 identical property) at a price determined in ac19 cordance with such contract, but only if such

20 property was acquired and such contract was en21 tered into on a substantially contemporaneous

22 basis,

23 ‘‘(B) an applicable straddle,
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1 ‘‘(C) any other transaction which is mar2 keted or sold as producing capital gains and as

3 a transaction described in paragraph (1), or

4 ‘‘(D) any other transaction specified in reg5 ulations prescribed by the Secretary.

6 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur7 poses of this section—

8 ‘‘(1) APPLICABLE STRADDLE.—The term ‘appli9 cable straddle’ means any straddle (within the mean10 ing of section 1092(c)); except that the term ‘personal

11 property’ shall include stock.

12 ‘‘(2) APPLICABLE RATE.—The term ‘applicable

13 rate’ means—

14 ‘‘(A) the applicable Federal rate determined

15 under section 1274(d) (compounded semiannu16 ally) as if the conversion transaction were a debt

17 instrument, or

18 ‘‘(B) if the term of the conversion trans19 action is indefinite, the Federal short-term rates

20 in effect under section 6621(b) during the period

21 of the conversion transaction (compounded

22 daily).

23 ‘‘(3) TREATMENT OF BUILT-IN LOSSES.—
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1 ‘‘(A) IN GENERAL.—If any position with a

2 built-in loss becomes part of a conversion trans3 action—

4 ‘‘(i) for purposes of applying this sub5 title to such position for periods after such

6 position becomes part of such transaction,

7 such position shall be taken into account at

8 its fair market value as of the time it be9 came part of such transaction, except that

10 ‘‘(ii) upon the disposition or other ter11 mination of such position in a transaction

12 in which gain or loss is recognized, such

13 built-in loss shall be recognized and shall

14 have a character determined without regard

15 to this section.

16 ‘‘(B) BUILT-IN LOSS.—For purposes of sub17 paragraph (A), the term ‘built-in loss’ means the

18 loss (if any) which would have been realized if

19 the position had been disposed of or otherwise

20 terminated at its fair market value as of the

21 time such position became part of such trans22 action.

23 ‘‘(4) POSITION TAKEN INTO ACCOUNT AT FAIR

24 MARKET VALUE.—In determining the taxpayer’s net

25 investment in any conversion transaction, there shall
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1 be included the fair market value of any position

2 which becomes part of such transaction (determined

3 as of the time such position became part of such

4 transaction).

5 ‘‘(5) SPECIAL RULE FOR OPTIONS DEALERS AND

6 COMMODITIES TRADERS.—

7 ‘‘(A) IN GENERAL.—Subsection (a) shall not

8 apply to transactions —

9 ‘‘(i) of an options dealer in the normal

10 course of the dealer’s trade or business of

11 dealing with options, or

12 ‘‘(ii) of a commodities trader in the

13 normal course of the trader’s trade or busi14 ness of trading section 1256 contracts.

15 ‘‘(B) DEFINITIONS.—For purposes of this

16 paragraph—

17 ‘‘(i) OPTIONS DEALER.—The term ‘op18 tions dealer’ has the meaning given such

19 term by section 1256(g)(8).

20 ‘‘(ii) COMMODITIES TRADER.— The

21 term ‘commodities trader’ means any per22 son who is a member (or, to the extent pro23 vided in regulations, is entitled to trade as

24 a member) of a domestic board of trade

25 which is designated as a contract market by
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1 the Commodity Futures Trading Commis2 sion.

3 ‘‘(C) LIMITED PARTNERS AND LIMITED EN4 TREPRENEURS.—In the case of any gain from a

5 transaction recognized by an entity which is al6 locable to a limited partner or limited entre7 preneur (within the meaning of section

8 464(e)(2)), subparagraph (A) shall not apply

9 if—

10 ‘‘(i) substantially all of the limited

11 partner’s (or limited entrepreneur’s) ex12 pected return from the entity is attributable

13 to the time value of the partner’s (or entre14 preneur’s) net investment in such entity,

15 ‘‘(ii) the transaction (or the interest in

16 the entity) was marketed or sold as produc17 ing capital gains treatment and as a trans18 action described in subsection (c)(1), or

19 ‘‘(iii) the transaction (or the interest

20 in the entity) is a transaction (or interest)

21 specified in regulations prescribed by the

22 Secretary.’’

23 (2) CLERICAL AMENDMENT.—The table of sec24 tions for part IV of subchapter P of chapter 1 is
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1 amended by adding at the end thereof the following

2 new item:

‘‘Sec. 1258. Recharacterization of gain from certain financial

transactions.’’

3 (3) EFFECTIVE DATE.—The amendments made

4 by this section shall apply to conversion transactions

5 entered into after April 30, 1993.

6 (b) REPEAL OF CERTAIN EXCEPTIONS TO MARKET

7 DISCOUNT RULES.—

8 (1) MARKET DISCOUNT BONDS ISSUED ON OR

9 BEFORE JULY 18, 1984.—The following provisions are

10 hereby repealed:

11 (A) Section 1276(e).

12 (B) Section 1277(d).

13 (2) TAX-EXEMPT OBLIGATIONS.—

14 (A) IN GENERAL.—Paragraph (1) of section

15 1278(a) (defining market discount bond) is

16 amended—

17 (i) by striking clause (ii) of subpara18 graph (B) and redesignating subclauses (iii)

19 and (iv) of such subparagraph as clauses

20 (ii) and (iii), respectively,

21 (ii) by redesignating subparagraph (C)

22 as subparagraph (D), and

23 (iii) by inserting after subparagraph

24 (B) the following new subparagraph:
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1 ‘‘(C) SECTION 1277 NOT APPLICABLE TO

2 TAX-EXEMPT OBLIGATIONS.—For purposes of sec3 tion 1277, the term ‘market discount bond’ shall

4 not include any tax-exempt obligation (as de5 fined in section 1275(a)(3)).’’

6 (B) CONFORMING AMENDMENT.—Sections

7 1276(a)(4) and 1278(b)(1) are each amended by

8 striking ‘‘sections 871(a)’’ and inserting ‘‘sec9 tions 103, 871(a),’’.

10 (3) EFFECTIVE DATE.—The amendments made

11 by this section shall apply to obligations purchased

12 (within the meaning of section 1272(d)(1) of the In13 ternal Revenue Code of 1986) after April 30, 1993.

14 (c) TREATMENT OF STRIPPED PREFERRED STOCK.—

15 (1) IN GENERAL.—Section 305 is amended by re16 designating subsection (e) as subsection (f) and by in17 serting after subsection (d) the following new sub18 section:

19 ‘‘(e) TREATMENT OF PURCHASER OF STRIPPED PRE20 FERRED STOCK.—

21 ‘‘(1) IN GENERAL.—If any person purchases

22 after April 30, 1993, any stripped preferred stock,

23 then such person, while holding such stock, shall in24 clude in gross income amounts equal to the amounts

25 which would have been so includible if such stripped
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1 preferred stock were a bond issued on the purchase

2 date and having original issue discount equal to the

3 excess, if any, of—

4 ‘‘(A) the redemption price for such stock,

5 over

6 ‘‘(B) the price at which such person pur7 chased such stock.

8 The preceding sentence shall also apply in the case of

9 any person whose basis in such stock is determined by

10 reference to the basis in the hands of such purchaser.

11 ‘‘(2) BASIS ADJUSTMENTS.—Appropriate adjust12 ments to basis shall be made for amounts includible

13 in gross income under paragraph (1).

14 ‘‘(3) TAX TREATMENT OF PERSON STRIPPING

15 STOCK.—If any person strips the rights to 1 or more

16 dividends from any stock described in paragraph

17 (5)(B) and after April 30, 1993, disposes of such divi18 dend rights, for purposes of paragraph (1), such per19 son shall be treated as having purchased the stripped

20 preferred stock on the date of such disposition for a

21 purchase price equal to such person’s adjusted basis

22 in such stripped preferred stock.

23 ‘‘(4) AMOUNTS TREATED AS ORDINARY IN24 COME.—Any amount included in gross income under

25 paragraph (1) shall be treated as ordinary income.
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1 ‘‘(5) STRIPPED PREFERRED STOCK.—For pur2 poses of this subsection—

3 ‘‘(A) IN GENERAL.—The term ‘stripped pre4 ferred stock’ means any stock described in sub5 paragraph (B) if there has been a separation in

6 ownership between such stock and any dividend

7 on such stock which has not become payable.

8 ‘‘(B) DESCRIPTION OF STOCK.—Stock is de9 scribed in this subsection if such stock—

10 ‘‘(i) is limited and preferred as to divi11 dends and does not participate in corporate

12 growth to any significant extent, and

13 ‘‘(ii) has a fixed redemption price.

14 ‘‘(6) PURCHASE.—For purposes of this sub15 section, the term ‘purchase’ means—

16 ‘‘(A) any acquisition of stock, where

17 ‘‘(B) the basis of such stock is not deter18 mined in whole or in part by the reference to the

19 adjusted basis of such stock in the hands of the

20 person from whom acquired.’’

21 (2) COORDINATION WITH SECTION 167(e).—Para22 graph (2) of section 167(e) is amended to read as fol23 lows:

24 ‘‘(2) COORDINATION WITH OTHER PROVISIONS.—
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1 ‘‘(A) SECTION 273.—This subsection shall

2 not apply to any term interest to which section

3 273 applies.

4 ‘‘(B) SECTION 305(e).—This subsection shall

5 not apply to the holder of the dividend rights

6 which were separated from any stripped pre7 ferred stock to which section 305(e)(1) applies.’’

8 (3) EFFECTIVE DATE.—The amendments made

9 by this subsection shall take effect on April 30, 1993.

10 (d) TREATMENT OF CAPITAL GAIN UNDER LIMITATION

11 ON INVESTMENT INTEREST.—

12 (1) IN GENERAL.—Subparagraph (B) of section

13 163(d)(4) (defining investment income) is amended to

14 read as follows:

15 ‘‘(B) INVESTMENT INCOME.—The term ‘in16 vestment income’ means the sum of—

17 ‘‘(i) gross income from property held

18 for investment (other than any gain taken

19 into account under clause (ii)(I)),

20 ‘‘(ii) the excess (if any) of—

21 ‘‘(I) the net gain attributable to

22 the disposition of property held for in23 vestment, over

24 ‘‘(II) the net capital gain deter25 mined by only taking into account
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1 gains and losses from dispositions of

2 property held for investment, plus

3 ‘‘(iii) so much of the net capital gain

4 referred to in clause (ii)(II) (or, if lesser,

5 the net gain referred to in clause (ii)(I)) as

6 the taxpayer elects to take into account

7 under this clause.’’

8 (2) COORDINATION WITH SPECIAL CAPITAL GAINS

9 RATE.—Subsection (h) of section 1, as amended by

10 section 8202(b), is amended by adding at the end the

11 following new sentence:

12 ‘‘For purposes of the preceding sentence, the net capital

13 gain for any taxable year shall be reduced (but not below

14 zero) by the amount which the taxpayer elects to take into

15 account as investment income for the taxable year under

16 section 163(d)(4)(B)(iii).’’

17 (3) EFFECTIVE DATE.—The amendments made

18 by this subsection shall apply to taxable years begin19 ning after December 31, 1992.

20 (e) TREATMENT OF CERTAIN APPRECIATED INVEN21 TORY.—

22 (1) IN GENERAL.—Paragraph (1) of section

23 751(d) is amended to read as follows:

24 ‘‘(1) SUBSTANTIAL APPRECIATION.—
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1 ‘‘(A) IN GENERAL.—Inventory items of the

2 partnership shall be considered to have appre3 ciated substantially in value if their fair market

4 value exceeds 120 percent of the adjusted basis to

5 the partnership of such property.

6 ‘‘(B) CERTAIN PROPERTY EXCLUDED.—For

7 purposes of subparagraph (A), there shall be ex8 cluded any inventory property if a principal

9 purpose for acquiring such property was to

10 avoid the provisions of this section relating to

11 inventory items.’’

12 (2) EFFECTIVE DATE.—The amendment made by

13 paragraph (1) shall apply to sales, exchanges, and

14 distributions after April 30, 1993.

15 Subpart B—Other Provisions

16 SEC. 8207. REPEAL OF LIMITATION ON AMOUNT OF WAGES

17 SUBJECT TO HEALTH INSURANCE EMPLOY18 MENT TAX.

19 (a) HOSPITAL INSURANCE TAX.—

20 (1) Paragraph (1) of section 3121(a) (defining

21 wages) is amended—

22 (A) by inserting ‘‘in the case of the taxes

23 imposed by sections 3101(a) and 3111(a)’’ after

24 ‘‘(1)’’,
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1 (B) by striking ‘‘applicable contribution

2 base (as determined under subsection (x))’’ each

3 place it appears and inserting ‘‘contribution and

4 benefit base (as determined under section 230 of

5 the Social Security Act)’’, and

6 (C) by striking ‘‘such applicable contribu7 tion base’’ and inserting ‘‘such contribution and

8 benefit base’’.

9 (2) Section 3121 is amended by striking sub10 section (x).

11 (b) SELF-EMPLOYMENT TAX.—

12 (1) Subsection (b) of section 1402 is amended—

13 (A) by striking ‘‘that part of the net’’ in

14 paragraph (1) and inserting ‘‘in the case of the

15 tax imposed by section 1401(a), that part of the

16 net’’,

17 (B) by striking ‘‘applicable contribution

18 base (as determined under subsection (k))’’ in

19 paragraph (1) and inserting ‘‘contribution and

20 benefit base (as determined under section 230 of

21 the Social Security Act)’’,

22 (C) by inserting ‘‘and’’ after ‘‘section

23 3121(b),’’, and

24 (D) by striking ‘‘and (C) includes’’ and all

25 that follows through ‘‘3111(b)’’.
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1 (2) Section 1402 is amended by striking sub2 section (k).

3 (c) RAILROAD RETIREMENT TAX.—

4 (1) Subparagraph (A) of section 3231(e)(2) is

5 amended by adding at the end thereof the following

6 new clause:

7 ‘‘(iii) HOSPITAL INSURANCE TAXES.—

8 Clause (i) shall not apply to—

9 ‘‘(I) so much of the rate applica10 ble under section 3201(a) or 3221(a) as

11 does not exceed the rate of tax in effect

12 under section 3101(b), and

13 ‘‘(II) so much of the rate applica14 ble under section 3211(a)(1) as does

15 not exceed the rate of tax in effect

16 under section 1401(b).’’

17 (2) Clause (i) of section 3231(e)(2)(B) is amend18 ed to read as follows:

19 ‘‘(i) TIER 1 TAXES.—Except as pro20 vided in clause (ii), the term ‘applicable

21 base’ means for any calendar year the con22 tribution and benefit base determined under

23 section 230 of the Social Security Act for

24 such calendar year.’’

25 (d) TECHNICAL AMENDMENTS.—
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1 (1) Paragraph (1) of section 6413(c) is amended

2 by striking ‘‘section 3101 or section 3201’’ and insert3 ing ‘‘section 3101(a) or section 3201(a) (to the extent

4 of so much of the rate applicable under section

5 3201(a) as does not exceed the rate of tax in effect

6 under section 3101(a))’’.

7 (2) Subparagraphs (B) and (C) of section

8 6413(c)(2) are each amended by striking ‘‘section

9 3101’’ each place it appears and inserting ‘‘section

10 3101(a)’’.

11 (3) Subsection (c) of section 6413 is amended by

12 striking paragraph (3).

13 (4) Sections 3122 and 3125 are each amended by

14 striking ‘‘applicable contribution base limitation’’

15 and inserting ‘‘contribution and benefit base limita16 tion’’.

17 (e) EFFECTIVE DATE.—The amendments made by this

18 section shall apply to 1994 and later calendar years.

19 SEC. 8208. TOP ESTATE AND GIFT TAX RATES MADE PERMA20 NENT.

21 (a) GENERAL RULE.—The table contained in para22 graph (1) of section 2001(c) is amended by striking the last

23 item and inserting the following new items:

‘‘Over $2,500,000 but not over

$3,000,000.

$1,025,800, plus 53% of the excess over

$2,500,000.

Over $3,000,000 ................................ $1,290,800, plus 55% of the excess over

$3,000,000.’’
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1 (b) CONFORMING AMENDMENTS.—

2 (1) Subsection (c) of section 2001 is amended by

3 striking paragraph (2) and by redesignating para4 graph (3) as paragraph (2).

5 (2) Paragraph (2) of section 2001(c), as redesig6 nated by paragraph (1), is amended by striking

7 ‘‘($18,340,000 in the case of decedents dying, and

8 gifts made, after 1992)’’.

9 (3) The last sentence of section 2101(b) is

10 amended by striking ‘‘section 2001(c)(3)’’ and insert11 ing ‘‘section 2001(c)(2)’’.

12 (c) EFFECTIVE DATE.—The amendments made by this

13 section shall apply in the case of decedents dying, and gifts

14 made, after December 31, 1992.

15 SEC. 8209. REDUCTION IN DEDUCTIBLE PORTION OF BUSI16 NESS MEALS AND ENTERTAINMENT.

17 (a) GENERAL RULE.—Paragraph (1) of section 274(n)

18 (relating to only 80 percent of meal and entertainment ex19 penses allowed as deduction) is amended by striking ‘‘80

20 percent’’ and inserting ‘‘50 percent’’.

21 (b) SUBSTANTIATION REQUIREMENT.—In the case of

22 taxable years beginning after December 31, 1993, Treasury

23 Regulation § 1.274–5T(c)(2)(iii)(B) shall be applied by sub24 stituting ‘‘$20’’ for ‘‘$25’’.
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1 (c) CONFORMING AMENDMENT.—The subsection head2 ing for section 274(n) is amended by striking ‘‘80’’ and in3 serting ‘‘50’’.

4 (d) EFFECTIVE DATE.—The amendments made by this

5 section shall apply to taxable years beginning after Decem6 ber 31, 1993.

7 SEC. 8209A. SENSE OF THE SENATE RELATING TO THE DE8 DUCTIBILITY OF BUSINESS MEALS AND EN9 TERTAINMENT EXPENSES.

10 (a) FINDINGS.—The Congress finds the following:

11 (1) That—

12 (A) travel and tourism is the third largest

13 retail industry in the United States and ac14 counts for 11 percent of the total value of goods

15 and services exported by the United States;

16 (B) in 1992, the tourism industry produced

17 revenues in the amount of $369,000,000,000

18 which produced $44,000,000,000 in tax revenues;

19 and

20 (C) of such tax revenues, the Federal Gov21 ernment received $24,000,000,000.

22 (2) The restaurant industry provides thousands

23 of jobs in the United States.
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1 (3) The American performing arts community

2 supports, develops, and exports world-class perform3 ing arts.

4 (4) The reduction in the rate of the tax deduct5 ibility of business meals and entertainment expenses

6 from 80 percent to 50 percent may have a negative

7 impact on the United States restaurant, entertain8 ment, and tourism industries.

9 (5) Any loss of revenues due to the reduction de10 scribed in paragraph (4) may result in the loss of jobs

11 in the restaurant, entertainment, and tourism indus12 tries, many of which are filled by young individuals

13 in their first jobs and by members of minority groups.

14 (6) The unemployment rate among individuals

15 and members described in paragraph (5) greatly ex16 ceeds the national unemployment rate of 6.9 percent.

17 (b) SENSE OF THE SENATE.—It is the sense of the Sen18 ate that the conferees with respect to this title will make

19 every effort to reduce or eliminate the proposed reduction

20 in the deductibility of business meals and entertainment ex21 penses.

22 SEC. 8210. ELIMINATION OF DEDUCTION FOR CLUB MEM23 BERSHIP FEES.

24 (a) IN GENERAL.—Subsection (a) of section 274 (relat25 ing to disallowance of certain entertainment, etc., expenses)
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1 is amended by adding at the end thereof the following new

2 paragraph:

3 ‘‘(3) DENIAL OF DEDUCTION FOR CLUB DUES.—

4 Notwithstanding the preceding provisions of this sub5 section, no deduction shall be allowed under this

6 chapter for amounts paid or incurred for membership

7 in any club organized for business, pleasure, recre8 ation, or other social purpose.’’

9 (b) EXCEPTION FOR EMPLOYEE RECREATIONAL EX10 PENSES NOT TO APPLY.—Paragraph (4) of section 274(e)

11 is amended by adding at the end thereof the following: ‘‘This

12 paragraph shall not apply for purposes of subsection

13 (a)(3).’’

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

15 section shall apply to amounts paid or incurred after De16 cember 31, 1993.

17 SEC. 8211. DISALLOWANCE OF DEDUCTION FOR CERTAIN

18 EMPLOYEE REMUNERATION IN EXCESS OF

19 $1,000,000.

20 (a) GENERAL RULE.—Section 162 (relating to trade

21 or business expenses) is amended by redesignating sub22 section (m) as subsection (n) and by inserting after sub23 section (l) the following new subsection:

24 ‘‘(m) CERTAIN EXCESSIVE EMPLOYEE REMUNERA25 TION.—
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1 ‘‘(1) IN GENERAL.—In the case of any publicly

2 held corporation, no deduction shall be allowed under

3 this chapter for applicable employee remuneration

4 with respect to any covered employee to the extent

5 that the amount of such remuneration for the taxable

6 year with respect to such employee exceeds $1,000,000.

7 ‘‘(2) PUBLICLY HELD CORPORATION.—For pur8 poses of this subsection, the term ‘publicly held cor9 poration’ means any corporation issuing any class of

10 common equity securities required to be registered

11 under section 12 of the Securities Exchange Act of

12 1934.

13 ‘‘(3) COVERED EMPLOYEE.—For purposes of this

14 subsection, the term ‘covered employee’ means any

15 employee of the taxpayer if—

16 ‘‘(A) as of the close of the taxable year, such

17 employee is the chief executive officer of the tax18 payer or is an individual acting in such a ca19 pacity, or

20 ‘‘(B) the total compensation for the taxable

21 year of such employee is required to be reported

22 to shareholders under the Securities Exchange

23 Act of 1934 by reason of such employee being

24 among the 4 highest compensated officers for the
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1 taxable year (other than the chief executive offi2 cer).

3 ‘‘(4) APPLICABLE EMPLOYEE REMUNERATION.—

4 For purposes of this subsection—

5 ‘‘(A) IN GENERAL.—Except as otherwise

6 provided in this paragraph, the term ‘applicable

7 employee remuneration’ means, with respect to

8 any covered employee for any taxable year, the

9 aggregate amount allowable as a deduction

10 under this chapter for such taxable year (deter11 mined without regard to this subsection) for re12 muneration for services performed by such em13 ployee (whether or not during the taxable year).

14 ‘‘(B) EXCEPTION FOR REMUNERATION PAY15 ABLE ON COMMISSION BASIS.—The term ‘appli16 cable employee remuneration’ shall not include

17 any remuneration payable on a commission

18 basis solely on account of income generated di19 rectly by the individual performance of the indi20 vidual to whom such remuneration is payable.

21 ‘‘(C) OTHER PERFORMANCE-BASED COM22 PENSATION.—The term ‘applicable employee re23 muneration’ shall not include any remuneration

24 payable solely on account of the attainment of

25 one or more performance goals, but only if—
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1 ‘‘(i) the performance goals are deter2 mined by a compensation committee of the

3 board of directors of the taxpayer which is

4 comprised solely of 2 or more outside direc5 tors,

6 ‘‘(ii) the material terms under which

7 the remuneration is to be paid, including

8 the performance goals, are disclosed to

9 shareholders and approved by a majority of

10 the vote in a separate shareholder vote be11 fore the payment of such remuneration, and

12 ‘‘(iii) before any payment of such re13 muneration, the compensation committee re14 ferred to in clause (i) certifies that the per15 formance goals and any other material

16 terms were in fact satisfied.

17 ‘‘(D) EXCEPTION FOR EXISTING BINDING

18 CONTRACTS.—The term ‘applicable employee re19 muneration’ shall not include any remuneration

20 payable under a written binding contract which

21 was in effect on February 17, 1993, and which

22 was not modified thereafter in any material re23 spect before such remuneration is paid.

24 ‘‘(E) REMUNERATION.—For purposes of this

25 paragraph, the term ‘remuneration’ includes any
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1 remuneration (including benefits) in any me2 dium other than cash, but shall not include—

3 ‘‘(i) any payment referred to in so

4 much of section 3121(a)(5) as precedes sub5 paragraph (E) thereof, and

6 ‘‘(ii) any benefit provided to or on be7 half of an employee if at the time such bene8 fit is provided it is reasonable to believe

9 that the employee will be able to exclude

10 such benefit from gross income under this

11 chapter.

12 For purposes of clause (i), section 3121(a)(5)

13 shall be applied without regard to section

14 3121(v)(1).

15 ‘‘(F) COORDINATION WITH DISALLOWED

16 GOLDEN PARACHUTE PAYMENTS.—The dollar

17 limitation contained in paragraph (1) shall be

18 reduced (but not below zero) by the amount (if

19 any) which would have been included in the ap20 plicable employee remuneration of the covered

21 employee for the taxable year but for being dis22 allowed under section 280G.’’

23 (b) EFFECTIVE DATE.—The amendment made by sub24 section (a) shall apply to amounts which would otherwise
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1 be deductible for taxable years beginning on or after Janu2 ary 1, 1994.

3 SEC. 8212. REDUCTION IN COMPENSATION TAKEN INTO AC4 COUNT IN DETERMINING CONTRIBUTIONS

5 AND BENEFITS UNDER QUALIFIED RETIRE6 MENT PLANS.

7 (a) QUALIFICATION REQUIREMENT.—

8 (1) IN GENERAL.—Section 401(a)(17) is amend9 ed—

10 (A) by striking ‘‘$200,000’’ in the first sen11 tence and inserting ‘‘$150,000’’,

12 (B) by striking the second sentence, and

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

14 subparagraph:

15 ‘‘(B) COST-OF-LIVING ADJUSTMENT.—

16 ‘‘(i) IN GENERAL.—If, for any cal17 endar year after 1994, the excess (if any)

18 of—

19 ‘‘(I) $150,000, increased by the

20 cost-of-living adjustment for the cal21 endar year, over

22 ‘‘(II) the dollar amount in effect

23 under subparagraph (A) for taxable

24 years beginning in the calendar year,
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1 is equal to or greater than $10,000, then the

2 $150,000 amount under subparagraph (A)

3 (as previously adjusted under this subpara4 graph) for any taxable year beginning in

5 any subsequent calendar year shall be in6 creased by $10,000.

7 ‘‘(ii) COST-OF-LIVING ADJUSTMENT.—

8 The cost-of-living adjustment for any cal9 endar year shall be the adjustment made

10 under section 415(d) for such calendar year,

11 except that the base period for purposes of

12 section 415(d)(1)(A) shall be the calendar

13 quarter beginning October 1, 1993.’’

14 (2) CONFORMING AMENDMENT.—Section

15 401(a)(17) is amended by striking ‘‘(17) A trust’’ and

16 inserting:

17 ‘‘(17) COMPENSATION LIMIT.—

18 ‘‘(A) IN GENERAL.—A trust’’.

19 (b) SIMPLIFIED EMPLOYEE PENSIONS.—

20 (1) IN GENERAL.—Paragraphs (3)(C) and

21 (6)(D)(ii) of section 408(k) are each amended by

22 striking ‘‘$200,000’’ and inserting ‘‘$150,000’’.

23 (2) COST-OF-LIVING.—Paragraph (8) of section

24 408(k) is amended to read as follows:
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1 ‘‘(8) COST-OF-LIVING ADJUSTMENT.—The Sec2 retary shall adjust the $300 amount in paragraph

3 (2)(C) at the same time and in the same manner as

4 under section 415(d) and shall adjust the $150,000

5 amount in paragraphs (3)(C) and (6)(D)(ii) at the

6 same time, and by the same amount, as the adjust7 ment under section 401(a)(17)(B).’’

8 (c) OTHER RELATED PROVISIONS.—

9 (1) IN GENERAL.—Sections 404(l) and 505(b)(7)

10 are each amended—

11 (A) by striking ‘‘$200,000’’ in the first sen12 tence and inserting ‘‘$150,000’’, and

13 (B) by striking the second sentence and in14 serting ‘‘The Secretary shall adjust the $150,000

15 amount at the same time, and by the same

16 amount, as the adjustment under section

17 401(a)(17)(B).’’

18 (2) CONFORMING AMENDMENT.—The heading for

19 section 505(b)(7) is amended by striking ‘‘$200,000’’.

20 (d) EFFECTIVE DATES.—

21 (1) IN GENERAL.—Except as provided in para22 graph (2), the amendments made by this section shall

23 apply to benefits accruing in plan years beginning

24 after December 31, 1993.
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1 (2) EXCEPTION FOR COLLECTIVELY BARGAINED

2 PLANS.—In the case of a plan maintained pursuant

3 to 1 or more collective bargaining agreements between

4 employee representatives and 1 or more employers

5 ratified before the date of the enactment of this Act,

6 the amendments made by this section shall not apply

7 to contributions or benefits pursuant to such agree8 ments for plan years beginning before the earlier of—

9 (A) the latest of—

10 (i) January 1, 1994,

11 (ii) the date on which the last of such

12 collective bargaining agreements terminates

13 (without regard to any extension, amend14 ment, or modification of such agreements on

15 or after such date of enactment), or

16 (iii) in the case of a plan maintained

17 pursuant to collective bargaining under the

18 Railway Labor Act, the date of execution of

19 an extension or replacement of the last of

20 such collective bargaining agreements in ef21 fect on such date of enactment, or

22 (B) January 1, 1997.

23 (3) TRANSITION RULE FOR STATE AND LOCAL

24 PLANS.—
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1 (A) IN GENERAL.—In the case of an eligible

2 participant in a governmental plan (within the

3 meaning of section 414(d) of the Internal Reve4 nue Code of 1986), the dollar limitation under

5 section 401(a)(17) of such Code shall not apply

6 to the extent the amount of compensation which

7 is allowed to be taken into account under the

8 plan would be reduced below the amount which

9 was allowed to be taken into account under the

10 plan as in effect on July 1, 1993.

11 (B) ELIGIBLE PARTICIPANT.—For purposes

12 of subparagraph (A), an eligible participant is

13 an individual who first became a participant in

14 the plan during a plan year beginning before the

15 1st plan year beginning after the earlier of—

16 (i) the plan year in which the plan is

17 amended to reflect the amendments made by

18 this section, or

19 (ii) December 31, 1995.

20 (C) PLAN MUST BE AMENDED TO INCOR21 PORATE LIMITS.—This paragraph shall not

22 apply to any eligible participant of a plan un23 less the plan is amended so that the plan incor24 porates by reference the dollar limitation under

25 section 401(a)(17) of the Internal Revenue Code
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1 of 1986, effective with respect to noneligible par2 ticipants for plan years beginning after Decem3 ber 31, 1995 (or earlier if the plan amendment

4 so provides).

5 SEC. 8213. MODIFICATION TO DEDUCTION FOR CERTAIN

6 MOVING EXPENSES.

7 (a) DOLLAR LIMITATION.—

8 (1) IN GENERAL.—Paragraph (3) of section

9 217(b) is amended by striking subparagraphs (A) and

10 (B) and inserting the following:

11 ‘‘(A) DOLLAR LIMIT.—

12 ‘‘(i) IN GENERAL.—The aggregate

13 amount allowable as a deduction under sub14 section (a) in connection with a commence15 ment of work shall not exceed $10,000, of

16 which the aggregate amount which is attrib17 utable to expenses described in subpara18 graph (C) or (D) of paragraph (1) shall not

19 exceed $1,500.

20 ‘‘(ii) COST-OF-LIVING ADJUSTMENT.—

21 In the case of taxable years beginning in

22 calendar years after 1994, the $10,000

23 amount under clause (i) shall be increased

24 by an amount equal to the product of such

25 dollar amount and the cost-of-living adjust-
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1 ment determined under section 1(f)(3) for

2 the calendar year in which the taxable year

3 begins, except that section 1(f)(3)(B) shall

4 be applied by substituting ‘1993’ for ‘1992’.

5 Any amount determined under this clause

6 which is not a multiple of $50 shall be

7 rounded to the next lowest multiple of $50.

8 ‘‘(B) HUSBAND AND WIFE.—If a husband

9 and wife both commence work at a new prin10 cipal place of work within the same general loca11 tion, subparagraph (A) shall be applied as if

12 there was only 1 commencement of work. In the

13 case of a husband and wife filing separate re14 turns, subparagraph (A) shall be applied by sub15 stituting ‘$5,000’ for ‘$10,000’ and ‘$750’ for

16 ‘$1,500’.’’

17 (2) FOREIGN MOVES.—Paragraph (1) of section

18 217(h) is amended by striking subparagraphs (B) and

19 (C) and inserting:

20 ‘‘(B) subsection (b)(2)(A) shall be applied

21 by substituting ‘$4,500’ for ‘$1,500’, and

22 ‘‘(C) subsection (b)(2)(B) shall be applied as

23 if the last sentence of such subsection read as fol24 lows: ‘In the case of a husband and wife filing

25 separate returns, subparagraph (A) (as modified
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1 by subsection (h)(1)(B)) shall be applied by sub2 stituting ‘‘$2,250’’ for ‘‘$4,500’’.’.’’

3 (b) REPEAL OF DEDUCTION FOR QUALIFIED RESI4 DENCE SALE, ETC., EXPENSES.—

5 (1) IN GENERAL.—Paragraph (1) of section

6 217(b) (defining moving expenses) is amended by in7 serting ‘‘or’’ at the end of subparagraph (C), by strik8 ing ‘‘, or’’ at the end of subparagraph (D) and in9 serting a period, and by striking

10 subparagraph (E).

11 (2) CONFORMING AMENDMENTS.—

12 (A) Subsection (b) of section 217, as

13 amended by subsection (a), is amended by strik14 ing paragraph (2) and redesignating paragraph

15 (3) as paragraph (2).

16 (B) Section 217 is amended by striking sub17 section (e).

18 (c) DEDUCTION DISALLOWED FOR MEAL EXPENSES.—

19 Paragraph (1) of section 217(b) is amended—

20 (1) by striking ‘‘meals and lodging’’ in subpara21 graphs (B), (C) and (D) and inserting ‘‘lodging’’, and

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

23 new sentence:

24 ‘‘Such term shall not include any expenses for meals.’’
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1 (d) EFFECTIVE DATE.—The amendments made by this

2 section shall apply to expenses incurred after December 31,

3 1993.

4 SEC. 8214. SIMPLIFICATION OF INDIVIDUAL ESTIMATED

5 TAX SAFE HARBOR BASED ON LAST YEAR’S

6 TAX.

7 (a) IN GENERAL.—Paragraph (1) of section 6654(d)

8 (relating to amount of required estimated tax installments)

9 is amended by striking subparagraphs (C), (D), (E), and

10 (F) and by inserting the following new subparagraph:

11 ‘‘(C) LIMITATION ON USE OF PRECEDING

12 YEAR’S TAX.—

13 ‘‘(i) IN GENERAL.—If the adjusted

14 gross income shown on the return of the in15 dividual for the preceding taxable year ex16 ceeds $150,000, clause (ii) of subparagraph

17 (B) shall be applied by substituting ‘110

18 percent’ for ‘100 percent’.

19 ‘‘(ii) SEPARATE RETURNS.—In the

20 case of a married individual (within the

21 meaning of section 7703) who files a sepa22 rate return for the taxable year for which

23 the amount of the installment is being de24 termined, clause (i) shall be applied by sub25 stituting ‘$75,000’ for ‘$150,000’.
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1 ‘‘(iii) SPECIAL RULE.—In the case of

2 an estate or trust, adjusted gross income

3 shall be determined as provided in section

4 67(e).’’

5 (b) CONFORMING AMENDMENTS.—

6 (1) Subparagraph (A) of section 6654(j)(3) is

7 amended by striking ‘‘and subsection (d)(1)(C)(iii)

8 shall not apply’’.

9 (2) Paragraph (4) of section 6654(l) is amended

10 by striking ‘‘paragraphs (1)(C)(iv) and (2)(B)(i) of

11 subsection (d)’’ and inserting ‘‘subsection

12 (d)(2)(B)(i)’’.

13 (c) EFFECTIVE DATE.—The amendments made by this

14 section shall apply to taxable years beginning after Decem15 ber 31, 1993.

16 SEC. 8215. SOCIAL SECURITY AND TIER 1 RAILROAD RE17 TIREMENT BENEFITS.

18 (a) ADDITIONAL INCLUSION FOR CERTAIN TAX19 PAYERS.—

20 (1) IN GENERAL.—Subsection (a) of section 86

21 (relating to social security and tier 1 railroad retire22 ment benefits) is amended by adding at the end the

23 following new paragraph:

24 ‘‘(2) ADDITIONAL AMOUNT.—In the case of a tax25 payer with respect to whom the amount determined
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1 under subsection (b)(1)(A) exceeds the adjusted base

2 amount, the amount included in gross income under

3 this section shall be equal to the lesser of—

4 ‘‘(A) the sum of—

5 ‘‘(i) 85 percent of such excess, plus

6 ‘‘(ii) the lesser of the amount deter7 mined under paragraph (1) or an amount

8 equal to one-half of the difference between

9 the adjusted base amount and the base

10 amount of the taxpayer, or

11 ‘‘(B) 85 percent of the social security bene12 fits received during the taxable year.’’

13 (2) CONFORMING AMENDMENTS.—Subsection (a)

14 of section 86 is amended—

15 (A) by striking ‘‘Gross’’ and inserting:

16 ‘‘(1) IN GENERAL.—Except as provided in para17 graph (2), gross’’, and

18 (B) by redesignating paragraphs (1) and

19 (2) as subparagraphs (A) and (B), respectively.

20 (b) ADJUSTED BASE AMOUNT.—Section 86(c) (defin21 ing base amount) is amended to read as follows:

22 ‘‘(c) BASE AMOUNT AND ADJUSTED BASE AMOUNT.—

23 For purposes of this section—

24 ‘‘(1) BASE AMOUNT.—The term ‘base amount’

25 means—
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1 ‘‘(A) except as otherwise provided in this

2 paragraph, $25,000,

3 ‘‘(B) $32,000 in the case of a joint return,

4 and

5 ‘‘(C) zero in the case of a taxpayer who—

6 ‘‘(i) is married as of the close of the

7 taxable year (within the meaning of section

8 7703) but does not file a joint return for

9 such year, and

10 ‘‘(ii) does not live apart from his

11 spouse at all times during the taxable year.

12 ‘‘(2) ADJUSTED BASE AMOUNT.—The term ‘ad13 justed base amount’ means—

14 ‘‘(A) except as otherwise provided in this

15 paragraph, $32,000,

16 ‘‘(B) $40,000 in the case of a joint return,

17 and

18 ‘‘(C) zero in the case of a taxpayer described

19 in paragraph (1)(C).’’

20 (c) TRANSFERS TO THE HOSPITAL INSURANCE TRUST

21 FUND.—

22 (1) IN GENERAL.—Paragraph (1) of section

23 121(e) of the Social Security Amendments of 1983

24 (Public Law 92–21) is amended by—

25 (A) striking ‘‘There’’ and inserting:
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1 ‘‘(A) There’’;

2 (B) inserting ‘‘(i)’’ immediately following

3 ‘‘amounts equivalent to’’; and

4 (C) striking the period and inserting the

5 following: ‘‘, less (ii) the amounts equivalent to

6 the aggregate increase in tax liabilities under

7 chapter 1 of the Internal Revenue Code of 1986

8 which is attributable to the amendments to sec9 tion 86 of such Code made by section 8215 of the

10 Revenue Reconciliation Act of 1993.

11 ‘‘(B) There are hereby appropriated to the

12 hospital insurance trust fund amounts equal to

13 the increase in tax liabilities described in sub14 paragraph (A)(ii). Such appropriated amounts

15 shall be transferred from the general fund of the

16 Treasury on the basis of estimates of such tax li17 abilities made by the Secretary of the Treasury.

18 Transfers shall be made pursuant to a schedule

19 made by the Secretary of the Treasury that takes

20 into account estimated timing of collection of

21 such liabilities.’’

22 (2) DEFINITION.—Paragraph (3) of section

23 121(e) of such Act is amended by redesignating sub24 paragraph (B) as subparagraph (C), and by inserting
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1 after subparagraph (A) the following new subpara2 graph:

3 ‘‘(B) HOSPITAL INSURANCE TRUST FUND.—

4 The term ‘hospital insurance trust fund’ means

5 the fund established pursuant to section 1817 of

6 the Social Security Act.’’.

7 (3) CONFORMING AMENDMENT.—Paragraph (2)

8 of section 121(e) of such Act is amended in the first

9 sentence by striking ‘‘paragraph (1)’’ and inserting

10 ‘‘paragraph (1)(A).’’

11 (4) TECHNICAL AMENDMENTS.—Paragraph

12 (1)(A) of section 121(e) of such Act, as redesignated

13 and amended by paragraph (1), is amended by strik14 ing ‘‘1954’’ and inserting ‘‘1986’’.

15 (d) EFFECTIVE DATE.—The amendments made by

16 subsections (a) and (b) shall apply to taxable years begin17 ning after December 31, 1993.

18 PART II—PROVISIONS AFFECTING BUSINESSES

19 SEC. 8221. INCREASE IN TOP MARGINAL RATE UNDER SEC20 TION 11.

21 (a) GENERAL RULE.—Paragraph (1) of section 11(b)

22 (relating to amount of tax) is amended—

23 (1) by striking ‘‘and’’ at the end of subpara24 graph (B),
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1 (2) by striking subparagraph (C) and inserting

2 the following:

3 ‘‘(C) 34 percent of so much of the taxable

4 income as exceeds $75,000 but does not exceed

5 $10,000,000, and

6 ‘‘(D) 35 percent of so much of the taxable

7 income as exceeds $10,000,000.’’, and

8 (3) by adding at the end thereof the following

9 new sentence: ‘‘In the case of a corporation which has

10 taxable income in excess of $15,000,000, the amount

11 of the tax determined under the foregoing provisions

12 of this paragraph shall be increased by an additional

13 amount equal to the lesser of (i) 3 percent of such ex14 cess, or (ii) $100,000.’’

15 (b) CERTAIN PERSONAL SERVICE CORPORATIONS.—

16 Paragraph (2) of section 11(b) is amended by striking ‘‘34

17 percent’’ and inserting ‘‘35 percent’’.

18 (c) CONFORMING AMENDMENTS.—

19 (1) Clause (iii) of section 852(b)(3)(D) is amend20 ed by striking ‘‘66 percent’’ and inserting ‘‘65 per21 cent’’.

22 (2) Subsection (a) of section 1201 is amended by

23 striking ‘‘34 percent’’ each place it appears and in24 serting ‘‘35 percent’’.
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1 (3) Paragraphs (1) and (2) of section 1445(e)

2 are each amended by striking ‘‘34 percent’’ and in3 serting ‘‘35 percent’’.

4 (d) EFFECTIVE DATE.—The amendments made by this

5 section shall apply to taxable years beginning on or after

6 January 1, 1993; except that the amendment made by sub7 section (c)(3) shall take effect on the date of the enactment

8 of this Act.

9 SEC. 8222. DISALLOWANCE OF DEDUCTION FOR LOBBYING

10 EXPENDITURES.

11 (a) DISALLOWANCE OF DEDUCTION.—

12 (1) IN GENERAL.—Part IX of subchapter B of

13 chapter 1 (relating to items not deductible) is amend14 ed by adding at the end the following new section:

15 ‘‘SEC. 280I. LOBBYING EXPENDITURES.

16 ‘‘(a) DEDUCTION DISALLOWED.—No deduction shall be

17 allowed under this chapter for any amount paid or in18 curred—

19 ‘‘(1) for lobbying activities, or

20 ‘‘(2) to another person for the conduct of lobby21 ing activities.

22 ‘‘(b) LOBBYING ACTIVITIES.—For purposes of this sec23 tion—

24 ‘‘(1) IN GENERAL.—The term ‘lobbying activity’

25 means—
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1 ‘‘(A) any lobbying contact, or

2 ‘‘(B) any activity in support of a lobbying

3 contact.

4 ‘‘(2) SUPPORT ACTIVITIES.—For purposes of

5 paragraph (1)(B), the following shall be treated as in

6 support of a lobbying contact:

7 ‘‘(A) Any preparation or planning activity

8 relating to a lobbying contact (including, in the

9 case of a lobbyist, the formulation, review, and

10 management of the lobbying contacts on behalf of

11 a client).

12 ‘‘(B) Any research or other background

13 work relating to a lobbying contact.

14 ‘‘(C) Any activity coordinating the lobbying

15 activity of 2 or more persons.

16 ‘‘(3) MEALS, ENTERTAINMENT, OR TRAVEL.—

17 Any amount paid or incurred in connection with the

18 providing of meals, entertainment, or travel to a cov19 ered legislative or executive branch official (or to an

20 individual accompanying such official) shall be treat21 ed as paid or incurred for a lobbying activity without

22 regard to whether it is in support of a lobbying con23 tact.

24 ‘‘(c) LOBBYING CONTACT.—For purposes of this sec25 tion—
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1 ‘‘(1) IN GENERAL.—The term ‘lobbying contact’

2 means—

3 ‘‘(A) in the case of a lobbyist, any oral or

4 written communication with a covered legislative

5 or executive branch official, and

6 ‘‘(B) in the case of any other person, any

7 oral or written communication with a covered

8 legislative or executive branch official in connec9 tion with an attempt to influence governmental

10 actions described in paragraph (2).

11 ‘‘(2) GOVERNMENTAL ACTIONS AFFECTED.—The

12 following governmental actions are described in this

13 paragraph:

14 ‘‘(A) The formulation, modification, adop15 tion, or repeal of legislation (including legisla16 tive proposals).

17 ‘‘(B) The formulation, modification, adop18 tion, or repeal of a Federal rule, regulation,

19 Executive order, or any other program, policy,

20 or position of the United States.

21 ‘‘(C) The administration or execution of a

22 Federal program or policy (including the nego23 tiation, award, or administration of a Federal

24 contract, grant, loan, permit, or license).
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1 ‘‘(3) EXCEPTIONS.—The term ‘lobbying contact’

2 shall not include any contact—

3 ‘‘(A) required by subpoena, civil investiga4 tive demand, or otherwise compelled by statute,

5 regulation, or other action of Congress, a State

6 or local legislative body, or a Federal agency,

7 ‘‘(B) made in response to a notice in the

8 Federal Register, Commerce Business Daily, or

9 other similar publication soliciting communica10 tions from the public and directed to the agency

11 official specifically designated in the notice to re12 ceive such communications,

13 ‘‘(C) made to Federal agency officials with

14 regard to judicial proceedings, criminal or civil

15 law enforcement inquiries, investigations or pro16 ceedings, or filings required by statute or regula17 tion,

18 ‘‘(D) made in compliance with written

19 agency procedures regarding an adjudication

20 conducted by the agency under section 554 of

21 title 5, United States Code, or any substantially

22 similar provision, or

23 ‘‘(E) made on behalf of an individual with

24 regard to such individual’s benefits, employment,

25 other personal matters involving only that indi-
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1 vidual, or disclosures by that individual pursu2 ant to applicable whistleblower statutes,

3 ‘‘(F) in the case of any governmental action

4 described in paragraph (2) (B) or (C), which

5 consists of written comments filed in a public

6 docket or other communications made on the

7 record in a public proceeding, or

8 ‘‘(G) in the case of any governmental action

9 described in paragraph (2)(C), which consists of

10 communications which are made to officials serv11 ing in the agency responsible for taking such ac12 tion who serve in the Senior Executive Service or

13 who are members of the uniformed services whose

14 pay grade is lower than 0–9 under section 201

15 of title 37, United States Code.

16 ‘‘(d) SPECIAL RULE FOR EXEMPT ORGANIZATIONS.—

17 ‘‘(1) TREATMENT OF DUES, ETC.—Subsection (a)

18 shall apply to dues, assessments, or other similar

19 amounts paid by any person to an organization ex20 empt from taxation under this chapter (other than an

21 organization described in section 170(c)) to the extent

22 such dues, assessments, or amounts are attributable to

23 amounts paid or incurred by the organization which

24 are described in subsection (a).
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1 ‘‘(2) SPECIAL RULE FOR CHARITIES.—In the

2 case of an organization described in section 170(c)

3 (other than paragraph (1) thereof or section

4 170(b)(1)(A)(i)), subsection (a) shall apply to any

5 dues, assessments, contributions, or other similar

6 amounts which are paid to the organization and

7 which are otherwise deductible under this chapter to

8 the extent that any such amount—

9 ‘‘(A) is attributable to amounts paid or in10 curred by the organization which are described

11 in subsection (a),

12 ‘‘(B) is in connection with lobbying activi13 ties of direct financial interest to the payor’s (or

14 a related person’s) trade or business, and

15 ‘‘(C) when added to all other payments

16 made by the payor (and any related person) to

17 the organization during the calendar year in

18 which the taxable year begins, exceeds $2,000.

19 ‘‘(3) ALLOCATION RULES.—For purposes of this

20 subsection—

21 ‘‘(A) dues or other similar amounts paid

22 during any calendar year shall, except as pro23 vided by the Secretary, only be attributable to

24 amounts not deductible under subsection (a)
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1 which are paid or incurred by the organization

2 during such calendar year, and

3 ‘‘(B) amounts which are not deductible

4 under subsection (a) shall be treated as paid first

5 out of dues or other similar amounts.

6 ‘‘(4) REPORTING REQUIREMENTS.—

‘‘For requirements of organization to notify contributors, see section 6050O.

7 ‘‘(e) OTHER RULES AND DEFINITIONS.—For purposes

8 of this section—

9 ‘‘(1) SPECIAL RULE FOR CERTAIN TAXPAYERS.—

10 In the case of—

11 ‘‘(A) any taxpayer engaged in the trade or

12 business of conducting activities described in

13 subsection (a), or

14 ‘‘(B) any taxpayer who is an employee who

15 is reimbursed by his employer for expenses in16 curred in conducting such activities,

17 subsection (a) shall not apply to expenditures of the

18 taxpayer in conducting such activities on behalf of

19 another person or his employer (but shall apply to

20 payments by such other person or the employer to the

21 taxpayer for conducting the activities).

22 ‘‘(2) AGENCY.—The term ‘agency’ has the same

23 meaning given such term by section 551(1) of title 5,

24 United States Code.
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1 ‘‘(3) COVERED EXECUTIVE BRANCH OFFICIAL.—

2 The term ‘covered executive branch official’ means—

3 ‘‘(A) the President,

4 ‘‘(B) the Vice President,

5 ‘‘(C) any officer or employee of the Execu6 tive Office of the President, other than a clerical

7 or secretarial employee,

8 ‘‘(D) any officer or employee serving in an

9 Executive level I, II, III, IV, or V position, as

10 designated in statute or Executive order,

11 ‘‘(E) any officer or employee serving in a

12 Senior Executive Service position as defined

13 under section 3232(a)(2) of title 5, United States

14 Code,

15 ‘‘(F) any member of the uniformed services

16 whose pay grade is at or in excess of O–7 under

17 section 201 of title 37, United States Code, and

18 ‘‘(G) any officer or employee serving in a

19 position of confidential or policy-determining

20 character under schedule C of the excepted service

21 pursuant to section 7511 of title 5, United States

22 Code.

23 ‘‘(4) COVERED LEGISLATIVE BRANCH OFFI24 CIAL.—The term ‘covered legislative branch official’

25 means—
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1 ‘‘(A) a Member of Congress,

2 ‘‘(B) an elected officer of Congress,

3 ‘‘(C) any employee of a Member of the

4 House of Representatives, of a committee of the

5 House of Representatives, or on the leadership

6 staff of the House of Representatives,

7 ‘‘(D) any employee of a Senator, of a Sen8 ate committee, or on the leadership staff of the

9 Senate, and

10 ‘‘(E) any employee of a joint committee of

11 the Congress.

12 Such term includes any member, officer, or employee

13 of a State or local legislative body.

14 ‘‘(5) LOBBYIST.—The term ‘lobbyist’ means any

15 person who is employed or retained by another person

16 to perform services which include any attempt to in17 fluence a governmental action described in subsection

18 (c)(2). Such term does not include a person whose lob19 bying activities are only incidental to, and are not a

20 significant part of, the services the person performs

21 for such other person. For purposes of the preceding

22 sentence, lobbying activities shall not include activi23 ties described in subsection (c)(3).

24 ‘‘(6) LEGISLATION.—The term ‘legislation’ has

25 the meaning given such term by section 4911(e)(2).
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1 ‘‘(7) COORDINATION WITH SECTION 4911.—No tax

2 shall be imposed under section 4911 on any amount

3 with respect to which a deduction is not allowed by

4 reason of subsection (d).

5 ‘‘(f) CROSS REFERENCE.—

‘‘For disallowance of deductions for grassroots lobbying expenditures, see section 162(e)(2).’’

6 (2) CONFORMING AMENDMENTS.—

7 (A) Section 162(e) (relating to appearances,

8 etc., with respect to legislation) is amended to

9 read as follows:

10 ‘‘(e) DENIAL OF DEDUCTION FOR CERTAIN POLITICAL

11 EXPENDITURES.—

12 ‘‘(1) IN GENERAL.—No deduction shall be al13 lowed under this chapter for any amount paid or in14 curred—

15 ‘‘(A) for participation in, or intervention

16 in, any political campaign on behalf of (or in

17 opposition to) any candidate for public office, or

18 ‘‘(B) in connection with any attempt to in19 fluence the general public, or segments thereof,

20 with respect to legislative matters, elections, or

21 referendums.

22 ‘‘(2) APPLICATION TO DUES.—

23 ‘‘(A) IN GENERAL.—No deduction shall be

24 allowed under this chapter for the portion of
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1 dues or other similar amounts paid by the tax2 payer to an organization which is allocable to

3 the expenditures described in paragraph (1).

4 ‘‘(B) ALLOCATION.—For purposes of sub5 paragraph (A), expenditures described in para6 graph (1) shall be treated as paid first out of

7 dues or other similar amounts.

8 ‘‘(3) CROSS REFERENCE.—

‘‘For disallowance of deductions for lobbying expenditures, see section 280I.’’

9 (B) The table of sections for part IX of sub10 chapter B of chapter 1 is amended by adding at

11 the end the following new item:

‘‘Sec. 280I. Lobbying expenditures.’’

12 (3) EFFECTIVE DATE.—The amendments made

13 by this subsection shall apply to amounts paid or in14 curred after December 31, 1993.

15 (b) REPORTING REQUIREMENTS RELATING TO LOBBY16 ING EXPENDITURES.—

17 (1) IN GENERAL.—Subpart B of part III of sub18 chapter A of chapter 61 (relating to information con19 cerning transactions with other persons) is amended

20 by adding at the end the following new section:
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1 ‘‘SEC. 6050O. RETURNS RELATING TO LOBBYING EXPENDI2 TURES OF CERTAIN ORGANIZATIONS.

3 ‘‘(a) REQUIREMENT OF REPORTING.—Each organiza4 tion described in section 280I(d) shall make a return, ac5 cording to the forms or regulations prescribed by the Sec6 retary, setting forth the names and addresses of persons

7 paying dues to the organization, the amount of the dues

8 paid by such person, and the portion of such dues which

9 is nondeductible under section 280I.

10 ‘‘(b) STATEMENTS TO BE FURNISHED TO PERSONS

11 WITH RESPECT TO WHOM INFORMATION IS FURNISHED.—

12 Any organization required to make a return under sub13 section (a) shall furnish to each person whose name is re14 quired to be set forth in such return a written statement

15 showing—

16 ‘‘(1) the name and address of the organization,

17 and

18 ‘‘(2) the dues paid by the person during the cal19 endar year and the portion of such dues which is non20 deductible under section 280I.

21 The written statement required under the preceding sen22 tence shall be furnished (either in person or in a statement

23 mailing by first-class mail which includes adequate notice

24 that the statement is enclosed) to the persons on or before

25 January 31 of the year following the calendar year for

26 which the return under subsection (a) was made and shall
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1 be in such form as the Secretary may prescribe by regula2 tions.

3 ‘‘(c) DE MINIMUS EXCEPTION.—This section shall not

4 apply to any organization for any calendar year if the or5 ganization’s lobbying expenditures described in section

6 280I(a) for such year are less than $2,000. For purposes

7 of the preceding sentence, overhead costs otherwise allocable

8 to lobbying activities shall not be taken into account.

9 ‘‘(d) WAIVER.—The Secretary may waive the reporting

10 requirements of this section with respect to any organiza11 tion or class of organizations if the Secretary determines

12 that such reporting is not necessary to carry out the pur13 poses of section 280I.

14 ‘‘(e) DUES.—For purposes of this section, the term

15 ‘dues’ includes assessments, contributions, and other similar

16 amounts.’’

17 (2) PENALTIES.—

18 (A) RETURNS.—Subparagraph (B) of sec19 tion 6724(d)(1) (defining information return) is

20 amended by striking ‘‘or’’ at the end of clause

21 (xi), by striking the period at the end of the

22 clause (xii) relating to section 4101(d) and in23 serting a comma, by redesignating the clause

24 (xii) relating to section 338(h)(10) as clause

25 (xiii), by striking the period at the end of clause
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1 (xiii) (as so redesignated) and inserting ‘‘, or’’,

2 and by adding at the end the following new

3 clause:

4 ‘‘(xiv) section 6050O(a) (relating to in5 formation on nondeductible lobbying ex6 penditures).’’

7 (B) PAYEE STATEMENTS.—Paragraph (2)

8 of section 6724(d) (defining payee statement) is

9 amended by striking ‘‘or’’ at the end of subpara10 graph (R), by striking the period at the end of

11 subparagraph (S) and inserting ‘‘, or’’, and by

12 adding at the end the following new subpara13 graph:

14 ‘‘(T) section 6050O(b) (relating to returns

15 on nondeductible lobbying expenditures).’’

16 (3) CONFORMING AMENDMENT.—The table of sec17 tions for subpart B of part III of subchapter A of

18 chapter 61 is amended by adding at the end the fol19 lowing new item:

‘‘Sec. 6050O. Returns relating to lobbying expenditures of certain

organizations.’’

20 (4) EFFECTIVE DATE.—The amendments made

21 by this subsection shall apply to calendar years begin22 ning after December 31, 1993.
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1 SEC. 8223. MARK TO MARKET ACCOUNTING METHOD FOR

2 SECURITIES DEALERS.

3 (a) GENERAL RULE.—Subpart D of part II of sub4 chapter E of chapter 1 (relating to inventories) is amended

5 by adding at the end thereof the following new section:

6 ‘‘SEC. 475. MARK TO MARKET ACCOUNTING METHOD FOR

7 DEALERS IN SECURITIES.

8 ‘‘(a) GENERAL RULE.—Notwithstanding any other

9 provision of this subpart, the following rules shall apply

10 to securities held by a dealer in securities:

11 ‘‘(1) Any security which is inventory in the

12 hands of the dealer shall be included in inventory at

13 its fair market value.

14 ‘‘(2) In the case of any security which is not in15 ventory in the hands of the dealer and which is held

16 at the close of any taxable year—

17 ‘‘(A) the dealer shall recognize gain or loss

18 as if such security were sold for its fair market

19 value on the last business day of such taxable

20 year, and

21 ‘‘(B) any gain or loss shall be taken into ac22 count for such taxable year.

23 Proper adjustment shall be made in the amount of

24 any gain or loss subsequently realized for gain or loss

25 taken into account under the preceding sentence. The

26 Secretary may provide by regulations for the applica-
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1 tion of this paragraph at times other than the times

2 provided in this paragraph.

3 ‘‘(b) EXCEPTIONS.—

4 ‘‘(1) IN GENERAL.—Subsection (a) shall not

5 apply to—

6 ‘‘(A) any security held for investment, and

7 ‘‘(B) any security which is a hedge with re8 spect to—

9 ‘‘(i) a security to which subsection (a)

10 does not apply, or

11 ‘‘(ii) a position, right to income, or a

12 liability which is not a security in the

13 hands of the taxpayer.

14 To the extent provided in regulations, subparagraph

15 (B) shall not apply to any security held by a person

16 in its capacity as a dealer in securities.

17 ‘‘(2) IDENTIFICATION REQUIRED.—A security

18 shall not be treated as described in subparagraph (A)

19 or (B) of paragraph (1), as the case may be, unless

20 such security is clearly identified in the dealer’s

21 records as being described in such subparagraph be22 fore the close of the day on which it was acquired,

23 originated, or entered into (or such other time as the

24 Secretary may by regulations prescribe).
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1 ‘‘(3) SECURITIES SUBSEQUENTLY NOT EX2 EMPT.—If a security ceases to be described in para3 graph (1) at any time after it was identified as such

4 under paragraph (2), subsection (a) shall apply to

5 any changes in value of the security occurring after

6 the cessation.

7 ‘‘(4) SPECIAL RULE FOR PROPERTY HELD FOR

8 INVESTMENT.—To the extent provided in regulations,

9 subparagraph (A) of paragraph (1) shall not apply to

10 any security described in subparagraph (D) or (E) of

11 subsection (c)(2) which is held by a dealer in such se12 curities.

13 ‘‘(c) DEFINITIONS.—For purposes of this section—

14 ‘‘(1) DEALER IN SECURITIES DEFINED.—The

15 term ‘dealer in securities’ means a taxpayer who—

16 ‘‘(A) regularly purchases securities from or

17 sells securities to customers in the ordinary

18 course of a trade or business; or

19 ‘‘(B) regularly offers to enter into, assume,

20 offset, assign or otherwise terminate positions in

21 securities with customers in the ordinary course

22 of a trade or business.

23 ‘‘(2) SECURITY DEFINED.—The term ‘security’

24 means any—

25 ‘‘(A) share of stock in a corporation;
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1 ‘‘(B) partnership or beneficial ownership

2 interest in a widely held or publicly traded part3 nership or trust;

4 ‘‘(C) note, bond, debenture, or other evidence

5 of indebtedness;

6 ‘‘(D) interest rate, currency, or equity no7 tional principal contract;

8 ‘‘(E) evidence of an interest in, or a deriva9 tive financial instrument in, any security de10 scribed in subparagraph (A), (B), (C), or (D), or

11 any currency, including any option, forward

12 contract, short position, and any similar finan13 cial instrument in such a security or currency;

14 and

15 ‘‘(F) position which—

16 ‘‘(i) is not a security described in sub17 paragraph (A), (B), (C), (D), or (E),

18 ‘‘(ii) is a hedge with respect to such a

19 security, and

20 ‘‘(iii) is clearly identified in the deal21 er’s records as being described in this sub22 paragraph before the close of the day on

23 which it was acquired or entered into (or

24 such other time as the Secretary may by

25 regulations prescribe).
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1 Subparagraph (E) shall not include any contract to

2 which section 1256(a) applies.

3 ‘‘(3) HEDGE.—The term ‘hedge’ means any posi4 tion which reduces the dealer’s risk of interest rate or

5 price changes or currency fluctuations, including any

6 position which is reasonably expected to become a

7 hedge within 60 days after the acquisition of the posi8 tion.

9 ‘‘(d) SPECIAL RULES.—For purposes of this section—

10 ‘‘(1) COORDINATION WITH CERTAIN RULES.—The

11 rules of sections 263(g), 263A, and 1256(a) shall not

12 apply to securities to which subsection (a) applies,

13 and section 1091 shall not apply (and section 1092

14 shall apply) to any loss recognized under subsection

15 (a).

16 ‘‘(2) IMPROPER IDENTIFICATION.—If a tax17 payer—

18 ‘‘(A) identifies any security under sub19 section (b)(2) as being described in subsection

20 (b)(1) and such security is not so described, or

21 ‘‘(B) fails under subsection (c)(2)(F)(iii) to

22 identify any position which is described in sub23 section (c)(2)(F) (without regard to clause (iii)

24 thereof) at the time such identification is re25 quired,
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1 the provisions of subsection (a) shall apply to such se2 curity or position, except that any loss under this sec3 tion prior to the disposition of the security or posi4 tion shall be recognized only to the extent of gain pre5 viously recognized under this section (and not pre6 viously taken into account under this paragraph)

7 with respect to such security or position.

8 ‘‘(3) CHARACTER OF GAIN OR LOSS.—

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

10 subparagraph (B) or section 1236(b)—

11 ‘‘(i) IN GENERAL.—Any gain or loss

12 with respect to a security under subsection

13 (a)(2) shall be treated as ordinary income

14 or loss.

15 ‘‘(ii) SPECIAL RULE FOR DISPOSI16 TIONS.—If—

17 ‘‘(I) gain or loss is recognized

18 with respect to a security before the

19 close of the taxable year, and

20 ‘‘(II) subsection (a)(2) would have

21 applied if the security were held as of

22 the close of the taxable year,

23 such gain or loss shall be treated as ordi24 nary income or loss.
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1 ‘‘(B) EXCEPTION.—Subparagraph (A) shall

2 not apply to any gain or loss which is allocable

3 to a period during which—

4 ‘‘(i) the security is described in sub5 section (b)(1)(B) (without regard to sub6 section (b)(2)),

7 ‘‘(ii) the security is held by a person

8 other than in connection with its activities

9 as a dealer in securities, or

10 ‘‘(iii) the security is improperly identi11 fied (within the meaning of subparagraph

12 (A) or (B) of paragraph (2)).

13 ‘‘(e) REGULATORY AUTHORITY.—The Secretary shall

14 prescribe such regulations as may be necessary or appro15 priate to carry out the purposes of this section, including

16 rules—

17 ‘‘(1) to prevent the use of year-end transfers, re18 lated parties, or other arrangements to avoid the pro19 visions of this section, and

20 ‘‘(2) to provide for the application of this section

21 to any security which is a hedge which cannot be

22 identified with a specific security, position, right to

23 income, or liability.’’

24 (b) CONFORMING AMENDMENTS.—
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1 (1) Paragraph (1) of section 988(d) is amend2 ed—

3 (A) by striking ‘‘section 1256’’ and insert4 ing ‘‘section 475 or 1256’’, and

5 (B) by striking ‘‘1092 and 1256’’ and in6 serting ‘‘475, 1092, and 1256’’.

7 (2) The table of sections for subpart D of part

8 II of subchapter E of chapter 1 is amended by adding

9 at the end thereof the following new item:

‘‘Sec. 475. Mark to market accounting method for dealers in securities.’’

10 (c) EFFECTIVE DATE.—

11 (1) IN GENERAL.—The amendments made by

12 this section shall apply to all taxable years ending on

13 or after December 31, 1993.

14 (2) CHANGE IN METHOD OF ACCOUNTING.—In

15 the case of any taxpayer required by this section to

16 change its method of accounting for any taxable

17 year—

18 (A) such change shall be treated as initiated

19 by the taxpayer,

20 (B) such change shall be treated as made

21 with the consent of the Secretary, and

22 (C) except as provided in paragraph (3),

23 the net amount of the adjustments required to be

24 taken into account by the taxpayer under section
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1 481 of the Internal Revenue Code of 1986 shall

2 be taken into account ratably over the 5-taxable

3 year period beginning with the first taxable year

4 ending on or after December 31, 1993.

5 (3) SPECIAL RULE FOR FLOOR SPECIALISTS AND

6 MARKET MAKERS.—

7 (A) IN GENERAL.—If—

8 (i) a taxpayer (or any predecessor)

9 used the last-in first-out (LIFO) method of

10 accounting with respect to any qualified se11 curities for the 5-taxable year period ending

12 with its last taxable year ending before De13 cember 31, 1993, and

14 (ii) any portion of the net amount de15 scribed in paragraph (2)(C) is attributable

16 to the use of such method of accounting,

17 then paragraph (2)(C) shall be applied by taking

18 such portion into account ratably over the 15-

19 taxable year period beginning with the first tax20 able year ending on or after December 31, 1993.

21 (B) QUALIFIED SECURITY.—For purposes of

22 this paragraph, the term ‘‘qualified security’’

23 means any security acquired—

24 (i) by a floor specialist (as defined in

25 section 1236(d)(2) of the Internal Revenue
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1 Code of 1986) in connection with the spe2 cialist’s duties as a specialist on an ex3 change, but only if the security is one in

4 which the specialist is registered with the

5 exchange, or

6 (ii) by a taxpayer who is a market

7 maker in connection with the taxpayer’s du8 ties as a market maker, but only if—

9 (I) the security is included on the

10 National Association of Security Deal11 ers Automated Quotation System,

12 (II) the taxpayer is registered as

13 a market maker in such security with

14 the National Association of Security

15 Dealers, and

16 (III) as of the last day of the tax17 able year preceding the taxpayer’s first

18 taxable year ending on or after Decem19 ber 31, 1993, the taxpayer (or any

20 predecessor) has been actively and reg21 ularly engaged as a market maker in

22 such security for the 2-year period end23 ing on such date (or, if shorter, the pe24 riod beginning 61 days after the secu-
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1 rity was listed in such quotation sys2 tem and ending on such date).

3 SEC. 8224. CLARIFICATION OF TREATMENT OF CERTAIN

4 FSLIC FINANCIAL ASSISTANCE.

5 (a) GENERAL RULE.—For purposes of chapter 1 of the

6 Internal Revenue Code of 1986—

7 (1) any FSLIC assistance with respect to any

8 loss of principal, capital, or similar amount upon the

9 disposition of any asset shall be taken into account as

10 compensation for such loss for purposes of section 165

11 of such Code, and

12 (2) any FSLIC assistance with respect to any

13 debt shall be taken into account for purposes of sec14 tion 166, 585, or 593 of such Code in determining

15 whether such debt is worthless (or the extent to which

16 such debt is worthless) and in determining the

17 amount of any addition to a reserve for bad debts

18 arising from the worthlessness or partial worthlessness

19 of such debts.

20 (b) FSLIC ASSISTANCE.—For purposes of this section,

21 the term ‘‘FSLIC assistance’’ means any assistance (or

22 right to assistance) with respect to a domestic building and

23 loan association (as defined in section 7701(a)(19) of such

24 Code without regard to subparagraph (C) thereof) under

25 section 406(f) of the National Housing Act or section 21A
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1 of the Federal Home Loan Bank Act (or under any similar

2 provision of law).

3 (c) EFFECTIVE DATE.—

4 (1) IN GENERAL.—Except as otherwise provided

5 in this subsection—

6 (A) The provisions of this section shall

7 apply to taxable years ending on or after March

8 4, 1991, but only with respect to FSLIC assist9 ance not credited before March 4, 1991.

10 (B) If any FSLIC assistance not credited

11 before March 4, 1991, is with respect to a loss

12 sustained or charge-off in a taxable year ending

13 before March 4, 1991, for purposes of determin14 ing the amount of any net operating loss carry15 over to a taxable year ending on or after March

16 4, 1991, the provisions of this section shall apply

17 to such assistance for purposes of determining

18 the amount of the net operating loss for the tax19 able year in which such loss was sustained or

20 debt written off. Except as provided in the pre21 ceding sentence, this section shall not apply to

22 any FSLIC assistance with respect to a loss

23 sustained or charge-off in a taxable year ending

24 before March 4, 1991.
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1 (2) EXCEPTIONS.—The provisions of this section

2 shall not apply to any assistance to which the amend3 ments made by section 1401(a)(3) of the Financial

4 Institutions Reform, Recovery, and Enforcement Act

5 of 1989 apply.

6 SEC. 8225. MODIFICATION OF CORPORATE ESTIMATED TAX

7 RULES.

8 (a) INCREASE IN REQUIRED INSTALLMENT BASED ON

9 CURRENT YEAR TAX.—

10 (1) IN GENERAL.—Clause (i) of section

11 6655(d)(1)(B) (relating to amount of required install12 ment) is amended by striking ‘‘91 percent’’ each place

13 it appears and inserting ‘‘100 percent’’.

14 (2) CONFORMING AMENDMENTS.—

15 (A) Subsection (d) of section 6655 is

16 amended—

17 (i) by striking paragraph (3), and

18 (ii) by striking ‘‘91 PERCENT’’ in the

19 paragraph heading of paragraph (2) and

20 inserting ‘‘100 PERCENT’’.

21 (B) Clause (ii) of section 6655(e)(2)(B) is

22 amended by striking the table contained therein

23 and inserting the following:

‘‘In the case of the following re- The applicable

quired installments: percentage is:

1st ....................................................................... 25

2nd ...................................................................... 50
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3rd ...................................................................... 75

4th ....................................................................... 100.’’

1 (C) Clause (i) of section 6655(e)(3)(A) is

2 amended by striking ‘‘91 percent’’ and inserting

3 ‘‘100 percent’’.

4 (b) MODIFICATION OF PERIODS FOR APPLYING

5 ANNUALIZATION.—

6 (1) Clause (i) of section 6655(e)(2)(A) is amend7 ed—

8 (A) by striking ‘‘or for the first 5 months’’

9 in subclause (II),

10 (B) by striking ‘‘or for the first 8 months’’

11 in subclause (III), and

12 (C) by striking ‘‘or for the first 11 months’’

13 in subclause (IV).

14 (2) Paragraph (2) of section 6655(e) is amended

15 by adding at the end thereof the following new sub16 paragraph:

17 ‘‘(C) ELECTION FOR DIFFERENT

18 ANNUALIZATION PERIODS.—

19 ‘‘(i) If the taxpayer makes an election

20 under this clause—

21 ‘‘(I) subclause (I) of subparagraph

22 (A)(i) shall be applied by substituting

23 ‘2 months’ for ‘3 months’,
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1 ‘‘(II) subclause (II) of subpara2 graph (A)(i) shall be applied by sub3 stituting ‘4 months’ for ‘3 months’,

4 ‘‘(III) subclause (III) of subpara5 graph (A)(i) shall be applied by sub6 stituting ‘7 months’ for ‘6 months’, and

7 ‘‘(IV) subclause (IV) of subpara8 graph (A)(i) shall be applied by sub9 stituting ‘10 months’ for ‘9 months’.

10 ‘‘(ii) If the taxpayer makes an election

11 under this clause—

12 ‘‘(I) subclause (II) of subpara13 graph (A)(i) shall be applied by sub14 stituting ‘5 months’ for ‘3 months’,

15 ‘‘(II) subclause (III) of subpara16 graph (A)(i) shall be applied by sub17 stituting ‘8 months’ for ‘6 months’, and

18 ‘‘(III) subclause (IV) of subpara19 graph (A)(i) shall be applied by sub20 stituting ‘11 months’ for ‘9 months’.

21 ‘‘(iii) An election under clause (i) or

22 (ii) shall apply to the taxable year for

23 which made and such an election shall be

24 effective only if made on or before the date
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1 required for the payment of the first re2 quired installment for such taxable year.’’

3 (3) The last sentence of section 6655(g)(3) is

4 amended by striking ‘‘and subsection (e)(2)(A)’’ and

5 inserting ‘‘and, except in the case of an election under

6 subsection (e)(2)(C), subsection (e)(2)(A)’’.

7 (c) EFFECTIVE DATE.—The amendments made by this

8 section shall apply to taxable years beginning after Decem9 ber 31, 1993.

10 SEC. 8226. MODIFICATIONS OF DISCHARGE OF INDEBTED11 NESS PROVISIONS.

12 (a) REPEAL OF STOCK FOR DEBT EXCEPTION IN DE13 TERMINING INCOME FROM DISCHARGE OF INDEBTED14 NESS.—

15 (1) IN GENERAL.—Subsection (e) of section 108

16 is amended—

17 (A) by striking paragraph (10) and by re18 designating paragraph (11) as paragraph (10),

19 and

20 (B) by amending paragraph (8) to read as

21 follows:

22 ‘‘(8) INDEBTEDNESS SATISFIED BY CORPORA23 TION’S STOCK.—For purposes of determining income

24 of a debtor from discharge of indebtedness, if a debtor

25 corporation transfers stock to a creditor in satisfac-
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1 tion of its indebtedness, such corporation shall be

2 treated as having satisfied the indebtedness with an

3 amount of money equal to the fair market value of the

4 stock.’’

5 (2) CONFORMING AMENDMENT.—Subparagraph

6 (C) of section 382(l)(5) is amended to read as follows:

7 ‘‘(C) COORDINATION WITH SECTION 108.—In

8 applying section 108(e)(8) to any case to which

9 subparagraph (A) applies, there shall not be

10 taken into account any indebtedness for interest

11 described in subparagraph (B).’’

12 (3) EFFECTIVE DATE.—

13 (A) IN GENERAL.—Except as otherwise pro14 vided in this paragraph, the amendments made

15 by this subsection shall apply to stock transferred

16 after June 17, 1993, in satisfaction of any in17 debtedness.

18 (B) EXCEPTION FOR TITLE 11 CASES.—The

19 amendments made by this subsection shall not

20 apply to stock transferred in satisfaction of any

21 indebtedness if such transfer is in a title 11 or

22 similar case (as defined in section 368(a)(3)(A)

23 of the Internal Revenue Code of 1986) which was

24 filed on or before June 17, 1993.
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1 (C) EXCEPTION FOR BINDING CONTRACTS.—

2 The amendments made by this section shall not

3 apply to any stock transferred after June 17,

4 1993, and before January 1, 1994, if such trans5 fer is pursuant to a binding contract in effect on

6 June 17, 1993, and at all times thereafter before

7 the transfer.

8 (D) EXCEPTION FOR CERTAIN FILINGS.—

9 The amendments made by this section shall not

10 apply to any stock transferred in satisfaction of

11 any indebtedness if—

12 (i) such transfer occurs after June 17,

13 1993, and before January 1, 1994, and

14 (ii) the taxpayer had filed with the Se15 curities and Exchange Commission on or

16 before June 17, 1993, a registration state17 ment which proposed a stock-for-debt ex18 change with respect to such indebtedness,

19 and which discussed the possible application

20 of the stock-for-debt exception to such ex21 change.

22 (b) TAX ATTRIBUTES SUBJECT TO REDUCTION.—

23 (1) MINIMUM TAX CREDIT.—Section 108(b)(2)

24 (relating to tax attributes affected; order of reduction)

25 is amended by redesignating subparagraphs (C), (D),
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HR 2264 EAS

1 and (E) as subparagraphs (D), (E), and (F) and by

2 adding after subparagraph (B) the following new sub3 paragraph:

4 ‘‘(C) MINIMUM TAX CREDIT.—The amount

5 of the minimum tax credit available under sec6 tion 53(b) as of the beginning of the taxable year

7 immediately following the taxable year of the

8 discharge.’’

9 (2) PASSIVE ACTIVITY LOSSES AND CREDITS.—

10 Section 108(b)(2), as amended by paragraph (1), is

11 amended by redesignating subparagraph (F) as sub12 paragraph (G) and by adding after subparagraph (E)

13 the following new subparagraph:

14 ‘‘(F) PASSIVE ACTIVITY LOSS AND CREDIT

15 CARRYOVERS.—Any passive activity loss or cred16 it carryover of the taxpayer under section 469(b)

17 from the taxable year of the discharge.’’

18 (3) CONFORMING AMENDMENTS.—

19 (A) Subparagraph (B) of section 108(b)(3)

20 is amended to read as follows:

21 ‘‘(B) CREDIT CARRYOVER REDUCTION.—The

22 reductions described in subparagraphs (B), (C),

and (G) shall be 331 23 ⁄3 cents for each dollar ex24 cluded by subsection (a). The reduction described

25 in subparagraph (F) in any passive activity
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credit carryover shall be 331 1 ⁄3 cents for each dol2 lar excluded by subsection (a).’’

3 (B) Subparagraph (B) of section 108(b)(4)

4 is amended by striking ‘‘(C)’’ in the text and

5 heading thereof and inserting ‘‘(D)’’.

6 (C) Subparagraph (C) of section 108(b)(4)

7 is amended by striking ‘‘(E)’’ in the text and

8 heading thereof and inserting ‘‘(G)’’.

9 (D) Subparagraph (B) of section 108(g)(3)

10 is amended—

11 (i) by striking ‘‘subparagraphs (A),

12 (B), (C), and (E)’’ and inserting ‘‘subpara13 graphs (A), (B), (C), (D), (F), and (G)’’,

14 (ii) by striking ‘‘subparagraphs (B)

15 and (E)’’ and inserting ‘‘subparagraphs

16 (B), (C), and (G)’’, and

17 (iii) by inserting before the period at

18 the end the following: ‘‘and the attribute de19 scribed in subparagraph (F) of subsection

20 (b)(2) to the extent attributable to any pas21 sive activity credit carryover’’.

22 (4) EFFECTIVE DATE.—The amendments made

23 by this section shall apply to taxable years beginning

24 after December 31, 1993.
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1 SEC. 8227. LIMITATION ON SECTION 936 CREDIT.

2 (a) GENERAL RULE.—Subsection (a) of section 936

3 (relating to Puerto Rico and possession tax credit) is

4 amended—

5 (1) by striking ‘‘as provided in paragraph (3)’’

6 in paragraph (1) and inserting ‘‘as otherwise pro7 vided in this section’’;

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

9 new paragraph:

10 ‘‘(4) LIMITATIONS ON CREDIT FOR ACTIVE BUSI11 NESS INCOME.—

12 ‘‘(A) IN GENERAL.—The amount of the

13 credit determined under paragraph (1)(A) for

14 any taxable year shall not exceed the sum of the

15 following amounts:

16 ‘‘(i) 95 percent of the sum of—

17 ‘‘(I) the aggregate amount of the

18 possession corporation’s qualified pos19 session wages for such taxable year,

20 plus

21 ‘‘(II) the allocable employee fringe

22 benefit expenses of the possession cor23 poration for the taxable year.

24 ‘‘(ii) The sum of—

25 ‘‘(I) 50 percent of the depreciation

26 deductions allowable under section 167
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1 to the possession corporation for the

2 taxable year with respect to short-life

3 qualified tangible property,

4 ‘‘(II) 75 percent of the deprecia5 tion deductions allowable under section

6 167 to the possession corporation for

7 the taxable year with respect to me8 dium-life qualified tangible property,

9 and

10 ‘‘(III) 100 percent of the deprecia11 tion deductions allowable under section

12 167 to the possession corporation for

13 the taxable year with respect to long14 life qualified tangible property.

15 ‘‘(iii) If the possession corporation does

16 not have an election to use the method de17 scribed in subsection (h)(5)(C)(ii) (relating

18 to profit split) in effect for the taxable year,

19 the amount of qualified possession income

20 taxes for the taxable year allocable to

21 nonsheltered income.

22 ‘‘(B) ELECTION TO TAKE REDUCED CRED23 IT.—
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1 ‘‘(i) IN GENERAL.—If an election

2 under this subparagraph applies to a pos3 session corporation for any taxable year—

4 ‘‘(I) subparagraph (A), and the

5 provisions of subsection (i), shall not

6 apply to such possession corporation

7 for such taxable year, and

8 ‘‘(II) the credit determined under

9 paragraph (1)(A) for such taxable year

10 shall be the applicable percentage of the

11 credit which would otherwise have been

12 determined under such paragraph.

13 Notwithstanding subclause (I), a possession

14 corporation to which an election under this

15 subparagraph applies shall be entitled to the

16 benefits of subsection (i)(3)(B) for taxes al17 locable (on a pro rata basis) to taxable in18 come the tax on which is not offset by rea19 son of this subparagraph.

20 ‘‘(ii) APPLICABLE PERCENTAGE.—The

21 term ‘applicable percentage’ means the per22 centage determined in accordance with the

23 following table:

‘‘In the case of taxable The percentage is:

year beginning in:

1994 ................................................................................................ 60

1995 ................................................................................................ 55

1996 ................................................................................................ 50
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‘‘In the case of taxable The percentage is:

year beginning in:

1997 ................................................................................................ 45

1998 and thereafter ........................................................................ 40.

1 ‘‘(iii) ELECTION.—

2 ‘‘(I) IN GENERAL.—An election

3 under this subparagraph by any pos4 session corporation may be made only

5 for the corporation’s first taxable year

6 beginning after December 31, 1993, for

7 which it is a possession corporation.

8 ‘‘(II) PERIOD OF ELECTION.—An

9 election under this subparagraph shall

10 apply to the taxable year for which

11 made and all subsequent taxable years

12 unless revoked.

13 ‘‘(III) AFFILIATED GROUPS.—If,

14 for any taxable year, an election is not

15 in effect for any possession corporation

16 which is a member of an affiliated

17 group, any election under this sub18 paragraph for any other member of

19 such group is revoked for such taxable

20 year and all subsequent taxable years.

21 For purposes of this subclause, mem22 bers of an affiliated group shall be de23 termined without regard to the excep-
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1 tions contained in section 1504(b) and

2 as if the constructive ownership rules

3 of section 1563(e) applied for purposes

4 of section 1504(a). The Secretary may

5 prescribe regulations to prevent the

6 avoidance of this subclause through

7 deconsolidation or otherwise.

8 ‘‘(C) CROSS REFERENCE.—

‘‘For definitions and special rules applicable to

this paragraph, see subsection (i).’’; and

9 (3) by inserting ‘‘97.5 percent of’’ after ‘‘equal

10 to’’ in paraagraph (1).

11 (b) DEFINITIONS AND SPECIAL RULES.—Section 936

12 is amended by adding at the end thereof the following new

13 subsection:

14 ‘‘(i) DEFINITIONS AND SPECIAL RULES RELATING TO

15 LIMITATIONS OF SUBSECTION (a)(4).—

16 ‘‘(1) QUALIFIED POSSESSION WAGES.—For pur17 poses of this section—

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

19 possession wages’ means wages paid or incurred

20 by the possession corporation during the taxable

21 year in connection with the active conduct of a

22 trade or business within a possession of the

23 United States to any employee for services per24 formed in such possession, but only if such serv-
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1 ices are performed while the principal place of

2 employment of such employee is within such pos3 session.

4 ‘‘(B) LIMITATION ON AMOUNT OF WAGES

5 TAKEN INTO ACCOUNT.—

6 ‘‘(i) IN GENERAL.—The amount of

7 wages which may be taken into account

8 under subparagraph (A) with respect to any

9 employee for any taxable year shall not ex10 ceed 85 percent of the contribution and ben11 efit base determined under section 230 of

12 the Social Security Act for the calendar

13 year in which such taxable year begins.

14 ‘‘(ii) TREATMENT OF PART-TIME EM15 PLOYEES, ETC.—If—

16 ‘‘(I) any employee is not em17 ployed by the possession corporation on

18 a substantially full-time basis at all

19 times during the taxable year, or

20 ‘‘(II) the principal place of em21 ployment of any employee with the

22 possession corporation is not within a

23 possession at all times during the tax24 able year,
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1 the limitation applicable under clause (i)

2 with respect to such employee shall be the

3 appropriate portion (as determined by the

4 Secretary) of the limitation which would

5 otherwise be in effect under clause (i).

6 ‘‘(C) TREATMENT OF CERTAIN EMPLOY7 EES.—The term ‘qualified possession wages’ shall

8 not include any wages paid to employees who

9 are assigned by the employer to perform services

10 for another person, unless the principal trade or

11 business of the employer is to make employees

12 available for temporary periods to other persons

13 in return for compensation. All possession cor14 porations treated as 1 corporation under para15 graph (6) shall be treated as 1 employer for pur16 poses of the preceding sentence.

17 ‘‘(D) WAGES.—

18 ‘‘(i) IN GENERAL.—Except as provided

19 in clause (ii), the term ‘wages’ has the

20 meaning given to such term by subsection

21 (b) of section 3306 (determined without re22 gard to any dollar limitation contained in

23 such section). For purposes of the preceding

24 sentence, such subsection (b) shall be ap-
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1 plied as if the term ‘United States’ included

2 all possessions of the United States.

3 ‘‘(ii) SPECIAL RULE FOR AGRICUL4 TURAL LABOR AND RAILWAY LABOR.—In

5 any case to which subparagraph (A) or (B)

6 of paragraph (1) of section 51(h) applies,

7 the term ‘wages’ has the meaning given to

8 such term by section 51(h)(2).

9 ‘‘(2) ALLOCABLE EMPLOYEE FRINGE BENEFIT

10 EXPENSES.—

11 ‘‘(A) IN GENERAL.—The allocable employee

12 fringe benefit expenses of any possession corpora13 tion for any taxable year is an amount which

14 bears the same ratio to the amount determined

15 under subparagraph (B) for such taxable year

16 as—

17 ‘‘(i) the aggregate amount of the pos18 session corporation’s qualified possession

19 wages for such taxable year, bears to

20 ‘‘(ii) the aggregate amount of the wages

21 paid or incurred by such possession cor22 poration during such taxable year.

23 In no event shall the amount determined under

24 the preceding sentence exceed 15 percent of the

25 amount referred to in clause (i).
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1 ‘‘(B) EXPENSES TAKEN INTO ACCOUNT.—

2 For purposes of subparagraph (A), the amount

3 determined under this subparagraph for any tax4 able year is the aggregate amount allowable as

5 a deduction under this chapter to the possession

6 corporation for such taxable year (determined

7 without regard to paragraph (5)) with respect

8 to—

9 ‘‘(i) employer contributions under a

10 stock bonus, pension, profit-sharing, or an11 nuity plan,

12 ‘‘(ii) employer-provided coverage under

13 any accident or health plan for employees,

14 and

15 ‘‘(iii) the cost of life or disability in16 surance provided to employees.

17 Any amount treated as wages under paragraph

18 (1)(D) shall not be taken into account under this

19 subparagraph.

20 ‘‘(3) TREATMENT OF POSSESSION TAXES.—

21 ‘‘(A) AMOUNT OF CREDIT FOR POSSESSION

22 CORPORATIONS NOT USING PROFIT SPLIT.—

23 ‘‘(i) IN GENERAL.—For purposes of

24 subsection (a)(4)(A)(iii), the amount of the

25 qualified possession income taxes for any
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1 taxable year allocable to nonsheltered in2 come shall be an amount which bears the

3 same ratio to the possession income taxes

4 for such taxable year as—

5 ‘‘(I) the increase in the tax liabil6 ity of the possession corporation under

7 this chapter by reason of subsection

8 (a)(4)(A) (without regard to clause

9 (iii) thereof) and paragraph (5) of this

10 subsection, bears to

11 ‘‘(II) the tax liability of the pos12 session corporation for the taxable year

13 determined without regard to the credit

14 allowable under this section and with15 out regard to paragraph (5) of this

16 subsection.

17 ‘‘(ii) LIMITATION ON AMOUNT OF

18 TAXES TAKEN INTO ACCOUNT.—Possession

19 income taxes shall not be taken into account

20 under clause (i) for any taxable year to the

21 extent that the amount of such taxes exceeds

22 9 percent of the amount of the taxable in23 come for such taxable year.

24 ‘‘(B) DEDUCTION FOR POSSESSION COR25 PORATIONS USING PROFIT SPLIT.—Notwithstand-
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1 ing subsection (c) if a possession corporation is

2 not described in subsection (a)(4)(A)(iii) for any

3 taxable year, such possession corporation shall be

4 allowed a deduction for such taxable year in an

5 amount which bears the same ratio to the posses6 sion income taxes for such taxable year as—

7 ‘‘(i) the increase in the tax liability of

8 the possession corporation under this chap9 ter by reason of subsection (a)(4)(A) and

10 paragraph (5) of this subsection, bears to

11 ‘‘(ii) the tax liability of the possession

12 corporation for the taxable year determined

13 without regard to the credit allowable under

14 this section and without regard to para15 graph (5) of this subsection.

16 In determining the credit under subsection (a)

17 and in applying the preceding sentence, taxable

18 income shall be determined without regard to the

19 preceding sentence.

20 ‘‘(C) POSSESSION INCOME TAXES.—For

21 purposes of this paragraph, the term ‘possession

22 income taxes’ means any taxes of a possession of

23 the United States which are treated as not being

24 income, war profits, or excess profits taxes paid
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1 or accrued to a possession of the United States

2 by reason of subsection (c).

3 ‘‘(4) CATEGORIES OF DEPRECIABLE PROP4 ERTY.—For purposes of this section—

5 ‘‘(A) QUALIFIED TANGIBLE PROPERTY.—

6 The term ‘qualified tangible property’ means

7 any tangible property used by the possession cor8 poration in a possession of the United States in

9 the active conduct of a trade or business within

10 such possession.

11 ‘‘(B) SHORT-LIFE QUALIFIED TANGIBLE

12 PROPERTY.—The term ‘short-life qualified tan13 gible property’ means any qualified tangible

14 property to which section 168 applies and which

15 is 3-year property or 5-year property for pur16 poses of such section.

17 ‘‘(C) MEDIUM-LIFE QUALIFIED TANGIBLE

18 PROPERTY.—The term ‘medium-life qualified

19 tangible property’ means any qualified tangible

20 property to which section 168 applies and which

21 is 7-year property or 10-year property for pur22 poses of such section.

23 ‘‘(D) LONG-LIFE QUALIFIED TANGIBLE

24 PROPERTY.—The term ‘long-life qualified tan25 gible property’ means any qualified tangible
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1 property to which section 168 applies and which

2 is not described in subparagraph (B) or (C).

3 ‘‘(E) TRANSITIONAL RULE.—In the case of

4 any qualified tangible property to which section

5 168 (as in effect on the day before the date of the

6 enactment of the Tax Reform Act of 1986) ap7 plies, any reference in this paragraph to section

8 168 shall be treated as a reference to such section

9 as so in effect.

10 ‘‘(5) DENIAL OF DOUBLE BENEFIT.—

11 ‘‘(A) IN GENERAL.—Notwithstanding any

12 other provision of this chapter, no deduction

13 shall be allowed to a possession corporation for—

14 ‘‘(i) any qualified possession wages,

15 ‘‘(ii) any allocable employee fringe

16 benefit expenses, and

17 ‘‘(iii) any depreciation deductions re18 ferred to in subsection (a)(4)(A)(ii).

19 ‘‘(B) COORDINATION WITH OTHER PROVI20 SIONS.—Subparagraph (A) shall not apply for

21 purposes of—

22 ‘‘(i) determining the amount of the

23 credit allowable under subsection (a)(1)(A)

24 or otherwise determining the taxable income
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1 of the possession corporation under any

2 other provision of this section, and

3 ‘‘(ii) determining adjustments to the

4 basis of any property on account of depre5 ciation deductions.

6 ‘‘(6) ELECTION TO COMPUTE CREDIT ON CON7 SOLIDATED BASIS.—

8 ‘‘(A) IN GENERAL.—Any affiliated group

9 may elect to treat all possession corporations

10 which would be members of such group but for

11 section 1504(b) (3) or (4) as 1 corporation for

12 purposes of this section. The credit determined

13 under this section with respect to such 1 corpora14 tion shall be allocated among such possession

15 corporations in such manner as the Secretary

16 may prescribe.

17 ‘‘(B) ELECTION.—An election under sub18 paragraph (A) shall apply to the taxable year

19 for which made and all succeeding taxable years

20 unless revoked with the consent of the Secretary.

21 ‘‘(7) POSSESSION CORPORATION.—The term ‘pos22 session corporation’ means a domestic corporation for

23 which the election provided in subsection (a) is in ef24 fect.’’

25 (c) MINIMUM TAX TREATMENT.—
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1 (1) IN GENERAL.—Clause (ii) of section

2 56(g)(4)(C) (relating to treatment of special rule for

3 certain dividends) is amended by striking ‘‘sections

4 936 and 921’’ and inserting ‘‘sections 936 (including

5 subsections (a)(4) and (i) thereof) and 921’’.

6 (2) TREATMENT OF FOREIGN TAXES.—Clause

7 (iii) of section 56(g)(4)(C) is amended by adding at

8 the end thereof the following subclauses:

9 ‘‘(IV) SEPARATE APPLICATION OF

10 FOREIGN TAX CREDIT LIMITATIONS.—

11 In determining the alternative mini12 mum foreign tax credit, section 904(d)

13 shall be applied as if dividends from a

14 corporation eligible for the credit pro15 vided by section 936 were a separate

16 category of income referred to in a sub17 paragraph of section 904(d)(1).

18 ‘‘(V) COORDINATION WITH LIMITA19 TION ON 936 CREDIT.—Any reference in

20 this clause to a dividend received from

21 a corporation eligible for the credit

22 provided by section 936 shall be treated

23 as a reference to the portion of any

24 such dividend for which the dividends

25 received deduction is disallowed under
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1 clause (i) after the application of

2 clause (ii)(I).’’

3 (d) CONFORMING AMENDMENT.—Paragraph (4) of sec4 tion 904(b) is amended by inserting before the period at

5 the end thereof the following: ‘‘(without regard to sub6 sections (a)(4) and (i) thereof)’’.

7 (e) INCREASE IN LIMITATION ON COVER OVER.—Para8 graph (1) of section 7652(f) is amended to read as follows:

9 ‘‘(1) $10.50 ($11.30 in the case of distilled spir10 its brought into the United States during the 5-year

11 period beginning on July 1, 1995), or.’’

12 (f) EFFECTIVE DATE.—The amendments made by this

13 section shall apply to taxable years beginning after Decem14 ber 31, 1993; except that the amendment made by subsection

15 (e) shall take effect on October 1, 1993.

16 SEC. 8228. MODIFICATION TO LIMITATION ON DEDUCTION

17 FOR CERTAIN INTEREST.

18 (a) GENERAL RULE.—Paragraph (3) of section 163(j)

19 (defining disqualified interest) is amended to read as fol20 lows:

21 ‘‘(3) DISQUALIFIED INTEREST.—For purposes of

22 this subsection, the term ‘disqualified interest’

23 means—

24 ‘‘(A) any interest paid or accrued by the

25 taxpayer (directly or indirectly) to a related per-
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1 son if no tax is imposed by this subtitle with re2 spect to such interest, and

3 ‘‘(B) any interest paid or accrued by the

4 taxpayer with respect to any indebtedness to a

5 person who is not a related person if—

6 ‘‘(i) there is a disqualified guarantee of

7 such indebtedness, and

8 ‘‘(ii) no gross basis tax is imposed by

9 this subtitle with respect to such interest.’’

10 (b) DEFINITIONS.—Paragraph (6) of section 163(j) is

11 amended by adding at the end thereof the following new

12 subparagraphs:

13 ‘‘(D) DISQUALIFIED GUARANTEE.—

14 ‘‘(i) IN GENERAL.—Except as provided

15 in clause (ii), the term ‘disqualified guaran16 tee’ means any guarantee by a related per17 son which is—

18 ‘‘(I) an organization exempt from

19 taxation under this subtitle, or

20 ‘‘(II) a foreign person.

21 ‘‘(ii) EXCEPTIONS.—The term ‘dis22 qualified guarantee’ shall not include a

23 guarantee—

24 ‘‘(I) in any circumstances identi25 fied by the Secretary by regulation,
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1 where the interest on the indebtedness

2 would have been subject to a net basis

3 tax if the interest had been paid to the

4 guarantor, or

5 ‘‘(II) if the taxpayer owns a con6 trolling interest in the guarantor.

7 For purposes of subclause (II), except as

8 provided in regulations, the term ‘a control9 ling interest’ means direct or indirect own10 ership of at least 80 percent of the total vot11 ing power and value of all classes of stock

12 of a corporation, or 80 percent of the profit

13 and capital interests in any other entity.

14 For purposes of the preceding sentence, the

15 rules of paragraphs (1) and (5) of section

16 267(c) shall apply; except that such rules

17 shall also apply to interest in entities other

18 than corporations.

19 ‘‘(iii) GUARANTEE.—Except as pro20 vided in regulations, the term ‘guarantee’

21 includes any arrangement under which a

22 person (directly or indirectly through an

23 entity or otherwise) assures, on a condi24 tional or unconditional basis, the payment
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1 of another person’s obligation under any in2 debtedness.

3 ‘‘(E) GROSS BASIS AND NET BASIS

4 TAXATION.—

5 ‘‘(i) GROSS BASIS TAX.—The term

6 ‘gross basis tax’ means any tax imposed by

7 this subtitle which is determined by ref8 erence to the gross amount of any item of

9 income without any reduction for any de10 duction allowed by this subtitle.

11 ‘‘(ii) NET BASIS TAX.—The term ‘net

12 basis tax’ means any tax imposed by this

13 subtitle which is a not a gross basis tax.’’

14 (c) CONFORMING AMENDMENT.—Subparagraph (B) of

15 section 163(j)(5) is amended by striking ‘‘to a related per16 son’’.

17 (d) EFFECTIVE DATE.—The amendments made by this

18 section shall apply to interest paid or accrued in taxable

19 years beginning after December 31, 1993.
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1 PART III—FOREIGN TAX PROVISIONS

2 Subpart A—Current Taxation of Certain Earnings of

3 Controlled Foreign Corporations

4 SEC. 8231. EARNINGS INVESTED IN EXCESS PASSIVE AS5 SETS.

6 (a) GENERAL RULE.—Paragraph (1) of section 951(a)

7 (relating to amounts included in gross income of United

8 States shareholders) is amended by striking ‘‘and’’ at the

9 end of subparagraph (A), by striking the period at the end

10 of subparagraph (B) and inserting ‘‘; and’’, and by adding

11 at the end thereof the following new subparagraph:

12 ‘‘(C) the amount determined under section

13 956A with respect to such shareholder for such

14 year (but only to the extent not excluded from

15 gross income under section 959(a)(3)).’’

16 (b) AMOUNT OF INCLUSION.—Subpart F of part III

17 of subchapter N of chapter 1 is amended by inserting after

18 section 956 the following new section:

19 ‘‘SEC. 956A. EARNINGS INVESTED IN EXCESS PASSIVE AS20 SETS.

21 ‘‘(a) GENERAL RULE.—In the case of any controlled

22 foreign corporation, the amount determined under this sec23 tion with respect to any United States shareholder for any

24 taxable year is the lesser of—

25 ‘‘(1) the excess (if any) of—
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1 ‘‘(A) such shareholder’s pro rata share of the

2 amount of the controlled foreign corporation’s ex3 cess passive assets for such taxable year, over

4 ‘‘(B) the amount of earnings and profits de5 scribed in section 959(c)(1)(B) with respect to

6 such shareholder, or

7 ‘‘(2) such shareholder’s pro rata share of the ap8 plicable earnings of such controlled foreign corpora9 tion determined after the application of section

10 951(a)(1)(B).

11 ‘‘(b) APPLICABLE EARNINGS.—For purposes of this

12 section, the term ‘applicable earnings’ means, with respect

13 to any controlled foreign corporation, the sum of—

14 ‘‘(1) the amount referred to in section 316(a)(1)

15 to the extent such amount was accumulated in taxable

16 years beginning after September 30, 1993, and

17 ‘‘(2) the amount referred to in section 316(a)(2),

18 but reduced by distributions made during the taxable year

19 and reduced by the earnings and profits described in section

20 959(c)(1) to the extent that the earnings and profits so de21 scribed were accumulated in taxable years beginning after

22 September 30, 1993.

23 ‘‘(c) EXCESS PASSIVE ASSETS.—For purposes of this

24 section—
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1 ‘‘(1) IN GENERAL.—The excess passive assets of

2 any controlled foreign corporation for any taxable

3 year is the excess (if any) of—

4 ‘‘(A) the average of the amounts of passive

5 assets held by such corporation as of the close of

6 each quarter of such taxable year, over

7 ‘‘(B) 25 percent of the average of the

8 amounts of total assets held by such corporation

9 as of the close of each quarter of such taxable

10 year.

11 For purposes of the preceding sentence, the amount

12 taken into account with respect to any asset shall be

13 its adjusted basis as determined for purposes of com14 puting earnings and profits.

15 ‘‘(2) PASSIVE ASSET.—

16 ‘‘(A) IN GENERAL.—Except as otherwise

17 provided in this section, the term ‘passive asset’

18 means any asset held by the controlled foreign

19 corporation which produces passive income (as

20 defined in section 1296(b)) or is held for the pro21 duction of such income.

22 ‘‘(B) COORDINATION WITH SECTION 956.—

23 The term ‘passive asset’ shall not include any

24 United States property (as defined in section

25 956).
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1 ‘‘(3) CERTAIN RULES TO APPLY.—For purposes of

2 this subsection, the rules of the following provisions

3 shall apply:

4 ‘‘(A) Section 1296(c) (relating to look-thru

5 rules).

6 ‘‘(B) Section 1297(d) (relating to leasing

7 rules).

8 ‘‘(C) Section 1297(e) (relating to intangible

9 property).

10 ‘‘(d) TREATMENT OF CERTAIN CHAINS OF CON11 TROLLED FOREIGN CORPORATION.—

12 ‘‘(1) IN GENERAL.—For purposes of applying

13 subsection (c)—

14 ‘‘(A) all controlled foreign corporations

15 which are members of the same CFC chain shall

16 be treated as 1 controlled foreign corporation,

17 and

18 ‘‘(B) the amount of the excess passive assets

19 determined with respect to such 1 corporation

20 shall be allocated among the controlled foreign

21 corporations which are members of such chain in

22 proportion to their respective amounts of appli23 cable earnings.

24 ‘‘(2) CFC CHAIN.—For purposes of paragraph

25 (1), the term ‘CFC chain’ means any chain of con-
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1 trolled foreign corporations connected through stock

2 ownership, but only if more than 50 percent (by vote

3 or value) of the stock of each member of such chain

4 (other than the top tier corporation) is owned (di5 rectly or indirectly) by one or more other members of

6 the chain.

7 ‘‘(e) SPECIAL RULE WHERE CORPORATION CEASES TO

8 BE CONTROLLED FOREIGN CORPORATION DURING TAX9 ABLE YEAR.—If any foreign corporation ceases to be a con10 trolled foreign corporation during any taxable year—

11 ‘‘(1) the determination of any United States

12 shareholder’s pro rata share shall be made on the

13 basis of stock owned (within the meaning of section

14 958(a)) by such shareholder on the last day during

15 the taxable year on which the foreign corporation is

16 a controlled foreign corporation, and

17 ‘‘(2) the amount of such corporation’s excess pas18 sive assets for such taxable year shall be determined

19 by only taking into account quarters ending on or be20 fore such last day, and

21 ‘‘(3) in determining applicable earnings, the

22 amount taken into account by reason of being de23 scribed in paragraph (2) of section 316(a) shall be the

24 portion of the amount so described which is allocable

25 (on a pro rata basis) to the part of such year during
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1 which the corporation is a controlled foreign corpora2 tion.

3 ‘‘(f) REGULATIONS.—The Secretary shall prescribe

4 such regulations as may be necessary to carry out the pur5 poses of this section, including regulations to prevent the

6 avoidance of the provisions of this section through reorga7 nizations or otherwise.’’

8 (c) PREVIOUSLY TAXED INCOME RULES.—

9 (1) IN GENERAL.—Subsection (a) of section 959

10 (relating to exclusion from gross income of previously

11 taxed earnings and profits) is amended by striking

12 ‘‘or’’ at the end of paragraph (1), by adding ‘‘or’’ at

13 the end of paragraph (2), and by inserting after

14 paragraph (2) the following new paragraph:

15 ‘‘(3) such amounts would, but for this subsection,

16 be included under section 951(a)(1)(C) in the gross

17 income of,’’.

18 (2) ALLOCATION RULES.—

19 (A) Subsection (a) of section 959 is amend20 ed by adding at the end thereof the following new

21 sentence: ‘‘The rules of subsection (c) shall apply

22 for purposes of paragraph (1) of this subsection

23 and the rules of subsection (f) shall apply for

24 purposes of paragraphs (2) and (3) of this sub25 section.’’.
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1 (B) Section 959 is amended by adding at

2 the end thereof the following new subsection:

3 ‘‘(f) ALLOCATION RULES FOR CERTAIN INCLUSIONS.—

4 ‘‘(1) IN GENERAL.—For purposes of this sec5 tion—

6 ‘‘(A) amounts that would be included under

7 subparagraph (B) of section 951(a)(1) (deter8 mined without regard to this section) shall be

9 treated as attributable first to earnings described

10 in subsection (c)(2), and then to earnings de11 scribed in subsection (c)(3), and

12 ‘‘(B) amounts that would be included under

13 subparagraph (C) of section 951(a)(1) (deter14 mined without regard to this section) shall be

15 treated as attributable first to earnings described

16 in subsection (c)(2) to the extent the earnings so

17 described were accumulated in taxable years be18 ginning after September 30, 1993, and then to

19 earnings described in subsection (c)(3).

20 ‘‘(2) TREATMENT OF DISTRIBUTIONS.—In apply21 ing this section, actual distributions shall be taken

22 into account before amounts that would be included

23 under subparagraphs (B) and (C) of section 951(a)(1)

24 (determined without regard to this section).’’
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1 (C) Paragraph (1) of section 959(c) is

2 amended to read as follows:

3 ‘‘(1) first to the aggregate of—

4 ‘‘(A) earnings and profits attributable to

5 amounts included in gross income under section

6 951(a)(1)(B) (or which would have been included

7 except for subsection (a)(2) of this section), and

8 ‘‘(B) earnings and profits attributable to

9 amounts included in gross income under section

10 951(a)(1)(C) (or which would have been included

11 except for subsection (a)(3) of this section),

12 with any distribution being allocated between earn13 ings and profits described in subparagraph (A) and

14 earnings and profits described in subparagraph (B)

15 proportionately on the basis of the respective amounts

16 of such earnings and profits,’’.

17 (3) CONFORMING AMENDMENTS.—

18 (A) Subsections (a) and (b) of section 959

19 are each amended by striking ‘‘earnings and

20 profits for a taxable year’’ and inserting ‘‘earn21 ings and profits’’.

22 (B) Paragraph (2) of section 959(c) is

23 amended to read as follows:

24 ‘‘(2) then to earnings and profits attributable to

25 amounts included in gross income under section
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1 951(a)(1)(A) (but reduced by amounts not included

2 under subparagraph (B) or (C) of section 951(a)(1)

3 because of the exclusions in paragraphs (2) and (3)

4 of subsection (a) of this section), and’’

5 (C) Subsection (b) of section 989 is amend6 ed by striking ‘‘section 951(a)(1)(B)’’ and insert7 ing ‘‘subparagraph (B) or (C) of section

8 951(a)(1)’’.

9 (d) MODIFICATIONS TO PASSIVE FOREIGN INVEST10 MENT COMPANY RULES.—

11 (1) ADJUSTED BASIS USED IN CERTAIN DETER12 MINATIONS.—Subsection (a) of section 1296 is amend13 ed by striking the material following paragraph (2)

14 and inserting the following:

15 ‘‘In the case of a controlled foreign corporation (or any

16 other foreign corporation if such corporation so elects), the

17 determination under paragraph (2) shall be based on the

18 adjusted bases (as determined for purposes of computing

19 earnings and profits) of its assets in lieu of their value.

20 Such an election, once made, may be revoked only with the

21 consent of the Secretary.’’

22 (2) TREATMENT OF CERTAIN SUBPART F INCLU23 SIONS.—Subsection (b) of section 1297 is amended by

24 adding at the end thereof the following new para25 graph:
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1 ‘‘(9) TREATMENT OF CERTAIN SUBPART F INCLU2 SIONS.—Any amount included in gross income under

3 subparagraph (B) or (C) of section 951(a)(1) shall be

4 treated as a distribution received with respect to the

5 stock.’’

6 (3) TREATMENT OF CERTAIN DEALERS IN SECU7 RITIES.—Subsection (b) of section 1296 is amended

8 by adding at the end thereof the following new para9 graph:

10 ‘‘(3) TREATMENT OF CERTAIN DEALERS IN SECU11 RITIES.—

12 ‘‘(A) IN GENERAL.—In the case of any for13 eign corporation which is a controlled foreign

14 corporation (as defined in section 957(a)), the

15 term ‘passive income’ does not include any in16 come derived in the active conduct of a securities

17 business by such corporation if such corporation

18 is registered as a securities broker or dealer

19 under section 15(a) of the Securities Exchange

20 Act of 1934 or is registered as a Government se21 curities broker or dealer under section 15C(a) of

22 such Act. To the extent provided in regulations,

23 such term shall not include any income derived

24 in the active conduct of a securities business by
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1 a controlled foreign corporation which is not so

2 registered.

3 ‘‘(B) APPLICATION OF LOOK-THRU

4 RULES.—For purposes of paragraph (2)(C),

5 rules similar to the rules of subparagraph (A) of

6 this paragraph shall apply in determining

7 whether any income of a related person (whether

8 or not a corporation) is passive income.

9 ‘‘(C) LIMITATION.—The preceding provi10 sions of this paragraph shall only apply in the

11 case of persons who are United States sharehold12 ers (as defined in section 951(b)) in the con13 trolled foreign corporation.’’

14 (4) LEASING AND INTANGIBLE ASSET RULES.—

15 Section 1297 is amended by redesignating subsection

16 (d) as subsection (f) and by inserting after subsection

17 (c) the following new subsections:

18 ‘‘(d) TREATMENT OF CERTAIN LEASED PROPERTY.—

19 For purposes of this part:

20 ‘‘(1) IN GENERAL.—Any tangible personal prop21 erty with respect to which a foreign corporation is the

22 lessee under a lease with a term of at least 12 months

23 shall be treated as an asset actually held by such cor24 poration.

25 ‘‘(2) DETERMINATION OF ADJUSTED BASIS.—
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1 ‘‘(A) IN GENERAL.—The adjusted basis of

2 any asset to which paragraph (1) applies shall

3 be the unamortized portion (as determined under

4 regulations prescribed by the Secretary) of the

5 present value of the payments under the lease for

6 the use of such property.

7 ‘‘(B) PRESENT VALUE.—For purposes of

8 subparagraph (A), the present value of payments

9 described in subparagraph (A) shall be deter10 mined in the manner provided in regulations

11 prescribed by the Secretary—

12 ‘‘(i) as of the beginning of the lease

13 term, and

14 ‘‘(ii) except as provided in such regula15 tions, by using a discount rate equal to the

16 applicable Federal rate determined under

17 section 1274(d)—

18 ‘‘(I) by substituting the lease term

19 for the term of the debt instrument,

20 and

21 ‘‘(II) without regard to paragraph

22 (2) or (3) thereof.

23 ‘‘(3) EXCEPTIONS.—This subsection shall not

24 apply in any case where—
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1 ‘‘(A) the lessor is a related person (as de2 fined in section 954(d)(3)) with respect to the

3 foreign corporation, or

4 ‘‘(B) a principal purpose of leasing the

5 property was to avoid the provisions of this

6 section.

7 ‘‘(e) SPECIAL RULES FOR CERTAIN INTANGIBLES.—

8 ‘‘(1) RESEARCH EXPENDITURES.—The adjusted

9 basis of the total assets of a controlled foreign cor10 poration shall be increased by the research or experi11 mentation expenditures (within the meaning of sec12 tion 174) paid or incurred by such foreign corpora13 tion during the taxable year and the preceding 2 tax14 able years.

15 ‘‘(2) CERTAIN LICENSED INTANGIBLES.—In the

16 case of any intangible property (as defined in section

17 936(h)(3)(B)) with respect to which a controlled for18 eign corporation is a licensee and which is used by

19 such foreign corporation in the active conduct of a

20 trade or business, the adjusted basis of the total assets

21 of such foreign corporation shall be increased by an

22 amount equal to 300 percent of the payments made

23 during the taxable year for the use of such intangible

24 property. For purposes of the preceding sentence, pay25 ments to a foreign person shall not be taken into ac-
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1 count if such foreign person is a related person (as

2 defined in section 954(d)(3)) with respect to the con3 trolled foreign corporation.

4 ‘‘(3) CONTROLLED FOREIGN CORPORATION.—For

5 purposes of this subsection, the term ‘controlled for6 eign corporation’ has the meaning given such term by

7 section 957(a).’’

8 (e) EFFECTIVE DATE.—The amendments made by this

9 section shall apply to taxable years of foreign corporations

10 beginning after September 30, 1993, and to taxable years

11 of United States shareholders in which or with which such

12 taxable years of foreign corporations end.

13 SEC. 8232. MODIFICATION TO TAXATION OF INVESTMENT IN

14 UNITED STATES PROPERTY.

15 (a) GENERAL RULE.—Section 956 (relating to invest16 ment of earnings in United States property) is amended—

17 (1) by redesignating subsections (b) and (c) as

18 subsections (c) and (d), respectively, and

19 (2) by striking subsection (a) and inserting the

20 following:

21 ‘‘(a) GENERAL RULE.—In the case of any controlled

22 foreign corporation, the amount determined under this sec23 tion with respect to any United States shareholder for any

24 taxable year is the lesser of—

25 ‘‘(1) the excess (if any) of—
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1 ‘‘(A) such shareholder’s pro rata share of the

2 average of the amounts of United States property

3 held (directly or indirectly) by the controlled for4 eign corporation as of the close of each quarter

5 of such taxable year, over

6 ‘‘(B) the amount of earnings and profits de7 scribed in section 959(c)(1)(A) with respect to

8 such shareholder, or

9 ‘‘(2) such shareholder’s pro rata share of the ap10 plicable earnings of such controlled foreign corpora11 tion.

12 The amount taken into account under paragraph (1) with

13 respect to any property shall be its adjusted basis as deter14 mined for purposes of computing earnings and profits, re15 duced by any liability to which the property is subject.

16 ‘‘(b) ADJUSTMENTS FOR CERTAIN DISTRIBUTIONS;

17 OTHER SPECIAL RULES.—

18 ‘‘(1) APPLICABLE EARNINGS.—For purposes of

19 this section, the term ‘applicable earnings’ has the

20 meaning given to such term by section 956A(b), ex21 cept that the provisions of such section disregarding

22 earnings and profits accumulated in taxable years be23 ginning before October 1, 1993 shall be disregarded.

24 ‘‘(2) SPECIAL RULE WHERE CORPORATION

25 CEASES TO BE CONTROLLED FOREIGN CORPORA-
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1 TION.—Rules similar to the rules of section 956A(e)

2 shall apply for purposes of this section.’’

3 (b) CONFORMING AMENDMENTS.—

4 (1) Subparagraph (B) of section 951(a)(1) is

5 amended to read as follows:

6 ‘‘(B) the amount determined under section

7 956 with respect to such shareholder for such

8 year (but only to the extent not excluded from

9 gross income under section 959(a)(2)); and’’

10 (2) Subsection (a) of section 951 is amended by

11 striking paragraph (4).

12 (c) EFFECTIVE DATE.—The amendments made by this

13 section shall apply to taxable years of controlled foreign cor14 porations beginning after September 30, 1993, and to tax15 able years of United States shareholders in which or with

16 which such taxable years of controlled foreign corporations

17 end.

18 SEC. 8233. OTHER MODIFICATIONS TO SUBPART F.

19 (a) SAME COUNTRY EXCEPTION NOT TO APPLY TO

20 CERTAIN DIVIDENDS.—

21 (1) IN GENERAL.—Paragraph (3) of section

22 954(c) (relating to certain income received from relat23 ed persons) is amended by adding at the end thereof

24 the following new subparagraph:
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1 ‘‘(C) EXCEPTION FOR CERTAIN DIVI2 DENDS.—Subparagraph (A)(i) shall not apply to

3 any dividend with respect to any stock which is

4 attributable to earnings and profits of the dis5 tributing corporation accumulated during any

6 period during which the person receiving such

7 dividend did not hold such stock.’’

8 (2) EFFECTIVE DATE.—The amendment made by

9 paragraph (1) shall apply to taxable years of con10 trolled foreign corporations beginning after September

11 30, 1993, and to taxable years of United States share12 holders in which or with which such taxable years of

13 controlled foreign corporations end.

14 (b) SIMPLIFICATION OF SECTION 960(b).—

15 (1) IN GENERAL.—Subsection (b) of section 960

16 is amended—

17 (A) by redesignating paragraphs (3) and

18 (4) as paragraphs (4) and (5), respectively, and

19 (B) by striking paragraphs (1) and (2) and

20 inserting the following new paragraphs:

21 ‘‘(1) INCREASE IN SECTION 904 LIMITATION.—In

22 the case of any taxpayer who—

23 ‘‘(A) either (i) chose to have the benefits of

24 subpart A of this part for a taxable year begin25 ning after September 30, 1993, in which he was
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1 required under section 951(a) to include any

2 amount in his gross income, or (ii) did not pay

3 or accrue for such taxable year any income, war

4 profits, or excess profits taxes to any foreign

5 country or to any possession of the United

6 States,

7 ‘‘(B) chooses to have the benefits of subpart

8 A of this part for any taxable year in which he

9 receives 1 or more distributions or amounts

10 which are excludable from gross income under

11 section 959(a) and which are attributable to

12 amounts included in his gross income for taxable

13 years referred to in subparagraph (A), and

14 ‘‘(C) for the taxable year in which such dis15 tributions or amounts are received, pays, or is

16 deemed to have paid, or accrues income, war

17 profits, or excess profits taxes to a foreign coun18 try or to any possession of the United States

19 with respect to such distributions or amounts,

20 the limitation under section 904 for the taxable year

21 in which such distributions or amounts are received

22 shall be increased by the lesser of the amount of such

23 taxes paid, or deemed paid, or accrued with respect

24 to such distributions or amounts or the amount in the
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1 excess limitation account as of the beginning of such

2 taxable year.

3 ‘‘(2) EXCESS LIMITATION ACCOUNT.—

4 ‘‘(A) ESTABLISHMENT OF ACCOUNT.—Each

5 taxpayer meeting the requirements of paragraph

6 (1)(A) shall establish an excess limitation ac7 count. The opening balance of such account shall

8 be zero.

9 ‘‘(B) INCREASES IN ACCOUNT.—For each

10 taxable year beginning after September 30, 1993,

11 the taxpayer shall increase the amount in the ex12 cess limitation account by the excess (if any)

13 of—

14 ‘‘(i) the amount by which the limita15 tion under section 904(a) for such taxable

16 year was increased by reason of the total

17 amount of the inclusions in gross income

18 under section 951(a) for such taxable year,

19 over

20 ‘‘(ii) the amount of any income, war

21 profits, and excess profits taxes paid, or

22 deemed paid, or accrued to any foreign

23 country or possession of the United States

24 which were allowable as a credit under sec25 tion 901 for such taxable year and which
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1 would not have been allowable but for the

2 inclusions in gross income described in

3 clause (i).

4 Proper reductions in the amount added to the

5 account under the preceding sentence for any

6 taxable year shall be made for any increase in

7 the credit allowable under section 901 for such

8 taxable year by reason of a carryback if such in9 crease would not have been allowable but for the

10 inclusions in gross income described in clause

11 (i).

12 ‘‘(C) DECREASES IN ACCOUNT.—For each

13 taxable year beginning after September 30, 1993,

14 for which the limitation under section 904 was

15 increased under paragraph (1), the taxpayer

16 shall reduce the amount in the excess limitation

17 account by the amount of such increase.

18 ‘‘(3) DISTRIBUTIONS OF INCOME PREVIOUSLY

19 TAXED IN YEARS BEGINNING BEFORE OCTOBER 1,

20 1993.—If the taxpayer receives a distribution or

21 amount in a taxable year beginning after September

22 30, 1993, which is excluded from gross income under

23 section 959(a) and is attributable to any amount in24 cluded in gross income under section 951(a) for a tax25 able year beginning before October 1, 1993, the limi-
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1 tation under section 904 for the taxable year in which

2 such amount or distribution is received shall be in3 creased by the amount determined under this sub4 section as in effect on the day before the date of the

5 enactment of the Revenue Reconcilation Act of 1993.’’

6 (2) EFFECTIVE DATE.—The amendment made by

7 paragraph (1) shall apply to taxable years beginning

8 after September 30, 1993.

9 Subpart B—Allocation of Research and Experimental

10 Expenditures

11 SEC. 8234. ALLOCATION OF RESEARCH AND EXPERIMENTAL

12 EXPENDITURES.

13 (a) GENERAL RULE.—Subparagraph (B) of section

14 864(f)(1) (relating to allocation of research and experi15 mental expenditures) is amended by striking ‘‘64 percent’’

16 each place it appears and inserting ‘‘50 percent’’.

17 (b) CONFORMING AMENDMENTS.—

18 (1) Subsection (f) of section 864 is amended by

19 striking paragraph (5) and inserting the following

20 new paragraphs:

21 ‘‘(5) REGULATIONS.—The Secretary shall pre22 scribe such regulations as may be appropriate to

23 carry out the purposes of this subsection, including

24 regulations relating to the determination of whether

25 any expenses are attributable to activities conducted
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1 in the United States or outside the United States and

2 regulations providing such adjustments to the provi3 sions of this subsection as may be appropriate in the

4 case of cost-sharing arrangements and contract re5 search.

6 ‘‘(6) APPLICABILITY.—This subsection shall

7 apply to the taxpayer’s first taxable year (beginning

8 on or before August 1, 1994) following the taxpayer’s

9 last taxable year to which Revenue Procedure 92–56

10 applies or would apply if the taxpayer elected the

11 benefits of such Revenue Procedure.’’

12 (2) Subparagraph (D) of section 864(f)(4) is

13 amended by striking ‘‘subparagraph (C)’’ and insert14 ing ‘‘subparagraph (B) or (C)’’.

15 Subpart C—Other Provisions

16 SEC. 8235. REPEAL OF CERTAIN EXCEPTIONS FOR WORKING

17 CAPITAL.

18 (a) PROVISIONS RELATING TO OIL AND GAS IN19 COME.—

20 (1) AMENDMENTS TO SECTION 907.—

21 (A) Paragraph (1) of section 907(c) is

22 amended by adding at the end thereof the follow23 ing new flush sentence:
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1 ‘‘Such term does not include any dividend or interest in2 come which is passive income (as defined in section

3 904(d)(2)(A)).’’.

4 (B) Paragraph (2) of section 907(c) is

5 amended by adding at the end thereof the follow6 ing new flush sentence:

7 ‘‘Such term does not include any dividend or interest in8 come which is passive income (as defined in section

9 904(d)(2)(A)).’’.

10 (2) SEPARATE APPLICATION OF FOREIGN TAX

11 CREDIT.—Clause (iii) of section 904(d)(2)(A) is

12 amended by inserting ‘‘and’’ at the end of subclause

13 (II), by striking ‘‘, and’’ at the end of subclause (III)

14 and inserting a period, and by striking subclause

15 (IV).

16 (3) TREATMENT UNDER SUBPART F.—

17 (A) Paragraph (1) of section 954(g) is

18 amended by adding at the end thereof the follow19 ing new flush sentence:

20 Such term shall not include any foreign personal holding

21 company income (as defined in subsection (c)).’’.

22 (B) Paragraph (8) of section 954(b) is

23 amended by striking ‘‘(1),’’.

24 (b) TREATMENT OF SHIPPING INCOME.—Subsection (f)

25 of section 954 is amended by adding at the end thereof the
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1 following new sentence: ‘‘Such term shall not include any

2 dividend or interest income which is foreign personal hold3 ing company income (as defined in subsection (c)).’’.

4 (c) EFFECTIVE DATE.—The amendments made by this

5 section shall apply to taxable years beginning after Decem6 ber 31, 1992.

7 SEC. 8236. MODIFICATIONS OF ACCURACY-RELATED PEN8 ALTY.

9 (a) THRESHOLD REQUIREMENT.—Clause (ii) of sec10 tion 6662(e)(1)(B) (relating to substantial valuation

11 misstatement under chapter 1) is amended to read as

12 follows:

13 ‘‘(ii) the net section 482 transfer price

14 adjustment for the taxable year exceeds the

15 lesser of $5,000,000 or 10 percent of the tax16 payer’s gross receipts.’’

17 (b) CERTAIN ADJUSTMENTS EXCLUDED IN DETERMIN18 ING THRESHOLD.—Subparagraph (B) of section 6662(e)(3)

19 is amended to read as follows:

20 ‘‘(B) CERTAIN ADJUSTMENTS EXCLUDED IN

21 DETERMINING THRESHOLD.—For purposes of de22 termining whether the threshold requirements of

23 paragraph (1)(B)(ii) are met, the following shall

24 be excluded:
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1 ‘‘(i) Any portion of the net increase in

2 taxable income referred to in subparagraph

3 (A) which is attributable to any redeter4 mination of a price if—

5 ‘‘(I) it is established that the tax6 payer determined such price in accord7 ance with a specific pricing method set

8 forth in the regulations prescribed

9 under section 482 and that the tax10 payer’s use of such method was reason11 able,

12 ‘‘(II) the taxpayer has documenta13 tion (which was in existence as of the

14 time of filing the return) which sets

15 forth the determination of such price

16 in accordance with such a method and

17 which establishes that the use of such

18 method was reasonable, and

19 ‘‘(III) the taxpayer provides such

20 documentation to the Secretary within

21 30 days of a request for such docu22 mentation.

23 ‘‘(ii) Any portion of the net increase in

24 taxable income referred to in subparagraph

25 (A) which is attributable to a redetermina-
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1 tion of price where such price was not deter2 mined in accordance with such a specific

3 pricing method if—

4 ‘‘(I) the taxpayer establishes that

5 none of such pricing methods was like6 ly to result in a price that would clear7 ly reflect income, the taxpayer used an8 other pricing method to determine such

9 price, and such other pricing method

10 was likely to result in a price that

11 would clearly reflect income,

12 ‘‘(II) the taxpayer has documenta13 tion (which was in existence as of the

14 time of filing the return) which sets

15 forth the determination of such price

16 in accordance with such other method

17 and which establishes that the require18 ments of subclause (I) were satisfied,

19 and

20 ‘‘(III) the taxpayer provides such

21 documentation to the Secretary within

22 30 days of request for such documenta23 tion.

24 ‘‘(iii) Any portion of such net increase

25 which is attributable to any transaction
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1 solely between foreign corporations unless,

2 in the case of any such corporations, the

3 treatment of such transaction affects the de4 termination of income from sources within

5 the United States or taxable income effec6 tively connected with the conduct of a trade

7 or business within the United States.’’

8 (c) COORDINATION WITH REASONABLE CAUSE EXCEP9 TION.—Paragraph (3) of section 6662(e) is amended by

10 adding at the end thereof the following new subparagraph:

11 ‘‘(D) COORDINATION WITH REASONABLE

12 CAUSE EXCEPTION.—For purposes of section

13 6664(c) the taxpayer shall not be treated as hav14 ing reasonable cause for any portion of an

15 underpayment attributable to a net section 482

16 transfer price adjustment unless such taxpayer

17 meets the requirements of clause (i), (ii), or (iii)

18 of subparagraph (B) with respect to such por19 tion.’’

20 (d) CONFORMING AMENDMENT.—Clause (iii) of section

21 6662(h)(2)(A) is amended to read as follows:

22 ‘‘(iii) in paragraph (1)(B)(ii)—

23 ‘‘(I) ‘$20,000,000’ for

24 ‘$5,000,000’, and
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1 ‘‘(II) ‘20 percent’ for ‘10 per2 cent’.’’

3 (e) EFFECTIVE DATE.—The amendments made by this

4 section shall apply to taxable years beginning after Decem5 ber 31, 1993.

6 SEC. 8237. DENIAL OF PORTFOLIO INTEREST EXEMPTION

7 FOR CONTINGENT INTEREST.

8 (a) GENERAL RULE.—

9 (1) Subsection (h) of section 871 (relating to re10 peal of tax on interest of nonresident alien individ11 uals received from certain portfolio debt investments)

12 is amended by redesignating paragraphs (4), (5), and

13 (6) as paragraphs (5), (6), and (7), respectively, and

14 by inserting after paragraph (3) the following new

15 paragraph:

16 ‘‘(4) PORTFOLIO INTEREST NOT TO INCLUDE

17 CERTAIN CONTINGENT INTEREST.—For purposes of

18 this subsection—

19 ‘‘(A) IN GENERAL.—Except as otherwise

20 provided in this paragraph, the term ‘portfolio

21 interest’ shall not include—

22 ‘‘(i) any interest if the amount of such

23 interest is determined by reference to—
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1 ‘‘(I) any receipts, sales or other

2 cash flow of the debtor or a related per3 son,

4 ‘‘(II) any income or profits of the

5 debtor or a related person,

6 ‘‘(III) any change in value of any

7 property of the debtor or a related per8 son, or

9 ‘‘(IV) any dividend, partnership

10 distributions, or similar payments

11 made by the debtor or a related person,

12 or

13 ‘‘(ii) any other type of contingent in14 terest that is identified by the Secretary by

15 regulation, where a denial of the portfolio

16 interest exemption is necessary or appro17 priate to prevent avoidance of Federal in18 come tax.

19 ‘‘(B) RELATED PERSON.—The term ‘related

20 person’ means any person who is related to the

21 debtor within the meaning of section 267(b) or

22 707(b)(1), or who is a party to any arrangement

23 undertaken for a purpose of avoiding the appli24 cation of this paragraph.
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1 ‘‘(C) EXCEPTIONS.—Subparagraph (A)(i)

2 shall not apply to—

3 ‘‘(i) any amount of interest solely by

4 reason of the fact that the timing of any in5 terest or principal payment is subject to a

6 contingency,

7 ‘‘(ii) any amount of interest solely by

8 reason of the fact that the interest is paid

9 with respect to nonrecourse or limited re10 course indebtedness,

11 ‘‘(iii) any amount of interest all or

12 substantially all of which is determined by

13 reference to any other amount of interest

14 not described in subparagraph (A) (or by

15 reference to the principal amount of indebt16 edness on which such other interest is paid),

17 ‘‘(iv) any amount of interest solely by

18 reason of the fact that the debtor or a relat19 ed person enters into a hedging transaction

20 to reduce the risk of interest rate or cur21 rency fluctuations with respect to such in22 terest,

23 ‘‘(v) any amount of interest determined

24 by reference to—
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1 ‘‘(I) changes in the value of prop2 erty (including stock) that is actively

3 traded (within the meaning of section

4 1092(d)) other than property described

5 in section 897(c)(1) or (g),

6 ‘‘(II) the yield on property de7 scribed in subclause (I), other than a

8 debt instrument that pays interest de9 scribed in subparagraph (A), or stock

10 or other property that represents a ben11 eficial interest in the debtor or a relat12 ed person, or

13 ‘‘(III) changes in any index of the

14 value of property described in

15 subclause (I) or of the yield on prop16 erty described in subclause (II), and

17 ‘‘(vi) any other type of interest identi18 fied by the Secretary by regulation.

19 ‘‘(D) EXCEPTION FOR CERTAIN EXISTING

20 INDEBTEDNESS.—Subparagraph (A) shall not

21 apply to any interest paid or accrued with re22 spect to any indebtedness with a fixed term—

23 ‘‘(i) which was issued on or before

24 April 7, 1993, or
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1 ‘‘(ii) which was issued after such date

2 pursuant to a written binding contract in

3 effect on such date and at all times there4 after before such indebtedness was issued.’’

5 (2) Subsection (c) of section 881 is amended by

6 redesignating paragraphs (4), (5), and (6) as para7 graphs (5), (6), and (7), respectively, and by insert8 ing after paragraph (3) the following new paragraph:

9 ‘‘(4) PORTFOLIO INTEREST NOT TO INCLUDE

10 CERTAIN CONTINGENT INTEREST.—For purposes of

11 this subsection, the term ‘portfolio interest’ shall not

12 include any interest which is treated as not being

13 portfolio interest under the rules of section 871(h)(4).’’

14 (b) CONFORMING AMENDMENTS.—

15 (1) Clause (ii) of section 871(h)(2)(B) is amend16 ed by striking ‘‘paragraph (4)’’ and inserting ‘‘para17 graph (5)’’.

18 (2) Clause (ii) of section 881(c)(2)(B) is amend19 ed by striking ‘‘section 871(h)(4)’’ and inserting ‘‘sec20 tion 871(h)(5)’’.

21 (3) Paragraph (6) of section 881(c) (as redesig22 nated by subsection (a)) is amended by striking ‘‘sec23 tion 871(h)(5)’’ each place it appears and inserting

24 ‘‘section 871(h)(6)’’.
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1 (4) Paragraph (9) of section 1441(c) is amended

2 by striking ‘‘section 871(h)(3)’’ and inserting ‘‘section

3 871(h)(3) or (4)’’.

4 (5) Subsection (a) of section 1442 is amended—

5 (A) by striking ‘‘871(h)(3)’’ and inserting

6 ‘‘871(h)(3) or (4)’’, and

7 (B) by striking ‘‘881(c)(3)’’ and inserting

8 ‘‘881(c)(3) or (4)’’.

9 (c) EFFECTIVE DATE.—The amendments made by this

10 section shall apply to interest received after December 31,

11 1993.

12 SEC. 8238. REGULATIONS DEALING WITH CONDUIT AR13 RANGEMENTS.

14 Section 7701 is amended by redesignating subsection

15 (l) as subsection (m) and by inserting after subsection (k)

16 the following new subsection:

17 ‘‘(l) REGULATIONS RELATING TO CONDUIT ARRANGE18 MENTS.—The Secretary may prescribe regulations

19 recharacterizing any multiple-party financing transaction

20 as a transaction directly among any 2 or more of such par21 ties where the Secretary determines that such

22 recharacterization is appropriate to prevent avoidance of

23 any tax imposed by this title.’’
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1 SEC. 8239. TREATMENT OF EXPORT OF CERTAIN SOFTWOOD

2 LOGS.

3 (a) FOREIGN SALES CORPORATIONS.—Paragraph (2)

4 of section 927(a) (relating to exclusion of certain property)

5 is amended by striking ‘‘or’’ at the end of subparagraph

6 (C), by striking the period at the end of subparagraph (D)

7 and inserting ‘‘, or’’, and by adding at the end the follow8 ing:

9 ‘‘(E) any unprocessed timber which is a

10 softwood.

11 For purposes of subparagraph (E), the term ‘unproc12 essed timber’ means any log, cant, or similar form of

13 timber.’’

14 (b) DOMESTIC INTERNATIONAL SALES CORPORA15 TIONS.—Paragraph (2) of section 993(c) (relating to exclu16 sion of certain property) is amended—

17 (1) by striking ‘‘or’’ at the end of subparagraph

18 (C), by striking the period at the end of subparagraph

19 (D) and inserting ‘‘, or’’, and by adding after sub20 paragraph (D) the following new subparagraph:

21 ‘‘(E) any unprocessed timber which is a

22 softwood.’’, and

23 (2) by adding at the end the following new sen24 tence: ‘‘For purposes of subparagraph (E), the term

25 ‘unprocessed timber’ means any log, cant, or similar

26 form of timber.’’
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1 (c) SOURCE RULE.—Subsection (b) of section 865 (re2 lating to source rules for personal property sales) is amend3 ed by adding at the end the following: ‘‘Notwithstanding

4 the preceding sentence, any income from the sale of any

5 unprocessed timber which is a softwood and was cut from

6 an area in the United States shall be sourced in the United

7 States and the rules of sections 862(a)(6) and 863(b) shall

8 not apply to any such income. For purposes of the preceding

9 sentence, the term ‘unprocessed timber’ means any log, cant,

10 or similar form of timber.’’

11 (d) ELIMINATION OF DEFERRAL.—Subsection (d) of

12 section 954 is amended by adding at the end the following

13 new paragraph:

14 ‘‘(4) SPECIAL RULE FOR CERTAIN TIMBER PROD15 UCTS.—For purposes of subsection (a)(2), the term

16 ‘foreign base company sales income’ includes any in17 come (whether in the form of profits, commissions,

18 fees, or otherwise) derived in connection with—

19 ‘‘(A) the sale of any unprocessed timber re20 ferred to in section 865(b), or

21 ‘‘(B) the milling of any such timber outside

22 the United States.

23 Subpart G shall not apply to any amount treated as

24 subpart F income by reason of this paragraph.’’
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1 (e) EFFECTIVE DATE.—The amendments made by this

2 section shall apply to sales, exchanges, or other dispositions

3 after the date of the enactment of this Act.

4 PART IV—TRANSPORTATION FUELS PROVISIONS

5 Subpart A—Transportation Fuels Tax

6 SEC. 8241. TRANSPORTATION FUELS TAX.

7 (a) GASOLINE.—

8 (1) IN GENERAL.—Clause (iii) of section

9 4081(a)(2)(B) (relating to rates of tax) is amended to

10 read as follows:

11 ‘‘(iii) the deficit reduction rate is 6.8 cents

12 a gallon (4.3 cents a gallon on and after October

13 1, 1995).’’

14 (2) DEFICIT REDUCTION RATE MADE PERMA15 NENT.—Section 4081(d) (relating to termination) is

16 amended by striking paragraph (3).

17 (b) DIESEL FUEL AND AVIATION FUEL.—

18 (1) DIESEL FUEL.—

19 (A) IN GENERAL.—Paragraph (4) of section

20 4091(b) (relating to rate of tax) is amended by

21 striking ‘‘2.5 cents per gallon’’ and inserting

22 ‘‘6.8 cents per gallon (4.3 cents per gallon on

23 and after October 1, 1995)’’.

24 (B) DIESEL FUEL DEFICIT REDUCTION

25 RATE MADE PERMANENT.—Section 4091(b)(6)
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1 (relating to termination) is amended by striking

2 subparagraph (D).

3 (2) AVIATION FUEL.—

4 (A) GASOLINE IN NONCOMMERCIAL AVIA5 TION.—Paragraph (3) of section 4041(c) is

6 amended to read as follows:

7 ‘‘(3) RATE OF TAX.—The rate of tax imposed by

8 paragraph (2) on any gasoline is 1 cent.’’

9 (3) CONFORMING AMENDMENTS.—

10 (A) Subparagraphs (A) and (B) of section

11 4093(c)(2) are amended to read as follows:

12 ‘‘(A) NO REFUND OF CERTAIN TAXES ON

13 FUEL USED IN DIESEL-POWERED TRAINS.—In

14 the case of fuel sold for use in a diesel-powered

15 train, paragraph (1) shall not apply to so much

16 of the tax imposed by section 4091 as is attrib17 utable to the Leaking Underground Storage Tank

18 Trust Fund financing rate and the diesel fuel

19 deficit reduction rate imposed under such sec20 tion. The preceding sentence shall not apply in

21 the case of fuel sold for exclusive use by a State

22 or any political subdivision thereof.

23 ‘‘(B) NO REFUND OF CERTAIN TAXES ON

24 FUEL USED IN AIRCRAFT.—In the case of fuel

25 sold for use in any aircraft (except supplies for
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1 vessels or aircraft within the meaning of section

2 4221(d)(3)), paragraph (1) also shall not apply

3 to so much of the tax imposed by section 4091

4 as is attributable to the Leaking Underground

5 Storage Tank Trust Fund financing rate and the

6 aviation fuel deficit reduction rate imposed by

7 such section. The preceding sentence shall not

8 apply in the case of fuel sold for exclusive use by

9 a State or any political subdivision thereof.’’

10 (B) Section 4093(d) is amended by insert11 ing ‘‘and the aviation fuel deficit reduction rate’’

12 after ‘‘rate’’.

13 (c) SPECIAL FUELS.—Section 4041(m)(1)(A) is

14 amended by striking ‘‘1.25 cents’’ and inserting ‘‘5.55 cents

15 (4.3 cents on and after October 1, 1995)’’.

16 (d) FUEL USED IN COMMERCIAL TRANSPORTATION ON

17 INLAND WATERWAYS.—

18 (1) IN GENERAL.—Section 4042(b)(1) (relating

19 to amount of tax) is amended—

20 (A) by striking ‘‘and’’ at the end of sub21 paragraph (A),

22 (B) by striking the period at the end of sub23 paragraph (B) and inserting ‘‘, and’’, and

24 (C) by adding at the end thereof the follow25 ing new subparagraph:
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1 ‘‘(C) the deficit reduction rate.’’

2 (2) RATE.—Section 4042(b)(2) (relating to rates)

3 is amended by adding at the end the following new

4 subparagraph:

5 ‘‘(C) The deficit reduction rate is 4.3 cents

6 per gallon.’’

7 (e) CONFORMING AMENDMENTS.—

8 (1) Section 6421(f) is amended—

9 (A) by striking subparagraph (B) of para10 graph (2) and inserting the following:

11 ‘‘(B) in aviation which is not noncommer12 cial aviation (as so defined) with respect to the

13 tax imposed by section 4081 at the Leaking Un14 derground Storage Tank Trust Fund financing

15 rate and at the deficit reduction rate to the ex16 tent such deficit reduction rate does not exceed

17 4.3 cents per gallon.’’, and

18 (B) by inserting ‘‘and at the deficit reduc19 tion rate to the extent such deficit reduction rate

20 does not exceed 4.3 cents per gallon’’ after ‘‘fi21 nancing rate’’ in paragraph (3), and

22 (C) by inserting ‘‘AND DEFICIT REDUCTION

23 TAX’’ after ‘‘TAX’’ in the heading for paragraph

24 (3).
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1 (2) Section 6427(l) is amended by striking para2 graphs (3) and (4) and inserting the following new

3 paragraphs:

4 ‘‘(3) NO REFUND OF CERTAIN TAXES ON FUEL

5 USED IN DIESEL-POWERED TRAINS.—In the case of

6 fuel used in a diesel-powered train, paragraph (1)

7 shall not apply to so much of the tax imposed by sec8 tion 4091 as is attributable to the Leaking Under9 ground Storage Tank Trust Fund financing rate and

10 the diesel fuel deficit reduction rate imposed by such

11 section. The preceding sentence shall not apply in the

12 case of fuel sold for exclusive use by a State or any

13 political subdivision thereof.

14 ‘‘(4) NO REFUND OF CERTAIN TAXES ON FUEL

15 USED IN AIRCRAFT.—In the case of fuel used in any

16 aircraft (except supplies for vessels or aircraft within

17 the meaning of section 4221(d)(3)), paragraph (1)

18 also shall not apply to so much of the tax imposed

19 by section 4091 as is attributable to the Leaking Un20 derground Storage Tank Trust Fund financing rate

21 and the aviation fuel deficit reduction rate imposed

22 by such section. The preceding sentence shall not

23 apply in the case of fuel sold for exclusive use by a

24 State or any political subdivision thereof.’’
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1 (3) Section 9502(b)(3) is amended by inserting

2 ‘‘and the deficit reduction rate’’ after ‘‘financing

3 rate’’.

4 (4) Section 9503(b)(4)(B) is amended by insert5 ing ‘‘and the deficit reduction rates under such sec6 tions to the extent such rates do not exceed 4.3 cents

7 per gallon’’ after ‘‘such sections’’.

8 (5) Section 9503(c)(4)(D) is amended by insert9 ing ‘‘and the deficit reduction rates under such sec10 tions to the extent such rates do not exceed 4.3 cents

11 per gallon’’ after ‘‘such sections’’.

12 (6) Section 9503(c)(5)(B) is amended by insert13 ing ‘‘and the deficit reduction rate under such section

14 to the extent such rate does not exceed 4.3 cents per

15 gallon’’ after ‘‘such section’’.

16 (7) Section 9503(c)(6)(D) is amended by insert17 ing ‘‘and the deficit reduction rate to the extent such

18 rate does not exceed 4.3 cents per gallon’’ after ‘‘fi19 nancing rate’’.

20 (8) Section 9506(b) is amended by inserting

21 ‘‘and the deficit reduction rate’’ after ‘‘financing

22 rate’’.

23 (f) EFFECTIVE DATE.—The amendments made by this

24 section shall take effect on October 1, 1993.

25 (g) FLOOR STOCKS TAXES.—
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1 (1) IMPOSITION OF TAX.—In the case of gasoline,

2 diesel fuel, and aviation fuel on which tax was im3 posed under section 4081 or 4091 of the Internal Rev4 enue Code of 1986 before October 1, 1993, and which

5 is held on such date by any person, there is hereby

6 imposed a floor stocks tax of 4.3 cents per gallon on

7 such gasoline, diesel fuel, and aviation fuel.

8 (2) LIABILITY FOR TAX AND METHOD OF PAY9 MENT.—

10 (A) LIABILITY FOR TAX.—A person holding

11 gasoline, diesel fuel, or aviation fuel on October

12 1, 1993, to which the tax imposed by paragraph

13 (1) applies shall be liable for such tax.

14 (B) METHOD OF PAYMENT.—The tax im15 posed by paragraph (1) shall be paid in such

16 manner as the Secretary shall prescribe.

17 (C) TIME FOR PAYMENT.—The tax imposed

18 by paragraph (1) shall be paid on or before No19 vember 30, 1993.

20 (3) DEFINITIONS.—For purposes of this sub21 section—

22 (A) HELD BY A PERSON.—Gasoline, diesel

23 fuel, and aviation fuel shall be considered as

24 ‘‘held by a person’’ if title thereto has passed to
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1 such person (whether or not delivery to the per2 son has been made).

3 (B) GASOLINE.—The term ‘‘gasoline’’ has

4 the meaning given such term by section 4082 of

5 such Code.

6 (C) DIESEL FUEL.—The term ‘‘diesel fuel’’

7 has the meaning given such term by section 4092

8 of such Code.

9 (D) AVIATION FUEL.—The term ‘‘aviation

10 fuel’’ has the meaning given such term by section

11 4092 of such Code.

12 (E) SECRETARY.—The term ‘‘Secretary’’

13 means the Secretary of the Treasury or his dele14 gate.

15 (4) EXCEPTION FOR EXEMPT USES.—The tax

16 imposed by paragraph (1) shall not apply to gasoline,

17 diesel fuel, or aviation fuel held by any person exclu18 sively for any use to the extent a credit or refund of

19 the tax imposed by section 4081 or 4091 of such Code,

20 as the case may be, is allowable for such use.

21 (5) EXCEPTION FOR FUEL HELD IN VEHICLE

22 TAX.—No tax shall be imposed by paragraph (1) on

23 gasoline or diesel fuel held in the tank of a motor ve24 hicle or motorboat.
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1 (6) EXCEPTION FOR CERTAIN AMOUNTS OF

2 FUEL.—

3 (A) IN GENERAL.—No tax shall be imposed

4 by paragraph (1)—

5 (i) on gasoline held on October 1, 1993,

6 by any person if the aggregate amount of

7 gasoline held by such person on such date

8 does not exceed 4,000 gallons, and

9 (ii) on diesel fuel or aviation fuel held

10 on October 1, 1993, by any person if the ag11 gregate amount of diesel fuel or aviation

12 fuel held by such person on such date does

13 not exceed 2,000 gallons.

14 The preceding sentence shall apply only if such

15 person submits to the Secretary (at the time and

16 in the manner required by the Secretary) such

17 information as the Secretary shall require for

18 purposes of this paragraph.

19 (B) EXEMPT FUEL.—For purposes of sub20 paragraph (A), there shall not be taken into ac21 count fuel held by any person which is exempt

22 from the tax imposed by paragraph (1) by rea23 son of paragraph (4) or (5).

24 (C) CONTROLLED GROUPS.—For purposes of

25 this paragraph—
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1 (i) CORPORATIONS.—

2 (I) IN GENERAL.—All persons

3 treated as a controlled group shall be

4 treated as 1 person.

5 (II) CONTROLLED GROUP.—The

6 term ‘‘controlled group’’ has the mean7 ing given to such term by subsection

8 (a) of section 1563 of such Code; except

9 that for such purposes the phrase

10 ‘‘more than 50 percent’’ shall be sub11 stituted for the phrase ‘‘at least 80 per12 cent’’ each place it appears in such

13 subsection.

14 (ii) NONINCORPORATED PERSONS

15 UNDER COMMON CONTROL.—Under regula16 tions prescribed by the Secretary, principles

17 similar to the principles of clause (i) shall

18 apply to a group of persons under common

19 control where 1 or more of such persons is

20 not a corporation.

21 (7) OTHER LAW APPLICABLE.—All provisions of

22 law, including penalties, applicable with respect to

23 the taxes imposed by section 4081 of such Code in the

24 case of gasoline and section 4091 of such Code in the

25 case of diesel fuel shall, insofar as applicable and not
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1 inconsistent with the provisions of this subsection,

2 apply with respect to the floor stock taxes imposed by

3 paragraph (1) to the same extent as if such taxes were

4 imposed by such section 4081 or 4091.

5 Subpart B—Modifications to Tax on Diesel Fuel

6 SEC. 8242. MODIFICATIONS TO TAX ON DIESEL FUEL.

7 (a) IN GENERAL.—Subparts A and B of part III of

8 subchapter A of chapter 32 (relating to manufacturers ex9 cise taxes), as amended by subpart A, are amended to read

10 as follows:

11 ‘‘Subpart A—Gasoline and Diesel Fuel

‘‘Sec. 4081. Imposition of tax.

‘‘Sec. 4082. Exemptions for diesel fuel.

‘‘Sec. 4083. Definitions and special rule.

‘‘Sec. 4084. Cross references.

12 ‘‘SEC. 4081. IMPOSITION OF TAX.

13 ‘‘(a) TAX IMPOSED.—

14 ‘‘(1) TAX ON REMOVAL, ENTRY, OR SALE.—

15 ‘‘(A) IN GENERAL.—There is hereby im16 posed a tax at the rate specified in paragraph

17 (2) on—

18 ‘‘(i) the removal of a taxable fuel from

19 any refinery,

20 ‘‘(ii) the removal of a taxable fuel from

21 any terminal,
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1 ‘‘(iii) the entry into the United States

2 of any taxable fuel for consumption, use, or

3 warehousing, and

4 ‘‘(iv) the sale of a taxable fuel to any

5 person who is not registered under section

6 4101 unless there was a prior taxable re7 moval or entry of such fuel under clause (i),

8 (ii), or (iii).

9 ‘‘(B) EXEMPTION FOR BULK TRANSFERS TO

10 REGISTERED TERMINALS OR REFINERIES.—The

11 tax imposed by this paragraph shall not apply

12 to any removal or entry of a taxable fuel trans13 ferred in bulk to a terminal or refinery if the

14 person removing or entering the taxable fuel and

15 the operator of such terminal or refinery are reg16 istered under section 4101.

17 ‘‘(2) RATES OF TAX.—

18 ‘‘(A) IN GENERAL.—The rate of the tax im19 posed by this section is the sum of—

20 ‘‘(i) the Highway Trust Fund financ21 ing rate,

22 ‘‘(ii) the Leaking Underground Storage

23 Tank Trust Fund financing rate, and

24 ‘‘(iii) the deficit reduction rate.
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1 ‘‘(B) RATES.—For purposes of subpara2 graph (A)—

3 ‘‘(i) the Highway Trust Fund financ4 ing rate is—

5 ‘‘(I) 11.5 cents per gallon in the

6 case of gasoline, and

7 ‘‘(II) 17.5 cents per gallon in the

8 case of diesel fuel,

9 ‘‘(ii) the Leaking Underground Storage

10 Tank Trust Fund financing rate is 0.1 cent

11 per gallon, and

12 ‘‘(iii) the deficit reduction rate is 6.8

13 cents per gallon (4.3 cents per gallon on

14 and after October 1, 1995).

15 ‘‘(b) TREATMENT OF REMOVAL OR SUBSEQUENT SALE

16 BY BLENDER.—

17 ‘‘(1) IN GENERAL.—There is hereby imposed a

18 tax at the rate specified in subsection (a) on taxable

19 fuel removed or sold by the blender thereof.

20 ‘‘(2) CREDIT FOR TAX PREVIOUSLY PAID.—If—

21 ‘‘(A) tax is imposed on the removal or sale

22 of a taxable fuel by reason of paragraph (1), and

23 ‘‘(B) the blender establishes the amount of

24 the tax paid with respect to such fuel by reason

25 of subsection (a),
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1 the amount of the tax so paid shall be allowed as a

2 credit against the tax imposed by reason of para3 graph (1).

4 ‘‘(c) TAXABLE FUELS MIXED WITH ALCOHOL AT RE5 FINERY, ETC.—

6 ‘‘(1) REDUCED RATES.—

7 ‘‘(A) IN GENERAL.—Under regulations pre8 scribed by the Secretary, subsection (a) shall be

9 applied by substituting rates which are the ap10 plicable fraction of the otherwise applicable rates

11 in the case of the removal or entry of any taxable

12 fuel for use in producing at the time of such re13 moval or entry a qualified alcohol mixture. Sub14 ject to such terms and conditions as the Sec15 retary may prescribe (including the application

16 of section 4101), the treatment under the preced17 ing sentence also shall apply to use in producing

18 such a mixture after the time of such removal or

19 entry.

20 ‘‘(B) APPLICABLE FRACTION.—For purposes

21 of subparagraph (A), the applicable fraction is—

22 ‘‘(i) in the case of a qualified alcohol

23 mixture which contains gasoline, the frac24 tion the numerator of which is 10 and the

25 denominator of which is—
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1 ‘‘(I) 9 in the case of 10 percent

2 gasohol,

3 ‘‘(II) 9.23 in the case of 7.7 per4 cent gasohol, and

5 ‘‘(III) 9.43 in the case of 5.7 per6 cent gasohol, and

7 ‘‘(ii) in the case of a qualified alcohol

8 mixture which does not contain gasoline,

10 9 ⁄9.

10 ‘‘(2) LATER SEPARATION OF FUEL FROM QUALI11 FIED ALCOHOL MIXTURE.—If any person separates

12 the taxable fuel from a qualified alcohol mixture on

13 which tax was imposed under subsection (a) at the

14 otherwise applicable Highway Trust Fund financing

15 rate (or its equivalent) by reason of this subsection

16 (or with respect to which a credit or payment was al17 lowed or made by reason of section 6427(f)(1)), such

18 person shall be treated as the refiner of such taxable

19 fuel. The amount of tax imposed on any removal of

20 such fuel by such person shall be reduced by the

21 amount of tax imposed (and not credited or refunded)

22 on any prior removal or entry of such fuel.

23 ‘‘(3) ALCOHOL; QUALIFIED ALCOHOL MIXTURE.—

24 For purposes of this subsection—
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1 ‘‘(A) ALCOHOL.—The term ‘alcohol’ includes

2 methanol and ethanol but does not include alco3 hol produced from petroleum, natural gas, or

4 coal (including peat). Such term does not in5 clude alcohol with a proof of less than 190 (de6 termined without regard to any added dena7 turants).

8 ‘‘(B) QUALIFIED ALCOHOL MIXTURE.—The

9 term ‘qualified alcohol mixture’ means—

10 ‘‘(i) any mixture of gasoline with alco11 hol if at least 5.7 percent of such mixture

12 is alcohol, and

13 ‘‘(ii) any mixture of diesel fuel with al14 cohol if at least 10 percent of such mixture

15 is alcohol.

16 ‘‘(4) OTHERWISE APPLICABLE RATES FOR GASO17 LINE MIXTURES.—For purposes of this subsection—

18 ‘‘(A) IN GENERAL.—In the case of the High19 way Trust Fund financing rate, the otherwise

20 applicable rate for gasoline in a qualified alcohol

21 mixture is—

22 ‘‘(i) 6.1 cents a gallon for 10 percent

23 gasohol,

24 ‘‘(ii) 7.342 cents a gallon for 7.7 per25 cent gasohol, and
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1 ‘‘(iii) 8.422 cents a gallon for 5.7 per2 cent gasohol.

3 In the case of a mixture none of the alcohol in

4 which consists of ethanol, clauses (i), (ii), and

5 (iii) shall be applied by substituting ‘5.5 cents’

6 for ‘6.1 cents’, ‘6.88 cents’ for ‘7.342 cents’, and

7 ‘8.08 cents’ for ‘8.422 cents’.

8 ‘‘(B) 10 PERCENT GASOHOL.—The term ‘10

9 percent gasohol’ means any mixture of gasoline

10 with alcohol if at least 10 percent of such mix11 ture is alcohol.

12 ‘‘(C) 7.7 PERCENT GASOHOL.—The term

13 ‘7.7 percent gasohol’ means any mixture of gaso14 line with alcohol if at least 7.7 percent, but not

15 10 percent or more, of such mixture is alcohol.

16 ‘‘(D) 5.7 PERCENT GASOHOL.—The term

17 ‘5.7 percent gasohol’ means any mixture of gaso18 line with alcohol if at least 5.7 percent, but not

19 7.7 percent or more, of such mixture is alcohol.

20 ‘‘(5) OTHERWISE APPLICABLE RATES FOR DIE21 SEL FUEL MIXTURES.—For purposes of this sub22 section, in the case of the Highway Trust Fund fi23 nancing rate, the otherwise applicable rate for diesel

24 fuel in a qualified alcohol mixture is 12.1 cents per

25 gallon (11.5 cents per gallon in the case of a qualified
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1 alcohol mixture none of the alcohol in which consists

2 of ethanol).

3 ‘‘(6) TERMINATION.—Paragraph (1) shall not

4 apply to any removal or sale after September 30,

5 2000.

6 ‘‘(d) TERMINATION.—

7 ‘‘(1) HIGHWAY TRUST FUND FINANCING RATE.—

8 On and after October 1, 1999, the Highway Trust

9 Fund financing rate under subsection (a)(2) shall not

10 apply.

11 ‘‘(2) LEAKING UNDERGROUND STORAGE TANK

12 TRUST FUND FINANCING RATE.—The Leaking Under13 ground Storage Tank Trust Fund financing rate

14 under subsection (a)(2) shall not apply after Decem15 ber 31, 1995.

16 ‘‘(e) REFUNDS IN CERTAIN CASES.—Under regulations

17 prescribed by the Secretary, if any person who paid the tax

18 imposed by this section with respect to any taxable fuel es19 tablishes to the satisfaction of the Secretary that a prior

20 tax was paid (and not credited or refunded) with respect

21 to such taxable fuel, then an amount equal to the tax paid

22 by such person shall be allowed as a refund (without inter23 est) to such person in the same manner as if it were an

24 overpayment of tax imposed by this section.
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1 ‘‘SEC. 4082. EXEMPTIONS FOR DIESEL FUEL.

2 ‘‘(a) IN GENERAL.—Except as provided in subsection

3 (d), the tax imposed by section 4081 shall not apply to die4 sel fuel—

5 ‘‘(1) which the Secretary determines is destined

6 for a nontaxable use, and

7 ‘‘(2) which is indelibly dyed in accordance with

8 regulations which the Secretary shall prescribe.

9 Such regulations shall allow an individual choice of dye

10 color approved by the Secretary or chosen from any list of

11 approved dye colors that the Secretary may publish.

12 ‘‘(b) NONTAXABLE USE.—For purposes of this section,

13 the term ‘nontaxable use’ means—

14 ‘‘(1) any use which is exempt from the tax im15 posed by section 4041(a)(1) other than by reason of

16 the imposition of tax on any sale thereof,

17 ‘‘(2) any use in a train, and

18 ‘‘(3) any use described in section 6427(b)(1).

19 ‘‘(c) REGULATIONS.—The Secretary shall prescribe

20 such regulations as may be necessary to carry out this sec21 tion, including regulations requiring the conspicuous label22 ing of retail diesel fuel pumps and other delivery facilities

23 to assure that persons are aware of which fuel is available

24 only for nontaxable uses.
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1 ‘‘(d) CROSS REFERENCE.—

‘‘For tax on train, motorboat, and certain bus uses

of fuel purchased tax-free, see section 4041(a)(1).

2 ‘‘SEC. 4083. DEFINITIONS AND SPECIAL RULE.

3 ‘‘(a) TAXABLE FUEL.—For purposes of this subpart—

4 ‘‘(1) IN GENERAL.—The term ‘taxable fuel’

5 means—

6 ‘‘(A) gasoline, and

7 ‘‘(B) diesel fuel.

8 ‘‘(2) GASOLINE.—The term ‘gasoline’ includes, to

9 the extent prescribed in regulations—

10 ‘‘(A) gasoline blend stocks, and

11 ‘‘(B) products commonly used as additives

12 in gasoline.

13 For purposes of subparagraph (A), the term ‘gasoline

14 blend stock’ means any petroleum product component

15 of gasoline.

16 ‘‘(3) DIESEL FUEL.—The term ‘diesel fuel’

17 means any liquid (other than gasoline) which is suit18 able for use as a fuel in a diesel-powered highway ve19 hicle, a diesel-powered train, or a diesel-powered boat.

20 ‘‘(b) CERTAIN USES DEFINED AS REMOVAL.—If any

21 person uses taxable fuel (other than in the production of

22 gasoline, diesel fuel, or special fuels referred to in section

23 4041), such use shall for the purposes of this chapter be con24 sidered a removal.
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1 ‘‘SEC. 4084. CROSS REFERENCES.

‘‘(1) For provisions to relieve farmers from excise

tax in the case of gasoline used on the farm for farming purposes, see section 6420.

‘‘(2) For provisions to relieve purchasers of gasoline from excise tax in the case of gasoline used for

certain nonhighway purposes, used by local transit

systems, or sold for certain exempt purposes, see section 6421.

‘‘(3) For provisions to relieve purchasers from excise tax in the case of taxable fuel not used for taxable purposes, see section 6427.

2 ‘‘Subpart B—Aviation Fuel

‘‘Sec. 4091. Imposition of tax.

‘‘Sec. 4092. Exemptions.

‘‘Sec. 4093. Definitions.

3 ‘‘SEC. 4091. IMPOSITION OF TAX.

4 ‘‘(a) TAX ON SALE.—

5 ‘‘(1) IN GENERAL.—There is hereby imposed a

6 tax on the sale of aviation fuel by the producer or the

7 importer thereof or by any producer of aviation fuel.

8 ‘‘(2) USE TREATED AS SALE.—For purposes of

9 paragraph (1), if any producer uses aviation fuel

10 (other than for a nontaxable use as defined in section

11 6427(l)(2)(B)) on which no tax has been imposed

12 under such paragraph, then such use shall be consid13 ered a sale.

14 ‘‘(b) RATE OF TAX.—

15 ‘‘(1) IN GENERAL.—The rate of the tax imposed

16 by subsection (a) shall be the sum of—

17 ‘‘(A) the Airport and Airway Trust Fund

18 financing rate,
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1 ‘‘(B) the Leaking Underground Storage

2 Tank Trust Fund financing rate.

3 ‘‘(2) AIRPORT AND AIRWAY TRUST FUND FINANC4 ING RATE.—For purposes of paragraph (1), the Air5 port and Airway Trust Fund financing rate is 17.5

6 cents per gallon.

7 ‘‘(3) LEAKING UNDERGROUND STORAGE TANK

8 TRUST FUND FINANCING RATE.—For purposes of

9 paragraph (1), the Leaking Underground Storage

10 Tank Trust Fund financing rate is 0.1 cent per

11 gallon.

12 ‘‘(4) DEFICIT REDUCTION RATE.—For purposes

13 of paragraph (1), the deficit reduction rate is 4.3

14 cents per gallon.

15 ‘‘(5) TERMINATION OF RATES.—

16 ‘‘(A) The Airport and Airway Trust Fund

17 financing rate shall not apply on and after Jan18 uary 1, 1996.

19 ‘‘(B) The Leaking Underground Storage

20 Tank Fund financing rate shall not apply dur21 ing any period during which the Leaking Under22 ground Storage Tank Trust Fund financing rate

23 under section 4081 does not apply.

24 ‘‘(c) REDUCED RATE OF TAX FOR AVIATION FUEL IN

25 ALCOHOL MIXTURE, ETC.—
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1 ‘‘(1) IN GENERAL.—The Airport and Airway

2 Trust Fund financing rate shall be—

3 ‘‘(A) 4.1 cents per gallon in the case of the

4 sale of any mixture of aviation fuel if—

5 ‘‘(i) at least 10 percent of such mixture

6 consists of alcohol (as defined in section

7 4081(c)(3)), and

8 ‘‘(ii) the aviation fuel in such mixture

9 was not taxed under subparagraph (B), and

10 ‘‘(B) 4.56 cents per gallon in the case of the

11 sale of aviation fuel for use (at the time of such

12 sale) in producing a mixture described in sub13 paragraph (A).

14 In the case of a sale described in subparagraph (B),

15 the Leaking Underground Storage Tank Trust Fund

financing rate shall be 1 16 ⁄9 cent per gallon and the deficit reduction rate shall be 10 17 ⁄9 of such rate.

18 ‘‘(2) LATER SEPARATION.—If any person sepa19 rates the aviation fuel from a mixture of the aviation

20 fuel and alcohol on which tax was imposed under sub21 section (a) at the Airport and Airway Trust Fund fi22 nancing rate equivalent to 4.1 cents per gallon by

23 reason of this subsection (or with respect to which a

24 credit or payment was allowed or made by reason of

25 section 6427(f)(1)), such person shall be treated as the
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1 producer of such aviation fuel. The amount of tax im2 posed on any sale of such aviation fuel by such person

3 shall be reduced by the amount of tax imposed (and

4 not credited or refunded) on any prior sale of such

5 fuel.

6 ‘‘(3) TERMINATION.—Paragraph (1) shall not

7 apply to any sale after September 30, 2000.

8 ‘‘(d) LOWER RATES OF TAX ON ALCOHOL MIXTURES

9 NOT MADE FROM ETHANOL.—In the case of a mixture de10 scribed in subsection (c)(1)(A)(i) none of the alcohol in

11 which is ethanol—

12 ‘‘(1) subsections (c)(1)(A) and (c)(2) shall each

13 be applied by substituting rates which are 0.6 cents

14 less than the rates contained therein, and

15 ‘‘(2) subsection (c)(1)(B) shall be applied by substituting rates which are 10 16 ⁄9 of the rates determined

17 under paragraph (1).

18 ‘‘SEC. 4092. EXEMPTIONS.

19 ‘‘(a) NONTAXABLE USES.—The Airport and Airway

20 Trust Fund financing rate under section 4091 shall not

21 apply to aviation fuel sold by a producer or importer for

22 use by the purchaser in a nontaxable use (as defined in

23 section 6427(l)(2)(B)).

24 ‘‘(b) SALES TO PRODUCER.—Under regulations pre25 scribed by the Secretary, the tax imposed by section 4091
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1 shall not apply to aviation fuel sold to a producer of such

2 fuel.

3 ‘‘(c) SUPPLIES FOR VESSELS AND AIRCRAFT.—The

4 Leaking Underground Storage Tank Trust Fund financing

5 rate and the deficit reduction rate under section 4091 shall

6 not apply to aviation fuel sold for use or used as supplies

7 for vessels or aircraft (within the meaning of section

8 4221(d)(3)).

9 ‘‘SEC. 4093. DEFINITIONS.

10 ‘‘(a) AVIATION FUEL.—For purposes of this subpart,

11 the term ‘aviation fuel’ means any liquid (other than any

12 product taxable under section 4081) which is suitable for

13 use as a fuel in an aircraft.

14 ‘‘(b) PRODUCER.—For purposes of this subpart—

15 ‘‘(1) CERTAIN PERSONS TREATED AS PRODUC16 ERS.—

17 ‘‘(A) IN GENERAL.—The term ‘producer’ in18 cludes any person described in subparagraph (B)

19 and registered under section 4101 with respect to

20 the tax imposed by section 4091.

21 ‘‘(B) PERSONS DESCRIBED.—A person is

22 described in this subparagraph if such person

23 is—

24 ‘‘(i) a refiner, blender, or wholesale dis25 tributor of aviation fuel, or
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1 ‘‘(ii) a dealer selling aviation fuel ex2 clusively to producers of aviation fuel.

3 ‘‘(C) REDUCED RATE PURCHASERS TREAT4 ED AS PRODUCERS.—Any person to whom avia5 tion fuel is sold at a reduced rate under this sub6 part shall be treated as the producer of such fuel.

7 ‘‘(2) WHOLESALE DISTRIBUTOR.—For purposes

8 of paragraph (1), the term ‘wholesale distributor’ in9 cludes any person who sells aviation fuel to producers,

10 retailers, or to users who purchase in bulk quantities

11 and deliver into bulk storage tanks. Such term does

12 not include any person who (excluding the term

13 ‘wholesale distributor’ from paragraph (1)) is a pro14 ducer or importer.’’

15 (b) CIVIL PENALTY FOR USING REDUCED-RATE FUEL

16 FOR TAXABLE USE.—

17 (1) IN GENERAL.—Part I of subchapter B of

18 chapter 68 (relating to assessable penalties) is amend19 ed by adding at the end thereof the following new sec20 tion:

21 ‘‘SEC. 6714. DYED FUEL SOLD FOR USE OR USED IN TAX22 ABLE USE.

23 ‘‘(a) IMPOSITION OF PENALTY.—If any dyed fuel—
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1 ‘‘(1) is sold or held for sale by any person for

2 any use which such person knows or has reason to

3 know is not a reduced-tax use of such fuel, or

4 ‘‘(2) is used by any person for a use other than

5 a reduced-tax use and such person knew, or had rea6 son to know, that such fuel was so dyed,

7 then, in addition to the tax, such person shall pay a penalty

8 on such sale or use.

9 ‘‘(b) AMOUNT OF PENALTY.—The amount of the pen10 alty under subsection (a) on any sale or use shall be the

11 greater of—

12 ‘‘(1) $1,000, or

13 ‘‘(2) an amount equal to twice the excess of the

14 aggregate taxes which should have been imposed

15 under section 4081 on the fuel so sold or used over the

16 prior taxes (if any) imposed on such fuel under such

17 section which have not been credited or refunded.

18 ‘‘(c) DEFINITIONS.—For purposes of this section—

19 ‘‘(1) DYED FUEL.—The term ‘dyed fuel’ means

20 diesel fuel dyed in accordance with section 4082.

21 ‘‘(2) REDUCED-TAX USE.—The term ‘reduced-tax

22 use’ means, with respect to any fuel, the use for which

23 such fuel was dyed.’’
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1 (2) CLERICAL AMENDMENT.—The table of sec2 tions for such part I is amended by adding at the end

3 thereof the following new item:

‘‘Sec. 6714. Dyed fuel sold for use or used in taxable use.’’

4 (c) REGISTERED VENDORS TO ADMINISTER CLAIMS

5 FOR REFUND OF DIESEL FUEL.—Section 6427(l) (relating

6 to nontaxable uses of diesel fuel and aviation fuel) is

7 amended by adding at the end the following new paragraph:

8 ‘‘(5) REGISTERED VENDORS TO ADMINISTER

9 CLAIMS FOR REFUND OF DIESEL FUEL SOLD TO

10 FARMERS AND STATE AND LOCAL GOVERNMENTS.—

11 ‘‘(A) IN GENERAL.—Paragraph (1) shall

12 not apply to the ultimate purchaser of undyed

13 diesel fuel used on a farm for farming purposes

14 (within the meaning of section 6420(c)) or for

15 the exclusive use of a State or local government.

16 ‘‘(B) PAYMENT TO ULTIMATE, REGISTERED

17 VENDOR.—The amount which would have other18 wise been paid under paragraph (1) (without re19 gard to subparagraph (A)) shall be paid to the

20 ultimate vendor of such fuel, if such vendor—

21 ‘‘(i) is registered under section 4101,

22 and

23 ‘‘(ii) meets the requirements of section

24 6416(a).’’

25 (d) TECHNICAL AND CONFORMING AMENDMENTS.—
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1 (1) Subsection (c) of section 40 is amended by

2 striking ‘‘, section 4081(c), or section 4091(c)’’ and

3 inserting ‘‘or section 4081(c)’’.

4 (2) Subsection (a) of section 4101 is amended by

5 striking ‘‘4081’’ and inserting ‘‘4041(a)(1), 4081,’’.

6 (3) Section 4102 is amended by striking ‘‘gaso7 line’’ and inserting ‘‘any taxable fuel (as defined in

8 section 4083)’’.

9 (4) Paragraph (1) of section 4041(a), as amend10 ed by subtitle A, is amended to read as follows:

11 ‘‘(1) TAX ON DIESEL FUEL IN CERTAIN CASES.—

12 ‘‘(A) IN GENERAL.—There is hereby im13 posed a tax on any liquid other than gasoline (as

14 defined in section 4083)—

15 ‘‘(i) sold by any person to an owner,

16 lessee, or other operator of a diesel-powered

17 highway vehicle, a diesel-powered train, or

18 a diesel-powered boat for use as a fuel in

19 such vehicle, train, or boat, or

20 ‘‘(ii) used by any person as a fuel in

21 a diesel-powered highway vehicle, a diesel22 powered train, or a diesel-powered boat un23 less there was a taxable sale of such fuel

24 under clause (i).
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1 ‘‘(B) EXEMPTION FOR PREVIOUSLY TAXED

2 FUEL.—No tax shall be imposed by this para3 graph on the sale or use of diesel fuel if there was

4 a taxable removal of such fuel under section 4081

5 and the tax thereon was not credited or refunded.

6 ‘‘(C) RATE OF TAX.—

7 ‘‘(i) IN GENERAL.—Except as otherwise

8 provided in this subparagraph, the rate of

9 the tax imposed by this paragraph shall be

10 the sum of the Highway Trust Fund financ11 ing rate on diesel fuel and the deficit reduc12 tion rate in effect under section 4081 at the

13 time of such sale or use.

14 ‘‘(ii) CERTAIN RATES NOT TO APPLY TO

15 TRAINS.—

16 ‘‘(I) HIGHWAY TRUST FUND FI17 NANCING RATE.—The Highway Trust

18 Fund financing rate shall not apply to

19 any sale for use, or use, of fuel in a

20 train.

21 ‘‘(II) DEFICIT REDUCTION

22 RATE.—The deficit reduction rate shall

23 not apply to any sale for use, or use,

24 of fuel in a train if such fuel is used
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1 by a State or any political subdivision

2 thereof

3 ‘‘(iii) CERTAIN BUS USES.—If the lim4 itation in section 6427(b)(2)(A) applies to

5 fuel sold for use or used in an automobile

6 bus, the Highway Trust Fund financing

7 rate shall be 3 cents per gallon and so much

8 of the deficit reduction rate as exceeds 4.3

9 cents per gallon shall not apply.’’

10 (5) Paragraph (2) of section 4041(a), as amend11 ed by subtitle A, is amended by striking ‘‘or para12 graph (1) of this subsection’’ and by inserting ‘‘on

13 gasoline’’ after ‘‘Highway Trust Fund financing

14 rate’’.

15 (6) Paragraph (1) of section 4041(c), as amend16 ed by subpart A, is amended by striking ‘‘the aviation

17 fuel deficit reduction rate’’ and inserting ‘‘the deficit

18 reduction rate imposed under section 4091 on’’.

19 (7) Paragraph (2) of section 4041(c) is amended

20 by striking ‘‘any product taxable under section 4081’’

21 and inserting ‘‘gasoline (as defined in section 4083)’’.

22 (8) Paragraph (2) of section 4041(d) is amend23 ed—
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1 (A) by striking ‘‘(other than a product tax2 able under section 4081)’’ and inserting ‘‘(other

3 than gasoline (as defined in section 4083))’’, and

4 (B) by striking ‘‘section 4091’’ and insert5 ing ‘‘section 4081’’.

6 (9) Paragraph (3) of section 4041(d) is amended

7 by striking ‘‘(other than any product taxable under

8 section 4081)’’ and inserting ‘‘(other than gasoline (as

9 defined in section 4083))’’.

10 (10) Subparagraph (A) of section 4041(k)(1) is

11 amended by striking ‘‘sections 4081(c) and 4091(c),

12 as the case may be’’ and inserting ‘‘section 4081(c)’’.

13 (11) Subparagraph (B) of section 4041(m)(1) is

14 amended by striking ‘‘section 4091(d)(1)’’ and insert15 ing ‘‘section 4091(c)(1)’’.

16 (12) Section 6206 is amended by striking ‘‘4041

17 or 4091’’ and inserting ‘‘4041, 4081, or 4091’’.

18 (13) The heading for subsection (f) of section

19 6302 is amended by inserting ‘‘AND DIESEL FUEL’’

20 after ‘‘GASOLINE’’.

21 (14) Paragraph (1) of section 6412(a) is amend22 ed by striking ‘‘gasoline’’ each place it appears (in23 cluding the heading) and inserting ‘‘taxable fuel’’.
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1 (15)(A) Subparagraph (A) of section 6416(a)(4)

2 is amended by striking ‘‘product’’ each place it ap3 pears and inserting ‘‘gasoline’’.

4 (B) Subparagraph (B) of section 6416(a)(4) is

5 amended by striking all that follows ‘‘substituting’’

6 and inserting ‘‘ ‘any gasoline taxable under section

7 4081’ for ‘aviation fuel’ therein).’’

8 (16) The third sentence of section 6416(b)(2) is

9 amended by inserting ‘‘any tax imposed under section

10 4081 on diesel fuel and’’ after ‘‘in the case of’’.

11 (17) Sections 6420(c)(5) and 6421(e)(1) are each

12 amended by striking ‘‘section 4082(b)’’ and inserting

13 ‘‘section 4083(a)’’.

14 (18) Section 6421(e)(2)(B)(iv), as added in sub15 title A, is amended

16 (A) by striking ‘‘4091’’ both places it ap17 pears and inserting ‘‘4081’’, and

18 (B) by striking ‘‘diesel fuel deficit’’ in

19 subclause (I) and inserting ‘‘deficit’’.

20 (19) Subsection (b) of section 6427 is amended—

21 (A) by striking ‘‘if any fuel’’ in paragraph

22 (1) and inserting ‘‘if any fuel other than gaso23 line (as defined in section 4083(a))’’, and

24 (B) by striking ‘‘4091’’ each place it ap25 pears and inserting ‘‘4081’’.
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1 (20)(A) Paragraph (1) of section 6427(f) is

2 amended by striking ‘‘, 4091(c)(1)(A), or

3 4091(d)(1)(A)’’ and inserting ‘‘or 4091(c)(1)(A)’’.

4 (B) Paragraph (2) of section 6427(f) is amended

5 to read as follows:

6 ‘‘(2) DEFINITIONS.—For purposes of paragraph

7 (1)—

8 ‘‘(A) REGULAR TAX RATE.—The term ‘regu9 lar tax rate’ means—

10 ‘‘(i) in the case of gasoline or diesel

11 fuel, the aggregate rate of tax imposed by

12 section 4081 determined without regard to

13 subsection (c) thereof, and

14 ‘‘(ii) in the case of aviation fuel, the

15 aggregate rate of tax imposed by section

16 4091 determined without regard to sub17 section (c) thereof.

18 ‘‘(B) INCENTIVE TAX RATE.—The term ‘in19 centive tax rate’ means—

20 ‘‘(i) in the case of gasoline or diesel

21 fuel, the aggregate rate of tax imposed by

22 section 4081 with respect to fuel described

23 in subsection (c)(1) thereof, and

24 ‘‘(ii) in the case of aviation fuel, the

25 aggregate rate of tax imposed by section
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1 4091 with respect to fuel described in sub2 section (c)(1)(B) thereof.’’

3 (21) Subsection (h) of section 6427 is amended

4 by striking ‘‘section 4082(b)’’ and inserting ‘‘section

5 4083(a)(2)’’.

6 (22) Paragraph (3) of section 6427(i) is amend7 ed—

8 (A) by striking ‘‘GASOHOL’’ in the heading

9 and inserting ‘‘ALCOHOL MIXTURE’’, and

10 (B) by striking ‘‘gasoline used to produce

11 gasohol (as defined in section 4081(c)(1))’’ in

12 subparagraph (A) and inserting ‘‘gasoline or die13 sel fuel used to produce a qualified alcohol mix14 ture (as defined in section 4081(c)(3))’’.

15 (23) The heading of paragraph (4) of section

16 6427(i) is amended by inserting ‘‘4081 OR’’ before

17 ‘‘4091’’.

18 (24) Subsection (l) of section 6427, as amended

19 by subpart A, is amended to read as follows:

20 ‘‘(l) NONTAXABLE USES OF DIESEL FUEL AND AVIA21 TION FUEL.—

22 ‘‘(1) IN GENERAL.—Except as provided in sub23 section (k) and in paragraphs (3) and (4) of this sub24 section, if—
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1 ‘‘(A) any diesel fuel on which tax has been

2 imposed by section 4081, or

3 ‘‘(B) any aviation fuel on which tax has

4 been imposed by section 4091,

5 is used by any person in a nontaxable use, the Sec6 retary shall pay (without interest) to the ultimate

7 purchaser of such fuel an amount equal to the aggre8 gate amount of tax imposed on such fuel under sec9 tion 4081 or 4091, as the case may be.

10 ‘‘(2) NONTAXABLE USE.—For purposes of this

11 subsection, the term ‘nontaxable use’ means—

12 ‘‘(A) in the case of diesel fuel, any use

13 which is exempt from the tax imposed by section

14 4041(a)(1) other than by reason of the imposi15 tion of tax on any sale thereof, and

16 ‘‘(B) in the case of aviation fuel, any use

17 which is exempt from the tax imposed by section

18 4041(c)(1) other than by reason of the imposition

19 of tax on any sale thereof.

20 ‘‘(3) NO REFUND OF CERTAIN TAXES ON FUEL

21 USED IN DIESEL-POWERED TRAINS.—Fuel used in a

22 diesel-powered train shall be treated as a nontaxable

23 use for purposes of this section, except that paragraph

24 (1) shall not apply to so much of the tax imposed by

25 section 4081 as is attributable to the Leaking Under-
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1 ground Storage Tank Trust Fund financing rate and

2 the deficit reduction rate imposed by such section, un3 less such fuel was used by a State or any political

4 subdivision thereof.

5 ‘‘(4) NO REFUND OF CERTAIN TAXES ON FUELS

6 USED IN AIRCRAFT.—In the case of fuel used in any

7 aircraft (other than as supplies for vessels or aircraft,

8 within the meaning of section 4221(d)(3)), paragraph

9 (1) also shall not apply to so much of the tax imposed

10 by section 4091 as is attributable to the Leaking Un11 derground Storage Tank Trust Fund financing rate

12 and the deficit reduction rate imposed by such sec13 tion. The preceding sentence shall not apply if such

14 fuel was used by a State or any political subdivision

15 thereof.’’

16 (25) Paragraph (1) of section 9503(b) is amend17 ed—

18 (A) by striking ‘‘gasoline),’’ in subpara19 graph (E) and inserting ‘‘gasoline and diesel

20 fuel), and’’,

21 (B) by striking subparagraph (F), and

22 (C) by redesignating subparagraph (G) as

23 subparagraph (F).
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1 (26)(A) Subparagraph (B) of section 9503(b)(4)

2 is amended by striking ‘‘, 4081, and 4091’’ and in3 serting ‘‘and 4081’’.

4 (B) Subparagraph (C) of section 9503(b)(4), as

5 amended by subtitle A, is amended by striking

6 ‘‘4091’’ and inserting ‘‘4081’’.

7 (27) Subparagraph (D) of section 9503(c)(6) is

8 amended by striking ‘‘, 4081, and 4091’’ and insert9 ing ‘‘and 4081’’.

10 (28) Paragraph (2) of section 9503(e) is amend11 ed—

12 (A) by striking ‘‘, 4081, and 4091’’ and in13 serting ‘‘and 4081’’, and

14 (B) by striking ‘‘, 4081, or 4091’’ and in15 serting ‘‘or 4081’’.

16 (29) Subsection (b) of section 9508 is amended—

17 (A) by inserting ‘‘and diesel fuel’’ after

18 ‘‘gasoline’’ in paragraph (2),

19 (B) by striking ‘‘diesel fuel and’’ in para20 graph (3), and

21 (C) by striking ‘‘4091’’ in the last sentence,

22 as added by subtitle A, and inserting ‘‘4081’’.

23 (30) The table of subparts for part III of sub24 chapter A of chapter 32 is amended by striking the
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1 items relating to subparts A and B and inserting the

2 following new items:

‘‘Subpart A. Gasoline and diesel fuel.

‘‘Subpart B. Aviation fuel.’’

3 (e) EFFECTIVE DATE.—The amendments made by this

4 section shall take effect on January 1, 1994.

5 SEC. 8243. FLOOR STOCKS TAX.

6 (a) IN GENERAL.—There is hereby imposed a floor

7 stocks tax on diesel fuel held by any person on January

8 1, 1994, if—

9 (1) no tax was imposed on such fuel under sec10 tion 4041(a) or 4091 of the Internal Revenue Code of

11 1986 as in effect on the day before the date of the en12 actment of this Act, and

13 (2) tax would have been imposed by section 4081

14 of such Code, as amended by this Act, on any prior

15 removal, entry, or sale of such fuel had such section

16 4081 applied to such fuel for periods before such date

17 of enactment.

18 (b) RATE OF TAX.—The rate of the tax imposed by

19 subsection (a) shall be the amount of tax which would be

20 imposed under section 4081 of the Internal Revenue Code

21 of 1986 if there were a taxable sale of such fuel on such

22 date.

23 (c) LIABILITY AND PAYMENT OF TAX.—
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1 (1) LIABILITY FOR TAX.—A person holding the

2 diesel fuel on January 1, 1994, to which the tax im3 posed by this section applies shall be liable for such

4 tax.

5 (2) METHOD OF PAYMENT.—The tax imposed by

6 this section shall be paid in such manner as the Sec7 retary shall prescribe.

8 (3) TIME FOR PAYMENT.—The tax imposed by

9 this section shall be paid on or before July 31, 1994.

10 (d) DEFINITIONS.—For purposes of this section—

11 (1) DIESEL FUEL.—The term ‘‘diesel fuel’’ has

12 the meaning given such term by section 4083(a) of

13 such Code.

14 (2) SECRETARY.—The term ‘‘Secretary’’ means

15 the Secretary of the Treasury or his delegate.

16 (e) EXCEPTIONS.—

17 (1) PERSONS ENTITLED TO CREDIT OR RE18 FUND.—The tax imposed by this section shall not

19 apply to fuel held by any person exclusively for any

20 use to the extent a credit or refund of the tax imposed

21 by section 4081 is allowable for such use.

22 (2) COMPLIANCE WITH DYEING REQUIRED.—

23 Paragraph (1) shall not apply to the holder of any

24 fuel if the holder of such fuel fails to comply with any
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1 requirement imposed by the Secretary with respect to

2 dyeing.

3 (f) OTHER LAWS APPLICABLE.—All provisions of law,

4 including penalties, applicable with respect to the taxes im5 posed by section 4081 of such Code shall, insofar as applica6 ble and not inconsistent with the provisions of this section,

7 apply with respect to the floor stock taxes imposed by this

8 section to the same extent as if such taxes were imposed

9 by such section 4081.

10 Subpart C—Extension of Motor Fuel Tax Rates;

11 Increased Deposits Into Highway Trust Fund

12 SEC. 8244. EXTENSION OF MOTOR FUEL TAX RATES; IN13 CREASED DEPOSITS INTO HIGHWAY TRUST

14 FUND.

15 (a) IN GENERAL.—Clause (i) of section 4081(a)(2)(B),

16 as amended by subpart B, is amended—

17 (1) by striking ‘‘11.5 cents’’ and inserting ‘‘14

18 cents’’, and

19 (2) by striking ‘‘17.5 cents’’ and inserting ‘‘20

20 cents’’.

21 (b) CONFORMING AMENDMENTS.—

22 (1) Subparagraph (A) of section 4081(c)(4), as

23 so amended, is amended to read as follows:

24 ‘‘(A) IN GENERAL.—In the case of the High25 way Trust Fund financing rate, the otherwise
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1 applicable rate for gasoline in a qualified alcohol

2 mixture is—

3 ‘‘(i) 8.6 cents a gallon for 10 percent

4 gasohol,

5 ‘‘(ii) 9.842 cents a gallon for 7.7 per6 cent gasohol, and

7 ‘‘(iii) 10.922 cents a gallon for 5.7 per8 cent gasohol.

9 In the case of a mixture none of the alcohol in which

10 consists of ethanol, clauses (i), (ii), and (iii) shall be

11 applied by substituting ‘8.0 cents’ for ‘8.6 cents’, ‘9.38

12 cents’ for ‘9.842 cents’, and ‘10.58 cents’ for ‘10.922’.’’

13 (2) Paragraph (5) of section 4081(c), as so

14 amended, is amended—

15 (A) by striking ‘‘12.1 cents’’ and inserting

16 ‘‘14.6 cents’’, and

17 (B) by striking ‘‘11.5 cents’’ and inserting

18 ‘‘14.0’’.

19 (3) Subparagraph (A) of section 4041(m)(1), as

20 amended by subpart A, is amended to read as follows:

21 ‘‘(A) under subsection (a)(2) the Highway

22 Trust Fund financing shall be 7 cents per gallon

23 and the deficit reduction rate shall be 4.3 cents

24 per gallon, and’’.
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1 (4) Clause (ii) of section 4041(a)(1)(C), as so

2 amended, is amended—

3 (A) by striking ‘‘The Highway Trust Fund

4 financing rate’’ and inserting ‘‘So much of the

5 Highway Trust Fund financing rate as exceeds

6 2.5 cents per gallon’’, and

7 (B) by striking ‘‘HIGHWAY RATE’’ in the

8 heading and inserting ‘‘PORTION OF HIGHWAY

9 RATE’’.

10 (5) Paragraph (4) of section 6427(l), as amended

11 by subpart B, is amended—

12 (A) by inserting ‘‘2.5 cents per gallon of the

13 Highway Trust Fund financing rate and’’ after

14 ‘‘attributable to’’, and

15 (B) by striking ‘‘DEFICIT REDUCTION TAX’’

16 in the heading and inserting ‘‘PORTION OF TAX’’.

17 (6) Subsection (b) of section 9503 is amended by

18 adding at the end thereof the following new para19 graph:

20 ‘‘(6) RETENTION OF CERTAIN TAXES IN GENERAL

21 FUND.—

22 ‘‘(A) IN GENERAL.—There shall not be

23 taken into account under paragraphs (1) and

24 (2)—
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1 ‘‘(i) the tax imposed by section 4081

2 on diesel fuel used in any train, and

3 ‘‘(ii) so much of the nonhighway rec4 reational fuel taxes (as defined in subsection

5 (c)(6)(D)) as are attributable to 2.5 cents of

6 the Highway Trust Fund financing rate.

7 ‘‘(B) TRANSFERS FROM HIGHWAY TRUST

8 FUND.—For purposes of determining the amount

9 paid from the Highway Trust Fund under sub10 section (c)(6), the Highway Trust Fund financ11 ing rate shall be treated as being 2.5 cents less

12 than the otherwise applicable rate.’’

13 (c) INCREASE IN DEPOSITS IN MASS TRANSIT AC14 COUNT.—Paragraph (2) of section 9503(e) is amended by

15 striking ‘‘1.5 cents’’ and inserting ‘‘2 cents’’.

16 (d) EFFECTIVE DATE.—The amendments made by this

17 section shall take effect October 1, 1995, but the amendment

18 made by subsection (c) shall apply only to amounts attrib19 utable to taxes imposed on or after such date.

20 PART V—COMPLIANCE PROVISIONS

21 SEC. 8251. MODIFICATIONS TO SUBSTANTIAL UNDERSTATE22 MENT AND RETURN-PREPARER PENALTIES.

23 (a) REASONABLE BASIS REQUIRED.—

24 (1) SUBSTANTIAL UNDERSTATEMENT PENALTY.—

25 Clause (ii) of section 6662(d)(2)(B) (relating to re-
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1 duction for understatement due to position of tax2 payer or disclosed item) is amended to read as fol3 lows:

4 ‘‘(ii) any item if—

5 ‘‘(I) the relevant facts affecting the

6 item’s tax treatment are adequately

7 disclosed in the return or in a state8 ment attached to the return, and

9 ‘‘(II) there is a reasonable basis

10 for the tax treatment of such item by

11 the taxpayer.’’

12 (b) EFFECTIVE DATE.—The amendments made by this

13 section shall apply to returns the due dates for which (deter14 mined without regard to extensions) are after December 31,

15 1993.

16 SEC. 8252. RETURNS RELATING TO THE CANCELLATION OF

17 INDEBTEDNESS BY CERTAIN FINANCIAL EN18 TITIES.

19 (a) IN GENERAL.—Subpart B of part III of subchapter

20 A of chapter 61 (relating to information concerning trans21 actions with other persons) is amended by adding at the

22 end thereof the following new section:
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1 ‘‘SEC. 6050P. RETURNS RELATING TO THE CANCELLATION

2 OF INDEBTEDNESS BY CERTAIN FINANCIAL

3 ENTITIES.

4 ‘‘(a) IN GENERAL.—Any applicable financial entity

5 which discharges (in whole or in part) the indebtedness of

6 any person during any calendar year shall make a return

7 (at such time and in such form as the Secretary may by

8 regulations prescribe) setting forth—

9 ‘‘(1) the name, address, and TIN of each person

10 whose indebtedness was discharged during such cal11 endar year,

12 ‘‘(2) the date of the discharge and the amount of

13 the indebtedness discharged, and

14 ‘‘(3) such other information as the Secretary

15 may prescribe.

16 ‘‘(b) EXCEPTION.—Subsection (a) shall not apply to

17 any discharge of less than $600.

18 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur19 poses of this section—

20 ‘‘(1) APPLICABLE FINANCIAL ENTITY.—The term

21 ‘applicable financial entity’ means—

22 ‘‘(A) any financial institution described in

23 section 581 or 591(a) and any credit union,

24 ‘‘(B) the Federal Deposit Insurance Cor25 poration, the Resolution Trust Corporation, the

26 National Credit Union Administration, and any
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1 other Federal executive agency (as defined in sec2 tion 6050M), and any successor or subunit of

3 any of the foregoing, and

4 ‘‘(C) any other corporation which is a di5 rect or indirect subsidiary of an entity referred

6 to in subparagraph (A) but only if, by virtue of

7 being affiliated with such entity, such other cor8 poration is subject to supervision and examina9 tion by a Federal or State agency which regu10 lates entities referred to in subparagraph (A).

11 ‘‘(2) GOVERNMENTAL UNITS.—In the case of an

12 entity described in paragraph (1)(B), any return

13 under this section shall be made by the officer or em14 ployee appropriately designated for the purpose of

15 making such return.

16 ‘‘(d) STATEMENTS TO BE FURNISHED TO PERSONS

17 WITH RESPECT TO WHOM INFORMATION IS REQUIRED TO

18 BE FURNISHED.—Every applicable financial entity re19 quired to make a return under subsection (a) shall furnish

20 to each person whose name is required to be set forth in

21 such return a written statement showing—

22 ‘‘(1) the name and address of the entity required

23 to make such return, and

24 ‘‘(2) the information required to be shown on the

25 return with respect to such person.
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1 The written statement required under the preceding sen2 tence shall be furnished to the person on or before January

3 31 of the year following the calendar year for which the

4 return under subsection (a) was made.’’

5 (b) PENALTIES.—

6 (1) RETURNS.—Subparagraph (B) of section

7 6724(d)(1) is amended by redesignating clauses (viii)

8 through (xv) as clauses (ix) through (xvi), respec9 tively, and by inserting after clause (vii) the following

10 new clause:

11 ‘‘(viii) section 6050P (relating to re12 turns relating to the cancellation of indebt13 edness by certain financial entities),’’.

14 (2) STATEMENTS.—Paragraph (2) of section

15 6724(d) is amended by redesignating subparagraphs

16 (P) through (S) as subparagraphs (Q) through (T),

17 respectively, and by inserting after subparagraph (O)

18 the following new subparagraph:

19 ‘‘(P) section 6050P(d) (relating to returns

20 relating to the cancellation of indebtedness by

21 certain financial entities),’’.

22 (c) CLERICAL AMENDMENT.—The table of sections for

23 subpart B of part III of subchapter A of chapter 61 is
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1 amended by adding at the end thereof the following new

2 item:

‘‘Sec. 6050P. Returns relating to the cancellation of indebtedness by

certain financial entities.’’

3 (d) EFFECTIVE DATE.—The amendments made by this

4 section shall apply to discharges of indebtedness after the

5 date of the enactment of this Act.

6 PART VI—TREATMENT OF INTANGIBLES

7 SEC. 8261. AMORTIZATION OF GOODWILL AND CERTAIN

8 OTHER INTANGIBLES.

9 (a) GENERAL RULE.—Part VI of subchapter B of

10 chapter 1 (relating to itemized deductions for individuals

11 and corporations) is amended by adding at the end thereof

12 the following new section:

13 ‘‘SEC. 197. AMORTIZATION OF GOODWILL AND CERTAIN

14 OTHER INTANGIBLES.

15 ‘‘(a) GENERAL RULE.—A taxpayer shall be entitled to

16 an amortization deduction with respect to any amortizable

17 section 197 intangible. The amount of such deduction shall

18 be determined by amortizing 75 percent of the adjusted

19 basis (for purposes of determining gain) of such intangible

20 ratably over the 14-year period beginning with the month

21 in which such intangible was acquired.

22 ‘‘(b) NO OTHER DEPRECIATION OR AMORTIZATION

23 DEDUCTION ALLOWABLE.—Except as provided in sub24 section (a), no depreciation or amortization deduction shall
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1 be allowable with respect to any amortizable section 197

2 intangible.

3 ‘‘(c) AMORTIZABLE SECTION 197 INTANGIBLE.—For

4 purposes of this section—

5 ‘‘(1) IN GENERAL.—Except as otherwise provided

6 in this section, the term ‘amortizable section 197 in7 tangible’ means any section 197 intangible—

8 ‘‘(A) which is acquired by the taxpayer

9 after the date of the enactment of this section,

10 and

11 ‘‘(B) which is held in connection with the

12 conduct of a trade or business or an activity de13 scribed in section 212.

14 ‘‘(2) EXCLUSION OF SELF-CREATED INTANGI15 BLES, ETC.—The term ‘amortizable section 197 intan16 gible’ shall not include any section 197 intangible—

17 ‘‘(A) which is not described in subpara18 graph (D), (E), or (F) of subsection (d)(1), and

19 ‘‘(B) which is created by the taxpayer.

20 This paragraph shall not apply if the intangible is

21 created in connection with a transaction (or series of

22 related transactions) involving the acquisition of as23 sets constituting a trade or business or substantial

24 portion thereof.
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1 ‘‘(3) ANTI-CHURNING RULES.—

‘‘For exclusion of intangibles acquired in certain

transactions, see subsection (f)(9).

2 ‘‘(d) SECTION 197 INTANGIBLE.—For purposes of this

3 section—

4 ‘‘(1) IN GENERAL.—Except as otherwise provided

5 in this section, the term ‘section 197 intangible’

6 means—

7 ‘‘(A) goodwill,

8 ‘‘(B) going concern value,

9 ‘‘(C) any of the following intangible items:

10 ‘‘(i) workforce in place including its

11 composition and terms and conditions (con12 tractual or otherwise) of its employment,

13 ‘‘(ii) business books and records, oper14 ating systems, or any other information

15 base (including lists or other information

16 with respect to current or prospective cus17 tomers),

18 ‘‘(iii) any patent, copyright, formula,

19 process, design, pattern, knowhow, format,

20 or other similar item,

21 ‘‘(iv) any customer-based intangible,

22 ‘‘(v) any supplier-based intangible,

23 and

24 ‘‘(vi) any other similar item,
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1 ‘‘(D) any license, permit, or other right

2 granted by a governmental unit or an agency or

3 instrumentality thereof,

4 ‘‘(E) any covenant not to compete (or other

5 arrangement to the extent such arrangement has

6 substantially the same effect as a covenant not to

7 compete) entered into in connection with an ac8 quisition (directly or indirectly) of an interest in

9 a trade or business or substantial portion there10 of, and

11 ‘‘(F) any franchise, trademark, or trade

12 name.

13 ‘‘(2) CUSTOMER-BASED INTANGIBLE.—

14 ‘‘(A) IN GENERAL.—The term ‘customer15 based intangible’ means—

16 ‘‘(i) composition of market,

17 ‘‘(ii) market share, and

18 ‘‘(iii) any other value resulting from

19 future provision of goods or services pursu20 ant to relationships (contractual or other21 wise) in the ordinary course of business

22 with customers.

23 ‘‘(B) SPECIAL RULE FOR FINANCIAL INSTI24 TUTIONS.—In the case of a financial institution,
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1 the term ‘customer-based intangible’ includes de2 posit base and similar items.

3 ‘‘(3) SUPPLIER-BASED INTANGIBLE.—The term

4 ‘supplier-based intangible’ means any value resulting

5 from future acquisitions of goods or services pursuant

6 to relationships (contractual or otherwise) in the ordi7 nary course of business with suppliers of goods or

8 services to be used or sold by the taxpayer.

9 ‘‘(e) EXCEPTIONS.—For purposes of this section, the

10 term ‘section 197 intangible’ shall not include any of the

11 following:

12 ‘‘(1) FINANCIAL INTERESTS.—Any interest—

13 ‘‘(A) in a corporation, partnership, trust, or

14 estate, or

15 ‘‘(B) under an existing futures contract, for16 eign currency contract, notional principal con17 tract, or other similar financial contract.

18 ‘‘(2) LAND.—Any interest in land.

19 ‘‘(3) COMPUTER SOFTWARE.—

20 ‘‘(A) IN GENERAL.—Any—

21 ‘‘(i) computer software which is read22 ily available for purchase by the general

23 public, is subject to a nonexclusive license,

24 and has not been substantially modified,

25 and
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1 ‘‘(ii) other computer software which is

2 not acquired in a transaction (or series of

3 related transactions) involving the acquisi4 tion of assets constituting a trade or busi5 ness or substantial portion thereof.

6 ‘‘(B) COMPUTER SOFTWARE DEFINED.—For

7 purposes of subparagraph (A), the term ‘com8 puter software’ means any program designed to

9 cause a computer to perform a desired function.

10 Such term shall not include any data base or

11 similar item unless the data base or item is in

12 the public domain and is incidental to the oper13 ation of otherwise qualifying computer software.

14 ‘‘(4) CERTAIN INTERESTS OR RIGHTS ACQUIRED

15 SEPARATELY.—Any of the following not acquired in

16 a transaction (or series of related transactions) in17 volving the acquisition of assets constituting a trade

18 business or substantial portion thereof:

19 ‘‘(A) Any interest in a film, sound record20 ing, video tape, book, or similar property.

21 ‘‘(B) Any right to receive tangible property

22 or services under a contract or granted by a gov23 ernmental unit or agency or instrumentality

24 thereof.

25 ‘‘(C) Any interest in a patent or copyright.
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1 ‘‘(D) To the extent provided in regulations,

2 any right under a contract (or granted by a gov3 ernmental unit or an agency or instrumentality

4 thereof) if such right—

5 ‘‘(i) has a fixed duration of less than

6 14 years, or

7 ‘‘(ii) is fixed as to amount and, with8 out regard to this section, would be recover9 able under a method similar to the unit-of10 production method.

11 ‘‘(5) INTERESTS UNDER LEASES AND DEBT IN12 STRUMENTS.—Any interest under—

13 ‘‘(A) an existing lease of tangible property,

14 or

15 ‘‘(B) except as provided in subsection

16 (d)(2)(B), any existing indebtedness.

17 ‘‘(6) TREATMENT OF SPORTS FRANCHISES.—A

18 franchise to engage in professional football, basketball,

19 baseball, or other professional sport, and any item ac20 quired in connection with such a franchise.

21 ‘‘(7) MORTGAGE SERVICING.—Any right to serv22 ice indebtedness which is secured by residential real

23 property unless such right is acquired in a trans24 action (or series of related transactions) involving the

25 acquisition of assets (other than rights described in
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1 this paragraph) constituting a trade or business or

2 substantial portion thereof.

3 ‘‘(8) CERTAIN TRANSACTION COSTS.—Any fees

4 for professional services, and any transaction costs,

5 incurred by parties to a transaction with respect to

6 which any portion of the gain or loss is not recog7 nized under part III of subchapter C.

8 ‘‘(f) SPECIAL RULES.—

9 ‘‘(1) TREATMENT OF CERTAIN DISPOSITIONS,

10 ETC.—If there is a disposition of any amortizable sec11 tion 197 intangible acquired in a transaction or se12 ries of related transactions (or any such intangible

13 becomes worthless) and one or more other amortizable

14 section 197 intangibles acquired in such transaction

15 or series of related transactions are retained—

16 ‘‘(A) no loss shall be recognized by reason of

17 such disposition (or such worthlessness), and

18 ‘‘(B) appropriate adjustments to the ad19 justed bases of such retained intangibles shall be

20 made for any loss not recognized under subpara21 graph (A).

22 All persons treated as a single taxpayer under section

23 41(f)(1) shall be so treated for purposes of the preced24 ing sentence.

25 ‘‘(2) TREATMENT OF CERTAIN TRANSFERS.—
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1 ‘‘(A) IN GENERAL.—In the case of any sec2 tion 197 intangible transferred in a transaction

3 described in subparagraph (B), the transferee

4 shall be treated as the transferor for purposes of

5 applying this section with respect to so much of

6 the adjusted basis in the hands of the transferee

7 as does not exceed the adjusted basis in the hands

8 of the transferor.

9 ‘‘(B) TRANSACTIONS COVERED.—The trans10 actions described in this subparagraph are—

11 ‘‘(i) any transaction described in sec12 tion 332, 351, 361, 721, 731, 1031, or 1033,

13 and

14 ‘‘(ii) any transaction between members

15 of the same affiliated group during any tax16 able year for which a consolidated return is

17 made by such group.

18 ‘‘(3) TREATMENT OF AMOUNTS PAID PURSUANT

19 TO COVENANTS NOT TO COMPETE, ETC.—Any amount

20 paid or incurred pursuant to a covenant or arrange21 ment referred to in subsection (d)(1)(E) shall be treat22 ed as an amount chargeable to capital account.

23 ‘‘(4) TREATMENT OF FRANCHISES, ETC.—
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1 ‘‘(A) FRANCHISE.—The term ‘franchise’ has

2 the meaning given to such term by section

3 1253(b)(1).

4 ‘‘(B) TREATMENT OF RENEWALS.—Any re5 newal of a franchise, trademark, or trade name

6 (or of a license, a permit, or other right referred

7 to in subsection (d)(1)(D)) shall be treated as an

8 acquisition. The preceding sentence shall only

9 apply with respect to costs incurred in connec10 tion with such renewal.

11 ‘‘(C) CERTAIN AMOUNTS NOT TAKEN INTO

12 ACCOUNT.—Any amount to which section

13 1253(d)(1) applies shall not be taken into ac14 count under this section.

15 ‘‘(5) TREATMENT OF CERTAIN REINSURANCE

16 TRANSACTIONS.—In the case of any amortizable sec17 tion 197 intangible resulting from an assumption re18 insurance transaction, the amount taken into account

19 as the adjusted basis of such intangible under this sec20 tion shall be the excess of—

21 ‘‘(A) the amount paid or incurred by the

22 acquirer under the assumption reinsurance

23 transaction, over
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1 ‘‘(B) the amount required to be capitalized

2 under section 848 in connection with such trans3 action.

4 Subsection (b) shall not apply to any amount re5 quired to be capitalized under section 848.

6 ‘‘(6) TREATMENT OF CERTAIN SUBLEASES.—For

7 purposes of this section, a sublease shall be treated in

8 the same manner as a lease of the underlying prop9 erty involved.

10 ‘‘(7) TREATMENT AS DEPRECIABLE.—For pur11 poses of this chapter, any amortizable section 197 in12 tangible shall be treated as property which is of a

13 character subject to the allowance for depreciation

14 provided in section 167.

15 ‘‘(8) TREATMENT OF CERTAIN INCREMENTS IN

16 VALUE.—This section shall not apply to any incre17 ment in value if, without regard to this section, such

18 increment is properly taken into account in determin19 ing the cost of property which is not a section 197 in20 tangible.

21 ‘‘(9) ANTI-CHURNING RULES.—For purposes of

22 this section—

23 ‘‘(A) IN GENERAL.—The term ‘amortizable

24 section 197 intangible’ shall not include any sec25 tion 197 intangible which is described in sub-
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1 paragraph (A) or (B) of subsection (d)(1) (or for

2 which depreciation or amortization would not

3 have been allowable but for this section) and

4 which is acquired by the taxpayer after the date

5 of the enactment of this section, if—

6 ‘‘(i) the intangible was held or used at

7 any time on or after July 25, 1991, and on

8 or before such date of enactment by the tax9 payer or a related person,

10 ‘‘(ii) the intangible was acquired from

11 a person who held such intangible at any

12 time on or after July 25, 1991, and on or

13 before such date of enactment, and, as part

14 of the transaction, the user of such intangi15 ble does not change, or

16 ‘‘(iii) the taxpayer grants the right to

17 use such intangible to a person (or a person

18 related to such person) who held or used

19 such intangible at any time on or after

20 July 25, 1991, and on or before such date

21 of enactment.

22 For purposes of this subparagraph, the deter23 mination of whether the user of property changes

24 as part of a transaction shall be determined in

25 accordance with regulations prescribed by the
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1 Secretary. For purposes of this subparagraph,

2 deductions allowable under section 1253(d) shall

3 be treated as deductions allowable for amortiza4 tion.

5 ‘‘(B) EXCEPTION WHERE GAIN RECOG6 NIZED.—If—

7 ‘‘(i) subparagraph (A) would not

8 apply to an intangible acquired by the tax9 payer but for the last sentence of subpara10 graph (C)(i), and

11 ‘‘(ii) the person from whom the tax12 payer acquired the intangible elects, not13 withstanding any other provision of this

14 title—

15 ‘‘(I) to recognize gain on the dis16 position of the intangible, and

17 ‘‘(II) to pay a tax on such gain

18 which, when added to any other in19 come tax on such gain under this title,

20 equals such gain multiplied by the

21 highest rate of income tax applicable to

22 such person under this title,

23 then subparagraph (A) shall apply to the

24 intangible only to the extent that the tax25 payer’s adjusted basis in the intangible ex-
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1 ceeds the gain recognized under clause

2 (ii)(I).

3 ‘‘(C) RELATED PERSON DEFINED.—For

4 purposes of this paragraph—

5 ‘‘(i) RELATED PERSON.—A person

6 (hereinafter in this paragraph referred to as

7 the ‘related person’) is related to any person

8 if—

9 ‘‘(I) the related person bears a re10 lationship to such person specified in

11 section 267(b) or section 707(b)(1), or

12 ‘‘(II) the related person and such

13 person are engaged in trades or busi14 nesses under common control (within

15 the meaning of subparagraphs (A) and

16 (B) of section 41(f)(1)).

17 For purposes of subclause (I), in applying

18 section 267(b) or 707(b)(1), ‘20 percent’

19 shall be substituted for ‘50 percent’.

20 ‘‘(ii) TIME FOR MAKING DETERMINA21 TION.—A person shall be treated as related

22 to another person if such relationship exists

23 immediately before or immediately after the

24 acquisition of the intangible involved.
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1 ‘‘(D) ACQUISITIONS BY REASON OF

2 DEATH.—Subparagraph (A) shall not apply to

3 the acquisition of any property by the taxpayer

4 if the basis of the property in the hands of the

5 taxpayer is determined under section 1014(a).

6 ‘‘(E) SPECIAL RULE FOR PARTNERSHIPS.—

7 With respect to any increase in the basis of part8 nership property under section 732, 734, or 743,

9 determinations under this paragraph shall be

10 made at the partner level and each partner shall

11 be treated as having owned and used such part12 ner’s proportionate share of the partnership as13 sets.

14 ‘‘(F) ANTI-ABUSE RULES.—The term ‘amor15 tizable section 197 intangible’ does not include

16 any section 197 intangible acquired in a trans17 action, one of the principal purposes of which is

18 to avoid the requirement of subsection (c)(1) that

19 the intangible be acquired after the date of the

20 enactment of this section or to avoid the provi21 sions of subparagraph (A).

22 ‘‘(g) SPECIAL RULES FOR ACQUISITION OF CERTAIN

23 COMPUTER SOFTWARE BUSINESSES.—

24 ‘‘(1) IN GENERAL.—In the case of any section

25 197 intangible acquired in a transaction to which
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1 this subsection applies, subsection (a) shall be applied

2 with respect to one-half of the 75 percent of its ad3 justed basis which is amortizable under subsection (a)

4 by substituting ‘5-year period’ for ‘14-year period’.

5 ‘‘(2) TRANSACTIONS TO WHICH SUBSECTION AP6 PLIES.—

7 ‘‘(A) IN GENERAL.—This subsection shall

8 apply to a transaction (or series of related trans9 actions) involving the acquisition of assets con10 stituting a trade or business or substantial por11 tion thereof if—

12 ‘‘(i) the principal business activity of

13 the trade or business (or portion) is com14 puter software development, computer sales,

15 licensing, or leasing, the provision of com16 puter software services, or a combination

17 thereof, and

18 ‘‘(ii) during the testing period, the ag19 gregate computer software development costs

20 of such trade or business (or portion) are

21 not less than 17 percent of the greater of—

22 ‘‘(I) the aggregate gross receipts of

23 such trade or business (or portion), or
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1 ‘‘(II) the aggregate gross expendi2 tures of such trade or business (or por3 tion).

4 ‘‘(B) COMPUTER SOFTWARE DEVELOPMENT

5 COSTS.—For purposes of subparagraph (A), the

6 term ‘computer software development costs’

7 means the sum of—

8 ‘‘(i) the computer software development

9 costs which qualify as research and experi10 mentation expenditures under section 174,

11 plus

12 ‘‘(ii) the amortization deductions of the

13 trade or business with respect to computer

14 software not acquired in a transaction (or

15 series of related transactions) involving the

16 acquisition of assets constituting a trade or

17 business or substantial portion thereof.

18 ‘‘(C) TESTING PERIOD.—For purposes of

19 subparagraph (A), the term ‘testing period’

20 means the 5-year period ending on the date of

21 the last transaction described in subparagraph

22 (A) pursuant to which the section 197 intangible

23 was acquired (or, if shorter, the entire period of

24 existence of the trade or business (or portion) be25 fore such date).
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1 ‘‘(h) REGULATIONS.—The Secretary shall prescribe

2 such regulations as may be appropriate to carry out the

3 purposes of this section, including such regulations as may

4 be appropriate to prevent avoidance of the purposes of this

5 section through related persons or otherwise.’’

6 (b) MODIFICATIONS TO DEPRECIATION RULES.—

7 (1) TREATMENT OF CERTAIN PROPERTY EX8 CLUDED FROM SECTION 197.—Section 167 (relating to

9 depreciation deduction) is amended by redesignating

10 subsection (f) as subsection (g) and by inserting after

11 subsection (e) the following new subsection:

12 ‘‘(f) TREATMENT OF CERTAIN PROPERTY EXCLUDED

13 FROM SECTION 197.—

14 ‘‘(1) COMPUTER SOFTWARE.—

15 ‘‘(A) IN GENERAL.—If a depreciation de16 duction is allowable under subsection (a) with

17 respect to any computer software, such deduction

18 shall be computed by using the straight line

19 method and a useful life of 36 months.

20 ‘‘(B) COMPUTER SOFTWARE.—For purposes

21 of this section, the term ‘computer software’ has

22 the meaning given to such term by section

23 197(e)(3)(B); except that such term shall not in24 clude any such software which is an amortizable

25 section 197 intangible.
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1 ‘‘(2) CERTAIN INTERESTS OR RIGHTS ACQUIRED

2 SEPARATELY.—If a depreciation deduction is allow3 able under subsection (a) with respect to any property

4 described in subparagraph (B), (C), or (D) of section

5 197(e)(4), such deduction shall be computed in ac6 cordance with regulations prescribed by the Secretary.

7 ‘‘(3) MORTGAGE SERVICING RIGHTS.—If a depre8 ciation deduction is allowable under subsection (a)

9 with respect to any right described in section

10 197(e)(7), such deduction shall be computed by using

11 the straight line method and a useful life of 108

12 months.’’

13 (2) ALLOCATION OF BASIS IN CASE OF LEASED

14 PROPERTY.—Subsection (c) of section 167 is amended

15 to read as follows:

16 ‘‘(c) BASIS FOR DEPRECIATION.—

17 ‘‘(1) IN GENERAL.—The basis on which exhaus18 tion, wear and tear, and obsolescence are to be al19 lowed in respect of any property shall be the adjusted

20 basis provided in section 1011, for the purpose of de21 termining the gain on the sale or other disposition of

22 such property.

23 ‘‘(2) SPECIAL RULE FOR PROPERTY SUBJECT TO

24 LEASE.—If any property is acquired subject to a

25 lease—
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1 ‘‘(A) no portion of the adjusted basis shall

2 be allocated to the leasehold interest, and

3 ‘‘(B) the entire adjusted basis shall be taken

4 into account in determining the depreciation de5 duction (if any) with respect to the property sub6 ject to the lease.’’

7 (c) AMENDMENTS TO SECTION 1253.—Subsection (d)

8 of section 1253 is amended by striking paragraphs (2), (3),

9 (4), and (5) and inserting the following:

10 ‘‘(2) OTHER PAYMENTS.—Any amount paid or

11 incurred on account of a transfer, sale, or other dis12 position of a franchise, trademark, or trade name to

13 which paragraph (1) does not apply shall be treated

14 as an amount chargeable to capital account.

15 ‘‘(3) RENEWALS, ETC.—For purposes of deter16 mining the term of a transfer agreement under this

17 section, there shall be taken into account all renewal

18 options (and any other period for which the parties

19 reasonably expect the agreement to be renewed).’’

20 (d) AMENDMENT TO SECTION 848.—Subsection (g) of

21 section 848 is amended by striking ‘‘this section’’ and in22 serting ‘‘this section or section 197’’.

23 (e) AMENDMENTS TO SECTION 1060.—
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1 (1) Paragraph (1) of section 1060(b) is amended

2 by striking ‘‘goodwill or going concern value’’ and in3 serting ‘‘section 197 intangibles’’.

4 (2) Paragraph (1) of section 1060(d) is amended

5 by striking ‘‘goodwill or going concern value (or simi6 lar items)’’ and inserting ‘‘section 197 intangibles’’.

7 (f) TECHNICAL AND CONFORMING AMENDMENTS.—

8 (1) Subsection (g) of section 167 (as redesignated

9 by subsection (b)) is amended to read as follows:

10 ‘‘(g) CROSS REFERENCES.—

‘‘(1) For additional rule applicable to depreciation

of improvements in the case of mines, oil and gas

wells, other natural deposits, and timber, see section

611.

‘‘(2) For amortization of goodwill and certain other

intangibles, see section 197.’’

11 (2) Subsection (f) of section 642 is amended by

12 striking ‘‘section 169’’ and inserting ‘‘sections 169

13 and 197’’.

14 (3) Subsection (a) of section 1016 is amended by

15 striking paragraph (19) and by redesignating the fol16 lowing paragraphs accordingly.

17 (4) Subparagraph (C) of section 1245(a)(2) is

18 amended by striking ‘‘193, or 1253(d) (2) or (3)’’ and

19 inserting ‘‘or 193’’.

20 (5) Paragraph (3) of section 1245(a) is amended

21 by striking ‘‘section 185 or 1253(d) (2) or (3)’’.
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1 (6) The table of sections for part VI of sub2 chapter B of chapter 1 is amended by adding at the

3 end thereof the following new item:

‘‘Sec. 197. Amortization of goodwill and certain other intangibles.’’.

4 (g) EFFECTIVE DATE.—

5 (1) IN GENERAL.—Except as otherwise provided

6 in this subsection, the amendments made by this sec7 tion shall apply with respect to property acquired

8 after the date of the enactment of this Act.

9 (2) ELECTION TO HAVE AMENDMENTS APPLY TO

10 PROPERTY ACQUIRED AFTER JULY 25, 1991.—

11 (A) IN GENERAL.—If an election under this

12 paragraph applies to the taxpayer—

13 (i) the amendments made by this sec14 tion shall apply to property acquired by the

15 taxpayer after July 25, 1991,

16 (ii) subsection (c)(1)(A) of section 197

17 of the Internal Revenue Code of 1986 (as

18 added by this section) (and so much of sub19 section (f)(9)(A) of such section 197 as pre20 cedes clause (i) thereof) shall be applied

21 with respect to the taxpayer by treating

22 July 25, 1991, as the date of the enactment

23 of such section, and

24 (iii) in applying subsection (f)(9) of

25 such section, with respect to any property
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1 acquired by the taxpayer on or before the

2 date of the enactment of this Act, only hold3 ing or use on July 25, 1991, shall be taken

4 into account.

5 (B) ELECTION.—An election under this

6 paragraph shall be made at such time and in

7 such manner as the Secretary of the Treasury or

8 his delegate may prescribe. Such an election by

9 any taxpayer, once made—

10 (i) may be revoked only with the con11 sent of the Secretary, and

12 (ii) shall apply to the taxpayer making

13 such election and any other taxpayer under

14 common control with the taxpayer (within

15 the meaning of subparagraphs (A) and (B)

16 of section 41(f)(1) of such Code) at any time

17 after November 22, 1991, and on or before

18 the date on which such election is made.

19 (3) ELECTIVE BINDING CONTRACT EXCEPTION.—

20 (A) IN GENERAL.—The amendments made

21 by this section shall not apply to any acquisition

22 of property by the taxpayer if—

23 (i) such acquisition is pursuant to a

24 written binding contract in effect on the
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1 date of the enactment of this Act and at all

2 times thereafter before such acquisition,

3 (ii) an election under paragraph (2)

4 does not apply to the taxpayer, and

5 (iii) the taxpayer makes an election

6 under this paragraph with respect to such

7 contract.

8 (B) ELECTION.—An election under this

9 paragraph shall be made at such time and in

10 such manner as the Secretary of the Treasury or

11 his delegate shall prescribe. Such an election,

12 once made—

13 (i) may be revoked only with the con14 sent of the Secretary, and

15 (ii) shall apply to all property ac16 quired pursuant to the contract with respect

17 to which such election was made.

18 SEC. 8262. TREATMENT OF CERTAIN PAYMENTS TO RE19 TIRED OR DECEASED PARTNER.

20 (a) SECTION 736(b) NOT TO APPLY IN CERTAIN

21 CASES.—Subsection (b) of section 736 (relating to pay22 ments for interest in partnership) is amended by adding

23 at the end thereof the following new paragraph:

24 ‘‘(3) LIMITATION ON APPLICATION OF PARA25 GRAPH (2).—Paragraph (2) shall apply only if—
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1 ‘‘(A) capital is not a material income-pro2 ducing factor for the partnership, and

3 ‘‘(B) the retiring or deceased partner was a

4 general partner in the partnership.’’

5 (b) LIMITATION ON DEFINITION OF UNREALIZED RE6 CEIVABLES.—

7 (1) IN GENERAL.—Subsection (c) of section 751

8 (defining unrealized receivables) is amended—

9 (A) by striking ‘‘sections 731, 736, and

10 741’’ each place they appear and inserting ‘‘,

11 sections 731 and 741 (but not for purposes of

12 section 736)’’, and

13 (B) by striking ‘‘section 731, 736, or 741’’

14 each place it appears and inserting ‘‘section 731

15 or 741’’.

16 (2) TECHNICAL AMENDMENTS.—

17 (A) Subsection (e) of section 751 is amended

18 by striking ‘‘sections 731, 736, and 741’’ and in19 serting ‘‘sections 731 and 741’’.

20 (B) Section 736 is amended by striking sub21 section (c).

22 (c) EFFECTIVE DATE.—

23 (1) IN GENERAL.—The amendments made by

24 this section shall apply in the case of partners retir25 ing or dying on or after January 5, 1993.
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1 (2) BINDING CONTRACT EXCEPTION.—The

2 amendments made by this section shall not apply to

3 any partner retiring on or after January 5, 1993, if

4 a written contract to purchase such partner’s interest

5 in the partnership was binding on January 4, 1993,

6 and at all times thereafter before such purchase.

7 PART VII—MISCELLANEOUS PROVISIONS

8 SEC. 8271. DENIAL OF DEDUCTION RELATING TO TRAVEL

9 EXPENSES.

10 (a) IN GENERAL.—Section 274(m) (relating to addi11 tional limitations on travel expenses) is amended by adding

12 at the end thereof the following new paragraph:

13 ‘‘(3) TRAVEL EXPENSES OF SPOUSE, DEPEND14 ENT, OR OTHERS.—No deduction shall be allowed

15 under this chapter (other than section 217) for travel

16 expenses paid or incurred with respect to a spouse,

17 dependent, or other individual accompanying the tax18 payer (or an officer or employee of the taxpayer) on

19 business travel, unless—

20 ‘‘(A) the spouse, dependent, or other indi21 vidual is an employee of the taxpayer,

22 ‘‘(B) the travel of the spouse, dependent, or

23 other individual is for a bona fide business pur24 pose, and
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1 ‘‘(C) such expenses would otherwise be de2 ductible by the spouse, dependent, or other indi3 vidual.’’

4 (b) EFFECTIVE DATE.—The amendment made by this

5 section shall apply to amounts paid or incurred after De6 cember 31, 1993.

7 SEC. 8272. INCREASE IN WITHHOLDING FROM SUPPLE8 MENTAL WAGE PAYMENTS.

9 If an employer elects under Treasury Regulation

10 31.3402(g)–1 to determine the amount to be deducted and

11 withheld from any supplemental wage payment by using

12 a flat percentage rate, the rate to be used in determining

13 the amount to be so deducted and withheld shall not be less

14 than 28 percent. The preceding sentence shall apply to pay15 ments made after December 31, 1993.

16 SEC. 8273. EXCISE TAX ON CERTAIN VACCINES MADE PER17 MANENT.

18 (a) TAX.—Subsection (c) of section 4131 (relating to

19 tax on certain vaccines) is amended to read as follows:

20 ‘‘(c) APPLICATION OF SECTION.—The tax imposed by

21 this section shall apply—

22 ‘‘(1) after December 31, 1987, and before Janu23 ary 1, 1993, and
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1 ‘‘(2) during periods after the date of the enact2 ment of the Omnibus Budget Reconciliation Act of

3 1993.’’

4 (b) TRUST FUND.—Paragraph (1) of section 9510(c)

5 (relating to expenditures from Vaccine Injury Compensa6 tion Trust Fund) is amended by striking ‘‘and before Octo7 ber 1, 1992,’’.

8 (c) FLOOR STOCKS TAX.—

9 (1) IMPOSITION OF TAX.—On any taxable vac10 cine—

11 (A) which was sold by the manufacturer,

12 producer, or importer before the date of the en13 actment of this Act,

14 (B) on which no tax was imposed by section

15 4131 of the Internal Revenue Code of 1986 (or,

16 if such tax was imposed, was credited or re17 funded), and

18 (C) which is held on such date by any per19 son for sale or use,

20 there is hereby imposed a tax in the amount deter21 mined under section 4131(b) of such Code.

22 (2) LIABILITY FOR TAX AND METHOD OF PAY23 MENT.—

24 (A) LIABILITY FOR TAX.—The person hold25 ing any taxable vaccine to which the tax im-
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1 posed by paragraph (1) applies shall be liable for

2 such tax.

3 (B) METHOD OF PAYMENT.—The tax im4 posed by paragraph (1) shall be paid in such

5 manner as the Secretary shall prescribe by regu6 lations.

7 (C) TIME FOR PAYMENT.—The tax imposed

8 by paragraph (1) shall be paid on or before the

9 last day of the 6th month beginning after the

10 date of the enactment of this Act.

11 (3) DEFINITIONS.—For purposes of this sub12 section, terms used in this subsection which are also

13 used in section 4131 of such Code shall have the re14 spective meanings such terms have in such section.

15 (4) OTHER LAWS APPLICABLE.—All provisions of

16 law, including penalties, applicable with respect to

17 the taxes imposed by section 4131 of such Code shall,

18 insofar as applicable and not inconsistent with the

19 provisions of this subsection, apply to the floor stocks

20 taxes imposed by paragraph (1), to the same extent

21 as if such taxes were imposed by such section 4131.
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1 TITLE IX—COMMITTEE ON

2 FOREIGN RELATIONS

3 SEC. 9001. DELAY IN COST-OF-LIVING ADJUSTMENTS IN

4 FOREIGN SERVICE RETIREMENT BENEFITS

5 DURING FISCAL YEARS 1994, 1995, AND 1996.

6 (a) APPLICABILITY.—This section shall apply with re7 spect to any cost-of-living increase scheduled to take effect

8 under section 826 or 858 of the Foreign Service Act of 1980

9 during fiscal year 1994, 1995, or 1996.

10 (b) DELAY IN EFFECTIVE DATE OF ADJUSTMENTS.—

11 A cost-of-living increase described in subsection (a) shall

12 not take effect until the first day of the third calendar

13 month after the date such increase would take effect but for

14 this subsection.

15 (c) RULE OF CONSTRUCTION.—

16 (1) SIZE OF COST-OF-LIVING ADJUSTMENT.—

17 Nothing in this section shall be considered to affect

18 the size of the cost-of-living adjustment under section

19 8340(b) or section 8462(b) of title 5, United States

20 Code, in the same fiscal year as a cost-of-living in21 crease described in subsection (a).

22 (2) DETERMINATIONS OF ELIGIBILITY.—The

23 delay in the effective date of cost-of-living adjustments

24 under subsection (b) shall not affect any determina25 tion relating to eligibility for an annuity increase or
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1 the amount of the first increase in an annuity under

2 section 826 or 858 of the Foreign Service Act of 1980.

3 SEC. 9002. ELIMINATION OF THE ALTERNATIVE-FORM-OF4 ANNUITY OPTION UNDER THE FOREIGN

5 SERVICE RETIREMENT AND DISABILITY SYS6 TEM EXCEPT FOR INDIVIDUALS WITH CRITI7 CAL MEDICAL CONDITIONS.

8 (a) IN GENERAL.—Section 807(e)(1) of the Foreign

9 Service Act of 1980 (22 U.S.C. 4047(e)(1)) is amended by

10 striking ‘‘a participant may,’’ and inserting ‘‘any partici11 pant who has a life-threatening affliction or other critical

12 medical condition may,’’.

13 (b) EFFECTIVE DATE.—The amendment made by sub14 section (a) shall take effect January 1, 1994.

15 TITLE X—COMMITTEE ON

16 GOVERNMENTAL AFFAIRS

17 Subtitle A—Civil Service

18 SEC. 10001. DELAY IN COST-OF-LIVING ADJUSTMENTS IN

19 FEDERAL EMPLOYEE RETIREMENT BENEFITS

20 DURING FISCAL YEARS 1994, 1995, AND 1996.

21 (a) APPLICABILITY.—This section shall apply with re22 spect to any cost-of-living increase scheduled to take effect,

23 during fiscal year 1994, 1995, or 1996, under—

24 (1) section 8340(b) or 8462(b) of title 5, United

25 States Code; or
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1 (2) section 291 of the Central Intelligence Agency

2 Retirement Act (50 U.S.C. 2131), as set forth in sec3 tion 802 of the CIARDS Technical Corrections Act of

4 1992 (Public Law 102–496; 106 Stat. 3196).

5 (b) DELAY IN EFFECTIVE DATE OF ADJUSTMENTS.—

6 A cost-of-living increase described in subsection (a) shall

7 not take effect until the first day of the third calendar

8 month after the date such increase would otherwise take ef9 fect.

10 (c) RULE OF CONSTRUCTION.—Nothing in this section

11 shall be considered to affect any determination relating to

12 eligibility for an annuity increase or the amount of the first

13 increase in an annuity under section 8340(b) or (c) or sec14 tion 8462 (b) or (c) of title 5, United States Code, or com15 parable provisions of law.

16 SEC. 10002. PERMANENT ELIMINATION OF THE ALTER17 NATIVE-FORM-OF-ANNUITY OPTION EXCEPT

18 FOR INDIVIDUALS WITH A CRITICAL MEDICAL

19 CONDITION.

20 (a) CIVIL SERVICE RETIREMENT SYSTEM; FEDERAL

21 EMPLOYEES’ RETIREMENT SYSTEM.—Sections 8343a and

22 8420a of title 5, United States Code, are each amended—

23 (1) in subsection (a) by striking ‘‘an employee or

24 Member may,’’ and inserting ‘‘any employee or Mem-
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1 ber who has a life-threatening affliction or other criti2 cal medical condition may,’’; and

3 (2) by striking subsection (f).

4 (b) CENTRAL INTELLIGENCE AGENCY RETIREMENT

5 AND DISABILITY SYSTEM.—Section 294(a) of the Central

6 Intelligence Agency Retirement Act (50 U.S.C. 2143(a)), as

7 set forth in section 802 of the CIARDS Technical Correc8 tions Act of 1992 (Public Law 102–496; 106 Stat. 3196),

9 is amended by striking ‘‘a participant may,’’ and inserting

10 ‘‘any participant who has a life-threatening affliction or

11 other critical medical condition may,’’.

12 (c) EFFECTIVE DATE.—The amendments made by this

13 section shall become effective on October 1, 1995, and shall

14 apply with respect to any annuity commencing on or after

15 that date.

16 SEC. 10003. DISTRICT OF COLUMBIA GOVERNMENT CON17 TRIBUTIONS FOR CERTAIN EMPLOYEE AND

18 ANNUITANT HEALTH BENEFITS.

19 (a) CONTRIBUTIONS AFTER 1993.—

20 (1) IN GENERAL.—Section 8906(g) of title 5,

21 United States Code, is amended by adding at the end

22 thereof the following new paragraph:

23 ‘‘(3) The Government contributions authorized

24 by this section for health benefits for an annuitant

25 shall be paid by the government of the District of Co-
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1 lumbia, in the case of an annuitant whose eligibility

2 for an annuity is based on a separation from service

3 with such government, or who is a survivor of such

4 an annuitant or a survivor of an employee who died

5 while employed by such government.’’.

6 (2) EFFECTIVE DATE.—The amendment made by

7 paragraph (1) shall take effect on October 1, 1993,

8 and shall apply with respect to amounts payable for

9 periods beginning on or after that date.

10 (b) CONTRIBUTIONS FOR PERIOD BETWEEN 1975 AND

11 1993.—

12 (1) IN GENERAL.—The government of the Dis13 trict of Columbia shall pay into the Employees

14 Health Benefit Fund, as payment for any amounts

15 which would, for the period beginning on January 1,

16 1975 through September 30, 1993, have been payable

17 under the provisions of section 8906(g)(3) of title 5,

18 United States Code (as added by subsection (a)(1) of

19 this section) if such provision had been in effect as of

20 January 1, 1975, of which—

21 (A) at least 25 percent of the total of such

22 amounts shall be paid no later than January 1,

23 1994;
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1 (B) at least 25 percent of the total of such

2 amounts shall be paid no later than January 1,

3 1995;

4 (C) at least 25 percent of the total of such

5 amounts shall be paid no later than January 1,

6 1996; and

7 (D) any remaining balance shall be paid no

8 later than January 1, 1997.

9 (2) PRORATED PAYMENTS.—In determining any

10 amount for which the government of the District of

11 Columbia is liable under paragraph (1), the amount

12 of the liability shall be prorated to reflect only that

13 portion of total service which is attributable to civil14 ian service performed (by the former employee of the

15 government of the District of Columbia or by the de16 ceased individual referred to under section 8906

17 (g)(3) of title 5, United States Code, as the case may

18 be) during the period beginning on January 1, 1975,

19 through September 30, 1993, as estimated by the Of20 fice of Personnel Management.

21 Subtitle B—Postal Service

22 SEC. 10101. PAYMENTS TO BE MADE BY THE UNITED STATES

23 POSTAL SERVICE.

24 (a) RELATING TO CORRECTED CALCULATIONS FOR

25 PAST RETIREMENT COLAS.—In addition to any other
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1 payments required under section 8348(m) of title 5, United

2 States Code, or any other provision of law, the United

3 States Postal Service shall pay into the Civil Service Re4 tirement and Disability Fund a total of $693,000,000, of

5 which—

6 (1) at least one-third shall be paid not later than

7 September 30, 1996;

8 (2) at least two-thirds shall be paid not later

9 than September 30, 1997; and

10 (3) any remaining balance shall be paid not

11 later than September 30, 1998.

12 (b) RELATING TO CORRECTED CALCULATIONS FOR

13 PAST HEALTH BENEFITS.—In addition to any other pay14 ments required under section 8906(g)(2) of title 5, United

15 States Code, or any other provision of law, the United

16 States Postal Service shall pay into the Employees Health

17 Benefits Fund a total of $348,000,000, of which—

18 (1) at least one-third shall be paid not later than

19 September 30, 1996;

20 (2) at least two-thirds shall be paid not later

21 than September 30, 1997; and

22 (3) any remaining balance shall be paid not

23 later than September 30, 1998.
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1 Subtitle C—Miscellaneous

2 SEC. 10201. FEDERAL EMPLOYEES’ SURVIVOR ANNUITY IM3 PROVEMENTS.

4 (a) CIVIL SERVICE RETIREMENT SYSTEM.—

5 (1) REDUCTION FOR SPOUSAL ANNUITY.—Section

6 8339(j) of title 5, United States Code, is amended—

7 (A) in paragraph (3)—

8 (i) in the second sentence, by striking

9 out ‘‘, within such 2-year period,’’; and

10 (ii) by striking out the fourth sentence

11 and inserting in lieu thereof the following:

12 ‘‘The Office shall, by regulation, provide for

13 payment of the deposit required under this

14 paragraph by a reduction in the annuity of

15 the employee or Member. The reduction

16 shall, to the extent practicable, be designed

17 so that the present value of the future reduc18 tion is actuarially equivalent to the deposit

19 required under this paragraph, except that

20 the total reductions in the annuity of an

21 employee or Member to pay deposits re22 quired by the provisions of this paragraph,

23 paragraph (5), or subsection (k)(2) shall not

24 exceed 25 percent of the annuity computed

25 under subsections (a) through (i), (n), and
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1 (q), including adjustments under section

2 8340. The reduction, which shall be effective

3 on the same date as the election under this

4 paragraph, shall be permanent and unaf5 fected by any future termination of the enti6 tlement of the former spouse. Such reduction

7 shall be independent of and in addition to

8 the reduction required under the first sen9 tence of this paragraph.’’; and

10 (B) in paragraph (5)(C)—

11 (i) in clause (ii), by striking out ‘‘,

12 within 2 years after the date of the remar13 riage or, if later, the death or remarriage of

14 the former spouse (or of the last such surviv15 ing former spouse),’’; and

16 (ii) by amending clause (iii) to read as

17 follows:

18 ‘‘(iii) The Office shall, by regulation, pro19 vide for payment of the deposit required under

20 clause (ii) by a reduction in the annuity of the

21 employee or Member. The reduction shall, to the

22 extent practicable, be designed so that the present

23 value of the future reduction is actuarially

24 equivalent to the deposit required under clause

25 (ii), except that total reductions in the annuity
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1 of an employee or Member to pay deposits re2 quired by the provisions of this paragraph or

3 paragraph (3) shall not exceed 25 percent of the

4 annuity computed under subsections (a) through

5 (i), (n), and (q), including adjustments under

6 section 8340. The reduction required by this

7 clause, which shall be effective on the same date

8 as the election under clause (i), shall be perma9 nent and unaffected by any future termination

10 of the marriage. Such reduction shall be inde11 pendent of and in addition to the reduction re12 quired under clause (i).’’.

13 (2) REDUCTION RELATING TO FORMER

14 SPOUSE.—Section 8339(k)(2) of title 5, United States

15 Code, is amended—

16 (A) in subparagraph (B)(ii), by striking

17 out ‘‘Within 2 years after the date of the mar18 riage, the’’ and inserting in lieu thereof ‘‘The’’;

19 and

20 (B) by amending subparagraph (C) to read

21 as follows:

22 ‘‘(C) The Office shall, by regulation, provide for

23 payment of the deposit required under subparagraph

24 (B)(ii) by a reduction in the annuity of the employee

25 or Member. The reduction shall, to the extent prac-
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1 ticable, be designed so that the present value of the fu2 ture reduction is actuarially equivalent to the deposit

3 required under subparagraph (B)(ii), except that total

4 reductions in the annuity of an employee or Member

5 to pay deposits required by this subsection or sub6 section (j)(3) shall not exceed 25 percent of the annu7 ity computed under subsections (a) through (i), (n),

8 and (q), including adjustments under section 8340.

9 The reduction required by this subparagraph, which

10 shall be effective on the same date as the election

11 under subparagraph (A), shall be permanent and un12 affected by any future termination of the marriage.

13 Such reduction shall be independent of and in addi14 tion to the reduction required under subparagraph

15 (A).’’.

16 (3) DEPOSITS.—Section 8334(h) of title 5, Unit17 ed States Code, is amended by striking out ‘‘and by

18 section 8339(j)(5)(C) and the last sentence of section

19 8339(k)(2) of this title’’.

20 (b) FEDERAL EMPLOYEES RETIREMENT SYSTEM.—

21 Section 8418 of title 5, United States Code, is amended—

22 (1) in subsection (a)(1), by striking out ‘‘, before

23 the expiration of the 2-year period involved,’’; and

24 (2) by amending subsection (b) to read as fol25 lows:
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1 ‘‘(b) The Office shall, by regulation, provide for pay2 ment of the deposit required under subsection (a) by a re3 duction in the annuity of the employee or Member. The re4 duction shall, to the extent practicable, be designed so that

5 the present value of the future reduction is actuarially

6 equivalent to the deposit required under subsection (a), ex7 cept that the total reductions in the annuity of an employee

8 or Member to pay deposits required by this section shall

9 not exceed 25 percent of the annuity computed under section

10 8415 or section 8452, including adjustments under section

11 8462. The reduction required by this subsection, which shall

12 be effective at the same time as the election under section

13 8416 (b) and (c) or section 8417(b), shall be permanent and

14 unaffected by any future termination of the marriage or

15 the entitlement of the former spouse. Such reduction shall

16 be independent of and in addition to the reduction required

17 under section 8416 (b) and (c) or section 8417(b).’’.

18 (c) EFFECTIVE DATE.—

19 (1) IN GENERAL.—The amendments made by

20 this section shall take effect on the first day of the

21 first month beginning 30 days after the date of the

22 enactment of this Act and shall apply to all deposits

23 required under section 8339(j) (3) and (5),

24 8339(k)(2), or 8418 of title 5, United States Code, on
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1 which no payment has been made prior to such effec2 tive date.

3 (2) PARTIAL DEPOSIT.—For any deposit re4 quired under section 8339(j) (3) and (5), 8339(k)(2),

5 or 8418 of title 5, United States Code, or section 4

6 (b) and (c) of the Civil Service Retirement Spouse

7 Equity Act of 1984 that has been partially, but not

8 fully, paid before the effective date of this Act, the Of9 fice shall by regulation provide for determining the

10 remaining portion of the deposit and for payment of

11 the remaining portion of the deposit by a prospective

12 reduction in the annuity of the employee or Member.

13 The reduction shall be similar to the reductions pro14 vided pursuant to the amendments made under this

15 section.

16 TITLE XI—JUDICIARY

17 SEC. 11001. PATENT AND TRADEMARK FEES.

18 Section 10101 of the Omnibus Budget Reconciliation

19 Act of 1990 (35 U.S.C. 41 note) is amended—

20 (1) in subsection (a) by striking ‘‘1995’’ and in21 serting ‘‘1998’’;

22 (2) in subsection (b)(2) by striking ‘‘1995’’ and

23 inserting ‘‘1998’’; and

24 (3) in subsection (c)—
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1 (A) by striking ‘‘through 1995’’ and insert2 ing ‘‘through 1998’’; and

3 (B) by adding at the end the following:

4 ‘‘(6) $111,000,000 in fiscal year 1996.

5 ‘‘(7) $115,000,000 in fiscal year 1997.

6 ‘‘(8) $119,000,000 in fiscal year 1998.’’.

7 TITLE XII—COMMITTEE ON

8 LABOR AND HUMAN RESOURCES

9 Subtitle A—Student Loan

10 Provisions

11 SEC. 12001. SHORT TITLE; REFERENCES.

12 (a) SHORT TITLE.—This subtitle may be cited as the

13 ‘‘Student Loan Reform Act of 1993’’.

14 (b) REFERENCES.—References in this subtitle to ‘‘the

15 Act’’ are references to the Higher Education Act of 1965

16 (20 U.S.C. 1001 et seq.).

17 CHAPTER 1—FEDERAL DIRECT STUDENT

18 LOAN PROGRAM

19 SEC. 12011. FEDERAL DIRECT STUDENT LOAN PROGRAM.

20 Part D of title IV (20 U.S.C. 1087a) is amended to

21 read as follows:

22 ‘‘PART D—FEDERAL DIRECT STUDENT

23 LOAN PROGRAM

24 ‘‘SEC. 451. PURPOSE; PROGRAM AUTHORIZATION.

25 ‘‘(a) PURPOSE.—It is the purpose of this part—
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1 ‘‘(1) to simplify the delivery of student loans to

2 borrowers and eliminate borrower confusion;

3 ‘‘(2) to provide a variety of repayment plans, in4 cluding income contingent repayment, to borrowers so

5 that borrowers have flexibility in managing their stu6 dent loan repayment obligations, and so that those ob7 ligations do not foreclose careers in community or

8 public service for those borrowers;

9 ‘‘(3) to replace, through an orderly transition,

10 the Federal Family Education Loan Program under

11 part B of this title with the Federal Direct Student

12 Loan Program under this part;

13 ‘‘(4) to avoid the unnecessary cost, to taxpayers

14 and borrowers, and administrative complexity associ15 ated with the Federal Family Education Loan Pro16 gram under part B of this title through the use of a

17 direct student loan program; and

18 ‘‘(5) to create a more streamlined student loan

19 program that can be managed more effectively at the

20 Federal level.

21 ‘‘(b) PROGRAM AUTHORITY.—There are hereby made

22 available, in accordance with the provisions of this part,

23 such sums as may be necessary to make loans to all eligible

24 students in attendance at participating institutions of high25 er education selected by the Secretary (and the eligible par-
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1 ents of such students), to enable such students to pursue

2 their courses of study at such institutions during the period

3 beginning July 1, 1994. Such loans shall be made by par4 ticipating institutions, or consortia thereof, that have agree5 ments with the Secretary to originate loans, or by alter6 native originators designated by the Secretary to make

7 loans for students in attendance at participating institu8 tions (and their parents).

9 ‘‘SEC. 452. FUNDS FOR ORIGINATION OF DIRECT STUDENT

10 LOANS.

11 ‘‘(a) IN GENERAL.—The Secretary shall provide funds

12 for student and parent loans under this part—

13 ‘‘(1) directly to an institution of higher edu14 cation that has an agreement with the Secretary

15 under section 454(a) to participate in the direct stu16 dent loan program under this part and that also has

17 an agreement with the Secretary under section 454(b)

18 to originate loans under this part; or

19 ‘‘(2) through an alternative originator des20 ignated by the Secretary, on the basis of the need and

21 the eligibility of students at each participating insti22 tution, and parents of such students, for such loans.

23 ‘‘(b) FEES FOR ORIGINATION SERVICES.—

24 ‘‘(1) FEES FOR INSTITUTIONS.—The Secretary

25 shall pay fees to institutions of higher education or
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1 consortia thereof having agreements under section

2 454(b), in an amount established by the Secretary, to

3 assist in meeting the costs of loan origination. Such

4 fees—

5 ‘‘(A) shall be paid by the Secretary based on

6 all the loans made under this part to a particu7 lar borrower in the same academic year;

8 ‘‘(B) shall be subject to a sliding scale that

9 decreases the amount of such fees as the number

10 of borrowers increases; and

11 ‘‘(C)(i) for academic year 1994–1995, shall

12 not exceed a program-wide average of $10 per

13 borrower for all the loans made under this part

14 to such borrower in the same academic year; and

15 ‘‘(ii) for succeeding academic years, the Sec16 retary shall establish such average fee pursuant

17 to regulations.

18 ‘‘(2) FEES FOR ALTERNATIVE ORIGINATORS.—

19 The Secretary shall pay fees for loan origination serv20 ices to alternative originators of loans made under

21 this part in an amount established by the Secretary

22 in accordance with the terms of the contract described

23 in section 456(b) between the Secretary and each such

24 alternative originator.
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1 ‘‘(c) NO ENTITLEMENT TO PARTICIPATE OR ORIGI2 NATE.—No institution of higher education shall have a

3 right to participate in the program authorized by this part,

4 originate loans, or perform any program function under

5 this part. Nothing in this subsection shall be construed so

6 as to limit the entitlement of an eligible student attending

7 a participating institution (or the eligible parent of such

8 student) to borrow under this part nor limit the borrower’s

9 contractual right against the United States to receive any

10 loan for which the student (or parent) is eligible.

11 ‘‘(d) DELIVERY OF LOAN FUNDS.—Loan funds shall

12 be paid and delivered to an institution by the Secretary

13 prior to the beginning of the payment period established

14 by the Secretary in a manner that is consistent with pay15 ment and delivery of basic grants under subpart 1 of part

16 A.

17 ‘‘SEC. 453. SELECTION OF INSTITUTIONS FOR PARTICIPA18 TION AND ORIGINATION.

19 ‘‘(a) PHASE-IN OF PROGRAM.—

20 ‘‘(1) GENERAL AUTHORITY.—The Secretary shall

21 enter into agreements pursuant to section 454(a) with

22 institutions of higher education to participate in the

23 direct student loan program under this part, and

24 agreements pursuant to section 454(b) with institu25 tions of higher education, or consortia thereof, to
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1 originate loans in such program, for academic years

2 beginning on or after July 1, 1994. Alternative origi3 nation services, through which an entity other than

4 the participating institution at which the student is

5 in attendance originates the loan, shall be provided

6 by the Secretary, through 1 or more contracts under

7 section 456(b) or such other means as the Secretary

8 may provide, for students attending participating in9 stitutions that do not originate direct student loans

10 under this part. Such agreements for the academic

11 year 1994–1995 shall, to the extent feasible, be entered

12 into not later than January 1, 1994.

13 ‘‘(2) TRANSITION PROVISIONS.—In order to en14 sure an expeditious but orderly transition from the

15 loan programs under part B of this title to the direct

16 student loan program under this part, the Secretary

17 shall, in the exercise of the Secretary’s discretion, de18 termine the number of institutions with which the

19 Secretary whall enter into agreements under sub20 sections (a) and (b) of section 454 for any academic

21 year, except that the Secretary shall exercise such dis22 cretion so as to achieve the following goals:

23 ‘‘(A) For academic year 1994–1995, loans

24 made under this part shall represent 5 percent of

25 the new student loan volume for such year.
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1 ‘‘(B) For academic year 1995–1996, loans

2 made under this part shall represent 30 percent

3 of the new student loan volume for such year.

4 ‘‘(C) For academic year 1996–1997, loans

5 made under this part shall represent 40 percent

6 of the new student loan volume for such year.

7 ‘‘(D) For academic year 1997–1998 and fis8 cal year 1998, loans made under this part shall

9 represent 50 percent of the new student loan vol10 ume for such years.

11 ‘‘(3) NEW STUDENT LOAN VOLUME.—For the

12 purpose of this part, the term ‘new student loan vol13 ume’ means the estimated sum of all loans that will

14 be made, insured or guaranteed under this part and

15 part B in the year for which the determination is

16 made. The Secretary shall base the estimate described

17 in the preceding sentence on the most recent program

18 data available.

19 ‘‘(4) CASH MANAGEMENT.—The requirements of

20 sections 3335, 6501, and 6503 of title 31, United

21 States Code (the Cash Management Improvement Act

22 of 1990) shall apply to the program under this part

23 only to the extent specified in a schedule established

24 by the Secretaries of Education and the Treasury, ex25 cept that such schedule shall provide for the applica-
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1 tion of all such requirements not later than July 1,

2 1998.

3 ‘‘(b) SELECTION CRITERIA.—

4 ‘‘(1) APPLICATION.—Each institution of higher

5 education desiring to participate in the direct student

6 loan program under this part shall submit an appli7 cation satisfactory to the Secretary containing such

8 information and assurances as the Secretary may re9 quire.

10 ‘‘(2) SELECTION CRITERIA.—The Secretary shall

11 select institutions for participation in the direct stu12 dent loan program under this part, and shall enter

13 into agreements with such institutions under section

14 454(a), from among those institutions that submit the

15 applications described in paragraph (1), and meet

16 such other eligibility requirements as the Secretary

17 shall prescribe, by, to the extent possible—

18 ‘‘(A)(i) categorizing such institutions ac19 cording to anticipated loan volume, length of

20 academic program, control of the institution,

21 highest degree offered, size of student enrollment,

22 percentage of students borrowing under part B,

23 geographic location, annual loan volume, default

24 experience and composition of the student body;

25 and
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1 ‘‘(ii) beginning in academic year 1995–

2 1996 selecting institutions that are reasonably

3 representative of each of the categories described

4 pursuant to clause (i); and

5 ‘‘(B) if the Secretary determines it nec6 essary to carry out the purposes of this part, se7 lecting additional institutions.

8 ‘‘(c) SELECTION CRITERIA FOR ORIGINATION.—

9 ‘‘(1) IN GENERAL.—The Secretary may enter

10 into a supplemental agreement with an institution

11 (or a consortium of such institutions) that—

12 ‘‘(A) has an agreement under subsection

13 454(a);

14 ‘‘(B) desires to originate loans under this

15 part; and

16 ‘‘(C) meets the criteria described in para17 graph (2).

18 ‘‘(2) TRANSITION SELECTION CRITERIA.—For

19 academic year 1994–1995, the Secretary may approve

20 an institution to originate loans only if such institu21 tion—

22 ‘‘(A) made loans under part E of this title

23 in academic year 1993–1994 and did not exceed

24 the applicable maximum default rate under sec-
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1 tion 462(g) for the most recent fiscal year for

2 which data are available;

3 ‘‘(B) is not on the reimbursement system of

4 payment for any of the programs under subpart

5 1 or 3 of part A, part C, or part E;

6 ‘‘(C) is not overdue on program or financial

7 reports or audits required under this title;

8 ‘‘(D) is not subject to an emergency action,

9 or a limitation, suspension, or termination

10 under section 428(b)(1)(T), 432(h), or 487(c);

11 ‘‘(E) in the opinion of the Secretary, has

12 not had significant deficiencies identified by a

13 State postsecondary review entity under subpart

14 1 of part H of this title;

15 ‘‘(F) in the opinion of the Secretary, has

16 not had severe performance deficiencies for any

17 of the programs under this title, including such

18 deficiencies demonstrated by audits or program

19 reviews submitted or conducted during the 5 cal20 endar years immediately preceding the date of

21 application;

22 ‘‘(G) provides an assurance that such insti23 tution has no delinquent outstanding debts to the

24 Federal Government, unless such debts are being

25 repaid under or in accordance with a repayment
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1 arrangement satisfactory to the Federal Govern2 ment, or the Secretary in the Secretary’s discre3 tion determines that the existence or amount of

4 such debts has not been finally determined by the

5 cognizant Federal agency; and

6 ‘‘(H) meets such other criteria as the Sec7 retary may establish to protect the financial in8 terest of the United States and to promote the

9 purposes of this part.

10 ‘‘(3) REGULATIONS GOVERNING APPROVAL AFTER

11 TRANSACTION.—For academic year 1995–1996 and

12 subsequent academic years, the Secretary shall pro13 mulgate and publish in the Federal Register regula14 tions governing the approval of institutions to origi15 nate loans under this part in accordance with section

16 458(a)(2).

17 ‘‘(d) CONSORTIA.—Subject to such requirements as the

18 Secretary may prescribe, eligible institutions of higher edu19 cation with agreements under section 454(a) may apply to

20 the Secretary as consortia to originate loans under this part

21 for students in attendance at such institutions. Such insti22 tutions shall each be required to meet the requirements of

23 subsection (c) with respect to loan origination.
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1 ‘‘SEC. 454. AGREEMENTS WITH INSTITUTIONS.

2 ‘‘(a) PARTICIPATION AGREEMENTS.—An agreement

3 with any institution of higher education for participation

4 in the direct student loan program under this part shall—

5 ‘‘(1) provide for the establishment and mainte6 nance of a direct student loan program at the institu7 tion under which the institution will—

8 ‘‘(A) identify eligible students who seek stu9 dent financial assistance at such institution in

10 accordance with section 484;

11 ‘‘(B) estimate the need of each such student

12 as required by part F of this title for an aca13 demic year, except that, any loan obtained by a

14 student under this part with the same terms as

15 loans made under section 428H (except as other16 wise provided in this part), or a loan obtained

17 by a parent under this part with the same terms

18 as loans made under section 428B (except as oth19 erwise provided in this part), or obtained under

20 any State-sponsored or private loan program,

21 may be used to offset the expected family con22 tribution of the student for that year;

23 ‘‘(C) provide a statement that certifies the

24 eligibility of any student to receive a loan under

25 this part that is not in excess of the annual or

26 aggregate limit applicable to such loan, except
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1 that the institution may, in exceptional cir2 cumstances identified by the Secretary, refuse to

3 certify a statement that permits a student to re4 ceive a loan under this part, or certify a loan

5 amount that is less than the student’s determina6 tion of need (as determined under part F of this

7 title), if the reason for such action is documented

8 and provided in written form to such student;

9 ‘‘(D) set forth a schedule for disbursement of

10 the proceeds of the loan in installments, consist11 ent with the requirements of section 428G (other

12 than subsection (b)(1) of such section); and

13 ‘‘(E) provide timely and accurate informa14 tion—

15 ‘‘(i) concerning the status of student

16 borrowers (and students on whose behalf

17 parents borrow under this part) while such

18 students are in attendance at the institution

19 and concerning any new information of

20 which the institution becomes aware for

21 such students (or their parents) after such

22 borrowers leave the institution, to the Sec23 retary for the servicing and collecting of

24 loans made under this part; and
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1 ‘‘(ii) if the institution does not have an

2 agreement with the Secretary under sub3 section (b), concerning student eligibility

4 and need, as determined under subpara5 graphs (A) and (B), to the Secretary as

6 needed for the alternative origination of

7 loans to eligible students and parents in ac8 cordance with this part;

9 ‘‘(2) provide assurances that the institution will

10 comply with requirements established by the Secretary

11 relating to student loan information with respect to

12 loans made under this part;

13 ‘‘(3) provide that the institution accepts respon14 sibility and financial liability stemming from its fail15 ure to perform its functions pursuant to the agree16 ment;

17 ‘‘(4) provide that students at the institution and

18 their parents (with respect to such students) will be

19 eligible to participate in the programs under part B

20 of this title at the discretion of the Secretary for the

21 period during which such institution participates in

22 the direct student loan program under this part;

23 ‘‘(5) provide for the implementation of a quality

24 assurance system, as established by the Secretary and

25 developed in consultation with institutions of higher
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1 education, to ensure that the institution is complying

2 with program requirements and meeting program ob3 jectives;

4 ‘‘(6) provide that the institution will not charge

5 any fees of any kind, however described, to student or

6 parent borrowers for origination activities or the pro7 vision of any information necessary for a student or

8 parent to receive a loan under this part, or any bene9 fits associated with such loan; and

10 ‘‘(7) include such other provisions as the Sec11 retary determines are necessary to protect the inter12 ests of the United States and to promote the purposes

13 of this part.

14 ‘‘(b) ORIGINATION.—An agreement with any institu15 tion of higher education, or consortia thereof, for the origi16 nation of loans under this part shall—

17 ‘‘(1) supplement the agreement entered into in

18 accordance with subsection (a);

19 ‘‘(2) include provisions established by the Sec20 retary that are similar to the participation agreement

21 provisions described in paragraphs (1)(E)(ii), (2),

22 (3), (4), (5), (6), and (7) of subsection (a), as modi23 fied to relate to the origination of loans by the insti24 tution or consortium;
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1 ‘‘(3) provide that the institution or consortium

2 will originate loans to eligible students and parents

3 in accordance with this part; and

4 ‘‘(4) provide that the note or evidence of obliga5 tion on the loan shall be the property of the Secretary.

6 ‘‘(c) WITHDRAWAL AND TERMINATION PROCE7 DURES.—The Secretary shall establish procedures by which

8 institutions or consortia may withdraw or be terminated

9 from the program under this part.

10 ‘‘SEC. 455. TERMS AND CONDITIONS OF LOANS.

11 ‘‘(a) IN GENERAL.—

12 ‘‘(1) PARALLEL TERMS, CONDITIONS, BENEFITS,

13 AND AMOUNTS.—Unless otherwise specified in this

14 part, loans made to borrowers under this part shall

15 have the same terms, conditions, and benefits as loans

16 made to borrowers under sections 428, 428B, and

17 428H of this title.

18 ‘‘(2) DESIGNATION OF LOANS.—Loans made to

19 borrowers under this part that, except as otherwise

20 specified in this part, have the same terms, condi21 tions, and benefits as loans made to borrowers

22 under—

23 ‘‘(A) section 428 shall be known as ‘Federal

24 Direct Stafford Loans’;
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1 ‘‘(B) section 428B shall be known as ‘Fed2 eral Direct PLUS Loans’; and

3 ‘‘(C) section 428H shall be known as ‘Fed4 eral Direct Unsubsidized Stafford Loans’.

5 ‘‘(b) INTEREST RATE.—

6 ‘‘(1) RATES FOR FDSL AND FDUSL.—(A) For

7 Federal Direct Stafford Loans and Federal Direct

8 Unsubsidized Stafford Loans for which the first dis9 bursement is made on or after July 1, 1994, the ap10 plicable rate of interest shall, during any 12-month

11 period beginning on July 1 and ending on June 30,

12 be determined on the preceding June 1 and be equal

13 to—

14 ‘‘(i) the bond equivalent rate of 91-day

15 Treasury bills auctioned at the final auction held

16 prior to such June 1; plus

17 ‘‘(ii) 3.1 percent,

18 except that such rate shall not exceed 8.25 percent.

19 ‘‘(B)(i) Notwithstanding the provisions of sub20 paragraph (A), with respect to any Federal Direct

21 Stafford Loan or Federal Direct Unsubsidized Staf22 ford Loan for which the first disbursement is made on

23 or after July 1, 1994, the applicable rate of interest

24 for interest which accrues—
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1 ‘‘(I) prior to the beginning of the repayment

2 period of the loan; or

3 ‘‘(II) during the period in which principal

4 need not be paid (whether or not such principal

5 is in fact paid) by reason of a provision de6 scribed in section 428(b)(1)(M) or 427(a)(2)(C),

7 shall not exceed the rate determined under clause (ii).

8 ‘‘(ii) For purposes of clause (i) the rate deter9 mined under this clause shall, during any 12-month

10 period beginning on July 1 and ending on June 30,

11 be determined on the preceding June 1 and be equal

12 to—

13 ‘‘(I) the bond equivalent rate of 91-day

14 Treasury bills auctioned at the final auction

15 prior to such June 1; plus

16 ‘‘(II) 2.5 percent,

17 except that such rate shall not exceed 8.25 percent.

18 ‘‘(2) RATES FOR FDPLUS.—For Federal Direct

19 PLUS Loans for which the first disbursement is made

20 on or after July 1, 1994, the applicable rate of inter21 est shall, during any 12-month period beginning on

22 July 1 and ending on June 30, be determined on the

23 preceding June 1 and be equal to—
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1 ‘‘(A) the bond equivalent rate of 52-week

2 Treasury bills auctioned at final auction held

3 prior to such June 1; plus

4 ‘‘(B) 3.1 percent,

5 except that such rate shall not exceed 9 percent.

6 ‘‘(3) PUBLICATION.—The Secretary shall deter7 mine the applicable rates of interest under this sub8 section after consultation with the Secretary of Treas9 ury and shall publish such rate in the Federal Reg10 ister as soon as practicable after the date of deter11 mination.

12 ‘‘(c) ORIGINATION FEE.—The Secretary shall charge

13 the borrower of a loan made under this part an origination

14 fee of 4.0 percent of the principal amount of the loan.

15 ‘‘(d) REPAYMENT PLANS.—

16 ‘‘(1) DESIGN AND SELECTION.—Consistent with

17 criteria established by the Secretary, the Secretary

18 shall offer a borrower of a loan made under this part

19 a variety of plans for repayment of such loan, includ20 ing principal and interest on the loan. The borrower

21 shall be entitled to accelerate, without penalty, repay22 ment on the borrowers loans under this part. The bor23 rower may choose—
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1 ‘‘(A) a standard repayment plan, with a

2 fixed annual repayment amount paid over a

3 fixed period of time;

4 ‘‘(B) an extended repayment plan, with a

5 fixed annual repayment amount paid over an

6 extended period of time, except that the borrower

7 shall annually repay a minimum amount deter8 mined by the Secretary in accordance with sec9 tion 428(b)(1)(L);

10 ‘‘(C) a graduated repayment plan, with an11 nual repayment amounts established at 2 or

12 more graduated levels and paid over a fixed or

13 extended period of time, except that the borrow14 er’s scheduled payments shall not be less than 50

15 percent, nor more than 150 percent, of what the

16 amortized payment on the amount owed would

17 be if the loan were repaid under the standard re18 payment plan; and

19 ‘‘(D) an income contingent repayment plan,

20 with varying annual repayment amounts based

21 on the income of the borrower, paid over an ex22 tended period of time, not to exceed 20 years, ex23 cept that the plan described in this subpara24 graph shall not be available to the borrower of a

25 Federal Direct PLUS loan.
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1 ‘‘(2) SELECTION BY SECRETARY.—If a borrower

2 of a loan made under this part does not select a re3 payment plan described in paragraph (1), the Sec4 retary may provide the borrower with a repayment

5 plan described in subparagraph (A), (B), or (C) of

6 paragraph (1).

7 ‘‘(3) CHANGES IN SELECTIONS.—The borrower of

8 a loan made under this part may change the borrow9 er’s selection of a repayment plan under paragraph

10 (1), or the Secretary’s selection of a plan for the bor11 rower under paragraph (2), as the case may be, under

12 such terms and conditions as may be established by

13 the Secretary.

14 ‘‘(4) ALTERNATIVE REPAYMENT PLANS.—The

15 Secretary may provide, on a case by case basis, an

16 alternative repayment plan to a borrower of a loan

17 made under this part who demonstrates to the satis18 faction of the Secretary that the terms and conditions

19 of the repayment plans available under paragraph (1)

20 are not adequate to accommodate the borrower’s ex21 ceptional circumstances. In designing such alternative

22 repayment plans, the Secretary shall ensure that such

23 plans do not exceed the cost to the Federal Govern24 ment, as determined on the basis of the present value
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1 of future payments by such borrowers, of loans made

2 using the plans available under paragraph (1).

3 ‘‘(5) REPAYMENT AFTER DEFAULT.—The Sec4 retary may require any borrower who has defaulted

5 on a loan made under this part to—

6 ‘‘(A) pay all reasonable collection costs asso7 ciated with such loan; and

8 ‘‘(B) repay the loan pursuant to an income

9 contingent repayment plan.

10 ‘‘(e) INCOME CONTINGENT REPAYMENT.—

11 ‘‘(1) INFORMATION AND PROCEDURES.—The Sec12 retary may obtain such information as is reasonably

13 necessary regarding the income of a borrower (and the

14 borrower’s spouse, if applicable) of a loan made under

15 this part that is, or may be, repaid pursuant to in16 come contingent repayment, for the purpose of deter17 mining the annual repayment obligation of the bor18 rower. Return and return information (as defined in

19 section 6103 of the Internal Revenue Code of 1986)

20 may be obtained under the preceding sentence only to

21 the extent authorized by section 6103(l)(13) of such

22 Code. The Secretary shall establish procedures for de23 termining the borrower’s repayment obligation on

24 that loan for such year, and such other procedures as
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1 are necessary to implement effectively income contin2 gent repayment.

3 ‘‘(2) REPAYMENT BASED ON ADJUSTED GROSS

4 INCOME.—A repayment schedule for a loan made

5 under this part and repaid pursuant to income con6 tingent repayment shall be based on the adjusted gross

7 income (as defined in section 62 of the Internal Reve8 nue Code of 1986) of the borrower or, if the borrower

9 is married and files a Federal income tax return

10 jointly with the borrower’s spouse, on the adjusted

11 gross income of the borrower and the borrower’s

12 spouse.

13 ‘‘(3) ADDITIONAL DOCUMENTS.—A borrower who

14 chooses, or is required, to repay a loan made under

15 this part pursuant to income contingent repayment,

16 and for whom adjusted gross income is unavailable or

17 does not reasonably reflect the borrower’s current in18 come, shall provide to the Secretary other documenta19 tion of income satisfactory to the Secretary, which

20 documentation the Secretary may use to determine an

21 appropriate repayment schedule.

22 ‘‘(4) REPAYMENT SCHEDULES.—Income contin23 gent repayment schedules shall be established by regu24 lations promulgated by the Secretary and shall re25 quire payments that vary in relation to the appro-
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1 priate portion of the annual income of the borrower

2 (and the borrower’s spouse, if applicable) as deter3 mined by the Secretary.

4 ‘‘(5) CALCULATION OF BALANCE DUE.—The bal5 ance due on a loan made under this part that is re6 paid pursuant to income contingent repayment shall

7 equal the unpaid principal amount of the loan, any

8 accrued interest, and any fees, such as late charges,

9 assessed on such loan. The Secretary may promulgate

10 regulations limiting the amount of interest that may

11 be capitalized on such loan, and the timing of any

12 such capitalization.

13 ‘‘(6) NOTIFICATION TO BORROWERS.—The Sec14 retary shall establish procedures under which a bor15 rower of a loan made under this part who chooses or

16 is required to repay such loan pursuant to income

17 contingent repayment is notified of the terms and

18 conditions of such plan, including notification of such

19 borrower—

20 ‘‘(A) that the Internal Revenue Service will

21 disclose to the Secretary tax return information

22 as authorized under section 6103(l)(13) of the

23 Internal Revenue Code of 1986; and

24 ‘‘(B) that if a borrower considers that spe25 cial circumstances, such as a loss of employment
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1 by the borrower or the borrower’s spouse, war2 rant an adjustment in the borrower’s loan repay3 ment as determined using the information de4 scribed in subparagraph (A), or the alternative

5 documentation described in paragraph (3), the

6 borrower may contact the Secretary, who shall

7 determine whether such adjustment is appro8 priate, in accordance with criteria established by

9 the Secretary.

10 ‘‘(f) DEFERMENT.—

11 ‘‘(1) EFFECT ON PRINCIPAL AND INTEREST.—A

12 borrower of a loan made under this part who meets

13 the requirements described in paragraph (2) shall be

14 eligible for a deferment, during which periodic in15 stallments of principal need not be paid, and inter16 est—

17 ‘‘(A) shall not accrue, in the case of a Fed18 eral Direct Stafford Loan or a Federal Direct

19 Consolidation Loan that consolidated only Fed20 eral Direct Stafford Loans, or a combination of

21 such loans and Federal Stafford Loans for which

22 the student borrower received an interest subsidy

23 under section 428; or

24 ‘‘(B) shall accrue and be capitalized or paid

25 by the borrower, in the case of a Federal Direct
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1 PLUS Loan, a Federal Direct Unsubsidized

2 Stafford Loan, or a Federal Direct Consolidation

3 Loan other than loans described in subparagraph

4 (A).

5 ‘‘(2) ELIGIBILITY.—A borrower of a loan made

6 under this part shall be eligible for a deferment dur7 ing any period—

8 ‘‘(A) during which the borrower—

9 ‘‘(i) is carrying at least one-half the

10 normal full-time work load for the course of

11 study that the borrower is pursuing, as de12 termined by the eligible institution (as such

13 term is defined in section 435) the borrower

14 is attending; or

15 ‘‘(ii) is pursuing a course of study

16 pursuant to a graduate fellowship program

17 approved by the Secretary, or pursuant to

18 a rehabilitation training program for indi19 viduals with disabilities approved by the

20 Secretary,

21 except that no borrower shall be eligible for a

22 deferment under this subparagraph, or a loan

23 made under this part (other than a Federal Di24 rect PLUS Loan or a Federal Direct Consolida-
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1 tion Loan), while serving in a medical intern2 ship or residency program;

3 ‘‘(B) not in excess of 3 years during which

4 the borrower is seeking and unable to find full5 time employment;

6 ‘‘(C) not in excess of 3 years during which

7 the Secretary determines, in accordance with

8 regulations prescribed under section 435(o), that

9 the borrower has experienced or will experience

10 an economic hardship, regardless of the reason

11 for such hardship.

12 ‘‘(g) FEDERAL DIRECT CONSOLIDATION LOANS.—A

13 borrower of a loan made under this part may consolidate

14 such loan with the loans described in section 428C(a)(4)

15 and section 428C(d)(1)(C) only under such terms and con16 ditions as the Secretary shall establish pursuant to regula17 tions promulgated under this part. Loans made under this

18 subsection shall be known as ‘Federal Direct Consolidation

19 Loans’.

20 ‘‘(h) BORROWER DEFENSES.—Notwithstanding any

21 other provision of law, the Secretary shall specify in regula22 tions (except as authorized under section 458(a)), which

23 acts or omissions of an institution of higher education a

24 borrower may assert as a defense to repayment of a loan

25 made under this part, except that in no event may a bor-
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1 rower recover from the Secretary, in any action arising

2 from or relating to a loan made under this part, an amount

3 in excess of the amount such borrower has repaid on such

4 loan.

5 ‘‘(i) OPTICALLY IMAGED DOCUMENTS.—Records main6 tained in accordance with section 484A(c) may be used in

7 any proceeding, as permitted pursuant to section 484A(c),

8 with respect to a loan made under this part.

9 ‘‘(j) NONDISCHARGEABILITY IN BANKRUPTCY.—Not10 withstanding any other provision of law, a loan made

11 under this part shall not be dischargeable in any Federal

12 or State bankruptcy proceeding.

13 ‘‘(k) LOAN APPLICATION AND PROMISSORY NOTE.—

14 The common financial reporting form required in 483(a)(1)

15 shall constitute the application for loans made under this

16 part. The Secretary shall develop, print, and distribute to

17 participating institutions a standard promissory note and

18 loan disclosure form.

19 ‘‘(l) LOAN DISBURSEMENT.—

20 ‘‘(1) IN GENERAL.—Payments of loan proceeds to

21 students under this part shall be made by crediting

22 the student’s account for tuition and fees, and, in the

23 case of institutionally owned housing, room and

24 board. The student may elect to have the institution

25 provide other such goods and services by crediting the
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1 student’s account. Loan proceeds that remain after

2 the application of the previous sentences shall be de3 livered to the borrower in accordance with section

4 427(a)(3).

5 ‘‘(2) PAYMENT PERIODS.—The Secretary shall

6 establish periods for the payments described in para7 graph (2) in a manner that is consistent with pay8 ment of basic grants under subpart 1 of part A.

9 ‘‘(m) FISCAL CONTROL AND FUND ACCOUNTABILITY.—

10 ‘‘(1) IN GENERAL.—(A) An institution shall

11 maintain financial records in a manner consistent

12 with records maintained for other programs under

13 title IV.

14 ‘‘(B) An institution may maintain loan funds

15 under this part in the same account as other Federal

16 student financial assistance.

17 ‘‘(2) PAYMENTS; REFUNDS; ENROLLMENT STA18 TUS.—Payments, refunds and enrollment status shall

19 be reconciled in a manner and schedule that is con20 sistent with the manner and schedule set forth for the

21 quarterly submission of a payment summary report

22 required of institutions participating in the program

23 assisted under subpart 1 of part A.

24 ‘‘(3) TRANSACTION HISTORIES.—All transaction

25 histories under this part shall be maintained using
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1 the same system designated by the Secretary for the

2 provision of basic grants under subpart 1 of part A.

3 ‘‘(n) ENTITLEMENT PROVISION.—Except as provided

4 in section 454(a)(1)(C), an eligible student in attendance

5 at a participating institution (or a parent borrower) shall

6 have a contractual right against the United States to receive

7 any loan under this part for which such student (or parent)

8 is eligible.

9 ‘‘SEC. 456. CONTRACTS.

10 ‘‘(a) CONTRACTS FOR SUPPLIES AND SERVICES.—

11 ‘‘(1) IN GENERAL.—The Secretary may award 1

12 or more contracts for services and supplies described

13 in subsection (b). The entities with which the Sec14 retary may enter into such contracts shall include en15 tities which the Secretary determines are qualified to

16 provide such services and supplies and will comply

17 with the procedures applicable to the award of such

18 contracts. In the case of awarding contracts for the

19 servicing of loans under this part, the Secretary shall

20 only enter into contracts with entities that have ex21 tensive experience and a demonstrated record in loan

22 servicing and collection.

23 ‘‘(2) EXEMPTION.—The Secretary may award,

24 through June 30, 1998, contracts under this section

25 without regard to the requirements in section 303 of
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1 the Federal Property and Administrative Services Act

2 of 1949, section 18 of the Office of Federal Procure3 ment Policy Act, and section 8(e) of the Small Busi4 ness Act, and the corresponding requirements of the

5 Federal Acquisition Regulations, if the Secretary de6 termines, on a case-by-case basis, that exemption from

7 such requirements is in the public interest and nec8 essary for the orderly transition from the loan pro9 grams under part B to the direct student loan pro10 gram under this part.

11 ‘‘(3) APPLICATION OF REQUIREMENTS.—On and

12 after July 1, 1998, all statutory and regulatory re13 quirements described in paragraph (2) shall apply to

14 the award of a contract under this section.

15 ‘‘(b) CONTRACTS FOR ORIGINATION, SERVICING, AND

16 DATA SYSTEMS.—The Secretary may enter into 1 or more

17 contracts for—

18 ‘‘(1) the alternative origination of loans to stu19 dents attending institutions with agreements to par20 ticipate in the program under this part (or their par21 ents), if such institutions do not have agreements with

22 the Secretary under section 454(b);

23 ‘‘(2) the servicing and collection of loans made

24 under this part;
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1 ‘‘(3) the establishment and operation of 1 or

2 more data systems for the maintenance of records on

3 all loans made under this part;

4 ‘‘(4) services to assist in the orderly transition

5 from the loan programs under part B to the direct

6 student loan program under this part; and

7 ‘‘(5) such other aspects of the direct student loan

8 program as the Secretary determines are necessary to

9 ensure the successful operation of the program.

10 ‘‘SEC. 457. PLAN FOR IRS PARTICIPATION AND OTHER RE11 PAYMENT OPTIONS.

12 ‘‘(a) IN GENERAL.—The Secretaries of Education and

13 the Treasury shall, within 6 months of the date of enact14 ment of this part, submit a plan to the President that—

15 ‘‘(1) provides for—

16 ‘‘(A) repayment of loans made under this

17 part through wage withholding by the Internal

18 Revenue Service;

19 ‘‘(B) procedures for the resolution of dis20 putes through the Secretary of Education; and

21 ‘‘(C) an alternate system of fees and pen22 alties, which shall not include the seizure of real

23 property, by the Internal Revenue Service for the

24 nonpayment of amounts due; and
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1 ‘‘(2) evaluates the feasibility of other wage-with2 holding repayment options for such loans.

3 ‘‘(b) PRESIDENTIAL DETERMINATION.—If the Presi4 dent determines that the implementation of 1 or more re5 payment options contained in the plan described in sub6 section (a) would further the purposes of this part, the Sec7 retaries of Education and the Treasury shall be authorized

8 to take such actions as are reasonable and necessary to im9 plement such repayment options, including entering into

10 an agreement pursuant to section 6306 of the Internal Reve11 nue Code of 1986.

12 ‘‘(c) FUNDING.—The Secretary of Education may use

13 such amounts as the Secretary of Education determines nec14 essary from the funds made available under section 460 to

15 implement the repayment options selected by the President

16 under subsection (b) and shall make available to the Sec17 retary of the Treasury such amounts from the funds made

18 available under section 460 as the Secretaries determine to

19 be necessary to implement the repayment options carried

20 out by the Internal Revenue Service.

21 ‘‘SEC. 458. SECRETARIAL ACTIVITIES.

22 ‘‘(a) REGULATORY ACTIVITIES.—

23 ‘‘(1) NOTICE IN LIEU OF REGULATIONS FOR

24 FIRST YEAR OF PROGRAM.—The Secretary shall pub25 lish in the Federal Register whatever standards, cri-
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1 teria, and procedures, consistent with the provisions

2 of this part, that the Secretary, in consultation with

3 members of the higher education community, deter4 mine are reasonable and necessary to the successful

5 implementation of the direct student loan program

6 under this part in academic year 1994–1995. Section

7 431 of the General Education Provisions Act shall not

8 apply to the publication of such standards, criteria,

9 and procedures.

10 ‘‘(2) NEGOTIATED RULEMAKING.—Beginning

11 with academic year 1995–1996, all standards, cri12 teria, procedures and regulations implementing this

13 part shall be subject to negotiated rulemaking, includ14 ing all such standards, criteria, procedures and regu15 lations promulgated from the date of enactment of

16 this part.

17 ‘‘(b) CLOSING DATE FOR APPLICATIONS FROM INSTI18 TUTIONS.—The Secretary shall establish a date not later

19 than October 1, 1993, as the closing date for receiving ap20 plications from institutions of higher education desiring to

21 participate in the direct loan program under this part in

22 academic year 1994–1995.

23 ‘‘(c) PUBLICATION OF LIST OF PARTICIPATING INSTI24 TUTIONS AND CONTROL GROUP.—Not later than January

25 1, 1994, the Secretary shall publish in the Federal Register
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1 a list of the institutions of higher education selected to par2 ticipate in the direct loan program under this part in aca3 demic year 1994–1995.

4 ‘‘SEC. 459. REPORTS.

5 ‘‘(a) ANNUAL REPORTS.—The Secretary shall submit

6 to the Congress not later than July 1, 1994, and each July

7 1 for the 4 succeeding years an annual report describing

8 the progress and status of the direct loan program.

9 ‘‘(b) RESEARCH, DEMONSTRATION, AND EVALUA10 TION.—The Secretary may use a portion of the funds made

11 available pursuant to section 460 for research on, or the

12 demonstration or evaluation of, any aspects of the program

13 authorized by this part, including flexible repayment plans.

14 ‘‘(c) GAO INTERIM FINAL REPORT.—The Comptroller

15 General shall submit to the Congress not later than January

16 1, 1997, an interim final report evaluating the experience

17 of the Department of Education, the participating institu18 tions of higher education, students, and parents with respect

19 to the direct student loan program. The report shall in20 clude—

21 ‘‘(1) the administrative costs, including costs per

22 loan, incurred by participating institutions of higher

23 education in administering the direct student loan

24 program;
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1 ‘‘(2) the administrative costs, including costs per

2 loan, incurred by the Department of Education and

3 its contractors in carrying out its responsibilities, in4 cluding the costs of origination, data systems, servic5 ing, and collection;

6 ‘‘(3) an evaluation of the effectiveness of the di7 rect student loan program in providing services to

8 students and parents, including loan application,

9 loan origination, student financial aid packaging,

10 tracking of student status, responsiveness to student

11 inquiries and processing of deferments, forbearances,

12 and repayments;

13 ‘‘(4) the frequency and cost of borrower delin14 quency and default under the direct student loan pro15 gram and losses incurred by institutions of higher

16 education and servicers, including losses caused by

17 improper origination or servicing of loans;

18 ‘‘(5) the timeliness of capital availability to in19 stitutions of higher education and of loans to students

20 and parents and the cost of loan capital;

21 ‘‘(6) an evaluation of the effectiveness of the in22 come contingent repayment option;

23 ‘‘(7) a comparison of the experience of institu24 tions of higher education, students, and parents par25 ticipating in direct student loan program with the ex-
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1 perience of institutions, students, and parents in the

2 control group described in subsection (e) with respect

3 to the subjects indicated in paragraphs (1) through

4 (6) of this subsection;

5 ‘‘(8) an evaluation of the administrative per6 formance of the Department;

7 ‘‘(9) an analysis of the reasons institutions se8 lected by the Secretary to participate in the direct

9 student loan program chose not to participate and the

10 reasons institutions withdrew or were terminated

11 from such program;

12 ‘‘(10) an analysis of the experience of borrowers

13 with loans under both this part and part B and rec14 ommendations for the most effective repayment proce15 dures for such borrowers;

16 ‘‘(11) a comparison of the cost of loan capital for

17 loans for the direct student loan program with the

18 cost of loan capital for the comparable programs in

19 part B of this title;

20 ‘‘(12) an analysis, where practicable, of the expe21 rience of institutions which participate as part of a

22 consortia; and

23 ‘‘(13) recommendations for modifications, con24 tinuation, expansion, suspension, or termination of
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1 the direct student loan program or replacement of all

2 or some of the programs authorized by part B.

3 ‘‘(d) GAO FINAL REPORT.—The Comptroller General

4 shall submit to the Congress not later than May 1, 1998,

5 a final report evaluating the experience of the Department

6 of Education, the participating institutions of higher edu7 cation, and students with respect to the direct student loan

8 program. The report shall include the same matters pro9 vided for in subsection (c) of this section.

10 ‘‘(e) CONTROL GROUP.—To assist the Comptroller

11 General in preparing the reports required by subsections

12 (c) and (d) of this section, the Secretary shall select a con13 trol group of institutions of higher education, which rep14 resent a cross-section of all institutions of higher education

15 participating in part B of this title and which is com16 parable to the cross-section of institutions of higher edu17 cation selected for participating in the direct student loan

18 program. The Secretary shall select the control groups in

19 the same manner that the institutions of higher education

20 are selected to participate in the direct student loan pro21 gram.

22 ‘‘(f) TREATMENT OF COSTS.—In reporting with re23 spect to costs in the reports required by subsections (c) and

24 (d) of this section, the Comptroller General shall report sep25 arately the nonrecurrent costs such as start-up costs associ-
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1 ated with the direct student loan program, the administra2 tive costs incurred by institutions of higher education in

3 providing information to enable the Comptroller General to

4 prepare the reports required by subsections (c) and (d) of

5 this section and the normal costs of operating the direct

6 student loan program.

7 ‘‘SEC. 460. FUNDS FOR ADMINISTRATIVE EXPENSES.

8 ‘‘(a) IN GENERAL.—In each fiscal year beginning with

9 fiscal year 1994, there shall be available to the Secretary

10 of Education from funds not otherwise appropriated, funds

11 to be obligated for administrative costs under this part, in12 cluding the costs of the transition from the loan programs

13 under part B to the direct student loan program under this

14 part and transition support for the expenses of guaranty

15 agencies in servicing outstanding loans in their portfolios

16 and in guaranteeing new loans, not to exceed $20,000,000

17 in fiscal year 1994, $70,000,000 in fiscal year 1995,

18 $170,000,000 in fiscal year 1996, $305,000,000 in fiscal

19 year 1997, and $480,000,000 in fiscal year 1998. If in any

20 fiscal year, the Secretary determines that additional funds

21 for administrative expenses are needed as a result of such

22 transition, or the expansion of the direct student loan pro23 gram under this part, the Secretary is authorized to use

24 funds available under this section for any succeeding fiscal

25 year for such expenses, except that the total expenditures
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1 by the Secretary shall not exceed $1,045,000,000 in fiscal

2 years 1994 through 1998.

3 ‘‘(b) AVAILABILITY.—Funds made available under sub4 section (a) shall remain available until expended.

5 ‘‘(c) BUDGET JUSTIFICATION.—The Secretary shall in6 clude in the Department of Education’s annual budget jus7 tification to Congress a detailed description of the specific

8 activities for which the funds made available by this section

9 have been used in the prior and current years (if applica10 ble), the activities and costs planned for the budget year,

11 and the projection of activities and costs for each remaining

12 year for which administrative expenses under this section

13 are made available.

14 ‘‘(d) NOTIFICATION.—In the event the Secretary finds

15 it necessary to use the authority provided to the Secretary

16 under subsection (a) to draw funds for administrative ex17 penses from a future year’s funds, the Secretary shall imme18 diately notify the Committees on Appropriations of the Sen19 ate and of the House of Representatives, and the Labor and

20 Human Resources Committee of the Senate and the Edu21 cation and Labor Committee of the House of Representa22 tives, of such action and explain the reasons for such action.
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1 ‘‘SEC. 460A. NATIONAL STUDENT LOAN REFORM COMMIS2 SION.

3 ‘‘(a) ESTABLISHMENT.—There is hereby established a

4 bipartisan commission to be known as the National Student

5 Loan Reform Commission (hereafter in this section referred

6 to as the ‘Commission’).

7 ‘‘(b) MEMBERSHIP.—

8 ‘‘(1) IN GENERAL.—The Commission shall be

9 composed of 15 members appointed by the President

10 with the advice and consent of the Senate who are

11 representative of a broad combination of types of in12 stitutions of higher education, of whom at least 8

13 members shall be financial aid administrators.

14 ‘‘(2) PERIOD OF APPOINTMENT; VACANCIES.—

15 Members shall be appointed for the life of the Com16 mission. Any vacancy in the Commission shall not af17 fect its powers, but shall be filled in the same manner

18 as the original appointment.

19 ‘‘(3) INITIAL MEETING.—Not later than 30 days

20 after the date on which all members of the Commis21 sion have been appointed, the Commission shall hold

22 its first meeting.

23 ‘‘(4) MEETINGS.—The Commission shall meet at

24 the call of the Chairman.
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1 ‘‘(5) QUORUM.—A majority of the members of

2 the Commission shall constitute a quorum, but a less3 er number of members may hold hearings.

4 ‘‘(6) CHAIRMAN AND VICE CHAIRMAN.—The Com5 mission shall select a Chairman and Vice Chairman

6 from among its members.

7 ‘‘(c) DUTIES.—The Commission shall—

8 ‘‘(1) advise the President and the Congress on

9 the operation of the Federal Direct Student Loan Pro10 gram and the Federal Family Education Loan Pro11 gram;

12 ‘‘(2) evaluate and report to the Congress regard13 ing such programs on not less than an annual basis;

14 and

15 ‘‘(3) not later than January 1, 1997, report to

16 the President and the Congress with final rec17 ommendations on the advisability of replacing the

18 Federal Family Education Loan Program with direct

19 lending.

20 ‘‘(d) POWERS OF THE COMMISSION.—

21 ‘‘(1) HEARINGS.—The Commission may hold

22 such hearings, sit and act at such times and places,

23 take such testimony, and receive such evidence as the

24 Commission considers advisable to carry out the pur25 poses of this section.
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1 ‘‘(2) INFORMATION FROM FEDERAL AGENCIES.—

2 The Commission may secure directly from any Fed3 eral department or agency such information as the

4 Commission considers necessary to carry out the pro5 visions of this section. Upon request of the Chairman

6 of the Commission, the head of such department or

7 agency shall furnish such information to the Commis8 sion.

9 ‘‘(3) POSTAL SERVICES.—The Commission may

10 use the United States mails in the same manner and

11 under the same conditions as other departments and

12 agencies of the Federal Government.

13 ‘‘(4) GIFTS.—The Commission may accept, use,

14 and dispose of gifts or donations of services or prop15 erty.

16 ‘‘(e) COMMISSION PERSONNEL MATTERS.—

17 ‘‘(1) COMPENSATION OF MEMBERS.—Each mem18 ber of the Commission who is not an officer or em19 ployee of the Federal Government shall be com20 pensated at a rate equal to the daily equivalent of the

21 annual rate of basic pay prescribed for level IV of the

22 Executive Schedule under section 5315 of title 5,

23 United States Code, for each day (including travel

24 time) during which such member is engaged in the

25 performance of the duties of the Commission. All
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1 members of the Commission who are officers or em2 ployees of the United States shall serve without com3 pensation in addition to that received for their serv4 ices as officers or employees of the United States.

5 ‘‘(2) TRAVEL EXPENSES.—The members of the

6 Commission shall be allowed travel expenses, includ7 ing per diem in lieu of subsistence, at rates author8 ized for employees of agencies under subchapter I of

9 chapter 57 of title 5, United States Code, while away

10 from their homes or regular places of business in the

11 performance of services for the Commission.

12 ‘‘(3) STAFF.—

13 ‘‘(A) IN GENERAL.—The Chairman of the

14 Commission may, without regard to the civil

15 service laws and regulations, appoint and termi16 nate an executive director and such other addi17 tional personnel as may be necessary to enable

18 the Commission to perform its duties. The em19 ployment of an executive director shall be subject

20 to confirmation by the Commission.

21 ‘‘(B) COMPENSATION.—The Chairman of

22 the Commission may fix the compensation of the

23 executive director and other personnel without

24 regard to the provisions of chapter 51 and sub25 chapter III of chapter 53 of title 5, United States
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1 Code, relating to classification of positions and

2 General Schedule pay rates, except that the rate

3 of pay for the executive director and other per4 sonnel may not exceed the rate payable for level

5 V of the Executive Schedule under section 5316

6 of such title.

7 ‘‘(4) DETAIL OF GOVERNMENT EMPLOYEES.—

8 Any Federal Government employee may be detailed to

9 the Commission without reimbursement, and such de10 tail shall be without interruption or loss of civil serv11 ice status or privilege.

12 ‘‘(5) PROCUREMENT OF TEMPORARY AND INTER13 MITTENT SERVICES.—The Chairman of the Commis14 sion may procure temporary and intermittent services

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

16 at rates for individuals which do not exceed the daily

17 equivalent of the annual rate of basic pay prescribed

18 for level V of the Executive Schedule under section

19 5316 of such title.

20 ‘‘(6) AUTHORITY TO CONTRACT.—Subject to the

21 Federal Property and Administrative Services Act of

22 1949, the Commission is authorized to enter into con23 tracts with Federal and State agencies, private firms,

24 institutions and individuals for the conduct of activi-
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1 ties necessary to the discharge of its duties and re2 sponsibilities.

3 ‘‘(7) SOURCE OF ADMINISTRATIVE SUPPORT.—

4 Financial and administrative support services (in5 cluding those related to budget and accounting, finan6 cial reporting, payroll, and personnel) shall be pro7 vided to the Commission by the General Services Ad8 ministration (or other organization the Commission

9 determines appropriate) for which payment shall be

10 made in advance or by reimbursement, from funds of

11 the Commission, in such amounts as may be agreed

12 by the Chairman of the Commission and the Admin13 istrator of General Services (or head of another orga14 nization the Commission determines appropriate).

15 ‘‘(f) TERMINATION OF THE COMMISSION.—The Com16 mission shall terminate 18 months after the date on which

17 the Commission submits its report under subsection (c)(3).

18 ‘‘(g) FUNDS FOR EXPENSES OF THE COMMISSION.—

19 In each fiscal year beginning with fiscal year 1994, there

20 shall be available to the Secretary from funds not otherwise

21 appropriated, funds to be obligated for the costs of activities

22 assisted under this section, not to exceed $2,000,000 in each

23 of the fiscal years 1994, 1995, 1996, 1997 and 1998.’’.
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1 CHAPTER 2—STUDENT LOAN SAVINGS

2 SEC. 12021. SECRETARY’S EQUITABLE SHARE.

3 Section 428(c)(6)(A)(ii) of the Act (20 U.S.C.

4 1078(c)(6)(A)(ii)) is amended by striking ‘‘30 percent’’ and

5 inserting ‘‘27 percent’’.

6 SEC. 12022. INTEREST RATES.

7 Section 427A of the Higher Education Act of 1965 (20

8 U.S.C. 1077a) is amended—

9 (1) in subsection (c)(4), by adding at the end the

10 following new subparagraph:

11 ‘‘(E) Notwithstanding subparagraphs (A)

12 and (D) for any loan made pursuant to section

13 428B for which the first disbursement is made

14 on or after July 1, 1994—

15 ‘‘(i) subparagraph (B) shall be applied

16 by substituting ‘‘3.1’’ for ‘‘3.25’’; and

17 ‘‘(ii) the interest rate shall not exceed

18 9 percent.’’;

19 (2) by redesignating subsections (f), (g) and (h)

20 as subsections (g), (h) and (j), respectively;

21 (3) by adding after subsection (e) the following

22 new subsection:

23 ‘‘(f) INTEREST RATES FOR NEW LOANS AFTER JULY

24 1, 1994.—
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1 ‘‘(1) IN GENERAL.—Notwithstanding subsections

2 (a), (b), (d) and (e) of this section, with respect to

3 any loan made, insured, or guaranteed under this

4 part (other than a loan made pursuant to sections

5 428B and 428C) for which the first disbursement is

6 made on or after July 1, 1994, the applicable rate of

7 interest shall, during any 12-month period beginning

8 on July 1 and ending on June 30, be determined on

9 the preceding June 1 and be equal to—

10 ‘‘(A) the bond equivalent rate of 91-day

11 Treasury bills auctioned at the final auction held

12 prior to such June 1; plus

13 ‘‘(B) 3.10 percent,

14 except that such rate shall not exceed 8.25 percent.

15 ‘‘(2) CONSULTATION.—The Secretary shall deter16 mine the applicable rate of interest under paragraph

17 (1) after consultation with the Secretary of the Treas18 ury and shall publish such rate in the Federal Reg19 ister as soon as practicable after the date of deter20 mination.’’; and

21 (4) by inserting after subsection (h) (as redesig22 nated in paragraph (2)) the following new subsection:

23 ‘‘(i) IN-SCHOOL AND GRACE PERIOD INTEREST

24 RATES.—
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1 ‘‘(1) APPLICABLE RATE.—Notwithstanding any

2 other provision of this section, with respect to any

3 loan for which the first disbursement is made on or

4 after October 1, 1993, the applicable rate of interest

5 for interest which accrues—

6 ‘‘(A) prior to the beginning of the repay7 ment period of the loan; or

8 ‘‘(B) during the period in which principal

9 need not be paid (whether or not such principal

10 is in fact paid) by reason of a provision de11 scribed in section 428(b)(1)(M) or 427(a)(2)(C),

12 shall not exceed the rate determined under paragraph

13 (2).

14 ‘‘(2) METHOD OF CALCULATION.—For purposes

15 of paragraph (1) the rate determined under this para16 graph shall, during any 12-month period beginning

17 on July 1 and ending on June 30, be determined on

18 the preceding June 1 and be equal to—

19 ‘‘(A) the bond equivalent rate of 91-day

20 Treasury bills auctioned at the final auction

21 prior to such June 1; plus

22 ‘‘(B) 2.5 percent,

23 except that such rate shall not exceed 8.25 percent.’’.
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1 SEC. 12023. LENDER AND STUDENT LOAN FEES.

2 Section 438 of the Act (20 U.S.C. 1087–1) is amend3 ed—

4 (1) in the heading of subsection (c) by inserting

5 ‘‘FROM STUDENTS’’ after ‘‘ORIGINATION FEES’’;

6 (2) in subsection (c)—

7 (A) in paragraph (2)—

8 (i) by striking ‘‘428B,’’;

9 (ii) by inserting ‘‘, and part D’’ after

10 ‘‘439(o)’’; and

11 (iii) by striking ‘‘5 percent’’ and in12 serting ‘‘3.0 percent’’;

13 (B) in paragraph (6), by striking ‘‘5 per14 cent’’ and inserting ‘‘3.0 percent’’;

15 (3) by redesignating subsections (d) and (e) as

16 subsections (e) and (f), respectively; and

17 (4) by inserting after subsection (c) the following

18 new subsection:

19 ‘‘(d) LOAN FEES FROM LENDERS.—

20 ‘‘(1) DEDUCTION FROM INTEREST AND SPECIAL

21 ALLOWANCE SUBSIDIES.—Notwithstanding subsection

22 (b), the total amount of interest and special allowance

23 payable under section 428(a)(3)(A) and subsection (b)

24 of this section, respectively, to any holder shall be re25 duced by the Secretary by a loan fee in an amount

26 determined in accordance with paragraph (2) of this
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1 subsection. If the total amount of interest and special

2 allowance payable under section 428(a)(3)(A) and

3 subsection (b) of this section, respectively, is less than

4 the amount of such loan fee, then the Secretary shall

5 deduct such excess amount from subsequent quarters’

6 payments until the total amount has been deducted.

7 ‘‘(2) AMOUNT OF LOAN FEES.—With respect to

8 any loan under this part (other than loans made

9 under sections 428B, 428C and 439(o)) for which a

10 note or other written evidence of the loan was sent or

11 delivered to the borrower for signing on or after Octo12 ber 1, 1993, the amount of the loan fee which shall

13 be deducted under paragraph (1) shall be equal to .50

14 percent of the principal amount of the loan.

15 ‘‘(3) PLUS, CONSOLIDATION, SLMA LOANS.—

16 With respect to any loans made under section 428B,

17 428C, and 439 on or after October 1, 1993, each eligi18 ble lender under this part shall pay to the Secretary

19 a loan fee of .50 percent of the principal amount of

20 the loan.

21 ‘‘(4) DISTRIBUTION OF LOAN FEES.—The Sec22 retary shall deposit all fees collected pursuant to

23 paragraph (3) into the insurance fund established in

24 section 431.’’.
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1 SEC. 12024. OFFSET FEE.

2 Subsection (h) of section 439 of the Act (20 U.S.C.

3 1087–2(h)) is amended by adding at the end the following

4 new paragraph:

5 ‘‘(6) OFFSET FEE.—(A) The Association shall

6 pay to the Secretary, on a monthly basis, an offset fee

7 calculated on an annual basis in an amount equal to

8 0.30 percent of the principal amount of each loan

9 made, insured or guaranteed under this part which

10 the Association holds on or after the date of enactment

11 of this paragraph.

12 ‘‘(B) The Secretary shall deposit all fees collected

13 pursuant to subparagraph (A) into the insurance

14 fund established in section 431.’’.

15 SEC. 12025. ELIMINATION OF TAX EXEMPT FLOOR.

16 Section 438(b)(2)(B) of the Act (20 U.S.C. 1087–

17 1(b)(2)(B)) is amended by adding at the end the following

18 new clause:

19 ‘‘(iv) Notwithstanding clauses (i) and (ii), the

20 quarterly rate of the special allowance for holders of

21 loans which are financed with funds obtained by the

22 holder from the issuance of obligations originally is23 sued on or after October 1, 1993, the income from

24 which is excluded from gross income under the Inter25 nal Revenue Code of 1986, shall be 85 percent of the

26 quarterly rate of the special allowance established
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1 under subparagraph (A). Such rate shall also apply

2 to holders of loans which were made or purchased

3 with funds obtained by the holder from collections or

4 default reimbursements on, or interests or other in5 come pertaining to, eligible loans made or purchased

6 with funds described in the preceding sentence of this

7 subparagraph or from income on the investment of

8 such funds.’’.

9 SEC. 12026. REDUCTION IN INTEREST RATE FOR CONSOLI10 DATION LOANS; REBATE FEE.

11 (a) AMENDMENT.—Section 428C of the Act (20 U.S.C.

12 1078–3) is amended—

13 (1) in paragraph (1) of subsection (c)—

14 (A) in subparagraph (A), by striking ‘‘or

15 (C)’’;

16 (B) by amending subparagraph (B) to read

17 as follows:

18 ‘‘(B) A consolidation loan made on or after

19 October 1, 1993, shall bear interest on the un20 paid principal balance of the loan, during any

21 12-month period beginning on July 1 and end22 ing on June 30, determined on the preceding

23 June 1, which interest shall be equal to—
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1 ‘‘(i) the bond equivalent rate of 91-day

2 Treasury bills auctioned at the final auc3 tion held prior to such June 1; plus

4 ‘‘(ii) 3.10 percent,

5 except that such rate shall not exceed 9 percent.’’;

6 and

7 (C) by striking subparagraph (C); and

8 (2) by adding at the end the following new sub9 section:

10 ‘‘(f) INTEREST PAYMENT REBATE FEE.—

11 ‘‘(1) IN GENERAL.—Each holder of a consolida12 tion loan under this section shall pay to the Sec13 retary, on a monthly basis and in such manner as the

14 Secretary shall prescribe, a rebate fee calculated on an

15 annual basis equal to 0.70 percent of the principal

16 plus accrued unpaid interest on such loan.

17 ‘‘(2) DEPOSIT.—The Secretary shall deposit all

18 fees collected pursuant to subsection (a) into the in19 surance fund established in section 431.’’.

20 (b) ENFORCEMENT.—Subsection (d) of section 435 of

21 the Act (20 U.S.C. 1085(d)) is amended—

22 (1) in the matter preceding subparagraph (A) of

23 paragraph (1), by striking ‘‘(5)’’ and inserting ‘‘(6)’’;

24 and
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1 (2) by adding at the end the following new para2 graph:

3 ‘‘(6) REBATE FEE REQUIREMENT.—To be an eli4 gible lender under this part, an eligible lender shall

5 pay rebate fees in accordance with section 428C(f).’’.

6 SEC. 12027. INSURANCE PREMIUM.

7 (a) INSURANCE PREMIUM.—Section 428(b)(1)(H) of

8 the Act (20 U.S.C. 1078(b)(1)(H)) is amended by striking

9 ‘‘3 percent’’ and inserting ‘‘1 percent’’.

10 (b) REINSURANCE FEES.—Section 428(c) of the Act is

11 amended—

12 (1) by striking paragraph (9); and

13 (2) by redesignating paragraph (10) as para14 graph (9).

15 (c) EFFECTIVE DATE.—The amendments made by this

16 section shall be effective on July 1, 1994.

17 SEC. 12028. LOAN TRANSFER FEE.

18 Section 428(b)(2) of the Act (20 U.S.C. 1078(b)(2)) is

19 amended—

20 (1) by striking ‘‘and’’ at the end of subpara21 graph (E);

22 (2) by striking the period at the end of subpara23 graph (F) and inserting ‘‘; and’’; and

24 (3) by adding at the end thereof the following

25 new subparagraph:
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1 ‘‘(G) provide that, if a lender or holder, on

2 or after October 1, 1993, sells, transfers, or as3 signs a loan under this part, then the transferee

4 shall pay to the Secretary a transfer fee in an

5 amount equal to 0.25 percent the principal and

6 accrued unpaid interest of the loan, which trans7 fer fee shall be deposited into the insurance fund

8 established in section 431, except that the provi9 sions of this subparagraph shall not apply to

10 any such sale, transfer or assignment by a lender

11 or holder to such lender’s or holder’s affiliate or

12 pursuant to—

13 ‘‘(i) a merger or other consolidation

14 transaction; or

15 ‘‘(ii) a sale or other transfer of all or

16 any substantial portion of such lender’s or

17 holder’s business or student lending busi18 ness.’’.

19 SEC. 12029. RISK SHARING.

20 (a) GUARANTY AGENCY REINSURANCE PERCENT21 AGE.—Section 428(c)(1) of the Act (20 U.S.C. 1078(c)(1))

22 is amended—

23 (1) in subparagraph (A), by striking ‘‘100 per24 cent’’ and inserting ‘‘98 percent’’;
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1 (2) in subparagraph (B)(i), by striking ‘‘90 per2 cent’’ and inserting ‘‘88 percent’’;

3 (3) in subparagraph (B)(ii), by striking ‘‘80 per4 cent’’ and inserting ‘‘78 percent’’; and

5 (4) by adding at the end the following new sub6 paragraphs:

7 ‘‘(E) Notwithstanding any other provisions

8 of this section, in the case of a loan made pursu9 ant to a lender of last resort program, the Sec10 retary shall apply the provisions of—

11 ‘‘(i) the fourth sentence of subpara12 graph (A) by substituting ‘100 percent’ for

13 ‘98 percent’;

14 ‘‘(ii) subparagraph (B)(i) by substitut15 ing ‘100 percent’ for ‘88 percent’; and

16 ‘‘(iii) subparagraph (B)(ii) by sub17 stituting ‘100 percent’ for ‘78 percent’.

18 ‘‘(F) Notwithstanding any other provisions

19 of this section, in the case of an outstanding loan

20 transferred to a guaranty agency from another

21 guaranty agency pursuant to a plan approved

22 by the Secretary in response to the insolvency of

23 the latter such guarantee agency, the Secretary

24 shall apply the provision of—
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1 ‘‘(i) the fourth sentence of subpara2 graph (A) by substituting ‘100 percent’ for

3 ‘98 percent’;

4 ‘‘(ii) subparagraph (B)(i) by substitut5 ing ‘90 percent’ for ‘88 percent’; and

6 ‘‘(iii) subparagraph (B)(ii) by sub7 stituting ‘80 percent’ for ‘78 percent’.’’.

8 (b) RISK SHARING BY THE STUDENT LOAN MARKET9 ING ASSOCIATION.—Section 428(b)(1)(G) of the Act (20

10 U.S.C. 1078(b)(1)(G)) is amended by inserting before the

11 semicolon at the end thereof the following: ‘‘, except that

12 for loans held by the Student Loan Marketing Association

13 (other than loans made with advances to guaranty agencies

14 pursuant to section 439(p)) such percentage shall be 95 per15 cent’’.

16 (c) EFFECTIVE DATE.—The amendments made by this

17 section shall apply to any loan made on or after October

18 1, 1993.

19 SEC. 12030. PLUS LOAN AMOUNTS AND DISBURSEMENTS.

20 (a) LOAN AMOUNTS.—

21 (1) AMENDMENT.—Section 428B(b) of the Act

22 (20 U.S.C. 1078–2(b)) is amended to read as follows:

23 ‘‘(b) LIMITATIONS ON AMOUNTS OF LOANS.—

24 ‘‘(1) ANNUAL LIMIT.—Subject to paragraph (2),

25 the maximum amount parents may borrow for one
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1 student in any academic year or its equivalent (as

2 defined by regulation of the Secretary) is $10,000.

3 ‘‘(2) LIMITATION BASED ON NEED.—Any loan

4 under this section may be counted as part of the ex5 pected family contribution in the determination of

6 need under this title, but no loan may be made to any

7 parent under this section for any academic year in

8 excess of (A) the student’s estimated cost of attend9 ance, minus (B) other financial aid as certified by the

10 eligible institution under section 428(a)(2)(A). The

11 annual insurable limit on account of any student

12 shall not be deemed to be exceeded by a line of credit

13 under which actual payments to the borrower will not

14 be made in any year in excess of the annual limit.’’.

15 (2) EFFECTIVE DATE.—The amendment made by

16 paragraph (1) shall be effective for loans made on or

17 after July 1, 1994.

18 (b) MULTIPLE DISBURSEMENT REQUIRED.—

19 (1) AMENDMENT.—The matter preceding para20 graph (1) of section 428B(c) of the Act (20 U.S.C.

21 1078–2(c)) is amended by inserting ‘‘shall be dis22 bursed in accordance with the requirements of section

23 428G and’’ after ‘‘under this section’’.
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1 (2) CONFORMING AMENDMENTS.—Section

2 428G(e) of the Act (20 U.S.C. 1078–7(e) is amend3 ed—

4 (A) by striking ‘‘PLUS, CONSOLIDATION,’’

5 and inserting ‘‘CONSOLIDATION’’; and

6 (B) by striking ‘‘section 428B or 428C’’ and

7 inserting ‘‘section 428C’’.

8 CHAPTER 3—CONFORMING AMENDMENTS

9 Subchapter A—Conforming Amendments to

10 the Higher Education Act of 1965

11 SEC. 12041. PRESERVING LOAN ACCESS.

12 (a) PURPOSE.—It is the purpose of the amendments

13 made by this section to provide the Secretary with flexible

14 authority as needed to preserve access to student and parent

15 loans under part B of title IV of the Act during the transi16 tion from the Federal Family Education Loan Program

17 under such part to the Federal Direct Student Loan Pro18 gram under part D of such title.

19 (b) ADVANCES TO GUARANTY AGENCIES FOR LENDER20 OF-LAST-RESORT SERVICES.—

21 (1) AMENDMENT.—Section 428(j) of the Act (20

22 U.S.C. 1078(j)) is amended by adding at the end the

23 following new paragraph:

24 ‘‘(4) ADVANCES TO GUARANTY AGENCIES FOR LENDER25 OF-LAST-RESORT SERVICES DURING TRANSITION TO DIRECT
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1 LENDING.—(A) In order to ensure the availability of loan

2 capital during the transition from the Federal Family Edu3 cation Loan Program under this part to the Federal Direct

4 Student Loan Program under part D of this title, the Sec5 retary is authorized to provide a guaranty agency with ad6 ditional advance funds in accordance with section

7 422(c)(7), with such restrictions on the use of such funds

8 as are determined appropriate by the Secretary, in order

9 to ensure that the guaranty agency will make loans as the

10 lender-of-last-resort. Such agency shall make such loans in

11 accordance with this subsection and the requirements of the

12 Secretary.

13 ‘‘(B) Notwithstanding any other provision in this

14 part, a guaranty agency serving as a lender-of-last-resort

15 under this paragraph shall be paid a fee, established by the

16 Secretary, for making such loans in lieu of interest and spe17 cial allowance subsidies, and shall be required to assign

18 such loans to the Secretary on demand. Upon such assign19 ment, the portion of the advance represented by the loans

20 assigned shall be considered repaid by such guaranty agen21 cy.’’.

22 (2) CONFORMING AMENDMENT.—Section

23 422(c)(7) of the Act (20 U.S.C. 1072(c)(7)) is amend24 ed by striking all beginning with ‘‘to a guaranty
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1 agency’’ through the period and inserting ‘‘to a guar2 anty agency—

3 ‘‘(A) in accordance with section 428(j), in order

4 to ensure that the guaranty agency shall make loans

5 as the lender-of-last-resort during the transition from

6 the Federal Family Education Loan Program under

7 this part to the Federal Direct Student Loan Pro8 gram under part D of this title; or

9 ‘‘(B) if the Secretary is seeking to terminate the

10 guaranty agency’s agreement, or assuming the guar11 anty agency’s functions, in accordance with section

12 428(c)(10)(F)(v), in order to assist the agency in

13 meeting its immediate cash needs, ensure the uninter14 rupted payment of claims, or ensure that the guar15 anty agency shall make loans as described in sub16 paragraph (A);’’.

17 (c) LENDER REFERRAL SERVICES.—Section 428(e) of

18 the Act (20 U.S.C. 1078(e)) is amended—

19 (1) in paragraph (1)—

20 (A) by amending the paragraph heading to

21 read as follows: ‘‘IN GENERAL; AGREEMENTS

22 WITH GUARANTY AGENCIES.—’’;

23 (B) by inserting the subparagraph designa24 tion ‘‘(A)’’ immediately before ‘‘The Secretary’’;
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1 (C) by striking ‘‘in any State’’ and insert2 ing ‘‘with which the Secretary has an agreement

3 under subparagraph (B)’’; and

4 (D) by adding at the end the following new

5 subparagraph:

6 ‘‘(B)(i) The Secretary may enter into agree7 ments with guaranty agencies that meet stand8 ards established by the Secretary to provide lend9 er referral services in geographic areas specified

10 by the Secretary. Such guaranty agencies shall

11 be paid in accordance with paragraph (3) for

12 such services.

13 ‘‘(ii) The Secretary shall publish in the

14 Federal Register whatever standards, criteria,

15 and procedures, consistent with the provisions of

16 this part and part D of this title, the Secretary

17 determines are reasonable and necessary to pro18 vide lender referral services under this subsection

19 and ensure loan access to student and parent

20 borrowers during the transition from the loan

21 programs under this part to the direct student

22 loan programs under part D of this title. Section

23 431 of the General Education Provisions Act

24 shall not apply to the publication of such stand25 ards, criteria, and procedures.’’;
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1 (2) in paragraph (2)—

2 (A) in the matter preceding subparagraph

3 (A), by striking ‘‘in a State’’ and inserting

4 ‘‘with which the Secretary has an agreement

5 under paragraph (1)(B)’’;

6 (B) by amending subparagraph (A) to read

7 as follows:

8 ‘‘(A)(i) such student is either a resident of,

9 or is accepted for enrollment in, or is attending,

10 an eligible institution located in a geographic

11 area for which the Secretary (I) determines that

12 loans are not available to all eligible students,

13 and (II) has entered into an agreement with a

14 guaranty agency under paragraph (1)(B) to pro15 vide lender referral services; and’’;

16 (3) in paragraph (3), by striking ‘‘The’’ and in17 serting ‘‘From funds available for costs of transition

18 under section 460 of the Act, the’’; and

19 (4) by striking paragraph (5).

20 (d) STUDENT LOAN MARKETING ASSOCIATION.—Sec21 tion 439(q) of the Act (20 U.S.C. 1087–2(q)) is amended—

22 (1) in paragraph (1)(A)—

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

24 Association or its designated agent may begin

25 making loans’’ and inserting ‘‘the Association or
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1 its designated agent shall, not later than July 1,

2 1994, begin making loans to such eligible bor3 rowers’’; and

4 (B) by striking the second sentence;

5 (2) in paragraph (2)(A), by striking ‘‘the Asso6 ciation or its designated agent may’’ and inserting

7 ‘‘the Association or its designated agent shall, not

8 later than July 1, 1994,’’; and

9 (3) in paragraph (3), by striking all beginning

10 with ‘‘that—’’ through the period at the end of sub11 paragraph (B) and inserting ‘‘that the conditions

12 that caused the implementation of this subsection

13 have ceased to exist.’’.

14 SEC. 12042. GUARANTY AGENCY RESERVES.

15 Section 422 of the Act (20 U.S.C. 1072) is amended

16 by adding at the end the following new subsection:

17 ‘‘(g) PRESERVATION OF GUARANTY AGENCY RE18 SERVES.—

19 ‘‘(1) AUTHORITY TO RECOVER FUNDS.—Notwith20 standing any other provision of law, the reserve funds

21 of the guaranty agencies, and any assets purchased

22 with such reserve funds, regardless of who holds or

23 controls the reserves or assets, shall be considered to

24 be the property of the United States to be used in the

25 operation of the program authorized by this part or
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1 the program authorized by part D of this title. How2 ever, the Secretary may not require the return of all

3 reserve funds of a guaranty agency to the Secretary

4 unless the Secretary determines that such return is in

5 the best interest of the operation of the program au6 thorized by this part or the program authorized by

7 part D of this title, or to ensure the proper mainte8 nance of such agency’s funds or assets or the orderly

9 termination of the guaranty agency’s operations and

10 the liquidation of its assets. The reserves shall be

11 maintained by each guaranty agency to pay program

12 expenses and contingent liabilities, as authorized by

13 the Secretary, except that the Secretary may—

14 ‘‘(A) direct a guaranty agency to return to

15 the Secretary a portion of its reserve fund which

16 the Secretary determines is unnecessary to pay

17 the program expenses and contingent liabilities

18 of the guaranty agency;

19 ‘‘(B) direct the guaranty agency to require

20 the return, to the guaranty agency or to the Sec21 retary, of any reserve funds or assets held by, or

22 under the control of, any other entity, which the

23 Secretary determines are necessary to pay the

24 program expenses and contingent liabilities of

25 the guaranty agency, or which are required for
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1 the orderly termination of the guaranty agency’s

2 operations and the liquidation of its assets; and

3 ‘‘(C) direct a guaranty agency, or such

4 agency’s officers or directors, to cease any activi5 ties involving expenditure, use or transfer of the

6 guaranty agency’s reserve funds or assets which

7 the Secretary determines is a misapplication,

8 misuse, or improper expenditure of such funds or

9 assets.

10 ‘‘(2) TERMINATION PROVISIONS IN CONTRACTS.—

11 (A) To ensure that the funds and assets of the guar12 anty agency are preserved, any contract with respect

13 to the administration of a guaranty agency’s reserve

14 funds, or the administration of any assets purchased

15 or acquired with the reserve funds of the guaranty

16 agency, that is entered into or extended by the guar17 anty agency, or any other party on behalf of or with

18 the concurrence of the guaranty agency, after the date

19 of enactment of this subsection shall provide that the

20 contract is terminable by the Secretary upon 30 days

21 notice to the contracting parties if the Secretary de22 termines that such contract includes an impermissible

23 transfer of the reserve funds or assets, or is otherwise

24 inconsistent with the terms or purposes of this section.
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1 ‘‘(B) The Secretary may direct a guaranty agen2 cy to suspend or cease activities under any contract

3 entered into by or on behalf of such agency after Jan4 uary 1, 1993, if the Secretary determines that the

5 misuse or improper expenditure of such guaranty

6 agency’s funds or assets or such contract provides un7 necessary or improper benefits to such agency’s offi8 cers or directors.

9 ‘‘(3) PENALTIES.—Violation of any direction is10 sued by the Secretary under this subsection may be

11 subject to the penalties described in section 490 of this

12 Act.’’.

13 SEC. 12043. TERMS OF LOANS.

14 (a) AMENDMENT.—Section 428 of the Act (20 U.S.C.

15 1078) is amended—

16 (1) in subsection (b)(1)(D), by striking ‘‘be sub17 ject to’’ through the semicolon and inserting ‘‘be sub18 ject to income contingent repayment in accordance

19 with subsection (m);’’; and

20 (2) in subsection (m)—

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

22 follows:

23 ‘‘(1) AUTHORITY OF SECRETARY TO REQUIRE.—

24 The Secretary may require any borrower who has de25 faulted on a loan made under this part that is as-
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1 signed to the Secretary under subsection (c)(8) to

2 repay that loan under an income contingent repay3 ment plan, the terms and conditions of which shall be

4 established by the Secretary and the same as, or simi5 lar to, an income contingent repayment plan estab6 lished for purposes of part D of this title.’’; and

7 (B) by striking paragraphs (2), (3), and (4)

8 and inserting the following new paragraph:

9 ‘‘(2) LOANS FOR WHICH INCOME CONTINGENT

10 REPAYMENT MAY BE REQUIRED.—A loan made under

11 this part may be required to be repaid under this sub12 section if the note or other evidence of the loan has

13 been assigned to the Secretary pursuant to subsection

14 (c)(8).’’.

15 (b) EFFECTIVE DATE.—The amendments made by this

16 section shall be effective for loans made in accordance with

17 section 428 for periods of instruction beginning on or after

18 July 1, 1993, or made on or after July 1, 1993, in the case

19 of loans made in accordance with section 428B or 428C

20 of the Act.

21 SEC. 12044. ASSIGNMENT OF LOANS.

22 Section 428(c)(8) of the Act (20 U.S.C. 1078(c)(8)) is

23 amended—

24 (1) in the first sentence, by inserting the sub25 paragraph designation ‘‘(A)’’ before ‘‘If the’’;
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1 (2) by striking the second and third sentences;

2 and

3 (3) by adding at the end the following new sub4 paragraph:

5 ‘‘(B) An orderly transition from the Federal

6 Family Education Loan Program under this

7 part to the Federal Direct Student Loan Pro8 gram under part D of this title shall be deemed

9 to be in the Federal fiscal interest, and a guar10 anty agency shall promptly assign loans to the

11 Secretary under this paragraph upon the Sec12 retary’s request.’’.

13 SEC. 12045. TERMINATION OF GUARANTY AGENCY AGREE14 MENTS; ASSUMPTION OF GUARANTY AGENCY

15 FUNCTIONS BY THE SECRETARY.

16 Section 428(c)(9) of the Act (as redesignated by section

17 12027(b)(2)) (20 U.S.C. 1078(c)(10)) is amended—

18 (1) in subparagraph (C), by inserting ‘‘, as ap19 propriate,’’ after ‘‘the Secretary shall require’’;

20 (2) in subparagraph (D)—

21 (A) by inserting the clause designation ‘‘(i)’’

22 before ‘‘Each’’;

23 (B) by striking ‘‘Each’’ and inserting ‘‘If

24 the Secretary is not seeking to terminate the

25 guaranty agency’s agreement under subpara-
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1 graph (E), or assuming the guaranty agency’s

2 functions under subparagraph (F), a’’;

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

4 clause:

5 ‘‘(ii) If the Secretary is seeking to ter6 minate the guaranty agency’s agreement

7 under subparagraph (E), or assuming the

8 guaranty agency’s functions under subpara9 graph (F), a management plan described in

10 subparagraph (C) shall include the means

11 by which the Secretary and the guaranty

12 agency shall work together to ensure the or13 derly termination of the operations, and liq14 uidation of the assets, of the guaranty agen15 cy.’’;

16 (3) in subparagraph (E)—

17 (A) in clause (ii), by striking ‘‘or’’ after the

18 semicolon;

19 (B) in clause (iii), by striking the period

20 and inserting a semicolon; and

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

22 clauses:

23 ‘‘(iv) the Secretary determines that

24 such action is necessary to protect the Fed25 eral fiscal interest;
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1 ‘‘(v) the Secretary determines that such

2 action is necessary to ensure the continued

3 availability of loans to student or parent

4 borrowers; or

5 ‘‘(vi) the Secretary determines that

6 such action is necessary to ensure an or7 derly transition from the loan programs

8 under this part to the direct student loan

9 programs under part D of this title.’’;

10 (4) in subparagraph (F)—

11 (A) in the matter preceding clause (i), by

12 striking ‘‘Except as provided in subparagraph

13 (G), if’’ and inserting ‘‘If’’;

14 (B) by amending clause (v) to read as fol15 lows:

16 ‘‘(v) provide the guaranty agency with

17 additional advance funds in accordance

18 with section 422(c)(7), with such restric19 tions on the use of such funds as is deter20 mined appropriate by the Secretary, in

21 order to—

22 ‘‘(I) meet the immediate cash

23 needs of the guaranty agency;

24 ‘‘(II) ensure the uninterrupted

25 payment of claims; or
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1 ‘‘(III) ensure that the guaranty

2 agency will make loans as the lender3 of-last-resort, in accordance with sub4 section (j)(4);’’;

5 (C) in clause (vi)—

6 (i) by striking ‘‘and to avoid’’ and in7 serting ‘‘, to avoid’’;

8 (ii) by striking the period and insert9 ing a comma and ‘‘and to ensure an orderly

10 transition from the loan programs under

11 this part to the direct student loan pro12 grams under part D of this title.’’; and

13 (iii) by redesignating such clause as

14 clause (vii); and

15 (D) by inserting after clause (v) the follow16 ing new clause:

17 ‘‘(vi) use all funds and assets of the

18 guaranty agency to assist in the activities

19 undertaken in accordance with this sub20 paragraph and take appropriate action to

21 require the return, to the guaranty agency

22 or the Secretary, of any funds or assets pro23 vided by the guaranty agency, under con24 tract or otherwise, to any person or organi25 zation; or’’;
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1 (5) by striking subparagraph (G);

2 (6) by redesignating subparagraphs (H), (I), and

3 (J) as subparagraphs (I), (J), and (K), respectively;

4 (7) by inserting after subparagraph (F) the fol5 lowing new subparagraphs:

6 ‘‘(G) Notwithstanding any other provision

7 of law, if the Secretary has terminated or is seek8 ing to terminate a guaranty agency’s agreement

9 under subparagraph (E), or has assumed a guar10 anty agency’s functions under subparagraph

11 (F)—

12 ‘‘(i) such guaranty agency may not file

13 for bankruptcy;

14 ‘‘(ii) no State court may issue any

15 order affecting the Secretary’s actions with

16 respect to such guaranty agency;

17 ‘‘(iii) any contract with respect to the

18 administration of a guaranty agency’s re19 serve funds, or the administration of any

20 assets purchased or acquired with the re21 serve funds of the guaranty agency, that is

22 entered into or extended by the guaranty

23 agency, or any other party on behalf of or

24 with the concurrence of the guaranty agen25 cy, after the date of enactment of this sub-
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1 paragraph shall provide that the contract is

2 terminable by the Secretary upon 30 days

3 notice to the contracting parties if the Sec4 retary determines that such contract in5 cludes an impermissible transfer of the re6 serve funds or assets, or is otherwise incon7 sistent with the terms or purposes of this

8 section; and

9 ‘‘(iv) no provision of State law shall

10 apply to the actions of the Secretary in ter11 minating the operations of a guaranty

12 agency;

13 ‘‘(H) Notwithstanding any other provision

14 of law, the Secretary’s liability for any outstand15 ing liabilities of a guaranty agency (other than

16 outstanding student loan guarantees under this

17 part), the functions of which the Secretary has

18 assumed, shall not exceed the fair market value

19 of the reserves of the guaranty agency, minus

20 any necessary liquidation or other administra21 tive costs.’’; and

22 (8) in subparagraph (K) (as redesignated by

23 paragraph (5)), by striking all beginning with ‘‘sys24 tem, together’’ through the period and inserting ‘‘sys25 tem and the progress of the transition from the loan
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1 programs under this part to the direct student loan

2 programs under part D of this title.’’.

3 SEC. 12046. CONSOLIDATION LOANS.

4 (a) AMENDMENT.—Section 428C of the Act (20 U.S.C.

5 1078–3) is amended—

6 (1) in subsection (a)(3)(A), by striking all begin7 ning with ‘‘(A)’’ through the period at the end of

8 clause (ii) and inserting ‘‘(A) For the purpose of this

9 section, the term ‘eligible borrower’ means a borrower

10 who, at the time of application for a consolidation

11 loan is in repayment status, or in a grace period pre12 ceding repayment, or is a delinquent or defaulted bor13 rower who will reenter repayment through loan con14 solidation.’’;

15 (2) in subsection (b)—

16 (A) in paragraph (1)—

17 (i) in subparagraph (A)(ii), by insert18 ing ‘‘with income-sensitive repayment

19 terms’’ after ‘‘obtain a consolidation loan’’;

20 (ii) by redesignating subparagraph (E)

21 as subparagraph (F); and

22 (iii) by inserting after subparagraph

23 (D) the following new subparagraph:

24 ‘‘(E) that the lender shall offer an income25 sensitive repayment schedule, established by the
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1 lender in accordance with the regulations pro2 mulgated by the Secretary, to the borrower of

3 any consolidation loan made by the lender on or

4 after July 1, 1994; and’’;

5 (B) in paragraph (4), by amending sub6 paragraph (C) to read as follows:

7 ‘‘(C)(i) provides that periodic installments

8 of principal need not be paid, but interest shall

9 accrue and be paid in accordance with clause

10 (ii), during any period for which the borrower

11 would be eligible for a deferral under section

12 428(b)(1)(M), and that any such period shall not

13 be included in determining the repayment sched14 ule pursuant to subsection (c)(2) of this section;

15 and

16 ‘‘(ii) provides that interest shall accrue and

17 be paid—

18 ‘‘(I) by the Secretary, in the case of a

19 consolidation loan that consolidated only

20 Federal Stafford Loans for which the stu21 dent borrower received an interest subsidy

22 under section 428: or

23 ‘‘(II) by the borrower, or capitalized,

24 in the case of a consolidation loan other
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1 than a loan described in subclause (I);’’;

2 and

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

4 paragraph:

5 ‘‘(5) DIRECT LOANS.—In the event that a bor6 rower is unable to obtain a consolidation loan from

7 a lender with an agreement under subsection (a)(1),

8 the Secretary shall offer any such borrower who ap9 plies for it, a direct consolidation loan to be repaid

10 pursuant to income contingent repayment under part

11 D of this title or pursuant to any other repayment

12 provision under this section, except that the Secretary

13 shall not offer such loans if, in the Secretary’s judg14 ment, the Department of Education does not have the

15 necessary origination and servicing arrangements in

16 place for such loans.’’; and

17 (3) in subsection (c)—

18 (A) in paragraph (2)—

19 (i) in subparagraph (A)—

20 (I) in the matter preceding clause

21 (i), by striking ‘‘income sensitive re22 payment schedules. Such repayment

23 terms’’ and inserting ‘‘income sensitive

24 repayment schedules, established by the

25 lender in accordance with the regula-
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1 tions of the Secretary. Except as re2 quired by such income sensitive repay3 ment schedules, or by the terms of re4 payment pursuant to income contin5 gent repayment offered by the Sec6 retary under subsection (b)(5), such re7 payment terms’’;

8 (II) by redesignating clauses (i),

9 (ii), (iii), (iv), and (v) as clauses (ii),

10 (iii), (iv), (v), and (vi), respectively;

11 and

12 (III) by inserting before clause

13 (ii) (as redesignated by subclause (II))

14 the following new clause:

15 ‘‘(i) is less than $7,500, then such con16 solidation loan shall be repaid in not more

17 than 10 years;’’;

18 (ii) by striking subparagraph (B); and

19 (iii) by redesignating subparagraph

20 (C) as subparagraph (B); and

21 (B) in paragraph (3)(A), by inserting ‘‘ex22 cept as required by the terms of repayment pur23 suant to income contingent repayment offered by

24 the Secretary under subsection (b)(5),’’ before

25 ‘‘the lender’’.
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1 (b) EFFECTIVE DATE.—The amendments made by this

2 section shall be effective for loans made on or after July

3 1, 1994.

4 SEC. 12047. AUTHORITY TO USE OPTICALLY IMAGED DOCU5 MENTS.

6 (a) GENERAL AUTHORITY.—Section 484A of the Act

7 (20 U.S.C. 1091a) is amended—

8 (1) in the section heading, by inserting ‘‘; OPTI9 CALLY IMAGED DOCUMENTS’’ after ‘‘LIMITA10 TIONS’’; and

11 (2) by adding at the end the following new sub12 section:

13 ‘‘(c) OPTICALLY IMAGED DOCUMENTS.—

14 ‘‘(1) PURPOSE.—It is the purpose of this sub15 section to—

16 ‘‘(A) allow the Secretary to use optical im17 aging technology to store and retrieve documents

18 and records, including promissory notes and re19 payment agreements, required for the adminis20 tration of the programs authorized under part D

21 of this title, or for the administration of loans

22 made under part B of this title that have been

23 assigned to the Secretary;

24 ‘‘(B) permit the Secretary to destroy origi25 nals of such documents and records, including
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1 promissory notes and repayment agreements,

2 after such documents and records have been opti3 cally imaged, thereby achieving significant sav4 ings in storage and retrieval costs; and

5 ‘‘(C) ensure that the Secretary may intro6 duce as evidence in any proceeding with respect

7 to the programs or loans described in subpara8 graph (A) optically imaged documents and

9 records, including promissory notes and repay10 ment agreements.

11 ‘‘(2) EVIDENCE.—Notwithstanding any other

12 provision of law, an optically imaged copy of any

13 document or record, including a promissory note or

14 repayment agreement, may be introduced as evidence

15 in any proceeding with respect to the programs or

16 loans described in paragraph (1)(A) in any Federal

17 or State court, or other tribunal, and such optically

18 imaged copy shall be admissible in any court or tri19 bunal of the United States or any State as if such

20 copy were the original document or record and have

21 the same force and effect as the original.

22 ‘‘(3) CONSTRUCTION.—(A) Nothing in this sub23 section shall be interpreted to preclude the admissibil24 ity of a duplicate of a document or record required

25 for the administration of the programs or loans de-
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1 scribed in paragraph (1)(A) made by a technology

2 other than optical imaging consistent with the Fed3 eral Rules of Evidence and section 1732 of title 28,

4 United States Code, or applicable State law.

5 ‘‘(B) Nothing in this subsection shall be inter6 preted to preclude the admissibility of an optically

7 imaged copy of any document or record in a proceed8 ing outside the scope of this subsection consistent with

9 the Federal Rules of Evidence and section 1732 of

10 title 28 of the United States Code, or applicable State

11 law.’’.

12 (b) OPTICALLY IMAGED DOCUMENTS.—Section 432 of

13 the Act (20 U.S.C. 1082) is amended by adding at the end

14 the following new subsection:

15 ‘‘(q) OPTICALLY IMAGED DOCUMENTS.—Records

16 maintained in accordance with section 484A(c) may be

17 used in any proceeding, as permitted by section 484A(c),

18 with respect to a loan that was made under this part and

19 has been assigned to the Secretary.’’.

20 (c) CONFORMING AMENDMENT.—Section 487 of the Act

21 (20 U.S.C. 1094) is amended by adding at the end the fol22 lowing new subsection:

23 ‘‘(f) USE OF OPTICALLY IMAGED DOCUMENTS.—In

24 any proceeding with respect to a program or activity under

25 part D of this title, or with respect to a loan made under
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1 part B of this title that has been assigned to the Secretary,

2 records maintained in accordance with section 484A may

3 be used as provided in that section.’’.

4 SEC. 12048. CONSOLIDATION OF PROGRAMS.

5 (a) IN GENERAL.—Section 428H of the Act (20 U.S.C.

6 1078–9) is amended—

7 (1) in the matter preceding paragraph (1) of

8 subsection (b), by inserting ‘‘(including graduate and

9 professional students as defined in regulations pro10 mulgated by the Secretary)’’ after ‘‘484’’;

11 (2) in subsection (d), by inserting ‘‘, except

12 that—

13 ‘‘(1) the maximum annual amount of loans

14 under this section an independent student (or a stu15 dent whose parents are unable to borrow under the

16 Federal Direct PLUS Loan Program) may borrow in

17 any academic year or its equivalent or in any period

18 of 7 consecutive months, whichever is longer, shall be

19 as follows:

20 ‘‘(A) In the case of such a student attending

21 an eligible institution who has not completed

22 such student’s first 2 years of undergraduate

23 study, the amount determined in accordance

24 with section 428(b)(1), plus—
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1 ‘‘(i) $4,000, if such student is enrolled

2 in a program whose length is at least one

3 academic year in length (as determined

4 under section 481);

5 ‘‘(ii) $2,500, if such student is enrolled

6 in a program whose length is less than one

academic year, but at least 2 7 ⁄3 of such an

8 academic year; and

9 ‘‘(iii) $1,500, if such student is en10 rolled in a program whose length is less

than 2⁄3, but at least 1 11 ⁄3, of such an aca12 demic year.

13 ‘‘(B) In the case of such a student attending

14 an eligible institution who has completed the

15 first 2 years of undergraduate study but who has

16 not completed the remainder of a program of un17 dergraduate study, the amount determined in ac18 cordance with section 428(b)(1), plus—

19 ‘‘(i) $5,000, if such student is enrolled

20 in a program whose length is at least one

21 academic year in length (as determined

22 under section 481);

23 ‘‘(ii) $3,325, if such student is enrolled

24 in a program whose length is less than one
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academic year, but at least 2 1 ⁄3 of such an

2 academic year; and

3 ‘‘(iii) $1,675, if such student is en4 rolled in a program whose length is less

than 2⁄3, but at least 1 5 ⁄3, of such an aca6 demic year.

7 ‘‘(C) In the case of such a student who is

8 a graduate or professional student attending an

9 eligible institution, the amount determined in

10 accordance with section 428(b)(1), plus $10,000;

11 and

12 ‘‘(2) the maximum aggregate amount of such

13 loans such student may borrow shall be adjusted to

14 reflect the increased annual limits described in para15 graph (1)’’ before the period;

16 (3) in subsection (e), by adding at the end the

17 following new paragraphs:

18 ‘‘(5) AMORTIZATION.—The amount of the peri19 odic payment and the repayment schedule for any

20 loan made pursuant to this section shall be estab21 lished by assuming an interest rate equal to the ap22 plicable rate of interest at the time the repayment of

23 the principal amount of the loan commences. At the

24 option of the lender, the note or other written evidence

25 of the loan may require that—
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1 ‘‘(A) the amount of the periodic payment

2 will be adjusted annually; or

3 ‘‘(B) the period of repayment of principal

4 will be lengthened or shortened,

5 in order to reflect adjustments in interest rates occur6 ring as a consequence of section 427A(c)(4).

7 ‘‘(6) REPAYMENT PERIOD.—For purposes of cal8 culating the 10-year repayment period under section

9 428(b)(1)(D), such period shall commence at the time

10 the first payment of principal is due from the bor11 rower.’’; and

12 (4) by adding at the end the following new sub13 section:

14 ‘‘(h) REFINANCING.—

15 ‘‘(1) REFINANCING TO SECURE COMBINED PAY16 MENT.—An eligible lender may at any time consoli17 date loans held by such lender which are made under

18 this section to a borrower, including loans which were

19 made under sections 428A and 428B as such sections

20 were in effect prior to the date of enactment of the

21 Higher Education Amendments of 1986, under a sin22 gle repayment schedule which provides for a single

23 principal payment and a single payment of interest,

24 and shall calculate the repayment period for each in25 cluded loan from the date of the commencement of re-
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1 payment of the most recent included loan. Unless the

2 consolidated loan is obtained by a borrower who is

3 electing to obtain variable interest under paragraph

4 (2) or (3), such consolidated loan shall bear interest

5 at the weighted average of the rates of all included

6 loans rounded to the nearest whole percent. The exten7 sion of any repayment period of an included loan

8 pursuant to this paragraph shall be reported (if re9 quired by such loan) to the Secretary or guaranty

10 agency insuring the loan, as the case may be, but no

11 additional insurance premiums shall be payable with

12 respect to any such extension. The extension of the re13 payment period of any included loan shall not re14 quire the formal extension of the promissory note evi15 dencing the included loan or the execution of a new

16 promissory note, but shall be treated as an adminis17 trative forbearance of the repayment terms of the in18 cluded loan.

19 ‘‘(2) REFINANCING TO SECURE VARIABLE INTER20 EST RATE.—An eligible lender may reissue a loan

21 which was made under this section before July 1,

22 1987, or under sections 428A and 428B as such sec23 tions were in effect prior to the date of enactment of

24 the Higher Education Amendments of 1986 in order

25 to permit the borrower to obtain the interest rate pro-
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1 vided under section 427A(c)(4). A lender offering to

2 reissue a loan or loans for such purpose may charge

3 a borrower an amount not to exceed $100 to cover the

4 administrative costs of reissuing such loan or loans,

5 not more than one-half of which shall be paid to the

6 guarantor of the loan being reissued to recover costs

7 of reissuance. Reissuance of a loan under this para8 graph shall not affect any insurance applicable with

9 respect to the loan, and no additional insurance fee

10 may be charged to the borrower with respect to the

11 loan.

12 ‘‘(3) REFINANCING BY DISCHARGE OF PREVIOUS

13 LOAN.—A borrower who has applied to an original

14 lender for reissuance of a loan under paragraph (2)

15 and who is denied such reissuance may obtain a loan

16 from another lender for the purpose of discharging the

17 loan from such original lender. A loan made for such

18 purpose—

19 ‘‘(A) shall bear interest at the applicable

20 rate of interest provided under section

21 427A(c)(4);

22 ‘‘(B) shall not result in the extension of the

23 duration of the note (other than as permitted

24 under subsection (e)(5)(B));
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1 ‘‘(C) may be subject to an additional insur2 ance fee but shall not be subject to the adminis3 trative cost charge permitted by paragraph (2) of

4 this subsection; and

5 ‘‘(D) shall be applied to discharge the bor6 rower from any remaining obligation to the

7 original lender with respect to the original loan.

8 ‘‘(4) CERTIFICATION IN LIEU OF PROMISSORY

9 NOTE PRESENTATION.—Each new lender may accept

10 certification from the original lender of the borrower’s

11 original loan in lieu of presentation of the original

12 promissory note.

13 ‘‘(5) NOTIFICATION TO BORROWERS OF AVAIL14 ABILITY OF REFINANCING OPTIONS.—Each holder of a

15 loan made under this section or under section 428B

16 as in effect prior to the date of enactment of this Act

17 shall, not later than October 1, 1993, in the case of

18 loans made before the date of enactment of this para19 graph, notify the borrower of such loan—

20 ‘‘(A) of the refinancing options for which

21 the borrower is eligible under this subsection;

22 ‘‘(B) of those options which will be made

23 available by the holder and of the practical con24 sequences of such options in terms of interest
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1 rates and monthly and total payments for a set

2 of loan examples; and

3 ‘‘(C) that, with respect to any option that

4 the holder will not make available, the holder

5 will, to the extent practicable, refer the borrower

6 to an eligible lender offering such option.’’.

7 (b) REPEAL.—

8 (1) REPEALER.—Section 428A of the Act is re9 pealed.

10 (2) EFFECTIVE DATE.—The amendment made by

11 paragraph (1) shall be effective on July 1, 1994.

12 (c) TERMS, CONDITIONS AND BENEFITS.—Notwith13 standing the amendments made by this section, with respect

14 to loans provided under sections 428A and 428H of the

15 Higher Education Act of 1965 (as such sections existed on

16 the date preceding the date of enactment of this Act) the

17 terms, conditions and benefits applicable to such loans

18 under such sections shall continue to apply to such loans

19 after the date of enactment of this Act.

20 SEC. 12049. ORIGINATION FEE; INSURANCE PREMIUM.

21 Section 428H of the Act (20 U.S.C. 1078–8) is amend22 ed—

23 (1) in subsection (f)—
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1 (A) in the subsection heading, by striking

2 ‘‘INSURANCE PREMIUM’’ and inserting ‘‘ORIGI3 NATION FEE’’;

4 (B) in the heading of paragraph (1), by

5 striking ‘‘/INSURANCE PREMIUM’’;

6 (C) in paragraph (1)—

7 (i) by striking ‘‘a combined origination

8 fee and insurance premium in the amount

9 of 6.5 percent’’ and inserting ‘‘an origina10 tion fee in the amount of 3.0 percent’’; and

11 (ii) by striking the second sentence;

12 (D) in paragraph (2), by striking ‘‘com13 bined fee and premium’’ and inserting ‘‘origina14 tion fee’’;

15 (E) in paragraph (3), by striking ‘‘com16 bined origination fee and insurance premium’’

17 and inserting ‘‘origination fee’’;

18 (F) in paragraph (4)—

19 (i) in the heading, by striking ‘‘INSUR20 ANCE PREMIUM’’ and inserting ‘‘ORIGINA21 TION FEE’’;

22 (ii) by striking ‘‘combined origination

23 fee and insurance premiums’’ and inserting

24 ‘‘origination fees’’; and
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1 (iii) by striking ‘‘and premiums to

2 pay’’ and inserting ‘‘to pay’’; and

3 (G) in paragraph (5)—

4 (i) in the heading, by inserting ‘‘ORIGI5 NATION FEE AND’’ before ‘‘INSURANCE’’; and

6 (ii) in the second sentence—

7 (I) by striking ‘‘6.5 percent insur8 ance premium’’ and inserting ‘‘com9 bined origination fee under this sub10 section and the insurance premium

11 under subsection (h)’’; and

12 (II) by inserting ‘‘origination fee

13 and’’ before ‘‘insurance’’; and

14 (2) by adding at the end the following new sub15 section:

16 ‘‘(h) INSURANCE PREMIUM.—Each State or nonprofit

17 private institution or organization having an agreement

18 with the Secretary under section 428(b)(1) may charge a

19 borrower under this section an insurance premium equal

20 to not more than 1 percent of the principal amount of the

21 loan, if such premium will not be used for incentive pay22 ments to lenders.’’

23 SEC. 12050. DISBURSEMENTS FOR FIRST YEAR STUDENTS.

24 Section 428(G) of the Act (20 U.S.C. 1078–7) is

25 amended—
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1 (1) in the heading for subsection (b), by striking

2 ‘‘AND ENDORSEMENT’’; and

3 (2) in subsection (b)—

4 (A) by striking paragraph (1);

5 (B) in paragraph (2)—

6 (i) by striking ‘‘other than a student

7 described in paragraph (1)’’; and

8 (ii) by striking ‘‘(2) OTHER STU9 DENTS.—’’.

10 Subchapter B—Amendments to Other Laws

11 SEC. 12055. DISCLOSURE OF TAX RETURN INFORMATION.

12 (a) RETURNS AND RETURN INFORMATION.—Section

13 6103(a)(3) of the Internal Revenue Code of 1986 (hereafter

14 referred to in this part as ‘‘the Code’’) is amended by strik15 ing ‘‘(l)(12)’’ and inserting ‘‘(l)(10), (12), or (13)’’.

16 (b) INCOME CONTINGENT REPAYMENT OF STUDENT

17 LOANS.—Section 6103(l) of the Code is amended—

18 (1) in paragraph (10)(B), by striking ‘‘officers

19 and employees of an agency receiving return informa20 tion under subparagraph (A) shall use such informa21 tion’’ and inserting ‘‘return information disclosed

22 under subparagraph (A) may be used by officers and

23 employees of an agency, and by officers, employees,

24 and agents of the Department of Education,’’; and
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1 (2) at the end, by adding a new paragraph to

2 read as follows:

3 ‘‘(13) DISCLOSURE OF RETURN INFORMATION TO

4 CARRY OUT INCOME CONTINGENT REPAYMENT OF STU5 DENT LOANS.—

6 ‘‘(A) IN GENERAL.—The Secretary may,

7 upon written request from the Secretary of Edu8 cation, disclose to officers and employees of the

9 Department of Education return information

10 with respect to a taxpayer who has received a

11 Federal loan under a student loan program and

12 whose loan repayment amounts are based in

13 whole or in part on the taxpayer’s income. Such

14 return information shall be limited to—

15 ‘‘(i) taxpayer identity information

16 with respect to such taxpayer;

17 ‘‘(ii) the filing status of such taxpayer;

18 and

19 ‘‘(iii) the adjusted gross income of such

20 taxpayer (as defined in section 62).

21 ‘‘(B) RESTRICTION ON USE OF DISCLOSED

22 INFORMATION.—Return information disclosed

23 under subparagraph (A) may be used by officers,

24 employees, and agents of the Department of Edu25 cation only for the purposes of, and to the extent
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1 necessary in, establishing an appropriate income

2 contingent repayment level under a student loan

3 program.

4 ‘‘(C) DEFINITIONS.—For purposes of this

5 paragraph, the term ‘student loan program’

6 means the program authorized under part D of

7 title IV of the Higher Education Act of 1965 and

8 includes loans under parts B and E of title IV

9 the Higher Education Act of 1965 that are in de10 fault and have been assigned to the Department

11 of Education.’’.

12 (c) DISCLOSURE OF TAXPAYER IDENTITY INFORMA13 TION.—Section 6103(m)(4) of the Code is amended—

14 (1) in the heading, by inserting ‘‘OWE AN

15 OVERPAYMENT ON FEDERAL PELL GRANTS OR’’

16 immediately after ‘‘INDIVIDUALS WHO’’;

17 (2) in subparagraph (A)—

18 (A) by redesignating clauses (i) and (ii) as

19 subclauses (I) and (II); and

20 (B) by striking ‘‘of any taxpayer who has

21 defaulted on a loan—’’ and inserting ‘‘of any

22 taxpayer—

23 ‘‘(i) who owes an overpayment of a

24 grant awarded to that taxpayer under sub-
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1 part 1 of part A of title IV of the Higher

2 Education Act of 1965, or

3 ‘‘(ii) who has defaulted on a loan—’’;

4 (3) in subparagraph (B)—

5 (A) in clause (i), by striking ‘‘under part

6 B’’ and inserting ‘‘under part B or D’’; and

7 (B) in clause (ii), by striking ‘‘under part

8 E’’ and inserting ‘‘under subpart 1 of part A,

9 part D, or part E’’;

10 (d) PROCEDURE AND RECORDKEEPING.—Section

11 6103(p) of the Code is amended—

12 (1) in paragraph (3)(A), by striking ‘‘(11), or

13 (12), (m)’’ and inserting ‘‘(11), (12), or (13), (m)’’;

14 (2) in paragraph (4)—

15 (A) in the matter preceding subparagraph

16 (A), by striking ‘‘(10), or (11),’’ and inserting

17 ‘‘(10), (11), or (13),’’;

18 (B) in subparagraph (F)(ii), by striking

19 ‘‘(11), or (12),’’ and inserting ‘‘(11), (12), or

20 (13),’’; and

21 (C) in the flush left material after subpara22 graph (F), by striking ‘‘under subsection

23 (l)(12)(B)’’ and inserting ‘‘under paragraph

24 (10), (12)(B), or (13) of subsection (l)’’.
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1 (e) COLLECTION OF PAYMENTS.—(1) Subchapter A of

2 chapter 64 of the Code is amended by adding at the end

3 the following new section:

4 ‘‘SEC. 6306. COLLECTION OF PAYMENTS ON FEDERAL DI5 RECT STUDENT LOANS.

6 ‘‘Upon a determination by the President under section

7 457(b) of the Higher Education Act of 1965 concerning the

8 implementation of a plan for the repayment of Federal Di9 rect Stafford Loans through wage withholding or other

10 means by the Internal Revenue Service, the Secretary of the

11 Treasury may enter into an agreement with the Secretary

12 of Education to provide for the collection of payments on

13 loans made pursuant to part D of title IV of such Act. The

14 Secretary of the Treasury may assess and collect such pay15 ments as though they were additional income taxes due, and

16 shall establish such procedures and conventions as are nec17 essary under such agreement, including—

18 ‘‘(1) procedures for the resolution of disputes

19 through the Secretary of Education;

20 ‘‘(2) an alternate system of fees and penalties,

21 which system shall not include the seizure of real

22 property by the Internal Revenue Service, for the

23 nonpayment of amounts due; and

24 ‘‘(3) provisions related to withholding, payment

25 of estimated tax and allocation of payments.’’.
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1 (2) The table of sections for subchapter A of chapter

2 64 of the Code is amended by adding at the end the follow3 ing new item:

‘‘Sec. 6306. Collection of payments on Federal direct Stafford loans.’’.

4 (f) UNAUTHORIZED DISCLOSURE.—Section 7213(a)(2)

5 of the Code is amended by striking ‘‘(10) or (12)’’ and in6 serting ‘‘(10), (12), or (13),’’.

7 (g) EFFECTIVE DATE.—The amendments made by this

8 section shall be effective during the period beginning on the

9 date of enactment of this Act and ending on December 30,

10 1998.

11 CHAPTER 4—COST SHARING BY STATES

12 SEC. 12061. COST SHARING BY STATES.

13 (a) AMENDMENT.—Section 428 of the Higher Edu14 cation Act of 1965 (20 U.S.C. 1078) is amended by adding

15 at the end the following new subsection:

16 ‘‘(n) STATE SHARE OF DEFAULT COSTS.—

17 ‘‘(1) IN GENERAL.—In the case of any State in

18 which there are located any institutions of higher edu19 cation with cohort default rates that exceed 20 per20 cent, such State shall pay to the Secretary an amount

21 equal to—

22 ‘‘(A) the new loan volume attributable to all

23 institutions in the State for the current fiscal

24 year; multiplied by
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1 ‘‘(B) the percentage specified in paragraph

2 (2); multiplied by

3 ‘‘(C) the quotient of—

4 ‘‘(i) the sum of the amounts calculated

5 under paragraph (3) for each such institu6 tion in the State; divided by

7 ‘‘(ii) the total amount of loan volume

8 attributable to current and former students

9 of institutions located in that State entering

10 repayment in the period used to calculate

11 the cohort default rate.

12 ‘‘(2) PERCENTAGE.—For purposes of paragraph

13 (1)(B), the percentage used shall be—

14 ‘‘(A) 12.5 percent for fiscal year 1995;

15 ‘‘(B) 20 percent for fiscal year 1996; and

16 ‘‘(C) 50 percent for fiscal year 1997 and

17 succeeding fiscal years.

18 ‘‘(3) CALCULATION.—For purposes of paragraph

19 (1)(C)(i), the amount shall be determined by calculat20 ing for each institution the amount by which—

21 ‘‘(A) the amount of the loans received for at22 tendance by such institution’s current and

23 former students who (i) enter repayment during

24 the fiscal year used for the calculation of the co-
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1 hort default rate, and (ii) default before the end

2 of the following fiscal year; exceeds

3 ‘‘(B) 20 percent of the loans received for at4 tendance by all the current and former students

5 who enter repayment during the fiscal year used

6 for the calculation of the cohort default rate.

7 ‘‘(4) FEE.—A State shall charge a fee to an in8 stitution of higher education that participates in the

9 program under this part and is located in that State

10 according to a fee structure, approved by the Sec11 retary, that is based on the institution’s cohort default

12 rate and the State’s risk of loss under this subsection.

13 Such fee structure shall include a process by which an

14 institution with a high cohort default rate is exempt

15 from any fees under this paragraph if such institu16 tion demonstrates to the satisfaction of the State that

17 exceptional mitigating circumstances, as determined

18 by the State and approved by the Secretary, contrib19 uted to its cohort default rate.’’.

20 (b) EFFECTIVE DATE.—The amendment made by this

21 section shall be effective on October 1, 1994.
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1 CHAPTER 5—GENERAL EFFECTIVE DATE

2 SEC. 12071. GENERAL EFFECTIVE DATE.

3 Except as otherwise provided in this subtitle, this sub4 title and the amendments made by this subtitle shall be ef5 fective on October 1, 1993.

6 Subtitle B—Public Health Service

7 Act Provisions

8 SEC. 12101. HEALTH COVERAGE CLEARINGHOUSE.

9 (a) IN GENERAL.—The Public Health Service Act is

10 amended—

11 (1) by redesignating title XXVII (42 U.S.C.

12 300cc et seq.) as title XXVIII; and

13 (2) by inserting after title XXVI the following

14 new title:

15 ‘‘TITLE XXVII—HEALTH

16 COVERAGE CLEARINGHOUSE

17 ‘‘SEC. 2701. ESTABLISHMENT OF CLEARINGHOUSE.

18 ‘‘(a) IN GENERAL.—The Secretary shall establish and

19 operate a Health Coverage Clearinghouse (in this title re20 ferred to as the ‘Clearinghouse’) for the purpose of identify21 ing, for beneficiaries under a covered health program (as

22 defined in subsection (c)), third parties (which may include

23 a covered health program) which may be liable for payment

24 for health care items and services furnished to such bene25 ficiaries under such program.
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1 ‘‘(b) DIRECTOR.—The Clearinghouse shall be headed

2 by a Director (in this title referred to as the ‘Director’) ap3 pointed by the Secretary.

4 ‘‘(c) COVERED HEALTH PROGRAM DEFINED.—As used

5 in this title, the term ‘covered health program’ means any

6 of the following under which health care items or services

7 are furnished to a beneficiary—

8 ‘‘(1) a migrant health center receiving assistance

9 under section 329;

10 ‘‘(2) a community health center receiving assist11 ance under section 330;

12 ‘‘(3) an entity receiving assistance under section

13 340;

14 ‘‘(4) an alcohol or drug treatment entity or men15 tal health entity receiving assistance under title V or

16 title XIX;

17 ‘‘(5) a family planning project described in sec18 tion 1001;

19 ‘‘(6) an entity receiving assistance under title

20 XXVI;

21 ‘‘(7) a black lung clinic authorized under this

22 Act;

23 ‘‘(8) a clinic that treats sexually transmitted dis24 eases and is authorized under section 318;
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1 ‘‘(9) an entity receiving funds to provide pri2 mary health services to residents of public housing

3 under section 340A;

4 ‘‘(10) a non-Federal entity authorized under the

5 Indian Self-Determination Act;

6 ‘‘(11) a tuberculosis clinic receiving assistance

7 under section 317(j)(2) or 317(k)(2); or

8 ‘‘(12) any other Federally funded program that

9 provides payments for medical services provided to an

10 individual which are or may be covered under a pri11 vate health insurance policy.

12 ‘‘(d) OTHER DEFINITIONS.—As used in this title:

13 ‘‘(1) ADMINISTRATOR.—The term ‘administrator’

14 means, with respect to a covered health program de15 scribed in paragraphs (1) through (12) of subsection

16 (c), the individual responsible for the overall adminis17 tration of the program under which an entity de18 scribed in such paragraphs receives Federal funds.

19 ‘‘(2) GROUP HEALTH PLAN.—The term ‘group

20 health plan’ has the same meaning given the term

21 ‘employee welfare benefit plan’ in section 3(1) of the

22 Employee Retirement Income Security Act of 1974

23 (29 U.S.C. 1002(1)).

24 ‘‘(3) QUALIFIED EMPLOYER.—The term ‘quali25 fied employer’ has the same meaning given the term
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1 ‘employer’ in section 3(5) of the Employee Retirement

2 Income Security Act of 1974 (29 U.S.C. 1002(1)).

3 ‘‘SEC. 2702. PROVISION OF INFORMATION

4 ‘‘(a) REQUEST FOR INFORMATION.—An administrator

5 of a covered health program may request from the Director

6 information concerning the employment and group health

7 coverage of a program beneficiary, the beneficiary’s spouse,

8 and (if the beneficiary is a dependent child) the bene9 ficiary’s parents. The Director shall provide such informa10 tion if the request—

11 ‘‘(1) is in such form and manner and at such a

12 time as the Director may require, and

13 ‘‘(2) specifies the name and tax identification

14 number of the beneficiary.

15 ‘‘(b) DATA MATCHING PROGRAM.—

16 ‘‘(1) REQUEST BY DIRECTOR.—The Director

17 shall, at such intervals as the Director finds appro18 priate, transmit to the Secretary of the Treasury the

19 names and tax identification numbers of beneficiaries

20 with respect to whom a request has been made pursu21 ant to subsection (a), and request that such Secretary

22 disclose to the Secretary of Health and Human Serv23 ices the following information:
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1 ‘‘(A) Whether the beneficiary is married

2 and, if so, the name of the spouse and such

3 spouse’s tax identification number.

4 ‘‘(B) If the beneficiary is a dependent child,

5 the name of and tax identification numbers of

6 the beneficiary’s parents.

7 ‘‘(2) INFORMATION FROM SECRETARY.—The Sec8 retary shall, upon written request from the Director,

9 disclose to the Director, the following information:

10 ‘‘(A) For each individual who is identified

11 as having received wages (as defined in section

12 3401(a) of the Internal Revenue Code of 1986)

13 from an employer in a previous year—

14 ‘‘(i) the name and taxpayer identifica15 tion number of the individual; and

16 ‘‘(ii) the name, address, and taxpayer

17 identification number of the employer, and

18 whether such employer is a qualified em19 ployer.

20 ‘‘(B) For each individual who is identified

21 as married and whose spouse is identified as

22 having received wages (as defined in section

23 3401(a) of the Internal Revenue Code of 1986)

24 from an employer in a previous year—
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1 ‘‘(i) the name and taxpayer identifica2 tion number of the individual and of the in3 dividual’s spouse; and

4 ‘‘(ii) the name, address, and taxpayer

5 identification number of the spouse’s em6 ployer, and whether such employer is a

7 qualified employer.

8 ‘‘(C) For each individual who is identified

9 as a dependent child and whose parent is identi10 fied as having received wages (as defined in sec11 tion 3401(a) of the Internal Revenue Code of

12 1986) from an employer in a previous year—

13 ‘‘(i) the name and taxpayer identifica14 tion number of the individual and of the in15 dividual’s parent; and

16 ‘‘(ii) the name, address, and taxpayer

17 identification number of the parent’s em18 ployer, and whether such employer is a

19 qualified employer.

20 ‘‘(3) INFORMATION FROM EMPLOYERS.—The Di21 rector shall—

22 ‘‘(A) request, from the employer of each in23 dividual (including each spouse) with respect to

24 whom information was received from the Sec25 retary pursuant to paragraph (2), information
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1 concerning coverage of such individual (and of

2 the individual’s spouse and dependent children)

3 under the employer’s group health plan, specifi4 cally the period and nature of the coverage, and

5 the name, address, and identifying number of the

6 plan, and

7 ‘‘(B) furnish the information received in re8 sponse to such request with respect to an individ9 ual (or such individual’s spouse or dependent

10 children) to the administrator requesting such

11 information pursuant to subsection (a).

12 Under no circumstances shall the information re13 quested pertain in any way to the health status of the

14 individual, spouse or dependent children, to the cost

15 of such coverage, or to the beneficiary-specific limita16 tions on such coverage.

17 ‘‘SEC. 2703. REQUIREMENT THAT EMPLOYERS FURNISH IN18 FORMATION.

19 ‘‘(a) IN GENERAL.—An employer shall furnish to the

20 Director the information requested pursuant to section

21 2702(b)(3) within 90 days after receipt of such a request.

22 ‘‘(b) CIVIL MONEY PENALTY FOR FAILURE TO CO23 OPERATE.—

24 ‘‘(1) IN GENERAL.—An employer (other than a

25 Federal or other governmental entity) who willfully or
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1 repeatedly fails to provide timely and accurate re2 sponse to a request for information pursuant to sec3 tion 2702(b)(3) shall be subject, in addition to any

4 other penalties that may be prescribed by law, to a

5 civil money penalty of not to exceed $500 for each in6 dividual with respect to whom such a request is made.

7 ‘‘(2) ENFORCEMENT AUTHORITY.—In cases of

8 failure to respond to the Director in accordance with

9 subsection (a) to inquiries relating to requests pursu10 ant to section 2702, the provisions of section

11 353(h)(3), regarding procedures for the imposition of

12 civil money penalties developed by the Secretary, shall

13 apply in the same manner as such provisions apply

14 to penalties or proceedings under section 353.

15 ‘‘SEC. 2704. DATA BANK.

16 ‘‘(a) MAINTENANCE OF INFORMATION.—The Clearing17 house shall maintain a data bank, containing information

18 on individuals obtained pursuant to this title. Individual

19 information in the data bank shall be retained for not less

20 than one year after the date the information was obtained.

21 ‘‘(b) DISCLOSURE OF INFORMATION IN DATA BANK.—

22 ‘‘(1) IN GENERAL.—The Director is authorized

23 (subject to paragraph (2)) to disclose any information

24 in the data bank established pursuant to subsection
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1 (a) with respect to an individual (or an individual’s

2 spouse or parent)—

3 ‘‘(A) to the Secretary, administrators, em4 ployers, and insurers, to the extent necessary to

5 assist such administrators;

6 ‘‘(B) to Federal and State law enforcement

7 officials responsible for enforcement of civil or

8 criminal laws, in connection with investigations

9 or administrative or judicial law enforcement

10 proceedings relating to a covered health program;

11 and

12 ‘‘(C) for research or statistical purposes.

13 ‘‘(2) RESTRICTIONS ON DISCLOSURE.—Informa14 tion in the data bank may be disclosed under this

15 subsection only for purposes of, and to the extent nec16 essary in, determining the extent to which an individ17 ual is covered under any group health plan.

18 ‘‘(c) USE OF CONTRACTORS.—The responsibilities of

19 the Clearinghouse under this section may be carried out by

20 contract.

21 ‘‘(d) FEES.—The Clearinghouse shall—

22 ‘‘(1) establish fees for services under this section

23 designed to cover the full costs to the Clearinghouse of

24 providing such services, and
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1 ‘‘(2) require the payment of such fees to provide

2 such services.’’.

3 (b) CONFORMING AMENDMENTS.—

4 (1) Sections 2701 through 2714 of the Public

5 Health Service Act (42 U.S.C. 300cc through 300cc–

6 15) are redesignated as sections 2801 through 2814,

7 respectively.

8 (2) Sections 465(f) and 497 of such Act (42

9 U.S.C. 286(f) and 289(f)) are amended by striking

10 out ‘‘2701’’ each place that such appears and insert11 ing in lieu thereof ‘‘2801’’.

12 (c) ERISA AMENDMENT.—Section 101 of the Em13 ployee Retirement Income Security Act of 1974 (29 U.S.C.

14 1021) is amended by adding at the end thereof the following

15 new subsection:

16 ‘‘(g) COMPLIANCE WITH HEALTH COVERAGE CLEAR17 INGHOUSE REQUIREMENTS.—In addition to providing the

18 information required under this section, the administrator

19 of each employee benefit plan shall comply with the require20 ments of section 2703(a) of the Public Health Service Act.

21 The enforcement provisions of this Act shall apply to an

22 administrator that fails to comply with this subsection in

23 the same manner as such provisions otherwise apply to such

24 administrators under this section.’’.
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1 (d) EFFECTIVE DATE.—The amendments made by

2 subsections (a), (b), and (c) shall take effect on April 1,

3 1995.

4 SEC. 12102. PHYSICIAN OWNERSHIP STUDY.

5 (a) STUDY.—The Secretary of Health and Human

6 Services shall conduct a study concerning—

7 (1) the desirability of establishing a Federal pro8 hibition on the referral of a patient by a health care

9 provider to an entity in which the provider has a fi10 nancial interest or from which the provider receives

11 a financial benefit for such referral; and

12 (2) different options with respect to the scope of

13 any prohibition recommended under paragraph (1),

14 including options for the application of rules defining

15 prohibited activities that are similar to those imple16 mented under title XVIII of the Social Security Act,

17 and for the methods of enforcing such a prohibition.

18 (b) LIMITATION.—The study conducted under sub19 section (a) shall be restricted to determining the desirability

20 of establishing a prohibition of the type described in such

21 subsection with respect to patients for whom the health care

22 services involved are not provided or paid for under a Fed23 eral or State program.

24 (c) REPORT.—Not later than 6 months after the date

25 of enactment of this Act, the Secretary of Health and
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1 Human Services shall prepare and submit to the President

2 and the appropriate committees of Congress a report con3 cerning the results of the study conducted under subsection

4 (a).

5 SEC. 12103. DELAY IN COST-OF-LIVING ADJUSTMENTS IN

6 FEDERAL EMPLOYEE RETIREMENT BENEFITS

7 DURING FISCAL YEARS 1994, 1995, AND 1996.

8 (a) APPLICABILITY.—

9 (1) IN GENERAL.—This section shall apply with

10 respect to any cost-of-living increase for any person

11 described under paragraph (2) scheduled to take

12 effect, during fiscal year 1994, 1995, or 1996, under

13 section 8340(b) or 8462(b) of title 5, United States

14 Code.

15 (2) ANNUITANTS.—The provisions of paragraph

16 (1) shall apply to any annuitant who on the date pre17 ceding the date of retirement was a member of the

18 National Health Service Corps.

19 (b) DELAY IN EFFECTIVE DATE OF ADJUSTMENTS.—

20 A cost-of-living increase described in subsection (a) shall

21 not take effect until the first day of the third calendar

22 month after the date such increase would otherwise take ef23 fect.

24 (c) RULE OF CONSTRUCTION.—Nothing in this section

25 shall be considered to affect any determination relating to
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1 eligibility for an annuity increase or the amount of the first

2 increase in an annuity under section 8340(b) or (c) or sec3 tion 8462 (b) or (c) of title 5, United States Code, or com4 parable provisions of law.

5 SEC. 12104. PERMANENT ELIMINATION OF THE ALTER6 NATIVE-FORM-OF-ANNUITY OPTION EXCEPT

7 FOR INDIVIDUALS WITH A CRITICAL MEDICAL

8 CONDITION.

9 (a) CIVIL SERVICE RETIREMENT SYSTEM; FEDERAL

10 EMPLOYEES’ RETIREMENT SYSTEM.—A member of the Na11 tional Health Service Corps who is covered under chapter

12 83 or 84 of title 5, United States Code, and has a life-threat13 ening affliction or other critical medical condition may

14 elect annuity benefits under section 8343a or 8420a of title

15 5, United States Code, as the case may be.

16 (b) EFFECTIVE DATE.—The amendments made by this

17 section shall become effective on October 1, 1995, and shall

18 apply with respect to any annuity commencing on or after

19 that date.

20 SEC. 12105. FEDERAL TORT CLAIMS AMENDMENTS.

21 (a) CLARIFICATION OF COVERAGE OF OFFICERS AND

22 EMPLOYEES OF CLINICS.—The first sentence of section

23 224(g)(1) of the Public Health Service Act (42 U.S.C.

24 233(g)(1)) is amended by striking ‘‘officer, employee, or
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1 contractor’’ and inserting the following: ‘‘officer or employee

2 of such an entity, and any contractor’’.

3 (b) COVERAGE FOR SERVICES FURNISHED TO INDIVID4 UALS OTHER THAN PATIENTS OF CLINIC.—Section 224(g)

5 of such Act (42 U.S.C. 233(g)(1)), as amended by para6 graph (1), is further amended—

7 (1) in the first sentence of paragraph (1), by in8 serting after ‘‘Service’’ the following: ‘‘with respect to

9 services provided to patients of the entity and (subject

10 to paragraph (7)) to certain other individuals’’; and

11 (2) by adding at the end the following new para12 graph:

13 ‘‘(7) For purposes of paragraph (1), an officer, em14 ployee, or contractor described in such paragraph may be

15 deemed to be an employee of the Public Health Service with

16 respect to services provided to individuals who are not pa17 tients of an entity described in paragraph (4) only if the

18 Secretary determines—

19 ‘‘(A) that the provision of the services to such in20 dividuals benefits health center patients and general

21 populations that could be served by the health center

22 through community-wide intervention efforts within

23 the communities served by such health center, and fa24 cilitates the provision of services to health center pa25 tients; or
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1 ‘‘(B) that such services are otherwise required to

2 be provided to such individuals under an employment

3 contract (or other similar arrangement) between the

4 individual and the entity.’’.

5 (c) DETERMINING COMPLIANCE OF ENTITY WITH RE6 QUIREMENTS FOR COVERAGE.—

7 (1) IN GENERAL.—Section 224(h) of such Act (42

8 U.S.C. 233(h)), as added by section 2(b) of the Feder9 ally Supported Health Centers Assistance Act of 1992,

10 is amended by striking ‘‘the entity—’’ and inserting

11 the following: ‘‘the Secretary, after receiving such as12 surances and conducting such investigation as the

13 Secretary considers necessary, finds that the entity—

14 ’’.

15 (2) FINDING.—Section 224 of such Act (42

16 U.S.C. 233) is amended by adding at the end thereof

17 the following new subsection:

18 ‘‘(i) With respect to subsection (h), the finding of the

19 Secretary that an entity meets all of the requirements under

20 such subsection shall apply for the period specified by the

21 Secretary, and shall be binding for all parties unless the

22 Secretary reverses such finding for good cause shown at a

23 later date.’’.

24 (d) EFFECTIVE DATE.—The amendments made by this

25 section shall take effect as if included in the enactment of
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1 the Federally Supported Health Centers Assistance Act of

2 1992.

3 Subtitle C—Improved Immuniza4 tion Delivery and Monitoring

5 SEC. 12201. SHORT TITLE, REFERENCES AND PURPOSE.

6 (a) SHORT TITLE.—This subtitle may be cited as the

7 ‘‘Comprehensive Child Immunization Act of 1993’’.

8 (b) REFERENCES.—Except as otherwise expressly pro9 vided, whenever in this subtitle an amendment or repeal

10 is expressed in terms of an amendment to, or repeal of, a

11 section or other provision, the reference shall be considered

12 to be made to a section or other provision of the Public

13 Health Service Act (42 U.S.C. 201 et seq.).

14 (c) PURPOSE.—It is the purpose of this subtitle to en15 sure that children in the United States are appropriately

16 immunized against vaccine preventable infectious diseases

17 at the earliest appropriate age.

18 SEC. 12202. MONITORING OF CHILDHOOD IMMUNIZATIONS.

19 Title XXI of the Public Health Service Act (42 U.S.C.

20 300aa–1 et seq.) is amended by adding at the end thereof

21 the following new subtitle:
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1 ‘‘Subtitle 3—Improved Immuniza2 tion Delivery and Monitoring

3 Systems

4 ‘‘Part A—List of Vaccines and Administration

5 ‘‘SEC. 2141. LIST OF PEDIATRIC VACCINES; SCHEDULE FOR

6 ADMINISTRATION.

7 ‘‘(a) RECOMMENDED PEDIATRIC VACCINES.—

8 ‘‘(1) IN GENERAL.—The Secretary shall establish

9 a list of the vaccines that the Secretary recommends

10 for administration to all children for the purpose of

11 immunizing the children, subject to such contra12 indications for particular medical categories of chil13 dren as the Secretary may establish under subsection

14 (b)(1)(D). The Secretary shall periodically review the

15 list, and shall revise the list as appropriate.

16 ‘‘(2) RULE OF CONSTRUCTION.—

17 ‘‘(A) The list of vaccines specified in sub18 paragraph (B) is deemed to be the list of vac19 cines maintained under paragraph (1).

20 ‘‘(B) The list of vaccines specified in this

21 subparagraph is the list of vaccines that, for pur22 poses of paragraph (1), is established (and peri23 odically reviewed and as appropriate revised) by

24 the Advisory Committee on Immunization Prac25 tices, an advisory committee established by the
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1 Secretary, acting through the Director of the

2 Centers for Disease Control and Prevention.

3 ‘‘(b) RECOMMENDED SCHEDULE FOR ADMINISTRA4 TION.—

5 ‘‘(1) IN GENERAL.—Subject to paragraph (2), in

6 the case of a pediatric vaccine, the Secretary shall es7 tablish (and periodically review and as appropriate

8 revise) a schedule of nonbinding recommendations for

9 the following:

10 ‘‘(A) The number of immunizations with

11 the vaccine that children should receive.

12 ‘‘(B) The ages at which children should re13 ceive the immunizations.

14 ‘‘(C) The dose of vaccine that should be ad15 ministered in the immunizations.

16 ‘‘(D) Any contraindications regarding ad17 ministration of the vaccine.

18 ‘‘(E) Such other guidelines as the Secretary

19 determines to be appropriate with respect to ad20 ministering the vaccine to children.

21 ‘‘(2) VARIATIONS IN MEDICAL PRACTICE.—In es22 tablishing and revising a schedule under paragraph

23 (1), the Secretary shall ensure that, in the case of the

24 pediatric vaccine involved, the schedule provides for

25 the full range of variations in medical judgment re-
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1 garding the administration of the vaccine, subject to

2 remaining within medical norms.

3 ‘‘(3) RULE OF CONSTRUCTION.—

4 ‘‘(A) The schedule specified in subparagraph

5 (B) is deemed to be the schedule maintained

6 under paragraph (1).

7 ‘‘(B) The schedule specified in this

8 subparagraph is the schedule that, for purposes

9 of paragraph (1), is established (and periodi10 cally reviewed and as appropriate revised) by

11 the advisory committee specified in subsection

12 (a)(2)(B).

13 ‘‘(c) GENERALLY APPLICABLE RULES OF CONSTRUC14 TION.—This section does not supersede any State law or

15 requirements with respect to receiving immunizations (in16 cluding any such law relating to religious exemptions or

17 other exemptions under such State laws).

18 ‘‘(d) ISSUANCE OF LIST AND SCHEDULES.— Not later

19 than 180 days after the date of the enactment of this section,

20 the Secretary shall establish the initial list required in sub21 section (a) and the schedule required in subsection (b).
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1 ‘‘Part B—State Registry System for Immunization

2 Information

3 ‘‘SEC. 2145. PURPOSE.

4 ‘‘It is the purpose of this part to authorize the Sec5 retary, in consultation with State public health officials,

6 to establish State registry systems to monitor the immuni7 zation status of all children.

8 ‘‘SEC. 2146. GRANTS FOR IMMUNIZATION REGISTRIES.

9 ‘‘(a) IN GENERAL.—For the purpose described in sec10 tion 2145, the Secretary, acting through the Director of the

11 Centers for Disease Control and Prevention, shall make an

12 allotment each fiscal year for each State in an amount de13 termined in accordance with section 2151. The Secretary

14 shall make a grant to the State of the allotment made for

15 the State for the fiscal year if the State submits to the Sec16 retary an application in accordance with section 2150 on

17 behalf of the chief executive officer of such State.

18 ‘‘(b) DESIGN OF STATE REGISTRIES.—To carry out

19 the purpose described in section 2145, a State registry es20 tablished under this part shall be designed to—

21 ‘‘(1) provide accurate and up to date surveil22 lance data regarding immunization rates at the State

23 and local levels;

24 ‘‘(2) assist in identifying localities with inad25 equate immunization rates to target for necessary re26 medial assistance;
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1 ‘‘(3) assist in the effective administration and

2 management of immunization programs at State and

3 local levels by providing data to guide immunization

4 program efforts;

5 ‘‘(4) assist the State in providing and receiving

6 information on the immunization status of children

7 who move across geographic boundaries that are cov8 ered by different State or local registries; and

9 ‘‘(5) facilitate the linkage of vaccine dosage in10 formation to adverse events reported to the Centers for

11 Disease Control and Prevention under section 2125(b)

12 and disease outbreak patterns, for the purpose of mon13 itoring vaccine safety and effectiveness.

14 ‘‘(c) ELIGIBLE USE OF FUNDS.—The Secretary may

15 make a grant under subsection (a) only if the State agrees

16 to expend the grant for the purpose of—

17 ‘‘(1) collecting the data described in section 2147;

18 ‘‘(2) operating registries to maintain the data

19 (and establishing such registries, in the case of a

20 State that is not operating such a registry);

21 ‘‘(3) utilizing the data to monitor the extent to

22 which children have received immunizations in ac23 cordance with the schedule established under section

24 2141;
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1 ‘‘(4) notifying parents, as appropriate, if chil2 dren have not received immunizations in accordance

3 with such schedule;

4 ‘‘(5) coordinating and exchanging information

5 with other State registries to allow the monitoring of

6 the immunization status of children changing State of

7 residence; and

8 ‘‘(6) such other activities as the Secretary may

9 authorize with respect to achieving the objectives es10 tablished by the Secretary for the year 2000 for the

11 immunization status of children in the United States.

12 ‘‘(d) REQUIREMENT REGARDING STATE LAW.—

13 ‘‘(1) IN GENERAL.—The Secretary may make a

14 grant under subsection (a) only if the State in15 volved—

16 ‘‘(A) provides assurances satisfactory to the

17 Secretary that, not later than October 1, 1996,

18 the State will be operating a registry in accord19 ance with this part, including having in effect

20 such laws and regulations as may be necessary

21 to so operate such a registry; and

22 ‘‘(B) agrees that, prior to such date, the

23 State will make such efforts to operate a registry

24 in accordance with this part as may be author25 ized in the law and regulations of the State.
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1 ‘‘(2) RULES OF CONSTRUCTION.—

2 ‘‘(A) With respect to the agreements made

3 by a State under this part, other than para4 graph (1)(B), the Secretary may require compli5 ance with the agreements only to the extent con6 sistent with such paragraph.

7 ‘‘(B) The provisions of this part do not au8 thorize the Secretary, as a condition of the re9 ceipt of a grant under subsection (a) by a State,

10 to prohibit the State from providing any parent,

11 upon the request of the parent, with an exemp12 tion from the requirements established by the

13 State pursuant to this part for the collection of

14 data regarding any child of the parent.

15 ‘‘SEC. 2147. REGISTRY DATA.

16 ‘‘(a) IN GENERAL.—For purposes of section

17 2146(c)(1), the data described in this section are the data

18 described in subsection (b) and the data described in sub19 section (c).

20 ‘‘(b) DATA REGARDING BIRTH OF CHILD.—With re21 spect to the birth of a child, the data described in this sub22 section is as follows:

23 ‘‘(1) The name of each child born in the State

24 involved after the date of the implementation of the
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1 registry (in no event shall such date be later than Oc2 tober 1, 1996).

3 ‘‘(2) Demographic data on the child.

4 ‘‘(3) The name of one or both of the parents of

5 the child. If the child has been given up for adoption,

6 any information regarding the identity of the birth

7 parent or parents of the child may not be entered into

8 the registry, or if entered, shall be deleted.

9 ‘‘(4) The address, as of the date of the birth of

10 the child, of each parent whose name is received in

11 the registry pursuant to paragraph (3).

12 ‘‘(c) DATA REGARDING INDIVIDUAL IMMUNIZA13 TIONS.—With respect to a child to whom a pediatric vac14 cine is administered in the State involved, the data de15 scribed in this subsection is as follows:

16 ‘‘(1) The name, age, and address of the child.

17 ‘‘(2) The date on which the vaccine was adminis18 tered to the child.

19 ‘‘(3) The name and business address of the health

20 care provider that administered the vaccine.

21 ‘‘(4) The address of the facility at which the vac22 cine was administered.

23 ‘‘(5) The name and address of one or both par24 ents of the child as of the date on which the vaccine
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1 was administered, if such information is available to

2 the health care provider.

3 ‘‘(6) The type of vaccine.

4 ‘‘(7) The lot number or other information identi5 fying the particular manufacturing batch of the vac6 cine.

7 ‘‘(8) The dose of vaccine that was administered.

8 ‘‘(9) A notation of the presence of any adverse

9 medical reactions that the child experienced in rela10 tion to the vaccine and of which the health care pro11 vider is aware, in accordance with section 2125.

12 ‘‘(10) The presence of contraindications noted by

13 the health care provider with respect to administra14 tion of the vaccine to the child.

15 ‘‘(11) Such other data regarding immunizations

16 for the child, including identifying data, as the Sec17 retary, in consultation with State public health offi18 cials, may require consistent with applicable law (in19 cluding social security account numbers furnished

20 pursuant to section 205(c)(2)(E) of the Social Secu21 rity Act).

22 ‘‘(d) LIMITATION.—The Secretary may not establish

23 information reporting requirements in addition to those de24 scribed in subsection (c) if such requirements are unduly

25 burdensome.
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1 ‘‘(e) DATE CERTAIN FOR SUBMISSION TO REGISTRY.—

2 The Secretary may make a grant under section 2146 only

3 if the State involved agrees to ensure that, with respect to

4 a child—

5 ‘‘(1) the data described in subsection (b) are sub6 mitted to the registry under such section as soon as

7 possible but in no event later than 8 weeks after the

8 date on which the child is born; and

9 ‘‘(2) the data described in subsection (c) with re10 spect to a vaccine are submitted to such registry as

11 soon as possible but in no event later than 4 weeks

12 after the date on which the vaccine is administered to

13 the child.

14 ‘‘(f) UNIFORMITY IN METHODOLOGIES.—The Secretary

15 shall, in consultation with State public health officials, es16 tablish standards regarding the methodologies used in estab17 lishing and operating registries under section 2146, and

18 may make a grant under such section only if the State

19 agrees to comply with the standards. The Secretary shall

20 provide maximum flexibility to the States while also retain21 ing a reasonable degree of uniformity among the States in

22 such methodologies for the purpose of ensuring the utility,

23 comparability, and exchange of the data maintained in

24 such registries.
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1 ‘‘(g) COORDINATION AMONG STATES.—The Secretary

2 may make a grant under section 2146 to a State only if,

3 with respect to the operation of the registry of the State

4 under such section, the State agrees to transfer that infor5 mation contained in the State registry pursuant to section

6 2146 to other States upon the request of such States for such

7 information.

8 ‘‘SEC. 2148. FEDERAL STANDARDS ON CONFIDENTIALITY.

9 ‘‘(a) ESTABLISHMENT.—

10 ‘‘(1) IN GENERAL.—The Secretary, in consulta11 tion with the States, shall by regulation establish

12 standards providing for maintaining the confidential13 ity of the identity of individuals with respect to

14 whom data are maintained in registries under section

15 2146. Such standards shall, with respect to a State,

16 provide that the State is to have in effect laws or reg17 ulations regarding such confidentiality, including ap18 propriate penalties for violation of the laws. The Sec19 retary may make a grant under such section only if

20 the State involved agrees to comply with the stand21 ards.

22 ‘‘(2) USE OF DISCLOSURE.—

23 ‘‘(A) No personally identifiable information

24 relating to a child or to the parent or guardian

25 of such child that is collected or maintained by
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1 the State registry may be used or disclosed by

2 any holder of such information except as per3 mitted for—

4 ‘‘(i) the monitoring of a child’s immu5 nization status;

6 ‘‘(ii) oversight, audit, and evaluation

7 of the immunization delivery and registry

8 systems;

9 ‘‘(iii) activities relating to establishing

10 and maintaining a safe and effective supply

11 of recommended childhood vaccine;

12 ‘‘(iv) processing of insurance claims for

13 payment for vaccine administration (but

14 only to the extent necessary for processing

15 claims); and

16 ‘‘(v) administration of the National

17 Vaccine Injury Compensation Program

18 under subtitle 2.

19 ‘‘(B) Information regarding immunizations

20 provided as described in subparagraph (A)(i)

21 may be used or disclosed only with the written

22 authorization of the individual to whom it refers

23 or to the parent with custody of such individual.

24 ‘‘(b) USE OF SOCIAL SECURITY ACCOUNT NUMBERS.—

25 Any usage or disclosure of data in registries under section
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1 2146 that consists of social security account numbers and

2 related information which is otherwise permitted under this

3 part may be exercised only to the extent permitted under

4 section 205(c)(2)(E) of the Social Security Act. For pur5 poses of the preceding sentence, the term ‘related informa6 tion’ has the meaning given such term in clause (iv)(II)

7 of such section.

8 ‘‘SEC. 2149. PROVIDER PARTICIPATION.

9 ‘‘(a) IN GENERAL.—The State shall monitor and en10 force compliance by health care providers with the require11 ments of sections 2147 and 2148 and section 2155(b) for

12 all doses of pediatric vaccine administered in the State. The

13 State shall establish procedures satisfactory to the Secretary

14 for discontinuing the distribution of federally purchased or

15 State purchased vaccine for any health care provider who

16 fails to comply with the requirements of section 2147 and

17 for reinstating such vaccine supply to such provider upon

18 receiving from such provider—

19 ‘‘(1) the reports necessary to make current and

20 complete the information that would have been fur21 nished to the State registry between the dates of the

22 provider’s termination and reinstatement; and

23 ‘‘(2) satisfactory assurances regarding the pro24 vider’s future compliance.
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1 ‘‘(b) REPORTS TO SECRETARY.—The Secretary may

2 make a grant under section 2146 only if the State involved

3 agrees to submit to the Secretary such reports as the Sec4 retary determines to be appropriate with respect to the ac5 tivities of the State under this part.

6 ‘‘SEC. 2150. APPLICATION FOR GRANT.

7 ‘‘An application by a State for a grant under section

8 2146 is in accordance with this section if the application—

9 ‘‘(1) is submitted not later than the date speci10 fied by the Secretary;

11 ‘‘(2) contains each agreement required in this

12 part;

13 ‘‘(3) contains any information required in this

14 part to be submitted to the Secretary; and

15 ‘‘(4) is in such form, is made in such manner,

16 and contains such agreements, assurances, and infor17 mation as the Secretary determines to be necessary to

18 carry out this part.

19 ‘‘SEC. 2151. DETERMINATION OF AMOUNT OF ALLOTMENT.

20 ‘‘The Secretary shall determine the amount of the allot21 ments required in section 2146 for States for a fiscal year

22 in accordance with a formula established by the Secretary

23 that allots the amounts appropriated under section 2152

24 for the fiscal year on the basis of the costs of the States

25 in establishing and operating registries under section 2146.
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1 ‘‘SEC. 2152. AUTHORIZATION OF APPROPRIATIONS.

2 ‘‘For the purpose of carrying out this part, other than

3 section 2153, there are authorized to be appropriated

4 $152,000,000 for fiscal year 1994, $125,000,000 for fiscal

5 year 1995, and $35,000,000 for each of the fiscal years 1996

6 through 1999.

7 ‘‘SEC. 2153. NATIONAL IMMUNIZATION SURVEILLANCE PRO8 GRAM.

9 ‘‘(a) IN GENERAL.—The Secretary shall establish a na10 tional immunization surveillance program for the purpose

11 of assessing the effects of the programs and activities pro12 vided for in this subtitle towards appropriately immuniz13 ing children and facilitating State immunization registries.

14 The national immunization surveillance program shall—

15 ‘‘(1) provide technical assistance to States for the

16 development of vaccination registries and monitoring

17 systems; and

18 ‘‘(2) receive aggregate epidemiologic data (that is

19 in a format that is not person specific) collected by

20 States as provided for in section 2147 at intervals de21 termined appropriate by the Secretary for the purpose

22 of—

23 ‘‘(A) compiling accurate and up-to-date

24 surveillance data regarding immunization rates

25 at the State level in order to assess the progress
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1 made towards achieving nationally established

2 immunization goals;

3 ‘‘(B) assisting in the effective administra4 tion and management of immunization pro5 grams at the State level by providing technical

6 assistance to guide immunization program ef7 forts at the request of the State;

8 ‘‘(C) providing technical assistance to

9 States and localities to facilitate monitoring the

10 immunization status of children who move across

11 geographic boundaries that are covered by dif12 ferent State or local registries at the request of

13 such States or localities; and

14 ‘‘(D) monitoring the safety and effectiveness

15 of vaccines by linking vaccine dosage informa16 tion with adverse events reporting under section

17 2125(b) and disease outbreak patterns.

18 ‘‘(b) RULE OF CONSTRUCTION.—Nothing in this sub19 title shall be construed to authorize the release of person

20 specific information to the Secretary for the purpose of im21 munization surveillance.

22 ‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—There are

23 authorized to be appropriated such sums as may be nec24 essary to carry out this section in each of the fiscal years

25 1994 through 1999.
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1 ‘‘SEC. 2154. REPORT.

2 ‘‘Not later than January 1, 1995, and biennially there3 after, the Secretary shall prepare and submit to the appro4 priate committees of Congress a report concerning the plan5 ning, development, operation and effectiveness of the na6 tional immunization surveillance program and the State

7 immunization registries.

8 ‘‘Part C—Distribution of Vaccines, Public Outreach

9 and Education

10 ‘‘SEC. 2155. DISTRIBUTION OF VACCINES.

11 ‘‘(a) IN GENERAL.—

12 ‘‘(1) HEALTH CARE PROVIDERS.—The Secretary

13 shall provide for the distribution, without charge, of

14 recommended pediatric vaccines (in accordance with

15 section 2141) purchased by the Secretary to health

16 care providers who serve children and who—

17 ‘‘(A) are members of a uniformed service, or

18 are officers or employees of the United States;

19 ‘‘(B) are health centers (as defined in sec20 tion 2162(2)); or

21 ‘‘(C) provide services under section 503 of

22 the Indian Health Care Improvement Act or

23 pursuant to a contract under section 102 of the

24 Indian Self Determination Act.

25 ‘‘(2) STATES.—The Secretary shall provide for

26 the distribution, without charge, of those rec-
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1 ommended pediatric vaccines that are purchased by

2 the Secretary and provided to States for the purposes

3 of immunizing medicaid-eligible children, and addi4 tional vaccines that may be purchased by the Sec5 retary for children within those States.

6 ‘‘(b) DUTIES OF HEALTH CARE PROVIDERS.—

7 ‘‘(1) FREE PROVISION TO CHILDREN.—A health

8 care provider or entity receiving vaccine under this

9 section may use such vaccine only for administration

10 to children and may not impose a charge for such

11 vaccine. A provider or health care entity may impose

12 a fee that reflects actual regional costs as determined

13 by the Secretary for the administration of such vac14 cine, except that a provider may not deny a child a

15 vaccination due to the inability of the child’s parent

16 to pay an administration fee.

17 ‘‘(2) REPORTING REQUIREMENTS.—A health care

18 provider receiving vaccine under this section shall re19 port the information required under section 2147 to

20 the applicable State registry operated pursuant to a

21 grant under section 2146 if such State registry exists.

22 The provider shall additionally report to such State

23 registry any occurrence reported to the Secretary pur24 suant to section 2125(b). The provider shall also pro25 vide regular and periodic estimates to the State of the
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1 provider’s future dosage needs for recommended child2 hood vaccines distributed under this section. All re3 ports shall be made with such frequency and in such

4 detail as the Secretary, in consultation with State

5 public health officials, may prescribe.

6 ‘‘SEC. 2156. IMPROVED IMMUNIZATION DELIVERY, OUT7 REACH AND EDUCATION.

8 ‘‘(a) FEDERAL EFFORTS.—The Secretary, acting

9 through the Centers for Disease Control and Prevention and

10 in conjunction with State health officials and other appro11 priate public and private organizations, shall conduct the

12 following activities to improve Federal, State and local vac13 cine delivery systems and immunization outreach and edu14 cation efforts:

15 ‘‘(1) NATIONAL PUBLIC AWARENESS CAMPAIGN.—

16 ‘‘(A) IN GENERAL.—The Secretary, in con17 junction with State health officials and other ap18 propriate public and private organizations, shall

19 develop and implement a National Immuniza20 tion Public Awareness Campaign to assist fami21 lies (through bilingual means if necessary) of

22 children under the age of 2 years, and expectant

23 parents, in obtaining knowledge concerning the

24 importance of having their children immunized

25 and in identifying the vaccines, schedules for im-
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1 munization, and vaccine provider locations, ap2 propriate with respect to their children.

3 ‘‘(B) IMPLEMENTATION.—In implementing

4 the Campaign under subparagraph (A), the Sec5 retary shall ensure that—

6 ‘‘(i) new and innovative methods are

7 developed and utilized to publicly advertise

8 the need to have children immunized in a

9 timely manner;

10 ‘‘(ii) print, radio and television media

11 are utilized to convey immunization infor12 mation to the public; and

13 ‘‘(iii) with respect to immunization in14 formation, efforts are made to target preg15 nant women and the parents of children

16 under the age of 2.

17 ‘‘(2) INTERAGENCY COMMITTEE ON IMMUNIZA18 TION.—The Secretary, in conjunction with the Sec19 retary of Agriculture, the Secretary of Housing and

20 Urban Development, and the Secretary of Education,

21 shall carry out activities through the Interagency

22 Committee on Immunization to incorporate immuni23 zation status assessments and referral services as an

24 integral part of the process by which individuals

25 apply for assistance under—
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1 ‘‘(A) the food stamp program under the

2 Food Stamp Act of 1977;

3 ‘‘(B) section 17 of the Child Nutrition Act

4 of 1966;

5 ‘‘(C) the Head Start Act;

6 ‘‘(D) part A of title IV of the Social Secu7 rity Act;

8 ‘‘(E) title XIX of the Social Security Act;

9 ‘‘(F) any of the housing assistance laws of

10 the United States; and

11 ‘‘(G) other programs determined appro12 priate by any of the Secretaries described in this

13 paragraph.

14 ‘‘(3) EXPANDED OPPORTUNITY FOR NATIONAL

15 SERVICE.—The Secretary, in conjunction with the

16 Commission on National and Community Service

17 and other independent agencies, is encouraged to de18 velop opportunities for participants in national and

19 community service programs to contribute to local

20 initiatives for the improvement of immunization serv21 ices, including public outreach and education efforts.

22 ‘‘(b) GRANTS TO STATES.—

23 ‘‘(1) IN GENERAL.—

24 ‘‘(A) The Secretary may award grants to

25 States to enable such State to develop, revise and
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1 implement immunization improvement plans as

2 described in paragraph (2).

3 ‘‘(B) To be eligible to receive a grant under

4 subparagraph (A), a State shall prepare and

5 submit to the Secretary an application at such

6 time, in such manner, and containing such in7 formation as the Secretary may require.

8 ‘‘(2) DESIGN.—A State immunization improve9 ment plan shall be designed to improve immunization

10 delivery, outreach, education and coordination within

11 the State. Such plan shall provide for the creation

12 of—

13 ‘‘(A) a vaccine provider education cam14 paign and the distribution of any other mate15 rials determined to be appropriate by State

16 health officials—

17 ‘‘(i) to enable such providers to make

18 the best use of vaccination opportunities;

19 and

20 ‘‘(ii) to educate such providers concern21 ing their obligation to report immunization

22 information with respect to their patients to

23 State registries;

24 ‘‘(B) expanded capacity for the delivery of

25 immunizations through—
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1 ‘‘(i) increasing the number or type of

2 facilities through which vaccines may be

3 made available and the capacity of such fa4 cilities to immunize more children;

5 ‘‘(ii) developing alternative methods of

6 delivering vaccines, such as mobile health

7 clinics;

8 ‘‘(iii) increasing the number of hours

9 during which vaccines are made available

10 by providers within the State; or

11 ‘‘(iv) coordinating with federally quali12 fied health centers to reach and immunize

13 underserved children through education,

14 outreach, tracking, and the provision of

15 services;

16 except that, the Secretary may waive any spe17 cific requirement of this subparagraph if the Sec18 retary determines that State immunization de19 livery efforts are sufficient without the imposi20 tion of such requirement;

21 ‘‘(C) population-based assessment criteria

22 through which the State is able to assess the ef23 fectiveness of immunization activities in the

24 State, which may be fulfilled through the imple-
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1 mentation of a State immunization registry

2 under section 2146;

3 ‘‘(D) a public awareness campaign, in con4 junction with the National Campaign established

5 under subsection (a)(1), to provide parents with

6 information about the importance of immuniza7 tion, the types and schedules for the administra8 tion of vaccines, and the locations of vaccines

9 providers;

10 ‘‘(E) coordinated community outreach ac11 tivities among public or private health pro12 grams, including local health departments and

13 health centers, and other public or private enti14 ties, to encourage and facilitate the ability of

15 parents to obtain immunization services for their

16 children; and

17 ‘‘(F) other activities that are not inconsist18 ent with the purposes of this subtitle, subject to

19 the approval of the Secretary.

20 ‘‘(3) IMMUNIZATION IMPROVEMENT PLAN AP21 PROVAL.—

22 ‘‘(A) GOALS.—As part of the immunization

23 improvement plan of a State, the State shall es24 tablish immunization rate goals for children re25 siding within the State.
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1 ‘‘(B) APPROVAL.—The immunization im2 provement plan developed by a State under this

3 subsection shall be submitted to the Secretary for

4 approval prior to the distribution of grant funds

5 to the States under this subsection. The Secretary

6 shall periodically review the progress that the

7 State has made under such plan in achieving the

8 goals established under subparagraph (A).

9 ‘‘(C) DISTRIBUTION OF GRANTS.—In

10 awarding grants under this section, the Sec11 retary shall ensure that grant awards will be eq12 uitably distributed between rural and urban

13 areas. In determining such distribution, the Sec14 retary shall take into account the added costs of

15 supporting the health care delivery infrastruc16 ture in sparsely populated areas.

17 ‘‘(D) REPORTING.—A State shall annually

18 prepare and submit to the Director of the Cen19 ters for Disease Control and Prevention a report

20 concerning the implementation of the State im21 munization improvement plan. If the Director or

22 the Secretary, in reviewing the reports submitted

23 under this subparagraph determine that the

24 State has exceeded the goals established under

25 subparagraph (A), the Secretary may award a
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1 bonus to the State in an amount not to exceed

2 5 percent of the amount the State received under

3 the grant for the purposes of the grant.

4 ‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—There are

5 authorized to be appropriated to carry out this section,

6 $250,000,000 for fiscal year 1994, and such sums as may

7 be necessary for each of the fiscal years 1995 through 1999.

8 ‘‘Part D—General Provisions

9 ‘‘SEC. 2161. REPORT.

10 ‘‘Not later than October 1, 1995, and biennially there11 after, the Secretary shall prepare and submit to the appro12 priate committees of Congress a report concerning the costs,

13 efficiency, and effectiveness of procedures established to de14 liver vaccine to health care providers.

15 ‘‘SEC. 2162. NATIONAL VACCINE PROGRAM.

16 ‘‘The Secretary shall authorize a report to be prepared

17 by the National Academy of Sciences concerning the role

18 of the National Vaccine Program established under this title

19 in achieving progress towards the nationally established im20 munization goals for the year 2000, and recommendations

21 with respect to the changes in such Program that would

22 facilitate greater progress towards achieving such goals.

23 ‘‘SEC. 2163. DEFINITIONS.

24 ‘‘For purposes of this subtitle—
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1 ‘‘(1) HEALTH CARE PROVIDER.—The term

2 ‘health care provider’, with respect to the administra3 tion of vaccines to children, means an entity that is

4 licensed or otherwise authorized for such administra5 tion under the law of the State in which the entity

6 administers the vaccine, subject to section 333(e).

7 ‘‘(2) HEALTH CENTER.—The term ‘health center’

8 means—

9 ‘‘(A) a federally-qualified health center, as

10 defined in section 1905(l)(2) of the Social Secu11 rity Act; or

12 ‘‘(B) a public or nonprofit private entity

13 receiving Federal funds under—

14 ‘‘(i) section 329, 330 or 340;

15 ‘‘(ii) section 340A (relating to grants

16 for health services for residents of public

17 housing); or

18 ‘‘(iii) section 501(a)(2) of the Social

19 Security Act (relating to special projects of

20 regional and national significance).

21 ‘‘(3) IMMUNIZATION.—The term ‘immunization’

22 means an immunization against a vaccine-prevent23 able disease.

24 ‘‘(4) PARENT.—The term ‘parent’, with respect

25 to a child, means a legal guardian of the child.
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1 ‘‘(5) PEDIATRIC VACCINE.—The term ‘pediatric

2 vaccine’ means a vaccine included on the list estab3 lished under section 2141.

4 ‘‘(6) STATE.—The term ‘State’ means the 50

5 States, the District of Columbia, the Commonwealth

6 of Puerto Rico, Guam, American Samoa, the U.S.

7 Virgin Islands, the Republic of the Marshall Islands,

8 Micronesia, the Northern Mariana Islands, and

9 Palau.’’.

10 SEC. 12203. NATIONAL VACCINE INJURY COMPENSATION

11 PROGRAM AMENDMENTS.

12 (a) AMENDMENT OF VACCINE INJURY TABLE.—

13 (1) ADDITION OF VACCINES.—Section 2114 (42

14 U.S.C. 300aa–14) is amended by adding at the end

15 thereof the following new subsection:

16 ‘‘(f) ADDITION OF VACCINES TO TABLE.—

17 ‘‘(1) IN GENERAL.—The Vaccine Injury table

18 contained in subsection (a) shall also include any rec19 ommended childhood vaccine included in the list pro20 mulgated by the Secretary under section 2141.

21 ‘‘(2) REVIEW OF INFORMATION AND REVISION.—

22 Not later than 2 years after the addition of a new

23 vaccine to the table contained in subsection (a), and

24 on a regular basis thereafter, the Secretary shall re25 view information obtained under sections 2125 and
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1 part B of subtitle 3, and based on such review (and

2 other relevant information) shall, as appropriate, de3 velop with respect to such new vaccine—

4 ‘‘(A) revisions with respect to illnesses, dis5 abilities, injuries or conditions covered by such

6 table;

7 ‘‘(B) appropriate specifications of the time

8 period for the first symptom or manifestation of

9 onset or of significant aggravation of such ill10 nesses, disabilities, injuries or condition after

11 vaccine administration, for purposes of receiving

12 compensation under the Program; and

13 ‘‘(C) recommendations as to the amount of

14 tax that should be imposed under section 4131 of

15 the Internal Revenue Code of 1986 for each dose

16 of vaccine.

17 ‘‘(3) LIMITATION.—The Secretary may modify

18 the table contained in subsection (a) pursuant to

19 paragraphs (1) and (2) only in accordance with sub20 section (c).

21 ‘‘(4) REVISION.—For purposes of section

22 2116(b), the addition of vaccine to the table contained

23 in subsection (a) by operation of this subsection shall

24 constitute a revision of the table.’’.
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1 (2) ATTORNEYS FEES.—Section 2115(e) (42

2 U.S.C. 300aa–15(e)) is amended by adding at the end

3 thereof the following new paragraph:

4 ‘‘(4) The special master may award reasonable

5 attorneys fees whether or not an election has been

6 made under section 2121(a) to file a civil action con7 cerning such petition.’’.

8 (3) CONSENT FOR ANNUITY.—Subparagraphs (A)

9 and (B) of section 2115(f)(4) are amended by striking

10 ‘‘, with the consent of the petitioner,’’ each place that

11 such appears.

12 (4) TIME PERIODS FOR FEES AND COSTS.—

13 (A) IN GENERAL.—Section 2115(e) (42

14 U.S.C. 300aa–15(e)) (as amended by paragraph

15 (3)) is further amended by adding at the end

16 thereof the following new paragraph:

17 ‘‘(5) With respect to a petitioners’ application

18 for attorneys’ fees and costs—

19 ‘‘(A) if the respondent enters no objection to

20 such application within 21 days of the date on

21 which the application was filed (unless such time

22 period is extended by the special master with the

23 consent of the petitioner) the special master shall

24 enter a decision on such application within 30

25 days of such filing;
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1 ‘‘(B) if the respondent files an objection to

2 such application and the special master does not

3 enter a decision with respect to the application

4 within 60 days after the date on which the objec5 tion is filed, the special master involved shall,

6 upon the written request of the petitioner, enter

7 a decision within 15 days after the filing of such

8 request; and

9 ‘‘(C) if the respondent files an objection to

10 such application and the petitioner moves to re11 duce costs and fees as provided for in the objec12 tion, the special master shall enter a decision

13 within 5 days after the receipt of the petitioner’s

14 motion.

15 The chief special master, upon the request of a special

16 master, may waive the time limitations applicable to

17 the special master under this paragraph if the special

18 master demonstrates that complicating factors exist

19 with respect to the issues involved to which the time

20 limitation applies.’’.

21 (B) APPLICATION.—The amendment made

22 by subparagraph (A) shall apply to all petition23 ers’ applications for attorneys’ fees and costs

24 filed under section 2115(e) of the Public Health
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1 Service Act which are pending on the date of en2 actment of this Act.

3 (5) AUTHORIZATION OF APPROPRIATIONS.—Sec4 tion 2115(j) (42 U.S.C. 300aa–15(j)) is amended by

5 striking ‘‘$80,000,000 for each succeeding fiscal year’’

6 and inserting in lieu thereof ‘‘$110,000,000 for each

7 succeeding fiscal year’’.

8 (6) LIMITATION OF ACTIONS.—Section 2116(b)

9 (42 U.S.C. 300aa–16(b)) is amended by striking

10 ‘‘such person may file’’ and inserting ‘‘or to signifi11 cantly increase the likelihood of obtaining compensa12 tion, such person may, notwithstanding section

13 2111(b)(2), file’’.

14 (b) EXTENSION OF TIME FOR DECISION.—

15 (1) JURISDICTION.—Section 2112(d)(3)(D) (42

16 U.S.C. 300aa–12(d)(3)(D)) is amended by striking

17 ‘‘540 days’’ and inserting ‘‘30 months (but for not

18 more than 6 months at a time)’’.

19 (2) REPORT ON COLLECTIONS.—Section 2117

20 (42 U.S.C. 300aa–17) is amended by adding at the

21 end thereof the following new subsection:

22 ‘‘(c) REPORT.—The Attorney General shall, on Janu23 ary 1 of each year, prepare and submit to the appropriate

24 committees of Congress a report concerning amounts col25 lected under this section.’’.
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1 (3) INCREASED RESPONSIBILITIES OF COMMIS2 SION.—Section 2119(f) (42 U.S.C. 300aa–19(f)) is

3 amended—

4 (A) by striking ‘‘and’’ at the end of para5 graph (4);

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

7 paragraph (5) and inserting ‘‘, and’’; and

8 (C) by adding at the end thereof the follow9 ing new paragraph:

10 ‘‘(6) monitor the balance of the Vaccine Injury

11 Trust Fund established by section 9510 of the Inter12 nal Revenue Code and, as appropriate, recommend

13 changes in the tax per dose of vaccine imposed under

14 section 4131 of such Code.’’.

15 (c) SIMPLIFICATION OF VACCINE INFORMATION MATE16 RIALS.—

17 (1) INFORMATION.—Section 2126(b) (42 U.S.C.

18 300aa–26(b)) is amended—

19 (A) by striking ‘‘by rule’’ in the matter pre20 ceding paragraph (1);

21 (B) in paragraph (1), by striking ‘‘90’’ and

22 inserting ‘‘30’’; and

23 (C) in paragraph (2), by striking ‘‘, appro24 priate health care providers and parent organi25 zations’’.
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1 (2) REQUIREMENTS.—Section 2126(c) (42

2 U.S.C. 300aa–26(c)) is amended—

3 (A) in the matter preceding paragraph (1),

4 by inserting ‘‘shall be based on available data

5 and information,’’ after ‘‘such materials’’; and

6 (B) by striking out paragraphs (1) through

7 (10) and inserting in lieu thereof the following

8 new paragraphs:

9 ‘‘(1) a concise description of the benefits of the

10 vaccine;

11 ‘‘(2) a concise description of the risks associated

12 with the vaccine;

13 ‘‘(3) a statement of the availability of the Na14 tional Vaccine Injury Compensation Program;

15 ‘‘(4) a statement of the availability from the Sec16 retary of more detailed written information concern17 ing the information required under paragraphs (1),

18 (2), and (3), that shall be made available to the par19 ent, legal guardian, or other responsible person upon

20 request; and

21 ‘‘(5) such other relevant information as deter22 mined appropriate by the Secretary.’’.

23 (3) OTHER INDIVIDUALS.—Subsections (a) and

24 (d) of section 2126 (42 U.S.C. 300aa–26(a) and (d))

25 are amended by inserting ‘‘or to any other individ-
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1 ual’’ immediately after ‘‘to the legal representative of

2 any child’’ each place that such occurs.

3 (4) PROVIDER DUTIES.—Subsection (d) of sec4 tion 2126 (42 U.S.C. 300aa–26(d)) is amended—

5 (A) by striking all after ‘‘subsection (a),’’

6 the second place it appears in the first sentence

7 and inserting ‘‘supplemented with visual presen8 tations or oral explanations, in appropriate

9 cases.’’; and

10 (B) by striking ‘‘or other information’’ in

11 the last sentence.

12 (d) AUTHORIZATION OF APPROPRIATIONS.—Part A of

13 subtitle 2 of title XXI (42 U.S.C. 300aa–10 et seq.) is

14 amended by adding at the end thereof the following new

15 section:

16 ‘‘AUTHORIZATION OF APPROPRIATIONS

17 ‘‘SEC. 2120. (a) SECRETARY.—For purposes of admin18 istering this part, there are authorized to be appropriated

19 from the Vaccine Injury Compensation Trust Fund estab20 lished under section 9510(c) of the Internal Revenue Code

21 of 1986, to the Secretary, $3,000,000 for each of the fiscal

22 years 1994, 1995 and 1996.

23 ‘‘(b) ATTORNEY GENERAL.—For purposes of admin24 istering this part, there are authorized to be appropriated

25 from the Vaccine Injury Compensation Trust Fund de-
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1 scribed in subsection (a), to the Attorney General,

2 $3,000,000 for each of the fiscal years 1994, 1995 and 1996.

3 ‘‘(c) COURT OF FEDERAL CLAIMS.—For purposes of

4 administering this part, there are authorized to be appro5 priated from the Vaccine Injury Compensation Trust Fund

6 described in subsection (a), to the Court of Federal Claims,

7 $3,000,000 for each of the fiscal years 1994, 1995 and

8 1996.’’.

9 SEC. 12204. MISCELLANEOUS PROVISIONS.

10 Section 317(k) (42 U.S.C. 247b(k)) is amended—

11 (1) by striking out paragraph (1); and

12 (2) by redesignating paragraphs (2) through (5)

13 as paragraphs (1) and (4), respectively.

14 SEC. 12205. PERFORMANCE BASED GRANT PROGRAM.

15 (a) ANNUAL REPORT.—Not later than July 1 of each

16 year, a State shall prepare and submit to the Director of

17 the Center for Disease Control and Prevention a report that

18 contains an estimate (based on a base population sample)

19 of the percentage of 2 year old residents of the State who

20 have been fully immunized as described in subsection (c).

21 (b) PAYMENTS TO STATES.—

22 (1) IN GENERAL.—Subject to the availability of

23 appropriations, the Secretary of Health and Human

24 Services shall provide to a State that has submitted

25 an annual report under subsection (a) that dem-
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1 onstrates that the State has fully immunized at least

2 50 percent of the 2 year old residents of that State,

3 with respect to the year for which the report was pre4 pared, a payment in an amount equal to—

5 (A) with respect to a State that has dem6 onstrated the full immunization of at least 50

7 and less than 65 percent of all 2 year old resi8 dents of the State, $50 multiplied by the number

9 of fully immunized 2 year old resident children

10 in excess of the number of children equaling such

11 50 percent amount;

12 (B) with respect to a State that has dem13 onstrated the full immunization of at least 65

14 and less than 70 percent of all 2 year old resi15 dents of the State, $75 multiplied by the number

16 of fully immunized 2 year old resident children

17 in excess of the number of children equaling such

18 65 percent amount; and

19 (C) with respect to a State that has dem20 onstrated the full immunization of at least 70

21 and less than 91 percent of all 2 year old resi22 dents of the State, $100 multiplied by the num23 ber of fully immunized 2 year old resident chil24 dren in excess of the number of children equaling

25 such 70 percent amount.
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1 (2) As a condition of receiving amounts under

2 this section—

3 (i) States which combine State and Federal

4 funds to reach immunization goals shall agree to

5 reinvest in activities related to improving immu6 nization services that percentage of the payment

7 under subsection (b)(1) which is equal to the

8 Federal contribution to immunization services in

9 the State proportional to the State contribution

10 to such services.

11 (ii) States which verify that State-only

12 funds are responsible for the increase in immu13 nization rates that qualifies such State for pay14 ment under subsection (b)(1) may use amounts

15 awarded under this section for other purposes at

16 the State’s discretion.

17 (3) VERIFICATION.—Prior to making a payment

18 to a State under this subsection, the Secretary of

19 Health and Human Services shall, in collaboration

20 with the Centers for Disease Control and Prevention,

21 verify the accuracy of the State report involved.

22 (c) DEFINITION.—For purposes of this section, the

23 term ‘‘fully immunized’’ means a 2 year old child that has

24 received four doses of DTP vaccine (diphtheria, tetanus,
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1 pertussis), three doses of polio vaccine, and one dose of

2 MMR (measles, mumps, rubella) vaccine.

3 Subtitle D—ERISA Amendments

4 CHAPTER 1—GROUP HEALTH AMENDMENTS

5 SEC. 12301. COORDINATION OF ERISA PREEMPTION RULES

6 WITH SOCIAL SECURITY ACT PROVISIONS

7 PROVIDING FOR LIABILITY OF THIRD PAR8 TIES AND CHILD HEALTH INSURANCE SUP9 PORT ENFORCEMENT.

10 (a) IN GENERAL.—Paragraph (8) of section 514(b) of

11 the Employee Retirement Income Security Act of 1974 (29

12 U.S.C. 1144(b)(8)) is amended to read as follows:

13 ‘‘(8)(A) Subsection (a) of this section shall not apply

14 to any State law to the extent necessary to permit the State

15 to comply with the following requirements for the receipt

16 of Federal financial assistance under title XIX of the Social

17 Security Act:

18 ‘‘(i) subparagraphs (A), (B), and (I) of section

19 1902(a)(25) of such Act (relating to third-party li20 ability) and section 1903(o) of such Act (relating to

21 medicaid as secondary payor), as in effect on October

22 1, 1993; and

23 ‘‘(ii) sections 1902(a)(60) and 1908 of such Act

24 (relating to assignment of rights of payment and

25 child health insurance support), as in effect on the
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1 date of the enactment of the Omnibus Budget Rec2 onciliation Act of 1993.

3 ‘‘(B) Paragraph (2)(B) shall not apply to any State

4 law to the extent necessary to permit the compliance of the

5 State with any of the requirements described in subpara6 graph (A).’’.

7 (b) EFFECTIVE DATE.—The amendment made by sub8 section (a) shall take effect October 1, 1993.

9 SEC. 12302. CONTINUED COVERAGE OF COSTS OF A PEDI10 ATRIC VACCINE UNDER GROUP HEALTH

11 PLANS.

12 (a) IN GENERAL.—Part 6 of subtitle B of title I of

13 the Employee Retirement Income Security Act of 1974 (29

14 U.S.C. 1161 et seq.) is amended by adding at the end the

15 following new section:

16 ‘‘SEC. 609. CONTINUED COVERAGE OF COSTS OF A PEDI17 ATRIC VACCINE UNDER GROUP HEALTH

18 PLANS.

19 ‘‘A group health plan may not reduce its coverage of

20 the costs of pediatric vaccines (as defined under section

21 2162 of the Public Health Service Act) below the coverage

22 it provided as of May 1, 1993.’’.
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1 (b) CONFORMING AMENDMENT.—The table of contents

2 in section 1 of such Act is amended by adding after the

3 item relating to section 608 the following new item:

‘‘Sec. 609. Continued coverage of costs of a pediatric vaccine under group health

plans.’’.

4 (c) EFFECTIVE DATE.—The amendments made by this

5 section shall apply with respect to plan years beginning

6 after the date of the enactment of this Act.

7 CHAPTER 3—PUBLIC HEALTH SERVICE ACT

8 SEC. 12321. PROHIBITION ON REDUCTION IN COVERAGE OF

9 PEDIATRIC VACCINE.

10 Part D of subtitle 2 of title XXI of the Public Health

11 Service Act (42 U.S.C. 300aa–31 et seq.) is amended by

12 adding at the end thereof the following new section:

13 ‘‘SEC. 2135. PROHIBITION ON REDUCTION IN COVERAGE OF

14 PEDIATRIC VACCINE.

15 ‘‘(a) IN GENERAL.—Notwithstanding any other provi16 sion of law, a health insurance policy in effect prior to May

17 1, 1993, may not reduce the level of coverage for the costs

18 of pediatric vaccines below the level of coverage provided

19 on the date of enactment of this section.

20 ‘‘(b) CIVIL MONEY PENALTY.—

21 ‘‘(1) IN GENERAL.—An entity that fails to com22 ply with subsection (a) shall be subject, in addition

23 to any other penalties that may be prescribed by law,

24 to a civil money penalty of not to exceed $1,000 for
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1 each individual with respect to whom such a failure

2 occurs.

3 ‘‘(2) ENFORCEMENT.—With respect to an entity

4 that offers a health insurance policy in violation of

5 subsection (a), the provisions of section 353(h)(3), re6 garding procedures for the imposition of civil money

7 penalties developed by the Secretary, shall apply in

8 the same manner as such provisions apply to pen9 alties or proceedings under section 353.

10 ‘‘(c) DEFINITIONS.—As used in this section:

11 ‘‘(1) HEALTH INSURANCE POLICY.—The term

12 ‘health insurance policy’ has the same meaning given

13 the term ‘employee welfare benefit plan’ in section

14 3(1) of the Employee Retirement Income Security Act

15 of 1974 (29 U.S.C. 1002(1)) and includes any other

16 policy or plan which provides coverage for the provi17 sion of health care services (including a health main18 tenance organization agreement).

19 ‘‘(2) PEDIATRIC VACCINES.—The term ‘pediatric

20 vaccines’ has the same meaning given such term in

21 section 2163.’’.
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1 TITLE XIII—VETERANS’

2 PROGRAMS

3 SEC. 13001. PERMANENT EXTENSION OF LIMITATION ON

4 PENSION FOR CERTAIN RECIPIENTS OF MED5 ICAID-COVERED NURSING HOME CARE.

6 Section 5503(f) of title 38, United States Code, is

7 amended by striking out paragraph (7).

8 SEC. 13002. POLICY REGARDING COST-OF-LIVING ADJUST9 MENT IN COMPENSATION RATES.

10 The fiscal year 1994 cost-of-living adjustments in the

11 rates of and limitations for compensation payable under

12 chapter 11 of title 38, United States Code, and of depend13 ency and indemnity compensation payable under chapter

14 13 of such title will be no more than a percentage equal

15 to the percentage by which benefit amounts payable under

16 title II of the Social Security Act (42 U.S.C. 401 et seq.)

17 are increased effective December 1, 1993, as a result of a

18 determination under section 215(i) of such Act (42 U.S.C.

19 415(i)), with all increased monthly rates and limitations

20 (other than increased rates or limitations equal to a whole

21 dollar amount) rounded down to the next lower dollar. The

22 effective date of such adjustments shall not be earlier than

23 December 4, 1993.
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1 SEC. 13003. REDUCTION IN BASIC PAY AND INCENTIVES OF

2 MONTGOMERY GI BILL PARTICIPANTS.

3 (a) ACTIVE DUTY.—Section 3011(b) of title 38, United

4 States Code, is amended—

5 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’;

6 (2) by designating the second sentence as para7 graph (2); and

8 (3) in paragraph (1), as so designated, by strik9 ing out ‘‘shall be reduced by’’ and all that follows

10 through the period and inserting in lieu thereof ‘‘shall

11 be reduced by—

12 ‘‘(A) in the case of an individual who first enters

13 on active duty before October 1, 1993, $100 for each

14 of the first 12 months that such individual is entitled

15 to such pay;

16 ‘‘(B) in the case of an individual who first enters

17 on active duty during the fiscal year beginning on

18 October 1, 1993, $137 for each of the first 12 months

19 that such individual is entitled to such pay; and

20 ‘‘(C) in the case of an individual who first enters

21 on active duty during any fiscal year beginning after

22 September 30, 1994, an amount for each of the first

23 12 months that such individual is entitled to such

24 pay that is equal to the amount of the monthly pay

25 reduction of an individual under this paragraph dur26 ing the previous fiscal year increased by the same
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1 percentage, if any, as the percentage by which month2 ly rates of educational assistance are increased for

3 such fiscal year under section 3015(g)(3) of this

4 title.’’.

5 (b) SELECTED RESERVE.—Section 3012(c) of such

6 title is amended—

7 (1) by inserting ‘‘(1)’’ after ‘‘(c)’’;

8 (2) by designating the second sentence as para9 graph (2); and

10 (3) in paragraph (1), as so designated, by strik11 ing out ‘‘shall be reduced by’’ and all that follows

12 through the period and inserting in lieu thereof ‘‘shall

13 be reduced by—

14 ‘‘(A) in the case of an individual who first enters

15 on active duty before October 1, 1993, $100 for each

16 of the first 12 months that such individual is entitled

17 to such pay;

18 ‘‘(B) in the case of an individual who first enters

19 on active duty during the fiscal year beginning on

20 October 1, 1993, $137 for each of the first 12 months

21 that such individual is entitled to such pay; and

22 ‘‘(C) in the case of an individual who first enters

23 on active duty during any fiscal year beginning after

24 September 30, 1994, an amount for each of the first

25 12 months that such individual is entitled to such
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1 pay that is equal to the amount of the monthly pay

2 reduction of an individual under this paragraph dur3 ing the previous fiscal year increased by the same

4 percentage, if any, as the percentage by which month5 ly rates of educational assistance are increased for

6 such fiscal year under section 3015(g)(3) of this

7 title.’’.

8 (c) ENROLLMENT BEFORE INVOLUNTARY SEPARA9 TION.—Section 3018A(b) of such title is amended by strik10 ing out ‘‘$1,200’’ and inserting in lieu thereof ‘‘an amount

11 equal to 12 times the amount of the monthly pay reduction

12 determined for the individual in accordance with section

13 3011(b)(1) or section 3012(c)(1) of this title. For the pur14 poses of such determination, the date of the individual’s

15 election to receive assistance under subsection (a)(5) shall

16 be considered the date that the individual first enters on

17 active duty.’’.

18 (d) ENROLLMENT BY VOLUNTARY SEPARATION INCEN19 TIVE RECIPIENTS.—Section 3018B(b)(1) of such title is

20 amended by striking out ‘‘$1,200’’ and inserting in lieu

21 thereof ‘‘an amount equal to 12 times the amount of the

22 monthly pay reduction determined for the individual in ac23 cordance with section 3011(b)(1) or section 3012(c)(1) of

24 this title. For the purposes of such determination, the date

25 of the individual’s election to receive assistance under sub-
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1 section (a)(1)(E) shall be considered the date that the indi2 vidual first enters on active duty.’’.

3 SEC. 13004. PERMANENT EXTENSION OF PROCEDURES AP4 PLICABLE TO LIQUIDATION SALES UPON DE5 FAULT OF HOME LOANS GUARANTEED BY

6 THE DEPARTMENT OF VETERANS AFFAIRS.

7 (a) INCLUSION OF RESALE LOSSES IN NET-VALUE

8 CALCULATION.—Paragraph (1)(C) of section 3732(c) of title

9 38, United States Code, is amended by inserting ‘‘(includ10 ing losses sustained on the resale of the property)’’ after

11 ‘‘resale’’.

12 (b) PERMANENT EXTENSION OF AUTHORITY.—Para13 graph (11) of such section is repealed.

14 SEC. 13005. INCREASE IN CERTAIN LOAN FEES.

15 (a) FEE INCREASE.—Paragraph (2) of section 3729(a)

16 of title 38, United States Code, is amended—

17 (1) in the matter above subparagraph (A), by

18 striking out ‘‘1.25 percent’’ and inserting in lieu

19 thereof ‘‘2 percent’’;

20 (2) in subparagraph (A), by striking out ‘‘one

21 percent’’ and inserting in lieu thereof ‘‘1 percent’’;

22 (3) in subparagraph (B), by striking out ‘‘0.75

23 percent’’ and inserting in lieu thereof ‘‘1.50 percent’’;
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1 (4) in subparagraph (C), by striking out ‘‘0.50

2 percent’’ and inserting in lieu thereof ‘‘1.25 percent’’;

3 and

4 (5) in subparagraph (D)—

5 (i) by striking out ‘‘two percent’’ in clause

6 (i) and inserting in lieu thereof ‘‘2.75 percent’’;

7 (ii) by striking out ‘‘one percent’’ in clause

8 (ii) and inserting in lieu thereof ‘‘1 percent’’;

9 (iii) by striking out ‘‘1.50 percent’’ in

10 clause (iii)(I) and inserting in lieu thereof ‘‘2.25

11 percent’’; and

12 (iv) by striking out ‘‘1.25 percent’’ in clause

13 (iii)(II) and inserting in lieu thereof ‘‘2 per14 cent’’.

15 (b) FEE FOR MANUFACTURED HOMES.—Such para16 graph is further amended—

17 (1) in subparagraph (A), by striking out ‘‘or for

18 any purpose specified in section 3712 of this title

19 (other than section 3712(a)(1)(F))’’;

20 (2) by striking out ‘‘and’’ at the end of subpara21 graph (D);

22 (3) by striking out the period at the end of sub23 paragraph (E) and inserting in lieu thereof ‘‘; and’’;

24 and

25 (4) by adding at the end the following:
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1 ‘‘(F) in the case of a loan made for any purpose

2 specified in section 3712 of this title (other than sub3 section (a)(1)(F) of such section), the amount of such

4 fee shall be one percent of the total loan amount.’’.

5 (c) REPEAL OF TEMPORARY INCREASE IN FEES.—

6 Such section is further amended—

7 (1) in paragraph (2), by striking out ‘‘Except as

8 provided in paragraph (6) of this subsection, the’’ in

9 the matter above subparagraph (A) and inserting in

10 lieu thereof ‘‘The’’; and

11 (2) by striking out paragraph (6).

12 SEC. 13006. PERMANENT EXTENSION OF MEDICAL CARE

13 COST RECOVERY AUTHORITY.

14 Section 1729(a)(2)(E) of title 38, United States Code,

15 is amended by striking out ‘‘before August 1, 1994,’’.

16 SEC. 13007. PERMANENT EXTENSION OF REQUIREMENT

17 THAT CERTAIN VETERANS MAKE

18 COPAYMENTS FOR HEALTH-CARE SERVICES.

19 (a) MEDICATION COPAYMENT REQUIREMENT.—Sec20 tion 1722A of title 38, United States Code, is amended by

21 striking out subsection (c).

22 (b) HEALTH-CARE CATEGORIES AND COPAYMENTS.—

23 Section 8013 of the Omnibus Budget Reconciliation Act of

24 1990 (38 U.S.C. 1710 note) is amended by striking out sub25 section (e).
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1 SEC. 13008. PERMANENT AUTHORITY TO VERIFY INCOME

2 ELIGIBILITY FOR NEED-BASED BENEFITS.

3 (a) AUTHORITY FOR SECRETARY OF VETERANS AF4 FAIRS TO OBTAIN INFORMATION.—Section 5317 of title 38,

5 United States Code, is amended by striking out subsection

6 (g).

7 (b) AUTHORITY FOR SECRETARY OF TREASURY TO

8 PROVIDE INFORMATION.—Section 6103(l)(7)(D) of the In9 ternal Revenue Code of 1986 is amended by striking out

10 the last sentence.

11 TITLE XIV—ENFORCEMENT

12 PROCEDURES

13 Part A—Extension of Budget

14 Enforcement

15 SEC. 14001. PURPOSE.

16 The Congress declares that it is essential to—

17 (1) preserve the deficit reduction achieved by this

18 Act;

19 (2) extend the system of discretionary spending

20 limits for the single discretionary category set forth in

21 section 601 of the Congressional Budget Act of 1974;

22 (3) extend the pay-as-you-go enforcement system;

23 and

24 (4) prohibit the consideration of direct spending

25 or receipts legislation that would decrease the pay-as26 you-go surplus achieved by this Act and created under
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1 section 252 of the Balanced Budget and Emergency

2 Deficit Control Act of 1985.

3 SEC. 14002. DISCRETIONARY SPENDING LIMITS.

4 (a) DEFINITION OF ‘‘DISCRETIONARY SPENDING

5 LIMIT’’.—Section 601(a)(2) of the Congressional Budget

6 Act of 1974 is amended—

7 (1) in subparagraph (D) by striking the word

8 ‘‘and’’; and

9 (2) by inserting after subparagraph (E) the fol10 lowing:

11 ‘‘and

12 ‘‘(F) with respect to fiscal years 1996, 1997,

13 and 1998, for the discretionary category, the

14 amounts set forth for those years in section

15 12(b)(1) of House Concurrent Resolution 64

16 (One Hundred Third Congress);’’.

17 (b) POINT OF ORDER IN THE SENATE.—Section

18 601(b)(1) of the Congressional Budget Act of 1974 is

19 amended to read as follows:

20 ‘‘(1) Except as otherwise provided in this sub21 section, it shall not be in order in the Senate to con22 sider any concurrent resolution on the budget for fis23 cal year 1995, 1996, 1997, or 1998 (or amendment,

24 motion, or conference report on such a resolution)
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1 that would exceed any of the discretionary spending

2 limits in this section.’’.

3 (c) CONFORMING AMENDMENTS.—(1) Section 251 of

4 the Balanced Budget and Emergency Deficit Control Act

5 of 1985 is amended—

6 (A) in subsection (a) by striking ‘‘FISCAL YEARS

7 1991–1995 ENFORCEMENT.—’’ and inserting ‘‘FISCAL

8 YEARS 1991–1998 ENFORCEMENT.—‘‘;

9 (B) in subsection (b)(1)—

10 (i) in the matter before subparagraph (A),

11 by—

12 (I) striking ‘‘When the President sub13 mits the budget under section 1105(a) of

14 title 31, United States Code, for budget year

15 1992, 1993, 1994, or 1995’’ and inserting

16 ‘‘When the President submits the budget

17 under section 1105(a) of title 31, United

18 States Code, for budget year 1992, 1993,

19 1994, 1995, 1996, 1997, or 1998’’; and

20 (II) striking ‘‘the budget shall include,

21 adjustments to discretionary spending lim22 its (and those limits as cumulatively ad23 justed) for the budget year and each outyear

24 through 1995’’ and inserting ‘‘the budget

25 shall include, adjustments to discretionary
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1 spending limits (and those limits as cumu2 latively adjusted) for the budget year and

3 each outyear through 1998’’;

4 (ii) in paragraph (1)(B), by inserting at

5 the end thereof the following new clause:

6 ‘‘(iii) For a budget submitted for budg7 et year 1996, 1997, or 1998, the adjust8 ments shall be those necessary to reflect

9 changes in inflation estimates since those of

10 March 31, 1993, set forth on page 46 of

11 House Conference Report 103–48.’’;

12 (iii) in the matter before subparagraph (A)

13 in paragraph (2) by—

14 (I) striking ‘‘When OMB submits a se15 questration report under section 254 (g) or

16 (h) for fiscal year 1991, 1992, 1993, 1994,

17 or 1995’’ and inserting ‘‘When OMB sub18 mits a sequestration report under section

19 254 (g) or (h) for fiscal year 1991, 1992,

20 1993, 1994, 1995, 1996, 1997, or 1998’’;

21 and

22 (II) striking ‘‘for the fiscal year and

23 each succeeding year through 1995,’’ and

24 inserting ‘‘for the fiscal year and each suc25 ceeding year through 1998,’’;
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1 (iv) in paragraph (2)(D)(i), by striking

2 ‘‘for fiscal year 1991, 1992, 1993, 1994, or

3 1995,’’ and inserting ‘‘for any fiscal year,’’;

4 (v) in paragraph (2)(E), by—

5 (I) striking the final word ‘‘and’’ in

6 subparagraph (ii); and

7 (II) inserting before the final period

8 the following:

9 ‘‘; and

10 ‘‘(iv) if, for fiscal years 1994, 1995,

11 1996, 1997, and 1998, the amount of new

12 budget authority provided in appropriation

13 Acts exceeds the discretionary spending

14 limit on new budget authority due to tech15 nical estimates made by the director of the

16 Office of Management and Budget, the ad17 justment is the amount of the excess, but not

18 to exceed an amount (for any one fiscal

19 year) equal to 0.1 percent of the adjusted

20 descretionary spending limit on new budget

21 authority for that fiscal year’’; and

22 (vi) in paragraph (2)(F), by inserting im23 mediately before the final period the following: ‘‘,

24 and not to exceed 0.5 percent of the adjusted
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1 descretionary spending limit on outlays for the

2 fiscal year in fiscal year 1996, 1997, or 1998’’.

3 (2) REPORTS.—Sections 254(d)(2) and 254(g)(2)(A) of

4 the Balanced Budget and Emergency Deficit Control Act

5 of 1985 are each amended by striking ‘‘1995’’ and inserting

6 ‘‘1998’’.

7 (3) EXPIRATION.—(A) Notwithstanding section 275(b)

8 of the Balanced Budget and Emergency Deficit Control Act

9 of 1985, sections 250, 251, 252, and 254 through 258C of

10 that Act shall expire on September 30, 1998.

11 (B) Section 607 of the Congressional Budget Act of

12 1974 is amended by striking ‘‘shall apply to fiscal years

13 1991 to 1995’’ and inserting ‘‘shall apply to fiscal years

14 1991 to 1998’’.

15 SEC. 14003. ENFORCING PAY-AS-YOU-GO.

16 (a) Section 252 of the Balanced Budget and Emer17 gency Deficit Control Act of 1985 is amended—

18 (1) in subsection (a), by striking ‘‘FISCAL YEAR

19 1992–1995 ENFORCEMENT.’’ and inserting ‘‘FISCAL

20 YEAR 1992–1998 ENFORCEMENT.’’;

21 (2) in subsection (d), by striking ‘‘estimate of the

22 amount of change in outlays or receipts, as the case

23 may be, in each fiscal year through fiscal year 1995’’

24 both places that it appears and inserting ‘‘estimate of

25 the amount of change in outlays or receipts, as the
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1 case may be, in each fiscal year through fiscal year

2 1998’’ both places; and

3 (3) in subsection (e), by striking ‘‘for fiscal year

4 1991, 1992, 1993, 1994, or 1995,’’ and inserting ‘‘for

5 any fiscal year from 1991 through 1998,’’.

6 (b) Section 254(g)(3) of the Balanced Budget and

7 Emergency Deficit Control Act of 1985 is amended by strik8 ing ‘‘1995’’ and inserting ‘‘1998’’.

9 (c) Upon enactment of this Act, the director of the Of10 fice of Management and Budget shall reduce the balances

11 of direct spending and receipts legislation applicable to each

12 fiscal year under section 252 of the Balanced Budget and

13 Emergency Deficit Control Act of 1985 by an amount equal

14 to the net deficit reduction achieved through the enactment

15 in this Act of direct spending and receipts legislation for

16 that year.

17 SEC. 14004. EXERCISE OF RULE-MAKING POWERS.

18 The Congress enacts the provisions of this part—

19 (1) as an exercise of the rule-making power of

20 the Senate and the House of Representatives, respec21 tively, and as such these provisions shall be consid22 ered as part of the rules of each House, respectively,

23 or of that House to which they specifically apply, and

24 such rules shall supersede other rules only to the ex25 tent that they are inconsistent therewith; and
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1 (2) with full recognition of the constitutional

2 right of either House to change such rules (so far as

3 relating to such House) at any time, in the same

4 manner, and to the same extent as in the case of any

5 other rule of such House.

6 TITLE XV—MISCELLANOUS

7 PROVISIONS

8 SEC. 15001. SENSE OF THE SENATE WITH RESPECT TO FED9 ERAL ENTERPRISE ZONES AND RURAL DE10 VELOPMENT INVESTMENT ZONES.

11 (a) FINDINGS.—The Senate finds that—

12 (1) the crises of poverty, high unemployment,

13 out-migration, and job loss in America’s inner-cities,

14 rural areas and Indian reservations demands an ap15 propriate and timely response from Congress;

16 (2) manufacturing and industry has largely dis17 appeared from many United States inner cities and

18 rural areas. This, in turn, has led to the severe de19 cline in good high-wage jobs, wholesale trade, retail

20 businesses, and a large source of local tax revenues;

21 (3) encouraging small and medium-sized busi22 nesses, which create the majority of new jobs in the

23 United States economy, to locate and invest in poor

24 areas is one of the keys to revitalizing urban and

25 rural America;
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1 (4) Enterprise Zones will help attract businesses

2 to build and grow in poor areas; they will give people

3 incentives to invest in such businesses and to hire and

4 train both unemployed and economically disadvan5 taged individuals; they will create jobs and stimulate

6 entrepreneurship; and they will help restore the local

7 tax revenue base to these communities;

8 (5) the decline of small industry in rural areas

9 has caused thousands of people to leave such areas,

10 thus hastening the decay of rural communities and

11 leaving the elderly in particular stranded without the

12 help of family and younger neighbors;

13 (6) Enterprise Zones have been tested in 37

14 States since 1982 and have proven to be successful,

15 having generated capital investments in poor neigh16 borhoods in excess of $28,000,000,000 and having cre17 ated more than 258,000 jobs; and

18 (7) Enterprise Zones have been endorsed by,

19 among others, the National Governors Association, the

20 National Council of State Legislators, the Council of

21 Black State Legislators, the Conference of Mayors,

22 and the Conference of Black Mayors.

23 (b) DEFINITIONS.—

24 (1) The term ‘‘Enterprise Zone’’ means any eco25 nomically distressed urban area, rural area, or In-
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1 dian reservation designated by the Secretaries of

2 Housing and Urban Development, Agriculture or In3 terior for special regulatory and tax treatment, and

4 for the targeting of Federal, State, and local programs

5 for the purposes of providing economic revitalization,

6 economic development, and job creation;

7 (2) The term ‘‘empowerment zone’’ means any

8 designated enterprise zone which is designated to re9 ceive the full package of regulatory and tax relief and

10 targeted programs as provided for by the enterprise

11 zone program; and

12 (3) The term ‘‘enterprise community’’ means any

13 area eligible for enterprise zone designation and ulti14 mately designated by the Secretaries of Housing and

15 Urban Development, Agriculture, or the Interior but

16 does not receive the full package regulatory relief, tax

17 relief and targeted programs.

18 (c) SENSE OF THE SENATE.—It is the Sense of the

19 Senate that—

20 (1) enterprise zones are a vital, proven tool for

21 inner-city, rural, and Indian reservation revitaliza22 tion and that Congress should adopt Federal enter23 prise zone legislation;

24 (2) to insure cooperation and coordination

25 among Federal agencies and to provide targeted regu-
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1 latory relief, such legislation shall include the estab2 lishment of an Enterprise Board to development the

3 selection criteria and to waive any provision of Fed4 eral law or regulation administered by the Secretary

5 of the Department’s of Housing and Urban Develop6 ment, Agriculture, Health and Human Services,

7 Labor, or Education, if the Board determines the

8 waiver is necessary for achievement of the comprehen9 sive strategic plan of an enterprise zone;

10 (3) to adequately and substantially address the

11 crisis in urban and rural America, such legislation

12 shall include at least 75 empowerment zones; and

13 (4) each empowerment zone shall include each of

14 the following provisions:

15 (A) Enterprise Grants for implementing

16 local coordinated strategic plans such as:

17 (i) creating new, coordinated delivery

18 systems for relevant government services;

19 (ii) creating community lending or

20 micro-enterprise loan funds;

21 (iii) providing technical assistance, en22 trepreneurial support, workforce skill pro23 grams, and job-search and job matching

24 networks in the labor market;
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1 (iv) leveraging private matching sup2 port; and

3 (v) matching funds for community de4 velopment corporations;

5 (B) Community Policing Grants to increase

6 police presence, expand cooperative efforts be7 tween law enforcement and the community, and

8 to assure public safety;

9 (C) Innovative programs and zone priority

10 investments of existing Federal agency funds tar11 geted towards empowerment zones;

12 (D) Tax incentives aimed at reducing both

13 capital and labor costs associated with operation

14 of a business in an empowerment zone;

15 (E) Tax incentives aimed at attracting eq16 uity investments, including venture and seed

17 capital, in start-up or small enterprise zone

18 businesses; and

19 (F) Tax incentives to encourage the hiring

20 and training of economically disadvantaged in21 dividuals;

22 (5) Because the migration of jobs from rural

23 areas has caused many families to migrate too, the

24 indications of distress are different for rural than for

25 urban areas. Specifically, in determining whether a
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1 rural area is eligible for an enterprise zone, the fac2 tors shall include job loss and out-migration, rather

3 than just the poverty rate, which is an appropriate

4 factor for urban areas.

5 SEC. 15002. AMERICAN CITIZENS ANNUAL REPORT ACT.

6 (a) SHORT TITLE.—This section may be cited as the

7 ‘‘American Citizens Annual Report Act’’.

8 (b) FINDINGS AND PURPOSES.—

9 (1) FINDINGS.—The Congress makes the follow10 ing findings:

11 (A) Publicly owned corporations provide

12 shareholders with an annual report on the finan13 cial status of the corporation.

14 (B) Americans are entitled to an annual re15 port on the financial status of the Federal Gov16 ernment, as all citizens share an interest in the

17 financial well-being of our Federal Government.

18 Accurate, consistent, and broadly distributed re19 porting on the Nation’s finances are central to

20 the conduct of democracy.

21 (C) Recent Federal budget deficits have re22 sulted in more than a tripling of the Federal

23 debt. With prospects for enormous Federal budget

24 deficits for the next several years, the debt is a
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1 burden that affects the present and future gen2 erations of Americans.

3 (D) The actual financial performance of the

4 Federal Government often differs from the budget

5 by tens, even hundreds, of billions of dollars. For

6 example, the fiscal year 1991 budget was to re7 sult in a deficit of $63,000,000,000. Instead, the

8 actual deficit for the year was $268,700,000,000.

9 (E) The Chief Financial Officers Act is

10 leading agencies to develop reliable and relevant

11 financial information that is to be useful to the

12 public, including audited financial statements.

13 (F) The Federal Government continues to

14 lose billions of dollars each year through fraud,

15 waste, abuse, and mismanagement. Standardized

16 reporting to the public is essential to the im17 provement of accountability of public programs.

18 (G) The growing Federal debt is hindering

19 economic growth and competitiveness, and ulti20 mately, reduces the standard of living of all

21 Americans.

22 (2) PURPOSES.—The purposes of this section are

23 to—
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1 (A) provide the American taxpayer with an

2 annual report on the financial status of the Fed3 eral Government;

4 (B) increase the participation and aware5 ness of the public in finding solutions to the Fed6 eral Government’s budget problems;

7 (C) require the President, Congressional

8 leaders, and the chief financial officers of the

9 Government to report to the public on the well10 being of the Federal Government’s finances as a

11 part of their fiduciary responsibilities; and

12 (D) bring a public focus to efforts already

13 underway that seek to develop and improve fi14 nancial standards, annual reporting, and sys15 tems in the agencies of the Federal Government.

16 (c) ANNUAL REPORT.—Section 3513 of title 31, United

17 States Code, is amended by adding at the end thereof the

18 following:

19 ‘‘(d)(1) The Secretary of the Treasury shall distribute

20 to all taxpayers described in paragraph (6) an annual re21 port (referred to in this subsection as the ‘annual report’)

22 containing—

23 ‘‘(A) the most recent 5-year actual trends in

24 Federal receipts, expenditures, fund balances, assets

25 and liabilities, and debts by major category or source,
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1 along with a brief description of those trends for the

2 most recent year;

3 ‘‘(B) a comparison of the actual Federal spend4 ing and revenues by major category or source for the

5 most recent fiscal year—

6 ‘‘(i) to the budget request estimates as sub7 mitted by the President for that year; and

8 ‘‘(ii) to the enacted budget,

9 along with notes explaining differences;

10 ‘‘(C) statements from the President, the Majority

11 Leader of the Senate, and the Speaker of the House

12 of Representatives regarding significant aspects of the

13 Government’s financial performance; and

14 ‘‘(D) any other relevant information on the Gov15 ernment’s performance and contributions to economic

16 growth, productivity, and investment in infrastruc17 ture recommended for inclusion by the advisory com18 mittee and deemed appropriate by the Director of the

19 Office of Management and Budget.

20 ‘‘(2)(A) Preparation and content of the annual report

21 shall be supervised and directed by the Director of the Office

22 of Management and Budget.

23 ‘‘(B) There is established an advisory committee to

24 provide the Director of the Office of Management and Budg25 et with comments and suggestions on the design and content
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1 of the annual report. The advisory committee shall consist

2 of 9 members as follows:

3 ‘‘(i) 3 members to be appointed by the President.

4 ‘‘(ii) 2 members to be appointed by the Majority

5 Leader of the Senate.

6 ‘‘(iii) 1 member to be appointed by the Minority

7 Leader of the Senate.

8 ‘‘(iv) 2 members to be appointed by the Speaker

9 of the House of Representatives.

10 ‘‘(v) 1 member to be appointed by the Minority

11 Leader of the House of Representatives.

12 ‘‘(3) The annual report shall contain a statement of

13 assurance by the Director of the Office of Management and

14 Budget and an audit opinion the Comptroller General at15 testing to the reliability and relevancy accuracy of the in16 formation contained in the annual report.

17 ‘‘(4) The annual report shall be prepared annually in

18 a timely fashion after the close of each fiscal year. If the

19 final annual report for a fiscal year is not available within

20 3 calendar months after the close of that fiscal year, a pre21 liminary annual report shall be prepared and published

22 within that period containing substantially all the material

23 described in subparagraphs (A) and (B) of paragraph (1)

24 and the final annual report shall be prepared and published

25 as soon as possible thereafter.
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1 ‘‘(5)(A) In the case of any booklet of instructions for

2 Form 1040, 1040A, or 1040EZ prepared by the Secretary

3 for filing individual income tax returns for taxable years

4 beginning in any calendar year, the Secretary shall include

5 on the front inside cover of such booklet of instructions (in

6 addition to the information required in subsection (a) of

7 section 7523 of the Internal Revenue Code of 1986) a sum8 mary of the annual report prepared by the Director.

9 ‘‘(B) The summary referred to in subparagraph (A)

10 shall—

11 ‘‘(i) include the cumulative Federal debt at the

12 end of each of the 10 preceding fiscal years expressed

13 in total dollars and in dollars per capita;

14 ‘‘(ii) include the Federal deficit for each of the

15 10 preceding years expressed in total dollars and dol16 lars per capita; and

17 ‘‘(iii) be presented in a manner that is easily

18 comprehensible to a taxpayer.

19 ‘‘(6)(A) A taxpayer is described in this paragraph if

20 such taxpayer designates on the form for the return of the

21 tax imposed by chapter 1 of the Internal Revenue Code of

22 1986 for any taxable year that such taxpayer desires a copy

23 of the annual report described in this subsection and, in

24 cases where a taxpayer requests more than one copy of the
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1 report, submits a processing fee (if any) as described in

2 paragraph (7).

3 ‘‘(B) Space shall be made available for the designation

4 referred to in subparagraph (A) on the first page of the tax

5 return forms for such tax.

6 ‘‘(7) Notwithstanding any other provision of law, the

7 Secretary of the Treasury may impose a processing fee or

8 may accept contributions from corporations, foundations,

9 and other private entities for distribution or preparation

10 of the report, or both.’’.

11 (d) AUTHORIZATION.—For the purpose of carrying out

12 the provisions of the amendment made by this section, there

13 are authorized to be appropriated to the Secretary of the

14 Treasury and the Director of the Office of Management and

15 Budget $10,000,000 for fiscal year 1994, and such sums as

16 may be necessary for fiscal years 1995, 1996, 1997 and

17 1998. These amounts shall include any funds raised through

18 the authority established in section 3513(d)(7) of title 31,

19 United States Code, as added by this section.

Attest:

Secretary.
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