H. R. 2264—17
‘‘SEC. 306C. REFINANCING AND PREPAYMENT OF FFB LOANS.
‘‘(a) IN GENERAL.—A borrower of a loan made by the Federal
Financing Bank and guaranteed under section 306 may, at the
option of the borrower, refinance or prepay the loan or an advance
on the loan, or any portion of the loan or advance.
‘‘(b) PENALTY.—
‘‘(1) DETERMINATION
OF
PENALTY.—A penalty shall be
assessed against a borrower that refinances or prepays a loan
or loan advance, or any portion of a loan or advance, under
this section. Except as provided in paragraph (2), the penalty
shall be equal to the lesser of—
‘‘(A) the difference between the outstanding principal
balance of the loan being refinanced and the present value
of the loan discounted at a rate equal to the then current
cost of funds to the Department of the Treasury for obliga-
tions of comparable maturity to the loan being refinanced
or prepaid;
‘‘(B) 100 percent of the amount of interest for 1 year
on the outstanding principal balance of the loan or loan
advance, or any portion of the loan or advance, being
refinanced, multiplied by the ratio that—
‘‘(i) the number of quarterly payment dates
between the date of the refinancing or prepayment
and the maturity date for the loan advance; bears
to
‘‘(ii) the number of quarterly payment dates
between the first quarterly payment date that occurs
12 years after the end of the year in which the amount
being refinanced was advanced and the maturity date
of the loan advance; and
‘‘(C)(i) the present value of 100 percent of the amount
of interest for 1 year on the outstanding principal balance
of the loan or loan advance, or any portion of the loan
or advance, being refinanced or prepaid; plus
‘‘(ii) for the interval between the date of the refinancing
or prepayment and the first quarterly payment date that
occurs 12 years after the end of the year in which the
amount being refinanced or prepaid was advanced, the
present value of the difference between—
‘‘(I) each payment scheduled for the interval on
the loan amount being refinanced or prepaid; and
‘‘(II) the payment amounts that would be required
during the interval on the amounts being refinanced
or prepaid if the interest rate on the loan were equal
to the then current cost of funds to the Department
of the Treasury for obligations of comparable maturity
to the loan being refinanced or prepaid.
‘‘(2) LIMITATION.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph
(B), the penalty provided by paragraph (1)(A) shall be
required for refinancing or prepayment under this section.
‘‘(B) EXCEPTION.—In the case of a loan advanced under
an agreement that permits the refinancing or prepayment
of the loan advance based on the payment of 1 year of
interest on the outstanding principal balance of the loan
advance, a borrower may, in lieu of the penalty required
by paragraph (1)(A), pay a penalty as provided by—
H. R. 2264—18
‘‘(i) paragraph (1)(B), if the loan advance has
reached the 12-year maturity required under the loan
agreement for the refinancing or prepayment; or
‘‘(ii) paragraph (1)(C), if the loan advance has not
reached the 12-year maturity required under the loan
agreement for the refinancing or prepayment.
‘‘(3) FINANCING OF PENALTY.—
‘‘(A) IN GENERAL.—In the case of a refinancing under
this section, a borrower may, at the option of the borrower,
meet the penalty requirements of paragraph (1) by—
‘‘(i) making a payment in the amount of the
required penalty at the time of the refinancing; or
‘‘(ii) increasing the outstanding principal balance
of the loan advance guaranteed by the Administrator
that is being refinanced under this section by the
amount of the penalty.
‘‘(B) INCREASED PRINCIPAL.—If a borrower meets the
penalty requirements of paragraph (1) by increasing the
outstanding principal balance of the loan advance that
is being refinanced, the borrower shall make a payment
at the time of the refinancing equal to 2.5 percent of
the amount of the penalty that is added to the outstanding
principal balance of the loan.
‘‘(c) LOAN TERMS AND CONDITIONS AFTER REFINANCING.—
‘‘(1) IN GENERAL.—On the payment of a penalty as provided
by subsection (b), the loan or loan advance, or any portion
of the loan or advance, shall be refinanced at the interest
rate described in paragraph (2) for a term selected by the
borrower pursuant to paragraph (3), except that this paragraph
shall not apply if the loan advance, or any portion of the
advance, is prepaid by the borrower.
‘‘(2) INTEREST RATE.—The interest rate on a loan refinanced
under this section shall be determined to be equal to the
then current cost of funds to the Department of the Treasury
for obligations of comparable maturity to a term selected by
the borrower pursuant to paragraph (3).
‘‘(3) LOAN TERM.—Subject to paragraph (4), the borrower
of a loan that is refinanced under this section—
‘‘(A) shall select the term for which an interest rate
shall be determined pursuant to paragraph (2); and
‘‘(B) at the end of the term (and any succeeding term
selected by the borrower under this paragraph), may renew
the loan for another term selected by the borrower.
‘‘(4) MAXIMUM TERM.—The borrower may not select a term
pursuant to paragraph (3) that ends after the maturity date
set for the loan before the refinancing of the loan under this
section.
‘‘(5) EXISTING LOANS.—In the case of the refinancing of
a loan of a borrower pursuant to this section and the inclusion
of a penalty in the outstanding principal balance of the
refinanced loan pursuant to subsection (b)(3)—
‘‘(A) the refinancing and inclusion of the penalty shall
not be subject to appropriations or limited by the amount
provided during a fiscal year for new loans, loan guaran-
tees, or other credit activity;
‘‘(B) the request of the borrower for the refinancing
under this section may not be denied or delayed; and
H. R. 2264—19
‘‘(C) the borrower may not be limited in the selection
of any refinancing or prepayment option provided by this
section to the borrower.’’.
(b) REGULATIONS.—Not later than 45 days after the date of
enactment of this section, the Administrator of the Rural Electrifica-
tion Administration shall issue interim final regulations to carry
out the amendment made by subsection (a).
Subtitle C—Agricultural Trade
SEC. 1301. ACREAGE REDUCTION REQUIREMENTS.
(a) IN GENERAL.—Section 1104 of the Omnibus Budget Rec-
onciliation Act of 1990 (7 U.S.C. 1445b–3a note) is amended—
(1) in subsection (a), by striking paragraph (2) and inserting
the following new paragraph:
‘‘(2) corn under which the acreage planted to corn for har-
vest on a farm would be limited to the corn crop acreage
base for the farm for the crop reduced by not less than 71⁄2
percent.’’; and
(2) in subsection (b)(2), by striking ‘‘grain sorghum, and
barley,’’.
(b) READJUSTMENT OF SUPPORT LEVELS.—Section 1302 of such
Act (7 U.S.C. 1421 note) is amended—
(1) in subsection (b)—
(A) by striking paragraph (1); and
(B) by redesignating paragraphs (2) and (3) as para-
graphs (1) and (2), respectively;
(2) in subsection (c), by striking ‘‘and other programs’’;
and
(3) in subsection (d)—
(A) in paragraph (1)—
(i) by striking subparagraph (A); and
(ii) by redesignating subparagraphs (B) and (C)
as subparagraphs (A) and (B), respectively;
(B) in paragraph (2), by striking ‘‘(A), (B), and (C)’’
and inserting ‘‘(A) and (B)’’; and
(C) in paragraph (3)—
(i) by striking ‘‘measures specified in subparagraph
(A) of paragraph (1) and’’; and
(ii) by striking ‘‘(B) or (C)’’ and inserting ‘‘(A) or
(B)’’.
SEC. 1302. MARKET PROMOTION PROGRAM.
(a) REDUCTION OF FUNDING LEVEL.—Section 211(c)(1) of the
Agricultural Trade Act of 1978 (7 U.S.C. 5641(c)(1)) is amended
by striking ‘‘through 1995’’ and inserting ‘‘through 1993, and not
less than $110,000,000 for each of the fiscal years 1994 through
1997,’’.
(b) SECRETARIAL ACTIONS TO ACHIEVE SAVINGS.—In order to
enable the Secretary of Agriculture to achieve the savings required
in the market promotion program established by section 203 of
the Agricultural Trade Act of 1978 (7 U.S.C. 5623) as a result
of the amendments made by this section:
(1) UNFAIR
TRADE
PRACTICES.—Paragraph (2) of section
203(c) of such Act is amended to read as follows:
‘‘(2) UNFAIR TRADE PRACTICES.—
H. R. 2264—20
‘‘(A) REQUIREMENT.—Except as provided in subpara-
graph (B), the Secretary shall provide assistance under
this section only to counter or offset the adverse effects
of a subsidy, import quota, or other unfair trade practice
of a foreign country.
‘‘(B) EXCEPTION.—The Secretary shall waive the
requirements of this paragraph in the case of activities
conducted by small entities operating through the regional
State-related organizations.’’.
(2) GUIDELINES.—The Secretary of Agriculture should
implement changes in the market promotion program estab-
lished by section 203 of such Act, beginning with fiscal year
1994, in order to improve the effectiveness of the program
and to meet the following objectives:
(A) PRIORITY.—In providing assistance for branded pro-
motion, the Secretary should give priority to small-sized
entities.
(B) GRADUATION.—The Secretary should not provide
assistance under the program to promote a specific branded
product in a single market for more than 5 years unless
the Secretary determines that further assistance is nec-
essary in order to meet the objectives of the program.
(C) CONTRIBUTION LEVEL.—
(i) IN GENERAL.—The Secretary should require a
minimum contribution level of 10 percent from an
eligible trade organization that receives assistance for
nonbranded promotion.
(ii) INCREASES IN CONTRIBUTION LEVEL.—The Sec-
retary may increase the contribution level in any subse-
quent year that an eligible trade organization receives
assistance for nonbranded promotion.
(D) ADDITIONALITY.—The Secretary should require
each participant in the program to certify that any Federal
funds received supplement, but do not supplant, private
or third party participant funds or other contributions to
program activities.
(E) INDEPENDENT AUDITS.—If as a result of an evalua-
tion or audit of activities of a participant under the pro-
gram, the Secretary determines that a further review is
justified in order to ensure compliance with the require-
ments of the program, the Secretary should require the
participant to contract for an independent audit of the
program activities, including activities of any subcontrac-
tor.
(3) TOBACCO.—No funds made available under the market
promotion program may be used for activities to develop, main-
tain, or expand foreign markets for tobacco.
(c) REGULATIONS.—Not later than 90 days after the date of
enactment of this Act, the Secretary of Agriculture shall issue
regulations to implement this section and the amendments made
by this section.
Subtitle D—Miscellaneous
SEC. 1401. ADMISSION, ENTRANCE, AND RECREATION FEES.
(a) DEFINITIONS.—As used in this section:
H. R. 2264—21
(1) AREA OF CONCENTRATED PUBLIC USE.—The term ‘‘area
of concentrated public use’’ means an area administered by
the Secretary that meets each of the following criteria:
(A) The area is managed primarily for outdoor recre-
ation purposes.
(B) Facilities and services necessary to accommodate
heavy public use are provided in the area.
(C) The area contains at least 1 major recreation attrac-
tion.
(D) Public access to the area is provided in such a
manner that admission fees can be efficiently collected
at 1 or more centralized locations.
(2) BOAT LAUNCHING FACILITY.—The term ‘‘boat launching
facility’’ includes any boat launching facility, regardless of
whether specialized facilities or services, such as mechanical
or hydraulic boat lifts or facilities, are provided.
(3) CAMPGROUND.—The term ‘‘campground’’ means any
campground where a majority of the following amenities are
provided, as determined by the Secretary:
(A) Tent or trailer spaces.
(B) Drinking water.
(C) An access road.
(D) Refuse containers.
(E) Toilet facilities.
(F) The personal collection of recreation use fees by
an employee or agent of the Secretary.
(G) Reasonable visitor protection.
(H) If campfires are permitted in the campground,
simple devices for containing the fires.
(4) SECRETARY.—The term ‘‘Secretary’’ means the Secretary
of Agriculture.
(b) AUTHORITY TO IMPOSE FEES.—The Secretary may charge—
(1) admission or entrance fees at national monuments,
national volcanic monuments, national scenic areas, and areas
of concentrated public use administered by the Secretary; and
(2) recreation use fees at lands administered by the Sec-
retary in connection with the use of specialized outdoor recre-
ation sites, equipment, services, and facilities, including visitors’
centers, picnic tables, boat launching facilities, and camp-
grounds.
(c) AMOUNT OF FEES.—The amount of the admission, entrance,
and recreation fees authorized to be imposed under this section
shall be determined by the Secretary.
SEC. 1402. ENVIRONMENTAL CONSERVATION ACREAGE RESERVE PRO-
GRAM AMENDMENTS.
(a) ENVIRONMENTAL CONSERVATION ACREAGE RESERVE PRO-
GRAM.—Section 1230(b) of the Food Security Act of 1985 (16 U.S.C.
3830(b)) is amended by striking ‘‘to place in’’ and all that follows
through ‘‘acres’’.
(b) CONSERVATION RESERVE PROGRAM.—Section 1231(d) of such
Act (16 U.S.C. 3831(d)) is amended—
(1) by striking ‘‘may’’ and inserting ‘‘shall’’;
(2) by striking ‘‘the amount of acres specified in section
1230(b)’’ and inserting ‘‘a total of 38,000,000 acres during the
1986 through 1995 calendar years’’; and
H. R. 2264—22
(3) by striking ‘‘each of calendar years 1994 and 1995’’
and inserting ‘‘the 1995 calendar year’’.
(c) WETLANDS RESERVE PROGRAM.—Section 1237 of such Act
(16 U.S.C. 3837) is amended—
(1) by striking subsection (b) and inserting the following
new subsection:
‘‘(b) MINIMUM ENROLLMENT.—The Secretary shall enroll into
the wetlands reserve program—
‘‘(1) a total of not less than 330,000 acres by the end
of the 1995 calendar year; and
‘‘(2) a total of not less than 975,000 acres during the 1991
through 2000 calendar years.’’; and
(2) in subsection (c), by striking ‘‘1995’’ and inserting
‘‘2000’’.
SEC. 1403. FEDERAL CROP INSURANCE.
(a) ACTUARIAL SOUNDNESS.—Section 506 of the Federal Crop
Insurance Act (7 U.S.C. 1506) is amended by adding at the end
the following new subsection:
‘‘(n) ACTUARIAL SOUNDNESS.—The Corporation shall take such
actions as are necessary to improve the actuarial soundness of
Federal multiperil crop insurance coverage made available under
this title to achieve, on and after October 1, 1995, an overall
projected loss ratio of not greater than 1.1, including—
‘‘(1) instituting appropriate requirements for documentation
of the actual production history of insured producers to estab-
lish recorded or appraised yields for Federal crop insurance
coverage that more accurately reflect the associated actuarial
risk, except that the Corporation may not carry out this para-
graph in a manner that would prevent beginning farmers from
obtaining adequate Federal crop insurance, as determined by
the Corporation;
‘‘(2) establishing in counties, to the extent practicable, a
crop insurance option based on area yields in a manner that
allows an insured producer to qualify for an indemnity if a
loss has occurred in a specified area in which the farm of
the insured producer is located;
‘‘(3) establishing a database that contains the social security
account and employee identification numbers of participating
producers and using the numbers to identify insured producers
who are high risk for actuarial purposes and insured producers
who have not documented at least 4 years of production history,
to assess the performance of insurance providers, and for other
purposes permitted by law; and
‘‘(4) taking any other measures authorized by law to
improve the actuarial soundness of the Federal crop insurance
program while maintaining fairness and effective coverage for
agricultural producers.’’.
(b) CONFORMING AMENDMENTS.—
(1) REINSURANCE.—Section 508(h) of such Act (7 U.S.C.
1508(h)) is amended by striking the fifth sentence and inserting
the following new sentence: ‘‘The Corporation shall also pay
operating and administrative costs to insurers of policies on
which the Corporation provides reinsurance in an amount deter-
mined by the Corporation.’’.
H. R. 2264—23
(2) AREA YIELD PLAN.—Section 508 of such Act (7 U.S.C.
1508) is amended by adding at the end the following new
subsection:
‘‘(n) AREA YIELD PLAN.—
‘‘(1) IN GENERAL.—Notwithstanding any other provision of
this title, the Corporation may offer, only as an option to
individual crop insurance coverage available under this Act,
a crop insurance plan based on an area yield that allows
an insured producer to qualify for an indemnity if a loss has
occurred in an area, as specified by the Corporation, in which
the farm of the producer is located.
‘‘(2) LEVEL
OF
COVERAGE.—Under a plan offered under
paragraph (1), an insured producer shall be allowed to select
the level of production at which an indemnity will be paid
consistent with terms and conditions established by the Cor-
poration.’’.
(3) YIELD COVERAGE.—Section 508A of such Act (7 U.S.C.
1508a) is amended—
(A) in subsection (a)(1), by striking ‘‘may’’ and inserting
‘‘shall’’; and
(B) in subsection (b)—
(i) in paragraph (1)(A)—
(I) by striking ‘‘A crop insurance contract’’ and
all that follows through ‘‘producer—’’ and inserting
‘‘Under regulations issued by the Corporation, a
crop insurance contract offered under this title
to an eligible insured producer of a commodity
with respect to which the Corporation provides
crop insurance coverage shall make available to
the producer either—’’;
(II) by striking ‘‘or’’ at the end of clause (i);
(III) in clause (ii)—
(aa) by striking ‘‘5’’ and inserting ‘‘4 build-
ing to 10’’; and
(bb) by striking the period at the end and
inserting ‘‘; or’’; and
(IV) by adding at the end the following new
clause:
‘‘(iii) yield coverage based on—
‘‘(I) not less than 65 percent of the transitional
yield of the producer (adjusted to reflect actual
experience), as specified in regulations issued by
the Corporation based on production history
requirements; or
‘‘(II) the area yield under section 508(n) for
the crop established under the program for the
commodity involved.’’;
(ii) in paragraph (1)(B)—
(I) by striking ‘‘two’’ and inserting ‘‘3’’; and
(II) by inserting after ‘‘subparagraph (A)’’ the
following: ‘‘, where available (as determined by
the Corporation),’’;
(iii) in paragraph (2)—
(I) by striking ‘‘5’’ and inserting ‘‘4 building
to 10’’; and
(II) by inserting after ‘‘previous crops,’’ the
following: ‘‘not less than 65 percent of the transi-
H. R. 2264—24
tional yield of the producer (adjusted to reflect
actual experience), or the area yield,’’; and
(iv) in paragraph (3)(A)(i), by inserting after ‘‘farm
program yield’’ the following: ‘‘, not less than 65 percent
of the transitional yield of the producer (adjusted to
reflect actual experience), as specified in regulations
issued by the Corporation based on production history
requirements, or the area yield under section 508(n),
whichever is applicable,’’.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in paragraph (2), this
section and the amendments made by this section shall become
effective on October 1, 1993.
(2) REGULATIONS.—Not later than 30 days after the date
of enactment of this Act, the Secretary of Agriculture shall
publish, for public comment, proposed regulations to implement
the amendments made by this section.
TITLE II—ARMED SERVICES
PROVISIONS
SEC. 2001. LIMITATION ON COST-OF-LIVING ADJUSTMENTS FOR MILI-
TARY RETIREES.
Section 1401a(b) of title 10, United States Code, is amended—
(1) in paragraph (2), by striking out ‘‘The Secretary’’ and
inserting in lieu thereof ‘‘Except as provided in paragraph (6),
the Secretary’’; and
(2) by adding at the end the following new paragraph:
‘‘(6) SPECIAL RULES FOR PARAGRAPH (2) FOR FISCAL YEARS
1994 THROUGH 1998.—
‘‘(A) FISCAL
YEAR
1994.—In the case of an increase
in the retired pay of a member or former member referred
to in paragraph (2) that, pursuant to paragraph (1),
becomes effective on December 1, 1993, the initial month
for which such increase is payable as part of such retired
pay shall (notwithstanding such December 1 effective date)
be March 1994.
‘‘(B) FISCAL
YEARS
1995
THROUGH
1998.—In the case
of an increase in retired pay of a member or former member
referred to in paragraph (2) that, pursuant to paragraph
(1), becomes effective on December 1 of 1994, 1995, 1996,
or 1997, the initial month for which such increase is pay-
able as part of such retired pay shall (notwithstanding
such December 1 effective date) be September of the follow-
ing year.
‘‘(C) INAPPLICABILITY
TO
DISABILITY
RETIREES.—Sub-
paragraphs (A) and (B) do not apply with respect to the
retired pay of a member retired under chapter 61 of this
title.’’.
H. R. 2264—25
TITLE III—BANKING AND HOUSING
PROVISIONS
SEC. 3001. NATIONAL DEPOSITOR PREFERENCE.
(a) IN GENERAL.—Section 11(d)(11) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(d)(11)) is amended to read as follows:
‘‘(11) DEPOSITOR PREFERENCE.—
‘‘(A) 
IN
GENERAL.—Subject 
to 
section 
5(e)(2)(C),
amounts realized from the liquidation or other resolution
of any insured depository institution by any receiver
appointed for such institution shall be distributed to pay
claims (other than secured claims to the extent of any
such security) in the following order of priority:
‘‘(i) Administrative expenses of the receiver.
‘‘(ii) Any deposit liability of the institution.
‘‘(iii) Any other general or senior liability of the
institution (which is not a liability described in clause
(iv) or (v)).
‘‘(iv) Any obligation subordinated to depositors or
general creditors (which is not an obligation described
in clause (v)).
‘‘(v) Any obligation to shareholders or members
arising as a result of their status as shareholders or
members (including any depository institution holding
company or any shareholder or creditor of such com-
pany).
‘‘(B) EFFECT ON STATE LAW.—
‘‘(i) IN GENERAL.—The provisions of subparagraph
(A) shall not supersede the law of any State except
to the extent such law is inconsistent with the provi-
sions of such subparagraph, and then only to the extent
of the inconsistency.
‘‘(ii) PROCEDURE FOR DETERMINATION OF INCONSIST-
ENCY.—Upon the Corporation’s own motion or upon
the request of any person with a claim described in
subparagraph (A) or any State which is submitted
to the Corporation in accordance with procedures which
the Corporation shall prescribe, the Corporation shall
determine whether any provision of the law of any
State is inconsistent with any provision of subpara-
graph (A) and the extent of any such inconsistency.
‘‘(iii) JUDICIAL REVIEW.—The final determination
of the Corporation under clause (ii) shall be subject
to judicial review under chapter 7 of title 5, United
States Code.
‘‘(C) ACCOUNTING
REPORT.—Any distribution by the
Corporation in connection with any claim described in
subparagraph (A)(v) shall be accompanied by the account-
ing report required under paragraph (15)(B).’’.
(b) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Section 11(c)(13) of the Federal Deposit Insurance Act
(12 U.S.C. 1821(c)(13)) is amended—
(A) in subparagraph (A), by striking ‘‘subject to
subparagraph (B),’’;
(B) by inserting ‘‘and’’ after the semicolon at the end
of subparagraph (A);
H. R. 2264—26
(C) by striking subparagraph (B); and
(D) by redesignating subparagraph (C) as subpara-
graph (B).
(2) Section 11(g)(4) of the Federal Deposit Insurance Act
(12 U.S.C. 1921(g)(4)) is amended by striking ‘‘If the Corpora-
tion’’ and inserting ‘‘Subject to subsection (d)(11), if the Corpora-
tion’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply with respect to insured depository institutions for which
a receiver is appointed after the date of the enactment of this
Act.
SEC. 3002. TRANSFER OF FEDERAL RESERVE SURPLUSES.
(a) IN GENERAL.—The 1st undesignated paragraph of section
7 of the Federal Reserve Act (12 U.S.C. 289) is amended to read
as follows:
‘‘(a) DIVIDENDS
AND SURPLUS FUNDS
OF RESERVE BANKS.—
‘‘(1) STOCKHOLDER DIVIDENDS.—
‘‘(A) IN GENERAL.—After all necessary expenses of a
Federal reserve bank have been paid or provided for, the
stockholders of the bank shall be entitled to receive an
annual dividend of 6 percent on paid-in capital stock.
‘‘(B) DIVIDEND CUMULATIVE.—The entitlement to divi-
dends under subparagraph shall be cumulative.
‘‘(2) DEPOSIT OF NET EARNINGS IN SURPLUS FUND.—That
portion of net earnings of each Federal reserve bank which
remains after dividend claims under subparagraph (A) have
been fully met shall be deposited in the surplus fund of the
bank.
‘‘(3) PAYMENT TO TREASURY.—During fiscal years 1997 and
1998, any amount in the surplus fund of any Federal reserve
bank in excess of the amount equal to 3 percent of the total
paid-in capital and surplus of the member banks of such bank
shall be transferred to the Board for transfer to the Secretary
of the Treasury for deposit in the general fund of the Treasury.’’.
(b) ADDITIONAL TRANSFERS FOR FISCAL YEARS 1997 AND 1998.—
(1) IN GENERAL.—In addition to the amounts required to
be transferred from the surplus funds of the Federal reserve
banks pursuant to section 7(a)(3) of the Federal Reserve Act,
the Federal reserve banks shall transfer from such surplus
funds to the Board of Governors of the Federal Reserve System
for transfer to the Secretary of the Treasury for deposit in
the general fund of the Treasury, a total amount of
$106,000,000 in fiscal year 1997 and a total amount of
$107,000,000 in fiscal year 1998.
(2) ALLOCATION
BY
FED.—Of the total amount required
to be paid by the Federal reserve banks under paragraph
(1) for fiscal year 1997 or 1998, the Board of Governors of
the Federal Reserve System shall determine the amount each
such bank shall pay in such fiscal year.
(3) REPLENISHMENT
OF
SURPLUS
FUND
PROHIBITED.—No
Federal reserve bank may replenish such bank’s surplus fund
by the amount of any transfer by such bank under paragraph
(1) during fiscal years 1997 and 1998.
(c) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) The penultimate undesignated paragraph of section 7
of the Federal Reserve Act (12 U.S.C. 290) is amended by
H. R. 2264—27
striking ‘‘The net earnings derived’’ and inserting ‘‘(b) USE
OF EARNINGS TRANSFERRED TO THE TREASURY.—The net earn-
ings derived’’.
(2) The last undesignated paragraph of section 7 of the
Federal Reserve Act (12 U.S.C. 531) is amended by striking
‘‘Federal reserve banks’’ and inserting ‘‘(c) EXEMPTION FROM
TAXATION.—Federal reserve banks’’.
SEC. 3003. USE OF RETURN DATA FOR INCOME VERIFICATION UNDER
CERTAIN HOUSING ASSISTANCE PROGRAMS.
Section 904 of the Stewart B. McKinney Homeless Assistance
Amendments Act of 1988 (42 U.S.C. 3544) is amended as follows:
(1) DEFINITION.—In subsection (a), by adding at the end
the following:
‘‘(4) PROGRAM OF THE DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT.—The term ‘program of the Department of Hous-
ing and Urban Development’ includes Indian housing programs
assisted under title II of the United States Housing Act of
1937.’’.
(2) CONSENT FORMS.—In subsection (b)—
(A) in paragraph (1), by striking ‘‘and’’ at the end;
(B) in paragraph (2), by striking the period at the
end and inserting ‘‘; and’’;
(C) by inserting after paragraph (2) the following new
paragraph:
‘‘(3) sign a consent form approved by the Secretary authoriz-
ing the Secretary to request the Commissioner of Social Security
and the Secretary of the Treasury to release information pursu-
ant to section 6103(l)(7)(D)(ix) of the Internal Revenue Code
of 1986 with respect to such applicant or participant for the
sole purpose of the Secretary verifying income information
pertinent to the applicant’s or participant’s eligibility or level
of benefits.’’; and
(D) in the last sentence, by striking ‘‘This’’ and insert-
ing the following: ‘‘Except as provided in this subsection,
this’’.
(3) APPLICANT, PARTICIPANT, AND PUBLIC HOUSING AGENCY
PROTECTIONS.—In subsection (c)(2)—
(A) in subparagraph (A)—
(i) in the matter preceding clause (i)—
(I) by inserting after ‘‘compensation law’’ the
following: ‘‘or pursuant to section 6103(l)(7)(D)(ix)
of the Internal Revenue Code of 1986 from the
Commissioner of Social Security or the Secretary
of the Treasury’’; and
(II) by inserting ‘‘(in the case of information
obtained pursuant to such section 303(i))’’ before
‘‘representatives’’; and
(ii) in clause (ii), by inserting ‘‘or public housing
agency’’ after ‘‘owner’’ each place it appears; and
(B) in subparagraph (B), by inserting after ‘‘wages’’
each place it appears the following: ‘‘, other earnings or
income,’’.
(4) PENALTY.—In subsection (c)(3)—
(A) in subparagraph (A), by inserting ‘‘or section
6103(l)(7)(D)(ix) of the Internal Revenue Code of 1986 with-
H. R. 2264—28
out consent pursuant to subsection (b) of this section or’’
after ‘‘Social Security Act’’; and
(B) in the first sentence of subparagraph (B)—
(i) by striking clause (i) and inserting the following:
‘‘(i) a negligent or knowing disclosure of information
referred to in this section, section 303(i) of the Social
Security Act, or section 6103(l)(7)(D)(ix) of the Internal
Revenue Code of 1986 about such person by an officer
or employee of any public housing agency or owner
(or employee thereof), which disclosure is not author-
ized by this section, such section 303(i), such section
6103(l)(7)(D)(ix), or any regulation implementing this
section, 
such 
section 
303(i), 
or 
such 
section
6103(l)(7)(D)(ix), or for which consent, pursuant to sub-
section (b) of this section, has not been granted, or’’;
and
(ii) in clause (ii), by inserting ‘‘such section
6103(l)(7)(D)(ix),’’ after ‘‘303(i),’’.
(5) CONFORMING AMENDMENT.—The heading of subsection
(c) of section 904 of the Stewart B. McKinney Homeless Assist-
ance Amendments Act of 1988 is amended by striking ‘‘STATE
EMPLOYMENT’’.
SEC. 3004. GNMA REMIC GUARANTEE FEES.
Section 306(g)(3) of the National Housing Act (12 U.S.C.
1721(g)(3)) is amended by adding at the end the following new
subparagraph:
‘‘(E)(i) Notwithstanding subparagraphs (A) through (D), fees
charged for the guarantee of, or commitment to guarantee,
multiclass securities backed by a trust or pool of securities or
notes guaranteed by the Association under this subsection, and
other related fees shall be charged by the Association in an amount
the Association deems appropriate. The Association shall take such
action as may be necessary to reasonably assure that such portion
of the benefit, resulting from the Association’s multiclass securities
program, as the Association determines is appropriate accrues to
mortgagors who execute eligible mortgages after the date of the
enactment of this subparagraph.
‘‘(ii) The Association shall provide for the initial implementation
of the program for which fees are charged under the first sentence
of clause (i) by notice published in the Federal Register. The notice
shall be effective upon publication and shall provide an opportunity
for public comment. Not later than 12 months after publication
of the notice, the Association shall issue regulations for such pro-
gram based on the notice, comments received, and the experience
of the Association in carrying out the program during such period.
‘‘(iii) The Association shall consult with persons or entities
in such manner as the Association deems appropriate to ensure
the efficient commencement and operation of the multiclass securi-
ties program.
‘‘(iv) No State or local law, and no Federal law (except Federal
law enacted expressly in limitation of this clause after the effective
date of this subparagraph) shall preclude or limit the exercise
by the Association of its power to contract with persons or entities,
and its rights to enforce such contracts, for the purpose of ensuring
the efficient commencement and continued operation of the
multiclass securities program.’’.
H. R. 2264—29
SEC. 3005. MUTUAL MORTGAGE INSURANCE FUND PREMIUMS.
To improve the actuarial soundness of the Mutual Mortgage
Insurance Fund under the National Housing Act, the Secretary
of Housing and Urban Development shall increase the rate at
which the Secretary earns the single premium payment collected
at the time of insurance of a mortgage that is an obligation of
such Fund (with respect to the rate in effect on the date of the
enactment of this Act). In establishing such increased rate, the
Secretary shall consider any current audit findings and reserve
analyses and information regarding the expected average duration
of mortgages that are obligations of such Fund and may consider
any other information that the Secretary determines to be appro-
priate.
TITLE IV—STUDENT LOAN AND ERISA
PROVISIONS
SEC. 4001. TABLE OF CONTENTS.
The table of contents for this title is as follows:
TITLE IV—STUDENT LOAN AND ERISA PROVISIONS
Sec. 4001. Table of contents.
Subtitle A—Direct Student Loan Provisions
Sec. 4011. Short title; references.
CHAPTER 1—FEDERAL DIRECT STUDENT LOAN PROGRAM
Sec. 4021. Federal direct student loan program.
CHAPTER 2—CONFORMING AMENDMENTS TO THE HIGHER EDUCATION ACT OF 1965
Sec. 4041. Preserving loan access.
Sec. 4042. Guaranty agency reserves.
Sec. 4043. Terms of loans.
Sec. 4044. Assignment of loans.
Sec. 4045. Termination of guaranty agency agreements; assumption of guaranty
agency functions by the Secretary.
Sec. 4046. Consolidation loans.
Sec. 4047. Consolidation of programs.
Subtitle B—Additional Savings from the Student Loan Programs
Sec. 4101. Reduction of borrower interest rates.
Sec. 4102. Reduction in loan fees paid by students.
Sec. 4103. Loan fees from lenders.
Sec. 4104. Offset fee.
Sec. 4105. Elimination of tax exempt floor.
Sec. 4106. Reduction in interest rate for consolidation loans; rebate fee.
Sec. 4107. Reinsurance fees and administrative cost allowance.
Sec. 4108. Risk sharing.
Sec. 4109. Plus loan disbursements.
Sec. 4110. Secretary’s equitable share.
Sec. 4111. Reduction in the special allowance payment.
Sec. 4112. Supplemental preclaims assistance.
Subtitle C—Cost Sharing by States
Sec. 4201. Cost sharing by States.
Subtitle D—Group Health Plans
Sec. 4301. Standards for group health plan coverage.
H. R. 2264—30
Subtitle A—Direct Student Loan
Provisions
SEC. 4011. SHORT TITLE; REFERENCES.
(a) SHORT TITLE.—This subtitle may be cited as the ‘‘Student
Loan Reform Act of 1993’’.
(b) REFERENCES.—References in this subtitle and subtitles B
and C to ‘‘the Act’’ are references to the Higher Education Act
of 1965 (20 U.S.C. 1001 et seq.).
CHAPTER 1—FEDERAL DIRECT STUDENT LOAN
PROGRAM
SEC. 4021. FEDERAL DIRECT STUDENT LOAN PROGRAM.
Part D of title IV (20 U.S.C. 1087a) is amended to read as
follows:
‘‘PART D—FEDERAL DIRECT STUDENT LOAN
PROGRAM
‘‘SEC. 451. PROGRAM AUTHORITY.
There are hereby made available, in accordance with the provi-
sions of this part, such sums as may be necessary to make loans
to all eligible students (and the eligible parents of such students)
in attendance at participating institutions of higher education
selected by the Secretary, to enable such students to pursue their
courses of study at such institutions during the period beginning
July 1, 1994. Such loans shall be made by participating institutions,
or consortia thereof, that have agreements with the Secretary to
originate loans, or by alternative originators designated by the
Secretary to make loans for students in attendance at participating
institutions (and their parents).
‘‘SEC. 452. FUNDS FOR ORIGINATION OF DIRECT STUDENT LOANS.
‘‘(a) IN GENERAL.—The Secretary shall provide, on the basis
of the need and the eligibility of students at each participating
institution, and parents of such students, for such loans, funds
for student and parent loans under this part—
‘‘(1) directly to an institution of higher education that has
an agreement with the Secretary under section 454(a) to partici-
pate in the direct student loan programs under this part and
that also has an agreement with the Secretary under section
454(b) to originate loans under this part; or
‘‘(2) through an alternative originator designated by the
Secretary to students (and parents of students) attending
institutions of higher education that have an agreement with
the Secretary under section 454(a) but that do not have an
agreement with the Secretary under section 454(b).
‘‘(b) FEES FOR ORIGINATION SERVICES.—
‘‘(1) FEES FOR INSTITUTIONS.—The Secretary shall pay fees
to institutions of higher education (or a consortium of such
institutions) with agreements under section 454(b), in an
amount established by the Secretary, to assist in meeting the
costs of loan origination. Such fees—
H. R. 2264—31
‘‘(A) shall be paid by the Secretary based on all the
loans made under this part to a particular borrower in
the same academic year;
‘‘(B) shall be subject to a sliding scale that decreases
the per borrower amount of such fees as the number of
borrowers increases; and
‘‘(C)(i) for academic year 1994–1995, shall not exceed
a program-wide average of $10 per borrower for all the
loans made under this part to such borrower in the same
academic year; and
‘‘(ii) for succeeding academic years, shall not exceed
such average fee as the Secretary shall establish pursuant
to regulations.
‘‘(2) FEES FOR ALTERNATIVE ORIGINATORS.—The Secretary
shall pay fees for loan origination services to alternative origi-
nators of loans made under this part in an amount established
by the Secretary in accordance with the terms of the contract
described in section 456(b) between the Secretary and each
such alternative originator.
‘‘(c) NO ENTITLEMENT TO PARTICIPATE
OR ORIGINATE.—No
institution of higher education shall have a right to participate
in the programs authorized by this part, to originate loans, or
to perform any program function under this part. Nothing in this
subsection shall be construed so as to limit the entitlement of
an eligible student attending a participating institution (or the
eligible parent of such student) to borrow under this part.
‘‘(d) DELIVERY OF LOAN FUNDS.—Loan funds shall be paid and
delivered to an institution by the Secretary prior to the beginning
of the payment period established by the Secretary in a manner
that is consistent with payment and delivery of basic grants under
subpart 1 of part A of this title.
‘‘SEC. 453. SELECTION OF INSTITUTIONS FOR PARTICIPATION AND
ORIGINATION.
‘‘(a) PHASE-IN OF PROGRAM.—
‘‘(1) GENERAL AUTHORITY.—The Secretary shall enter into
agreements pursuant to section 454(a) with institutions of
higher education to participate in the direct student loan pro-
gram under this part, and agreements pursuant to section
454(b) with institutions of higher education, or consortia
thereof, to originate loans in such program, for academic years
beginning on or after July 1, 1994. Alternative origination
services, through which an entity other than the participating
institution at which the student is in attendance originates
the loan, shall be provided by the Secretary, through 1 or
more contracts under section 456(b) or such other means as
the Secretary may provide, for students attending participating
institutions that do not originate direct student loans under
this part. Such agreements for the academic year 1994–1995
shall, to the extent feasible, be entered into not later than
January 1, 1994.
‘‘(2) TRANSITION PROVISIONS.—In order to ensure an expedi-
tious but orderly transition from the loan programs under
part B of this title to the direct student loan program under
this part, the Secretary shall, in the exercise of the Secretary’s
discretion, determine the number of institutions with which
the Secretary shall enter into agreements under subsections
H. R. 2264—32
(a) and (b) of section 454 for any academic year, except that
the Secretary shall exercise such discretion so as to achieve
the following goals:
‘‘(A) for academic year 1994–1995, loans made under
this part shall represent 5 percent of the new student
loan volume for such year;
‘‘(B) for academic year 1995–1996, loans made under
this part shall represent 40 percent of the new student
loan volume for such year;
‘‘(C) for academic years 1996–1997 and 1997–1998,
loans made under this part shall represent 50 percent
of the new student loan volume for such years; and
‘‘(D) for the academic year that begins in fiscal year
1998, loans made under this part shall represent 60 percent
of the new student loan volume for such year.
‘‘(3) EXCEPTION.—The Secretary may exceed the percentage
goals described in subparagraphs (C) or (D) of paragraph (2)
if the Secretary determines that a higher percentage is war-
ranted by the number of institutions of higher education that
desire to participate in the program under this part and that
meet the eligibility requirements for such participation.
‘‘(4) NEW STUDENT LOAN VOLUME.—For the purpose of this
subsection, the term ‘new student loan volume’ means the
estimated sum of all loans (other than consolidation loans)
that will be made, insured or guaranteed under this part and
part B in the year for which the determination is made. The
Secretary shall base the estimate described in the preceding
sentence on the most recent program data available.
‘‘(b) SELECTION CRITERIA.—
‘‘(1) APPLICATION.—Each institution of higher education
desiring to participate in the direct student loan program under
this part shall submit an application satisfactory to the Sec-
retary containing such information and assurances as the Sec-
retary may require.
‘‘(2) SELECTION
PROCEDURE.—The Secretary shall select
institutions for participation in the direct student loan program
under this part, and shall enter into agreements with such
institutions under section 454(a), from among those institutions
that submit the applications described in paragraph (1), and
meet such other eligibility requirements as the Secretary shall
prescribe, by, to the extent possible—
‘‘(A)(i) categorizing such institutions according to
anticipated loan volume, length of academic program, con-
trol of the institution, highest degree offered, size of student
enrollment, geographic location, annual loan volume, and
default experience; and
‘‘(ii) beginning in academic year 1995–1996 selecting
institutions that are reasonably representative of each of
the categories described pursuant to clause (i); and
‘‘(B) if the Secretary determines it necessary to carry
out the purposes of this part, selecting additional institu-
tions.
‘‘(c) SELECTION CRITERIA FOR ORIGINATION.—
‘‘(1) IN GENERAL.—The Secretary may enter into a supple-
mental agreement with an institution (or a consortium of such
institutions) that—
‘‘(A) has an agreement under subsection 454(a);
H. R. 2264—33
‘‘(B) desires to originate loans under this part; and
‘‘(C) meets the criteria described in paragraph (2).
‘‘(2) TRANSITION SELECTION CRITERIA.—For academic year
1994–1995, the Secretary may approve an institution to origi-
nate loans only if such institution—
‘‘(A) made loans under part E of this title in academic
year 1993–1994 and did not exceed the applicable maxi-
mum default rate under section 462(g) for the most recent
fiscal year for which data are available;
‘‘(B) is not on the reimbursement system of payment
for any of the programs under subpart 1 or 3 of part
A, part C, or part E of this title;
‘‘(C) is not overdue on program or financial reports
or audits required under this title;
‘‘(D) is not subject to an emergency action, or a limita-
tion, suspension, or termination under section 428(b)(1)(T),
432(h), or 487(c);
‘‘(E) in the opinion of the Secretary, has not had signifi-
cant deficiencies identified by a State postsecondary review
entity under subpart 1 of part H of this title;
‘‘(F) in the opinion of the Secretary, has not had severe
performance deficiencies for any of the programs under
this title, including such deficiencies demonstrated by
audits or program reviews submitted or conducted during
the 5 calendar years immediately preceding the date of
application;
‘‘(G) provides an assurance that such institution has
no delinquent outstanding debts to the Federal Govern-
ment, unless such debts are being repaid under or in
accordance with a repayment arrangement satisfactory to
the Federal Government, or the Secretary in the Secretary’s
discretion determines that the existence or amount of such
debts has not been finally determined by the cognizant
Federal agency; and
‘‘(H) meets such other criteria as the Secretary may
establish to protect the financial interest of the United
States and to promote the purposes of this part.
‘‘(3) REGULATIONS
GOVERNING
APPROVAL
AFTER
TRANSI-
TION.—For academic year 1995–1996 and subsequent academic
years, the Secretary shall promulgate and publish in the Fed-
eral Register regulations governing the approval of institutions
to originate loans under this part in accordance with section
457(a)(2).
‘‘(d) ELIGIBLE INSTITUTIONS.—The Secretary may not select an
institution of higher education for participation under this section
unless such institution is an eligible institution under section 435(a).
‘‘(e) CONSORTIA.—Subject to such requirements as the Secretary
may prescribe, eligible institutions of higher education (as deter-
mined under subsection (d)) with agreements under section 454(a)
may apply to the Secretary as consortia to originate loans under
this part for students in attendance at such institutions. Each
such institution shall be required to meet the requirements of
subsection (c) with respect to loan origination.
H. R. 2264—34
‘‘SEC. 454. AGREEMENTS WITH INSTITUTIONS.
‘‘(a) PARTICIPATION AGREEMENTS.—An agreement with any
institution of higher education for participation in the direct student
loan program under this part shall—
‘‘(1) provide for the establishment and maintenance of a
direct student loan program at the institution under which
the institution will—
‘‘(A) identify eligible students who seek student finan-
cial assistance at such institution in accordance with sec-
tion 484;
‘‘(B) estimate the need of each such student as required
by part F of this title for an academic year, except that,
any loan obtained by a student under this part with the
same terms as loans made under section 428H (except
as otherwise provided in this part), or a loan obtained
by a parent under this part with the same terms as loans
made under section 428B (except as otherwise provided
in this part), or obtained under any State-sponsored or
private loan program, may be used to offset the expected
family contribution of the student for that year;
‘‘(C) provide a statement that certifies the eligibility
of any student to receive a loan under this part that is
not in excess of the annual or aggregate limit applicable
to such loan, except that the institution may, in exceptional
circumstances identified by the Secretary, refuse to certify
a statement that permits a student to receive a loan under
this part, or certify a loan amount that is less than the
student’s determination of need (as determined under part
F of this title), if the reason for such action is documented
and provided in written form to such student;
‘‘(D) set forth a schedule for disbursement of the pro-
ceeds of the loan in installments, consistent with the
requirements of section 428G; and
‘‘(E) provide timely and accurate information—
‘‘(i) concerning the status of student borrowers (and
students on whose behalf parents borrow under this
part) while such students are in attendance at the
institution and concerning any new information of
which the institution becomes aware for such students
(or their parents) after such borrowers leave the
institution, to the Secretary for the servicing and
collecting of loans made under this part; and
‘‘(ii) if the institution does not have an agreement
with the Secretary under subsection (b), concerning
student eligibility and need, as determined under sub-
paragraphs (A) and (B), to the Secretary as needed
for the alternative origination of loans to eligible stu-
dents and parents in accordance with this part;
‘‘(2) provide assurances that the institution will comply
with requirements established by the Secretary relating to stu-
dent loan information with respect to loans made under this
part;
‘‘(3) provide that the institution accepts responsibility and
financial liability stemming from its failure to perform its func-
tions pursuant to the agreement;
‘‘(4) provide that students at the institution and their par-
ents (with respect to such students) will be eligible to partici-
H. R. 2264—35
pate in the programs under part B of this title at the discretion
of the Secretary for the period during which such institution
participates in the direct student loan program under this
part, except that a student or parent may not receive loans
under both this part and part B for the same period of enroll-
ment;
‘‘(5) provide for the implementation of a quality assurance
system, as established by the Secretary and developed in con-
sultation with institutions of higher education, to ensure that
the institution is complying with program requirements and
meeting program objectives;
‘‘(6) provide that the institution will not charge any fees
of any kind, however described, to student or parent borrowers
for origination activities or the provision of any information
necessary for a student or parent to receive a loan under
this part, or any benefits associated with such loan; and
‘‘(7) include such other provisions as the Secretary deter-
mines are necessary to protect the interests of the United
States and to promote the purposes of this part.
‘‘(b) ORIGINATION.—An agreement with any institution of higher
education, or consortia thereof, for the origination of loans under
this part shall—
‘‘(1) supplement the agreement entered into in accordance
with subsection (a);
‘‘(2) include provisions established by the Secretary that
are similar to the participation agreement provisions described
in paragraphs (1)(E)(ii), (2), (3), (4), (5), (6), and (7) of subsection
(a), as modified to relate to the origination of loans by the
institution or consortium;
‘‘(3) provide that the institution or consortium will originate
loans to eligible students and parents in accordance with this
part; and
‘‘(4) provide that the note or evidence of obligation on
the loan shall be the property of the Secretary.
‘‘(c) WITHDRAWAL AND TERMINATION PROCEDURES.—The Sec-
retary shall establish procedures by which institutions or consortia
may withdraw or be terminated from the program under this part.
‘‘SEC. 455. TERMS AND CONDITIONS OF LOANS.
‘‘(a) IN GENERAL.—
‘‘(1) 
PARALLEL
TERMS, 
CONDITIONS, 
BENEFITS, 
AND
AMOUNTS.—Unless otherwise specified in this part, loans made
to borrowers under this part shall have the same terms, condi-
tions, and benefits, and be available in the same amounts,
as loans made to borrowers under sections 428, 428B, and
428H of this title.
‘‘(2) DESIGNATION
OF
LOANS.—Loans made to borrowers
under this part that, except as otherwise specified in this
part, have the same terms, conditions, and benefits as loans
made to borrowers under—
‘‘(A) section 428 shall be known as ‘Federal Direct
Stafford Loans’;
‘‘(B) section 428B shall be known as ‘Federal Direct
PLUS Loans’; and
‘‘(C) section 428H shall be known as ‘Federal Direct
Unsubsidized Stafford Loans’.
‘‘(b) INTEREST RATE.—
H. R. 2264—36
‘‘(1) RATES FOR FDSL AND FDUSL.—For Federal Direct Staf-
ford Loans and Federal Direct Unsubsidized Stafford Loans
for which the first disbursement is made on or after July
1, 1994, the applicable rate of interest shall, during any 12-
month period beginning on July 1 and ending on June 30,
be determined on the preceding June 1 and be equal to—
‘‘(A) the bond equivalent rate of 91-day Treasury bills
auctioned at the final auction held prior to such June
1; plus
‘‘(B) 3.1 percent,
except that such rate shall not exceed 8.25 percent.
‘‘(2) IN SCHOOL AND GRACE PERIOD RULES.—(A) Notwith-
standing the provisions of paragraph (1), but subject to para-
graph (3), with respect to any Federal Direct Stafford Loan
or Federal Direct Unsubsidized Stafford Loan for which the
first disbursement is made on or after July 1, 1995, the
applicable rate of interest for interest which accrues—
‘‘(i) prior to the beginning of the repayment period
of the loan; or
‘‘(ii) during the period in which principal need not
be paid (whether or not such principal is in fact paid)
by reason of a provision described in section 428(b)(1)(M)
or 427(a)(2)(C),
shall not exceed the rate determined under subparagraph (B).
‘‘(B) For the purpose of subparagraph (A), the rate deter-
mined under this subparagraph shall, during any 12-month
period beginning on July 1 and ending on June 30, be deter-
mined on the preceding June 1 and be equal to—
‘‘(i) the bond equivalent rate of 91-day Treasury bills
auctioned at the final auction prior to such June 1; plus
‘‘(ii) 2.5 percent,
except that such rate shall not exceed 8.25 percent.
‘‘(3) OUT-YEAR RULE.—Notwithstanding paragraphs (1) and
(2), for Federal Direct Stafford Loans and Federal Direct
Unsubsidized Stafford Loans made on or after July 1, 1998,
the applicable rate of interest shall, during any 12-month period
beginning on July 1 and ending on June 30, be determined
on the preceding June 1 and be equal to—
‘‘(A) the bond equivalent rate of the security with a
comparable maturity as established by the Secretary; plus
‘‘(B) 1.0 percent,
except that such rate shall not exceed 8.25 percent.
‘‘(4) RATES
FOR
FDPLUS.—(A) For Federal Direct PLUS
Loans for which the first disbursement is made on or after
July 1, 1994, the applicable rate of interest shall, during any
12-month period beginning on July 1 and ending on June
30, be determined on the preceding June 1 and be equal to—
‘‘(i) the bond equivalent rate of 52-week Treasury bills
auctioned at final auction held prior to such June 1; plus
‘‘(ii) 3.1 percent,
except that such rate shall not exceed 9 percent.
‘‘(B) For Federal Direct PLUS loans made on or after July
1, 1998, the applicable rate of interest shall, during any 12-
month period beginning on July 1 and ending on June 30,
be determined on the preceding June 1 and be equal to—
‘‘(i) the bond equivalent rate of the security with a
comparable maturity as established by the Secretary; plus
H. R. 2264—37
‘‘(ii) 2.1 percent,
except that such rate shall not exceed 9 percent.
‘‘(5) PUBLICATION.—The Secretary shall determine the
applicable rates of interest under this subsection after consulta-
tion with the Secretary of the Treasury and shall publish such
rate in the Federal Register as soon as practicable after the
date of determination.
‘‘(c) LOAN FEE.—The Secretary shall charge the borrower of
a loan made under this part an origination fee of 4.0 percent
of the principal amount of loan.
‘‘(d) REPAYMENT PLANS.—
‘‘(1) DESIGN
AND
SELECTION.—Consistent with criteria
established by the Secretary, the Secretary shall offer a bor-
rower of a loan made under this part a variety of plans for
repayment of such loan, including principal and interest on
the loan. The borrower shall be entitled to accelerate, without
penalty, repayment on the borrower’s loans under this part.
The borrower may choose—
‘‘(A) a standard repayment plan, with a fixed annual
repayment amount paid over a fixed period of time, consist-
ent with subsection (a)(1) of this section;
‘‘(B) an extended repayment plan, with a fixed annual
repayment amount paid over an extended period of time,
except that the borrower shall annually repay a minimum
amount determined by the Secretary in accordance with
section 428(b)(1)(L);
‘‘(C) a graduated repayment plan, with annual repay-
ment amounts established at 2 or more graduated levels
and paid over a fixed or extended period of time, except
that the borrower’s scheduled payments shall not be less
than 50 percent, nor more than 150 percent, of what the
amortized payment on the amount owed would be if the
loan were repaid under the standard repayment plan; and
‘‘(D) an income contingent repayment plan, with vary-
ing annual repayment amounts based on the income of
the borrower, paid over an extended period of time pre-
scribed by the Secretary, not to exceed 25 years, except
that the plan described in this subparagraph shall not
be available to the borrower of a Federal Direct PLUS
loan.
‘‘(2) SELECTION BY SECRETARY.—If a borrower of a loan
made under this part does not select a repayment plan
described in paragraph (1), the Secretary may provide the bor-
rower with a repayment plan described in subparagraph (A),
(B), or (C) of paragraph (1).
‘‘(3) CHANGES IN SELECTIONS.—The borrower of a loan made
under this part may change the borrower’s selection of a repay-
ment plan under paragraph (1), or the Secretary’s selection
of a plan for the borrower under paragraph (2), as the case
may be, under such terms and conditions as may be established
by the Secretary.
‘‘(4) ALTERNATIVE REPAYMENT PLANS.—The Secretary may
provide, on a case by case basis, an alternative repayment
plan to a borrower of a loan made under this part who dem-
onstrates to the satisfaction of the Secretary that the terms
and conditions of the repayment plans available under para-
graph (1) are not adequate to accommodate the borrower’s
H. R. 2264—38
exceptional circumstances. In designing such alternative repay-
ment plans, the Secretary shall ensure that such plans do
not exceed the cost to the Federal Government, as determined
on the basis of the present value of future payments by such
borrowers, of loans made using the plans available under para-
graph (1).
‘‘(5) REPAYMENT
AFTER
DEFAULT.—The Secretary may
require any borrower who has defaulted on a loan made under
this part to—
‘‘(A) pay all reasonable collection costs associated with
such loan; and
‘‘(B) repay the loan pursuant to an income contingent
repayment plan.
‘‘(e) INCOME CONTINGENT REPAYMENT.—
‘‘(1) INFORMATION AND PROCEDURES.—The Secretary may
obtain such information as is reasonably necessary regarding
the income of a borrower (and the borrower’s spouse, if
applicable) of a loan made under this part that is, or may
be, repaid pursuant to income contingent repayment, for the
purpose of determining the annual repayment obligation of
the borrower. Returns and return information (as defined in
section 6103 of the Internal Revenue Code of 1986) may be
obtained under the preceding sentence only to the extent
authorized by section 6103(l)(13) of such Code. The Secretary
shall establish procedures for determining the borrower’s repay-
ment obligation on that loan for such year, and such other
procedures as are necessary to implement effectively income
contingent repayment.
‘‘(2) REPAYMENT BASED ON ADJUSTED GROSS INCOME.—A
repayment schedule for a loan made under this part and repaid
pursuant to income contingent repayment shall be based on
the adjusted gross income (as defined in section 62 of the
Internal Revenue Code of 1986) of the borrower or, if the
borrower is married and files a Federal income tax return
jointly with the borrower’s spouse, on the adjusted gross income
of the borrower and the borrower’s spouse.
‘‘(3) ADDITIONAL DOCUMENTS.—A borrower who chooses, or
is required, to repay a loan made under this part pursuant
to income contingent repayment, and for whom adjusted gross
income is unavailable or does not reasonably reflect the
borrower’s current income, shall provide to the Secretary other
documentation of income satisfactory to the Secretary, which
documentation the Secretary may use to determine an appro-
priate repayment schedule.
‘‘(4) REPAYMENT
SCHEDULES.—Income contingent repay-
ment schedules shall be established by regulations promulgated
by the Secretary and shall require payments that vary in
relation to the appropriate portion of the annual income of
the borrower (and the borrower’s spouse, if applicable) as deter-
mined by the Secretary.
‘‘(5) CALCULATION OF BALANCE DUE.—The balance due on
a loan made under this part that is repaid pursuant to income
contingent repayment shall equal the unpaid principal amount
of the loan, any accrued interest, and any fees, such as late
charges, assessed on such loan. The Secretary may promulgate
regulations limiting the amount of interest that may be capital-
ized on such loan, and the timing of any such capitalization.
H. R. 2264—39
‘‘(6) NOTIFICATION
TO
BORROWERS.—The Secretary shall
establish procedures under which a borrower of a loan made
under this part who chooses or is required to repay such loan
pursuant to income contingent repayment is notified of the
terms and conditions of such plan, including notification of
such borrower—
‘‘(A) that the Internal Revenue Service will disclose
to the Secretary tax return information as authorized under
section 6103(l)(13) of the Internal Revenue Code of 1986;
and
‘‘(B) that if a borrower considers that special cir-
cumstances, such as a loss of employment by the borrower
or the borrower’s spouse, warrant an adjustment in the
borrower’s loan repayment as determined using the
information described in subparagraph (A), or the alter-
native documentation described in paragraph (3), the bor-
rower may contact the Secretary, who shall determine
whether such adjustment is appropriate, in accordance with
criteria established by the Secretary.
‘‘(f) DEFERMENT.—
‘‘(1) EFFECT ON PRINCIPAL AND INTEREST.—A borrower of
a loan made under this part who meets the requirements
described in paragraph (2) shall be eligible for a deferment,
during which periodic installments of principal need not be
paid, and interest—
‘‘(A) shall not accrue, in the case of a—
‘‘(i) Federal Direct Stafford Loan; or
‘‘(ii) a Federal Direct Consolidation Loan that
consolidated only Federal Direct Stafford Loans, or
a combination of such loans and Federal Stafford Loans
for which the student borrower received an interest
subsidy under section 428; or
‘‘(B) shall accrue and be capitalized or paid by the
borrower, in the case of a Federal Direct PLUS Loan,
a Federal Direct Unsubsidized Stafford Loan, or a Federal
Direct Consolidation Loan not described in subparagraph
(A)(ii).
‘‘(2) ELIGIBILITY.—A borrower of a loan made under this
part shall be eligible for a deferment during any period—
‘‘(A) during which the borrower—
‘‘(i) is carrying at least one-half the normal full-
time work load for the course of study that the
borrower is pursuing, as determined by the eligible
institution (as such term is defined in section 435(a))
the borrower is attending; or
‘‘(ii) is pursuing a course of study pursuant to
a graduate fellowship program approved by the Sec-
retary, or pursuant to a rehabilitation training pro-
gram for individuals with disabilities approved by the
Secretary,
except that no borrower shall be eligible for a deferment
under this subparagraph, or a loan made under this part
(other than a Federal Direct PLUS Loan or a Federal
Direct Consolidation Loan), while serving in a medical
internship or residency program;
‘‘(B) not in excess of 3 years during which the borrower
is seeking and unable to find full-time employment;
H. R. 2264—40
‘‘(C) not in excess of 3 years during which the Secretary
determines, in accordance with regulations prescribed
under section 435(o), that the borrower has experienced
or will experience an economic hardship.
‘‘(g) FEDERAL DIRECT CONSOLIDATION LOANS.—A borrower of
a loan made under this part may consolidate such loan with the
loans described in section 428C(a)(4) only under such terms and
conditions as the Secretary shall establish pursuant to section
457(a)(1) or regulations promulgated under this part. Loans made
under this subsection shall be known as ‘Federal Direct Consolida-
tion Loans’.
‘‘(h) BORROWER DEFENSES.—Notwithstanding any other provi-
sion of State or Federal law, the Secretary shall specify in regula-
tions (except as authorized under section 457(a)(1)) which acts
or omissions of an institution of higher education a borrower may
assert as a defense to repayment of a loan made under this part,
except that in no event may a borrower recover from the Secretary,
in any action arising from or relating to a loan made under this
part, an amount in excess of the amount such borrower has repaid
on such loan.
‘‘(i) LOAN APPLICATION AND PROMISSORY NOTE.—The common
financial reporting form required in section 483(a)(1) shall con-
stitute the application for loans made under this part (other than
a Federal Direct PLUS loan). The Secretary shall develop, print,
and distribute to participating institutions a standard promissory
note and loan disclosure form.
‘‘(j) LOAN DISBURSEMENT.—
‘‘(1) IN GENERAL.—Proceeds of loans to students under this
part shall be applied to the student’s account for tuition and
fees, and, in the case of institutionally owned housing, to room
and board. Loan proceeds that remain after the application
of the previous sentence shall be delivered to the borrower
by check or other means that is payable to and requires the
endorsement or other certification by such borrower.
‘‘(2) PAYMENT PERIODS.—The Secretary shall establish peri-
ods for the payments described in paragraph (1) in a manner
consistent with payment of basic grants under subpart 1 of
part A of this title.
‘‘(k) FISCAL CONTROL AND FUND ACCOUNTABILITY.—
‘‘(1) IN GENERAL.—(A) An institution shall maintain finan-
cial records in a manner consistent with records maintained
for other programs under this title.
‘‘(B) Except as otherwise required by regulations of the
Secretary, or in a notice under section 457(a)(1), an institution
may maintain loan funds under this part in the same account
as other Federal student financial assistance.
‘‘(2) PAYMENTS AND REFUNDS.—Payments and refunds shall
be reconciled in a manner consistent with the manner set
forth for the submission of a payment summary report required
of institutions participating in the program under subpart 1
of part A, except that nothing in this paragraph shall prevent
such reconciliations on a monthly basis.
‘‘(3) TRANSACTION
HISTORIES.—All transaction histories
under this part shall be maintained using the same system
designated by the Secretary for the provision of basic grants
under subpart 1 of part A of this title.
H. R. 2264—41
‘‘SEC. 456. CONTRACTS.
‘‘(a) CONTRACTS FOR SUPPLIES AND SERVICES.—
‘‘(1) IN GENERAL.—The Secretary shall, to the extent prac-
ticable, award contracts for origination, servicing, and collection
described in subsection (b). In awarding such contracts, the
Secretary shall ensure that such services and supplies are
provided at competitive prices.
‘‘(2) ENTITIES.—The entities with which the Secretary may
enter into contracts shall include only entities which the Sec-
retary determines are qualified to provide such services and
supplies and will comply with the procedures applicable to
the award of such contracts. In the case of awarding contracts
for the origination, servicing, and collection of loans under
this part, the Secretary shall enter into contracts only with
entities that have extensive and relevant experience and dem-
onstrated effectiveness. The entities with which the Secretary
may enter into such contracts shall include, where practicable,
agencies with agreements with the Secretary under sections
428(b) and (c), if such agencies meet the qualifications as deter-
mined by the Secretary under this subsection and if those
agencies have such experience and demonstrated effectiveness.
In awarding contracts to such State agencies, the Secretary
shall, to the extent practicable and consistent with the purposes
of this part, give special consideration to State agencies with
a history of high quality performance to perform services for
institutions of higher education within their State.
‘‘(3) RULE OF CONSTRUCTION.—Nothing in this section shall
be construed as a limitation of the authority of any State
agency to enter into an agreement for the purposes of this
section as a member of a consortium of State agencies.
‘‘(b) CONTRACTS FOR ORIGINATION, SERVICING, AND DATA SYS-
TEMS.—The Secretary may enter into contracts for—
‘‘(1) the alternative origination of loans to students attend-
ing institutions of higher education with agreements to partici-
pate in the program under this part (or their parents), if such
institutions do not have agreements with the Secretary under
section 454(b);
‘‘(2) the servicing and collection of loans made under this
part;
‘‘(3) the establishment and operation of 1 or more data
systems for the maintenance of records on all loans made
under this part;
‘‘(4) services to assist in the orderly transition from the
loan programs under part B to the direct student loan program
under this part; and
‘‘(5) such other aspects of the direct student loan program
as the Secretary determines are necessary to ensure the
successful operation of the program.
‘‘SEC. 457. REGULATORY ACTIVITIES.
‘‘(a) NOTICE IN LIEU OF REGULATIONS FOR FIRST YEAR OF PRO-
GRAM.—
‘‘(1) NOTICE IN LIEU OF REGULATIONS FOR FIRST YEAR OF
PROGRAM.—The Secretary shall publish in the Federal Register
whatever standards, criteria, and procedures, consistent with
the provisions of this part, the Secretary, in consultation with
members of the higher education community, determines are
H. R. 2264—42
reasonable and necessary to the successful implementation of
the first year of the direct student loan program authorized
by this part. Section 431 of the General Education Provisions
Act shall not apply to the publication of such standards, criteria,
and procedures.
‘‘(2) NEGOTIATED RULEMAKING.—Beginning with academic
year 1995–1996, all standards, criteria, procedures, and regula-
tions implementing this part as amended by the Student Loan
Reform Act of 1993 shall, to the extent practicable, be subject
to negotiated rulemaking, including all such standards, criteria,
procedures, and regulations promulgated from the date of enact-
ment of such Act.
‘‘(b) CLOSING DATE FOR APPLICATIONS FROM INSTITUTIONS.—
The Secretary shall establish a date not later than October 1,
1993, as the closing date for receiving applications from institutions
of higher education desiring to participate in the first year of
the direct loan program under this part.
‘‘(c) PUBLICATION OF LIST OF PARTICIPATING INSTITUTIONS.—
Not later than January 1, 1994, the Secretary shall publish in
the Federal Register a list of the institutions of higher education
selected to participate in the first year of the direct loan program
under this part.
‘‘SEC. 458. FUNDS FOR ADMINISTRATIVE EXPENSES.
‘‘(a) IN GENERAL.—Each fiscal year, there shall be available
to the Secretary of Education from funds available pursuant to
section 422(g) and from funds not otherwise appropriated, funds
to be obligated for administrative costs under this part, including
the costs of the transition from the loan programs under part
B to the direct student loan programs under this part (including
the costs of annually assessing the program under this part and
the progress of the transition) and transition support (including
administrative costs) for the expenses of guaranty agencies in servic-
ing outstanding loans in their portfolios and in guaranteeing new
loans, not to exceed (from such funds not otherwise appropriated)
$260,000,000 in fiscal year 1994, $345,000,000 in fiscal year 1995,
$550,000,000 in fiscal year 1996, $595,000,000 in fiscal year 1997,
and $750,000,000 in fiscal year 1998. If in any fiscal year the
Secretary determines that additional funds for administrative
expenses are needed as a result of such transition or the expansion
of the direct student loan programs under this part, the Secretary
is authorized to use funds available under this section for a subse-
quent fiscal year for such expenses, except that the total expendi-
tures by the Secretary (from such funds not otherwise appropriated)
shall not exceed $2,500,000,000 in fiscal years 1994 through 1998.
The Secretary is also authorized to carry over funds available
under this section to a subsequent fiscal year.
‘‘(b) AVAILABILITY.—Funds made available under subsection (a)
shall remain available until expended.
‘‘(c) BUDGET JUSTIFICATION.—No funds may be expended under
this section unless the Secretary includes in the Department of
Education’s annual budget justification to Congress a detailed
description of the specific activities for which the funds made avail-
able by this section have been used in the prior and current years
(if applicable), the activities and costs planned for the budget year,
and the projection of activities and costs for each remaining year
H. R. 2264—43
for which administrative expenses under this section are made
available.
‘‘(d) NOTIFICATION.—In the event the Secretary finds it nec-
essary to use the authority provided to the Secretary under sub-
section (a) to draw funds for administrative expenses from a future
year’s funds, no funds may be expended under this section unless
the Secretary immediately notifies the Committees on Appropria-
tions of the Senate and of the House of Representatives, and the
Labor and Human Resources Committee of the Senate and the
Education and Labor Committee of the House of Representatives,
of such action and explain the reasons for such action.’’.
CHAPTER 2—CONFORMING AMENDMENTS TO THE
HIGHER EDUCATION ACT OF 1965
SEC. 4041. PRESERVING LOAN ACCESS.
(a) ADVANCES TO GUARANTY AGENCIES FOR LENDER-OF-LAST-
RESORT SERVICES.—
(1) AMENDMENT.—Section 428(j) of the Act (20 U.S.C.
1078(j)) is amended by striking paragraph (3) and inserting
the following:
‘‘(3) ADVANCES
TO
GUARANTY
AGENCIES
FOR
LENDER-OF-
LAST-RESORT
SERVICES
DURING
TRANSITION
TO
DIRECT
LEND-
ING.—(A) In order to ensure the availability of loan capital
during the transition from the Federal Family Education Loan
Program under this part to the Federal Direct Student Loan
Program under part D of this title, the Secretary is authorized
to provide a guaranty agency with additional advance funds
in accordance with section 422(c)(7), with such restrictions on
the use of such funds as are determined appropriate by the
Secretary, in order to ensure that the guaranty agency will
make loans as the lender-of-last-resort. Such agency shall make
such loans in accordance with this subsection and the require-
ments of the Secretary.
‘‘(B) Notwithstanding any other provision in this part, a
guaranty agency serving as a lender-of-last-resort under this
paragraph shall be paid a fee, established by the Secretary,
for making such loans in lieu of interest and special allowance
subsidies, and shall be required to assign such loans to the
Secretary on demand. Upon such assignment, the portion of
the advance represented by the loans assigned shall be consid-
ered repaid by such guaranty agency.’’.
(2) CONFORMING AMENDMENTS.—
(A) ADVANCES
TO
GUARANTEE
AGENCIES.—Section
422(c)(7) of the Act (20 U.S.C. 1072(c)(7)) is amended by
striking all beginning with ‘‘to a guaranty agency’’ through
the period and inserting ‘‘to a guaranty agency—
‘‘(A) in accordance with section 428(j), in order to
ensure that the guaranty agency shall make loans as the
lender-of-last-resort during the transition from the Federal
Family Education Loan Program under this part to the
Federal Direct Student Loan Program under part D of
this title; or
‘‘(B) if the Secretary is seeking to terminate the guar-
anty agency’s agreement, or assuming the guaranty agen-
cy’s functions, in accordance with section 428(c)(10)(F)(v),
in order to assist the agency in meeting its immediate
H. R. 2264—44
cash needs, ensure the uninterrupted payment of claims,
or ensure that the guaranty agency shall make loans as
described in subparagraph (A);’’.
(B) RULES
AND
OPERATING
PROCEDURES.—Section
428(j)(2) of the Act (20 U.S.C. 1078(j)(2)) is amended—
(i) in subparagraph (A), by inserting before the
semicolon at the end the following: ‘‘and ensure a
response within 60 days after the student’s original
complete application is filed under this subsection’’;
(ii) by redesignating subparagraphs (B) through
(D) as subparagraphs (C) through (E), respectively;
and
(iii) by inserting after subparagraph (A) the follow-
ing new subparagraph:
‘‘(B) consistent with standards established by the Sec-
retary, students applying for loans under this subsection
shall not be subject to additional eligibility requirements
or requests for additional information beyond what is
required under this title in order to receive a loan under
this part from an eligible lender, nor be required to receive
more than two rejections from eligible lenders in order
to obtain a loan under this subsection;’’.
(b) LENDER REFERRAL SERVICES.—Section 428(e) of the Act
(20 U.S.C. 1078(e)) is amended—
(1) in paragraph (1)—
(A) by amending the paragraph heading to read as
follows: ‘‘IN GENERAL; AGREEMENTS WITH GUARANTY AGEN-
CIES.—’’;
(B) by inserting the subparagraph designation ‘‘(A)’’
immediately before ‘‘The Secretary’’;
(C) by striking ‘‘in any State’’ and inserting ‘‘with which
the Secretary has an agreement under subparagraph (B)’’;
and
(D) by adding at the end the following new subpara-
graph:
‘‘(B)(i) The Secretary may enter into agreements with guar-
anty agencies that meet standards established by the Secretary
to provide lender referral services in geographic areas specified
by the Secretary. Such guaranty agencies shall be paid in
accordance with paragraph (3) for such services.
‘‘(ii) The Secretary shall publish in the Federal Register
whatever standards, criteria, and procedures, consistent with
the provisions of this part and part D of this title, the Secretary
determines are reasonable and necessary to provide lender
referral services under this subsection and ensure loan access
to student and parent borrowers during the transition from
the loan programs under this part to the direct student loan
programs under part D of this title. Section 431 of the General
Education Provisions Act shall not apply to the publication
of such standards, criteria, and procedures.’’;
(2) in paragraph (2)—
(A) in the matter preceding subparagraph (A), by strik-
ing ‘‘in a State’’ and inserting ‘‘with which the Secretary
has an agreement under paragraph (1)(B)’’;
(B) by amending subparagraph (A) to read as follows:
‘‘(A)(i) such student is either a resident of, or is
accepted for enrollment in, or is attending, an eligible
H. R. 2264—45
institution located in a geographic area for which the Sec-
retary (I) determines that loans are not available to all
eligible students, and (II) has entered into an agreement
with a guaranty agency under paragraph (1)(B) to provide
lender referral services; and’’;
(3) in paragraph (3), by striking ‘‘The’’ and inserting ‘‘From
funds available for costs of transition under section 458 of
the Act, the’’; and
(4) by striking paragraph (5).
(c) LENDER-OF-LAST-RESORT FUNCTIONS
OF STUDENT LOAN
MARKETING ASSOCIATION.—Subsection (q) of section 439 of the Act
(20 U.S.C. 1087–2(q)) is amended to read as follows:
‘‘(q) LENDER-OF-LAST-RESORT.—
‘‘(1) ACTION AT REQUEST OF SECRETARY.—(A) Whenever the
Secretary determines that eligible borrowers are seeking and
are unable to obtain loans under this part, the Association
or its designated agent shall, not later than 90 days after
the date of enactment of the Student Loan Reform Act of
1993, begin making loans to such eligible borrowers in accord-
ance with this subsection at the request of the Secretary. The
Secretary may request that the Association make loans to
borrowers within a geographic area or for the benefit of students
attending institutions of higher education that certify, in accord-
ance with standards established by the Secretary, that their
students are seeking and unable to obtain loans.
‘‘(B) Loans made pursuant to this subsection shall be insur-
able by the Secretary under section 429 with a certificate
of comprehensive insurance coverage provided for under section
429(b)(1) or by a guaranty agency under paragraph (2)(A) of
this subsection.
‘‘(2) ISSUANCE
AND
COVERAGE
OF
LOANS.—(A) Whenever
the Secretary, after consultation with, and with the agreement
of, representatives of the guaranty agency in a State, or an
eligible lender in a State described in section 435(d)(1)(D),
determines that a substantial portion of eligible borrowers in
such State or within an area of such State are seeking and
are unable to obtain loans under this part, the Association
or its designated agent shall begin making such loans to borrow-
ers in such State or within an area of such State in accordance
with this subsection at the request of the Secretary.
‘‘(B) Loans made pursuant to this subsection shall be insur-
able by the agency identified in subparagraph (A) having an
agreement pursuant to section 428(b). For loans insured by
such agency, the agency shall provide the Association with
a certificate of comprehensive insurance coverage, if the
Association and the agency have mutually agreed upon a means
to determine that the agency has not already guaranteed a
loan under this part to a student which would cause a subse-
quent loan made by the Association to be in violation of any
provision under this part.
‘‘(3) TERMINATION OF LENDING.—The Association or its des-
ignated agent shall cease making loans under this subsection
at such time as the Secretary determines that the conditions
which caused the implementation of this subsection have ceased
to exist.’’.
H. R. 2264—46
SEC. 4042. GUARANTY AGENCY RESERVES.
Section 422 of the Act (20 U.S.C. 1072) is amended by adding
at the end the following new subsection:
‘‘(g) PRESERVATION
AND
RECOVERY
OF
GUARANTY
AGENCY
RESERVES.—
‘‘(1) AUTHORITY TO RECOVER FUNDS.—Notwithstanding any
other provision of law, the reserve funds of the guaranty agen-
cies, and any assets purchased with such reserve funds, regard-
less of who holds or controls the reserves or assets, shall be
considered to be the property of the United States to be used
in the operation of the program authorized by this part or
the program authorized by part D of this title. However, the
Secretary may not require the return of all reserve funds of
a guaranty agency to the Secretary unless the Secretary deter-
mines that such return is in the best interest of the operation
of the program authorized by this part or the program author-
ized by part D of this title, or to ensure the proper maintenance
of such agency’s funds or assets or the orderly termination
of the guaranty agency’s operations and the liquidation of its
assets. The reserves shall be maintained by each guaranty
agency to pay program expenses and contingent liabilities, as
authorized by the Secretary, except that—
‘‘(A) the Secretary may direct a guaranty agency to
return to the Secretary a portion of its reserve fund which
the Secretary determines is unnecessary to pay the pro-
gram expenses and contingent liabilities of the guaranty
agency;
‘‘(B) the Secretary may direct the guaranty agency
to require the return, to the guaranty agency or to the
Secretary, of any reserve funds or assets held by, or under
the control of, any other entity, which the Secretary deter-
mines are necessary to pay the program expenses and
contingent liabilities of the guaranty agency, or which are
required
for
the
orderly
termination
of
the
guaranty
agency’s operations and the liquidation of its assets;
‘‘(C) the Secretary may direct a guaranty agency, or
such agency’s officers or directors, to cease any activities
involving expenditure, use or transfer of the guaranty
agency’s reserve funds or assets which the Secretary deter-
mines is a misapplication, misuse, or improper expenditure
of such funds or assets; and
‘‘(D) any such determination under subparagraph (A)
or (B) shall be based on standards prescribed by regulations
that are developed through negotiated rulemaking and that
include procedures for administrative due process.
‘‘(2) TERMINATION
PROVISIONS
IN
CONTRACTS.—(A) To
ensure that the funds and assets of the guaranty agency are
preserved, any contract with respect to the administration of
a guaranty agency’s reserve funds, or the administration of
any assets purchased or acquired with the reserve funds of
the guaranty agency, that is entered into or extended by the
guaranty agency, or any other party on behalf of or with the
concurrence of the guaranty agency, after the date of enactment
of this subsection shall provide that the contract is terminable
by the Secretary upon 30 days notice to the contracting parties
if the Secretary determines that such contract includes an
impermissible transfer of the reserve funds or assets, or is
H. R. 2264—47
otherwise inconsistent with the terms or purposes of this sec-
tion.
‘‘(B) The Secretary may direct a guaranty agency to suspend
or cease activities under any contract entered into by or on
behalf of such agency after January 1, 1993, if the Secretary
determines that the misuse or improper expenditure of such
guaranty agency’s funds or assets or such contract provides
unnecessary or improper benefits to such agency’s officers or
directors.
‘‘(3) PENALTIES.—Violation of any direction issued by the
Secretary under this subsection may be subject to the penalties
described in section 490 of this Act.
‘‘(4) AVAILABILITY OF FUNDS.—Any funds that are returned
or otherwise recovered by the Secretary pursuant to this sub-
section shall be available for expenditure for expenses pursuant
to section 458 of this Act.’’.
SEC. 4043. TERMS OF LOANS.
(a) AMENDMENT.—Section 428 of the Act (20 U.S.C. 1078) is
amended—
(1) in subsection (b)(1)(D), by striking ‘‘be subject to’’
through the semicolon and inserting ‘‘be subject to income
contingent repayment in accordance with subsection (m);’’; and
(2) in subsection (m)—
(A) by amending paragraph (1) to read as follows:
‘‘(1) AUTHORITY OF SECRETARY TO REQUIRE.—The Secretary
shall require at least 10 percent of the borrowers who have
defaulted on loans made under this part that are assigned
to the Secretary under subsection (c)(8) to repay those loans
under an income contingent repayment plan, the terms and
conditions of which shall be established by the Secretary and
the same as, or similar to, an income contingent repayment
plan established for purposes of part D of this title.’’; and
(B) by striking paragraphs (2), (3), and (4) and insert-
ing the following new paragraph:
‘‘(2) LOANS
FOR
WHICH
INCOME
CONTINGENT
REPAYMENT
MAY
BE
REQUIRED.—A loan made under this part may be
required to be repaid under this subsection if the note or
other evidence of the loan has been assigned to the Secretary
pursuant to subsection (c)(8).’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall take effect on July 1, 1994.
SEC. 4044. ASSIGNMENT OF LOANS.
Section 428(c)(8) of the Act (20 U.S.C. 1078(c)(8)) is amended—
(1) in the first sentence, by inserting the subparagraph
designation ‘‘(A)’’ before ‘‘If the’’;
(2) by striking the second and third sentences; and
(3) by adding at the end the following new subparagraph:
‘‘(B) An orderly transition from the Federal Family Edu-
cation Loan Program under this part to the Federal Direct
Student Loan Program under part D of this title shall be
deemed to be in the Federal fiscal interest, and a guaranty
agency shall promptly assign loans to the Secretary under
this paragraph upon the Secretary’s request.’’.
H. R. 2264—48
SEC. 4045. TERMINATION 
OF 
GUARANTY 
AGENCY 
AGREEMENTS;
ASSUMPTION OF GUARANTY AGENCY FUNCTIONS BY THE
SECRETARY.
Section 428(c)(10) of the Act is amended—
(1) in subparagraph (C), by inserting ‘‘, as appropriate,’’
after ‘‘the Secretary shall require’’;
(2) in subparagraph (D)—
(A) by inserting the clause designation ‘‘(i)’’ before
‘‘Each’’;
(B) by striking ‘‘Each’’ and inserting ‘‘If the Secretary
is not seeking to terminate the guaranty agency’s agree-
ment under subparagraph (E), or assuming the guaranty
agency’s functions under subparagraph (F), a’’;
(C) by adding at the end the following new clause:
‘‘(ii) If the Secretary is seeking to terminate the guaranty
agency’s agreement under subparagraph (E), or assuming the
guaranty agency’s functions under subparagraph (F), a manage-
ment plan described in subparagraph (C) shall include the
means by which the Secretary and the guaranty agency shall
work together to ensure the orderly termination of the oper-
ations, and liquidation of the assets, of the guaranty agency.’’;
(3) in subparagraph (E)—
(A) in clause (ii), by striking ‘‘or’’ after the semicolon;
(B) in clause (iii), by striking the period and inserting
a semicolon; and
(C) by adding at the end the following new clauses:
‘‘(iv) the Secretary determines that such action is nec-
essary to protect the Federal fiscal interest;
‘‘(v) the Secretary determines that such action is nec-
essary to ensure the continued availability of loans to stu-
dent or parent borrowers; or
‘‘(vi) the Secretary determines that such action is nec-
essary to ensure an orderly transition from the loan pro-
grams under this part to the direct student loan programs
under part D of this title.’’;
(4) in subparagraph (F)—
(A) in the matter preceding clause (i), by striking
‘‘Except as provided in subparagraph (G), if’’ and inserting
‘‘If’’;
(B) by amending clause (v) to read as follows:
‘‘(v) provide the guaranty agency with additional
advance funds in accordance with section 422(c)(7), with
such restrictions on the use of such funds as is determined
appropriate by the Secretary, in order to—
‘‘(I) meet the immediate cash needs of the guaranty
agency;
‘‘(II) ensure the uninterrupted payment of claims;
or
‘‘(III) ensure that the guaranty agency will make
loans as the lender-of-last-resort, in accordance with
subsection (j);’’;
(C) in clause (vi)—
(i) by striking ‘‘and to avoid’’ and inserting ‘‘to
avoid’’;
(ii) by striking the period and inserting a comma
and ‘‘and to ensure an orderly transition from the
H. R. 2264—49
loan programs under this part to the direct student
loan programs under part D of this title.’’; and
(iii) by redesignating such clause as clause (vii);
and
(D) by inserting after clause (v) the following new
clause:
‘‘(vi) use all funds and assets of the guaranty agency
to assist in the activities undertaken in accordance with
this subparagraph and take appropriate action to require
the return, to the guaranty agency or the Secretary, of
any funds or assets provided by the guaranty agency, under
contract or otherwise, to any person or organization; or’’;
(5) by striking subparagraph (G);
(6) by redesignating subparagraphs (H), (I), and (J) as
subparagraphs (I), (J), and (K), respectively;
(7) by inserting after subparagraph (F) the following new
subparagraphs:
‘‘(G) Notwithstanding any other provision of Federal or
State law, if the Secretary has terminated or is seeking to
terminate a guaranty agency’s agreement under subparagraph
(E), or has assumed a guaranty agency’s functions under
subparagraph (F)—
‘‘(i) no State court may issue any order affecting the
Secretary’s actions with respect to such guaranty agency;
‘‘(ii) any contract with respect to the administration
of a guaranty agency’s reserve funds, or the administration
of any assets purchased or acquired with the reserve funds
of the guaranty agency, that is entered into or extended
by the guaranty agency, or any other party on behalf
of or with the concurrence of the guaranty agency, after
the date of enactment of this subparagraph shall provide
that the contract is terminable by the Secretary upon 30
days notice to the contracting parties if the Secretary
determines that such contract includes an impermissible
transfer of the reserve funds or assets, or is otherwise
inconsistent with the terms or purposes of this section;
and
‘‘(iii) no provision of State law shall apply to the actions
of the Secretary in terminating the operations of a guaranty
agency.
‘‘(H) Notwithstanding any other provision of law, the Sec-
retary’s liability for any outstanding liabilities of a guaranty
agency (other than outstanding student loan guarantees under
this part), the functions of which the Secretary has assumed,
shall not exceed the fair market value of the reserves of the
guaranty agency, minus any necessary liquidation or other
administrative costs.’’; and
(8) in subparagraph (K) (as redesignated by paragraph
(5)), by striking all beginning with ‘‘system, together’’ through
the period and inserting ‘‘system and the progress of the transi-
tion from the loan programs under this part to the direct
student loan programs under part D of this title.’’.
SEC. 4046. CONSOLIDATION LOANS.
(a) COST SAVINGS FROM CONSOLIDATION LOANS.—Section 428C
of the Act (20 U.S.C. 1078–3) is amended—
H. R. 2264—50
(1) in subsection (a) by amending paragraph (3)(A) to read
as follows:
‘‘(3) DEFINITION OF ELIGIBLE BORROWERS.—(A) For the pur-
pose of this section, the term ‘eligible borrower’ means a bor-
rower who, at the time of application for a consolidation loan
is in repayment status, or in a grace period preceding repay-
ment, or is a delinquent or defaulted borrower who will reenter
repayment through loan consolidation.’’;
(2) in subsection (b)—
(A) in paragraph (1)—
(i) in subparagraph (A)(ii), by inserting ‘‘with
income-sensitive repayment terms’’ after ‘‘obtain a
consolidation loan’’;
(ii) by redesignating subparagraph (E) as subpara-
graph (F); and
(iii) by inserting after subparagraph (D) the follow-
ing new subparagraph:
‘‘(E) that the lender shall offer an income-sensitive
repayment schedule, established by the lender in accord-
ance with the regulations promulgated by the Secretary,
to the borrower of any consolidation loan made by the
lender on or after July 1, 1994; and’’;
(B) in paragraph (4), by amending subparagraph (C)
to read as follows:
‘‘(C)(i) provides that periodic installments of principal
need not be paid, but interest shall accrue and be paid
in accordance with clause (ii), during any period for which
the borrower would be eligible for a deferral under section
428(b)(1)(M), and that any such period shall not be included
in determining the repayment schedule pursuant to sub-
section (c)(2) of this section; and
‘‘(ii) provides that interest shall accrue and be paid—
‘‘(I) by the Secretary, in the case of a consolidation
loan that consolidated only Federal Stafford Loans for
which the student borrower received an interest sub-
sidy under section 428; or
‘‘(II) by the borrower, or capitalized, in the case
of a consolidation loan other than a loan described
in subclause (I);’’; and
(C) by adding at the end the following new paragraph:
‘‘(5) DIRECT LOANS.—In the event that a borrower is unable
to obtain a consolidation loan from a lender with an agreement
under subsection (a)(1), or is unable to obtain a consolidation
loan with income-sensitive repayment terms acceptable to the
borrower from such a lender, the Secretary shall offer any
such borrower who applies for it, a direct consolidation loan.
Such direct consolidation loan shall, as requested by the bor-
rower, be repaid either pursuant to income contingent repay-
ment under part D of this title or pursuant to any other
repayment provision under this section. The Secretary shall
not offer such loans if, in the Secretary’s judgment, the Depart-
ment of Education does not have the necessary origination
and servicing arrangements in place for such loans.’’; and
(3) in subsection (c)—
(A) in paragraph (1), by amending subparagraphs (B)
and (C) to read as follows:
H. R. 2264—51
‘‘(B) A consolidation loan made before July 1, 1994, shall
bear interest at an annual rate on the unpaid principal balance
of the loan that is equal to the greater of—
‘‘(i) the weighted average of the interest rates on the
loans consolidated, rounded to the nearest whole percent;
or
‘‘(ii) 9 percent.
‘‘(C) A consolidation loan made on or after July 1, 1994,
shall bear interest at an annual rate on the unpaid principal
balance of the loan that is equal to the weighted average
of the interest rates on the loans consolidated, rounded upward
to the nearest whole percent.’’;
(B) in paragraph (2)—
(i) in subparagraph (A)—
(I) in the matter preceding clause (i), by strik-
ing ‘‘income sensitive repayment schedules. Such
repayment terms’’ and inserting ‘‘income-sensitive
repayment schedules, established by the lender
in accordance with the regulations of the Sec-
retary. Except as required by such income-sen-
sitive repayment schedules, or by the terms of
repayment pursuant to income contingent repay-
ment offered by the Secretary under subsection
(b)(5), such repayment terms’’;
(II) by redesignating clauses (i), (ii), (iii), (iv),
and (v) as clauses (ii), (iii), (iv), (v), and (vi), respec-
tively; and
(III) by inserting before clause (ii) (as redesig-
nated by subclause (II)) the following new clause:
‘‘(i) is less than $7,500, then such consolidation loan
shall be repaid in not more than 10 years;’’;
(ii) by striking subparagraph (B); and
(iii) by redesignating subparagraph (C) as subpara-
graph (B); and
(C) in paragraph (3)(B), by inserting ‘‘except as
required by the terms of repayment pursuant to income
contingent repayment offered by the Secretary under sub-
section (b)(5),’’ before ‘‘the lender’’.
(b) COHORT DEFAULT RATE CONFORMING AMENDMENTS.—
(1) AMENDMENTS TO DEFINITION.—Section 435(m)(1) of the
Act (20 U.S.C. 1085) is amended—
(A) in subparagraph (A), by inserting ‘‘(or on the por-
tion of a loan made under section 428C that is used to
repay any such loans)’’ immediately after ‘‘on such loans’’;
(B) in subparagraph (C), by inserting ‘‘(or on the por-
tion of a loan made under section 428C that is used to
repay any such loans)’’ immediately after ‘‘on such loans’’;
and
(C) in subparagraph (D)—
(i) by inserting ‘‘(or the portion of a loan made
under section 428C that is used to repay a loan made
under such section)’’ after ‘‘section 428A’’ the first place
it appears; and
(ii) by inserting ‘‘(or a loan made under section
428C a portion of which is used to repay a loan made
under such section)’’ after ‘‘section 428A’’ the second
place it appears.
H. R. 2264—52
(2) CONFORMING AMENDMENT.—Section 428C(a)(3)(B)(ii) of
the Act (20 U.S.C. 1078–3(a)(3)(B)(ii)) is amended by striking
the second sentence.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect on July 1, 1994, except that the amendments
made by subsection (a)(2)(B) shall take effect upon enactment.
SEC. 4047. CONSOLIDATION OF PROGRAMS.
(a) IN GENERAL.—Section 428H of the Act (20 U.S.C. 1078–
9) is amended—
(1) in the matter preceding paragraph (1) of subsection
(b), by inserting ‘‘(including graduate and professional students
as defined in regulations promulgated by the Secretary)’’ after
‘‘484’’;
(2) by amending subsection (d) to read as follows:
‘‘(d) LOAN LIMITS.—
‘‘(1) IN GENERAL.—Except as provided in paragraphs (2)
and (3), the annual and aggregate limits for loans under this
section shall be the same as those established under section
428(b)(1), less any amount received by such student pursuant
to the subsidized loan program established under section 428.
‘‘(2) ANNUAL
LIMITS
FOR
INDEPENDENT, GRADUATE, AND
PROFESSIONAL
STUDENTS.—The maximum annual amount of
loans under this section an independent student (or a student
whose parents are unable to borrow under section 428B or
the Federal Direct PLUS Loan Program) may borrow in any
academic year or its equivalent or in any period of 7 consecutive
months, whichever is longer, shall be the amount determined
under paragraph (1), plus—
‘‘(A) in the case of such a student attending an eligible
institution who has not completed such student’s first 2
years of undergraduate study—
‘‘(i) $4,000, if such student is enrolled in a program
whose length is at least one academic year in length
(as determined under section 481);
‘‘(ii) $2,500, if such student is enrolled in a program
whose length is less than one academic year, but at
least 2⁄3 of such an academic year; and
‘‘(iii) $1,500, if such student is enrolled in a pro-
gram whose length is less than 2⁄3, but at least 1⁄3,
of such an academic year;
‘‘(B) in the case of such a student attending an eligible
institution who has completed the first 2 years of under-
graduate study but who has not completed the remainder
of a program of undergraduate study—
‘‘(i) $5,000, if such student is enrolled in a program
whose length is at least one academic year in length
(as determined under section 481);
‘‘(ii) $3,325, if such student is enrolled in a program
whose length is less than one academic year, but at
least 2⁄3 of such an academic year; and
‘‘(iii) $1,675, if such student is enrolled in a pro-
gram whose length is less than 2⁄3, but at least 1⁄3,
of such an academic year; and
‘‘(C) in the case of such a student who is a graduate
or professional student attending an eligible institution,
$10,000.
H. R. 2264—53
‘‘(3) AGGREGATE LIMITS FOR INDEPENDENT, GRADUATE, AND
PROFESSIONAL STUDENTS.—The maximum aggregate amount of
loans under this section a student described in paragraph (2)
may borrow shall be the amount described in paragraph (1),
adjusted to reflect the increased annual limits described in
paragraph (2), as prescribed by the Secretary by regulation.’’;
and
(3) in subsection (e), by adding at the end the following
new paragraphs:
‘‘(5) AMORTIZATION.—The amount of the periodic payment
and the repayment schedule for any loan made pursuant to
this section shall be established by assuming an interest rate
equal to the applicable rate of interest at the time the repay-
ment of the principal amount of the loan commences. At the
option of the lender, the note or other written evidence of
the loan may require that—
‘‘(A) the amount of the periodic payment will be
adjusted annually; or
‘‘(B) the period of repayment of principal will be length-
ened or shortened,
in order to reflect adjustments in interest rates occurring as
a consequence of section 427A(c)(4).
‘‘(6) REPAYMENT PERIOD.—For purposes of calculating the
10-year repayment period under section 428(b)(1)(D), such
period shall commence at the time the first payment of principal
is due from the borrower.’’.
(b) REPEAL.—Section 428A of the Act is repealed.
(c) TERMS, CONDITIONS AND BENEFITS.—Notwithstanding the
amendments made by this section, with respect to loans provided
under sections 428A and 428H of the Act (as such sections existed
on the date preceding the date of enactment of this Act) the terms,
conditions and benefits applicable to such loans under such sections
shall continue to apply to such loans after the date of enactment
of this Act.
(d) EFFECTIVE DATE.—Except as otherwise provided herein,
the amendments made by this section shall take effect on July
1, 1994.
Subtitle B—Additional Savings From The
Student Loan Programs
SEC. 4101. REDUCTION OF BORROWER INTEREST RATES.
Section 427A of the Act (20 U.S.C. 1077a) is amended—
(1) in subsection (c)(4), by adding at the end the following
new subparagraph:
‘‘(E) Notwithstanding subparagraphs (A) and (D) for any
loan made pursuant to section 428B for which the first disburse-
ment is made on or after July 1, 1994—
‘‘(i) subparagraph (B) shall be applied by substituting
‘‘3.1’’ for ‘‘3.25’’; and
‘‘(ii) the interest rate shall not exceed 9 percent.’’;
(2) by redesignating subsections (f), (g), and (h) as sub-
sections (i), (j), and (k) respectively;
(3) by adding after subsection (e) the following new sub-
sections:
‘‘(f) INTEREST RATES FOR NEW LOANS AFTER JULY 1, 1994.—
H. R. 2264—54
‘‘(1) IN GENERAL.—Notwithstanding subsections (a), (b), (d),
and (e) of this section, with respect to any loan made, insured,
or guaranteed under this part (other than a loan made pursuant
to section 428B or 428C) for which the first disbursement
is made on or after July 1, 1994, the applicable rate of interest
shall, during any 12-month period beginning on July 1 and
ending on June 30, be determined on the preceding June 1
and be equal to—
‘‘(A) the bond equivalent rate of 91-day Treasury bills
auctioned at the final auction held prior to such June
1; plus
‘‘(B) 3.10 percent,
except that such rate shall not exceed 8.25 percent.
‘‘(2) CONSULTATION.—The Secretary shall determine the
applicable rate of interest under paragraph (1) after consulta-
tion with the Secretary of the Treasury and shall publish such
rate in the Federal Register as soon as practicable after the
date of determination.
‘‘(g) IN SCHOOL AND GRACE PERIOD RULES.—
‘‘(1) GENERAL
RULE.—Notwithstanding the provisions of
subsection (f), but subject to subsection (h), with respect to
any loan under section 428 or 428H of this part for which
the first disbursement is made on or after July 1, 1995, the
applicable rate of interest for interest which accrues—
‘‘(A) prior to the beginning of the repayment period
of the loan; or
‘‘(B) during the period in which principal need not
be paid (whether or not such principal is in fact paid)
by reason of a provision described in section 428(b)(1)(M)
or 427(a)(2)(C),
shall not exceed the rate determined under paragraph (2).
‘‘(2) RATE DETERMINATION.—For purposes of paragraph (1),
the rate determined under this paragraph shall, during any
12-month period beginning on July 1 and ending on June
30, be determined on the preceding June 1 and be equal to—
‘‘(A) the bond equivalent rate of 91-day Treasury bills
auctioned at the final auction prior to such June 1; plus
‘‘(B) 2.5 percent,
except that such rate shall not exceed 8.25 percent.
‘‘(3) CONSULTATION.—The Secretary shall determine the
applicable rate of interest under this subsection after consulta-
tion with the Secretary of the Treasury and shall publish such
rate in the Federal Register as soon as practicable after the
date of determination.
‘‘(h) INTEREST RATES FOR NEW LOANS AFTER JULY 1, 1998.—
‘‘(1) IN GENERAL.—Notwithstanding subsections (a), (b), (d),
(e), (f), and (g) of this section, with respect to any loan made,
insured, or guaranteed under this part (other than a loan
made pursuant to sections 428B and 428C) for which the first
disbursement is made on or after July 1, 1998, the applicable
rate of interest shall, during any 12-month period beginning
on July 1 and ending on June 30, be determined on the preced-
ing June 1 and be equal to—
‘‘(A) the bond equivalent rate of the securities with
a comparable maturity as established by the Secretary;
plus
‘‘(B) 1.0 percent,
H. R. 2264—55
except that such rate shall not exceed 8.25 percent.
‘‘(2) INTEREST
RATES
FOR
NEW
PLUS
LOANS
AFTER
JULY
1, 1998.—Notwithstanding subsections (a), (b), (d), (e), (f), and
(g), with respect to any loan made under section 428B for
which the first disbursement is made on or after July 1, 1998,
paragraph (1) shall be applied—
‘‘(A) by substituting ‘2.1 percent’ for ‘1.0 percent’ in
subparagraph (B); and
‘‘(B) by substituting ‘9.0 percent’ for ‘8.25 percent’ in
the matter following such subparagraph.
‘‘(3) CONSULTATION.—The Secretary shall determine the
applicable rate of interest under this subsection after consulta-
tion with the Secretary of the Treasury and shall publish such
rate in the Federal Register as soon as practicable after the
date of determination.’’.
SEC. 4102. REDUCTION IN LOAN FEES PAID BY STUDENTS.
(a) ORIGINATION FEES.—Section 438 of the Act (20 U.S.C. 1087–
1) is amended—
(1) in the heading of subsection (c) by inserting ‘‘FROM
STUDENTS’’ after ‘‘ORIGINATION FEES’’; and
(2) in subsection (c)—
(A) in paragraph (2)—
(i) by striking ‘‘428A, 428B, 428C,’’ and inserting
‘‘428C’’; and
(ii) by striking ‘‘5 percent’’ and inserting ‘‘3.0 per-
cent’’; and
(B) in paragraph (6), by striking ‘‘5 percent’’ and insert-
ing ‘‘3.0 percent’’.
(b) ORIGINATION FEE; INSURANCE PREMIUM FOR UNSUBSIDIZED
LOANS.—Section 428H of the Act (20 U.S.C. 1078–8) is amended—
(1) in subsection (f)—
(A) in the subsection heading, by striking ‘‘INSURANCE
PREMIUM’’ and inserting ‘‘ORIGINATION FEE’’;
(B) in
the
heading
of
paragraph
(1),
by
striking
‘‘/INSURANCE PREMIUM’’;
(C) in paragraph (1)—
(i) by striking ‘‘a combined origination fee and
insurance premium in the amount of 6.5 percent’’ and
inserting ‘‘an origination fee in the amount of 3.0 per-
cent’’; and
(ii) by striking the second sentence;
(D) in paragraph (2), by striking ‘‘combined fee and
premium’’ and inserting ‘‘origination fee’’;
(E) in paragraph (3), by striking ‘‘combined origination
fee and insurance premium’’ and inserting ‘‘origination fee’’;
(F) in paragraph (4)—
(i) in the heading, by striking ‘‘INSURANCE PRE-
MIUM’’ and inserting ‘‘ORIGINATION FEE’’;
(ii) by striking ‘‘combined origination fee and insur-
ance premiums’’ and inserting ‘‘origination fees’’; and
(iii) by striking ‘‘and premiums to pay’’ and insert-
ing ‘‘to pay’’; and
(G) in paragraph (5)—
(i) in the heading, by inserting ‘‘ORIGINATION FEE
AND’’ before ‘‘INSURANCE’’; and
(ii) in the second sentence—
H. R. 2264—56
(I) by striking ‘‘6.5 percent insurance pre-
mium’’ and inserting ‘‘combined origination fee
under this subsection and the insurance premium
under subsection (h)’’; and
(II) by inserting ‘‘origination fee and’’ before
‘‘insurance’’; and
(2) by adding at the end the following new subsection:
‘‘(l) INSURANCE PREMIUM.—Each State or nonprofit private
institution or organization having an agreement with the Secretary
under section 428(b)(1) may charge a borrower under this section
an insurance premium equal to not more than 1.0 percent of the
principal amount of the loan, if such premium will not be used
for incentive payments to lenders.’’.
(c) INSURANCE PREMIUM.—Section 428(b)(1)(H) of the Act (20
U.S.C. 1078(b)(1)(H)) is amended by striking ‘‘3 percent’’ and insert-
ing ‘‘1.0 percent’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall take effect on July 1, 1994.
SEC. 4103. LOAN FEES FROM LENDERS.
Section 438 of the Act (20 U.S.C 1087–1) is further amended—
(1) by redesignating subsections (d) and (e) as subsections
(e) and (f), respectively; and
(2) by inserting after subsection (c) the following new sub-
section:
‘‘(d) LOAN FEES FROM LENDERS.—
‘‘(1) DEDUCTION FROM INTEREST AND SPECIAL ALLOWANCE
SUBSIDIES.—Notwithstanding subsection (b), the Secretary shall
reduce the total amount of interest and special allowance pay-
able under section 428(a)(3)(A) and subsection (b) of this section,
respectively, to any holder of a loan by a loan fee in an amount
determined in accordance with paragraph (2) of this subsection.
If the total amount of interest and special allowance payable
under section 428(a)(3)(A) and subsection (b) of this section,
respectively, is less than the amount of such loan fee, then
the Secretary shall deduct such excess amount from subsequent
quarters’ payments until the total amount has been deducted.
‘‘(2) AMOUNT
OF
LOAN
FEES.—With respect to any loan
under this part for which the first disbursement was made
on or after October 1, 1993, the amount of the loan fee which
shall be deducted under paragraph (1) shall be equal to 0.50
percent of the principal amount of the loan.
‘‘(3) DISTRIBUTION
OF
LOAN
FEES.—The Secretary shall
deposit all fees collected pursuant to paragraph (3) into the
insurance fund established in section 431.’’.
SEC. 4104. OFFSET FEE.
Subsection (h) of section 439 of the Act (20 U.S.C. 1087–2(h))
is amended by adding at the end the following new paragraph:
‘‘(7) OFFSET
FEE.—(A) The Association shall pay to the
Secretary, on a monthly basis, an offset fee calculated on an
annual basis in an amount equal to 0.30 percent of the principal
amount of each loan made, insured or guaranteed under this
part that the Association holds (except for loans made pursuant
to sections 428C, 439(o), or 439(q)) and that was acquired
on or after the date of enactment of this paragraph.
H. R. 2264—57
‘‘(B) If the Secretary determines that the Association has
substantially failed to comply with subsection (q), subparagraph
(A) shall be applied by substituting ‘1.0 percent’ for ‘0.3 percent’.
‘‘(C) The Secretary shall deposit all fees collected pursuant
to this paragraph into the insurance fund established in section
431.’’.
SEC. 4105. ELIMINATION OF TAX EXEMPT FLOOR.
Section 438(b)(2)(B) of the Act (20 U.S.C. 1087–1(b)(2)(B)) is
amended by adding at the end the following new clause:
‘‘(iv) Notwithstanding clauses (i) and (ii), the quarterly
rate of the special allowance for holders of loans which are
financed with funds obtained by the holder from the issuance
of obligations originally issued on or after October 1, 1993,
the income from which is excluded from gross income under
the Internal Revenue Code of 1986, shall be the quarterly
rate of the special allowance established under subparagraph
(A), (E), or (F), as the case may be. Such rate shall also
apply to holders of loans which were made or purchased with
funds obtained by the holder from collections or default
reimbursements on, or interest or other income pertaining to,
eligible loans made or purchased with funds described in the
preceding sentence of this subparagraph or from income on
the investment of such funds.’’.
SEC. 4106. REDUCTION IN INTEREST RATE FOR CONSOLIDATION
LOANS; REBATE FEE.
(a) AMENDMENT.—Section 428C of the Act (20 U.S.C. 1078–
3) is amended by adding at the end the following new subsection:
‘‘(f) INTEREST PAYMENT REBATE FEE.—
‘‘(1) IN GENERAL.—For any month beginning on or after
October 1, 1993, each holder of a consolidation loan under
this section for which the first disbursement was made on
or after October 1, 1993, shall pay to the Secretary, on a
monthly basis and in such manner as the Secretary shall pre-
scribe, a rebate fee calculated on an annual basis equal to
1.05 percent of the principal plus accrued unpaid interest on
such loan.
‘‘(2) DEPOSIT.—The Secretary shall deposit all fees collected
pursuant to subsection (a) into the insurance fund established
in section 431.’’.
(b) ENFORCEMENT.—Subsection (d) of section 435 of the Act
(20 U.S.C. 1085(d)) is amended—
(1) in the matter preceding subparagraph (A) of paragraph
(1), by striking ‘‘(5)’’ and inserting ‘‘(6)’’; and
(2) by adding at the end the following new paragraph:
‘‘(6) REBATE FEE REQUIREMENT.—To be an eligible lender
under this part, an eligible lender shall pay rebate fees in
accordance with section 428C(f).’’.
SEC. 4107. REINSURANCE FEES AND ADMINISTRATIVE COST ALLOW-
ANCE.
(a) REINSURANCE FEES.—Section 428(c) of the Act (20 U.S.C.
1078(c)) is amended—
(1) by striking paragraph (9); and
(2) by redesignating paragraph (10) as paragraph (9).
(b) ADMINISTRATIVE COST ALLOWANCE.—Section 428(f)(1) of the
Act (20 U.S.C. 1078(f)(1)) is amended—
H. R. 2264—58
(1) in subparagraph (A), by striking ‘‘The Secretary’’ and
inserting ‘‘For a fiscal year prior to fiscal year 1994, the Sec-
retary’’; and
(2) in subparagraph (B), by inserting ‘‘prior to fiscal year
1994’’ after ‘‘any fiscal year’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect on October 1, 1993.
SEC. 4108. RISK SHARING.
(a) GUARANTY AGENCY REINSURANCE PERCENTAGE.—Section
428(c)(1) of the Act (20 U.S.C. 1078(c)(1)) is amended—
(1) in the fourth sentence of subparagraph (A), by striking
‘‘100 percent’’ and inserting ‘‘98 percent’’;
(2) in subparagraph (B)(i), by striking ‘‘90 percent’’ and
inserting ‘‘88 percent’’;
(3) in subparagraph (B)(ii), by striking ‘‘80 percent’’ and
inserting ‘‘78 percent’’; and
(4) by adding at the end the following new subparagraphs:
‘‘(E) Notwithstanding any other provisions of this section,
in the case of a loan made pursuant to a lender-of-last-resort
program, the Secretary shall apply the provisions of—
‘‘(i) the fourth sentence of subparagraph (A) by
substituting ‘100 percent’ for ‘98 percent’;
‘‘(ii) subparagraph (B)(i) by substituting ‘100 percent’
for ‘88 percent’; and
‘‘(iii) subparagraph (B)(ii) by substituting ‘100 percent’
for ‘78 percent’.
‘‘(F) Notwithstanding any other provisions of this section,
in the case of an outstanding loan transferred to a guaranty
agency from another guaranty agency pursuant to a plan
approved by the Secretary in response to the insolvency of
the latter such guarantee agency, the Secretary shall apply
the provision of—
‘‘(i) the fourth sentence of subparagraph (A) by
substituting ‘100 percent’ for ‘98 percent’;
‘‘(ii) subparagraph (B)(i) by substituting ‘90 percent’
for ‘88 percent’; and
‘‘(iii) subparagraph (B)(ii) by substituting ‘80 percent’
for ‘78 percent’.’’.
(b) RISK SHARING BY THE LOAN HOLDERS.—Section 428(b)(1)(G)
of the Act (20 U.S.C. 1078(b)(1)(G)) is amended—
(1) by striking ‘‘100 percent’’ and inserting ‘‘98 percent’’;
and
(2) by adding before the semicolon at the end the following:
‘‘, except that such program shall insure 100 percent of the
unpaid principal of loans made with funds advanced pursuant
to section 428(j) or 439(q)’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to any loan for which the first disbursement is made
on or after October 1, 1993.
SEC. 4109. PLUS LOAN DISBURSEMENTS.
(a) MULTIPLE DISBURSEMENT REQUIRED.—The matter preceding
paragraph (1) of section 428B(c) of the Act (20 U.S.C. 1078–2(c))
is amended by inserting ‘‘shall be disbursed in accordance with
the requirements of section 428G and’’ after ‘‘under this section’’.
(b) CONFORMING AMENDMENTS.—Section 428G(e) of the Act (20
U.S.C. 1078–7(e) is amended—
H. R. 2264—59
(1) in the subsection heading, by striking ‘‘PLUS, CONSOLI-
DATION,’’ and inserting ‘‘CONSOLIDATION’’; and
(2) by striking ‘‘section 428B or 428C’’ and inserting ‘‘section
428C’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall be effective with respect to loans for which the first disburse-
ment is made on or after October 1, 1993.
SEC. 4110. SECRETARY’S EQUITABLE SHARE.
(a) AMENDMENT.—Section 428(c)(6)(A)(ii) of the Act (20 U.S.C.
1078(c)(6)(A)(ii)) is amended by striking ‘‘30 percent’’ and inserting
‘‘27 percent’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on October 1, 1993.
SEC. 4111. REDUCTION IN THE SPECIAL ALLOWANCE PAYMENT.
Paragraph (2) of section 438(b) of the Act (20 U.S.C. 1087–
1(b)(2)) is amended—
(1) in subparagraph (A)—
(A) by striking ‘‘and (D)’’ and inserting ‘‘(D), (E), and
(F)’’; and
(B) by striking ‘‘427A(e)’’ and inserting ‘‘427A(f)’’; and
(2) by adding at the end the following new subparagraphs:
‘‘(E) In the case of any loan for which the applicable rate
of interest is described in section 427A(g)(2), subparagraph
(A)(iii) shall be applied by substituting ‘2.5 percent’ for ‘3.10
percent’.
‘‘(F) Subject to paragraph (4), the special allowance paid
pursuant to this subsection on loans for which the applicable
rate of interest is determined under section 427A(h) shall be
computed (i) by determining the applicable bond equivalent
rate of the security with a comparable maturity, as established
by the Secretary, (ii) by subtracting the applicable interest
rates on such loans from such applicable bond equivalent rate,
(iii) by adding 1.0 percent to the resultant percent, and (iv)
by dividing the resultant percent by 4. If such computation
produces a number less than zero, such loans shall be subject
to section 427A(f).’’.
SEC. 4112. SUPPLEMENTAL PRECLAIMS ASSISTANCE.
(a) AMENDMENT.—Section 428(l)(2) of the Act (20 U.S.C.
1078(l)(2)) is amended by striking the second sentence and inserting
the following: ‘‘For each loan on which such assistance is performed
and for which a default claim is not presented to the guaranty
agency by the lender on or before the 150th day after the loan
becomes 120 days delinquent, such payment shall be equal to one
percent of the total of the unpaid principal and the accrued unpaid
interest of the loan.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect on October 1, 1993.
Subtitle C—Cost Sharing by States
SEC. 4201. COST SHARING BY STATES.
(a) AMENDMENT.—Section 428 of the Act (20 U.S.C. 1078) is
amended by adding at the end the following new subsection:
‘‘(n) STATE SHARE OF DEFAULT COSTS.—
H. R. 2264—60
‘‘(1) IN GENERAL.—In the case of any State in which there
are located any institutions of higher education that have a
cohort default rate that exceeds 20 percent, such State shall
pay to the Secretary an amount equal to—
‘‘(A) the new loan volume attributable to all institutions
in the State for the current fiscal year; multiplied by
‘‘(B) the percentage specified in paragraph (2); multi-
plied by
‘‘(C) the quotient of—
‘‘(i) the sum of the amounts calculated under para-
graph (3) for each such institution in the State; divided
by
‘‘(ii) the total amount of loan volume attributable
to current and former students of institutions located
in that State entering repayment in the period used
to calculate the cohort default rate.
‘‘(2) PERCENTAGE.—For purposes of paragraph (1)(B), the
percentage used shall be—
‘‘(A) 12.5 percent for fiscal year 1995;
‘‘(B) 20 percent for fiscal year 1996; and
‘‘(C) 50 percent for fiscal year 1997 and succeeding
fiscal years.
‘‘(3) CALCULATION.—For purposes of paragraph (1)(C)(i),
the amount shall be determined by calculating for each institu-
tion the amount by which—
‘‘(A) the amount of the loans received for attendance
by such institution’s current and former students who (i)
enter repayment during the fiscal year used for the calcula-
tion of the cohort default rate, and (ii) default before the
end of the following fiscal year; exceeds
‘‘(B) 20 percent of the loans received for attendance
by all the current and former students who enter repay-
ment during the fiscal year used for the calculation of
the cohort default rate.
‘‘(4) FEE.—A State may charge a fee to an institution of
higher education that participates in the program under this
part and is located in that State according to a fee structure,
approved by the Secretary, that is based on the institution’s
cohort default rate and the State’s risk of loss under this
subsection. Such fee structure shall include a process by which
an institution with a high cohort default rate is exempt from
any fees under this paragraph if such institution demonstrates
to the satisfaction of the State that exceptional mitigating
circumstances, as determined by the State and approved by
the Secretary, contributed to its cohort default rate.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect on October 1, 1994.
Subtitle D—Group Health Plans
SEC. 4301. STANDARDS FOR GROUP HEALTH PLAN COVERAGE.
(a) IN GENERAL.—Part 6 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1161 et seq.)
is amended by adding at the end the following new section:
H. R. 2264—61
‘‘ADDITIONAL STANDARDS FOR GROUP HEALTH PLANS
‘‘SEC. 609. (a) GROUP HEALTH PLAN COVERAGE PURSUANT TO
MEDICAL CHILD SUPPORT ORDERS.—
‘‘(1) IN GENERAL.—Each group health plan shall provide
benefits in accordance with the applicable requirements of any
qualified medical child support order.
‘‘(2) DEFINITIONS.—For purposes of this subsection—
‘‘(A) QUALIFIED MEDICAL CHILD SUPPORT ORDER.—The
term ‘qualified medical child support order’ means a medi-
cal child support order—
‘‘(i) which creates or recognizes the existence of
an alternate recipient’s right to, or assigns to an alter-
nate recipient the right to, receive benefits for which
a participant or beneficiary is eligible under a group
health plan, and
‘‘(ii) with respect to which the requirements of
paragraphs (3) and (4) are met.
‘‘(B) MEDICAL CHILD SUPPORT ORDER.—The term ‘medi-
cal child support order’ means any judgment, decree, or
order (including approval of a settlement agreement) issued
by a court of competent jurisdiction which—
‘‘(i) provides for child support with respect to a
child of a participant under a group health plan or
provides for health benefit coverage to such a child,
is made pursuant to a State domestic relations law
(including a community property law), and relates to
benefits under such plan, or
‘‘(ii) enforces a law relating to medical child sup-
port described in section 1908 of the Social Security
Act (as added by section 13822 of the Omnibus Budget
Reconciliation Act of 1993) with respect to a group
health plan.
‘‘(C) ALTERNATE
RECIPIENT.—The term ‘alternate
recipient’ means any child of a participant who is recog-
nized under a medical child support order as having a
right to enrollment under a group health plan with respect
to such participant.
‘‘(3) INFORMATION TO BE INCLUDED IN QUALIFIED ORDER.—
A medical child support order meets the requirements of this
paragraph only if such order clearly specifies—
‘‘(A) the name and the last known mailing address
(if any) of the participant and the name and mailing
address of each alternate recipient covered by the order,
‘‘(B) a reasonable description of the type of coverage
to be provided by the plan to each such alternate recipient,
or the manner in which such type of coverage is to be
determined,
‘‘(C) the period to which such order applies, and
‘‘(D) each plan to which such order applies.
‘‘(4) RESTRICTION ON NEW TYPES OR FORMS OF BENEFITS.—
A medical child support order meets the requirements of this
paragraph only if such order does not require a plan to provide
any type or form of benefit, or any option, not otherwise pro-
vided under the plan, except to the extent necessary to meet
the requirements of a law relating to medical child support
described in section 1908 of the Social Security Act (as added
H. R. 2264—62
by section 13822 of the Omnibus Budget Reconciliation Act
of 1993).
‘‘(5) PROCEDURAL REQUIREMENTS.—
‘‘(A) TIMELY NOTIFICATIONS AND DETERMINATIONS.—In
the case of any medical child support order received by
a group health plan—
‘‘(i) the plan administrator shall promptly notify
the participant and each alternate recipient of the
receipt of such order and the plan’s procedures for
determining whether medical child support orders are
qualified medical child support orders, and
‘‘(ii) within a reasonable period after receipt of
such order, the plan administrator shall determine
whether such order is a qualified medical child support
order and notify the participant and each alternate
recipient of such determination.
‘‘(B) ESTABLISHMENT OF PROCEDURES FOR DETERMINING
QUALIFIED
STATUS
OF
ORDERS.—Each group health plan
shall establish reasonable procedures to determine whether
medical child support orders are qualified medical child
support orders and to administer the provision of benefits
under such qualified orders. Such procedures—
‘‘(i) shall be in writing,
‘‘(ii) shall provide for the notification of each person
specified in a medical child support order as eligible
to receive benefits under the plan (at the address
included in the medical child support order) of such
procedures promptly upon receipt by the plan of the
medical child support order, and
‘‘(iii) shall permit an alternate recipient to des-
ignate a representative for receipt of copies of notices
that are sent to the alternate recipient with respect
to a medical child support order.
‘‘(6) ACTIONS TAKEN BY FIDUCIARIES.—If a plan fiduciary
acts in accordance with part 4 of this subtitle in treating
a medical child support order as being (or not being) a qualified
medical child support order, then the plan’s obligation to the
participant and each alternate recipient shall be discharged
to the extent of any payment made pursuant to such act of
the fiduciary.
‘‘(7) TREATMENT OF ALTERNATE RECIPIENTS.—
‘‘(A) TREATMENT AS BENEFICIARY GENERALLY.—A per-
son who is an alternate recipient under a qualified medical
child support order shall be considered a beneficiary under
the plan for purposes of any provision of this Act.
‘‘(B) TREATMENT
AS
PARTICIPANT
FOR
PURPOSES
OF
REPORTING AND DISCLOSURE REQUIREMENTS.—A person who
is an alternate recipient under any medical child support
order shall be considered a participant under the plan
for purposes of the reporting and disclosure requirements
of part 1.
‘‘(8) DIRECT PROVISION OF BENEFITS PROVIDED TO ALTER-
NATE RECIPIENTS.—Any payment for benefits made by a group
health plan pursuant to a medical child support order in
reimbursement for expenses paid by an alternate recipient or
an alternate recipient’s custodial parent or legal guardian shall
H. R. 2264—63
be made to the alternate recipient or the alternate recipient’s
custodial parent or legal guardian.
‘‘(b) RIGHTS OF STATES WITH RESPECT TO GROUP HEALTH PLANS
WHERE PARTICIPANTS OR BENEFICIARIES THEREUNDER ARE ELIGIBLE
FOR MEDICAID BENEFITS.—
‘‘(1) COMPLIANCE BY PLANS WITH ASSIGNMENT OF RIGHTS.—
A group health plan shall provide that payment for benefits
with respect to a participant under the plan will be made
in accordance with any assignment of rights made by or on
behalf of such participant or a beneficiary of the participant
as required by a State plan for medical assistance approved
under title XIX of the Social Security Act pursuant to section
1912(a)(1)(A) of such Act (as in effect on the date of the enact-
ment of the Omnibus Budget Reconciliation Act of 1993).
‘‘(2) ENROLLMENT
AND
PROVISION
OF
BENEFITS
WITHOUT
REGARD TO MEDICAID ELIGIBILITY.—A group health plan shall
provide that, in enrolling an individual as a participant or
beneficiary or in determining or making any payments for
benefits of an individual as a participant or beneficiary, the
fact that the individual is eligible for or is provided medical
assistance under a State plan for medical assistance approved
under title XIX of the Social Security Act will not be taken
into account.
‘‘(3) ACQUISITION BY STATES OF RIGHTS OF THIRD PARTIES.—
A group health plan shall provide that, to the extent that
payment has been made under a State plan for medical assist-
ance approved under title XIX of the Social Security Act in
any case in which a group health plan has a legal liability
to make payment for items or services constituting such assist-
ance, payment for benefits under the plan will be made in
accordance with any State law which provides that the State
has acquired the rights with respect to a participant to such
payment for such items or services.
‘‘(c) GROUP HEALTH PLAN COVERAGE OF DEPENDENT CHILDREN
IN CASES OF ADOPTION.—
‘‘(1) COVERAGE
EFFECTIVE
UPON
PLACEMENT
FOR
ADOP-
TION.—In any case in which a group health plan provides
coverage for dependent children of participants or beneficiaries,
such plan shall provide benefits to dependent children placed
with participants or beneficiaries for adoption under the same
terms and conditions as apply in the case of dependent children
who are natural children of participants or beneficiaries under
the plan, irrespective of whether the adoption has become final.
‘‘(2) RESTRICTIONS BASED ON PREEXISTING CONDITIONS AT
TIME
OF
PLACEMENT
FOR
ADOPTION
PROHIBITED.—A group
health plan may not restrict coverage under the plan of any
dependent child adopted by a participant or beneficiary, or
placed with a participant or beneficiary for adoption, solely
on the basis of a preexisting condition of such child at the
time that such child would otherwise become eligible for cov-
erage under the plan, if the adoption or placement for adoption
occurs while the participant or beneficiary is eligible for cov-
erage under the plan.
‘‘(3) DEFINITIONS.—For purposes of this subsection—
‘‘(A) CHILD.—The term ‘child’ means, in connection with
any adoption, or placement for adoption, of the child, an
H. R. 2264—64
individual who has not attained age 18 as of the date
of such adoption or placement for adoption.
‘‘(B) PLACEMENT FOR ADOPTION.—The term ‘placement’,
or being ‘placed’, for adoption, in connection with any place-
ment for adoption of a child with any person, means the
assumption and retention by such person of a legal obliga-
tion for total or partial support of such child in anticipation
of adoption of such child. The child’s placement with such
person terminates upon the termination of such legal
obligation.
‘‘(d) CONTINUED COVERAGE OF COSTS OF A PEDIATRIC VACCINE
UNDER GROUP HEALTH PLANS.—A group health plan may not reduce
its coverage of the costs of pediatric vaccines (as defined under
section 1928(h)(6) of the Social Security Act as amended by section
13830 of the Omnibus Budget Reconciliation Act of 1993) below
the coverage it provided as of May 1, 1993.
‘‘(e) REGULATIONS.—Any regulations prescribed under this sec-
tion shall be prescribed by the Secretary of Labor, in consultation
with the Secretary of Health and Human Services.’’.
(b) CONFORMING AMENDMENTS TO ERISA TO ENSURE COMPLI-
ANCE
WITH
MEDICARE
AND
MEDICAID
COVERAGE
DATA
BANK
REQUIREMENTS.—
(1) REPORTS TO DATA BANK.—Section 101 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1021) is
amended—
(A) by redesignating subsection (f) as subsection (g);
and
(B) by inserting after subsection (e) the following new
subsection:
‘‘(f) INFORMATION NECESSARY TO COMPLY WITH MEDICARE AND
MEDICAID COVERAGE DATA BANK REQUIREMENTS.—
‘‘(1) PROVISION OF INFORMATION BY GROUP HEALTH PLAN
UPON REQUEST OF EMPLOYER.—
‘‘(A) IN GENERAL.—An employer shall comply with the
applicable requirements of section 1144 of the Social Secu-
rity Act (as added by section 13581 of the Omnibus Budget
Reconciliation Act of 1993). Upon the request of an
employer maintaining a group health plan, any plan spon-
sor, plan administrator, insurer, third-party administrator,
or other person who maintains under the plan the informa-
tion necessary to enable the employer to comply with the
applicable requirements of section 1144 of the Social Secu-
rity Act shall, in such form and manner as may be pre-
scribed in regulations of the Secretary (in consultation
with the Secretary of Health and Human Services), provide
such information (not inconsistent with paragraph (2))—
‘‘(i) in the case of a request by an employer
described in subparagraph (B) and a plan that is not
a multiemployer plan or a component of an arrange-
ment described in subparagraph (C), to the Medicare
and Medicaid Coverage Data Bank;
‘‘(ii) in the case of a plan that is a multiemployer
plan or is a component of an arrangement described
in subparagraph (C), to the employer or to such Data
Bank, at the option of the plan; and
‘‘(iii) in any other case, to the employer or to such
Data Bank, at the option of the employer.
H. R. 2264—65
‘‘(B) EMPLOYER DESCRIBED.—An employer is described
in this subparagraph for any calendar year if such employer
normally employed fewer than 50 employees on a typical
business day during such calendar year.
‘‘(C) 
ARRANGEMENT
DESCRIBED.—An 
arrangement
described in this subparagraph is any arrangement in
which two or more employers contribute for the purpose
of providing group health plan coverage for employees.
‘‘(2) INFORMATION NOT REQUIRED TO BE PROVIDED.—Any
plan sponsor, plan administrator, insurer, third-party adminis-
trator, or other person described in paragraph (1)(A) (other
than the employer) that maintains the information under the
plan shall not provide to an employer in order to satisfy the
requirements of section 1144 of the Social Security Act, and
shall not provide to the Data Bank under such section, informa-
tion that pertains in any way to—
‘‘(A) the health status of a participant, or of the partici-
pant’s spouse, dependent child, or other beneficiary,
‘‘(B) the cost of coverage provided to any participant
or beneficiary, or
‘‘(C) any limitations on such coverage specific to any
participant or beneficiary.
‘‘(3) REGULATIONS.—The Secretary may, in consultation
with the Secretary of Health and Human Services, prescribe
such regulations as are necessary to carry out this subsection.’’.
(c) CONFORMING AMENDMENTS.—
(1) CIVIL ACTIONS.—Section 502(a) of such Act (29 U.S.C.
1132(a)) is amended—
(A) in paragraph (5), by striking ‘‘or’’ at the end;
(B) in paragraph (6), by striking the period and insert-
ing a semicolon; and
(C) by adding at the end the following new paragraphs:
‘‘(7) by a State to enforce compliance with a qualified medi-
cal child support order (as defined in section 609(a)(2)(A));
or
‘‘(8) by the Secretary, or by an employer or other person
referred to in section 101(f)(1), (A) to enjoin any act or practice
which violates subsection (f) of section 101, or (B) to obtain
appropriate equitable relief (i) to redress such violation or (ii)
to enforce such subsection.’’.
(2) CIVIL PENALTY.—Section 502(c) of such Act (29 U.S.C.
1132(c)) is amended by adding at the end the following new
paragraph:
‘‘(4) The Secretary may assess a civil penalty of not more
than $1,000 for each violation by any person of section 101(f)(1).
For purposes of this paragraph, each violation described in subpara-
graph (A) with respect to any single participant, and each violation
described in subparagraph (B) with respect to any single participant
or beneficiary, shall be treated as a separate violation. The Sec-
retary and the Secretary of Health and Human Services shall
maintain such ongoing consultation as may be necessary and appro-
priate to coordinate enforcement under this subsection with enforce-
ment under section 1144(c)(8) of the Social Security Act.’’.
(3) JURISDICTION.—Section 502(e)(1) of such Act (29 U.S.C.
1132(e)(1)) is amended—
H. R. 2264—66
(A) in the first sentence, by striking ‘‘or fiduciary’’
and inserting ‘‘fiduciary, or any person referred to in section
101(f)(1)’’; and
(B) in the second sentence, by striking ‘‘subsection
(a)(1)(B)’’ and inserting ‘‘paragraphs (1)(B) and (7) of sub-
section (a)’’.
(4) EFFECT ON OTHER LAWS.—Section 514 of such Act (29
U.S.C. 1144) is amended—
(A) in subsection (b)(7)(D), by inserting ‘‘, qualified
medical child support orders (within the meaning of section
609(a)(2)(A)), and the provisions of law referred to in section
609(a)(2)(B)(ii) to the extent enforced by qualified medical
child support orders’’ before the period; and
(B) by striking subsection (b)(8) and inserting the fol-
lowing:
‘‘(8) Subsection (a) of this section shall not be construed to
preclude any State cause of action—
‘‘(A) with respect to which the State exercises its acquired
rights under section 609(b)(3) with respect to a group health
plan (as defined in section 607(1)), or
‘‘(B) for recoupment of payment with respect to items or
services pursuant to a State plan for medical assistance
approved under title XIX of the Social Security Act which
would not have been payable if such acquired rights had been
executed before payment with respect to such items or services
by the group health plan.’’;
(5) CLERICAL AMENDMENTS.—
(A) The heading for part 6 of subtitle B of title I
of such Act is amended to read as follows:
‘‘PART 6—GROUP HEALTH PLANS’’.
(B) The table of contents in section 1 of such Act
is amended—
(i) by striking the item relating to the heading
for part 6 of subtitle B of title I and inserting the
following:
‘‘PART 6—GROUP HEALTH PLANS’’;
and
(ii) by inserting after the item relating to section
608 the following new item:
‘‘Sec. 609. Additional standards for group health plans.’’.
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section
shall take effect on the date of the enactment of this Act.
(2) PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1,
1994.—Any amendment to a plan required to be made by an
amendment made by this section shall not be required to be
made before the first plan year beginning on or after January
1, 1994, if—
(A) during the period after the date before the date
of the enactment of this Act and before such first plan
year, the plan is operated in accordance with the require-
ments of the amendments made by this section, and
H. R. 2264—67
(B) such plan amendment applies retroactively to the
period after the date before the date of the enactment
of this Act and before such first plan year.
A plan shall not be treated as failing to be operated in accord-
ance with the provisions of the plan merely because it operates
in accordance with this paragraph.
Subtitle E—Fee Increase
SEC. 4401. FEE INCREASE.
The Tea Importation Act (21 U.S.C. 41 et seq.) is amended—
(1) by inserting the 4th undesignated paragraph under
the center heading ‘‘FOOD AND DRUG ADMINISTRATION’’ of title
II of the Labor-Federal Security Appropriation Act, 1942 (21
U.S.C. 46a) as a new section 13 of the Tea Importation Act,
and
(2) by amending such new section 13 to read as follows:
‘‘SEC. 13. No tea or merchandise described as tea shall be
examined for importation into the United States, or released by
the Customs Service, under the Tea Importation Act unless the
importer or consignee of such tea or merchandise has paid, before
the examination, a fee in an amount equal to—
‘‘(1) 10 cents for each hundred weight or fraction thereof
of the tea or merchandise; or
‘‘(2) the approximate cost of the examinations;
whichever amount is less. Such fee shall be deposited into the
Treasury of the United States as miscellaneous receipts.’’
TITLE V—TRANSPORTATION AND
PUBLIC WORKS PROVISIONS
SEC. 5001. RECREATIONAL USER FEES.
(a) IN GENERAL.—Section 210 of the Flood Control Act of 1968
(16 U.S.C. 460d–3) is amended—
(1) by striking ‘‘SEC. 210. No entrance’’ and inserting the
following:
‘‘SEC. 210. RECREATIONAL USER FEES.
‘‘(a) PROHIBITION ON ADMISSIONS FEES.—No entrance’’;
(2) by striking the second sentence; and
(3) by adding at the end the following new subsection:
‘‘(b) FEES
FOR USE
OF DEVELOPED RECREATION SITES
AND
FACILITIES.—
‘‘(1) ESTABLISHMENT
AND
COLLECTION.—Notwithstanding
section 4(b) of the Land and Water Conservation Fund Act
of 1965 (16 U.S.C. 460l–6a(b)), the Secretary of the Army is
authorized, subject to paragraphs (2) and (3), to establish and
collect fees for the use of developed recreation sites and facili-
ties, including campsites, swimming beaches, and boat launch-
ing ramps but excluding a site or facility which includes only
a boat launch ramp and a courtesy dock.
‘‘(2) EXEMPTION
OF
CERTAIN
FACILITIES.—The Secretary
shall not establish or collect fees under this subsection for
the use or provision of drinking water, wayside exhibits, roads,
scenic drives, overlook sites, picnic tables, toilet facilities, sur-
H. R. 2264—68
face water areas, undeveloped or lightly developed shoreland,
or general visitor information.
‘‘(3) PER VEHICLE LIMIT.—The fee under this subsection
for use of a site or facility (other than an overnight camping
site or facility or any other site or facility at which a fee
is charged for use of the site or facility as of the date of
the enactment of this paragraph) for persons entering the site
or facility by private, noncommercial vehicle transporting not
more than 8 persons (including the driver) shall not exceed
$3 per day per vehicle. Such maximum amount may be adjusted
annually by the Secretary for changes in the Consumer Price
Index of All Urban Consumers published by the Bureau of
Labor Statistics of the Department of Labor.
‘‘(4) DEPOSIT INTO TREASURY ACCOUNT.—All fees collected
under this subsection shall be deposited into the Treasury
account for the Corps of Engineers established by section 4(i)
of the Land and Water Conservation Fund Act of 1965 (16
U.S.C. 460l–6a(i)).’’.
(b) CONFORMING AMENDMENT FOR CAMPSITES.—Section 4(b) of
the Land and Water Conservation Fund Act of 1965 (16 U.S.C.
460l–6a(b)) is amended by striking the next to the last sentence.
TITLE VI—COMMUNICATIONS LICENS-
ING AND SPECTRUM ALLOCATION IM-
PROVEMENT
SEC. 6001. TRANSFER OF AUCTIONABLE FREQUENCIES.
(a) 
AMENDMENT.—The 
National 
Telecommunications 
and
Information Administration Organization Act (47 U.S.C. 901 et
seq.) is amended—
(1) by striking the heading of part B and inserting the
following:
‘‘PART C—SPECIAL AND TEMPORARY
PROVISIONS’’;
(2) by redesignating sections 131 through 135 as sections
151 through 155, respectively; and
(3) by inserting after part A the following new part:
‘‘PART B—TRANSFER OF AUCTIONABLE
FREQUENCIES.
‘‘SEC. 111. DEFINITIONS.
‘‘As used in this part:
‘‘(1) The term ‘allocation’ means an entry in the National
Table of Frequency Allocations of a given frequency band for
the purpose of its use by one or more radiocommunication
services.
‘‘(2) The term ‘assignment’ means an authorization given
to a station licensee to use specific frequencies or channels.
‘‘(3) The term ‘the 1934 Act’ means the Communications
Act of 1934 (47 U.S.C. 151 et seq.).
H. R. 2264—69
‘‘SEC. 112. NATIONAL SPECTRUM ALLOCATION PLANNING.
‘‘The Assistant Secretary and the Chairman of the Commission
shall meet, at least biannually, to conduct joint spectrum planning
with respect to the following issues:
‘‘(1) the extent to which licenses for spectrum use can
be issued pursuant to section 309(j) of the 1934 Act to increase
Federal revenues;
‘‘(2) the future spectrum requirements for public and pri-
vate uses, including State and local government public safety
agencies;
‘‘(3) the spectrum allocation actions necessary to accommo-
date those uses; and
‘‘(4) actions necessary to promote the efficient use of the
spectrum, including spectrum management techniques to pro-
mote increased shared use of the spectrum that does not cause
harmful interference as a means of increasing commercial
access.
‘‘SEC. 113. IDENTIFICATION OF REALLOCABLE FREQUENCIES.
‘‘(a) IDENTIFICATION REQUIRED.—The Secretary shall, within
18 months after the date of the enactment of the Omnibus Budget
Reconciliation Act of 1993, prepare and submit to the President
and the Congress a report identifying and recommending for
reallocation bands of frequencies—
‘‘(1) that are allocated on a primary basis for Federal
Government use;
‘‘(2) that are not required for the present or identifiable
future needs of the Federal Government;
‘‘(3) that can feasibly be made available, as of the date
of submission of the report or at any time during the next
15 years, for use under the 1934 Act (other than for Federal
Government stations under section 305 of the 1934 Act);
‘‘(4) the transfer of which (from Federal Government use)
will not result in costs to the Federal Government, or losses
of services or benefits to the public, that are excessive in
relation to the benefits to the public that may be provided
by non-Federal licensees; and
‘‘(5) that are most likely to have the greatest potential
for productive uses and public benefits under the 1934 Act
if allocated for non-Federal use.
‘‘(b) MINIMUM AMOUNT OF SPECTRUM RECOMMENDED.—
‘‘(1) IN
GENERAL.—In accordance with the provisions of
this section, the Secretary shall recommend for reallocation,
for use other than by Federal Government stations under sec-
tion 305 of the 1934 Act (47 U.S.C. 305), bands of frequencies
that in the aggregate span not less than 200 megahertz, that
are located below 5 gigahertz, and that meet the criteria speci-
fied in paragraphs (1) through (5) of subsection (a). Such bands
of frequencies shall include bands of frequencies, located below
3 gigahertz, that span in the aggregate not less than 100
megahertz.
‘‘(2) MIXED USES PERMITTED TO BE COUNTED.—Bands of
frequencies which a report of the Secretary under subsection
(a) or (d)(1) recommends be partially retained for use by Federal
Government stations, but which are also recommended to be
reallocated to be made available under the 1934 Act for use
by non-Federal stations, may be counted toward the minimum
H. R. 2264—70
spectrum required by paragraph (1) of this subsection, except
that—
‘‘(A) the bands of frequencies counted under this para-
graph may not count toward more than one-half of the
minimums required by paragraph (1) of this subsection;
‘‘(B) a band of frequencies may not be counted under
this paragraph unless the assignments of the band to Fed-
eral Government stations under section 305 of the 1934
Act (47 U.S.C. 305) are limited by geographic area, by
time, or by other means so as to guarantee that the poten-
tial use to be made by such Federal Government stations
is substantially less (as measured by geographic area, time,
or otherwise) than the potential use to be made by non-
Federal stations; and
‘‘(C) the operational sharing permitted under this para-
graph shall be subject to the interference regulations pre-
scribed by the Commission pursuant to section 305(a) of
the 1934 Act and to coordination procedures that the
Commission and the Secretary shall jointly establish and
implement to ensure against harmful interference.
‘‘(c) CRITERIA FOR IDENTIFICATION.—
‘‘(1) NEEDS OF THE FEDERAL GOVERNMENT.—In determining
whether a band of frequencies meets the criteria specified in
subsection (a)(2), the Secretary shall—
‘‘(A) consider whether the band of frequencies is used
to provide a communications service that is or could be
available from a commercial provider or other vendor;
‘‘(B) seek to promote—
‘‘(i) the maximum practicable reliance on commer-
cially available substitutes;
‘‘(ii) the sharing of frequencies (as permitted under
subsection (b)(2));
‘‘(iii) the development and use of new communica-
tions technologies; and
‘‘(iv) the use of nonradiating communications sys-
tems where practicable; and
‘‘(C) seek to avoid—
‘‘(i) serious degradation of Federal Government
services and operations;
‘‘(ii) excessive costs to the Federal Government
and users of Federal Government services; and
‘‘(iii) excessive disruption of existing use of Federal
Government frequencies by amateur radio licensees.
‘‘(2) FEASIBILITY OF USE.—In determining whether a fre-
quency band meets the criteria specified in subsection (a)(3),
the Secretary shall—
‘‘(A) assume that the frequency will be assigned by
the Commission under section 303 of the 1934 Act (47
U.S.C. 303) within 15 years;
‘‘(B) assume reasonable rates of scientific progress and
growth of demand for telecommunications services;
‘‘(C) seek to include frequencies which can be used
to stimulate the development of new technologies; and
‘‘(D) consider the immediate and recurring costs to
reestablish services displaced by the reallocation of spec-
trum.
H. R. 2264—71
‘‘(3) ANALYSIS
OF
BENEFITS.—In determining whether a
band of frequencies meets the criteria specified in subsection
(a)(5), the Secretary shall consider—
‘‘(A) the extent to which equipment is or will be avail-
able that is capable of utilizing the band;
‘‘(B) the proximity of frequencies that are already
assigned for commercial or other non-Federal use;
‘‘(C) the extent to which, in general, commercial users
could share the frequency with amateur radio licensees;
and
‘‘(D) the activities of foreign governments in making
frequencies available for experimentation or commercial
assignments in order to support their domestic manufactur-
ers of equipment.
‘‘(4) POWER AGENCY FREQUENCIES.—
‘‘(A) APPLICABILITY OF CRITERIA.—The criteria specified
by subsection (a) shall be deemed not to be met for any
purpose under this part with regard to any frequency
assignment to, or any frequency assignment used by, a
Federal power agency for the purpose of withdrawing that
assignment.
‘‘(B) MIXED USE ELIGIBILITY.—The frequencies assigned
to any Federal power agency may only be eligible for mixed
use under subsection (b)(2) in geographically separate
areas, but in those cases where a frequency is to be shared
by an affected Federal power agency and a non-Federal
user, such use by the non-Federal user shall not cause
harmful interference to the affected Federal power agency
or adversely affect the reliability of its power system.
‘‘(C) DEFINITION.—As used in this paragraph, the term
‘Federal power agency’ means the Tennessee Valley Author-
ity, the Bonneville Power Administration, the Western Area
Power Administration, the Southwestern Power Adminis-
tration, the Southeastern Power Administration, or the
Alaska Power Administration.
‘‘(5) LIMITATION
ON
REALLOCATION.—None of the fre-
quencies recommended for reallocation in the reports required
by this subsection shall have been recommended, prior to the
date of enactment of the Omnibus Budget Reconciliation Act
of 1993, for reallocation to non-Federal use by international
agreement.
‘‘(d) PROCEDURE FOR IDENTIFICATION OF REALLOCABLE BANDS
OF FREQUENCIES.—
‘‘(1) SUBMISSION OF PRELIMINARY IDENTIFICATION TO CON-
GRESS.—Within 6 months after the date of the enactment of
the Omnibus Budget Reconciliation Act of 1993, the Secretary
shall prepare, make publicly available, and submit to the Presi-
dent, the Congress, and the Commission a report which makes
a preliminary identification of reallocable bands of frequencies
which meet the criteria established by this section.
‘‘(2) PUBLIC
COMMENT.—The Secretary shall provide
interested persons with the opportunity to submit, within 90
days after the date of its publication, written comment on
the preliminary report required by paragraph (1). The Secretary
shall immediately transmit a copy of any such comment to
the Commission.
H. R. 2264—72
‘‘(3) COMMENT
AND
RECOMMENDATIONS
FROM
COMMIS-
SION.—The Commission shall, within 90 days after the conclu-
sion of the period for comment provided pursuant to paragraph
(2), submit to the Secretary the Commission’s analysis of such
comments 
and 
the 
Commission’s 
recommendations 
for
responses to such comments, together with such other com-
ments and recommendations as the Commission deems appro-
priate.
‘‘(4) DIRECT DISCUSSIONS.—The Secretary shall encourage
and provide opportunity for direct discussions among commer-
cial representatives and Federal Government users of the spec-
trum to aid the Secretary in determining which frequencies
to recommend for reallocation. The Secretary shall provide
notice to the public and the Commission of any such discussions,
including the name or names of any businesses or other persons
represented in such discussions. A representative of the
Commission (and of the Secretary at the election of the Sec-
retary) shall be permitted to attend any such discussions. The
Secretary shall provide the public and the Commission with
an opportunity to comment on the results of any such discus-
sions prior to the submission of the final report required by
subsection (a).
‘‘(e) TIMETABLE FOR REALLOCATION AND LIMITATION.—
‘‘(1) TIMETABLE REQUIRED.—The Secretary shall, as part
of the reports required by subsections (a) and (d)(1), include
a timetable that recommends effective dates by which the Presi-
dent shall withdraw or limit assignments of the frequencies
specified in such reports.
‘‘(2) EXPEDITED REALLOCATION.—
‘‘(A) REQUIRED
REALLOCATION.—The Secretary shall,
as part of the report required by subsection (d)(1), specifi-
cally identify and recommend for immediate reallocation
bands of frequencies that in the aggregate span not less
than 50 megahertz, that meet the criteria described in
subsection (a), and that can be made available for
reallocation immediately upon issuance of the report
required by subsection (d)(1). Such bands of frequencies
shall include bands of frequencies, located below 3
gigahertz, that in the aggregate span not less than 25
megahertz .
‘‘(B) PERMITTED REALLOCATION.—The Secretary may,
as part of such report, identify and recommend bands of
frequencies for immediate reallocation for a mixed use
pursuant to subsection (b)(2), but such bands of frequencies
may not count toward the minimums required by subpara-
graph (A).
‘‘(3) DELAYED
EFFECTIVE
DATES.—In setting the rec-
ommended delayed effective dates, the Secretary shall—
‘‘(A) consider the need to reallocate bands of frequencies
as early as possible, taking into account the requirements
of paragraphs (1) and (2) of section 115(b);
‘‘(B) be based on the useful remaining life of equipment
that has been purchased or contracted for to operate on
identified frequencies;
‘‘(C) consider the need to coordinate frequency use with
other nations; and
H. R. 2264—73
‘‘(D) take into account the relationship between the
costs to the Federal Government of changing to different
frequencies and the benefits that may be obtained from
commercial and other non-Federal uses of the reassigned
frequencies.
‘‘SEC. 114. WITHDRAWAL OR LIMITATION OF ASSIGNMENT TO FED-
ERAL GOVERNMENT STATIONS.
‘‘(a) IN GENERAL.—The President shall—
‘‘(1) within 6 months after receipt of a report by the Sec-
retary under subsection (a) or (d)(1) of section 113, withdraw
the assignment to a Federal Government station of any fre-
quency 
which 
the 
report 
recommends 
for 
immediate
reallocation;
‘‘(2) within either such 6-month period, limit the assign-
ment to a Federal Government station of any frequency which
the report recommends be made immediately available for
mixed use under section 113(b)(2);
‘‘(3) by the delayed effective date recommended by the
Secretary under section 113(e) (except as provided in subsection
(b)(4) of this section), withdraw or limit the assignment to
a Federal Government station of any frequency which the report
recommends be reallocated or made available for mixed use
on such delayed effective date;
‘‘(4) assign or reassign other frequencies to Federal Govern-
ment stations as necessary to adjust to such withdrawal or
limitation of assignments; and
‘‘(5) transmit a notice and description to the Commission
and each House of Congress of the actions taken under this
subsection.
‘‘(b) EXCEPTIONS.—
‘‘(1) AUTHORITY TO SUBSTITUTE.—If the President deter-
mines that a circumstance described in paragraph (2) exists,
the President—
‘‘(A) may substitute an alternative frequency or fre-
quencies for the frequency that is subject to such deter-
mination and withdraw (or limit) the assignment of that
alternative frequency in the manner required by subsection
(a); and
‘‘(B) shall submit a statement of the reasons for taking
the action described in subparagraph (A) to the Commis-
sion, Committee on Energy and Commerce of the House
of Representatives, and the Committee on Commerce,
Science, and Transportation of the Senate.
‘‘(2) GROUNDS FOR SUBSTITUTION.—For purposes of para-
graph (1), the following circumstances are described in this
paragraph:
‘‘(A) the reassignment would seriously jeopardize the
national defense interests of the United States;
‘‘(B) the frequency proposed for reassignment is
uniquely suited to meeting important governmental needs;
‘‘(C) the reassignment would seriously jeopardize public
health or safety;
‘‘(D) the reassignment will result in costs to the Federal
Government that are excessive in relation to the benefits
that may be obtained from commercial or other non-Federal
uses of the reassigned frequency; or
H. R. 2264—74
‘‘(E) the reassignment will disrupt the existing use
of a Federal Government band of frequencies by amateur
radio licensees.
‘‘(3) CRITERIA
FOR
SUBSTITUTED
FREQUENCIES.—For pur-
poses of paragraph (1), a frequency may not be substituted
for a frequency identified and recommended by the report of
the Secretary under section 113(a) unless the substituted fre-
quency also meets each of the criteria specified by section
113(a).
‘‘(4) DELAYS IN IMPLEMENTATION.—If the President deter-
mines that any action cannot be completed by the delayed
effective date recommended by the Secretary pursuant to sec-
tion 113(e), or that such an action by such date would result
in a frequency being unused as a consequence of the Commis-
sion’s plan under section 115, the President may—
‘‘(A) withdraw or limit the assignment to Federal
Government stations on a later date that is consistent
with such plan, except that the President shall notify each
committee specified in paragraph (1)(B) and the Commis-
sion of the reason that withdrawal or limitation at a later
date is required; or
‘‘(B) substitute alternative frequencies pursuant to the
provisions of this subsection.
‘‘SEC. 115. DISTRIBUTION OF FREQUENCIES BY THE COMMISSION.
‘‘(a) ALLOCATION AND ASSIGNMENT OF IMMEDIATELY AVAILABLE
FREQUENCIES.—With respect to the frequencies made available for
immediate reallocation pursuant to section 113(e)(2), the Commis-
sion, not later than 18 months after the date of enactment of
the Omnibus Budget Reconciliation Act of 1993, shall issue regula-
tions to allocate such frequencies and shall propose regulations
to assign such frequencies.
‘‘(b) ALLOCATION AND ASSIGNMENT OF REMAINING AVAILABLE
FREQUENCIES.—With respect to the frequencies made available for
reallocation pursuant to section 113(e)(3), the Commission shall,
not later than 1 year after receipt of the report required by section
113(a), prepare, submit to the President and the Congress, and
implement, a plan for the allocation and assignment under the
1934 Act of such frequencies. Such plan shall—
‘‘(1) not propose the immediate allocation and assignment
of all such frequencies but, taking into account the timetable
recommended by the Secretary pursuant to section 113(e), shall
propose—
‘‘(A) gradually to allocate and assign the frequencies
remaining, after making the reservation required by
subparagraph (B), over the course of 10 years beginning
on the date of submission of such plan; and
‘‘(B) to reserve a significant portion of such frequencies
for allocation and assignment beginning after the end of
such 10-year period;
‘‘(2) contain appropriate provisions to ensure—
‘‘(A) the availability of frequencies for new technologies
and services in accordance with the policies of section 7
of the 1934 Act (47 U.S.C. 157);
‘‘(B) the availability of frequencies to stimulate the
development of such technologies; and
H. R. 2264—75
‘‘(C) the safety of life and property in accordance with
the policies of section 1 of the 1934 Act (47 U.S.C. 151);
‘‘(3) address (A) the feasibility of reallocating portions of
the spectrum from current commercial and other non-Federal
uses to provide for more efficient use of the spectrum, and
(B) innovation and marketplace developments that may affect
the relative efficiencies of different spectrum allocations;
‘‘(4) not prevent the Commission from allocating fre-
quencies, and assigning licenses to use frequencies, not included
in the plan; and
‘‘(5) not preclude the Commission from making changes
to the plan in future proceedings.
‘‘SEC. 116. AUTHORITY TO RECOVER REASSIGNED FREQUENCIES.
‘‘(a) AUTHORITY OF PRESIDENT.—Subsequent to the withdrawal
of assignment to Federal Government stations pursuant to section
114, the President may reclaim reassigned frequencies for reassign-
ment to Federal Government stations in accordance with this sec-
tion.
‘‘(b) PROCEDURE FOR RECLAIMING FREQUENCIES.—
‘‘(1) UNALLOCATED FREQUENCIES.—If the frequencies to be
reclaimed have not been allocated or assigned by the Commis-
sion pursuant to the 1934 Act, the President shall follow the
procedures for substitution of frequencies established by section
114(b) of this part.
‘‘(2) ALLOCATED
FREQUENCIES.—If the frequencies to be
reclaimed have been allocated or assigned by the Commission,
the President shall follow the procedures for substitution of
frequencies established by section 114(b) of this part, except
that the statement required by section 114(b)(1)(B) shall
include—
‘‘(A) a timetable to accommodate an orderly transition
for licensees to obtain new frequencies and equipment nec-
essary for its utilization; and
‘‘(B) an estimate of the cost of displacing spectrum
users licensed by the Commission.
‘‘(c) COSTS OF RECLAIMING FREQUENCIES.—The Federal Govern-
ment shall bear all costs of reclaiming frequencies pursuant to
this section, including the cost of equipment which is rendered
unusable, the cost of relocating operations to a different frequency,
and any other costs that are directly attributable to the reclaiming
of the frequency pursuant to this section, and there are authorized
to be appropriated such sums as may be necessary to carry out
the purposes of this section.
‘‘(d) EFFECTIVE
DATE
OF
RECLAIMED
FREQUENCIES.—The
Commission shall not withdraw licenses for any reclaimed fre-
quencies until the end of the fiscal year following the fiscal year
in which a statement under section 114(b)(1)(B) pertaining to such
frequencies is received by the Commission.
‘‘(e) EFFECT
ON OTHER LAW.—Nothing in this section shall
be construed to limit or otherwise affect the authority of the Presi-
dent under section 706 of the 1934 Act (47 U.S.C. 606).
‘‘SEC. 117. EXISTING 
ALLOCATION 
AND 
TRANSFER 
AUTHORITY
RETAINED.
‘‘(a) ADDITIONAL REALLOCATION.—Nothing in this part prevents
or limits additional reallocation of spectrum from the Federal
Government to other users.
H. R. 2264—148
‘‘If taxable income is:
The tax is:
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.’’
(b) CONFORMING AMENDMENTS.—
(1) Section 531 is amended by striking ‘‘28 percent’’ and
inserting ‘‘36 percent’’.
(2) Section 541 is amended by striking ‘‘28 percent’’ and
inserting ‘‘36 percent’’.
(3)(A) Subsection (f) of section 1 is amended—
(i) by striking ‘‘1990’’ in paragraph (1) and inserting
‘‘1993’’, and
(ii) by striking ‘‘1989’’ in paragraph (3)(B) and inserting
‘‘1992’’.
(B) Subsection (f) of section 1 is amended by adding at
the end thereof the following new paragraph:
‘‘(7) SPECIAL RULE FOR CERTAIN BRACKETS.—
‘‘(A) CALENDAR YEAR 1994.—In prescribing the tables
under paragraph (1) which apply with respect to taxable
years beginning in calendar year 1994, the Secretary shall
make no adjustment to the dollar amounts at which the
36 percent rate bracket begins or at which the 39.6 percent
rate begins under any table contained in subsection (a),
(b), (c), (d), or (e).
‘‘(B) LATER
CALENDAR
YEARS.—In prescribing tables
under paragraph (1) which apply with respect to taxable
years beginning in a calendar year after 1994, the cost-
of-living adjustment used in making adjustments to the
dollar amounts referred to in subparagraph (A) shall be
determined under paragraph (3) by substituting ‘1993’ for
‘1992’.’’
(C) Subparagraph (C) of section 41(e)(5) is amended by
striking ‘‘1989’’ each place it appears and inserting ‘‘1992’’.
(D) Subparagraph (B) of section 63(c)(4) is amended by
striking ‘‘1989’’ and inserting ‘‘1992’’.
(E) Subparagraph (B) of section 68(b)(2) is amended by
striking ‘‘1989’’ and inserting ‘‘1992’’.
(F) Subparagraph (B) of section 132(f)(6) is amended by
striking ‘‘, determined by substituting’’ and all that follows
down through the period at the end thereof and inserting
a period.
(G) Subparagraphs (A)(ii) and (B)(ii) of section 151(d)(4)
are each amended by striking ‘‘1989’’ and inserting ‘‘1992’’.
(H) Clause (ii) of section 513(h)(2)(C) is amended by striking
‘‘1989’’ and inserting ‘‘1992’’.
(4) Paragraph (3) of section 453A(c) is amended by adding
at the end thereof the following new sentence:
‘‘For purposes of applying the preceding sentence with respect
to so much of the gain which, when recognized, will be treated
as long-term capital gain, the maximum rate on net capital
gain under section 1(h) or 1201 (whichever is appropriate)
shall be taken into account.’’
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 1992.
(d) ELECTION
TO PAY ADDITIONAL 1993 TAXES
IN INSTALL-
MENTS.—
H. R. 2264—149
(1) IN GENERAL.—At the election of the taxpayer, the addi-
tional 1993 taxes may be paid in 3 equal installments.
(2) DATES FOR PAYING INSTALLMENTS.—In the case of any
tax payable in installments by reason of paragraph (1)—
(A) the first installment shall be paid on or before
the due date for the taxpayer’s taxable year beginning
in calendar year 1993,
(B) the second installment shall be paid on or before
the date 1 year after the date determined under subpara-
graph (A), and
(C) the third installment shall be paid on or before
the date 2 years after the date determined under subpara-
graph (A).
For purposes of the preceding sentence, the term ‘‘due date’’
means the date prescribed for filing the taxpayer’s return deter-
mined without regard to extensions.
(3) EXTENSION WITHOUT INTEREST.—For purposes of section
6601 of the Internal Revenue Code of 1986, the date prescribed
for the payment of any tax payable in installments under
paragraph (1) shall be determined with regard to the extension
under paragraph (1).
(4) ADDITIONAL 1993 TAXES.—
(A) IN GENERAL.—For purposes of this subsection, the
term ‘‘additional 1993 taxes’’ means the excess of—
(i) the taxpayer’s net chapter 1 liability as shown
on the taxpayer’s return for the taxpayer’s taxable
year beginning in calendar year 1993, over
(ii) the amount which would have been the tax-
payer’s net chapter 1 liability for such taxable year
if such liability had been determined using the rates
which would have been in effect under section 1 of
the Internal Revenue Code of 1986 for taxable years
beginning in calendar year 1993 but for the amend-
ments made by this section and section 13202 and
such liability had otherwise been determined on the
basis of the amounts shown on the taxpayer’s return.
(B) NET
CHAPTER
LIABILITY.—For purposes of
subparagraph (A), the term ‘‘net chapter 1 liability’’ means
the liability for tax under chapter 1 of the Internal Revenue
Code of 1986 determined—
(i) after the application of any credit against such
tax other than the credits under sections 31 and 34,
and
(ii) before crediting any payment of estimated tax
for the taxable year.
(5) ACCELERATION OF PAYMENTS.—If the taxpayer does not
pay any installment under this section on or before the date
prescribed for its payment or if the Secretary of the Treasury
or his delegate believes that the collection of any amount pay-
able in installments under this section is in jeopardy, the
Secretary shall immediately terminate the extension under
paragraph (1) and the whole of the unpaid tax shall be paid
on notice and demand from the Secretary.
(6) ELECTION ON RETURN.—An election under paragraph
(1) shall be made on the taxpayer’s return for the taxpayer’s
taxable year beginning in calendar year 1993.