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ginning on the effective date of the Patent and
Trademark Office Corporation Act of 1995.
‘‘(g) LABOR-MANAGEMENT RELATIONS.—
‘‘(1) LABOR RELATIONS AND EMPLOYEE RELA-
TIONS PROGRAMS.—The Office shall develop labor
relations and employee relations programs with the
objective of improving productivity and efficiency, in-
corporating the following principles:
‘‘(A) Such programs shall be consistent
with the merit principles in section 2301(b) of
title 5.
‘‘(B) Such programs shall provide veterans
preference protections equivalent to those estab-
lished by sections 2801, 3308–3318, and 3320
of title 5.
‘‘(C)(i) In order to maximize individual
freedom of choice in the pursuit of employment
and to encourage an economic climate condu-
cive to economic growth, the right to work shall
not be subject to undue restraint or coercion.
The right to work shall not be infringed or re-
stricted in any way based on membership in, af-
filiation with, or financial support of a labor or-
ganization.
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‘‘(ii) No person shall be required, as a con-
dition of employment or continuation of employ-
ment:
‘‘(I) To resign or refrain from vol-
untary membership in, voluntary affiliation
with, or voluntary financial support of a
labor organization.
‘‘(II) To become or remain a member
of a labor organization.
‘‘(III) To pay any dues, fees, assess-
ments, or other charges of any kind or
amount to a labor organization.
‘‘(IV) To pay to any charity or other
third party, in lieu of such payments, any
amount equivalent to or a pro-rata portion
of dues, fees, assessments, or other charges
regularly required of members of a labor
organization.
‘‘(V) To be recommended, approved,
referred, or cleared by or through a labor
organization.
‘‘(iii) This subparagraph shall not apply to
a person described in section 7103(a)(2)(v) of
title 5 or a ‘supervisor’, ‘management official’,
or ‘confidential employee’ as those terms are
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defined in 7103(a)(10), (11), and (13) of such
title.
‘‘(iv) Any labor organization recognized by
the Office as the exclusive representative of a
unit of employees of the Office shall represent
the interests of all employees in that unit with-
out discrimination and without regard to labor
organization membership.
‘‘(2) ADOPTION
OF
EXISTING
LABOR
AGREE-
MENTS.—The Office shall adopt all labor agreements
which are in effect, as of the day before the effective
date of the Patent and Trademark Office Corpora-
tion Act of 1995, with respect to such Office (as
then in effect). Each such agreement shall remain in
effect for the 2-year period commencing on such
date, unless the agreement provides for a shorter du-
ration or the parties agree otherwise before such pe-
riod ends.
‘‘(h) CARRYOVER OF PERSONNEL.—
‘‘(1) FROM PTO.—Effective as of the effective
date of the Patent and Trademark Office Corpora-
tion Act of 1995, all officers and employees of the
Patent and Trademark Office on the day before
such effective date shall become officers and employ-
ees of the Office, without a break in service.
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‘‘(2) OTHER PERSONNEL.—Any individual who,
on the day before the effective date of the Patent
and Trademark Office Corporation Act of 1995, is
an officer or employee of the Department of Com-
merce (other than an officer or employee under
paragraph (1)) shall be transferred to the Office if—
‘‘(A) such individual serves in a position
for which a major function is the performance
of work reimbursed by the Patent and Trade-
mark Office, as determined by the Secretary of
Commerce;
‘‘(B) such individual serves in a position
that performed work in support of the Patent
and Trademark Office during at least half of
the incumbent’s work time, as determined by
the Secretary of Commerce; or
‘‘(C) such transfer would be in the interest
of the Office, as determined by the Secretary of
Commerce in consultation with the Commis-
sioner of Patents and Trademarks.
Any transfer under this paragraph shall be effective
as of the same effective date as referred to in para-
graph (1), and shall be made without a break in
service.
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‘‘(3) ACCUMULATED
LEAVE.—The amount of
sick and annual leave and compensatory time accu-
mulated under title 5 before the effective date de-
scribed in paragraph (1), by officers or employees of
the Patent and Trademark Office who so become of-
ficers or employees of the Office, are obligations of
the Office.
‘‘(4) TERMINATION RIGHTS.—Any employee re-
ferred to in paragraph (1) or (2) of this subsection
whose employment with the Office is terminated
during the 2-year period beginning on the effective
date of the Patent and Trademark Office Corpora-
tion Act of 1995 shall be entitled to rights and bene-
fits, to be afforded by the Office, similar to those
such employee would have had under Federal law if
termination had occurred immediately before such
date. An employee who would have been entitled to
appeal any such termination to the Merit Systems
Protection Board, if such termination had occurred
immediately before such effective date, may appeal
any such termination occurring within this 2-year
period to the Board under such procedures as it may
prescribe.
‘‘(5) CONTINUATION
IN
OFFICE
OF
CERTAIN
OFFICERS.—(A) The individual serving as the Com-
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missioner of Patents and Trademarks on the day be-
fore the effective date of the Patent and Trademark
Office Corporation Act of 1995 may serve as the
Commissioner until the earlier of 1 year after the ef-
fective date of that Act or the date on which a Com-
missioner is appointed under subsection (a).
‘‘(B) The individual serving as the Assistant
Commissioner for Patents on the day before the ef-
fective date of the Patent and Trademark Office
Corporation Act of 1995 may serve as the Deputy
Commissioner for Patents until the earlier of 1 year
after the effective date of that Act or the date on
which a Deputy Commissioner for Patents is ap-
pointed under subsection (b).
‘‘(C) The individual serving as the Assistant
Commissioner for Trademarks on the day before the
effective date of the Patent and Trademark Office
Corporation Act of 1995 may serve as the Deputy
Commissioner for Trademarks until the earlier of 1
year after the effective date of that Act or the date
on which a Deputy Commissioner for Trademarks is
appointed under subsection (b).
‘‘(i) COMPETITIVE STATUS.—For purposes of ap-
pointment to a position in the competitive service for
which an officer or employee of the Office is qualified,
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such officer or employee shall not forfeit any competitive
status, acquired by such officer or employee before the ef-
fective date of the Patent and Trademark Office Corpora-
tion Act of 1995, by reason of becoming an officer or em-
ployee of the Office pursuant to subsection (h).
‘‘(j) SAVINGS PROVISIONS.—All orders, determina-
tions, rules, and regulations regarding compensation and
benefits and other terms and conditions of employment,
in effect for the Office and its officers and employees im-
mediately before the effective date of the Patent and
Trademark Office Corporation Act of 1995, shall continue
in effect with respect to the Office and its officers and
employees until modified, superseded, or set aside by the
Office or a court of appropriate jurisdiction or by oper-
ation of law.’’.
SEC. 17414. MANAGEMENT ADVISORY BOARD.
Chapter 1 of part I of title 35, United States Code,
is amended by inserting after section 4 the following:
‘‘§ 5. Patent and Trademark Office Management Advi-
sory Board
‘‘(a) ESTABLISHMENT OF MANAGEMENT ADVISORY
BOARD.—
‘‘(1) APPOINTMENT.—The Patent and Trade-
mark Office shall have a Management Advisory
Board (hereafter in this title referred to as the
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‘Board’) of 12 members, 4 of whom shall be ap-
pointed by the President, 4 of whom shall be ap-
pointed by the Speaker of the House of Representa-
tives, and 4 of whom shall be appointed by the
President pro tempore of the Senate. Not more than
3 of the 4 members appointed by each appointing
authority shall be members of the same political
party.
‘‘(2) TERMS.—Members of the Board shall be
appointed for a term of 4 years each, except that of
the members first appointed by each appointing au-
thority, 1 shall be for a term of 1 year, 1 shall be
for a term of 2 years, and 1 shall be for a term of
3 years. No member may serve more than 1 term.
‘‘(3) CHAIR.—The President shall designate the
chair of the Board, whose term as chair shall be for
3 years.
‘‘(4) TIMING
OF
APPOINTMENTS.—Initial ap-
pointments to the Board shall be made within 3
months after the effective date of the Patent and
Trademark Office Corporation Act of 1995, and va-
cancies shall be filled within 3 months after they
occur.
‘‘(5) VACANCIES.—Vacancies shall be filled in
the manner in which the original appointment was
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made under this subsection. Members appointed to
fill a vacancy occurring before the expiration of the
term for which the member’s predecessor was ap-
pointed shall be appointed only for the remainder of
that term. A member may serve after the expiration
of that member’s term until a successor is ap-
pointed.
‘‘(b) BASIS FOR APPOINTMENTS.—Members of the
Board shall be citizens of the United States who shall be
chosen so as to represent the interests of diverse users
of the Patent and Trademark Office, and shall include in-
dividuals with substantial background and achievement in
corporate finance and management.
‘‘(c) APPLICABILITY OF CERTAIN ETHICS LAWS.—
Members of the Board shall be special Government em-
ployees within the meaning of section 202 of title 18.
‘‘(d) MEETINGS.—The Board shall meet at the call
of the chair to consider an agenda set by the chair.
‘‘(e) DUTIES.—The Board shall—
‘‘(1) review the policies, goals, performance,
budget, and user fees of the Patent and Trademark
Office, and advise the Commissioner on these mat-
ters; and
‘‘(2) within 60 days after the end of each fiscal
year, prepare an annual report on the matters re-
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ferred to in paragraph (1), transmit the report to
the President and the Committees on the Judiciary
of the Senate and the House of Representatives, and
publish the report in the Patent and Trademark Of-
fice Official Gazette.
‘‘(f) STAFF.—The Board shall employ a staff of not
more than 10 members and shall procure support services
for the staff adequate to enable the Board to carry out
its functions, using funds available to the Commissioner
under section 42 of this title. The Board shall ensure that
members of the staff, other than clerical staff, are espe-
cially qualified in the areas of patents, trademarks, or
management of public agencies. Persons employed by the
Board shall receive compensation as determined by the
Board, which may not exceed the limitations set forth in
section 3(c) of this title, shall serve in accordance with
terms and conditions of employment established by the
Board, and shall be subject solely to the direction of the
Board, notwithstanding any other provision of law.
‘‘(g) COMPENSATION.—Members of the Board shall
be compensated for each day (including travel time) dur-
ing which they are attending meetings or conferences of
the Board or otherwise engaged in the business of the
Board, at the rate which is the daily equivalent of the an-
nual rate of basic pay in effect for level III of the Execu-
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tive Schedule under section 5314 of title 5, and while away
from their homes or regular places of business they may
be allowed travel expenses, including per diem in lieu of
subsistence, as authorized by section 5703 of title 5.
‘‘(h) ACCESS
TO INFORMATION.—Members of the
Board shall be provided access to records and information
in the Patent and Trademark Office, except for personnel
or other privileged information and information concern-
ing patent applications required to be kept in confidence
by section 122 of this title.’’.
SEC. 17415. INDEPENDENCE FROM DEPARTMENT OF COM-
MERCE.
(a) DUTIES OF COMMISSIONER.—Section 6 of title
35, United States Code, is amended—
(1) by striking ‘‘, under the direction of the
Secretary of Commerce,’’ each place it appears; and
(2) by striking ‘‘, subject to the approval of the
Secretary of Commerce,’’.
(b) REGULATIONS FOR AGENTS AND ATTORNEYS.—
Section 31 of title 35, United States Code, is amended
by striking ‘‘, subject to the approval of the Secretary of
Commerce,’’.
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SEC. 17416. TRADEMARK TRIAL AND APPEAL BOARD.
Section 17 of the Act of July 5, 1946 (commonly re-
ferred to as the ‘‘Trademark Act of 1946’’) (15 U.S.C.
1067) is amended to read as follows:
‘‘SEC. 17. (a) In every case of interference, opposition
to registration, application to register as a lawful concur-
rent user, or application to cancel the registration of a
mark, the Commissioner shall give notice to all parties and
shall direct a Trademark Trial and Appeal Board to deter-
mine and decide the respective rights of registration.
‘‘(b) The Trademark Trial and Appeal Board shall
include the Commissioner, the Deputy Commissioner for
Patents, the Deputy Commissioner for Trademarks, and
members competent in trademark law who are appointed
by the Commissioner.’’.
SEC. 17417. BOARD OF PATENT APPEALS AND INTER-
FERENCES.
Section 7 of title 35, United States Code, is amended
to read as follows:
‘‘§ 7. Board of Patent Appeals and Interferences
‘‘(a) ESTABLISHMENT
AND COMPOSITION.—There
shall be in the Patent and Trademark Office a Board of
Patent Appeals and Interferences. The Commissioner, the
Deputy Commissioner for Patents, the Deputy Commis-
sioner for Trademarks, and the examiners-in-chief shall
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constitute the Board. The examiners-in-chief shall be per-
sons of competent legal knowledge and scientific ability.
‘‘(b) DUTIES.—The Board of Patent Appeals and
Interferences shall, on written appeal of an applicant, re-
view adverse decisions of examiners upon applications for
patents and shall determine priority and patentability of
invention in interferences declared under section 135(a)
of this title. Each appeal and interference shall be heard
by at least 3 members of the Board, who shall be des-
ignated by the Commissioner. Only the Board of Patent
Appeals and Interferences may grant rehearings.’’.
SEC. 17418. SUITS BY AND AGAINST THE CORPORATION.
Chapter 1 of part I of title 35, United States Code,
is amended—
(1) by redesignating sections 8 through 14 as
sections 9 through 15; and
(2) by inserting after section 7 the following
new section:
‘‘§ 8. Suits by and against the Corporation
‘‘(a) IN GENERAL.—
‘‘(1) ACTIONS UNDER UNITED STATES LAW.—
Any civil action or proceeding to which the Patent
and Trademark Office is a party is deemed to arise
under the laws of the United States. The Federal
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courts shall have exclusive jurisdiction over all civil
actions by or against the Office.
‘‘(2) CONTRACT CLAIMS.—Any action or pro-
ceeding against the Office in which any claim is cog-
nizable under the Contract Disputes Act of 1978 (41
U.S.C. 601 and following) shall be subject to that
Act. For purposes of that Act, the Commissioner
shall be deemed to be the agency head with respect
to contract claims arising with respect to the Office.
Any other action or proceeding against the Office
founded upon contract may be brought in an appro-
priate district court, notwithstanding any provision
of title 28.
‘‘(3) TORT CLAIMS.—(A) Any action or pro-
ceeding against the Office in which any claim is cog-
nizable under the provisions of section 1346(b) and
chapter 171 of title 28, shall be governed by those
provisions.
‘‘(B) Any other action or proceeding against the
Office founded upon tort may be brought in an ap-
propriate district court without regard to the provi-
sions of section 1346(b) and chapter 171 of title 28.
‘‘(4) PROHIBITION
ON
ATTACHMENT, LIENS,
ETC.—No attachment, garnishment, lien, or similar
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process, intermediate or final, in law or equity, may
be issued against property of the Office.
‘‘(5) SUBSTITUTION
OF
OFFICE
AS
PARTY.—
The Office shall be substituted as defendant in any
civil action or proceeding against an officer or em-
ployee of the Office, if the Office determines that the
officer or employee was acting within the scope of
his or her employment with the Office. If the Office
refuses to certify scope of employment, the officer or
employee may at any time before trial petition the
court to find and certify that the officer or employee
was acting within the scope of his or her employ-
ment. Upon certification by the court, the Office
shall be substituted as the party defendant. A copy
of the petition shall be served upon the Office. In
any such civil action or proceeding to which para-
graph (3)(A) applies, the provisions of section
1346(b) and chapter 171 of title 28 shall apply in
lieu of this paragraph.
‘‘(b) RELATIONSHIP WITH JUSTICE DEPARTMENT.—
‘‘(1) EXERCISE BY OFFICE OF ATTORNEY GEN-
ERAL’S AUTHORITIES.—Except as provided in this
section, with respect to any action or proceeding in
which the Office is a party or an officer or employee
thereof is a party in his or her official capacity, the
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Office, officer, or employee may exercise, without
prior authorization from the Attorney General, the
authorities and duties that otherwise would be exer-
cised by the Attorney General on behalf of the Of-
fice, officer, or employee under title 28 and other
laws.
‘‘(2) APPEARANCES BY ATTORNEY GENERAL.—
Notwithstanding paragraph (1), at any time the At-
torney General may, in any action or proceeding de-
scribed in paragraph (1), file an appearance on be-
half of the Office or the officer or employee involved,
without the consent of the Office or the officer or
employee. Upon such filing, the Attorney General
shall represent the Office or such officer or employee
with exclusive authority in the conduct, settlement,
or compromise of that action or proceeding.
‘‘(3) CONSULTATIONS
WITH
AND
ASSISTANCE
BY ATTORNEY GENERAL.—The Office may consult
with the Attorney General concerning any legal mat-
ter, and the Attorney General shall provide advice
and assistance to the Office, including representing
the Office in litigation, if requested by the Office.
‘‘(4) 
REPRESENTATION
BEFORE
SUPREME
COURT.—The Attorney General shall represent the
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Office in all cases before the United States Supreme
Court.
‘‘(5) QUALIFICATIONS OF ATTORNEYS.—An at-
torney admitted to practice to the bar of the highest
court of at least one State in the United States or
the District of Columbia and employed by the Office
may represent the Office in any legal proceeding in
which the Office or an officer or employee of the Of-
fice is a party or interested, regardless of whether
the attorney is a resident of the jurisdiction in which
the proceeding is held and notwithstanding any
other prerequisites of qualification or appearance re-
quired by the court or administrative body before
which the proceeding is conducted.’’.
SEC. 17419. ANNUAL REPORT OF COMMISSIONER.
Section 15 of title 35, United States Code, as redesig-
nated by section 17418 of this Act, is amended to read
as follows:
‘‘§ 15. Annual report to Congress
‘‘The Commissioner shall report to the Congress, not
later than 180 days after the end of each fiscal year, the
moneys received and expended by the Office, the purposes
for which the moneys were spent, the quality and quantity
of the work of the Office, and other information relating
to the Office. The report under this section shall also meet
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the requirements of section 9106 of title 31, to the extent
that such requirements are not inconsistent with the pre-
ceding sentence. The report required under this section
shall be deemed to be the report of the Patent and Trade-
mark Office under section 9106 of title 31, and the Com-
missioner shall not file a separate report under such sec-
tion.’’.
SEC. 17420. SUSPENSION OR EXCLUSION FROM PRACTICE.
Section 32 of title 35, United States Code, is amend-
ed by inserting before the last sentence the following: ‘‘The
Commissioner shall have the discretion to designate any
attorney who is an officer or employee of the Patent and
Trademark Office to conduct the hearing required by this
section.’’.
SEC. 17421. FUNDING.
Section 42 of title 35, United States Code, is amend-
ed to read as follows:
‘‘§ 42. Patent and Trademark Office funding
‘‘(a) FEES PAYABLE TO THE OFFICE.—All fees for
services performed by or materials furnished by the Patent
and Trademark Office shall be payable to the Office.
‘‘(b) USE OF MONEYS.—Moneys of the Patent and
Trademark Office not otherwise used to carry out the
functions of the Office shall be kept in cash on hand or
on deposit, or invested in obligations of the United States
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or guaranteed by the United States, or in obligations or
other instruments which are lawful investments for fidu-
ciary, trust, or public funds. Fees available to the Commis-
sioner under this title shall be used exclusively for the
processing of patent applications and for other services
and materials relating to patents. Fees available to the
Commissioner under section 31 of the Act of July 5, 1946
(commonly referred to as the ‘Trademark Act of 1946’;
15 U.S.C. 1113), shall be used exclusively for the process-
ing of trademark registrations and for other services and
materials relating to trademarks.
‘‘(c) BORROWING
AUTHORITY.—The Patent and
Trademark Office is authorized to issue from time to time
for purchase by the Secretary of the Treasury its deben-
tures, bonds, notes, and other evidences of indebtedness
(hereafter in this subsection referred to as ‘obligations’)
to assist in financing its activities. Borrowing under this
subsection shall be subject to prior approval in appropria-
tion Acts. Such borrowing shall not exceed amounts ap-
proved in appropriation Acts. Any such borrowing shall
be repaid only from fees paid to the Office and surcharges
appropriated by the Congress. Such obligations shall be
redeemable at the option of the Office before maturity in
the manner stipulated in such obligations and shall have
such maturity as is determined by the Office with the ap-
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proval of the Secretary of the Treasury. Each such obliga-
tion issued to the Treasury shall bear interest at a rate
not less than the current yield on outstanding marketable
obligations of the United States of comparable maturity
during the month preceding the issuance of the obligation
as determined by the Secretary of the Treasury. The Sec-
retary of the Treasury shall purchase any obligations of
the Office issued under this subsection and for such pur-
pose the Secretary of the Treasury is authorized to use
as a public-debt transaction the proceeds of any securities
issued under chapter 31 of title 31, and the purposes for
which securities may be issued under that chapter are ex-
tended to include such purpose. Payment under this sub-
section of the purchase price of such obligations of the
Patent and Trademark Office shall be treated as public
debt transactions of the United States.’’.
SEC. 17422. AUDITS.
Chapter 4 of part I of title 35, United States Code,
is amended by adding at the end the following new section:
‘‘§ 43. Audits
‘‘(a) IN GENERAL.—Financial statements of the Pat-
ent and Trademark Office shall be prepared on an annual
basis in accordance with generally accepted accounting
principles. Such statements shall be audited by an inde-
pendent certified public accountant chosen by the Com-
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missioner. The audit shall be conducted in accordance with
standards that are consistent with generally accepted Gov-
ernment auditing standards and other standards estab-
lished by the Comptroller General, and with the generally
accepted auditing standards of the private sector, to the
extent feasible. The Commissioner shall transmit to the
Committees on the Judiciary of the House of Representa-
tives and the Senate the results of each audit under this
subsection.
‘‘(b) REVIEW
BY COMPTROLLER GENERAL.—The
Comptroller General may review any audit of the financial
statement of the Patent and Trademark Office that is con-
ducted under subsection (a). The Comptroller General
shall report to the Congress and the Office the results of
any such review and shall include in such report appro-
priate recommendations.
‘‘(c) AUDIT
BY
COMPTROLLER
GENERAL.—The
Comptroller General may audit the financial statements
of the Office and such audit shall be in lieu of the audit
required by subsection (a). The Office shall reimburse the
Comptroller General for the cost of any audit conducted
under this subsection.
‘‘(d) ACCESS TO OFFICE RECORDS.—All books, fi-
nancial records, report files, memoranda, and other prop-
erty that the Comptroller General deems necessary for the
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performance of any audit shall be made available to the
Comptroller General.
‘‘(e) APPLICABILITY IN LIEU OF TITLE 31 PROVI-
SIONS.—This section applies to the Office in lieu of the
provisions of section 9105 of title 31.’’.
SEC. 17423. TRANSFERS.
(a) TRANSFER OF FUNCTIONS.—Except as otherwise
provided in this Act, there are transferred to, and vested
in, the Patent and Trademark Office all functions, powers,
and duties vested by law in the Secretary of Commerce
or the Department of Commerce or in the officers or com-
ponents in the Department of Commerce with respect to
the authority to grant patents and register trademarks,
and in the Patent and Trademark Office, as in effect on
the day before the effective date of this subtitle, and in
the officers and components of such Office.
(b) TRANSFER
OF FUNDS
AND PROPERTY.—The
Secretary of Commerce shall transfer to the Patent and
Trademark Office, on the effective date of this subtitle,
so much of the assets, liabilities, contracts, property,
records, and unexpended and unobligated balances of ap-
propriations, authorizations, allocations, and other funds
employed, held, used, arising from, available to, or to be
made available to the Department of Commerce, including
funds set aside for accounts receivable which are related
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to functions, powers, and duties which are vested in the
Patent and Trademark Office by this subtitle.
CHAPTER 2—EFFECTIVE DATE;
TECHNICAL AMENDMENTS
SEC. 17431. EFFECTIVE DATE.
This subtitle shall take effect 6 months after the date
of the enactment of this Act.
SEC. 17432. TECHNICAL AND CONFORMING AMENDMENTS.
(a) AMENDMENTS TO TITLE 35.—
(1) The table of contents for part I of title 35,
United States Code, is amended by amending the
item relating to chapter 1 to read as follows:
‘‘1. Establishment, Officers and Employees, Functions ...........................
1.’’
(2) The table of sections for chapter 1 of title
35, United States Code, is amended to read as fol-
lows:
‘‘CHAPTER 1—ESTABLISHMENT, OFFICERS
AND EMPLOYEES, FUNCTIONS
‘‘Sec.
‘‘1. Establishment.
‘‘2. Powers and duties.
‘‘3. Officers and employees.
‘‘4. Restrictions on officers and employees as to interest in patents.
‘‘5. Patent and Trademark Office Management Advisory Board.
‘‘6. Duties of Commissioner.
‘‘7. Board of Patent Appeals and Interferences.
‘‘8. Suits by and against the Corporation.
‘‘9. Library.
‘‘10. Classification of patents.
‘‘11. Certified copies of records.
‘‘12. Publications.
‘‘13. Exchange of copies of patents with foreign countries.
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‘‘14. Copies of patents for public libraries.
‘‘15. Annual report to Congress.’’.
(3) The table of contents for chapter 4 of part I of
title 35, United States Code, is amended by adding at the
end the following new item:
‘‘43. Audits.’’.
(b) OTHER PROVISIONS OF LAW.—
(1) Section 9101(3) of title 31, United States
Code, is amended by adding at the end the follow-
ing:
‘‘(O) the Patent and Trademark Office.’’.
(2) Section 500(e) of title 5, United States
Code, is amended by striking ‘‘Patent Office’’ and
inserting ‘‘Patent and Trademark Office’’.
(3) Section 5102(c)(23) of title 5, United
States Code, is amended by striking ‘‘Department of
Commerce’’.
(4) Section 5316 of title 5, United States Code
(5 U.S.C. 5316) is amended by striking ‘‘Commis-
sioner of Patents, Department of Commerce.’’,
‘‘Deputy Commissioner of Patents and Trade-
marks.’’, ‘‘Assistant Commissioner for Patents.’’,
and ‘‘Assistant Commissioner for Trademarks.’’.
(5) Section 12 of the Act of February 14, 1903
(15 U.S.C. 1511) is amended by striking ‘‘(d) Pat-
ent and Trademark Office;’’ and redesignating sub-
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sections (a) through (g) as paragraphs (1) through
(6), respectively.
(6) The Act of April 12, 1892 (27 Stat. 395;
20 U.S.C. 91) is amended by striking ‘‘Patent Of-
fice’’ and inserting ‘‘Patent and Trademark Office’’.
(7) Sections 505(m) and 512(o) of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 355(m)
and 360b(o)) are each amended by striking ‘‘of the
Department of Commerce’’.
(8) Section 105(e) of the Federal Alcohol Ad-
ministration Act (27 U.S.C. 205(e)) is amended by
striking ‘‘Patent Office’’ and inserting ‘‘Patent and
Trademark Office’’.
(9) Section 1744 of title 28, United States
Code is amended—
(A) by striking ‘‘Patent Office’’ each place
it appears and inserting ‘‘Patent and Trade-
mark Office’’; and
(B) by striking ‘‘Commissioner of Patents’’
and inserting ‘‘Commissioner of Patents and
Trademarks’’.
(10) Section 1745 of title 28, United States
Code, is amended by striking ‘‘United States Patent
Office’’ and inserting ‘‘Patent and Trademark Of-
fice’’.
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(11) Section 1928 of title 28, United States
Code, is amended by striking ‘‘Patent Office’’ and
inserting ‘‘Patent and Trademark Office’’.
(12) Section 160 of the Atomic Energy Act of
1954 (42 U.S.C. 2190) is amended—
(A) by striking ‘‘United States Patent Of-
fice’’ and inserting ‘‘Patent and Trademark Of-
fice’’; and
(B) by striking ‘‘Commissioner of Patents’’
and inserting ‘‘Commissioner of Patents and
Trademarks’’.
(13) Section 305(c) of the National Aeronautics
and Space Act of 1958 (42 U.S.C. 2457(c)) is
amended by striking ‘‘Commissioner of Patents’’ and
inserting ‘‘Commissioner of Patents and Trade-
marks’’.
(14) Section 12(a) of the Solar Heating and
Cooling Demonstration Act of 1974 (42 U.S.C.
5510(a)) is amended by striking ‘‘Commissioner of
the Patent Office’’ and inserting ‘‘Commissioner of
Patents and Trademarks’’.
(15) Section 1111 of title 44, United States
Code, is amended by striking ‘‘the Commissioner of
Patents,’’.
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(16) Section 1114 of title 44, United States
Code, is amended by striking ‘‘the Commissioner of
Patents,’’.
(17) Section 1123 of title 44, United States
Code, is amended by striking ‘‘the Patent Office.’’.
(18) Sections 1337 and 1338 of title 44, United
States Code, and the items relating to those sections
in the table of contents for chapter 13 of such title,
are repealed.
(19) Section 10(i) of the Trading With the
Enemy Act (50 U.S.C. App. 10(i)) is amended by
striking ‘‘Commissioner of Patents’’ and inserting
‘‘Commissioner of Patents and Trademarks’’.
(20) Section 8G(a)(2) of the Inspector General
Act of 1978 (5 U.S.C. App.) is amended by inserting
‘‘the Patent and Trademark Office,’’, after ‘‘the
Panama Canal Commission,’’.
Subtitle E—Miscellaneous
Provisions
SEC. 17501. REFERENCES.
Any reference in any other Federal law, Executive
order, rule, regulation, or delegation of authority, or any
document of or pertaining to a department or office from
which a function is transferred by this title—
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(1) to the head of such department or office is
deemed to refer to the head of the department or of-
fice to which such function is transferred; or
(2) to such department or office is deemed to
refer to the department or office to which such func-
tion is transferred.
SEC. 17502. EXERCISE OF AUTHORITIES.
Except as otherwise provided by law, a Federal offi-
cial to whom a function is transferred by this title may,
for purposes of performing the function, exercise all au-
thorities under any other provision of law that were avail-
able with respect to the performance of that function to
the official responsible for the performance of the function
immediately before the effective date of the transfer of the
function under this title.
SEC. 17503. SAVINGS PROVISIONS.
(a) LEGAL DOCUMENTS.—All orders, determinations,
rules, regulations, permits, grants, loans, contracts, agree-
ments, certificates, licenses, and privileges—
(1) that have been issued, made, granted, or al-
lowed to become effective by the President, the Sec-
retary of Commerce, the United States Trade Rep-
resentative, any officer or employee of any office
transferred by this title, or any other Government
official, or by a court of competent jurisdiction, in
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the performance of any function that is transferred
by this title, and
(2) that are in effect on the effective date of
such transfer (or become effective after such date
pursuant to their terms as in effect on such effective
date),
shall continue in effect according to their terms until
modified, terminated, superseded, set aside, or revoked in
accordance with law by the President, any other author-
ized official, a court of competent jurisdiction, or operation
of law.
(b) PROCEEDINGS.—This title shall not affect any
proceedings or any application for any benefits, service,
license, permit, certificate, or financial assistance pending
on the date of the enactment of this Act before an office
transferred by this title, but such proceedings and applica-
tions shall be continued. Orders shall be issued in such
proceedings, appeals shall be taken therefrom, and pay-
ments shall be made pursuant to such orders, as if this
Act had not been enacted, and orders issued in any such
proceeding shall continue in effect until modified, termi-
nated, superseded, or revoked by a duly authorized official,
by a court of competent jurisdiction, or by operation of
law. Nothing in this subsection shall be considered to pro-
hibit the discontinuance or modification of any such pro-
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ceeding under the same terms and conditions and to the
same extent that such proceeding could have been discon-
tinued or modified if this title had not been enacted.
(c) SUITS.—This title shall not affect suits com-
menced before the date of the enactment of this Act, and
in all such suits, proceeding shall be had, appeals taken,
and judgments rendered in the same manner and with the
same effect as if this title had not been enacted.
(d) NONABATEMENT OF ACTIONS.—No suit, action,
or other proceeding commenced by or against the Depart-
ment of Commerce or the Secretary of Commerce, or by
or against any individual in the official capacity of such
individual as an officer or employee of an office trans-
ferred by this title, shall abate by reason of the enactment
of this title.
(e) CONTINUANCE OF SUITS.—If any Government of-
ficer in the official capacity of such officer is party to a
suit with respect to a function of the officer, and under
this title such function is transferred to any other officer
or office, then such suit shall be continued with the other
officer or the head of such other office, as applicable, sub-
stituted or added as a party.
(f) ADMINISTRATIVE PROCEDURE AND JUDICIAL RE-
VIEW.—Except as otherwise provided by this title, any
statutory requirements relating to notice, hearings, action
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upon the record, or administrative or judicial review that
apply to any function transferred by this title shall apply
to the exercise of such function by the head of the Federal
agency, and other officers of the agency, to which such
function is transferred by this title.
SEC. 17504. TRANSFER OF ASSETS.
Except as otherwise provided in this title, so much
of the personnel, property, records, and unexpended bal-
ances of appropriations, allocations, and other funds em-
ployed, used, held, available, or to be made available in
connection with a function transferred to an official or
agency by this title shall be available to the official or the
head of that agency, respectively, at such time or times
as the Director of the Office of Management and Budget
directs for use in connection with the functions trans-
ferred.
SEC. 17505. DELEGATION AND ASSIGNMENT.
Except as otherwise expressly prohibited by law or
otherwise provided in this title, an official to whom func-
tions are transferred under this title (including the head
of any office to which functions are transferred under this
title) may delegate any of the functions so transferred to
such officers and employees of the office of the official as
the official may designate, and may authorize successive
redelegations of such functions as may be necessary or ap-
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propriate. No delegation of functions under this section
or under any other provision of this title shall relieve the
official to whom a function is transferred under this title
of responsibility for the administration of the function.
SEC. 17506. AUTHORITY OF DIRECTOR OF THE OFFICE OF
MANAGEMENT AND BUDGET WITH RESPECT
TO FUNCTIONS TRANSFERRED.
(a) DETERMINATIONS.—If necessary, the Director
shall make any determination of the functions that are
transferred under this title.
(b) INCIDENTAL TRANSFERS.—The Director, at such
time or times as the Director shall provide, may make
such determinations as may be necessary with regard to
the functions transferred by this title, and to make such
additional incidental dispositions of personnel, assets, li-
abilities, grants, contracts, property, records, and unex-
pended balances of appropriations, authorizations, alloca-
tions, and other funds held, used, arising from, available
to, or to be made available in connection with such func-
tions, as may be necessary to carry out the provisions of
this title. The Director shall provide for the termination
of the affairs of all entities terminated by this title and
for such further measures and dispositions as may be nec-
essary to effectuate the purposes of this title.
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SEC. 17507. CERTAIN VESTING OF FUNCTIONS CONSIDERED
TRANSFERS.
For purposes of this title, the vesting of a function
in a department or office pursuant to reestablishment of
an office shall be considered to be the transfer of the
function.
SEC. 17508. AVAILABILITY OF EXISTING FUNDS.
Existing appropriations and funds available for the
performance of functions, programs, and activities termi-
nated pursuant to this title shall remain available, for the
duration of their period of availability, for necessary ex-
penses in connection with the termination and resolution
of such functions, programs, and activities.
SEC. 17509. DEFINITIONS.
For purposes of this title—
(1) the term ‘‘function’’ includes any duty, obli-
gation, power, authority, responsibility, right, privi-
lege, activity, or program; and
(2) the term ‘office’ includes any office, admin-
istration, agency, bureau, institute, council, unit, or-
ganizational entity, or component thereof.
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TITLE XVIII—WELFARE REFORM
SEC. 18001. ENACTMENT OF THE PERSONAL RESPONSIBIL-
ITY ACT OF 1995.
H.R. 4, as passed by the House of Representatives
on March 24, 1995, is hereby enacted with the following
amendments:
(1) In section 101, insert
‘‘(a) IN GENERAL.—’’ before ‘‘Title IV of the Social
Security Act’’.
(2) At the end of section 101, add the follow-
ing:
(b) SUBMISSION OF STATE PLAN FOR FISCAL YEAR
1996 DEEMED ACCEPTANCE
OF GRANT LIMITATIONS
AND FORMULA.—The submission of a plan by a State
under section 402(a) of the Social Security Act (as in ef-
fect pursuant to the amendment made by subsection (a)
of this section) for fiscal year 1996 is deemed to constitute
the State’s acceptance of the grant limitations under sec-
tion 403(a)(1)(A)(i) of such Act (as so in effect) for fiscal
year 1996 (including the formula for computing the
amount of the grant).
(3) Strike section 403(a)(1)(A) of the Social
Security Act, as proposed to be added by section
101, and insert the following:
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‘‘(A) IN
GENERAL.—Each eligible State
shall be entitled to receive from the Secretary—
‘‘(i) for fiscal year 1996, a grant in
an amount equal to—
‘‘(I) the State family assistance
grant for fiscal year 1996; minus
‘‘(II) the total amount of obliga-
tions to the State under part A of this
title (as in effect before the effective
date of this part) for fiscal year 1996,
other than with respect to amounts
expended for child care pursuant to
subsection (g) or (i) of section 402 of
this title (as so in effect); and
‘‘(ii) for each of fiscal years 1997,
1998, 1999, and 2000, a grant in an
amount equal to the State family assist-
ance grant for the fiscal year.
(4) In section 201, insert
‘‘(a) IN GENERAL.—’’ before ‘‘Part B of title IV of
the Social Security Act’’.
(5) At the end of section 201, add the follow-
ing:
(b) SUBMISSION OF STATE PLAN FOR FISCAL YEAR
1996 DEEMED ACCEPTANCE
OF GRANT LIMITATIONS
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AND FORMULA.—The submission of a plan by a State
under section 422(a) of the Social Security Act (as in ef-
fect pursuant to the amendment made by subsection (a)
of this section) for fiscal year 1996 is deemed to constitute
the State’s acceptance of the grant limitations under sec-
tion 423(a)(1)(A) of such Act (as so in effect) for fiscal
year 1996 (including the formula for computing the
amount of the grant).
(6) Strike section 423(a)(1) of the Social Secu-
rity Act, as proposed to be added by section 201,
and insert the following:
‘‘(1) IN GENERAL.—Each eligible State shall be
entitled to receive from the Secretary—
‘‘(A) for fiscal year 1996, a grant in an
amount equal to—
‘‘(i) the State share of the child pro-
tection amount for fiscal year 1996; minus
‘‘(ii) the total amount of obligations to
the State under parts B and E of this title
(as in effect before the effective date of
this part) for fiscal year 1996; and
‘‘(B) for each subsequent fiscal year speci-
fied in subsection (b)(1), a grant in an amount
equal to the State share of the child protection
amount for the fiscal year.
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(7) Strike section 301(b) and insert the follow-
ing:
(b) AUTHORIZATION OF APPROPRIATIONS.—Section
658B of the Child Care and Development Block Grant Act
of 1990 (42 U.S.C. 9858B) is amended to read as follows:
‘‘SEC. 658B. AUTHORIZATION OF APPROPRIATIONS.
‘‘There are authorized to be appropriated to carry out
this subchapter $1,804,000,000 for fiscal year 1996 and
$2,093,000,000 for each of the fiscal years 1997, 1998,
1999, 2000, 2001, and 2002.’’.
(8) In the matter preceding paragraph (1) of
section 3 of the Child Nutrition Act of 1966, as pro-
posed to be amended by section 321, strike ‘‘The
Secretary’’ and insert ‘‘(a) IN GENERAL.—The Sec-
retary’’.
(9) At the end of section 3 of the Child Nutri-
tion Act of 1966, as proposed to be amended by sec-
tion 321, add the following:
‘‘(b) ADDITIONAL REQUIREMENTS.—
‘‘(1) RESTRICTION ON ALLOTMENTS.—
‘‘(A) COMPUTATION.—The Secretary shall
provide for the computation of State obligation
allotments in accordance with this section for
each of the fiscal years 1996 through 2000.
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‘‘(B) LIMITATION ON OBLIGATIONS.—The
Secretary shall not enter into obligations with
any State under this Act for a fiscal year in ex-
cess of the obligation allotment for that State
for the fiscal year, as determined under sub-
section (a). The sum of such obligation allot-
ments for all States in any fiscal year shall not
exceed the amount appropriated to carry out
this Act for that fiscal year.
‘‘(2) AGREEMENT.—The submission of an ap-
plication by a State under section 4 is deemed to
constitute the State’s acceptance of the obligation al-
lotment limitations under this section (including the
formula for computing the amount of such obligation
allotment).
(10) In the matter preceding paragraph (1) of
section 3 of the National School Lunch Act, as pro-
posed to be amended by section 341, strike ‘‘The
Secretary’’ and insert ‘‘(a) IN GENERAL.—The Sec-
retary’’.
(11) At the end of section 3 of the National
School Lunch Act, as proposed to be amended by
section 341, add the following:
‘‘(b) ADDITIONAL REQUIREMENTS.—
‘‘(1) RESTRICTION ON ALLOTMENTS.—
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‘‘(A) COMPUTATION.—The Secretary shall
provide for the computation of State obligation
allotments in accordance with this section for
each of the fiscal years 1996 through 2000.
‘‘(B) LIMITATION ON OBLIGATIONS.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), the Secretary shall not enter into obli-
gations with any State under this Act for
a fiscal year in excess of the obligation al-
lotment for that State for the fiscal year,
as determined under subsection (a). The
sum of such obligation allotments for all
States in any fiscal year shall not exceed
the school-based nutrition amount for that
fiscal year.
‘‘(ii) REDUCTION
FOR
POST-ENACT-
MENT NEW OBLIGATIONS IN FISCAL YEAR
1996.—
‘‘(I) IN GENERAL.—The amount
of the obligation allotment otherwise
provided under this section for fiscal
year 1996 for a State under this Act
(as in effect on and after the date of
the enactment of the Personal Re-
sponsibility Act of 1995) shall be re-
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duced by the amount of the obliga-
tions described in subclause (II) that
are entered into under this Act or
under the Child Nutrition Act of 1966
on or after October 1, 1995, but prior
to the date of the enactment of the
Personal Responsibility Act of 1995.
‘‘(II) AMOUNT OF OBLIGATIONS
DESCRIBED.—(aa) Except as provided
in division (bb), the amount of the ob-
ligations described in this subclause
are 100 percent of the amount of the
obligations entered into under this Act
and under the Child Nutrition Act of
1966 (except obligations entered into
under section 17 of such Act).
‘‘(bb) For purposes of obligations
entered into under the summer food
service program for children under
section 13 of this Act, the child and
adult care food program under section
17 of this Act, and the special milk
program under section 3 of the Child
Nutrition Act of 1966, the amount of
the obligations described in this
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subclause are 12.5 percent of the
amount the obligations entered into
under each such program.
‘‘(2) AGREEMENT.—The submission of an ap-
plication by a State under section 4 is deemed to
constitute the State’s acceptance of the obligation al-
lotment limitations under this section (including the
formula for computing the amount of such obligation
allotment).
‘‘(3) TERMINATION OF PROGRAMS; LIMITATION
ON NEW OBLIGATION AUTHORITY.—
‘‘(A) ELIMINATION OF INDIVIDUAL ENTI-
TLEMENT.—Effective on the date of the enact-
ment of the Personal Responsibility Act of
1995—
‘‘(i) except as provided in subpara-
graph (B), the Federal Government has no
obligation to provide payment with respect
to items and services provided under this
Act (as in effect on and after the date of
the enactment of the Personal Responsibil-
ity Act of 1995); and
‘‘(ii) this Act (as in effect on and
after the date of the enactment of the Per-
sonal Responsibility Act of 1995) shall not
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be construed as providing for an entitle-
ment, under Federal law in relation to the
Federal Government, in an individual or
person at the time of provision or receipt
of services.
‘‘(B) LIMITATION
ON
OBLIGATION
AU-
THORITY.—Notwithstanding any other provision
of this Act, the Secretary is authorized to enter
into obligations with any State under this Act
for expenses incurred after the date of the en-
actment of the Personal Responsibility Act and
during fiscal year 1996, but not in excess of the
obligation allotment for that State for fiscal
year 1996, as determined under subsection (a).
TITLE XIX—CONTRACT WITH
AMERICA-TAX RELIEF
SEC. 19001. ENACTMENT OF CONTRACT WITH AMERICA TAX
RELIEF ACT OF 1995.
(a) IN GENERAL.—Title VI of H.R. 1215 of the
104th Congress, as passed by the House of Representa-
tives, is hereby enacted with the following modifications
to such title:
(1) Strike subtitle E (relating to social security
earnings test) and redesignate subtitles F and G as
subtitles E and F, respectively.
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(2) Strike subsections (c)(2) and (d)(2) of sec-
tion 6201.
(3) Strike the amendment contained in para-
graph (2) of section 6301(d) and insert the follow-
ing: ‘‘Subsection (h) of section 1 is amended by add-
ing at the end the following new sentence: ‘For pur-
poses of this subsection, taxable income shall be
computed without regard to the deduction allowed
by section 1202.’ ’’
(4) Strike section 6321 (relating to depreciation
adjustment for certain property placed in service
after December 31, 1994).
(5) Strike part III of subtitle C (relating to al-
ternative minimum tax relief).
(6) Strike subtitle F (as redesignated by para-
graph (1)) and insert the following:
‘‘Subtitle F—Tax Reduction
Contingent on Deficit Reduction
‘‘SEC. 6701. TAX REDUCTION CONTINGENT ON DEFICIT RE-
DUCTION.
‘‘This title, which is contained within the Act that—
‘‘(1) carries out the concurrent resolution on
the budget for fiscal year 1996 that provides that
the budget of the United States will be in balance
by fiscal year 2002; and
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‘‘(2) achieves a level of deficit reduction pursu-
ant to the reconciliation instructions of that concur-
rent resolution that will result in a budget of the
United States that will be in balance by fiscal year
2002; and
‘‘(B) is certified pursuant to the requirements
set forth in section 210 of that concurrent resolu-
tion,
shall take effect as so provided by its effective date provi-
sions.
‘‘SEC. 6702. MONITORING.
‘‘The Committees on the Budget of the House of
Representatives and the Senate shall each monitor
progress on achieving a balanced budget consistent with
the most recently agreed to concurrent resolution on the
budget for fiscal year 1996 or any subsequent fiscal year
(and the reconciliation Act for that resolution) or the most
recently agreed to concurrent resolution on the budget
that would achieve a balanced budget by fiscal year 2002
(and the reconciliation Act for that resolution). After con-
sultation with the Director of the Congressional Budget
Office, each such committee shall submit a report of its
findings to its House and the President on or before De-
cember 15, 1995, and annually thereafter. Each such re-
port shall contain the following:
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‘‘(1) Estimates of the deficit levels (based on
legislation enacted through the date of the report)
for each fiscal year through fiscal year 2002.
‘‘(2) An analysis of the variance (if any) be-
tween those estimated deficit levels and the levels set
forth in the concurrent resolution on the budget for
fiscal year 1996 or the most recently agreed to con-
current resolution on the budget that would achieve
a balanced budget by fiscal year 2002.
‘‘(3) Policy options to achieve the additional
levels of deficit reduction necessary to balance the
budget of the United States by fiscal year 2002.
‘‘SEC. 6703. CONGRESSIONAL ACTION.
‘‘Each House of Congress shall incorporate the policy
options included in the report of its Committee on the
Budget under section 6702(a)(3) (or other policy options)
in developing a concurrent resolution on the budget for
any fiscal year that achieves the additional levels of deficit
reduction necessary to balance the budget of the United
States by fiscal year 2002.
‘‘SEC. 6704. PRESIDENTIAL ACTION.
‘‘If the President submits a budget under section
1105(a) of title 31, United States Code, that does not pro-
vide for a balanced budget for the United States by fiscal
year 2002, then the President shall include with that sub-
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mission a complete budget that balances the budget by
that fiscal year.’’
(7) Conform the table of contents accordingly.
(b) TECHNICAL CORRECTION.—Effective with re-
spect to taxable years ending after December 31, 1994,
paragraph (1) of section 1201(b) of the Internal Revenue
Code of 1986, as added by such title VI, is amended to
read as follows:
‘‘(1) IN GENERAL.—In the case of any taxable
year ending after December 31, 1994, and beginning
before January 1, 1996, in applying subsection (a),
net capital gain for such taxable year shall not ex-
ceed such net capital gain determined by taking into
account only gain or loss properly taken into account
for the portion of the taxable year after December
31, 1994.’’
SEC. 19002. COMPLIANCE WITH CONCURRENT RESOLUTION
ON THE BUDGET.
(a) IN GENERAL.—For purposes of the Internal Rev-
enue Code of 1986, the taxpayer’s net modified chapter
1 liability for any taxable year shall be such liability deter-
mined without regard to this section—
(1) increased by 27 percent of the excess (if
any) of—
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(A) the amount which would be the tax-
payer’s net modified chapter 1 liability for such
year if such liability were determined without
regard to the amendments made by subtitles A,
B, C, and D of title VI of H.R. 1215 of the
104th Congress, as passed by the House of
Representatives, over
(B) the taxpayer’s net modified chapter 1
liability for such year determined without re-
gard to this section, or
(2) reduced by 27 percent of the excess (if any)
of the amount described in paragraph (1)(B) over
the liability described in paragraph (1)(A).
(b) NET MODIFIED CHAPTER 1 LIABILITY.—For
purposes of subsection (a), the term ‘‘net modified chapter
1 liability’’ means the liability for tax under chapter 1 of
the Internal Revenue Code of 1986 determined—
(1) without regard to sections 1201 and 1202
of such Code, as amended by such title VI,
(2) without regard to the amendments made by
sections 6103 and 6104 of such title VI,
(3) after the application of any credit against
such tax other than the credits under sections 31,
33, and 34 of such Code, and
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(4) before crediting any payment of estimated
tax for the taxable year.
(c) CAPITAL GAINS.—
(1) CAPITAL
GAINS
DEDUCTION
FOR
TAX-
PAYERS
OTHER
THAN
CORPORATIONS.—For pur-
poses of applying section 1202 of the Internal Reve-
nue Code of 1986, as added by such title VI—
(A) in the case of taxable years ending be-
fore January 1, 1996, ‘‘42.5 percent’’ shall be
substituted for ‘‘50 percent’’ in subsection (a)
thereof, and
(B) in the case of taxable years ending
after December 31, 1995, ‘‘34.5 percent’’ shall
be substituted for ‘‘50 percent’’ in subsection
(a) thereof.
(2) ALTERNATIVE
CAPITAL
GAINS
TAX
FOR
CORPORATIONS.—
(A) For purposes of applying section 1201
of such Code, as amended by such title VI—
(i) in the case of taxable years ending
before January 1, 1996, ‘‘26.5 percent’’
shall be substituted for ‘‘25 percent’’ in
subsection (a)(2) thereof, and
(ii) in the case of taxable years ending
after December 31, 1995, ‘‘31.9 percent’’
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shall be substituted for ‘‘25 percent’’ in
subsection (a)(2) thereof.
(B) For purposes of applying section
852(b)(3)(D)(iii) of such Code, as amended by
such title VI—
(i) in the case of taxable years ending
before January 1, 1996, ‘‘73.5 percent’’
shall be substituted for ‘‘75 percent’’ in
subsection (a)(2) thereof, and
(ii) in the case of taxable years ending
after December 31, 1995, ‘‘68.1 percent’’
shall be substituted for ‘‘75 percent’’ in
subsection (a)(2) thereof.
(3) INDEXING.—For purposes of applying sec-
tion 1022 of such Code, as added by such title VI,
only 69 percent of the applicable inflation adjust-
ment under subsection (c)(2) of such section 1022
shall be taken into account.
(4) CONFORMING
CHANGES.—Proper adjust-
ments shall be made to the percentages and frac-
tions in the following provisions to reflect the per-
centages in paragraphs (1) and (2):
(A) 
Sections 
170(c), 
1445(e), 
and
7518(g)(6)(A) of such Code.
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(B) Section 607(h)(6)(A) of the Merchant
Marine Act, 1936.
(d) AMERICAN DREAM SAVINGS ACCOUNTS.—For
purposes of applying section 408A of such Code, as added
by such title VI—
(1) only 69 percent of the income on the assets
held in an American Dream Savings Account (which
would otherwise be includible in gross income) shall
be excludible from gross income,
(2) only 69 percent of any distribution attrib-
utable to amounts not previously included in gross
income shall be entitled to the treatment described
in subsection (d)(1) of such section 408A, and
(3) only 69 percent of any payment or distribu-
tion referred to in subsection (d)(3)(B) of such sec-
tion 408A shall be entitled to the treatment de-
scribed in such subsection.
(e) 
SPOUSAL
INDIVIDUAL
RETIREMENT
AC-
COUNTS.—For purposes of applying sections 219 and 408
of such Code—
(1) only 69 percent of the contributions to an
individual retirement plan which are allowable as a
deduction solely by reason of the amendments made
by section 6104 of such title VI shall be allowed as
a deduction, and
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(2) only 69 percent of the income on the assets
held in an individual retirement plan which are at-
tributable to contributions permitted solely by reason
of the amendments made by section 6104 of such
title VI (which would otherwise be includible in gross
income) shall be excludible from gross income.
(f) ALTERNATIVE MINIMUM TAX.—
(1) IN GENERAL.—In the case of taxable years
beginning after December 31, 1994—
(A) in the case of a taxpayer other than a
corporation, the tax imposed by section 55 of
such Code shall be determined without regard
to paragraph (1) of section 56(a) of such Code,
and
(B) in the case of a corporation, the ten-
tative minimum tax under section 55 of such
Code shall be zero.
(2) DELAY IN BENEFIT OF REPEAL FOR TAX-
ABLE YEARS 1995 AND 1996.—
(A) IN GENERAL.—Paragraph (1) shall not
apply to any taxable year beginning before Jan-
uary 1, 1997, but there shall be allowed as a
credit against the tax imposed by subtitle A of
such Code for each taxable year referred to in
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subparagraph (C) an amount equal to the credit
determined under subparagraph (B).
(B) AMOUNT OF CREDIT.—The credit de-
termined under this subparagraph for any tax-
able year to which this paragraph applies is an
amount equal to 1⁄3 of the excess (if any) of—
(i) the aggregate tax paid under sec-
tion 55 of such Code for taxable years be-
ginning after December 31, 1994, and be-
fore January 1, 1997, over
(ii) the amount of tax which would
have been imposed by such section 55 for
such taxable years had paragraph (1) ap-
plied to such taxable years.
(C) YEARS CREDIT ALLOWED.—The tax-
able years referred to in this subparagraph are
the first 3 taxable years of the taxpayer begin-
ning after December 31, 1996.
(D) COORDINATION WITH OTHER PROVI-
SIONS.—For purposes of the Internal Revenue
Code of 1986, the credit allowed under para-
graph (1) shall be treated as a credit allowed
under subpart C of part IV of subchapter A of
chapter 1 of such Code and as referred to in
paragraph (2) of 1324(b) of title 31, United
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States Code, immediately before the period at
the end thereof.
(g) COMPARABLE TREATMENT
FOR ESTATE
AND
GIFT TAX CHANGES.—A rule similar to the rule of sub-
section (a) shall apply to any reduction in liability for tax
under subtitle B of such Code by reason of the amend-
ments made by section 6351 of such title VI.
TITLE XX—BUDGET
ENFORCEMENT
SEC. 20001. SHORT TITLE; PURPOSE.
(a) SHORT TITLE.—This title may be cited as the
‘‘Seven-Year Balanced Budget Enforcement Act of 1995’’.
(b) PURPOSE.—This title extends and reduces the
discretionary spending limits and extends the pay-as-you-
go requirements.
SEC. 20002. DISCRETIONARY SPENDING LIMITS.
(a) LIMITS.—Section 601(a)(2) of the Congressional
Budget Act of 1974 is amended by striking subparagraphs
(A), (B), (C), (D), and (F), by redesignating subpara-
graph (E) as subparagraph (A) and by striking ‘‘and’’ at
the end of that subparagraph, and by inserting after sub-
paragraph (A) the following new subparagraphs:
‘‘(B) with respect to fiscal year 1996, for
the discretionary category: $485,074,000,000 in
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new budget authority and $531,768,000,000 in
outlays;
‘‘(C) with respect to fiscal year 1997, for
the discretionary category: $481,423,000,000 in
new budget authority and $519,288,000,000 in
outlays;
‘‘(D) with respect to fiscal year 1998, for
the discretionary category: $489,233,000,000 in
new budget authority and $511,173,000,000 in
outlays;
‘‘(E) with respect to fiscal year 1999, for
the discretionary category: $480,420,000,000 in
new budget authority and $508,695,000,000 in
outlays;
‘‘(F) with respect to fiscal year 2000, for
the discretionary category: $487,347,000,000 in
new budget authority and $512,202,000,000 in
outlays;
‘‘(G) with respect to fiscal year 2001, for
the discretionary category: $494,307,000,000 in
new budget authority and $514,109,000,000 in
outlays; and
‘‘(H) with respect to fiscal year 2002, for
the discretionary category: $496,188,000,000 in
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new budget authority and $512,426,000,000 in
outlays;’’.
(b) COMMITTEE
ALLOCATIONS
AND
ENFORCE-
MENT.—Section 602 of the Congressional Budget Act of
1974 is amended—
(1) in subsection (c), by striking ‘‘1995’’ and
inserting ‘‘2002’’ and by striking the last sentence;
and
(2) in subsection (d), by striking ‘‘1992 TO
1995’’ in the side heading and inserting ‘‘1996 TO
2002’’ and by striking ‘‘1992 through 1995’’ and in-
serting ‘‘1996 through 2002’’.
(c) TERM OF BUDGET RESOLUTIONS.—Section 606
of the Congressional Budget Act of 1974 is amended—
(1) in its section heading by striking ‘‘5-year’’
and inserting ‘‘term of’’;
(2) in the sideheading of subsection (a), by
striking ‘‘5-YEAR’’ and inserting ‘‘TERM OF’’;
(3) in subsection (a), by striking ‘‘1992, 1993,
1994, or 1995’’ and inserting ‘‘1996 or any fiscal
year thereafter through 2002’’ and by inserting ‘‘at
least’’ before ‘‘each’’; and
(4) in subsection (d)(1), by striking ‘‘1992,
1993, 1994, and 1995’’ and inserting ‘‘1996 or any
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fiscal year thereafter through 2002’’, and by striking
‘‘(i) and (ii)’’.
(d) EFFECTIVE DATE.—Section 607 of the Congres-
sional Budget Act of 1974 is amended by striking ‘‘1991
to 1998’’ and inserting ‘‘1996 to 2002’’.
(e) SEQUESTRATION REGARDING VIOLENT CRIME
REDUCTION TRUST FUND.—(1) Section 251A(b)(1) of
the Balanced Budget and Emergency Deficit Control Act
of 1985 is amended by striking subparagraphs (B), (C),
and (D) and its last sentence and inserting the following:
‘‘(B) 
For 
fiscal 
year 
1996,
$2,227,000,000.
‘‘(C) For fiscal year 1997, $3,846,000,000.
‘‘(D) 
For 
fiscal 
year 
1998,
$4,901,000,000.
‘‘(E) 
For 
fiscal 
year 
1999,
$5,639,000,000.
‘‘(F) 
For 
fiscal 
year 
2000,
$6,225,000,000.’’.
(2) Section 310002 of the Violent Crime Control and
Law Enforcement Act of 1994 (42 U.S.C. 14212) is re-
pealed.
(f) CONFORMING AMENDMENT.—The item relating
to section 606 in the table of contents set forth in section
1(b) of the Congressional Budget and Impoundment Con-
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‘‘(6) The term ‘budgetary resources’ means new
budget authority, unobligated balances, direct spend-
ing authority, and obligation limitations.’’;
(3) in paragraph (9), by striking ‘‘1992’’ and
inserting ‘‘1996’’; and
(4) in paragraph (14), by striking ‘‘through fis-
cal year 1995’’.
SEC. 20004. ENFORCING DISCRETIONARY SPENDING LIM-
ITS.
Section 251 of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended—
(1) in the side heading of subsection (a), by
striking ‘‘1991–1998’’ and inserting ‘‘1996–2002’’;
(2) in the first sentence of subsection (b)(1), by
striking ‘‘1992, 1993, 1994, 1995, 1996, 1997 or
1998’’ and inserting ‘‘1997 or any fiscal year there-
after through 2002’’ and by striking ‘‘through
1998’’ and inserting ‘‘through 2002’’;
(3) in subsection (b)(1), by striking ‘‘the follow-
ing:’’ and all that follows through ‘‘The adjust-
ments’’ and inserting ‘‘the following: the adjust-
ments’’ and by striking subparagraphs (B) and (C);
(4) in subsection (b)(2), by striking ‘‘1991,
1992, 1993, 1994, 1995, 1996, 1997, or 1998’’ and
inserting ‘‘1996 or any fiscal year thereafter through
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2002’’ and by striking ‘‘through 1998’’ and insert-
ing ‘‘through 2002’’;
(5) in subsection (b)(2)(E), by striking clauses
(i), (ii), and (iii) and by striking ‘‘(iv) if, for fiscal
years 1994, 1995, 1996, 1997, and 1998’’ and in-
serting ‘‘If, for fiscal years 1996 through 2002’’;
and
(6) in subsection (b)(2)(F), by striking every-
thing after ‘‘the adjustment in outlays’’ and insert-
ing ‘‘for a category for a fiscal year is the amount
of the excess but not to exceed 0.5 percent of the
adjusted discretionary spending limit on outlays for
that fiscal year in fiscal year 1996 or any fiscal year
thereafter through 2002.’’.
SEC. 20005. ENFORCING PAY-AS-YOU-GO.
(a) EXTENSION.—(1) Section 252 of the Balanced
Budget and Emergency Deficit Control Act of 1985 is
amended—
(A) in the side heading of subsection (a), by
striking ‘‘FISCAL YEARS 1992–1998’’; and
(B) in subsection (e), by striking ‘‘, for any fis-
cal year from 1991 through 1998,’’ and by striking
‘‘through 1995’’.
(b) ROLLING PAY-AS-YOU-GO SCORECARD.—Section
252(d) of the Balanced Budget and Emergency Deficit
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Control Act of 1985 is amended by striking ‘‘each fiscal
year through fiscal year 1998’’ each place it appears and
inserting ‘‘the current year (if applicable), the budget
year, and each of the first 4 outyears’’.
SEC. 20006. REPORTS AND ORDERS.
Section 254 of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended—
(1) in subsection (d)(2), by striking
‘‘1998’’ and inserting ‘‘2002’’; and
(2)(A) in subsection (g)(2)(A), by striking
‘‘1998’’ and inserting ‘‘2002’’; and
(B) in subsection (g)(3), by striking ‘‘in each
outyear through 1998’’ and inserting ‘‘in each of the
4 ensuing outyears’’.
SEC. 20007. TECHNICAL CORRECTION.
Section 258 of the Balanced Budget and Emergency
Deficit Control Act of 1985, entitled ‘‘Modification of
Presidential Order’’, is repealed.
SEC. 20008. SPECIAL RULE ON INTERRELATIONSHIP BE-
TWEEN CHANGES IN DISCRETIONARY SPEND-
ING LIMITS AND PAY-AS-YOU-GO REQUIRE-
MENTS.
(a)(1) Section 252 of the Balanced Budget and
Emergency Deficit Control Act of 1985 is amended by
adding at the end the following new subsection:
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‘‘(f) SPECIAL RULE
ON INTERRELATIONSHIP BE-
TWEEN SECTIONS 251, 251A, and 252.—Whenever legis-
lation is enacted during the 104th Congress that decreases
the discretionary spending limits for budget authority and
outlays for a fiscal year under section 601(a)(2) of the
Congressional Budget Act of 1974 or in section 251A(b)
of the Balanced Budget and Emergency Deficit Control
Act of 1985, or both, then, for purposes of subsection (b),
an amount equal to that decrease in the discretionary
spending limit for outlays shall be treated as direct spend-
ing legislation decreasing the deficit for that fiscal year.’’.
(2) Section 310(a) of the Congressional Budget Act
of 1974 is amended by striking ‘‘or’’ at the end of para-
graph (3), by redesignating paragraph (4) as paragraph
(5) and by striking ‘‘and (3)’’ in such redesignated para-
graph (5) and inserting ‘‘(3), and (4)’’, and by inserting
after paragraph (3) the following new paragraph:
‘‘(4) carry out section 252(f) of the Balanced
Budget and Emergency Deficit Control Act of 1985;
or’’.
(b) For purposes of section 252(f) of the Balanced
Budget and Emergency Deficit Control Act of 1985 (as
amended by subsection (a)(1))—
(1) reductions in the discretionary spending
limit for outlays under section 601(a)(2) of the Con-
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gressional Budget Act of 1974 for each of fiscal
years 1999 through 2002 under section 20002 shall
be measured as reductions from the discretionary
spending limit for outlays for fiscal year 1998 as in
effect immediately before the enactment of this Act;
and
(2) reductions in the discretionary spending
limit for outlays under section 251A(b) of the Bal-
anced Budget and Emergency Deficit Control Act of
1985 for each of fiscal years 1996 through 2000
under section 20002 shall be measured as reductions
in outlays for that fiscal year under section 251A(b)
as in effect immediately before the enactment of this
Act.
SEC. 20009. MEDICARE SAVINGS CANNOT BE USED TO PAY
FOR TAX CUTS.
Any net savings in direct spending and receipts in
the Medicare program for any fiscal year resulting from
the enactment of this Act or H.R. 2425 (as applicable)
shall not be counted for purposes of section 252 of the
Balanced Budget and Emergency Deficit Control Act of
1985.
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SEC. 20010. EFFECTIVE DATE.
(a) EXPIRATION.—Section 275(b) of the Balanced
Budget and Emergency Deficit Control Act of 1985 is
amended—
(1) by striking ‘‘Part C of this title, section’’
and inserting ‘‘Sections 251, 253, 258B, and’’; and
(2) by striking ‘‘1995’’ and inserting ‘‘2002’’.
(b) EXPIRATION.—Section 14002(c)(3) of the Omni-
bus Budget Reconciliation Act of 1993 (2 U.S.C. 900
note) is repealed.
SEC. 20011. APPLICATION OF SECTION 251 ADJUSTMENTS.
Section 251(b)(2) of the Balanced Budget and Emer-
gency Deficit Control Act of 1985 is amended by adding
at the end the following new subparagraph:
‘‘(H) SPECIAL ALLOWANCE FOR WELFARE RE-
FORM.—If, for any fiscal year, appropriations are
enacted for accounts specified in clauses (i) and (ii),
the adjustment shall be the sum of:
‘‘(i) the excess of the appropriation for the
fiscal year for the Child Care and Development
Block Grant over $1,082,000,000, but not to
exceed $722,000,000 in fiscal year 1996 or
$1,011,000,000 in fiscal year 1997 through
2002; and
‘‘(ii) the excess of the appropriation for the
fiscal year for the Family Nutrition Block
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Grant Program over $3,470,000,000, but not to
exceed $692,000,000 in fiscal year 1996,
$1,307,000,000 
in 
fiscal 
year 
1997,
$1,466,000,000 
in 
fiscal 
year 
1998,
$1,650,000,000 
in 
fiscal 
year 
1999,
$1,838,000,000 
in 
fiscal 
year 
2000,
$2,075,000,000 
in 
fiscal 
year 
2001, 
or
$2,324,000,000 in fiscal year 2002;
and the outlays flowing in all years from such excess
appropriations (as reduced pursuant to the limita-
tions in clauses (i) and (ii).’’.
SEC. 20012. SPECIAL RULES APPLICABLE TO DEPARTMENT
OF DEFENSE SEQUESTRATION.
Section 255 of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended by striking sub-
section (h) (relating to optional exemption of military per-
sonnel) and adding at the end the following new sub-
section:
‘‘(j) OPTIONAL EXEMPTION FOR MILITARY PERSON-
NEL.—
‘‘(1) AUTHORITY FOR EXEMPTION.—The Presi-
dent may, with respect to any military personnel ac-
count, exempt that account from sequestration or
provide for a lower uniform percentage reduction
than would otherwise apply.
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‘‘(B) The President may not use the au-
thority provided by subparagraph (A) unless he
notifies the Congress of the manner in which
such authority will be exercised on or before the
initial snapshot date for the budget year.
‘‘(2) AUTHORITY FOR MILITARY TECHNICIANS
AND MEDICAL PERSONNEL.—
‘‘(A) Whenever the President exempts a
military personnel account from sequestration
under paragraph (1) and after all other seques-
trations to Department of Defense account have
been made, the Secretary of Defense may trans-
fer amounts to any appropriation for operation
and maintenance for the current fiscal year
from amounts available under any other appro-
priation to the Department of Defense, but—
‘‘(i) amounts so transferred shall be
available only for the pay of military tech-
nicians, the pay of medical personnel, and
other expenses of medical programs (in-
cluding CHAMPUS); and
‘‘(ii) the total amount transferred to
any operations and maintenance appropria-
tion shall not exceed the amount seques-
tered from such appropriation.
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‘‘(C) The authority to make transfers pur-
suant to subparagraph (A) is in addition to any
authority of the Secretary of Defense to make
transfers of appropriated funds under any other
provision of law.
‘‘(D) The Secretary of Defense may carry
out a transfer of funds under subparagraph (A)
only after notifying the Committees on Appro-
priations of the Senate and House of Rep-
resentatives of the proposed transfer and a pe-
riod of 20 calendar days in session has elapsed
after such notice is received.’’.
SEC. 20013. TREATMENT OF DIRECT STUDENT LOANS.
Section 504 of the Federal Credit Reform Act of
1990 is amended by adding at the end the following new
subsection:
‘‘(h) TREATMENT OF DIRECT STUDENT LOANS.—
The cost of a direct loan under the Federal direct student
loan program shall be the net present value, at the time
when the direct loan is disbursed, of the following cash
flows for the estimated life of the loan:
‘‘(1) Loan disbursements.
‘‘(2) Repayments of principal.
‘‘(3) Payments of interest and other payments
by or to the Government over the life of the loan
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after adjusting for estimated defaults, prepayments,
fees, penalties, and other recoveries.
‘‘(4) Direct expenses, including—
‘‘(A) activities related to credit extension,
loan origination, loan servicing, management of
contractors, and payments to contractors, other
government entities, and program participants;
‘‘(B) collection of delinquent loans; and
‘‘(C) writeoff and closeout of loans.’’.
SEC. 20014. DEFINITION OF PROGRAMS, PROJECTS, AND
ACTIVITIES FOR DEPARTMENT OF DEFENSE
APPROPRIATIONS.
For purposes of the Balanced Budget and Emergency
Deficit Control Act of 1985, the term program, project,
and activity for appropriations contained in any Depart-
ment of Defense appropriation Act shall be defined as the
most specific level of budget items identified in the most
recent Department of Defense appropriation Act, the ac-
companying House and Senate Committee reports, the
conference report and accompanying joint explanatory
statement of the managers of the committee of conference,
the related classified annexes and reports, and the P–1
and R–1 budget justification documents as subsequently
modified by congressional action: Provided, That the fol-
lowing exception to the above definition shall apply:
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For the Military Personnel and the Operation and
Maintenance accounts, the term ‘‘program, project, and
activity’’ is defined as the appropriation accounts con-
tained in the most recent Department of Defense appro-
priation Act: Provided further, That at the time the Presi-
dent submits his budget for any fiscal year, the Depart-
ment of Defense shall transmit to the Committees on Ap-
propriations and the Committees on Armed Services of the
Senate and the House of Representatives a budget jus-
tification document to be known as the ‘‘O–1’’ which shall
identify, at the budget activity, activity group, and sub-
activity group level, the amounts requested by the Presi-
dent to be appropriated to the Department of Defense for
operation and maintenance in any budget request, or
amended budget request, for that fiscal year.
Passed the House of Representatives October 26,
1995.
Attest:
ROBIN H. CARLE,
Clerk.